Effects of
registration of charge: Once
the particulars of charge have been registered by the Registrar of Companies,
it has the following effects:
·
that while dealing with the company in respect of any property subject
to a registered charge, the dealer is deemed to have notice of such charge as
from the date of such registration.
·
Where any person acquires a property or any part thereof, or any share
or interest therein, which is subject to charge under section 125(4) and charge
has been registered with Registrar, the acquirer shall be deemed to have notice
of the charge as from the date of such registration. [Section 126]
Effect of Non-registration of Charge
– Consequences of Non-registration of a Charge:
1. The money secured becomes immediately
payable: According to company 125 if the charge becomes valid then the
money secured thereby shall become immediately payable. [section 125(3)]
Further nothing in section 125(1) shall prejudice
any contract or obligation for payment of the money secured by the charge.
[section 125(2)]
2. The charge is void: - the charge
becomes void, if they are not registered with the Registrar of Companies. It
shall be void as against the subsequent encumbrances as well as against the
liquidator and the creditors [section 125(1)]
3. No right of lien on the document of title: If a charge
becomes void for non-registration then no right of lien can be claimed on the
documents of title as they are only ancillary to and were delivered pursuant to
charge.
4. Penalties:- if any default is committed in
filing the Registrar of Companies for the registration the particulars:-
(i) Of any charge created by the company.
(ii) Or of the
payment of satisfaction of a debt in respect of which a charge has been
registered.
(iii) Or of the
issue of debenture of a series, requiring registration with the registrar.
Then till the registration has been effected
on the application of some other person. Then the company and every officer who
is in default shall be punishable with fine which may extend to Rs. 5,000 for
every year.
If a company conducts a default in complying
with any other requirement to registration with the Registrar of Companies of
any charge created by the company, then the company and every officer who is in
default will be punishable with a fine of Rs. 10,000.
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 mortgage
or charge becomes void as against the liquidator and other creditors. The
omission to register does not prejudice any contract or obligation for
repayment of the money secured by the charge, and where the charge becomes void
for want of registration, the money secured by it immediately becomes payable.
Where an earlier charge and a subsequent charge have been created in
succession in favour of the same charge holder, if, on account of
non-registration or other cause, the later charge is or becomes void, the
equitable doctrine of revival will apply so as to revive the earlier charge.
Where a charge is void for non-registration, no right of lien can be claimed on
the documents of title, as they were only ancillary to the charge and were
delivered pursuant to the charge. The default is also punishable under section
142.
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