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Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Act No. 54 of 2002 17th December 2002

*[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.] BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:-

 

PART I PRELIMINARY

Section 1. Short title, extent and commencement.

(1) This Act may be called the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (2) It extends to the whole of India. (3) It shall be deemed to have come into force on the 21st day of June, 2002.

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*Subs. by Act 44 of 2016, s. 2, for the long title (w.e.f. 1-9-2016). 

 

Section 2 Definitions

 

CHAPTER II REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS OF BANKS AND FINANCIAL INSTITUTIONS

Section 3 Registration of asset reconstruction companies

Section 4 Cancellation of certificate of registration

Section 5 Acquisition of rights or interest in financial assets

Section 5A Transfer of pending applications to any one of Debts Recovery Tribunals in certain cases

Section 6 Notice to obligor and discharge of obligation of such obligor

Section 7 Issue of security by raising of receipts or funds by asset reconstruction company

Section 8 Exemption from registration of security receipt

Section 9 Measures for assets reconstruction

Section 10 Other functions of asset reconstruction company

Section 11 Resolution of disputes

Section 12 Power of Reserve Bank to determine policy and issue directions

Section 12A Power of Reserve Bank to call for statements and information

Section 12B Power of Reserve Bank to carry out audit and inspection

 

CHAPTER III ENFORCEMENT OF SECURITYINTEREST

Section 13 Enforcement of security interest

Section 14 Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset

Section 15 Manner and effect of take over of management

Section 16 No compensation to directors for loss of office

Section 17 Application against measures to recover secured debts

Section 17A Making of application to Court of District Judge in certain cases

Section 18 Appeal to Appellate Tribunal

Section 18A Validation of fees levied

Section 18B Appeal to High Court in certain cases

Section 18C Right to lodge a caveat

Section 19 Right of borrower to receive compensation and costs in certain cases

 

CHAPTER IV CENTRAL REGISTRY

Section 20 Central Registry

Section 20A Integration of registration systems with Central Registry

Section 20B Delegation of powers, Section 21 Central Registrar

Section 22 Register of securitisation, reconstruction and security interest transactions

Section 23 Filing of transactions of securitisation, reconstruction and creation of security interest

Section 24 Modification of security interest registered under this Act

Section 25 Asset reconstruction company or secured creditors to report satisfaction of security interest

Section 26 Right to inspect particulars of securitisation, reconstruction and security interest transactions

Section 26A Rectification by Central Government in matters of registration, modification and satisfaction, etc

 

CHAPTER IV A REGISTRATION BY SECURED CREDITORS AND OTHER CREDITORS

Section 26B Registration by secured creditors and other creditors

Section 26C Effect of the registration of transactions, etc

Section 26D Right of enforcement of securities, Section 26 E Priority to secured creditors

 

CHAPTER V OFFENCES AND PENALTIES

Section 27 Penalties

Section 29 Offences, Section 30 Cognizance of offences

Section 30A Power of adjudicating authority to impose penalty

Section 30B Appeal against penalties, Section 30C Appellate Authority

Section 30D Recovery of penalties

 

CHAPTER VI MISCELLANEOUS

Section 31 Provisions of this Act not to apply in certain cases

Section 31A Power to exempt a class or classes of banks or financial institutions

Section 32 Protection of action taken in good faith

Section 33 Offences by companies

Section 34 Civil court not to have jurisdiction, Section 35 The provisions of this Act to override other laws

Section Limitation, Section 37 Application of other laws not barred

Section 38 Power of Central Government to make rules

Section 39 Certain provisions of this Act to apply after Central Registry is set up or cause to be set up, Section 40 Power to remove difficulties, Section 41 Amendments to certain enactments, Section 42 Repeal and saving

 

THE SCHEDULE

(See section 41)

Year Act No Short Title Amendment
1956 1 The Companies Act, 1956 In section 4A, in sub-section (1), after clause (vi), insert the following:-
"(vii) the 1[asset reconstruction company] which has obtained a certificate of registration under sub-section (4) or section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.".
1956 42 The Securities Contracts (Regulation) Act, 1956 In section 2, in clause (h), after sub-clause (ib), insert the following:- "(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.".
1986 1 The Sick Industrial Companies (Special Provisions) Act, 1985 In section 15, in sub-section (1), after the proviso, insert the following:-
"Provided further that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where financial assets have been acquired by any 2[asset reconstruction company] under sub-section (1) of section 5 of that Act: Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act.".

1. Subs. by Act 44 of 2016, s. 3, for "securitisation company or the reconstruction company" (w.e.f. 1-9-2016)

2. Subs. by s. 3, ibid., for "securitisation company or reconstruction company" (w.e.f. 1-9-2016).

 

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