VAHAN registration as proof of security interest treated as Central Registry registration in liquidation proceedings

VAHAN e-portal registration, after integration with the Central Registry, was treated as proof of security interest for liquidation purposes because the statutory framework deems such registrations to be with the Central Registry. Section 52(3) of the Insolvency and Bankruptcy Code, 2016 and Regulation 21 of the Liquidation Process Regulations permit proof of security interest through Central Registry registration, while Section 20A of SARFAESI and the 03.05.2019 notification, read with the 04.10.2019 clarification, extend that deeming effect to VAHAN-registered vehicles. On that basis, VAHAN registration could not be ignored, and the creditor was recognised as a secured creditor.

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Issues: Whether registration of vehicles on the VAHAN e-portal, after integration with the Central Registry, is sufficient to establish security interest and entitle the creditor to be treated as a secured creditor in liquidation.

Analysis: Section 52(3) of the Insolvency and Bankruptcy Code, 2016 and Regulation 21 of the IBBI (Liquidation Process) Regulations, 2016 permit proof of security interest through registration with the Central Registry. Section 20A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 authorises integration of registration systems and provides that, after such integration, the relevant security interests shall be deemed to be registered with the Central Registry. The notification dated 03.05.2019 declared integration of the VAHAN National Register with the Central Registry, and the clarification dated 04.10.2019 stated that vehicles registered with VAHAN shall be deemed registered with the Central Registry for the purposes of the SARFAESI Act, 2002. In this framework, VAHAN registration could not be disregarded for proof of security interest. The earlier decision relied on by the liquidator did not involve such SARFAESI-based registration and was distinguishable.

Conclusion: The registration on the VAHAN portal was accepted as sufficient proof of security interest, and the creditor was entitled to be treated as a secured creditor.

Final Conclusion: The impugned order was set aside and the appellant's claim as a secured creditor was allowed.

Ratio Decidendi: Where the statutory scheme creates a deeming registration through integration of the VAHAN system with the Central Registry, VAHAN registration must be treated as proof of security interest for liquidation proceedings under the applicable insolvency framework.

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