CERSAI registration can independently prove secured creditor status in liquidation despite no Companies Act charge filing

Security interest in liquidation may be proved under Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016 by any prescribed mode, including registration with CERSAI. The text explains that this registration operates as an independent basis to establish secured creditor status, even if the charge is not registered with the Registrar of Companies under Section 77 of the Companies Act, 2013. It also notes that the insolvency framework under the Code prevails for proving security interest in liquidation, while the Companies Act registration requirement does not displace the specific modes recognised in the liquidation regulations.

---

---

Issues: Whether a financial creditor whose charge is registered with CERSAI, but not with the Registrar of Companies under Section 77 of the Companies Act, 2013, can be treated as a secured financial creditor in liquidation proceedings.

Analysis: Section 52 of the Insolvency and Bankruptcy Code, 2016 permits proof of security interest through records of an information utility or by such other means as specified by the Board. Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016 specifies three modes of proving security interest, namely records with an information utility, a certificate of registration of charge issued by the Registrar of Companies, or proof of registration of charge with CERSAI. The provision uses the disjunctive expression 'or', showing that registration with CERSAI is an independent mode of proving security interest. Although Section 77 of the Companies Act, 2013 requires registration of charge with the Registrar of Companies and contains a non-obstante clause, the later and special insolvency regime under the Code, read with Regulation 21, governs proof of security interest in liquidation. Section 20 of the SARFAESI Act, 2002 also recognises CERSAI registration for security interests, supporting the statutory scheme.

Conclusion: A charge registered with CERSAI is sufficient to establish secured creditor status for liquidation purposes under Regulation 21, even without registration under Section 77 of the Companies Act, 2013. The Appellant was entitled to be treated as a secured financial creditor.

Ratio Decidendi: In liquidation proceedings, security interest may be proved by any mode specified in Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016, and CERSAI registration is an independent and sufficient mode for establishing secured creditor status.

---