Section 20A SARFAESI Act: Integration of Registration Systems with Central Registry
Section 20A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) provides a legal framework for linking existing registration systems with the Central Registry. The provision aims to improve the availability of records relating to rights over property and the creation, modification or satisfaction of security interests.
Purpose and meaning of Section 20A
The Central Registry is the registry established under Section 20 of the SARFAESI Act. A security interest broadly concerns a right, title or interest in property created in favour of a secured creditor to secure repayment or performance of an obligation, subject to the Act's definitions and exclusions. Creation, modification and satisfaction respectively refer to establishing a security interest, changing its recorded particulars and recording discharge of the secured obligation or security interest.
Section 20A: Statutory provision
Sub-section (1): Power to integrate registration systems
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 prescribed.
Explanation to sub-section (1): The registration records include records of registration under the Companies Act, 2013 (18 of 2013), the Registration Act, 1908 (16 of 1908), the Merchant Shipping Act, 1958 (44 of 1958), the Motor Vehicles Act, 1988 (59 of 1988), the Patents Act, 1970 (39 of 1970), the Designs Act, 2000 (16 of 2000), or other such records under any other law for the time being in force.
Sub-section (2): Notification and deemed registration
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.
How the integration mechanism operates
- Identify registration systems: Existing records may be maintained by State registrars or authorities under other laws.
- Consult and integrate: The Central Government may integrate those records with the Central Registry in the prescribed manner and in consultation with the relevant governments or authorities.
- Notify dates: After integration, the Central Government must notify the date of integration and the date from which the integrated records are available.
- Apply the deeming provision: From the notified operative date, security interests registered in the covered systems are deemed registered with the Central Registry for SARFAESI purposes.
Accordingly, the provision is about interoperability and legal recognition of integrated records. It does not, merely by its wording, establish that every register maintained under every listed law has already been integrated or remove other obligations that may independently apply under the Act or applicable rules.
Relationship with other provisions
Section 20 establishes the Central Registry; Sections 20B and 21 concern delegation and the Central Registrar; Section 22 addresses the register; Section 23 concerns filing transactions; and Section 24 addresses modification of registered security interests. The registration and enforcement consequences must be read with the other applicable provisions, including Sections 26B to 26E.
Practical checks for lenders, borrowers and purchasers
When verifying an interest in property, check the original registering authority, the Central Registry/CERSAI records where applicable, the relevant notification and operative date, and any subsequent modifications or satisfaction entries. A registry search is one part of due diligence and should not be treated as a conclusive guarantee of title or absence of every encumbrance.
Legislative history
Section 20A was inserted by Section 16 of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (Act 44 of 2016), with effect from 1 September 2016.
Frequently asked questions
What is Section 20A of the SARFAESI Act?
It authorises integration of registration records from other registration systems with the Central Registry under Section 20, subject to the prescribed manner.
Does integration automatically mean every record is deemed registered?
The deeming effect under Section 20A(2) follows a Central Government notification declaring the integration and availability dates. The scope of the notification matters.
Which registration laws are mentioned in Section 20A?
The explanation mentions the Companies Act, 2013, Registration Act, 1908, Merchant Shipping Act, 1958, Motor Vehicles Act, 1988, Patents Act, 1970 and Designs Act, 2000, as well as other applicable laws.
Official legal resources
Consult the India Code portal for the SARFAESI Act and amendments, the e-Gazette of India for notifications and the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) for registry-related information and services.
This article explains the statutory scheme. The current effect of an integration arrangement depends on the applicable rules and official notifications.