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  • Effects of Non-Registration of Charge

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    If a charge which requires registration is not registered, it does not mean that the transaction is altogether void or the debt not recoverable. As against the company itself, so long as the company does not go into liquidation, the mortgage or charge is enforceable. Unless and until a charge is registered with the Registrar of companies, it has no sanctity notwithstanding the fact that such charge was brought into vogue by reason of agreement interparties.

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    If a charge which requires registration is not registered, it does not mean that the transaction is altogether void or the debt not recoverable. As against the company itself, so long as the company does not go into liquidation, the mortgage or charge is enforceable. Unless and until a charge is registered with the Registrar of companies, it has no sanctity notwithstanding the fact that such charge was brought into vogue by reason of agreement interparties.

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    3K views1 page

    Effects of Non-Registration of Charge

    Uploaded by

    peaceendswithme
    If a charge which requires registration is not registered, it does not mean that the transaction is altogether void or the debt not recoverable. As against the company itself, so long as the company does not go into liquidation, the mortgage or charge is enforceable. Unless and until a charge is registered with the Registrar of companies, it has no sanctity notwithstanding the fact that such charge was brought into vogue by reason of agreement interparties.

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    Effects of Non-Registration of Charge

    If a mortgage or charge which requires registration is not registered, it does not mean that the transaction is altogether void or the debt not recoverable. The only consequence is that the security created by the Charge becomes void against the liquidator or creditor.1 As against the company itself, so long as the company does not go into liquidation, the mortgage or charge is enforceable.2 The omission to register does not prejudice any contract any contract or obligation for repayment of the money secured by the charge, and where the charges becomes void for want of registration, money secured by it immediately becomes payable. As a result of winding up, a creditor under an unregistered charge becomes an unsecured creditor.3 In absence of any registration of charge u/s 125, on date of winding up order, Official Liquidator would be justified in treating such charge as ordinary creditor.4 . Unless and until a charge is registered with the Registrar of Companies, it has no sanctity notwithstanding the fact that such charge was brought into vogue by reason of agreement interparties between the two creditors or by registration of guarantee bond.5 Charges were held to be void against the liquidator or creditor unless registered. Court observed that filing of copy of document of charge with Registrar is not the formality but a definite legal requirement and that non-filing creates a certain legal impediments.6

    1 2

    Official Liquidator v. Union Bank Of India, AIR 1988 NOC 78 (Ker). Official Liquidator v. Bharatpur Princess Trust, Mysore, (1971) 41 Com Cases 359 (Mad). 3 Kerala State Financial Enterprises Ltd. v. Official Liquidator, AIR 2007 SC 63. 4 Rajasthan Financial Corporation v. Official Liquidator, Jaipur Spinning & Weaving Mills Ltd. (In Liquidation) (1997) 88 Comp Cas 192 (Raj) 5 A.P. State Financial Corpn.v. Mopeds India Ltd. (2005) 124 Comp Cas 833 (AP) 6 Antifriction Bearing Corporation Ltd v. State Of Maharastra (1999) 20 Scl, 373 (Bom)

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