*O Z?0~0-33004 1 2002 KEGISTERED NO. DL-3300412002 < mm eXTRAORDlNARY 9rm 11-=1
PART XI - Section 1 fimir?mlf& PUBLISHED BY AUTHORITY P --- ?iO 511 ;If f$F8, T W , X'TC-3 21, 20021 ?TRlT 30, 1924 No. 511 NEW DELHI, WEDNESDAY, AUGUST 21,2002/ SRAVANA 30, 1924 -- m m i f M p s a ~ i f * % m % f 8 ; ; n ~ ~ - d ; - ~ s 3 ~ @ r r ~ ~ l Separate paging is given to U~is Part in order that it may be filed as a separate compilation.
MINISTRY o ~ L ' A W AND JUSTICE (Legislative Department) New Delhi, lhe 2 1 st August, 2002lSravana 30, 1924 (Saka) \ THE SECURITISATIOlV AND RECONSTRUCTION OF FINANCIAL ASSETS ,AND ENFORCEMENT OF SECURITY INTEREST (SECOND) ORDINANCE; 2002 k No. 3 OF 2002 . .
id Promulgated by the President in the Fifly-third Year of the ~ e ~ i b l i c o f 1ndia.
1 An Ordinance to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto.
WHEREAS the Secriritisation and R-~CG~ST~!C?~OT! 9f Fi:?a!?slal .*.ssets and Enf~:-cemcnt of Secui-ity Interest Ordinance, 2002 to provide for the atoresaid matters was promulgated by the President on the 2 1 st day of June, 2002;
AND WHEREAS the Securitisation and Reconstruction of Financial Assets and Enforcement bf Security lnterest Bill, 2002 was introduced in the House of the People to replace the said Ordinance but has not been passed;
AND WHEREAS Parliament is not In session and the President is satisfied that circunlstances exist which render it necessary for him to take immediate action to give continued effect to the provisions of the said Ordinance;
NOW, THEREFORE, in exercise ofthe powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:-
CHAPTER I Short title, 1. (I) This Ordinance may be called the Securitisation and Reconstniction of Financial extent and . Assets ~ ? , ? d Er,f$rcement 2f Security t.;!r.te?t (Second) Qrdixncg, 2%2.
commence- . .
-menl. (2) It extend~.to the whole of India. :
. - '>!.
(.?) ~t'shall h;d8smed to have come into forcorcl! on thc.2 1st dny of Junc, 2002.
I Definitions. 2. (I) In this Ordinance, unless the context otherwise requires,- .
I (a) "Appellate Tribunal" means a Debts Recovery Appellate Tribunal established under sub-section ( I ) of section 8 ofthe Recovery of Debts Due to Banks and Financial Institutions Act, 1993; 51 of 1993.
(h) "asset rec.onstnrc.tion" menns acquisition by any sccuritisatinn cnnywuy or 7 reconstrt~ction company of any right or interest of any hank nr financial institution in any financial assistance for the purpose of realisation of sbch financial nssistancc;
(c) "bank" means- I (ii) a corresponding new bank; or I - -
(iii) the State Bank of India; or I (iv) a subsidiary bank; or (v ) such other bank which the Central Government may, by notificatian, - specify for the purposes of this Ordinance;
(4 "banking company" shall have the meaning assigned to it in clause (c) of section 5 of the Banking Regulatian Acx, 1949; 10 of 1949.
I (e) "Board" means the Securities apdExchange Board of lndiaestablished under section 3 of the Securities and Exchange Board of India Act, 1992; 15 of 1992 I. .
. . (f) "1~orrowar"means any p~rsnn'!who has becn granted financial assistnncc by any bank or financizil ihstib~tlan er who has given any gfi-rautet: or c r~a ted any mortgage or pledge as security for the financial assistance granted by any bank or . @f financial institution and includes a person who becomes borrower of a securitisatioi~ , company or reconstruction Company consequent upan acquisition by it of any rjghts or interest of any bank or financial institution in'relation tosuch financial assistance;
b . .
(g),"Central Registry" ineans the registry set up or caiise to he set up llnder subsection (I) of scction 20,
(h) "corresponding new bank" shall have the meaning assigned to it in clause
(da) of section 5 of the Uanking Regulation Act, 1949; . 10 of 1949.
(i) "Debts Recovery Tribunal" means theTribunal established under sub-section (I) of section 3 of the Recovery of Debts Due to Banks and Financial Institutions I Act, 1993, 51 of 1993 0) "default" means non-payment of any principal debt or interest thereon or any other amount payable by a borrower to any secured creditor consequent upon which ;he account of such betrower is classified as non-performing m e t in the books of y account ofthe secured creditor in accordance wifh the directions or guidelines issued by the Reserve Bank;
SEC. 11 . THE GAZETI'E OF INDIA EXTRAORDINARY 3 ( k ) "financial assistance" means any loan or advance granted or any clcbentures or bonds subscribed or any guarantees given or letters of credit established or any other credit facility extended by any bank or financial institution;
(1) "financial asset" lneans debt or receivables and includes- ( i ) a claim to any debt or receivables or part thereof, whether secured or unsecured; or
(ii) any debt or receivables secured by, ~no~tgage of, or charge on, immovable property; or
(iii) a mortgage, charge, hypothecation or pledge of movable property; or
(lv) any right or interest in the security, whether full or part underlying such debt or receivables; or
(v) any beneficial interest in property, whether movable or immovable, or in such.debt, receivables, whether such interest is existing, future, accruing, conditional or contingent; or
(vi) any financial assistancc;
( m ) "financial institution" mean's- ( i ) a public financial institution within the meaning of section 4A of the Companies Act, 1956;
(ii) any institution specified by the Central Government under sub-clause
(ii) of clause (h) of section 2 oft11d Recove~y of Debts Due to Banks and Financial Institutio~~s Act, 1993;
(iii) lnternational Finance Corporation established under the lnternational Finance Corporation (Status, immunities and Privileges) Act, 1958;
(iv) any other institution or non-banking financial company as defined i n clause V) of section 45-1 of the Reserve Bank of India Act, 1934, which the central Government may, by notification, specify as fininoial institution forthe purposes of this ordinance;
- . (n) "hypothecation" means a charge in or upon any movable property, existing or future, created by a borrower i n favour of a secured creditor without delivery of possession of the movable property to such creditor, as a security for financial aqsistance and includes floating charge and crystallisation of such charge into fixed charge on movable property;
(0) "non-performing asset" means an asset or account of a borrower, which has *" been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in.accordance with the' directions or under g!!idelines relating tc! rrsset I ilassificalions issued by the Reserve Bank; . .
I I 07) "notification" means a nptification published in the Official Gazette;
(q) "obligor" lneans a person liable to the originator, whether under a contract or otherwise, to pay a financial asset or to discharge any obligation in res'pect of a financial asset, whether existing, future, conditional or contingent and includes the borrower;
( r . ) "originator" means the owner of a financial asset which is acquired by a sec~iritisation company or rcconstructiur~ company for the purpose of securitisation or asset recu~~struction;
(s) "prescribed" means prescribed by rules made under this Ordinance;
... - THE GAZETTE OF INDIA EXTRAORDINARY [PART I I- ( t ) ."property" means-
(i) immovable property;
(ii) movable property;
(iii) any debt or any right to receive payment of money, whether secured or unsecured;
(iv) receivables, whether existing or future;
(v) intangible assets, being know-how, patent, copyright, trade mark.
i i c ~ i c ~ , fiaiichise or aiiy oilier tiiisiiies~ oi c~iiimei-cia! right cf similzr iii~t"~'~,
(u) "qualified institutional buyer" means a financial institution, insurance company, bank, state financial corporation, state industrial develop~nent corporation, trustee or any asset management comp,any making investment on behalf of mutual h n d or provident fund or gratuity fund or pension fund or a foreign institutional investor registered under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder, or any other body corporate as may be specified by the Board;
(v) "reconstruction,company" means a company formed and registered under the Companies Act, 1956 for the purpose of asset reconstt.uction;
(w) "Registrar of Companies" means the Registrar defined in clause (40) of section 2 of the Companies Act, 1956;
(xf "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934;
(v) "scheme" means a scheme inviting subscription to security receipts proposed to be issued by a securitisatio~l company or reconstruction company under that scheme;
(z) "securitisation" means acquisilion of financial assets by any securitisat~on company or reconstruction company from any originator, whether by raising of funds by such securitisation company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets 01. otherwise;
(za)"securitisation company" means any company formed and registered under the Companies Act, 1956 for the purpose of securitisation;
( ~ 6 ) ~ ~ s e c ~ r i t y aireement" means an age'ement, instrument or any other document or arrangement under which security interest is created in favocr ofthe secured creditor including the creztion of mortgage by deposi: of title deeds with the securcd crcditor;
- (xc) "secured asset" means the property on which security interest is created;
(zd) "secured creditor" means any bank or financial institution or any consortium or group of banks or financial institutions and includes-
(i) debenture trustee appointed by any bank or financial institution; or '
(ii) securitisation company or reconstruction company; or ( l i i ) any other trustee holding securities on behalf of a bank or financial institution, , in whose favour security interest is created for due repayment by any borrower of any f nancial assistance;
(ze) "secured debt" means a debt which is secured by any security intere~t;
(zJ) "security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31;
THE GAZETTE OF WDIA EXTRAORDINARY 5 .
(zg) "security receipt" means a receipt or other security, issued by a securitisation company or reconstruction company to any qualified institutional buyer pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitisation;
(zh) "sponsor" means any person holding not less than ten per cent. of the paid-up equity capital of a securitisation company or reconstruction company;
(zi) "State Bank of India" means the State Bank of lndia constituted under section 3 of 23 of 1955. Lhe Stale Bank of lndia Act, 1955;
(zj) "sfibsidiary bank" shall have the meaning assigned to it in clause ( k ) of section 2 38 of 1959: of the State Bank of India (Subsidiary Banks) Act, 1959.
(2) Words and expressions used and not defined in this 0rdig.ance.but defined in the i 9 of 1872. Indian Contract Act, 1872 or the Transfer of Property Act, 1882 or the Companies Act, 1956 of or the Securities and Exchange Board of India Act, 1992 shall have the same meanings 1 of 1956.
. . : of 1992. respectively assigned to them'in those Acts.
i..
' '
CHAPTER 11 . .
REGULATION OF SECURITISATION AND UECONSTR~CTION OF F~NANCIAL ASSETSOT:
BANKS AND FINANCIAL INSTITUTIONS
3. (I) No securitisation company or reconstruction company shall commence or carry Registration on the business of securitisation or asset reconstruction without- o f securitisation
(u) obtaining a certificate of registration granted under this section; and co~npanies or ' reconstruction
(b) having the owned fund of not less than two crore rupees or such other ,o,,pa,,ies amount not exceeding fifteen per cent. of total financial assets acquired or to be acquired by the securitisation company or reconstruction company, as the Reserve Bank may, by notification, specify; * Pravided that the Rescrve Bank may, by r~olilication, specify different amounts of owned fund for different class or classes of securitisation companies or reconstruction companies:
Provided further that a securitisation company or reconstruction company, existing on the commencement of this Ordinance, shall make an application for registration to the Reserve Bank before thc expiry of six months from such commencement and notwithstanding anything contained in this sub-section may continue to carry on the business of securitisation or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.
(2) Every securitisatio~i colnpany or reconstruction company shall make an application for registration to the Reserve Bank in such form and manner as it may specify.
(3) The Reserva Bank may, for the purpose of consideririg the applicatio~i for regislrdtior) of a securitisation colnpany or reconstruction company to commence or carry on thc business of securitisation or asset reconstruction, as the case may be, require to be satisfied, by an inspection of records or books of such securitisation company or reconstruction company, or otherwise, that the following conditions are fulfilled, namely:-
(u) that the securitisation colnpany or reconstruction colnpany has not incurred losses in any ofthe three preceding financial years;
(6) that such securitisation colnpany or reconstruction company has made adequate arrangements for realisation of the financial assets acquired for the purpose of securitisation or asset recor,struction and shall bc ablc to pay periodical returns and redeem on rcspective due dates on the investments made in the company by the qualified institutional buyers or other persons;
6 - THE GAZETTE OF INDIA EXTRAORDINARY [PART 11-
(c) that the directors of securitisation company or reconstruction cclnpany have adequate professional experience in matters related to finance, seraritisation and reconstruction;
(4 that the board of directors of such securitisation company or reconstruction company'does not consist of more than half o f its total number of directors who are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries:
(e) that any of its directors has not been convicted of any offence involving moral turpitude;/ u> that a sponsor, is plot a holding company of the securitisation company or .
reconstruction company, as the case may be, or, does not otherwise hold any controlling interest in such securitisation company or reconstruction company;
Cg) that the securitisation company or reconstruction company has complied with or is in a position to comply with prudential norms specised by the Reserve Bank.
(4) The Reserve Bank may, after being satisfied that the conditions specified in subsection (3) are fulfilled, grant a certificate of registration to the securitisation company or the reconstruction company to commence or carry on bilsiness of securitisation or asset reconstruction, subject to such conditions, which it may consider, fit to impose.
(5) Tile Reserve Bank may reject the application made under sub-section (2) if it is satisfied that the conditions specified in sub-section (3) are not fulfilled:
1 Provided that before rejecting the application, the applicant shall be given a reasonable I I opportunity of being heard.
I (6) Every ~,sci~ritisntion company 01 I ecur~ulruction culopally, sllall obtain prior approval I ofthe Reserve Bank for any substantial change in its management or change of location'of its ~egistered office or change in its name: *
Provided that the decision oftheReserve Bank, whether the change in management of - a securitisation company or a reconstruction company is a substantial change in its management or not,'shall be final.
Explanation.-For the fiurposes of this section, the expression "substantial change in management" means the change in the management by way of transfer of shares or amalgamation or transfer of the business of the company.
1 Clrnceilat~on of 4. (1) The Reserve Bank may cancel a certificate of registration granted to a securitisation 1 . certif cate qf company or a reconstruction company, rf such companyreg~strat~on.
I I (n) ceases to carry on the business of securitisation or asset recdnstruction; or I
(6) ceases to receive or hold any investment from aqualified institutional buyer;
Oi-
(c) Iias failed to colnply with any conditions subject to which the certificate of registration has been granted to it; or (4 at any time fails to fulfil any of the conditions referred to in clauses (0) to (g ) of sub-swtion (3) of section 3; or
(e) fails to-
(i) comply with any direction issued by the Reserve Bank under the provisions of this Ordinance; or jii) maintain accounts in accuc-dance wit11 the ~equiriinents of niiy law Gr any directioii.6r order issued by the Iteserve Bank under the provisiotls of this Ordinalice; or .THE GAZETTE OF 1NDI.A E X T R A O R D U R Y 7
(irr) submit or offer for inspection ~ t s books of account or other relevant documents when so dcinanded by thc Reserve Bank; or
(iv) obtain prior approval of the Reserve Bank required under sub-section
(6) of section 3:
Provided that before cancelling a certificate of registration on the grolind that the securitisation company or reconstruction company has failed to comply f!lp P y ~ ~ i ~ i ~ n ~ gf c!aijs. (c ) !?as failed tc f?!!fi! any nf tl)e -1,nnditions referred to in clause (@or sub-clause (iv) of clause je), the Reserve Bank, unless it is of the opinion that the delay in cancelling the certificate of registration granted under sub-section (4) of section 3 shall be prejudicial to the public interest or the interests of the investors or the securitisation colnpany or the , reconstruction company, shall give an opportunity to such company on such terms as the Reserve Bank may specify for taking necessary steps to comply with such provisions or fulfilment of such conditions.
(2) A securitisation company or reconstruction colnpany aggrieved by the order of rejection of application for registration or cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government:
Provided that before rejecting an appeal such company shall be given a reasonable opportunity of being heard.
(3) A securitisation company or reconstruction company, which is holding investments of qualified institutional buyers and whose application for grant of certificate of registration has been rejected or certificate of registration has heen cancelled shall, notwithstanding such rejection or cancellation, be deemed to be a securitisation company or reconstruction company untii it repays the entire investments held by it (together with interest, if any) within such period as the Reserve Bank rnay direct.
5. (I) Notwithstanding anything contained in any agreement or any other Taw for the Acquisitron of time being in force, any securitisation colnpany or reconstruction colnpany may. acquire rig'1ts O1 Interest in financial assets of any bank or financial institut~on- financial ( a ) by issuing a debenture or bond or any other security in the nature of the debenture, for consideration agreed upqn between such company and tile bank or financial institution, incorporating therein such terms and conditions as may be agreed upon between them; or , ( b ) by entering into an agre'ement with such bank or financial institution for the transfer of such financial assets to sucli company on such terms and conditions as ' may be agreed upon between them.
(2) If tlie bank er financial institution is a lender in relation to any financial assets acquired unrlcr sub-sec.tion (!) hy t.he securitisatio!? co!npany or th?.rcc,nnstro~.ti~n co!nnnnv r ...-, , such securitisation company or reconstruction conipany shall, on such acquisition, be deemed to be the lender a n i all tlie ;$its of such bank or financial institution shall vest in sucli company in relation to sucli financial assets.
(3) Unless otherwise expressly provided by this Ordinance, al I contracts, deeds, bonds, agreements, powers-of-attorney, grants of legal representation, permissions, approvals, consents or no otjjections under any law or otherwise and other instruments of whatever nature which relate to the said financial aSset and which are subsisting or having effect immediately before the acquisition of financial asset under sub-section ( I ) and to which the concerned bank or financial institution is a party or wliich are in favour of such bank or fi:iancial instikiiio:~ s!ia!I, after the acquisition orthe fina::cizl assets, be of as f i r ! ! force a:id effect against or in iavour of the securitisation company or reconstruction company, as the case may be, and may be enforced or acted upon as fully and effectually as tf, in tlie place of 8 THE GAZETTE OF INDIA EXTRAORDINARY [PAKT II- Notice to obligor and discharge of obligation of such obligor.
Issue of security by raising of receipts or funds by securitisation company or reconstruction company the said bank or financial institution, the securitisation company or the reconstruction company, as the case may be, had been a party thereto or as if they had been is~uzd in favour of the securitisation company or reconstniction company, as the case may be.
(4) If, on the date of acquisition of financial asset under sub-section (I), any suit, appeal or other proceeding of whatever nature relating to the said financial asset is pending by or against the bank or financial institution, save as provided in the third proviso to subsection ( I ) of section 15 of the Sick Industrial C~inpan.i&i~(Special ~ iov i s ions j~c t , 1985, the 1 of 1986.
salr,e sjlaii rl"i abaie, ",. be i;iscoiitiiiiie: be, iii hiiy Way, pi-5jii:icia;:y affeiied by i-easoii o f the acquisition of financial asset by the securitisation company or reconstruction company, as the case may be, but the suit, appeal or other proceeding may be continued,,prosecuted and enforced by or against the securitisation company or reconstruction company, as the . . .
case may be.
6 . ( I ) The bank or financial institution may, if it considers appropriate, give a notice of acquisition of financial assets by any securitisation conlpany or reconstruction company, to the concerned obligor and any other concerned person and to the concerned registering authority (including Registrar of Companies) in whose jurisdiction the mortgage, charge, hypothecation, assignment or other interest created on the financial assets had been registered.
(2) Where a notice ofacquisition of financial asset under sub-section (I) is given by a bank or financial institution, the obligor, on receipt of such notice, shall make payment to the concerned securitisation company or reconstruction company, as the case may be, and payment made tb,such company in discharge of any of the obligations in relation to the financial asset specified in the notice shall be a full discharge to the obligor making the payment from all liability in respect of such payment.
', (3) Where no notice of acquisition of financial asset under sub-section (1) is given by any bank or financial institution, any money or other properties subsequently received by the bank or financial institution, shall constitute monies or properties held in trust for the benefit of and on behalf of the securitisation colnpany or reconstruction company, as the case may be, and such bank or financial institution shall hold such payment or property which shall forthwith be made over or delivered to. such securitisation company or reconstruction company, as the case may be, or its agent duly authorised in this behalf.
7. (I) Without prejudice to the provisions contained in the Companies Act, 1956, the I of 1956.
Securities Contracts (Regulation) Act, 1956 and theSecurit!es and ExchangeBoard of India 42 of 1956 Act, 1992, any securitisation colnpany or reconstruction company, may, after acquisition of I 5 of 1992 any finaticial asset undel sub-section (1) of seci io~~ 5, oFer security receipts to qualifieci institut~onal buyers (other than by 'offer to public) fur subscription in accordance with the provisions of those Acts.
(2) A securitisatio~~ company or reconstruction colnpany lnay raise funds from the qualified institutional buyers by formulating schemes for acquiring financial assets and shall Iron- ,-o;-tr,' ;nmornto A ; ~ t ; - , t r,,,.n..n is., mo -.f -pnrh o-.rxrh nrhpmp f n r n.,,.., ,w,p u.lu r l lur l . ru~rr JCpUIuIb UlallllUI U,,~Ullta ,,,pect ,, ,u,,, au,lB av l lwr t r r u l bvb,r financial asset acquired out of investments made by a qualified institutional buyer and ensure that realisations of such financial asset is held and applied towards redemption of investments and payment of returns assured on such investments under the relevant scheme.
(3) In the event of non-realisation under sub-section (2) of financial assets, the qualified institutional buyers of a securitisation company or reconstruction company holding security receipts of not less than seventy-five per cent. of the total value of the security receipts issued by such company, shall be entitled to call a meeting of all the qualified institutional buyers and every resolution passed i n such meeting shall be binding on the company.
(4) The qualified institutional buyers shall, at a meeting called under sub-section (3), follow the same procedure, as near!y as possible as is followed at meetings of the board cf directors of the securitisation colnpany 01 reconstruction company, as the case may be.
THE GAZETTE OF I N D I A EXTRAORDINARY undivided interest afforded by a registered instrument; or I I (1)) any transfer of security receipts, shall not require compulsory registration ' 9. Without prejudice to the provisions contained in any otherlaw for tlie time being in force, a securitisation company or reconstructio~~ company may, ior\tlle purposes of asset reconstruction, having regard to the guidelines fi-allied by the Reserve Bank in'tl~is behalf, provide for any one or more of the fdlowing measures, namely:- ( (1 ) the proper management of the business oftlie bor~ower, by change In, or- take ,,.
over 01; tlie management of tlie business of tlie borrowel-.
1 P ( h ) the sale or lease of a part or whole of the business of tlie,borrower;
(c) rescheduling of payment of debts payable by tlie borrower;
(6) enforcement of security interest in accordance with the provisions of this Ordinance, I 1 (c) settlement of dues payable by tlie borrower;
V) taking possession,of secured assets in accordance with tlie provisions ofthis Ordinance. .
10. ( 1 ) Any securitisation cornpany or reconstruction cornpany registered under section 3 may - . . . .
( t r ) act as an agent for any bank or f~nancial ~~lstitution for the purpose of recovering their dues from the borrower on payment of such fee or charges as nlay be mutually agreed upon between the parties;
[Zxernplion t'roln regislral i o l ~ o f securily ~rccci ~IL.
M e a s i ~ r c s I b r asscls recoltslrl~ctiol,.
Olhor I l ~ n c t ~ o l l r o f . .
sccurilisalion cnrnpany or ;
r c c o ~ i s ~ r u c l i o ~ i compilny.
I ( h ) act as a managel refel red to in clause (c) of sub-section (I) of section 13 on such fee as rnay be mutually agreed upon between the parties;
I ( c ) act as receiver if appointed by any court or tribunal: I
Provided tliat no securitisation company or reconstruction company shall act as a manager ifacting as such gives rise to any pecuniary liability.
(2) Save as otlierw~se prov~ded in sub-section ( I ) , no securitisatron company or reconstruction .company wliich has been granted a certificate of registration unde~ subsection (4) of section 3, shall commence or carry on, without prior approval of the Reserve Bank, any business othe~ than that of securitisation or asset reconstruction:
provided tliat a securitisation company or reconstri~ctior~ company which is calrying on, on or before the colnlnencernent of this Ordinance, any business othel-than the busiriess of securitisation or asset reconstruction or business referred to in sub-section ( I ) , shall cease to carry on any such business within one year from the date of commencement of this Ordinance.
Exp1analion.-For the purposes of this section, "securitisation company" or "reconstruction company" does not include its subsidiary.
11. Where any dispute relating to securitisation or reconstruction or non-payment of Resoli~.tio~t of any amount due including interest arises amongst any of the parties, namely, the bank or dispL1teS financial inst~tutron or a securitisation company 01 reconstruction company or qualified institutional buyer, such dispute shall be settled by conciliation or arbitration as provided in Power of Reserve Bank to deterniine policy and issue directions.
10 THE GAZETTE OF INDIA-EXTRAORDINARY [PART II- the Arbitration and-Conciliation Act, 1996, as if the parties to the dispute have consented in 26 of 1996.
writing for determination of such dispute by conciliation or arbitration and the provisions of that Act shall apply accordingly.
12. (1) lfthe Reserve Bank is satisfied that in the public interest or to regulate financial system ofthe country to its advantage or to prevent the affairs of any securitisation conipany or reconstruction company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company, it is necessary or expedient so to do, it may determine the policy and give directions to all or any securitisation company or reconstruction company in matters relating to income recognition, accounting standards, making provisions for bad and doubtful debts, capital adequacy based on risk weights for assets and also relating to deployment of funds by the securitisation company or reconstruction company, as the case may be, and such company 'shall be bound to follow the policy so determined and the directions so issued.
(2) Without prejudice to the generality of the power vested under sub-section (I), the Reserve Bank may give directions to any securitisation company or reconstruction company generally or to a class of securitisation companies or reconstruction companies or to any securitisation company or reconstruction company in particular as to-
(a) the type of financial asset of a bank or financial institution which can be acquired and procedure for acquisition of such assets and valuation thereof;
i . (6) the aggregate vaiue of financial assets which may be acquired by any 1 1 securitisation cornpany or reconstruction company.
: s , : .
. \ I CHAPTER I11 ENFORCEMENT OF SECIJR!TY JNTEREST Fn torceriient 13. (1) Notwithstanding anything contained in section 69 or section 69A of the of security Transfer of Property Act, 1882, any security interest created in favour of any secured creditor 4 01. I 882 intcrest may be enforced, without the intervention of court or tribunal, by such creditor in accordance - I I with the provisions of this Ordinance.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, rnakes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the-secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing I which the secured creditor shall be entitled to exercise all or any of the rights under subsection (4).
I (3) 'The notice referred to in sub-section (2) shall give details of the amount payable by I the borrower and the secured assets intended to be enforced by the secured creditor in the ' 8 event of non-payment of secured debts by the borrower.
I ' (4) In-case the borrower fails to discharge his liability in full within the period specified in sub-section (Z), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(6) take over the management of the secured assqts of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset;
. , . .. .. . , 1 (c) appoint-afiy person (liereafter referred to as the manager) to mandge the i ! secured assets the posieision . . . . of .! . . which has been taken over by the secured creditor; . . , .
THE GAZETTE OF INDIA EXTRAORDINARY I I - -- (4 require at any time by notice in writing, any person who has acquired any of.
the secured assets fi-om the borrower and from whom any money is due or may become secured creditor shall give such person a valid discharge as if he has made payment to the borrower. I
(6) Any transfer of secured asset after taking possession thereof or take over of management under sub-section (4 ) , by the secured creditor or by the manager on behalf of the secured creditors shall vest in the transferee a!l rights in, 01. in relation to, the secured asset transferred as if the wansfer had been made by the owner of such secured asset.
( 7 ) Where any action has been taken against a borrower under the provisions of subsection (4, all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower atid the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trtlst, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received s'hall be paid to the person entitled thereto in accordance with his rights and interests.
(8) If the dues of the secured creditor together with all costs, charges and expenses incurredby him are tendered to the secured creditor zt any time before the date fixed for sale or transfer. the secuied asset shall not be sold or t r a ~ ~ k r r e d by the secured creditor, and no i'uCtlicr step shall be taken by him for transfer or saic: of that sccureil asset
(9) In the case of financing of a financial asseL by more than one secured creditors or joint filiancing of a financial asset by secured cred~tors, no secured creditor shall be entltlcd to exercise any or all of the rights conferred on him under nr pnr:uant to sub-section (-1) unlcss exe~cibt: of such right is agreed upon by the secured creditors representing not less lhan three-fourth In value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:
Provided that in the case of a c k p a n y in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of section 529A of I of 1956. the Companies Act, 1956:
f Provided further that in the case oT a company beingwound up on or after the 1 -5 colnlnencement of this Ordinance, the secured cieditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under provlso to sub- I of 1956. section ( I ) of section 529 of the Companies Act, 1956, may retain the sale proceeds of,his secured assets after depositing the workmen's dues with the liquidator in accordance with the provisions of section 529A of that Act:
Provided also that the liqbidator referred to in the second proviso shall intimate the secured creditor the workmen's dues in accordance with the provisions of section 529A of I of 1956. the Companies Act, 1956 and in case such workmen's dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmen's dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator:
Provided also that in case the secured creditor deposits the estimated amount of
Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen's dues, if any; . .
4 12 THEGAZETTE OF INIIIA EXTRAORDINARY [PART 11- ~xplanufion .--For the purposes of this sub-section,-- %1
(a) "record date" Ineans the date agreed upon by the secured creditors* rep~esenting not less than thl-ee-fourth in value of the amount outstandi~lg on such date;
(b) "amount outstanding" shall include principal, interest and any other dues payable by tlie borrower to the securea creditor in respect of secured asset as per tlie books of account of the secured creditor.
(10) Where dues of the secured creditor are not fully satisfied with the sale proceeds ' of the secured assets, the secured creditor may file an application in the for111 and manner as may be prescribed to the Debts Recovery Tribunal havingjurisdiction ora competent court, as the case may be, for recovery of the balance amount from the borrower.
( I I) Without prejudice to the rights conferred on the secured c~editor under or by this section, the secu~ed creditor shall be entitled to proceed against the guarantors or sell the pledged assets without first taking any of the measures specified in clauses (a ) to (6) of subsectlon (4 ) ih relation to the secured assets under this Ordinance.
(12) The rights of a secured cleditor under t h ~ s Ordinance may be exercised by one or more of his officers.autho~.ised in this behalf in such manner as may be prescribed.
(13) No borrower sllall, after receipt of notice referled to in sub-section (2), t~ansfer by way of sale, lease or otherwise (other than in the ordinary coulse of his busmess) any of his secured assets referred to ill the notice, w~thout prior written consent of the secu~ed c red~to~ . I Chief blctropolitan ?v4?zistrate .:r Districl :;4apistrate to assist secured I , ?editor 41 taking ::osscssion of :ecured asset.
14. (1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by tlie secured.creditor under theprovisions of this Ordinance, the secured creditor may, for t l ~ e purpose of taking possession or control of any such secured asset, request, in writing, the Chief ~etropolitan ~ a ~ i s t r a t ' e or tlie District Magistrate within whose jurisdi'ction.any S L I C I I secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan -Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him-- (a ) take possession of such asset and documents relating thereto; and
(h).forward such asset an$ docu~ne~its to the secured creditor.
(2) On publication of a notice under sub section (I),- (a ) in any case where the borrower is a company as defined in the Cu~npanics Act, 1956, all persons holding office as directors of the company and in any other case,
(2) For the purpose of securing compliance with the provisions of sub-sect1011 ( I ) , the Chief Metropolitan Magistrate or the District Magistrate may take orcause to be taken such sreps and use, or cause to be used, such force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority.
Manner and 15. (1) When'the managenlent of bi~siness of a borrower is taken over by a secured effect Of take creditor, the secured creditor may, by publishinga notice in a newspaper published in E~iglish over o f management, language and In a newspaper published in an Indian language In circulation in the place whqe the pr~nc~pal office of the borrower is situated, appoint as many pelsons as it th~nks fit-
(a) in a case In which the borrower is a company as defined in the Companies Act, 1956, to be the directors of that borrower in accordance with the provisions of that Act; or
(b) in any other case, to be the administrator of the business of the borrower.
SEC. I] THE GAZETTE O F INDIA EXTRAORDNARY 13 -- all persons holding any office having power of superintendeoce, direction and control of the bu'siness ofthe borrower inmediately before the publication of the notice under sub-section ( I ) , shall be deemed to have vacated their offices as such;
(b) any contract of management between the borrower and ,any director or , - manager thereof holding office as such immediately before publication of the notice under sub-section (I), shall be deemed to be terminated;
(c) the directors or the administrators appointed under this section shall talce such steps as may be necessary to take into their custody or under their control all the.
property, effects and actionable claims to which the business of the borrower is, or appears to be, entitled and all the property and effects of the business of the borrower shall be deemed to be in the custody ofthedirectors or.administrators, as the case ]nay be, as from the date of the publication of the notice;
(d) the directors appointed under this section shall, for all purposes, be the directors ofthe company of the borrower and such directors or, as the case may be, the administrators appointed under this section, shall alone be entitled to exercise all the ' powers of the directors or, as the case may be, of the persons exercising powers of superintendence, direction and contro!, of the business ofthe bor~ower whether such powers are derived from tile memorandum or articles of association ofthe company of the borrower or from any other source whatsoever.
(3) Where the management ofthe business of a borrower, being a company as defined in the Companies Act, 1956, is takcn ovcr by the secured creditor,.then, notwithstanding anything contained in the said Act or in lhc memorandum ur arlicles of association of such borrower,-
(a) it shall not be lawful for the shareholders of such company or any o t h e ~ person to nominate or appoint any person to be a director of the company;
(b) no resolution passed at any meeting of the shareholders of such 'company shall be given effect to unless approved by the secured creditor;
(c) no woceeding for the winding up of such company or for the appointment of a leceivel- in ~espeet thclcur sl~all lie i l l any courl, except with the consent of the secured creditor.
(4) Where the management of the business of a borrower had been taken over by the secured creditor, the secured creditor shall, on realisation of his debt in full, restore the managemenl of the business of the borrower to him.
16. ( I ) Notwithstanding anythihg to the contrary contained in any contract or in any other law forthe time being in force, no mahaging director or any other director or a manager or any person in charge of management of the business of the borrower shall be entitled to any co~npensation for the loss of office or for the premature termination under this Ordinance of any contract of management entered into by him with the borrower.
jij iu'ot'ning con~aineci in sub-sectton ( 1 ) shall affect the right of any sucl? managing director or any other director or manager or any such person in charge of management to recover from the business of the borrower, moneys recoverable otherwise than by way of such compensation.
17. (I) Any (including borrower) aggrieved by any ofthe measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may prefer an appeal to the Debts Recovery Tribunal havingjtlrisd~ction in the matter within forty-five days from the date on which such measures had been talcen.
No compcnsation to directors for loss of oftice.
Right to appeal. .
(2) Where an appeal is preferred by a borrower, s~lch appeal shall not be entertained by the Debts Recovery Tribunal unless the borrower has deposited with the Debts Recovery Tribunal seventy-five per cent. of the a ~ n o u r ~ t clai~med in the notice referred to 111 sub!sectton
(2) of section 1 3 :
14 THE GAZETTE OF INDIA EXTRAORDINARY [PART II- --
Provided that the Debts Recovery Tr~bunal may, for reasons to be recorded in writing, waive or reduce the ainount to be deposited under this section.
(3) Save as otherwise provided in thls Qrdinance, the Debts RecoLrery Tribunal shall, .as far as may be, dispose ofthe appeal in accordance with the provisions of the Recovery of Debts Due lo Banks and Financial Institutions Act, 1993 and rules made thereunder. 5 I or 1993 Appeal to Appeiiate 'l'ribunal.
Right o f borrower to receive compensatiod and costs in certain cases.
Central Registry.
18. (1) Any person aggrieved by any order made by the Debts Recovery Tribunal under sectlon 17 may prefer an appeai ro rhe kppeijait: TI i'uu~iaj iviiliin iliii-iy d5j-s fi-oi-ii the date of receipt of the order of Debts Recovery Tribunal.
(2) Save as otherwise provided in this Ordinance, the Appellate Tribunal shall, as far as may be, dispose of the appeal in accordance with the provisions of the Recovery of Debts .
Due to Banks and Financial Institutions Act, 1993 and rules made thereunder. 51 of 1993.
19. Ifthe Debts Recovery Tribunal or the Appellate Tribunal, as the case may be, on an appeal filed under section 17 or section 18, holds the possession of secured assets by the secured creditor as wrongful and directs the secured creditor to return such secured assets to the concerned borrower, such borrower shall be entitled to payment of such compensation and costs as may be deteimined by such Tribunal or the Appellate 'Tribunal.
CHAPTER 1V
20. ( I ) The Central Government may, by notification, set up or cause to be set up fiorn such date as it may specify in such notification, a registry to be known as the Central Registry with its own seal for the purposes of registration of transaction of sccuritisation and reconstruction of financial assets ,and creation of security interest under this Ordinance.
(2) The head office of the Central Registry shall be at such place as the Central Government inay specify and for the purpose of facilitating registration of transactions referred to in sub-section (I), there may be established at such other places as the Central Government may think fit, branch offices of the Central Registry.
J
(3) The Central Government may, by notification, define the territorial limits within which an office of the Central Registry may exercise its functions.
(4) The provisions of this Ordinance pertaining to the Central Registry shall be in addition to and not in derogation of any of the provisions contained in thetReglstration Act, 16 o f I 908 1908, the Companies Act, 1956, the Merchant Shipping Act, 1958, the Patents Act, 1970, the 'gS6.
44 o f !358. , Motor Vehicles Act, 1988, and tlie Designs Act, 2000 or any other law requiring registration 39 of 1970, of cbarges and shall not Affect the ~ r i b r i t ~ of charges or validity thereof under those Acts or 59 of 1988.
laws. 1 6 of 2000 Central 21. ( 1 ) TheCentral Government may, by notification, appoint a person for the purpose Registrar of registration of transactiolls relaling to 'secut'itisation, reconstruction of financial assets alld secul ity liiterest created over p~operties, to be known as the Centra! Registrar.
- (2) The ~ k n t r a ~ Government may appoint such other officers with such designations as itthinks fit for the p u ~ pose of discharging, under the superintendence and direction of the Central Registrar, such functions of the Central Registrar under this Ordinance as he may, from time to time, authorise them to discllarge.
Register of 22. (1) For the purposes of this Ordinance, a record'called the Central Register shall be securitisationl kept at the head office of the Central Registry for entering th'i particulars of the transactions reconstruction and security relating to- */ interest . transactions.
(a) securitisation of financial assets;
(11) reconstrzction of financial assets; and ( c ) creation of security interest.
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 15
(2) Notwithstanding anything contained in sub-section (I), i t shall be lawful for the Central Registrar to keep the records wholly or partly it1 computer, floppies, diskettes or in any other clectrortic form subject to such safeguards as may be prescribed.
(3) Where such register is maintained wholly or partly on computer, floppies, diskettes or in any other.electron~c form, under'sub-section (Z), any reference in this Ordinance to entry in the Central Register shall be construed as a reference to any entry as maintained on computer or in any other electronic form.
I (3) The register shall be kept under the control and management of the Centlal Regiskar.
' . > < . .
23. The particulars of every transaction of securitisation, asset I-econstruction or ' ~ i l i n g ot'transcreation of security interest shall be filed, with the Central Registrar in the mannerand on securitisation, payment ofsuch fee as may b,e within thirty days after thedate of such transaction ,.rcol,struction or creation of security, by the securitisation company or reconstruction company or the ,,d ,,,,tion secured creditor, as the case may be: of' security interest.
Provided that the Central Registrar may allow the filing of the particulars of such ti-ansaction or creation of security interest within thirty days next following the expiry of the said period of thirty days on payment of such additional fee not exceeding ten times the amount of such fee.
24. Whenever the telms or conditions, or the exterit 01 operation, of any security Modification interest registered under this Chapter, are, or is, modified, it shall be the duty ofthe securitisation of secerity company or the reconstruction company or the secured creditor, as the case may be, to send ~ , ' ' ~ ~ ~ ~ r ~ d to the Central Registrar, the particulars of such ~nodification, and the provisions of this llnder lhis Chapter as to registration of a security interest shall apply to such modification of such Ordinallce security interest.
25. (I.) The securitisation company or the reconstruction company or the secured Sccuritisation creditor, as the case may be, shall give intimation to the Central Registrar of the payment or colnpany Or reconslruclion satisfaction in 'full, of any security interest relating to the securitisation company or the colnpany reconstruction company or the secured creditor and requiring registration under this Chapter, secllre~ within thirty days from the date of such payment or satisfaction. creditor to report
(2) The Central Registrar shall, on receipt of such intimation, cause a notice to be sent of to the securit~sation company or reconstruction company or the secured creditor calling security upon it to show cause within a time not exceeding fourteen days specified in such notice, as illteresl to why payment or satisfaction should not be recorded as intimated to the Central Registrar.
. (3) If no cause is shown, the Central Registrar shall order that a meniorandum of satisfaction silaii be entered in the central Register.
(4) If cause is shown, the Central Registrar shall record a note to that effect in the Central Register, and shall inform the borrower that he has done so.
4" 26. (1) The particulars of securitisation or reconstruction or security interest entered Riglit to 111specl in the Central Reg~ster of such transactions kept under section 22 shall be open d u ~ ing the Particulars ~ r o ~ a r ~ l a r ~ t ~ n l ?
bus i~~ess hours for inspection by any person on payment of s l ~ h fee as may be pre~crihef ;~~~;;;";;;';o;l 27:If a default i s madecornparly or reconstruction company or secured creditor; or 16 THE GAZETTE OF INDIA EXTRAORDINARY [PART Ii-
(b) in sending under section 24, the particulars of the modification referred to in that section; or
(c) in giving intimation under section 25, every company and evcry officer of the company .or the secired creditor and every officer of the secured creditor who is in -default shall be punishable with fine which may extend to five thousand rupees for every day during which the default continues.
Penal ties for 28. If any securitisation company or reconstruction company fails to comply with any r,... r n r r r t : IIY.I-YUIIIvII- ciirecrion issued by tine Reserve Bank under section i2, such company and every otticer o t ance of direction of the company who is in default, shall be punishable with fine which may extend to fi ve lakh ' R~~~~~ ~ ~ ~ k . rupees and in ttie case of a continuing offence, with an additional fine which may extend to ten thousand rupees for every day during which the default continues.
Offences.
Cognizance of offence.
Provisions o f this Ordinance not to apply in certain cases. .
29. I f any person contravenes or attempts to contravene or abets the contravention of .
the provisions of this Ordinance or of any rules made thereunder, he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both.
30. No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the First Class shall-try any offence punishable under this Ordinance.
CHAPTER VI
31. The provisions of this Ordinance shall not apply to-
(a) a lien on any goods, money or security given by or under the Indian Contract of ,872 Act, 1872 or the Sale of Goods Act, 1930 or any other law for the time being in force; 3 of I 930.
(b) a pledge of movables within the meaning of section 172 ofthe Indlan ~ o n 6 a c t Act, 1872; 9 of 1872.
(c) creation of any security in any aircraft as defined in clause (I) of section 2 of the Aircraft Act, 1934; 24 o f 1934 , I
(d),creation of security inteiest 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 coritract in which no security interest has been created;
. \ - I ( f) any rights of unpaid seller under section 47 of the Sale ofGoods Act, 1930; 3 of 1930. i ~ -4 '
(g) any properties not l~able to attachment or sale under the first proviso to subsection ( I ) of section 60 of the Code bf Civil Procedure, 1908; \ 5 ot' 1908
(h) any security interest for securing repayment of any financial asset not exceeding one lakh rupees;
(I) any case in which the amount due is less than twenty per cent. of the principal amour? and interest thereon.
\ Protection of 32. No suit, prosecution or other legal proceedings shall lie against any secured * creditor o r any of 111s officers 01 manager exercising any of the rights ofthe secured creditor i n good faith I or borrower fol anything done or omitted to be done in good faith under this Ordinance.
33. ( I ) Where il-I offence h~ ide i ' t h i s~rd inance has been co~nrnittcd by a company, SIX. I] THE GAZETTE OF INDIA EXTRAORDINARY
Provided that notl~ing contained in this sub-section silall render any such person liable to any p~~nishment provided in this Ordinarice, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the com~nission of such offence.
(2) Notwithstand~ng anything contained in sub-section (I) , where an offence under this Ordinance has been committed by a company and it is proved that the offence has been comm~tted w~th the consent or connivance of, or is attributable to any neglect on the part of, ally di~ector, manager, secretary or othe~ officer of the company, such di~ector, Inanager, I secretary orothe~ officer shall also be deemed to be guilty oftlie offence a11d shall be liable to be proceeded 'against and punished accordingly.
I Exl~la17ulion.-For the purposes of this section.-
(u) "con~pany" mearls any .body corporateand i~lcludes a film or otller association of individuals; arid ( 1 7 ) "director". in relation to a firm, lnealrs a partner in the firm.
. . 34. No civil court shall I~aveJurisdiction to entertain any suit or proceeding i n respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or underthis Ordinance to determine and no in.iunction shall begranted by any court or other authority in respect of any action taken or to be taken in pursuance of any pol/vkr confer.red by or under this Ordinance or under the Recovery of D'ebts Due to Banks and Financial Institutions Act, 1993.
35. The provisio~ls of this O'r'dinance sliall have. effect, notwithstanding anything inconsisterlt therewith contained in any other law for the'tin~e being in fokceor any'inst~.u~nent having effect by virtue of any such law.
36. No seci~red creditor shall be ent~tled to take all ar any of the measures under subsection (I) of section 13, unless his claim in respect ofthe financial asset is made w1thi.n ihe period of limitation prescr~bed under the Lil-nitation Act, 1963.
37. The provisions of this Ordinance or the.rules ryade thereundw shall be in addition to, and not iil der02ation of, the Companies Act, 195G, the Securities Contracts - (Regulation) Act, 1956, the Securities and Exchange Board of India Act. 1992, the Recovery :of Debts Due to Banks pnd Financial Institutions Act, 1993,orany other law forthe time being . . . , .: .. . .
~ :. . in force. ..,. :. ..
- . - .
.. ? .. . > 'c ( . . ., . .
38. (1) The Central Governfi~ent lay, by notification and-in the~lectronic ~ a z e t t e as defined in ciause (s) of section 2 of the lnfoclnation ~ e ~ h r i b l o ~ j ; ~ c ' t ~ 2 0 0 0 , make rules for . .
carlying out the provisions ofthis Ordinance.
(2) In particular, and without prejudice to the generality of the foregoing power, such I . rules may provide for all or any of the following matters, namely:-
(a) the form and manner in whichan applicat~on !nay be filed unde~ sub-sect~on
(10) of section 13;
'
(b) the ~nanner 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;
Civil co~lrt no1 to Iiavc jur istliclion.
.l'hc provisions o f [his Ord i - nance In ovcrride ollicr laws.
I (c) the safeguards subject to which the records may be kept under sub-section I - (2) of section 22;
\ I (6) the rnanier 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 tra~isactions kept under section 22 and entered in the Central Register under sub-section (I) of sectron 26;
18 THE GAZETTE OF INDIA EXTRAORDINARY [PART I I- - - V) the fee for inspecting the Central Register maintained in electronic form under sub-section ( 2 ) of section 26;
(g) any other mafier which is to be, 01. may be, prescribed, in respect of which provision is to be, or may be, made by rules.
( 3 ) Every rule made under this ~rdirlance shall be laid, as soon as may be after ii is made, before each House of Parliament, while it is in session, for a total period of thirly days which may be comprised iu one session or in two or more successive sessions, and if, before the expiry of the session immediately following tlie 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.
Certain , 39. The provisions of sub-sections (2) , ( 3 ) and ( 4 ) of section 20 and sections 2 1,22,2?, provisions of 24,25,26 and 27 shall apply after the Central Registry is set up or cause to be set up under !his Ordinance to apply after sub-section ( I ) of section 20.
registry 1s set up or caused to be set up.
Power to 40. (1) If any difficulty arises in giving effect to the p~ovisions of this Ordinance, the remove Ceritral Government may, by order published in the Official~Gazette, make such provisions diffwulties not inconsistent witli tlie provisions of this Ordinance as may appear to be necessary for removing tlre difficulty:
Provided that no order shall be made under tliis section atter the expiry ot a per~od uf two years from the commencement ofihis Ordinance.
(2) Evcry order made under this section shall be laid, as soon as may be after i t is made, before each I louse of Parliament.
* Atnendrnet~ts 41. Theenactments specified in the Schedule shall be amended in the manner specified to certain therein.
enactn?ents.
\ I Repeal and 42. ( 1 ) The Securitisation and Reconstructio~i of Financial Assets and Enforcement of saving. Security Interest Ordirance, 2002 is hereby repealed. Ord. 2 of 2002
(2) Notwithstanding such ripeal, any thing done or any action taken under the said Ordinance shall be deemed to have be& done or taken under the corresponding provisions of th is Ordinance.
b SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 19 THE SCHEDULE (See section 4 1) Year Act No. Short title Amendment 1956 1 The Companies In section 4A, in sub-section (I), after clause (vi), Act, 1956. insert the following:- "(vii) the securitisation company or the . reconstructton 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 lnterest (Second) Ordinance, 2002.".
1956 42 The Securities . , In section 2, in clause (h), after sub-clause (ill), insert .Contracts the foll'owing:- (Regulation) Act, 1956.
1 . "( ic) security receipt as defined in clause (sg) of section 2 of the Securitisation and Reconstruction ! of Financial Assets and Enforcement of Security lnterest (Second) Ordinance, 2002.".
/ j 1986 1 ' Tlie ~ i c k l n d i l s ~ i a l . In sertion 15. in sub-section (I), after thkproviso, . , , .
Companies - insert the following:- I (Special Provisions) . I • Act, 1985.
"Provided iurther that io reference shall be made I to the B o a r d fo r Indusiria.1 and Financial I Reco~?struciion after the commencetnent of the .
Securitisation and Reconstruction of Financial Assets ahd Enforceriient of Security lnterest (Second) Ordinance, 2002, where financial assets have been acquired by any securitisation cornpany or reconstruction company under sub-section (I) of section 5 of that Ordinance:
Provided also that'on or after the commencement of the ~,ecuritisation and Reconstruction of Financial . j i Assets and Enforcement of Security lnterest . . t - , (Second) Ordinance, 2002,where q reference is . - petlding before the Board for Industrial and Financial Reconstruction, suih reference shall abate if the -secured creditors, representing not less than three- . .-.
A r fourth in value of the amount outstanding'against .
financial assistance disbursed to the borrower of I I such secured creditors, have taken any measures to recover their secured debt under sub-section(4) of i l section 13 of that Ordinance.".
A.P.J. ABDUL KALAM, President.
SUBHASH C. JAlN, Secy. to the Govt. of India.
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