Charge

Question 1

Crystallization of Charge

Answer 1

Crystallization means the charge becoming fixed and which can be used.
a) When company goes into liquidation
b) Ceases to carry on biz.
c) When creditors/debenture holders enforce their security
d) On the happening of the event specified in the deed

Question 2

Registration of Charge (Sec. 77)

Answer 2

Register charge, signed by the company and its charge holder, in Form CHG-1 and Debenture charge in Form CHG- 9 within 30 days of its creation and ROC may grant further extension of 30 days. Else, register in further 60 days by paying ad valorem fees

Question 3

Application for Registration of Charge (Sec. 78)

Answer 3

If company fails to register within time limit, charge Holder may apply
On receipt of such application, ROC shall forward the notice to the Company and within 14 days after the notice, the ROC shall register/shows a sufficient case for not registering a charge.
The charge holder can recover the amount of fees paid for registering the charge.

Question 4

Consequence of Non-Registration

Answer 4

A) No legal recognition to the liquidator/creditor
B) Creditor shall be reduced to unsecured creditor
C) however this shall not any contract or obligation for repayment of money secured by charge.

Question 5

Satisfaction of Charge

Answer 5

Company should give intimation of payment/satisfaction within 30 days of satisfaction in form CHG- 4

Question 6

Section 83

Answer 6

ROC may release charge even if no intimation is given, if evidence is shown to the satisfaction of ROC that:
A) Debt is satisfied B) Property is released from charge
ROC shall inform to affected parties within 30days of satisfaction of charge

Question 7

Penalty for Contravention - SECTION 86

Answer 7

Company - Rs. 5Lakh
OID - Rs. 50,000
Sec. 447 shall apply in case of Fraud