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CS Executive · Company Law and Practice · Charges

Orchid Pharma Pvt Ltd buys a plot that is already subject to a charge in favour of a financier. Which statement is correct under the Companies Act, 2013?

Section 77 registration provisions apply, so far as may be, to a company acquiring property that is subject to a charge. The acquisition does not extinguish the charge, and the buyer company is not exempt merely because the seller created it.

  1. ARegistration provisions of Section 77 apply, so far as may be, to a company acquiring property subject to a chargeCorrect
  2. BNo registration is needed because the charge was created by the seller
  3. COnly the seller must register, and the buyer is exempt in all cases
  4. DThe charge is automatically extinguished on acquisition

Explanation

Section 79 extends Section 77 registration provisions, so far as may be, to a company acquiring property subject to a charge and to modification of terms, conditions, extent or operation of a registered charge. Hence the acquiring company cannot ignore it.

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