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CA Intermediate · Corporate and Other Laws · Registration of Charges

Sundaram Textiles Ltd. created a charge on its factory building in favour of Canara Bank on 1 March to secure a term loan. The company did not file particulars of the charge with the Registrar within the 30-day period. Which of the following is the correct position under the Companies Act, 2013?

The Registrar may allow registration within a further period of 270 days, after the initial 30 days, on payment of additional fees if sufficient cause is shown. The charge is not automatically void and the loan is not recalled, so late registration remains possible.

  1. AThe charge becomes void automatically and the loan must be repaid immediately
  2. BThe Registrar may allow registration within a further 270 days on payment of additional fees if the company shows sufficient cause for the delayCorrect
  3. CThe charge can never be registered once the 30-day period has lapsed
  4. DOnly the Tribunal can allow registration, and only within 60 days of creation

Explanation

The particulars must be filed within 30 days of creation. If missed, the Registrar can permit filing within a further 300 days from creation (i.e. 270 days beyond the first 30) on payment of additional fees. Option C is wrong because late registration is allowed; option A is wrong because the loan is not extinguished.

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