I would be thankful if the Members could clarify my doubt, which is given below:
A public limited company has availed vehicle loan of Rs.10.00 lacs from a Nationalised Bank. The said vehicle has been offered to the Bank as security for due repayment and discharge of the loan facility. The company has executed requisite documents with the bank at the time of availing the loan facility.
I request you to kindly clarify whether it is mandatory for the company to file Form CHG-1 with ROC / MCA for creating necessary charge in favour of the bank in connection with availing of vehicle loan facility.
The bank officials are not insisting for creation of such charge. Some of my friends say creating charge is mandatory under the new act. Some say it is not mandatory thus creating a confusion in our minds. In view of the above I request the members of this forum to kindly clarify my above said doubt.
27 February 2015
Yes mandatory. Section 2(17) defines 'charge' to include a mortgage. Hypothecation of vehicle is 'mortgage'. Clause 8 (a) of e-form CHG-1 has a sub clause viz., Motor vehicle (hypothecation).
CAclubindia
