Sections 39, 40, 41 and 42 of the SARFAESI Act, 2002

Section 39: Certain provisions to apply after the Central Registry is established

Statutory provision: The provisions of sub-sections (2), (3) and (4) of section 20 and sections 21, 22, 23, 24, 25, 26 and 27 shall apply after the Central Registry is set up or caused to be set up under section 20(1).

Meaning and effect: Section 39 is a transitional commencement provision. It makes the operation of specified registration and administrative provisions conditional upon the establishment of the Central Registry. Section 20 concerns establishment of the Central Registry; section 21 deals with the Central Registrar; section 22 with the register; section 23 with filing transactions; section 24 with modifications; section 25 with satisfaction of security interests; section 26 with inspection; and section 27 with penalties.

The Central Registry has since been established. The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) administers relevant registration functions. Section 39 should therefore be understood as an original commencement condition, not a continuing exemption from registration obligations.

Section 40: Power to remove difficulties

Section 40(1): If difficulty arises in giving effect to the Act, the Central Government may issue an order published in the Official Gazette containing provisions necessary to remove that difficulty, provided those provisions are not inconsistent with the Act.

Statutory limitation: The proviso prohibits an order under this section after two years from the commencement of the Act. Accordingly, this is a time-limited transitional power, not a continuing authority to amend or override the legislation.

Section 40(2): Every order made under this section must be laid before each House of Parliament as soon as may be after it is made. This creates a requirement of parliamentary scrutiny.

Section 41: Amendments to certain enactments

Statutory provision: The enactments specified in the Schedule shall be amended in the manner specified therein.

Meaning and effect: Section 41 gives legislative effect to the consequential amendments listed in the Schedule to the SARFAESI Act. The Schedule must be consulted to identify the particular enactment and amendment. The historical effect of an amendment should be distinguished from the present text of another statute, which may have undergone subsequent amendment or repeal.

Section 42: Repeal and saving

Section 42(1): The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 (Ordinance 3 of 2002) is repealed.

Section 42(2): Despite that repeal, anything done or any action taken under the Ordinance is deemed to have been done or taken under the corresponding provisions of the Act.

Meaning and effect: This saving clause preserves legal continuity between the earlier Ordinance and the Act. The repeal does not, by itself, invalidate actions validly undertaken under the Ordinance; those actions are attributed to the corresponding provisions of the enacted legislation.

Practical interpretation

These provisions primarily address the legislative transition and administration of the SARFAESI framework. They should be read with the relevant substantive provisions of the Act, the rules and applicable notifications. In particular, the registration framework under sections 20 to 26 and the rule-making power under section 38 may be relevant when considering current compliance requirements.

Official legal resources

For the authoritative text, amendments, rules and notifications, consult the India Code, the Gazette of India, the Department of Financial Services, and the CERSAI portal.

This article explains the statutory scheme and does not replace the current consolidated Act, applicable rules, official notifications or case-specific legal advice.