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CA Intermediate · Corporate and Other Laws · Registration of Charges

Mehta Steels Ltd. acquired a plant already subject to a charge. The charge was created before acquisition and is on that property in India. The company took no step to register it. Which statement is correct?

A company that acquires property already subject to a charge must file the charge particulars with the Registrar within 30 days of the acquisition, with the Registrar able to extend time on sufficient cause. It is irrelevant that the seller created it, and there is no value threshold.

  1. ANo registration is needed because the charge was created by the seller, not by the company
  2. BThe company must register the charge within 30 days of the acquisition, with the Registrar permitted to extend the period on sufficient causeCorrect
  3. CRegistration is required only if the property is outside India
  4. DThe charge is void only if the property value exceeds Rs 1 crore

Explanation

Where a company acquires property subject to a charge, the particulars of the charge, with the instrument, must be filed with the Registrar within 30 days of the acquisition. The Act does not exempt acquisitions on the ground that the seller created the charge, and there is no value threshold. Extension is available on sufficient cause.

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