2025 (11) TMI 1106 - AT - IBC

Registration of vehicle charges on e-Vahan qualifies as registration under SARFAESI Act Section 20A and Reg 21(C)

HDFC Bank Ltd. Versus Shailendra Ajmera

NCLAT held that registration of vehicle charges on the e-Vahan portal satisfies registration within the meaning of the SARFAESI Act pursuant to Section ... CIRP - Secured Creditor - Registration of vehicle in Vahan e-portal shall be treated to be registration within meaning of SARFAESI Act 2002 or not - submission of Liquidator has been that the Registration as per the clarification issued by the Government of India is that the Registration is for the purposes of SARFAESI Act and cannot be relied in the Liquidation Proceedings - HELD THAT:- Regulation 21 of Sub Clause C provides proving of Security interest by Registration under the SARFAESI Act when integration of Registry under Vhan e-Portal has been provided by notification dated 03.05.2019 and is contemplated by Section 20A, we see no reason to not accept the registration under e-Vahan Portal as a registration within the meaning of SARFAESI Act 2002. When the Section 20A, sub section 2 uses the expression “shall be deemed to be registered” with the Central Registry of the Tribunal, the effect shall be deemed to be registered with the Central Registry for the Corporate Asset. When 03.05.2019 declared the date for integration and law provides deeming clause, it is failed to see why the Registration under the Vahan Portal cannot be accepted Registration under the SARFAESI Act 2002 and that is the clarification issued by the Government of India. When the statues itself provides for deeming class the Registration under the e- Vahan Portal has to be treated covered by Regulation 21 (Sub Clause C). Appellant is held to have security interest in the vehicles and claim of the Appellant was required to be accepted as Secured Creditor. The impugned order is set aside - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether registration of vehicles on the VAHAN e-Portal, after integration notified under section 20A(2) of the SARFAESI Act, 2002, constitutes registration 'with the Central Registry' for the purposes of proving a security interest under section 52(3) of the Insolvency and Bankruptcy Code, 2016 and Regulation 21(c) of the IBBI (Liquidation Process) Regulations, 2016. 2. Whether a secured creditor's claim based on VAHAN e-Portal registration is admissible as a secured claim in liquidation proceedings under the Code and Regulations. 3. Whether precedents which declined recognition of motor-vehicle entries (where no registration under the Central Registry/CERSAI was made) are applicable where integration of VAHAN with the Central Registry has been effected by statutory notification and governmental clarification. ISSUE-WISE DETAILED ANALYSIS - Issue 1: VAHAN e-Portal registration as registration 'with the Central Registry' Legal framework: Section 52(3) IBC requires proof of existence of security interest by records maintained by an information utility or 'such other means as may be specified by the Board.' Regulation 21 of the Liquidation Regulations enumerates modes of proving security interest, including 'proof of registration of charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India' (Reg.21(c)). Section 20A of SARFAESI Act empowers Central Government to integrate registration systems (including motor vehicle records) with the Central Registry and declares that, from the date of integration, security interests registered under those systems 'shall be deemed to be registered with the Central Registry.' A notification dated 03.05.2019 declared integration of the VAHAN National Register with the Central Registry from that date; subsequent governmental clarification (RBI/GoI communication dated 04.10.2019) stated that vehicles registered on VAHAN shall be deemed registered with the Central Registry for SARFAESI purposes. Precedent treatment: Prior Tribunal decisions holding that motor-vehicle entries under the Motor Vehicles Act did not suffice as registration with the Central Registry were decided in contexts where no statutory integration/deeming under section 20A(2) had been invoked or where no registration on VAHAN/CERSAI existed. Those decisions (e.g., where charge was not registered with CERSAI) are distinguishable on factual and statutory grounds. Interpretation and reasoning: The statutory text of section 20A(2) uses a deeming provision - once integration by notification is effected, security interests registered under the integrated registration systems 'shall be deemed to be registered with the Central Registry.' The 03.05.2019 notification effected integration of VAHAN with the Central Registry; the RBI/GoI clarification confirms that vehicles registered on VAHAN are to be treated as registered with the Central Registry for SARFAESI purposes. Given the express deeming language and the legislative purpose of creating a centralised database to record security interests, VAHAN entries post-integration fall within the register contemplated by Reg.21(c) and section 52(3). Ratio vs. Obiter: The holding that VAHAN registration post-integration constitutes registration with the Central Registry is ratio with respect to interpretation of section 20A(2), the 03.05.2019 notification, Reg.21(c) and section 52(3) IBC. Remarks distinguishing prior decisions that did not involve VAHAN/CERSAI integration are ratio insofar as they identify the factual and statutory distinction; broader observations in earlier cases about motor-vehicle entries generally are obiter when applied to post-integration VAHAN entries. Conclusion: Registration of vehicles on VAHAN after the notified integration date is to be treated as registration with the Central Registry for the purposes of proving a security interest under section 52(3) IBC and Regulation 21(c) of the Liquidation Regulations. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Admissibility of secured claim in liquidation based on VAHAN registration Legal framework: Section 52(3) IBC requires verification by the liquidator and permits realization of security interests proved by records of an information utility or other means specified by the Board (Reg.21 lists such means). The Liquidation Regulations expressly accept registration with the Central Registry (CERSAI) as proof of security interest (Reg.21(c)). Precedent treatment: Decisions declining secured-creditor status where no registration with CERSAI/central registry or information utility existed relied on absence of the statutory modes of proof set out in the Code and Regulations. Where proof was absent, the claim was appropriately rejected. Interpretation and reasoning: Where VAHAN registration is treated as Central Registry registration by virtue of section 20A(2) and the integration notification, a secured creditor relying on VAHAN entries satisfies Reg.21(c) and the verification requirement under section 52(3). The liquidator's duty to verify does not permit rejection where the statutory mode of proof (VAHAN/Central Registry registration post-integration) exists. The Court notes that regulatory clarification confirms the VAHAN entry's sufficiency for SARFAESI purposes and, linked via section 20A, suffices under the Code and Regulations. Ratio vs. Obiter: The conclusion that an appellant with VAHAN registration post-integration is entitled to be treated as a secured creditor and have the claim accepted in liquidation is ratio and disposes the present controversy; ancillary observations about the liquidator's verification role are ratio to the extent they interpret statutory verification obligations. Conclusion: A claim in form B supported by VAHAN registration (post-integration) is admissible as a secured claim in liquidation; the liquidator was required to accept such claim as that proof falls within Reg.21(c) and section 52(3). ISSUE-WISE DETAILED ANALYSIS - Issue 3: Applicability of prior judgments denying motor-vehicle entries as sufficient proof Legal framework and precedent treatment: Prior Tribunal judgments refused secured-creditor status where no registration with the Central Registry/CERSAI or information utility had been made; those rulings relied on strict compliance with Reg.21 and section 52(3). They did not involve the statutory integration under section 20A(2) or the 03.05.2019 notification rendering VAHAN entries deemed registrations. Interpretation and reasoning: The Court distinguishes earlier decisions on the ground that those cases involved absence of any CERSAI/central registry registration or VAHAN integration; by contrast, where the statute and notification effected integration and deeming, VAHAN registrations occupy the place of Central Registry entries. Thus, precedents denying sufficiency of motor-vehicle entries pre-integration do not control post-integration facts. Ratio vs. Obiter: The distinction of prior authorities is ratio in the context of differing statutory regimes/facts. The earlier courts' holdings remain authoritative for facts where no integration/deeming under section 20A(2) exists; they are not binding where statutory deeming operates. Conclusion: Precedents refusing to treat motor-vehicle entries as sufficient proof are not applicable where statutory integration and deeming under section 20A(2) and the 03.05.2019 notification have made VAHAN registration equivalent to Central Registry registration. FINAL CONCLUSION AND DISPOSITION (law-based conclusion) Where the Central Government, under section 20A(2) of the SARFAESI Act, has notified integration of the VAHAN National Register with the Central Registry (notification dated 03.05.2019) and governmental clarification treats VAHAN entries as deemed registrations for SARFAESI purposes, VAHAN registration constitutes registration 'with the Central Registry' for purposes of Reg.21(c) and section 52(3) IBC. Consequently, a secured creditor relying on such VAHAN registration is entitled to have its claim recognized as secured in liquidation proceedings; earlier decisions refusing motor-vehicle entries as sufficient are distinguishable on this statutory basis.