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Introduction: Chapter VI of the Act, under sections 77 to 87 contains the provisions relating to Registration of Charge. As per sub section 16 of section 2 “charge” means an interest or lien created on the property or assets of the Company or any of its undertakings or both as security and includes a mortgage.
Duty to register Charges: As per sub section 1 of section 77 it shall be the duty of every company creating a charge within or outside India, to register the particulars of charge signed by the Company and the charge- holder together with instrument of charges, if any creating such charges in such form, on payment of such fees and in such manner as may be prescribed.
Extension of Charge Registration time period: As per section 77 of the act, Registrar may on application and payment of fees by the company, extend the Charge Registration period by 300 days. And for further extension the Company should seek approval of Central Government under section 87 of the Act.
Central government under section 87 of the said act on being satisfied that omission to register any charge within time or any other omissions mentioned there in section 87 was accidental or on any other ground, it is just and equitable to grant relief, it may on the application of company or any person interested and on such terms and conditions as it deems expedient direct such extension of time period as the case require, that the omission or miss-statement shall be rectified.
Provided also that any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered.
Certificate of Registration: On successful registration of charge, the registrar shall issue certificate of registration in such form and manner as may be prescribed to the company and, as the case may be, to the person in whose favour charge is created.
No charge shall be taken into account by the liquidator or any other creditor unless it is duly registered under sub sec (1) and a certificate of registration of such charge is given by the Registrar.
Charge registration by the Charge Holder:As per section 78, Registrar may allow registration of charge on application by the person in whose favour charge is created on payment of such fees, within such time and in such form as may be prescribed, where a company fails to register charges without prejudice to its liability in respect of any offence under this Chapter.
Provided that where registration is affected on application of charge holder, that person shall be entitled to recover from the company the amount of any fees.
Section 77 to apply in certain cases:
- a company acquiring any property subject to a charge within the meaning of that section; or
- any modification in the terms or conditions or the extent or operation of any charge registered under that section.
Date of Notice of Charge: As per section 80 of the act any person acquiring any charged property or assets of a company or any of its undertaking duly registered under section 77 therein shall be deemed to have notice of the charge from the date of such registration.
Register of charge to be kept by the Registrar:Sub section (1) of section 81 requires that the Registrar shall, in respect of every company, keep a register containing particulars of the charges registered under this Chapter in such form and manner as may be prescribed. The register shall be open for inspection by any person on payment of such fees as may be prescribed for each inspection.
Report on satisfaction of charge by the Company: The Company shall give intimation to the Registrar on payment or satisfaction in full of any charge registered under this chapter within 30 days from the date of such payment or satisfaction.
Intimation of Appointment of receiver or manager: Intimation regarding appointment of receiver or manager shall be given within 30 days from the date of passing of order or of making of appointment and give notice of such appointment to the Company.
Company’s Register of Charges: Sub section 1 of section 85 requires that every company shall keep at its registered office “register of charges” in such form and manner as may be prescribed which shall include therein all charges and floating charges affecting any property or assets of the Co. or undertakings, indicating in each case such particulars as may be prescribed.
Provided that a copy of the instrument creating the charge shall also be kept at the registered office of the Company along with the register of charge.
Register of charge and instrument of charge shall be kept open for inspection by any member or creditor without payment of fees or by any other person on payment of such fees as may be prescribed, subject to such reasonable restrictions as the Company may impose by its article.
Penalty Provisions: Penalty for contraventions of any provision of this chapter shall not be less than 1 lakh rupees but which may extend to 10 lakh rupees and every officer of the Company who is in default shall be punishable with imprisonment for a term which may extend to 6 months or with a fine not less than 25000 rupees but which may extend to 1 lakh rupees.
Rectification in the register of Charge by the Central Government: Section 87 states that C.G on being satisfied that –
1. Omission to file particulars of charge created or modification thereof with the Registrar by the co. or
2. Omission to register any charge within required time or omission of timely intimation on payment or satisfaction of charge or
3. Omission or miss-statement of any particulars with respect to any charge or modification or memorandum of satisfaction
Was accidental or due to inadvertence or some other sufficient cause, or on any other ground, it is just and equitable to grant relief, it may on application of the company or any person interested direct such extension of the time, as the case may require, that the Omission or miss-statement shall be rectified.
The order of Central Government, extending the time for registration of charge shall not be prejudice to any right acquired in respect of the property concerned before the charge is actually registered.