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CA Intermediate · Corporate and Other Laws · Registration of Charges

Kaveri Agro Pvt. Ltd. borrowed from a bank against a charge on its land. The loan has been fully repaid and the bank has issued a no-dues letter, but the satisfaction of the charge has not been filed. A creditor asks what the position is. Which statement is correct under the Companies Act, 2013?

Satisfaction of a charge does not happen automatically on repayment. The company must file intimation of payment or satisfaction with the Registrar within the prescribed time, and the Registrar may allow a further period on payment of fees. Until it is filed, the register continues to show the charge.

  1. AThe company must file intimation of payment or satisfaction of the charge with the Registrar within 300 days of the payment, and the Registrar may allow further time subject to conditionsCorrect
  2. BThe charge is automatically removed from the register once the loan is repaid, so no filing is needed
  3. COnly the bank is permitted to file satisfaction, never the company
  4. DThe satisfaction can be filed only with the NCLT and not with the Registrar

Explanation

The Act requires the company to give intimation of payment or satisfaction of a charge to the Registrar. The notice is to be filed within 30 days of payment, and the Registrar can allow a further 300 days on fee. Removal is not automatic, and the filing is with the Registrar, not the NCLT.

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