Sunday, 20 April 2014

(12.10.12) Registration of Charges

Section 125 requires that the following charges must be registered with the Registrar within 30 days after the date of their creation. (i) a charge for the purpose of securing any issue of debentures; (ii) a charge on uncalled share capital of the company; (iii) a charge on any immovable property; (iv) a charge on any book debts of the company; (v) a charge not being a pledge on any movable property of the company; (vi) a floating charge on the undertaking or any property of the company including stock in trade; (vii) a charge on calls made but not paid; (viii) a charge on a ship or any share in a ship; (ix) a charge on good will, or a patent or a licence under a patent, or a trade mark or a licence under a trade mark; or a copyright or a licence under a copyright.

The Registrar may, however, allow the registration of a charge within 30 days next following the expiry of the said period of 30 days on payment of specified additional fee, if the company satisfies the Registrar that it had sufficient cause for not filing the required particulars or instrument, etc., within that period.

It is the duty of the company to send the above particulars to the Registrar but registration may also be effected on the application of the creditor. The creditor may in such a case recover the registration fee from the company (s.134).

Effect of non-registration

            (1)  In case a registrable charge is not registered within the prescribed time, it becomes void (i) against the liquidator; and (ii) any creditor of the company. However, the charge shall not be void against a purchaser of the properties charged [State Bank of India v. Vishwanirayat ( P ) Ltd. (1987) 3 Comp. L.J. 77 7].

            (2)  However, the debt, in respect of which the charge was given remains valid, that is, it can always be recovered as an unsecured debt.

            (3)  Another effect of non-registration of a charge is that the money secured thereby becomes immediately payable.

Besides, company and every officer may be subjected to a penalty upto Rs 500 for every day during which the default continues.

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