Company law
hiral gediya
(Querist) 19 March 2013
This query is : Resolved
sec 125 charge
what is meaning of interest in the property
Adv k . mahesh
(Expert) 19 March 2013
here with examples and case law
SECTION 125:
This section states that certain charges shall be void against the creditors and liquidators, unless they are registered. In respect of such charges registration becomes compulsory. This section makes it obligatory for the company to file particulars of the charge together with the instrument creating the charge with the concerned Registrar of Companies for registration. The registration of charges will depend upon the nature of rights acquired in the assets of the Company.
This section does not apply to charge created by partnership firm over its assets, merely because one of the partner may be a limited company is not the owner of the assets.
Essential conditions for Registration of charges
1. Charge for securing any issue of debenture.
2. Charge on uncalled share capital of company.
3. Charge on immovable property, where ever situated, including any interest therein.
4. Charge on book debts of company.
5. Charge on movable property (not a Pledge of company).
6. Floating charge on the undertaking or any property including stock in trade.
7. Charge on calls made but not paid.
8. Charge on a ship or any interest therein.
9. Charge on goodwill, patent licence, copyright or trade mark.
Consequences of Non-registration:
Non-registration would not prejudice any contract or obligation for payment of money secured by the charge and where the charge becomes void for registration, the debt secured becomes immediately payable. Also a charge on becoming void, no right if lien can be claimed on the documents of title as they were only ancillary to the charge and were delivered in pursuant to the charge.
If a registerable charge is not registered, the transaction does not become void or debt does not become irrecoverable but the security created by the charge or mortgage becomes void against liquidator and creditors.
PENALITY
It is mandatory for a company to file the particulars of charge and failure to do so or contravene the provisions of section 125 are punishable under sectio142 with fine extending up to rupees Five Hundred for every day of default.
CASE LAW
ANTIFRICTION BEARING CORPORATION LTD V. STATE OF MAHARASTRA (1999) 20 SCL, 373 (Bom)
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. Court also observed that where the company executed the debenture trust deed in Gujarat and was duly registered after paying stamp duty and where company wanted to issue debentures in Mumbai, company’s registered office being in Mumbai, Company was asked to pay stamp duty a prescribed on Maharashtra State.
R.K Nanda
(Expert) 19 March 2013
academic query.
Raj Kumar Makkad
(Expert) 21 March 2013
No reply against the purely academic query. Post the facts otherwise some experts may paste here material available on google which you can also do easily.
