Companies Act Section 77 — Duty to register charges, etc
CHAPTER VI REGISTRATION OF CHARGES
Commercial / Corporate
Summary
Sub-section (1) requires every company that creates a charge on its property, assets, or undertakings—whether the property is in India or abroad, and whether the charge is created in India or abroad—to register the details of that charge with the Registrar. The particulars must be signed by both the company and the person holding the charge, and must be submitted along with any instruments that created the charge. This registration must be done within thirty days of creating the charge, in the prescribed form, on payment of the prescribed fees, and in the prescribed manner.
The first proviso to sub-section (1) allows the Registrar to permit registration beyond the thirty-day period, but only if the company applies for it. For charges created before the commencement of the Companies (Amendment) Act, 2019, the registration may be allowed within three hundred days of the charge's creation. For charges created on or after that commencement, the registration may be allowed within sixty days of the charge's creation, but in both cases additional fees as prescribed must be paid.
The second proviso to sub-section (1) deals with situations where registration is not completed within the extended periods mentioned in the first proviso. If the charge was created before the commencement of the Companies (Amendment) Act, 2019, and registration was not done within the three hundred days, then the registration must be made within six months from the date of that commencement, on payment of additional prescribed fees, which may vary for different classes of companies. If the charge was created on or after that commencement and registration was not done within the sixty days, the Registrar may, on application, allow registration within a further period of sixty days, but only after payment of prescribed ad valorem fees.
The third proviso to sub-section (1) states that if a charge is registered later than the prescribed time, such later registration will not affect any rights that were acquired over the property before the charge was actually registered. The fourth proviso to sub-section (1) says that this entire section does not apply to charges that are prescribed in consultation with the Reserve Bank of India.
Sub-section (2) provides that once a charge is registered under sub-section (1), the Registrar must issue a certificate of registration to the company and to the person in whose favour the charge was created. This certificate must be issued in the prescribed form and manner.
Sub-section (3) states that, regardless of what any other law says, a charge created by a company will not be considered by a liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, or by any other creditor, unless the charge has been properly registered under sub-section (1) and the Registrar has issued a certificate of registration under sub-section (2).
Sub-section (4) clarifies that nothing in sub-section (3) affects any contract or obligation to repay the money that is secured by the charge. In other words, even if a charge is not registered and therefore not recognised, the underlying debt or repayment obligation still stands.
Official Text
(1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation: 5[Provided that the Registrar may, on an application by the company, allow such registration to be made—
(a) in case of charges created before the commencement of the Companies (Amendment) Act, 2019, within a period of three hundred days of such creation; or
(b) in case of charges created on or after the commencement of the Companies (Amendment) Act, 2019, within a period of sixty days of such creation, on payment of such additional fees as may be prescribed:
Provided further that if the registration is not made within the period specified—
(a) in clause (a) to the first proviso, the registration of the charges shall be made within six months from the date of commencement of the Companies (Amendment) Act, 2019, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies;
(b) in clause (b) to the first proviso, the Registrar may, on an application, allow such registration to be made within a further period of sixty days after payment of such ad valorem fees as may be prescribed.] Provided also that any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered: 1[Provided also that this section shall not apply to such charges as may be prescribed in consultation with the Reserve Bank of India.]
(2) Where a charge is registered with the Registrar under sub-section (1), he shall issue a certificate of registration of such charge in such form and in such manner as may be prescribed to the company and, as the case may be, to the person in whose favour the charge is created.
(3) Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator 2[appointed under this Act or the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] or any other creditor unless it is duly registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar under sub-section (2).
(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the money secured by a charge.