Charge Registration beyond 120 days

If the charge is not filled within a period of 120 days, , the Company needs to file the application to the Central Government under section 460 of the Companies Act 2013 for condone of delay which states that where any form is required to be filled before the Registar, under any of the provisions of the Companies Act 2013, the central government may condone the delay

CHG-1 is an e-form that has to be filed by a company that wants to create or modify a charge other than relating to debentures. Section 77 of the Companies Act, 2013 states that every charge has to be registered within 120 days, after which no  charge can be registered. However, if you had a valid reason for delay, you can make an application to the Central Government under section 460 of Companies Act, 2013, asking for relaxation of the time period for filing the charge. 

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which form will be filed for condonation of delay if registration of charge is not made beyond 120 days?

Correction: the remedy is Sec 87, not Sec 460.

• Under amended Sec 77 (from 2 November 2018):

– CHG-1 must be filed within 30 days of creation of charge.

– It can be filed within a further 60 days with additional fee (normal fee multiplied by a factor).

– Total window: 90 days.

• Beyond the extended window: apply to the Regional Director (on behalf of the Central Government) for condonation under Sec 87 in Form CHG-8, with fee. The RD may allow filing on such terms as it thinks fit.

• Grounds: inadvertence or sufficient cause, no prejudice to creditors or shareholders. Attach the charge document and the lender's NOC.

• After the order, file CHG-1 within the time the order allows.

• Unregistered charge: void against the liquidator and creditors (Sec 77(3)). Lenders often insist on registration before disbursement.

• Penalty: under Sec 86 for non-registration, on the company and its officers.