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CA Intermediate · Corporate and Other Laws · Registration of Charges

Meera Pharma Ltd. borrowed from a bank against a charge on its plant. The loan was fully repaid on 5 August, but the charge-holder did not acknowledge satisfaction. The company wants to remove the charge from the Registrar's records. What is the correct legal position under the Companies Act, 2013?

The company must file intimation of satisfaction of charge with the Registrar within the prescribed time. If the charge-holder refuses to acknowledge payment, the Registrar can, after notice to the holder and on being satisfied, enter satisfaction on the register. Repayment alone does not remove the entry.

  1. AThe company must file particulars of satisfaction of the charge with the Registrar in the prescribed form and time, and if the lender fails to acknowledge, the Registrar may allow it after notice to the lenderCorrect
  2. BThe charge is automatically removed from the register once the loan is repaid
  3. CThe company can only remove the entry by approaching the Supreme Court
  4. DNo filing is required because satisfaction of a charge need not be reported

Explanation

The Act requires intimation of satisfaction of a charge to the Registrar within 30 days of payment. If the charge-holder does not acknowledge satisfaction, the Registrar can, after giving notice to the charge-holder, record satisfaction if sufficient cause is shown. Registers do not update automatically, and approaching the Supreme Court is not the prescribed route.

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