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CS Executive · Company Law and Practice · Charges

Himalaya Steels Ltd acquires a warehouse in Ludhiana which is already subject to a registered mortgage in favour of a lender. Under the Companies Act, 2013, how do the registration provisions apply?

The registration provisions of section 77 apply, so far as may be, to a company that acquires property already subject to a charge. The fact that the charge was created earlier by someone else does not exempt the acquiring company from registration requirements.

  1. ASection 77 provisions on registration of charges apply, so far as may be, to a company acquiring property subject to a chargeCorrect
  2. BThey do not apply because the charge was created by the previous owner
  3. CThey apply only if the company's articles so provide
  4. DThey apply only if the property value exceeds the company's paid-up capital

Explanation

Section 79 states that the registration provisions of section 77 apply, so far as may be, to a company acquiring property subject to a charge and to any modification of the terms, conditions, extent or operation of a registered charge. The previous owner's creation of the charge does not exempt the acquirer.

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