Hypothecation for car loan

Guest (Querist) 25 August 2012 This query is : Resolved
A company has obtained car loan against hypothecation of the said vehicle.The Bank has executed a Loan Agreement and RC was endorsed in its favour.However, no Hypothecqation - Deed was executed.The Bank is insisting the company to arrange for registration of the charge?Can it be filed in the absence of the Hypothecation Deed?

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R.K Nanda (Expert) 25 August 2012
No,only HD is enough.

malipeddi jaggarao (Expert) 30 August 2012
Bank would have obtained some security document while granting the car loan to the company. Since it is a fixed asset, the company needs to register the charge of the bank. You can obtain a copy of document from the Bank. Or you ask them in the absence of the document how to file charge with Registrar.

Guest (Querist) 30 August 2012
Hypothecation is an extended form of pledge.In this case although the real possession of the vehicle remains with the banker,but constructive possession remains with the borrower.Hence, it is exempted from registration vide section 125(4)(e)of the Companies Act,1956.[Ref:Ramaiya's Guide to the Companies Act,1956 page 1809 in his 17th edition(2010)as well as clarification given by the CLB in their circular no.8(6)/125?60-PR dated 7th July,1960

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