Registration of Charges
1. It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation:
Provided that: the Registrar may, on an application by the company, allow such registration to be made within a period of three hundred days of such creation on payment of such additional fees as may be prescribed:
Provided further that: if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time in accordance with section 87:
Provided also that any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered.
2. Where a charge is registered with the Registrar under sub-section (1 ), he shall issue a certificate of registration of such charge in such form and in such manner as may be prescribed to the company and, as the case may be, to the person in whose favour the charge is created.
3. Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator or any other creditor unless it is duly registered under sub-section (1 ) and a certificate of registration of such charge is given by the Registrar under sub-section (2 ).
4. Nothing in sub-section (3 ) shall prejudice any contract or obligation for the repayment of the money secured by a charge.
Legal Commentary & Landmark Judgments: Section 77
Section 77 establishes the statutory obligation to register every charge created on corporate property or assets with the Registrar of Companies within thirty days, forming the legal basis of security perfection.
Crucially, sub-section (3) provides that no charge created by a company shall be taken into account by the liquidator or any other creditor unless it is duly registered under this section and a certificate of registration is issued by the Registrar under sub-section (2).
Section 77 is the cornerstone of corporate lending and banking in India. Under both the Companies Act and the Insolvency and Bankruptcy Code (IBC), a bank holding an unregistered mortgage or hypothecation cannot enforce its security interest against the Resolution Professional or Liquidator. Strict adherence to the thirty-day registration window in MCA Form CHG-1 is an indispensable condition of loan documentation.