CERSAI Registration Suffices for Secured Creditor Status Under IBC, Rules NCLAT

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has clarified that registration with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) is sufficient to establish a creditor’s status as a secured creditor under the Insolvency and Bankruptcy Code (IBC).

What the NCLAT Ruling Means for Creditors

The NCLAT’s decision clarifies that a charge registered with the Registrar of Companies (RoC) under Section 77 of the Companies Act is not the sole determinant of secured creditor status. Even if there is no RoC registration, a valid security interest recorded with CERSAI can be used to prove secured creditor status under the IBC.

The Crux of the Matter

The tribunal emphasized that the existence of a security interest is paramount. If a creditor can demonstrate a security interest through CERSAI registration, the absence of RoC registration is not necessarily fatal to their claim under the IBC.

This ruling is particularly important for financial institutions and other lenders who rely on security interests to protect their investments. It reinforces the validity and importance of CERSAI as a central repository for security interest information.

Impact on IBC Proceedings

This judgement provides much-needed clarity to ongoing and future IBC proceedings. It reduces the reliance on RoC registration and acknowledges the growing role of CERSAI in maintaining a comprehensive record of security interests across the country.

• The ruling is expected to streamline the claims process for secured creditors in insolvency cases.
• It strengthens the position of lenders and promotes efficient debt recovery under the IBC framework.

The NCLAT order reinforces the importance of CERSAI registration for all lenders seeking to establish their secured creditor status under the IBC.