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Application for Registration of Charge

Updated: Sep 30, 2022

Application for registration of charge by the charge-holder-

According to section 78, if a company fails to register a charge within the period specified above, the person in whose favor the charge is created may apply to the Registrar for registration of the charge, along with the instrument created for the charge in Form No.CHG-1 or Form No.CHG-9, as applicable, duly signed and fee. The registrar has the authority to notify the company about such an application. The corporation may either register the charge itself or establish a good reason why it should not be registered. If the company fails to comply, the Registrar may enable the charge to be registered within fourteen days after issuing notice to the firm.

When a person in whose favour the charge is generated applies for registration, that person is entitled to recover from the firm the amount of any fee or additional fees paid to the Registrar for charge registration.

Certificate of registration of charge-

Where a charge is registered with the Registrar, Registrar shall issue a certificate of registration of charge in Form No.CHG-2 and for registration of modification of charge in Form No.CHG-3 to the company and to the person in whose favour the charge is created.

The certificate issued by the Registrar whether in case of registration of charge or registration of modification, shall be conclusive evidence that the requirements of Chapter VI of the Act (Registration of Charges) and the Rules made thereunder as to registration of creation or modification of charge, as the case may be, have been complied with.

Furthermore, the Act states that no charge issued by the company will be considered by the liquidator or any other creditor unless it is properly registered and the Registrar issues a certificate of registration. This, however, has no bearing on any contract or duty relating to the repayment of the money secured by a charge.

Acquiring property under charge and modification of charge-

Section 79 of the Act makes it clear that the requirement of registering the charge shall also apply to a company acquiring any property subject to a charge or any modification in terms and conditions of any charge already registered.

It states that the provisions of Section 77 relating to charge registration apply to:

(a) any company acquiring any property subject to a charge within the meaning of that section; or

(b) any modification in the terms or conditions, or the scope or operation of any charge registered under that section.

The provisions relating to delaying are applicable mutatis mutandis to the registration of a charge on any property acquired subject to such charge, as well as the modification of a charge under section 79 of the Act.

Verification of instruments-

A copy of every instrument evidencing any creation or modification of charge that is needed to be filed with the Registrar by sections 77, 78, or 79 of the Rules shall be verified as follows:

(a) Where the instrument or deed relates solely to property located outside India, the copy must be verified by a certificate issued under the company's seal, or under the hand of any director or company secretary the company, or an authorised officer of the charge holder, or under the hand of someone other than the company who is interested in the mortgage or charge;

(b) When the instrument or deed relates, in whole or in part, to property in India, the copy must be confirmed by a certificate signed by any director or company secretary of the company, or an authorised officer of the charge holder.

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