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CS Professional · Corporate Restructuring, Valuation and Insolvency · Debt Recovery and SARFAESI

A bank's counsel advises that the Central Government has by notification set up the Central Registry under Section 20(1) of the SARFAESI Act. The bank's loan file already shows a charge registered with the Registrar of Companies under the Companies Act. Under Section 20(4), what is the effect of the Central Registry provisions on that existing registration?

The Central Registry provisions operate in addition to the Companies Act registration. They do not derogate from it, and they do not affect the priority or validity of the charge registered under that Act. Registration at the Central Registry therefore does not replace or downgrade the existing charge.

  1. AThe Central Registry provisions are in addition to the Companies Act registration and do not affect the priority or validity of the charge under that ActCorrect
  2. BThe Central Registry registration replaces the Companies Act registration, which then lapses
  3. CThe Companies Act registration ranks below any later Central Registry entry for the same asset
  4. DThe Companies Act registration remains valid only if repeated at the Central Registry within the notified period

Explanation

Section 20(4) states that the Act's Central Registry provisions are in addition to, and not in derogation of, other registration laws including the Companies Act. They do not affect the priority of charges or their validity under those laws. The options suggesting replacement, lower ranking or lapse contradict this.

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