Recent amendments in SARFAESI act

Recent Amendments in SARFAESI Act

On 24th day of January 2020 the Chapter IV –A of the SARFAESI Act, 2002 has come into force. Chapter IV A of the SARFAESI Act, 2002 inter alia contains the following important provisions.​

Notification of Chapter IV –A of the SARFAESI ACT​

i. Section 26 B: Attachment orders issued by any Government authority for​

recovery of Govt. dues may be filed with CERSAI.​

ii. Section 26 C: Security interest or attachment orders filed with CERSAIshall have priority over any subsequent security interest created uponsuch property​

iii. Section 26 C: Filing of security interest with CERSAI shall be deemed to​

constitute a Public notice from the date & time of filing with CERSAI.​

iv. Section 26 D: Secured Creditors shall be entitled to enforce securitiesunder SARFAESI Act only if the security interest is filed with CERSAI.​

v. Section 26E: After registration of security interest with CERSAI bySecured Creditors, their dues will be paid in priority over Govt. dues​

Implications for the Bank​

Bank can successfully desist the claims if any madeby the Tax Authorities, both State and Central Government Authorities on the assetsover which security interest has been created in favour of the Bank in pendingSARFAESI proceedings initiated by our Bank. Authorities cannot claim any priority over the amounts recovered by bank by sale of secured properties of the borrower/guarantor under SARFAESI Actprovided charge (mortgage & Hypothecation) created over the said properties in favourof the Bank is filed/registered before CERSAI. Further, the said provision of SARFAESIAct has overriding effect over all other enactments. Branches to ensure that mortgageand hypothecation created in its favour by way of security interest by the borrower(s) /guarantors should be filed before CERSAI