Security registration: CERSAI, ROC charges, and priority of debt

This page applies to all property mortgages and security interests created in favour of scheduled commercial banks, housing finance companies (HFCs), regional rural banks, and NBFCs across India.

It covers both individual homebuyers and commercial borrowers, partnerships, and incorporated companies. It explains the legal mechanisms of the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), corporate ROC charge filings on MCA21, and the statutory priority of debts under Section 26E of the SARFAESI Act.

Security interest registration in India is governed by two core central statutes: Chapter IV-A of the SARFAESI Act, 2002 for all financial creditors, and Chapter VI of the Companies Act, 2013 for corporate borrowers.

Under the 2016 amendments to the SARFAESI Act, Parliament inserted Chapter IV-A (Sections 26A to 26E), establishing an online central registry (CERSAI) to eliminate fraudulent double-mortgages:

1. Section 26D (Enforcement bar): No secured creditor is entitled to exercise the rights of enforcement of security under Chapter III of the SARFAESI Act (such as taking possession under Section 13(4) or auctioning the property) unless the security interest is duly registered with CERSAI.
2. Section 26E (Priority of secured debts): Once registered with CERSAI, the debt due to any secured creditor has priority over all other debts and all revenues, taxes, cesses, and other rates payable to the Central Government, State Government, or any local authority, subject to the provisions of the Insolvency and Bankruptcy Code, 2016.

For corporate borrowers, Section 77 of the Companies Act, 2013 mandates that every company creating a charge on its property or assets must file Form CHG-1 with the Registrar of Companies (ROC) within 30 days of creation. Under Section 77(3), no charge created by a company is taken into account by a liquidator or any other creditor unless it is duly registered with the ROC.

When you execute a mortgage, the lender uploads the complete asset details to the CERSAI web portal (cersai.org.in) within 30 days of document execution. The entry records the property's complete survey number, flat number, building name, municipal ward, latitude/longitude, borrower's KYC, sanctioned amount, and date of mortgage creation.

CERSAI generates a unique Security Interest ID. The database is publicly searchable. Any citizen, advocate, or prospective buyer can log on to CERSAI, pay a statutory search fee of ₹10, and search by property identifier to confirm whether the owner has already pledged the title deeds to any other bank or NBFC in India.

For a company borrower, the company secretary or chartered accountant files e-Form CHG-1 on the Ministry of Corporate Affairs (MCA21) portal accompanied by a certified copy of the mortgage deed within 30 days. The ROC issues a formal Certificate of Registration of Charge (Form CHG-2), creating a public record accessible on the MCA master data portal.

When the loan is fully repaid, the lender must file a Satisfaction of Charge on CERSAI and issue Form CHG-4 on MCA21 within 30 days to release the public encumbrance.

Before CERSAI was established, fraudsters routinely created color-photocopy title deeds or obtained duplicate deeds by filing false police loss reports, using the same property to take home loans from three or four different banks simultaneously. If a bank fails to conduct a CERSAI search before disbursement, it risks finding itself trapped behind a prior registered lender who holds first statutory charge.

Another critical failure occurs when a bank attempts to issue a Section 13(2) demand notice or take physical possession through the District Magistrate under Section 14 without having registered the mortgage on CERSAI. Under Section 26D of the SARFAESI Act, any repossession action taken by an unregistered creditor is void and illegal.

For companies, if the lender forgets to ensure ROC filing within the permissible statutory extension window under Section 77 (up to 60 days with additional fees), the bank loses its secured status if the company slips into liquidation under the IBC, relegating the bank to an unsecured creditor under the Section 53 waterfall.

1. If you are buying a second-hand property, conduct an independent CERSAI asset-based search at cersai.org.in before paying any token advance to verify that the seller has not concealed an active bank mortgage.
2. If your property is mortgaged and you face sudden SARFAESI notices, check whether the bank actually registered the charge on CERSAI. If the lender did not register on CERSAI before initiating SARFAESI, file an immediate objection under Section 26D before the Debt Recovery Tribunal (DRT).
3. When you pay off your home loan or commercial facility, do not stop at collecting your original deeds. Demand a formal CERSAI Satisfaction Certificate and (for companies) the ROC Form CHG-5 Certificate of Satisfaction of Charge.
4. If a local tax authority (municipal corporation or state sales tax department) attaches your mortgaged property for commercial tax arrears, point your lender to Section 26E of the SARFAESI Act, which legally establishes that the bank's registered mortgage takes precedence over state tax claims.

The Supreme Court and multiple High Courts have consistently held that the non-obstante clause in Section 26E gives secured creditors with registered CERSAI entries an absolute priority over state revenue dues. However, the courts have strictly enforced Section 26D, ruling that without CERSAI registration, a lender cannot invoke the extra-judicial recovery machinery of SARFAESI.

What is CERSAI and why does it matter to a homebuyer? CERSAI is the central online registry where banks and NBFCs must record all mortgages created over immovable property. It prevents fraud by allowing buyers and lenders to verify whether a property has already been mortgaged to another financial institution [1].

Can a bank seize my property under SARFAESI if they forgot to register on CERSAI? No. Under Section 26D of the SARFAESI Act, 2002, a secured creditor is legally barred from exercising any SARFAESI enforcement powers (including issuing possession notices or auctioning property) unless the security interest is registered with CERSAI [1].

Can the government attach my mortgaged home for my business tax dues? Under Section 26E of the SARFAESI Act, a bank's registered mortgage has legal priority over all government taxes, revenues, and municipal dues. The tax department cannot take auction proceeds until the bank's registered mortgage debt is fully satisfied [1].

What is an ROC charge and who does it apply to? An ROC charge is a formal registration of security filed with the Registrar of Companies under Section 77 of the Companies Act, 2013. It applies whenever a private or public limited company pledges or mortgages its assets to secure a loan [2].

How do I check if my property mortgage has been removed from CERSAI after loan repayment? You can log on to the public search portal at cersai.org.in and enter your property survey or flat number, or request your lender to provide the CERSAI charge satisfaction confirmation report generated upon loan closure.

• Types of mortgages — equitable mortgage formation and deed deposits.
• Mortgage enforcement and SARFAESI sales — Section 13 notices and auction defences.
• Release of title deeds — timeline for closing CERSAI entries upon loan payoff.
• Business and MSME loans — corporate charge management under Company law.