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SECURITISATION ACT

Title : SECURITISATION ACT

Year : 1962



The provisions of this Act shall not apply to-

(a) A lien on any goods, money or security given by or under the Indian Contract Act, 1872 (9 of 1872) or the Sale of Goods Act, 1930 (3 of 1930) or any other law for the time being in force;

(b) A pledge of movables within the meaning of section 172 of the Indian Contract Act, 1872 (9 of 1872)

(c) Creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft Act, 1934 (24 of 1934)

(d) Creation of security interest in any vessel as defined in clause (55) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958)

(e) Any conditional sale, hire-purchase or lease or any other contract in which no security interest has been created;

(f) Any rights of unpaid seller under section 47 of the Sale of Goods Act, 1930 (3 of 1930)

(g) Any properties not liable to attachment or sale under the first proviso to sub-section (1) of section 60 of the Code of Civil Procedure, 1908 (5 of 1908)

(h) Any security interest for securing repayment of any financial asset not exceeding one lakh rupees;

(i) Any security interest created in agricultural land;

(j) Any case in which the amount due is less than twenty per cent. of the principal amount and interest thereon.



No suit, prosecution or other legal proceedings shall lie against any secured creditor or any of his officers or manager exercising any of the rights of the secured creditor or borrower for anything done or omitted to be done in good faith under this Act.



(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-For the purposes of this section,-

(a) Company means any body corporate and includes a firm or other association of individuals; and

(b) Director, in relation to a firm, means a partner in the firm.



No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).



The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.



No secured creditor shall be entitled to take all or any of the measures under sub-section (4) of section 13, unless his claim in respect of the financial asset is made within the period of limitation prescribed under the Limitation Act, 1963 (36 of 1963).



The provisions of this Act or the rules made there under shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.



(1) The Central Government may, by notification and in the Electronic Gazette as defined in clause (s) of section 2 of the Information Technology Act, 2000 (21 od 2000), make rules for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

(a) The form and manner in which an application may be filed under sub-section (10) of section 13;

(b) The manner in which the rights of a secured creditor may be exercised by one or more of his officers under sub-section (12) of section 13;

(c) The safeguards subject to which the records may be kept under sub-section (2) of section 22;

(d) The manner in which the particulars of every transaction of securitisation shall be filed under section 23 and fee for filing such transaction;

(e) The fee for inspecting the particulars of transactions kept under section 22 and entered in the Central Register under sub-section (1) of section 26;

(f) The fees for inspecting the Central Register maintained in electronic form under sub-section (2) of section 26;

(g) Any other matter which is required to be, or may be, prescribed, in respect of which provision is to be, or may be, made by rules.

(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.



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 cause to be set up under sub-section (1) of section 20.



(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty:

Provided that no order shall be made under this section after the expiry of a period of two years from the commencement of this Act.

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.



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



(1) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 (2 of 2002) is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of this Act.


Year Act.No
      Short title 
               Amendment
1956
   1 The   Companies Act 1956   In section 4A in sub-section (1)after clause (vi) insert the following:-
"(vii) The securitisation company or the reconstruction company which has obtained a certificate of registration under sub-section(4)of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002".
1956  42The Securities Contracts (Regulation) Act 1956.

In section 2 in clause (h) after sub clause (ib) insert the following:-
 "(ic) Security receipt as defined in   clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002".
1986   1The Sick Industrial Companies(Special Provisions)Act 1985.  
In section 15 in sub-section (1) after the proviso insert the following:-
 
"PROVIDED FURTHER'' that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 where financial assets have been acquired by any securitisation company or reconstruction company under sub- section(1)of section 5 of that Act:
    
PROVIDED ALSO that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 where are ference is pending before the Board for Industrial and Financial Reconstruction such reference shall abate if the secured creditors representing not less than three- fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors have taken any measures to recover their secured debt under sub- section(4)of section 13 of that Act."

Last updated on September, 2016

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