Lease

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CA Bharti Sharma (Querist)
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08 February 2014 If a company has taken an asset on finance lease then can it be given as security for raising loan and if yes, whether its charge registration is required under section 125 of Companies Act, 1956?

CA Galib Mirza

CA Galib Mirza (Expert)
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08 February 2014 Dear Bharti,
As a company has taken an asset on finance lease basis, the risk and reward has been trf. to the lessee(company) hence if there are also indications regarding the purchase of such asset at the end of tenure, then you can also mortgage such machinery.
Provided if bankers asks you to repay the lease rentals first w.r.t. such asset then you may not be able to raise finance.
If such machine is mortgaged in first case then creation of charge is mandatory