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Related to charge

Renu Goel (Company Secretary) (207 Points)

14 December 2012

If a company has taken vehicle loan and bank is quite about the filing of charge...If the Company does not file form 8 what consequences can be??? Or should company file form 8....Please advice...

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8 Replies

Shankar BA(Hons) (CS) (278 Points)
Replied 14 December 2012

Generally the bank should file e-Form 8 within 30 days from the date of charge. If the bank fails to do so then the company which availed the loan has to approach the bank & appeal them to do so or otherwise inform them that the company would file the same. There is nothing serious which attracts consequences from ROC except penalty of Rs.5000/- to Rs.10000/-.

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Smriti Dhawan (Company Secretary ) (347 Points)
Replied 14 December 2012

Originally posted by : Renu Goel
	If a company has taken vehicle loan and bank is quite about the filing of charge...If the Company does not file form 8 what consequences can be??? Or should company file form 8....Please advice...

Dear Renu

There is no need to file Form 8 in your case as Section 124(4) specifies the charges which are required to be registered, and In the Vehicle loan availed by company , Vehicle is pledged with Bank and Section 125(4)(e) specfically says that pledge on movable property need not tobe registered.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 December 2012

Originally posted by : Smriti Dhawan
	Dear Renu There is no need to file Form 8 in your case as Section 124(4) specifies the charges which are required to be registered, and In the Vehicle loan availed by company , Vehicle is pledged with Bank and Section 125(4)(e) specfically says that pledge on movable property need not tobe registered.

Dear Smiriti,

Let me correct you conceptually. In the above case vehicle is hypothecated with the company for which charge is required to be filed under section 125(4)(e). Pledge is a situation where possession of article is given away which is normally not happen in the case of vehicle loan whereas hypothecation is something where borrower can enjoy the property under a charge on his/her property.

I would request you to refer page no. 21 (21 of 23) of my handout attached herewith for the difference between charge, hypothecation, pledge and mortgage.

So it is advisable to file form-8 with ROC in case of vehicle loans.

Attached File : 132189 1100327 company law handout colour.pdf downloaded: 156 times

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Shankar BA(Hons) (CS) (278 Points)
Replied 14 December 2012

Mr.Ankur Garg, Thank you very much for your MS Word Document.

Renu Goel (Company Secretary) (207 Points)
Replied 14 December 2012

Ankur Sir,

Please do let me know if the company doesn't file form 8 as the bank is quiet about it, what are the consequences that company can face???

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 14 December 2012

Originally posted by : Renu Goel
	Ankur Sir, Please do let me know if the company doesn't file form 8 as the bank is quiet about it, what are the consequences that company can face???

Consequences of Non-Registration of charge:

If you fail to registrar a compulsorily registrable then the same will be punishable with fine. As per section 142 a company or every officer of company is in default shall be liable to fine upto Rs 5000 for each day of continuing default. A further fine of Rs. 10000 may be impose on the company and every officer for other defaults relating to registration of charges.
A compulsorily registrable, which is not registered, is void against creditors. But still creditors can recover their dues. However the benefit of the charged security will not be available to them.
Obligation of the company shall remain as it is to fulfill the terms of contract even if charge is not registered.