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CA Intermediate · Corporate and Other Laws · Registration of Charges

Sunrise Textiles Pvt Ltd, Surat, borrowed Rs 2 crore from Bharat Finance Ltd and created a charge on its factory land on 1 April. The company did not file the particulars of the charge with the Registrar within the initial 30-day period. Which statement best describes the legal position under the Companies Act, 2013?

If the 30-day period is missed, the Registrar can permit registration within a further 270 days, making 300 days from creation, on payment of additional fees. After that, condonation of delay must be sought from the Central Government. An unregistered charge cannot be enforced against the liquidator or creditors.

  1. AThe charge becomes void immediately and cannot be registered at all
  2. BThe Registrar may allow registration within a further 270 days of creation on payment of additional feesCorrect
  3. CThe charge may be registered at any time without limit if the lender pays a penalty
  4. DThe charge remains valid against the liquidator even if never registered

Explanation

The charge must be filed within 30 days of creation. If missed, the Registrar may permit registration within a further 300 days from creation on payment of additional fees, which in total is 270 days beyond the first 30. Beyond this, the company must apply to the Central Government for condonation. Registration is not allowed without limit, and an unregistered charge is not effective against the liquidator or other creditors.

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