(12.10.13) Miscellaneous Provisions as regards Charges

1. Date of notice of charge (s.126). Where any charge on any property of a company required to be registered under s.125 has been so registered, any person acquiring such property or any part thereof or any share of interest therein shall be deemed to have notice of the charge as from the date of such registration.

            2.  Register of charges to be kept by registrar ( s. 1 30). The Registrar shall with respect to each company cause to be kept a register containing all the charges requiring registration and shall on payment of the prescribed fee, cause to enter in the Register with respect to every such charge the following particulars: (i) the date of its creation; (ii) the amount secured by the charge; (iii) short particulars of the property charged; and (iv) the persons entitled to the charge.

In case of a charge to the benefit of which the holders of a series of debentures are entitled, the particulars to be entered in the Register are: (i) the total amount secured by the whole series; (ii) the dates of the resolutions authorising the issue of the series and the date of the covering deed, if any, by which the security is created or defined; (iii) a general description of the property charged; (iv) the names of the trustee, if any, for the debentureholders; and (v) the amount or rate per cent of the commission or discount; if any, paid to any person subscribing or procuring subscriptions for any debentures of the company (Ss.128 and 129).

The Register so kept shall be open to inspection by any person on payment of a fee

of one rupee for each inspection.

            3. Index to register of charges (s.131). The Registrar shall give a certificate under his hand of the registration of any charge registered with him, stating the amount there by secured. The certificate shall be conclusive evidence that the requirements of the Act as to registration have been complied with.                                                                                                                                                                 

            4. Modification of charges (s.135). Section 135 provides that whenever the terms or conditions, or the extent and operation, of any charge registered are modified, it shall be the duty of the company to send to the Registrar the particulars of such modification within 30 days.

It may be noted that under s.134, a charge can be filed by the company or by any person interested in the charge. However, under s.135, modification of a charge can only be filed by the company.

            5.  What constitutes modification. The term 'modification' includes variation of any of the terms of the agreement including variation of rate of interest which may be by mutual agreement or by operation of law. Even if the rights of a charge holder are assigned to a third party, it will be regarded as a modification. Likewise, partial release of the charge on a particular asset or property, shall amount to modification of the charge.

            6. The memorandum of satisfaction(Ss.138 to l40). On payment or satisfaction of any charge, in full, the company must notify the fact to the Registrar within 30 days from the date of such payment or satisfaction. The Registrar shall, on receipt of such intimation, cause a notice to be sent to the holder of the charge calling upon to show cause within a time specified in such notice (but not exceeding 14 days) as to why payment or satisfaction should not be recorded as intimated to the Registrar. If no cause is shown, the Registrar shall order that a memorandum of satisfaction shall be entered in the Register of Charges.

But if cause is shown, the Registrar shall record a note to that effect in the Register

and shall inform the company that he has done so. The Registrar may also record memorandum of satisfaction even if no intimation has been received by him from the company on getting evidence to his satisfaction that any registered charge has been satisfied in whole or in part.

Where the Registrar enters a memorandum of satisfaction as above, he shall furnish the company with a copy of the memorandum of satisfaction (s.140).

            7.  Rectification of register of  company law board (s.141). The company Law Board is empowered to extend time for the registration of the charge or to order that the omission or misstatement in the Register of Charges be rectified. The persons who may apply to the CLB for such an order are the company or any interested person. The CLB has to be satisfied that the failure to register the charge or the omission or misstatement: (a) was accidental; or (b) was due to inadvertence or some other sufficient cause; or (c) is not of a nature as to prejudice the position of creditors or shareholders of the company; or (d) that on other grounds it is just and equitable to grant relief.

Where the CLB extends the time for the registration of a charge, the order shall not Prejudice any rights acquired in respect of the property concerned before the charge is actually registered.

            8.  Company’s register of charges (s.143). Every company must keep at its registered office a Register of Charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the company, giving in each: (a) a short description of the property charged; (b) the amount of the charge; and (c) the names of the persons entitled to charge.

If any officer of the company knowingly omits or willfully  authorises or permits the omission of any of the above entries, he shall be punishable with fine which may extend to Rs 5,000.