APPLICABILITY
OF SECTION:
Applicable
on both private and public company w.e.f 1st April, 2014 as per the MCA notification
dated 26th March, 2014.
Amendment
29th May, 2015 via notification no. G.S.R. 440(E)
Amendment 7th April, 2017 via
notification no. G.S.R. 339(E)
Amendment 6th July, 2018 via notification no. G.S.R.
614(E)
Amendment 18th December, 2018 G.S.R.
1218(E)
MEANING OF CHARGE:
Charge
means an interest or lien created on the property or assets of a company or any
of its undertakings or both as security and includes a mortgage
REGISTRATION OF CHARGES:
(1) BY THE COMPANY(CREATING CHARGE):
Every
company creating a charge within or outside India, on its property or assets or
any of its undertakings, whether
tangible or otherwise, and situated
in or outside India, have to register the particulars of the charge signed
by the company and the charge-holder together with the instruments, if any,
creating such charge in Form No.CHG-1 (for other than Debentures) or Form
No.CHG-9 (for debentures including rectification), on payment of such fees with the Registrar within thirty
days of its creation:
Provided
that the Registrar may, on an application by the company, allow such registration
to be made within a period of three hundred days of such creation on payment of
additional fees.
(2) BY THE PERSON IN WHOSE FAVOUR CHARGE
WAS CREATED:
If the Company failed to register the creation or
modification of charge within a period of 30 days the Chargeholder (in favour
of whom the charge is created/modified) may apply to the registrar for
registration of charge in Form
No.CHG-1 (for other than Debentures)
or Form No.CHG-9 (for debentures including rectification.
The Registrar may, on such application,
within a period of fourteen days after giving notice to the company, unless the
company itself registers the charge or shows sufficient cause why such charge
should not be registered, allow such registration on payment of such fees, as
may be prescribed
Where registration is effected on
application of the person in whose favour the charge is created, that person
shall be entitled to recover from the company the amount of any fees or
additional fees paid by him to the Registrar for the purpose of registration of
charge.
VERIFICATION OF INSTRUMENT:
A copy of every instrument evidencing any
creation or modification of charge and required to be filed with the Registrar
in pursuance of the provisions of the Act, shall be verified as follows-
(a) where the instrument or deed relates
solely to the property situated outside India, the copy shall be verified by a
certificate issued either under the seal of the company, or under the hand of
any director or company secretary of the company or an authorised officer of
the chargeholder or under the hand of some person other than the company who is
interested in the mortgage or charge;
(b) Where the instrument or deed relates,
whether wholly or partly, to the property situated in India, the copy shall be
verified by a certificate issued under the hand of any director or company
secretary of the company or an authorised officer of the charge holder.
REGISTRATION
OF SATISFACTION OF CHARGERS:
(1)
BY
THE COMPANY:
A company shall
give intimation to the Registrar in the Form No. CHG-4, of the payment or satisfaction in full of any
charge registered under this Chapter within a period of three hundred days from
the date of such payment or satisfaction and the provisions of sub-section (1) of
section 77 shall, as far as may be, apply to an intimation so given.
The Registrar
shall, on receipt of intimation of satisfaction of charge cause a notice to be sent
to the holder of the charge calling upon him to show cause within such time not
exceeding fourteen days, as may be specified in such notice, as to why payment
or satisfaction in full should not be recorded as intimated to the Registrar,
and if no cause is shown, by such holder of the charge, the Registrar shall
order that a memorandum of satisfaction shall be entered in the register of
charges kept by him.
Provided that the
notice referred as above shall not be required to be sent, in case the intimation
to the Registrar in this regard is in the specified form and signed by the holder
of charge.
(2)
IN ABSENCE OF
INTIMATION BY THE COMPANY:
(1) The Registrar
may, on evidence being given to his satisfaction with respect to any registered
charge:
(a) That the debt
for which the charge was given has been paid or satisfied in whole or in part;
or
(b) That part of
the property or undertaking charged has been released from the charge or has
ceased to form part of the company’s property or undertaking,
Enter in the
register of charges a memorandum of satisfaction in whole or in part, or of the
fact
that part of the
property or undertaking has been released from the charge or has ceased to form
part of the company’s property or undertaking, as the case may be,
notwithstanding the
fact that no
intimation has been received by him from the company.
(2) The Registrar
shall inform the affected parties within thirty days of making the entry in the
register of charges kept under sub-section (1) of section 81.
CERTIFICATE OF REGISTRATION:
(1) Where a charge is registered with the
Registrar under sub-section (1) of section 77 or section 78, he shall issue a
certificate of registration of such charge in Form No.CHG-2
(2)
Where the particulars of modification of charge is registered under section 79,
the Registrar shall issue a certificate of modification of charge in Form No. CHG-3
(3) Where the
Registrar enters a memorandum of satisfaction of charge he shall issue a
certificate of registration of satisfaction of charge in Form No.CHG-5.
The
certificate issued by the Registrar shall be conclusive evidence that the
requirements of the Act and the rules made there under as to registration of
creation or modification of charge, as the case may be, have been complied
with.
CONDONATION OF DELAY:
(1) AFTER 30 DAYS BUT BEFORE 300 DAYS OF
CREATION OR MODIFICATION OF CHARGE:
The application to condone the delay shall be filed with
the Registrar
in Form No. CHG-10 supported
by a declaration from the company signed by its secretary or director that such
belated filing shall not adversely affect rights of any other intervening
creditors of the company. Registrar on being satisfied can condone the delay
and register the charge.
(2) AFTER
300 DAYS OF CREATION OR MODIFICATION OF
CHARGE AND AFTER 30 DAYS OF SATISFACTION OF CHARGE:
Where the instrument creating
or modifying a charge is not filed within a period of three hundred days from
the date of its creation (including acquisition of a property subject to a
charge) or modification and where the satisfaction of the charge is not filed
within thirty days from the date on which such payment of satisfaction, the
Registrar shall not register the same unless the delay is condoned by the
Central Government.
The application for condonation of delay shall be filed
with the Central Government in Form No. CHG-8 along with the fee.
The order passed by the Central Government shall be
required to be filed with the Registrar in Form No. INC. 28
along with the fee as per the
conditions stipulated in the said order.
DATE OF NOTICE OF CHARGE:
Where
any charge on any property or assets of a company or any of its undertakings is
registered under section 77, any person acquiring such property, assets, undertakings
or part thereof or any share or interest therein shall be deemed to have notice
of the charge from the date of such registration.
COMPANY’S
REGISTER OF CHARGES:
(1)
Every company shall keep at its registered office a register of charges in Form
No. CHG. 7 and
enter therein particulars of all the charges registered with the Registrar on
any of the property, assets or undertaking of the company and the particulars
of any property acquired subject to a charge as well as particulars of any
modification of a charge and satisfaction of charge.
(2)
The entries in the register of charges maintained by the company shall be made
forthwith after the creation, modification or satisfaction of charge, as the
case may be.
(3)
Entries in the register shall be authenticated by a director or the secretary
of the company or any other person authorised by the Board for the purpose.
(4)
The register of charges shall be preserved permanently and the instrument
creating a charge or modification thereon shall be preserved for a period of
eight years from the date of satisfaction of charge by the company.
PUNISHMENT FOR
CONTRAVENTION:
If
any company contravenes any provision of this Chapter, the company shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to ten
lakh rupees and every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to six months or with
fine which shall not be less than twenty-five thousand rupees but which may extend
to one lakh rupees, or with both.
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