04 August 2011
While financing to a private limited company, besides endorsing the hypothecation over a movable asset (commercial vehicles ie trucks or commercial cash vans), do we need to create charge in ROC for such loans, please clarify.
04 August 2011
As per section 125(4)(e) of the Companies Act, 1956 a charge not being a pledge on movable property of company is required to be registered under the said Act. In the instant case, the vehicle has been hypothecated to the bank. In the case of Ideal Bank Ltd.(in liq.) vs. Pride of India Pictures Ltd. (in liq.) it was held that hypothecation amounts to pledge though constructive and hence registration of charge is not required. However, such charge can nevertheless be registered by the ROC ,if applied for, as per clarification given by DCA. (refer pp 1495 -A. Ramaiya' guide to CA-2006 edn.)
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