We as a banker were required to create security on following terms:
"First charge by way of hypothecation on plant and machinary ranking pari passu with other term loan lenders.
We had executed Deed of Hypothecation with the borrower however at the time of executing the said deed, pari passu letter from the other term loan lenders were not obtained for ceding of charge in our bank favour. Pending the stated pari passu letter from the other term loan lenders we filled the form 8 with ROC for charge registration and attached deed of hypothecation in form 8 as executed by the borrower in our banks favour. We correctly mentioned the nature and extent of charge as described above however did not attach pari passu letter with the form 8 as the same was not avavilable with us at that time. Interestingly ROC did not raise any objection on the same and registered the charge. Later on after one year of charge registration other term loan lenders issued letter ceding first pari passu charge in our banks favour. Now the question is: 1. Whether the charge registered earlier without attaching pari passu letter while filling form 8 is a valid one and in case of default committed by borrower the same would be enforceable in the court of law. or 2. we should again file form 8 (Perhaps modification of charge) attaching pari passu letter as received from the other banker. However this would require CLB approval for condonation of delay beyond 30 days.
19 May 2009
Is there a reference to the paripasu letter in the hypothecation agreement? in which case there is no need to file Form 8 seperately to include the parpassu letter, however by way of abundant caution it is better to file a modification in Form 8 quoting the earlier charge ID for continuity
19 May 2009
Also, if in the column of "Nature and Operation of Charge" Pari-passu charge was mentioned, no need even to modify the charge or else the charge needs to be modified.
CAclubindia
