The Enforcement of Security Interest and Recovery of Debt Lawsand Miscellaneous Provisions (Amendment) Act, 2016 has brought in several amendments to the present SARFAESI
framework. Greater emphasis has been given to the CERSAI and Debenture
Trustees/ Holders have been brought in as a secured creditor. Several steps
have been introduced to accelerate the disposal of recovery applications which
was the very intent with which the statutes were introduced in the first place.
The amendment also stipulates time frame for the District Magistrate/CMM to
dispose of S.14 applications for physical possession. The key features/changes
brought in by the Amendment has been described hereunder:
2016 AMENDMENTS TO SARFAESI Act
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Section
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Existing provision
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Amended provision
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2
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An Act to regulate
securitisation and reconstruction of financial assets and enforcement of
security interest and for matters connected therewith or incidental thereto.
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An Act to regulate
securitisation and reconstruction of financial assets and enforcement of security interest and to
provide for a Central database of security interests created on property rights and for matters connected therewith or incidental
thereto.
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2 (ba)
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{Newly Inserted}
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(ba) "asset reconstruction company"
means a company registered
with Reserve Bank under section 3
for
the purposes of carrying on
the business of asset reconstruction or securitisation, or both
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2 (f )
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{In addition to the existing section,
insertion is made.}
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Borrower means any person
who has been granted financial assistance by any bank or financial
institution or who has given any guarantee or created any mortgage or pledge
as security for the financial assistance granted by any bank or financial
institution and includes a person who becomes borrower of a securitisation
company or reconstruction company consequent upon acquisition by it of any
rights or interest of any bank or financial institution in relation to such
financial assistance or
who has raised funds through issue of debt securities"
(This amendment thus brings in the non redemption of Debentures also under the scope of the Act ) |
2 (ga)
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{Newly Inserted}
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"Company " means
a company as defined in clause
(20) of section 2 of the Companies Act, 2013;
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2 (ha)
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"debt" shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. |
"Debt" shall
have the meaning assigned to it in clause
(g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
and includes—
(i) unpaid
portion of the purchase price of any tangible
asset given on hire or financial
lease or conditional sale or
under any other contract;
(ii) any right, title or
interest on any intangible asset
or licence or assignment of such intangible asset, which secures the obligation to pay
any unpaid portion of the purchase price of such intangible
asset or an obligation incurred or credit otherwise extended to enable any borrower to
acquire the intangible asset or obtain licence of such asset;
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2 (ia)
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In addition to the existing section, insertion is
made.
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“Debt securities"
means debt securities listed in
accordance with the regulations made by the Board under the Securities and Exchange Board of India
Act,1992
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2 ( j )
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"default" means non-payment
of any debt or any other amount payable by the borrower to any secured
creditor consequent upon which the
account of such borrower is classified as non-performing asset in the books of account
of the secured creditor
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(j) "Default" means—
(i) non-payment of any debt or any other amount
payable by the borrower to any
secured creditor consequent
upon which the account of such borrower is classified as non-performing asset in the books of account
of the secured creditor; or
(ii) non-payment
of any debt or any
other amount payable by the
borrower with respect
to debt securities after notice
of ninety days demanding payment of dues served upon such borrower by the debenture
trustee or any other
authority in whose favour security
interest is created for the benefit of holders of such debt securities.
(This amendments requires for the Debenture Trustee to issue a Ninety Days notice as a pre-condition for issuing the Demand Notice under Section 13(2) of the Act) |
2 ( k )
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"financial assistance" means any loan or advance granted or any debentures or bonds subscribed or any guarantees given or letters of credit established or
any other credit facility extended by any bank
or financial institution
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"Financial assistance" means any loan or advance granted or any debentures or bonds subscribed or any guarantees given or letters of credit established or
any other credit facility extended by any bank
or financial institution" including funds provided for the
purpose of acquisition of any
tangible asset on hire or financial lease or conditional sale or under any other contract or obtaining
assignment or licence of any intangible asset or purchase of debt securities;"
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2 (l)
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In addition to the existing section, insertion is made. |
After sub-clause (v), the following sub-clauses are inserted,
namely:—
"(va) any beneficial right, title or interest
in any tangible asset given
on hire or financial lease or
conditional sale or
under any other contract which secures the obligation to pay any unpaid
portion of the purchase price of such asset or an obligation incurred or credit otherwise provided to enable the borrower
to acquire such tangible asset; or
(vb) any right, title
or interest on any intangible
asset or licence or assignment
of such intangible asset, which
secures the obligation to pay
any unpaid portion of the purchase
price of such intangible asset or an obligation
incurred or credit otherwise
extended to enable the borrower
to acquire such intangible asset or obtain licence of the intangible asset; or";
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2 (m)
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In addition to the existing section, insertion is made. |
After Sub- clause (iii) the following is
inserted:
"(iiia) a debenture trustee registered with
the Board and appointed for secured debt securities;
(iiib) asset
reconstruction company, whether
acting as such or
managing a trust created for the
purpose of securitisation or asset
reconstruction, as the
case may be ";
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2 (ma)
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In addition to the existing section, insertion is made. |
'(ma) "financial lease" means a lease under any lease agreement of tangible
asset, other than
negotiable instrument or negotiable document, for transfer of lessor's right
therein to the lessee for a certain
time in consideration of payment
of agreed amount periodically and
where the lessee
becomes the owner
of the such assets at
the expiry of the term
of lease or on payment
of the agreed residual amount, as the case may be;'
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2 (na)
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In addition to the existing section, insertion is made. |
(na) "Negotiable
document" means a document, which embodies a right to delivery of tangible
assets and satisfies the requirements
for negotiability under any law for the time
being in force including warehouse receipt and bill of lading;
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2 (zd)
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"secured creditor" means any bank or financial institution or any consortium or
group of banks or financial institutions and includes—
(i) debenture trustee appointed by any bank or
financial institution; or
(ii) securitisation company or reconstruction company, whether acting as
such or managing a trust set up by such securitisation company or reconstruction company for the securitisation or reconstruction, as the
case may be; or
(iii) any other trustee holding
securities
on
behalf of a bank or financial institution
in whose favour security interest is created
for due repayment by any borrower of any financial assistance;
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“Secured creditor” means
(i) any bank or
financial institution or any consortium
or group of banks or financial institutions holding any right,
title or interest upon any
tangible asset or intangible
asset as specified in clause (l); or
(ii) debenture trustee appointed by any bank or financial institution
or
(iii) an asset reconstruction company whether acting
as such or managing a trust set up by such asset
reconstruction company for the
securitisation or reconstruction, as the case may be; or
(iv) debenture trustee registered with the Board appointed by any
company for secured
debt securities; or
(v) any other
trustee holding securities on behalf of a bank or financial institution,
in whose favour security interest is created for due repayment by any borrower of any financial assistance;
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2 (zf)
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"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31 |
"Security interest" means right, title or interest of any kind, other than
those specified in section
31, upon property created in favour of any
secured creditor and includes—
i) any mortgage, charge, hypothecation, assignment or
any right, title or interest of any kind, on
tangible asset, retained by the
secured creditor as an
owner of the property,
given on hire or financial
lease or conditional sale or
under any other
contract which secures the obligation to pay any unpaid portion of the purchase price of the asset or an obligation
incurred or credit
provided to enable the borrower to acquire the tangible
asset; or
(ii) such right,
title or interest in any intangible asset or assignment
or licence of such
intangible asset which secures the obligation to pay
any unpaid portion of the purchase price of the intangible
asset or the obligation incurred or any credit provided to enable the borrower to acquire
the intangible asset or licence of intangible asset;
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3 (1) (b)
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Registration of securitisation companies or reconstruction companies:
(1)No securitisation company or reconstruction company shall commence or carry
on the business of securitisation or asset reconstruction without—
(b) having the owned fund of not less than
two crore rupees
or such other
amount not exceeding
fifteen per cent of total financial assets acquired or to be acquired by the
securitisation company or reconstruction company, as the
Reserve Bank may, by notification, specify:
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Registration of securitisation companies or reconstruction companies:
(1) No securitisation company or reconstruction company shall commence or carry on the business of securitisation or asset reconstruction without--
"(b) having
net owned fund of not
less than two crore rupees
or such other higher
amount as the Reserve Bank, may, by notification, specify:";
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3 (3) (f)
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that a sponsor, is not a holding company of the securitisation
company or
reconstruction company, as the case may be, or, does not otherwise hold
any controlling interest in
such
securitisation company or reconstruction
company;
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For clause
(f), the following clause shall be substituted, namely:—
"(f) that
a sponsor of an asset reconstruction
company is a fit and proper person in accordance with the criteria as may be specified
in the guidelines issued
by the Reserve Bank for such persons;
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3 (6)
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Every securitisation company
or reconstruction company, shall obtain prior approval of the Reserve Bank for any substantial change in its management or
change of location of
its registered office or change in
its name:
PROVIDED
that the decision of the Reserve
Bank, whether the change in
management of a securitisation company or a
reconstruction company is
a substantial
change in its management or not, shall be final.
Explanation : For the purposes of this section, the expression "substantial change in management" means the
change in
the
management by
way of transfer
of
shares
or
amalgamation or transfer of the
business of
the company.
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Every securitisation company
or reconstruction company, shall obtain prior approval of the Reserve Bank for any substantial change in its management "including
appointment of any
director on the board of
directors of the asset reconstruction company or managing director or chief executive
officer thereof" or change
of location of
its registered office or change in
its name:
Explanation: For the purposes of this section, the expression "substantial change in management" means the
change in
the
management by
way of transfer
of
shares
or change affecting the sponsorship in
the company by way of transfer of shares or amalgamation or transfer of
the business of the
company.
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5 (1A)
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In addition to the existing section, insertion is made. |
After sub-section (1),
the following sub-section shall be inserted, namely:—
"(1A) Any document executed by any bank or financial institution under
sub-section (1) in favour of the asset reconstruction company acquiring financial
assets for the purposes of asset reconstruction or securitisation shall be exempted
from stamp duty in
accordance with the provisions of section 8F of
the Indian Stamp
Act, 1899. Provided that the provisions of this sub-section shall not apply where the
acquisition of the financial assets by the asset reconstruction company is for
the purposes other
than asset reconstruction or securitisation."
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5 (2A)
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In addition to the existing section, insertion is made. |
After sub-section (2), the following sub-section shall be inserted, namely:—
"(2A) If the bank or financial institution is holding any right, title or interest
upon any tangible asset
or intangible asset
to secure payment of
any unpaid portion of the purchase
price of such
asset or an obligation incurred or credit otherwise provided to enable
the borrower to acquire the
tangible asset or assignment or licence of intangible asset, such right, title or interest shall vest in the asset reconstruction company on acquisition of such assets under
sub-section (1)."
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7 (1)
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Issue of security by raising of receipts or funds
by securitisation company or reconstruction company:
(1) Without prejudice to the provisions contained in the Companies Act, 1956 (1of1956), Securities Contracts (Regulation) Act, 1956 (42 of 1956), and
the Securities and
Exchange Board of India Act, 1992
(15 of 1992), any
securitisation company
or reconstruction company, may, after acquisition of any financial asset under sub-section (1) of
section 5, offer security receipts to qualified institutional buyers (other than by offer to public)
for
subscription in accordance with the provisions of
those Acts.
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Issue of security by raising of receipts or funds
by securitisation company or reconstruction company:
(1) Without prejudice to the provisions contained in the Companies Act, 1956 (1of1956), Securities Contracts (Regulation) Act, 1956 (42 of 1956), and
the Securities and
Exchange Board of India Act, 1992
(15 of 1992), any
securitisation company
or reconstruction company, may, after acquisition of any financial asset under sub-section (1) of
section 5, offer security receipts to qualified institutional buyers (or such
other category of investors including non-institutional
investors as may be specified by the Reserve Bank in consultation with the
Board, from
time to time,)
for
subscription in accordance with the provisions of
those Acts.
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9
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Without
prejudice to the provisions contained in any other law for the time being in force, a securitisation company or reconstruction company may, for the purposes of asset
reconstruction, having regard to the guidelines framed by the Reserve Bank in this behalf,
provide for any one or more of
the following measures, namely:--
(a) the proper management of the business of the borrower, by change in, or
take over of, the management of
the
business of the
borrower
(b) the sale or lease of
a part or whole of the
business of
the borrower
(c) rescheduling of payment of debts payable by the borrower;
(d) enforcement of security interest in accordance with the provisions of this Act
(e) settlement of dues payable by the borrower;
(f) taking possession of secured assets in accordance with the provisions of this
Act
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9.(1)
Without prejudice to the provisions contained in any other law for the time being
in force, an asset reconstruction company may,
for the purposes of
asset reconstruction, provide for any one or more of the following measures,
namely:—
(a) the proper
management of the business of the borrower, by change
in, or takeover of, the management of the business of the borrower;
(b) the sale or lease of
a part or
whole of the business of the borrower;
(c) rescheduling of payment of debts payable by the borrower;
(d) enforcement of security interest in accordance with the provisions of
this Act;
(e) settlement of dues payable by the borrower;
taking possession of secured assets in accordance with the provisions
of this Act;
(f) taking possession of secured assets in accordance with the provisions of this
Act
(g)conversion of any portion
of debt into shares of a borrower company:
Provided that
conversion of any part of debt into shares of a borrower company shall
be deemed always
to have been
valid, as if
the provisions of
this clause were
in force at all material times.
(2) The Reserve Bank shall, for the
purposes of sub-section (1), determine
the policy and issue necessary
directions including the direction for regulation of management of the business of the borrower and fees to be charged.
(3) The asset
reconstruction company shall take measures under sub-section
(1) in accordance with policies and
directions of the
Reserve Bank determined under sub-section (2)."
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12 (2)(c)
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In addition to the existing section, insertion is
made.
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"(c) the fee and other charges which may be charged or incurred for management
of financial assets
acquired by any asset reconstruction company;
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12 (2)(d)
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In addition to the existing section, insertion is
made.
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"(d) transfer of security receipts issued to qualified
buyers"
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12 (B)
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In addition to the existing section, insertion is made. |
"12B. (1)
The Reserve Bank may, for the purposes of this
Act, carry out or
caused to be carried
out audit and inspection of an asset reconstruction
company from time
to time.
(2) It shall be
the duty of an asset
reconstruction company and its officers to provide assistance and cooperation to the Reserve Bank to carry out audit or inspection
under sub-section (1).
(3) Where
on audit or inspection or otherwise, the Reserve Bank is satisfied that
business of an
asset reconstruction company
is being conducted in a manner
detrimental to public interest or to the interests of investors in security receipts issued
by such asset reconstruction
company, the Reserve Bank may, for
securing proper management of an asset
reconstruction company, by an order—
(a) remove
the Chairman or any director or appoint additional directors on
the board of directors of the asset reconstruction company; or
(b) appoint
any of its officers as an observer to observe the working of the
board of directors of such asset reconstruction company:
Provided that
no order for removal of Chairman or director under clause (a)
shall be made except after giving him an opportunity of being heard.
(4) It shall
be the duty of every director or other officer or employee of the asset
reconstruction company
to produce
before the person, conducting an audit or
inspection under sub-section (1), all such
books, accounts and other documents in his
custody or control
and to provide him such statements and information relating to the
affairs of the asset
reconstruction company as may be required by such person within
the stipulated time
specified by him."
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13
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In addition to the existing section, insertion is made. |
(i) in sub-section (2), the following proviso shall be inserted, namely:—
"Provided that—
(i) the requirement of classification of secured debt as non-performing
asset under this
sub-section shall not
apply to a borrower who has
raised funds through issue of debt securities; and (ii)
in the event of default, the debenture trustee shall be entitled to
enforce security interest in the same manner as provided under this section
with such modifications as may be necessary
and in accordance with the
terms and conditions of security documents executed in favour of the debenture trustee;";
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13 (8)
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(8) If the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor, and no further step shall be taken by him for transfer or sale of that secured asset. |
"(8) Where the amount of dues of the secured creditor together
with all costs, charges and expenses incurred by him is tendered to
the secured creditor at any time before
the date of
publication of notice for public auction or inviting quotations or tender from public
or private treaty
for transfer by
way of lease,
assignment or sale
of the secured assets,—
i) the secured
assets shall not be transferred by way of
lease assignment or
sale by the secured
creditor; and
ii) in case, any
step has been taken by
the secured creditor for transfer
by way of lease or
assignment or sale of the assets
before tendering of such amount
under this sub- section, no further step shall be taken by such secured creditor
for transfer by way
of lease or assignment or sale of such
secured assets."
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14
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In addition to the existing section, insertion is made. |
in section
14, in sub-section (1),—
(i) in the
second proviso, after the words
"secured assets", the words "within a period of thirty
days from the date of application" shall be inserted;
(ii) after the second proviso, the following proviso shall be inserted, namely:—
"Provided further
that if no order is passed by the Chief Metropolitan
Magistrate or District Magistrate within the said period of thirty days for reasons
beyond his control, he may, after
recording reasons in writing for the same, pass
the order within
such further period but not exceeding in aggregate sixty days."
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15
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In addition to the existing section, insertion is made. |
in section
15, in sub-section (4), the following proviso shall be
inserted, namely:—
"Provided that
if any secured creditor jointly with other secured creditors or any
asset reconstruction company or financial institution or any other
assignee has converted part of its debt into shares of a borrower company and thereby acquired
controlling interest in the borrower company, such
secured creditors shall not be liable
to restore the management of the business to such borrower."
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17
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Marginal heading:
Right to appeal
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Substituted to :
Application against
measures to recover secured debts
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17 (1A)
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In addition to the existing section, insertion is made. |
after sub-section (1),
the following sub-sections shall be inserted, namely:—
"(1A) An application under sub-section (1) shall be filed before the Debts
Recovery Tribunal within the local limits of whose jurisdiction—
(a) the cause of action, wholly
or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank
or financial institution is
maintaining an account
in which debt claimed is outstanding for the time
being.";
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17 (3)
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(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances
of the case and
evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the
rules
made thereunder, and
require
restoration of
the
management of the business
to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any
one or more measures referred to in sub-section (4) of section 13 taken by the secured creditors as invalid and
restore the possession of the secured assets
to the borrower or restore the management of the business to the borrower, as the case
may be, and pass such
order as it may consider appropriate and necessary in relation
to any of the recourse taken by the secured creditor under sub-section (4) of
section 13.
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"(3) If, the Debts
Recovery Tribunal, after examining the facts and
circumstances of the
case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4)
of section 13,
taken by the secured
creditor are not in
accordance with the provisions
of this Act and the rules
made thereunder, and require
restoration of the management or restoration of possession, of the
secured assets to the borrower
or other
aggrieved person, it may, by order,—
(a) declare
the recourse to any one or more measures referred to in
sub-section (4)
of section 13 taken by the secured creditor as invalid; and
(b) restore
the possession of secured assets
or management of secured assets to the borrower
or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and
(c) pass such
other direction as it may consider appropriate and necessary in relation to any of the
recourse taken by the secured
creditor under sub-section (4) of section 13."
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17 (4A)
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In addition to the existing section, insertion is made. |
(4A) Where—
(i)
any person, in an application under
sub-section (1), claims
any tenancy or leasehold
rights upon the secured asset, the Debt Recovery
Tribunal, after
examining the facts of the case and evidence produced by
the parties in relation to such claims shall, for the purposes of enforcement
of security interest, have the jurisdiction to examine whether lease
or tenancy,—
(a) has
expired or stood
determined; or
(b) is contrary to section 65A of the Transfer
of Property Act, 1882
Or
(c) is contrary to terms of mortgage; or
(d) is created
after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and
(ii) the Debt Recovery
Tribunal is satisfied that tenancy
right or leasehold rights
claimed in secured asset falls under the sub-clause (a)
or sub-clause (b) or
sub-clause (c) or
sub-clause (d)
of clause (i), then notwithstanding anything to the contrary
contained in any other law
for the time being in force, the Debt Recovery Tribunal may pass such order
as it deems
fit in accordance with the provisions of this Act."
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19
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If the Debts Recovery Tribunal or the Court of District Judge,
on an application made under section 17
or section 17A or the Appellate Tribunal or the High Court on an appeal preferred under section 18 or section
18A, holds that the possession
of secured assets by the secured creditor is not in accordance with the provisions of this Act and rules made thereunder and directs the secured creditors to return such secured
assets to the concerned borrowers, such borrower shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in section 18B.
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If the Debts Recovery Tribunal or the Court of District Judge,
on an application made under section 17
or section 17A or the Appellate Tribunal or the High Court on an appeal preferred under section 18 or section
18A, holds that the possession
of secured assets by the secured creditor is not in accordance with the provisions of this Act and rules made thereunder and directs the secured creditors to return such secured
assets to the concerned
borrowers or any other aggrieved
person, who has filed the application under section 17 or section 17A or appeal under section 18 or section 18A, as
the case may be, the borrower or such other person" shall be entitled to the payment of such compensation and costs as may be determined by such Tribunal or Court of District Judge or Appellate Tribunal or the High Court referred to in section 18B.
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20
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In addition to the existing section, insertion is made. |
20A. (1)
The Central Government may, for the purpose
of providing a Central database, in consultation with State Governments or other authorities operating registration system for recording rights over any property or creation, modification or
satisfaction of any security interest on such property, integrate the registration records
of such registration systems with the records
of Central Registry established under section 20, in such manner
as may be prescribe
Explanation.—For the purpose of
this sub-section, the registration records includes records
of registration under
the Companies Act, 2013,
the Registration Act,
1908, the Merchant Shipping Act, 1958, the Motor Vehicles
Act, 1988, the Patents
Act, 1970,
the Designs Act, 2000 or other such records under any other law for the time
being in force.
(2) The Central Government
shall after integration of records
of various registration systems referred
to in
sub-section (1) with
the Central Registry, by notification,
declare the date of integration
of registration systems
and the date from which such integrated records shall
be available; and with effect from such date, security interests over properties
which are registered
under any registration system referred to in sub-section (1) shall be deemed to be registered with the Central Registry
for the purposes of this Act.".
"20B. The Central Government may, by notification, delegate its powers and
functions under
this Chapter, in relation to establishment, operations and regulation of
the Central Registry to the Reserve Bank, subject to such terms and conditions as may
be prescribed."
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23
|
Renumbered
as Sec 23 (1)
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23 (1)
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Renumbered as stated above and insertion is made. |
(a) the words "within thirty
days after the date of such transaction or creation of security, by
the securitisation company
or reconstruction company or the secured creditor, as the case may be" shall be omitted;
(b) the first
proviso shall be
omitted;
(c) in the second
proviso, the word "further" shall be omitted;
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23 (2)
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Insertion is made to Sec 23 after sub section (1). |
(2) The Central Government may, by notification, require the registration of transaction relating to different types of security interest created on different kinds of property with the Central Registry. |
23 (3)
|
Insertion is made to Sec 23 after sub section (2). |
(3) The Central Government may, by rules, prescribe forms for registration for different types of security interest under this section and fee to be charged for such registration." |
Chapter IV A inserted after Sec 26A as new chapter |
Registration By Secured
Creditors And Other Creditors
26B. (1)
The Central Government may by notification, extend the provisions of
Chapter IV relating to Central Registry to all creditors other than secured creditors as
defined in clause (zd) of sub-section (1) of section 2, for creation, modification or
satisfaction of any security interest over any property of the borrower for the purpose
of securing due
repayment of any
financial assistance granted by such creditor to the borrower.
(2) From
the date of notification under sub-section (1),
any creditor including the secured creditor may file
particulars of transactions
of creation, modification
or satisfaction of any security interest with the Central Registry in such form and manner
as may be prescribed.
(3) A creditor other than the secured creditor filing particulars of transactions of
creation, modification and satisfaction
of security interest over properties
created in its favour
shall not be entitled to exercise any right of enforcement of securities under
this Act.
(4) Every
authority or officer of the Central Government or any State Government
or local authority, entrusted with the function of recovery of tax or other Government
dues and for issuing
any order for attachment of any property of any person liable
to pay the tax or
Government dues, shall
file with the
Central Registry such
attachment order with particulars of the assessee and details of tax or other Government dues from
such date as may be notified by the Central Government, in such form and manner as
may be prescribed.
(5) If any person,
having any claim against any borrower, obtains
orders for attachment of property from any court or other authority empowered to issue attachment
order, such person
may file particulars of such attachment orders with Central Registry
in such form
and manner on
payment of such
fee as may
be prescribed.
26C. (1) Without
prejudice to the provisions contained in any other law, for the time
being in force, any registration
of transactions of creation, modification or satisfaction
of security interest by a secured creditor or other creditor or filing of attachment orders under this
Chapter shall be deemed to
constitute a public notice
from the date and
time of filing of particulars
of such transaction with the
Central Registry for creation, modification or satisfaction of such security interest or attachment
order, as the
case may be.
(2) Where
security interest or attachment order upon any property
in favour of the secured creditor or any other creditor are filed for the purpose of registration under
the provisions of Chapter
IV and this Chapter, the claim of such secured creditor or other creditor
holding attachment order shall have priority over any subsequent security
interest created upon such property and any transfer by way of sale, lease or assignment or licence of such
property or attachment order subsequent
to such
registration, shall
be subject to
such claim:
Provided that
nothing contained in this sub-section
shall apply to transactions carried on by the borrower in the ordinary course of business.
26D. Notwithstanding anything contained in any other law for the time being in
force, from the date
of commencement of the provisions
of this Chapter, no
secured creditor shall
be entitled to exercise the rights of enforcement of securities under Chapter
III unless the
security interest created in its favour
by the borrower has been registered with the Central Registry.
26E. Notwithstanding anything contained in any other law for the time being in
force, after the registration
of security interest, the debts
due to any secured creditor shall be paid in
priority over all other debts
and all revenues, taxes, cesses
and other rates payable
to the Central Government or State Government or local authority.
Explanation.—For the purposes of this section, it is hereby clarified
that on or after the commencement of the Insolvency and Bankruptcy Code, 2016, in cases where
insolvency or bankruptcy proceedings are pending in respect of
secured assets of
the borrower, priority to
secured creditors in payment of debt
shall be subject to the provisions of that Code."
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27
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In addition to the existing section, insertion is made |
In section
27, the following proviso shall be inserted, namely:—
"Provided that
provisions of this section shall be deemed to
have been omitted from the date of coming into force of the provisions of this Chapter and section 23 as
amended by the Enforcement
of Security Interest and Recovery
of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016."
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28
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Penalties for non-compliance of direction of
Reserve Bank.-
If
any securitisation company or reconstruction company fails to comply with any
direction issued by the Reserve Bank under section 12, such company and every
officer of the company who is in default, shall be punishable with fine which
may extend to five lakh rupees and in the case of a continuing offence, with
an additional fine which may extend to ten thousand rupees for every day
during which the default continues.
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Omitted.
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30 A
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After Sec 30, the said section is inserted. |
30A. (1) Where any asset reconstruction company or any person fails to comply
with any direction issued by the Reserve Bank under this Act the adjudicating
authority may, by
an order, impose
on such company or
person in default, a penalty
not exceeding one crore
rupees or twice the amount
involved in such failure where such amount
is quantifiable, whichever is more, and where such failure is a continuing one, a further
penalty which may extend to one lakh rupees for every day, after
the first, during which such failure continues.
(2) For the purpose
of imposing penalty under sub-section (1), the adjudicating authority shall serve
a notice on the asset reconstruction
company or the person in
default requiring such company or person
to show cause why the
amount specified in the notice should
not be imposed as a penalty
and a reasonable opportunity
of being heard shall be given to such person.
(3) Any penalty
imposed under this section shall be payable within a period
of thirty days from the date of issue of notice under sub-section (2).
(4) Where
the asset reconstruction
company fails to pay the
penalty within the specified
period under sub-section (3),
the adjudicating authority shall, by
an order, cancel
its registration:
Provided that an opportunity
of being heard shall be
given to such asset reconstruction company before cancellation of registration.
(5) No complaint shall be filed against any person in default in any court pertaining
to any failure under sub-section (1) in respect of which any penalty has been imposed
and recovered by the Reserve
Bank under this section.
(6) Where
any complaint has been filed against a person
in default in the court
having jurisdiction no
proceeding for imposition of penalty
against that person shall be taken under this section.
Explanation.—For the purposes of this section and sections 30B, 30C and
30D,—
(i) "adjudicating authority" means such officer or a committee of officers
of the Reserve Bank, designated as such
from time to time, by
notification, by the
Central Board of Reserve Bank;
(ii) "person
in default" means
the asset reconstruction
company or any person which has committed any failure, contravention or default under this Act
and any person incharge
of such company or such
other person, as the case
may be, shall be
liable to be proceeded against and punished under section 33 for such failure or contravention or
default committed by such company or person.
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30 B |
{Newly Inserted}
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30B. A person in default, aggrieved by an order passed under sub-section (4)
of section 30A,
may, within
a period of thirty
days from the date on which such order is
passed, prefer
an appeal to the Appellate Authority:
Provided that the
Appellate Authority may entertain an appeal after the expiry of
the said period of
thirty days, if it is
satisfied that there was sufficient
cause for not filing it within such period.
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30C
|
{Newly Inserted} |
30C. (1) The Central Board of Reserve Bank may designate such officer or
committee of officers
as it deems fit to exercise the power of Appellate Authority.
(2) The Appellate Authority shall
have power to
pass such order
as it deems
fit after providing a reasonable opportunity of being heard to the person in default.
(3) The Appellate Authority may, by an order
stay the enforcement of the order
passed by the adjudicating
authority under section 30A, subject
to such terms and conditions, as it deems
fit.
(4) Where
the person in default fails to comply with
the terms and conditions imposed by order under sub-section (3) without reasonable cause, the
Appellate Authority may dismiss
the appeal.
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30D
|
{Newly Inserted} |
30D. (1)
Any penalty imposed under section 30A
shall be recovered as a "recoverable sum" and shall be payable within a period
of thirty days from the date on
which notice
demanding payment of the recoverable sum is served upon the person in
default and, in the
case of failure of payment
by such person within such
period, the Reserve Bank may, for the purpose of recovery,—
(a) debit
the current account, if any, of
the person in default maintained with the Reserve
Bank or by liquidating the securities, if any, held
to the credit of
such person in the books of the Reserve
Bank;
(b) issue a notice to the person from whom any
amount is due to the person in default,
requiring such person to deduct
from the amount payable by him to the
person in default, such amount
equivalent to the amount of
the recoverable sum, and to make payment
of such amount to the Reserve Bank.
(2) Save as otherwise provided in sub-section (4), a notice issued under clause (b)
of sub-section (1)
shall be binding on every
person to whom it is
issued, and, where such notice is
issued to a post office, bank
or an insurance company,
it shall not be necessary to produce any pass
book, deposit receipt, policy or
any other document for the
purpose of any entry or
endorsement thereof before payment is
made, notwithstanding any rule, practice or requirement to the contrary.
(3) Any claim
in respect of any amount, arising after the date of issue of notice
under sub-section (1) shall be void as against the demand contained in such notice.
(4) Any person, to whom the notice is sent under sub-section (1), objects to such notice by a statement on oath that the sum demanded or any part thereof is not
due to the person
in default or that
he does not hold any
money for or on account of
the person in default, then nothing contained in this section shall be deemed to require,
such person to pay such sum or part thereof, as the case may be.
(5) Where
it is found that statement made by the person under sub-section (4) is
false in material particulars, such person shall be personally liable to the Reserve Bank
to the extent
of his own liability to the person in default on the date of the notice, or to
the extent of the
recoverable sum payable
by the person in default
to the Reserve Bank, whichever is less.
(6) The Reserve
Bank may, at any time,
amend or revoke any notice issued under
sub-section (1) or extend the time for making the payment in pursuance of such notice.
(7) The Reserve
Bank shall grant a receipt
for any amount paid to it in compliance
with a notice issued under this section and the person so paying shall be fully discharged
from his liability to the person in default to the extent of the amount so paid.
(8) Any person
discharging any liability to the person in default after the receipt
of a notice under this
section shall be personally liable to the Reserve
Bank—
(a) to the extent of his own liability to the person in default so discharged; or
(b) to the extent
of the recoverable sum payable by the person in default to
the Reserve Bank,whichever is less.
(9) Where
the person to whom the notice is sent under this section, fails to make
payment in pursuance thereof to the Reserve Bank, he shall be deemed
to be the person in default
in respect
of the
amount specified in the notice
and action or proceedings may be taken or
instituted against him for the
realisation of the
amount in the manner provided in this section.
(10) The Reserve Bank may enforce recovery of recoverable sum through the principal civil
court having jurisdiction
in the area where the
registered office or the head office or the principal place of business of the person in default or the usual place
of residence of such
person is situated as if
the notice issued by the
Reserve Bank were a decree of the Court.
(11) No
recovery under sub-section (10) shall be enforced, except on an application made to the principal civil court by an officer of the Reserve Bank authorised
in this behalf certifying that the person in
default has failed to pay
the recoverable sum."
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31(e)
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The
provisions of this Act shall not apply to-
any conditional
sale, hire-purchase or lease or any other contract in which no security
interest has been created;
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Omitted.
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31 A (2) |
(2) For the purpose of imposing penalty under
sub-section (1), the adjudicating authority shall serve a notice on the asset
reconstruction company or the person in default requiring such company or
person to show cause why the amount specified in the notice should not be
imposed as a penalty and a reasonable opportunity of being heard shall be
given to such person.
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(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification
or both Houses agree
in making any modification in the notification, the notification shall not
be issued or, as
the case may
be, shall be
issued only in
such modified form as may be agreed upon by both the Houses.
(3) In reckoning any such period of thirty days as is referred to in sub-section (2),
no account shall be taken of any period during which the House referred to in sub-section (2) is prorogued or adjourned for more than four consecutive days.
(4) The copies of
every notification issued
under this section shall, as
soon as may be after
it has been issued, be laid before each House of Parliament."
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32
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No suit, prosecution
or other legal proceedings
shall lie against any secured creditor or any of his
officers or manager exercising any of the rights of the secured creditor or borrower
for
anything done or
omitted to be done in good faith under this Act.
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No suit, prosecution
or other legal proceedings
shall lie against "the Reserve Bank or the Central Registry or any secured creditor or any of its officers" for anything done or omitted
to be done in good faith under this Act.
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38 (2)
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After Sub Section 2, the said insertions are made. |
(i) clause
(a) shall be numbered as clause (aa) and before clause (aa)
as so renumbered, the following clause shall be inserted, namely:—
"(a) other business or commercial rights of similar nature under clause (t)
of section 2;
(ii) after clause (bc), the following clauses shall be inserted, namely:—
"(bca) the manner
of integration of records of various registration systems
with the records
of Central Registry under sub-section (1) of section 20A;
(bcb) the terms
and conditions of delegation of powers by the Central
Government to the Reserve Bank under section 20B.";
(iii) after clause (d), the following clauses shall be inserted, namely:—
"(da) the form for registration of different types of security interests and
fee thereof under
sub-section (3)
of section 23;
(iv) after
clause (f), the following clauses shall be inserted, namely:—
"(fa) the form and the manner
for filing particulars of transactions under
sub-section (2)
of section 26B;
(fb) the
form and manner of filing attachment orders with the Central Registry
and the date under sub-section (4) of section 26B;
(fc) the form and manner
of filing particulars of attachment order with the
Central Registry and the fee
under sub-section (5)
of section 26B."
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