A Company has availed car loan of Rs.6.50 lacs from Oriental Bank of Commerce. The company has executed the following documents with the bank at the time of availing the loan (1) Agreement of Term Loan (2) Common Agreement (3) General Power of Attorney.

Normally the hypothecation will be endorsed in the RC Book of the vehicle and RC book will be retained by the bank till the loan gets repaid.

The bank officer is now asking the company to create a charge in favour of the bank with ROC. My questions are (1) Whether it is mandatory to create and register the charge with ROC for car loans (2) Is the above documents are enough to file the charge with ROC (Note : The company has not executed any hypothecation deed and has executed only the above documents)

Hi,

No the above charge is not required to be registered with ROC as the above transaction is outside the preview of compulsorily registerable charge given under section 125(4) of the Companies Act, 1956.

You have to adopt a strict approach towards the bank.

Regards

Dear Murlidharan,

In my opinion charge is required to be registered with ROC under section 125(4)(e)

i.e. a charge, not being a pledge, on any movable property of the company;

Thus, it is mandatory to register the charge within 30 days from the date of execution of abovementioned documents.

Hello everyone.

Can anyone pl tell me what are the consequences of not filing charge . In one of my Company, there is renewal of terms and condition of CC limits, Fund Based Limits and Non fund based limits and no change at all. All terms are same as that of last year.There is only Collateral Security and personal gurantee of Directors. Now Bank is saying there is no need to file Form 8 for its renewal. Now can anyone pl tell me what will be consequnces of this on the Company for not filing Form 8 for modification.Prompt reply is appreciated.

Regards

Kamal

Preety Mam,

I have also dealt with the same issue bt we have registered the charge and after filing a letter from ROC was delivered to our corporate office stating that the charge was priorly registered only there is change in the limits as specified.

so, i suggest kindly register the same.

regards... 

Dear Preety,

The charge should be registered or modified in the above case.

It is a duty of company tofile the particulars of charges with the ROC within the stipulated time for registration or modification. Unless and until the charge is registered with the ROC, it has no sanctity notwithstanding the fact that such charge was brought into vogue by reason of agreement inter aprties between the two creditors or by registration of guarantee bond. 

In case of non filing and non registration of particulars of charge following consequences shall arise:-

1. the charge becomes void against liquidator or creditors and the money secured thereby shall immediately become payable. However, it can be enfored so long as the company does not go into liquidatino.

2. The security becomes void but non registration does not affect any contract or obligation of the company as to repayment of the money secured by the charge.

3. The company and every officer of the company or other person who is in default, shall be punishable with fine which may extend to Rs. 5000/- for every dau during which the default continues. A further fine of Rs. 10000/- may also be imposed on the company and every officer of the company who is in default of any other requirements of the Act concerning registration of a charge created by the Company,

Thank u so much.

Actually in our Company., all form 8 are filed by the bank itself. Now how should I convince them for filing Form 8. as there are not filing it. pl suggest.

Regards

Preety

Preety,

Show them the legal provisions regarding registraton of modification of charge.. if they r not convinced after that, then just ur company can file the form8 by itself by asking the bank to just put DSC on that form.. The form8 shud be filed otherwise it will b default on part of the company only..