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      Question

      Under Section 26B(3) of the SARFAESI Act (inserted by

      2016 Amendment), a creditor OTHER than a secured creditor who files particulars of security interest with the Central Registry is subject to which limitation?
      A Such creditor must obtain RBI's prior approval before filing Correct Answer Incorrect Answer
      B Such creditor's registration is valid only for a period of one year Correct Answer Incorrect Answer
      C Such creditor can enforce security only through the DRT, not independently Correct Answer Incorrect Answer
      D Such creditor must file within 30 days of creation of security interest Correct Answer Incorrect Answer
      E Such creditor shall NOT be entitled to exercise any right of enforcement of securities under the Act Correct Answer Incorrect Answer

      Solution

      Section 26B(3) is an important provision of Chapter IVA. It explicitly provides that 'a creditor other than the secured creditor filing particulars of transactions of creation, modification and satisfaction of security interest over properties created in its favour shall not be entitled to exercise any right of enforcement of securities under this Act.' Chapter IVA extended the registration framework to all creditors, but the right of self-help enforcement under SARFAESI (without court intervention, as under Section 13) remains the exclusive privilege of secured creditors as defined in Section 2(1)(zd). Non-secured creditors register to create public notice and priority, but must use court/DRT routes for enforcement.

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