Secured Transactions Act 2024 · As enacted · Part V · Priorities
41. Security right in accession
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
Subject to the provisions of subsections (2) and (3) and of section 42, a security right in goods that attached-
before such goods became an accession, shall have priority as to the accession, over the claim of any person in respect of the whole; and
after the goods became an accession, shall have priority as to the accession, over the claim of any person who subsequently acquired an interest in the whole, but not over the claim of any person who had an interest in the whole of the goods on the date the security right attached to the accession, and who has not consented in writing to the security right in the accession or disclaimed an interest in the accession, as part of the whole.
A security right referred to in subsection (1) shall be-
subordinate to the interest of-
a subsequent buyer of an interest in the whole of the goods; and
a creditor with a prior perfected security right in the whole of the goods, to the extent that the creditor makes subsequent advances, if the subsequent sale or the subsequent advance under the prior perfected security right, is made or contracted for, before the security right is perfected; and
subordinate to the interest of a creditor who registers a notice of judgment or notice of claim, before the security right is perfected.
Notwithstanding the provisions of paragraph (b)
of subsection (2), an acquisition security right in an accession that is perfected before or within ten days after the debtor obtains possession of the accession, shall have priority over the interest of a creditor referred to in that paragraph.
If a secured party has an interest in an accession that has priority over the claim of any person having an interest in the whole, the secured party may, on default and subject to the provisions of this Act relating to default, remove the accession from the whole, if, unless otherwise agreed, the secured party reimburses any person having an encumbrance or the owner of the whole of the goods who is not the debtor, for the cost of repairing any physical injury, excluding diminution in value of the whole, caused by the absence of the accession or by the necessity of replacement.
A person entitled to any reimbursement under subsection (4) may refuse permission to remove the accession, until the secured party has given adequate security for the reimbursement.
A secured party who has the right to remove an accession from the whole, shall serve on each person known to the secured party as having an interest in the balance of the goods and on any person with a security right in such balance, perfected by registration against the name of the debtor through the serial identification number of such balance of the goods, if such number is required for registration, a notice in writing of the secured party’s intention to remove the accession, containing-
the name and address of the secured party;
a description of the accession to be removed, sufficient to enable it to be identified;
the amount required to satisfy the obligation secured by the security right of the secured party;
a description of the other goods sufficient to enable them to be identified; and
a statement of the intention to remove the accession from the whole, unless the amount secured is paid on or before a date specified in the notice, which date shall not be less than ten days after the service of the notice.
The notice referred to in subsection (6) shall be served by registered post, at least ten days before the accession is removed.
A person having an interest in the whole that is subject to a security right in the accession may, before the accession has been removed by the secured party in accordance with the provisions of subsection (4), retain the accession upon payment to the secured party of the amount owing in respect of the security right having priority over such person’s interest.
Part VI
Registration
Part VII
General Provisions
Part VIII
Repeals and Savings
Part IX