SARFAESI Act, 2002 | Chapter IV | Section 24

Section 24 of the SARFAESI Act: Modification of Registered Security Interest

Section 24 requires an asset reconstruction company or secured creditor, as applicable, to report changes to a security interest already registered under Chapter IV of the SARFAESI Act, 2002. The modified particulars are sent to the Central Registrar and are governed by the Chapter's registration framework.

Key point: Registration of the original security interest is not the end of the record-keeping obligation. If its terms, conditions, extent or operation change, the relevant modification must also be reported.

Section 24: Statutory provision and meaning

Section 24, headed "Modification of security interest registered under this Act", provides in substance that whenever the terms or conditions, or the extent or operation, of any security interest registered under Chapter IV are modified, it is the duty of the asset reconstruction company or the secured creditors, as the case may be, to send particulars of that modification to the Central Registrar. The provisions of Chapter IV concerning registration of a security interest also apply to its modification.

This covers modifications of an already registered security interest. It does not independently create a new charge or replace the requirements for initial registration under Section 23.

What is a security interest?

Under Section 2(1)(zf), "security interest" broadly concerns a right, title or interest of any kind, other than those excluded by the statutory definition, created in favour of a secured creditor and includes a mortgage, charge, hypothecation, assignment or other right or interest in property securing payment or performance of an obligation. Its precise scope and exclusions are governed by the Act.

Meaning of modification

A modification means a change to the recorded terms, conditions, extent or operation of the security interest. Depending on the transaction and the governing documents, examples may include an alteration of secured limits, a change in the collateral covered, a variation of the charge or an amendment affecting the scope of the security. Not every change to a loan account necessarily modifies the registered security interest; the actual documents and registration particulars must be examined.

Central Registrar and CERSAI

The Central Registrar is appointed under Section 21. The Central Registry is provided for by Section 20. CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interest of India, operates the central registration system used for applicable security-interest filings.

Who must report the modification?

The statutory duty falls on the asset reconstruction company or the secured creditors, as applicable to the transaction. The borrower may be required to provide supporting documentation under contractual arrangements, but Section 24 itself identifies the reporting duty of those specified entities.

How modification reporting works

Identify the registered interest: Locate the existing Central Registry filing and the underlying security documents.
Record the actual change: Obtain the executed amendment, supplemental security document, approval or other instrument establishing the modification.
Prepare particulars: Specify the registered security interest and the relevant changes in the form required under the applicable Central Registry rules and portal procedures.
File and pay prescribed fees: Submit the modification through the applicable CERSAI process, with any required supporting information and fee.
Verify the updated record: Retain the acknowledgment and review the registered particulars for consistency with the transaction documents.

The SARFAESI (Central Registry) Rules, 2011, as amended, and applicable notifications govern procedural requirements, forms and fees. Check the current official rules and CERSAI instructions rather than assuming that an old filing form or fee remains unchanged.

Relationship with other SARFAESI provisions

Section 22: Central Register of securitisation, reconstruction and security-interest transactions.
Section 23: Filing of relevant transactions and creation of security interests.
Section 24: Filing changes to a previously registered security interest.
Section 25: Reporting satisfaction where the registered security interest is satisfied.
Section 26B: Registration requirements concerning secured creditors and other creditors.
Sections 26D and 26E: Statutory provisions on enforcement rights and priority, subject to their conditions and other applicable laws.

Modification is different from satisfaction

Modification updates an existing security interest that continues in an altered form. Satisfaction concerns the discharge of the security interest and is separately addressed in Section 25. For example, changing the property charged may require a modification filing, whereas complete discharge following repayment generally calls for a satisfaction filing. The transaction's legal effect determines the correct treatment.

2016 amendment and terminology

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (Act 44 of 2016), effective for the relevant changes from 1 September 2016, updated terminology in the SARFAESI Act, including the expression "asset reconstruction company" in place of older references to securitisation or reconstruction companies. The earlier webpage contained disordered amendment markers that obscured the sentence; the operative requirement is explained above without those typographical errors.

Frequently asked questions

Does Section 24 apply to a security interest that was never registered?

Section 24 expressly concerns modification of a security interest registered under Chapter IV. The separate obligation to register the underlying transaction must be considered under Section 23 and other applicable provisions.

Can a borrower directly discharge the lender's reporting duty?

Section 24 places the duty on the relevant asset reconstruction company or secured creditor. Borrowers should coordinate with that entity and preserve evidence of amendments, but contractual or portal arrangements do not change the wording of the statutory duty.

Does a modification filing by itself establish priority?

No universal conclusion follows from a filing alone. Priority and enforcement depend on the relevant provisions of the SARFAESI Act, other applicable laws, the nature of the security and competing interests.

Official legal resources

For a specific filing, consult the current statutory text, Central Registry Rules, notifications and CERSAI portal requirements. This article is a general legal explanation, not a substitute for transaction-specific advice.