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charge on assets

kaushal (w) (545 Points)

05 August 2008

1 what is charge over assets?
2 assets here means only Fixed assets only or debtor and stock also?
3 what is first charge and second charge ?
4 If assets is of Rs.1000
Does it means 1st charge on cash credit account of Rs. 300
2nd charge can be created of Rs. 200 ?

Does it mean that way or Some other way???

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3 Replies

CA Nitin Wadhwani (Chartered Accountant) (4469 Points)
Replied 06 August 2008

There is No definition in the companies act. however it means mortgage of immovable assets and hypothecation(but not pledge) of movable assets.

first charge means in case of default the amount which will be recovered from sale of charged asset will be paid to the first charge holder and so on

Devendra Goyal (Service) (24 Points)
Replied 06 August 2008

DearKaushal, Charge is not define but you can read Companies act sec 125 for Registration of Charge for Debentures, Like First Charge, Paripesu Charge, Etc. Regards, C.A.Devendra Goyal

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 06 August 2008

1. It is a subject matter of security for a borrowing and committed to it.
2.All assets can be charged.
3.First and secong charge are the order in which the assets have been committed for satisfaction of the borrowings concerned.
4. Sl no 3 is self explanatory.