Effect of non-registration of charge to creditor
Effect of non-registration of charge to creditor under IBC
Volkswagen Finance Private Limited Vs. Shree Balaji Printopack Pvt. Ltd.
*'Charge'* was not registered as per the provisions of Section 77 (1) of the Companies Act 2013 and as envisaged under the IBC Code, the Creditor cannot be treated as a 'Secured Creditor'. Even if vehicle hypothecation registered under the Motor Vehicles Act, 1988, it is mandatory to register with ROC to claim as 'Secured Creditor under Section 52 of IBC'
Penal Provision for company Default
Section 86 of the Act, provides for punishment for contraventions of Section 77 of the Act. It is provided that, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
Registration of Charge
Form and manner of Registration
Extension of time for Registration
However, if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time for filing of the particulars or for the registration of the charge from the Central Government (in eForm CHG-8) in accordance with Rule 12 and Section 87 of the Act. The eForm CHG-1 for registration of charge, will be processed by the Registrar of Companies office after the order of Central Government for approval for condonation of delay (in eForm INC 28) has been filed with the Registrar of Companies. The Central Government can provide for extension of time on the ground that the omission to file with the Registrar of Companies, the particulars of any charge or, the omission to register such charge, was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the position of creditors or shareholders of the company, or any other grounds, it is just and equitable to grant relief.