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CA Intermediate · Corporate and Other Laws · Registration of Charges

Veda Textiles Ltd. created a charge on its factory land 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 normal 30-day period. What is the correct legal position regarding the Registrar's power to accept late registration?

The Registrar may allow registration within a further 300 days after the initial 30 days, on payment of additional fees, if sufficient cause is shown. Beyond that period, the matter goes to the Central Government for condonation, so a five-year window or an automatic validity rule is wrong.

  1. AThe Registrar can never register the charge after 30 days
  2. BThe Registrar may allow registration within a further 300 days on payment of additional fees, if the company shows sufficient cause for the delayCorrect
  3. CThe Registrar may allow registration at any time within 5 years on payment of additional fees
  4. DThe charge becomes automatically valid against the liquidator if the lender has possession of the loan documents

Explanation

Under the Companies Act, particulars of a charge must be filed within 30 days of creation. If the company delays, the Registrar may permit filing within a further period of 300 days on payment of additional fees. Beyond that, the company must apply to the Central Government for condonation. The option stating five years is incorrect because the extension is limited to 300 days.

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