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CA Intermediate · Corporate and Other Laws · Registration of Charges

Sundaram Textiles Ltd. created a mortgage on its factory land in favour of Canara Bank on 1 March to secure a term loan. The company did not file the particulars of the charge with the Registrar within the 30-day period, and the delay is now 45 days from the date of creation. Under the Companies Act, 2013, what is the correct position about registration?

The Registrar may allow registration within 300 days of creation, that is, a further 270 days after the initial 30, on payment of additional fees. Either the company or the charge holder can apply. Being a bank lender gives no exemption from registration.

  1. AThe charge can never be registered once 30 days have passed
  2. BThe Registrar can allow registration within a further 270 days on payment of additional fees, and the charge can be registered by the company or the charge holderCorrect
  3. CRegistration after 30 days is possible only through an order of the Supreme Court
  4. DThe charge is automatically valid without registration because it is in favour of a bank

Explanation

The particulars must be filed within 30 days of creation. If missed, the Registrar may permit filing within a further 300 days from creation (i.e., 270 days after the first 30) on payment of additional fees. Either the company or the charge holder may apply. Beyond that, the company must approach the Central Government for condonation. The charge is not exempt merely because the lender is a bank.

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