Chapter 6: Registration of Charges - Test 1: answer key

Question 1 · 2 marks · Chapter 6: Registration of Charges · medium

Scenario. Anekta Garments Ltd. (AGL), a public company engaged in the manufacture of ready-made garments, sought to expand its production capacity by importing advanced automated cutting machines from Germany. To finance the acquisition, AGL availed a term loan of ₹12 crore from Pragati Commercial Bank Ltd. (PCBL) on 1st April 2026. The loan agreement, executed on the same date, provided for the creation of a charge by way of hypothecation over the imported machines. The machines were shipped from Hamburg on 15th April 2026 and arrived at Nhava Sheva port on 10th May 2026. AGL executed the deed of hypothecation on 20th April 2026, and the charge was deemed to be created on that date. The company filed the particulars of charge in Form CHG-1 with the Registrar of Companies (ROC) on 25th May 2026. The ROC, upon scrutiny, noticed that the instrument evidencing the charge was authenticated by a certificate issued under the hand of the company secretary of AGL. The ROC sought clarification on the validity of the verification. Meanwhile, PCBL, unaware of the filing, also wrote to the ROC on 5th June 2026, requesting that the charge be registered in its favour, as it feared that AGL might delay the process. AGL had not defaulted in filing within the original 30-day period, but PCBL's application was made as a precaution. The ROC also noted that the charge was created over assets situated in India (the machines, once imported) and that the company had complied with the requirement of filing the instrument signed by both the company and the charge-holder. The board of AGL later realised that due to an internal oversight, a subsequent modification to the charge—enhancing the loan amount by ₹3 crore—was not registered within the prescribed time. The modification was agreed upon on 1st July 2026, but the form was filed only on 20th September 2026. The ROC initiated penal action for non-registration within the stipulated period. AGL contended that since the original charge was registered, the modification did not require separate registration.

In the case of Anekta Garments Ltd., the instrument evidencing the creation of charge was authenticated by a certificate issued under the hand of the company secretary. Is this verification valid, considering that the property charged (the machines) is situated in India after import?

1. No, because for property situated in India, the copy must be authenticated by a certificate issued under the hand of any director or company secretary of the company or an authorised officer of the charge-holder. (correct answer)
2. Yes, because a certificate by the company secretary is always sufficient for instruments relating to property in India.
3. No, because the verification must be done only by the charge-holder's authorised officer.
4. Yes, because the instrument was signed by both the company and the charge-holder, rendering separate verification unnecessary.

Answer: A — No, because for property situated in India, the copy must be authenticated by a certificate issued under the hand of any director or company secretary of the company or an authorised officer of the charge-holder.

Explanation. Section 77(1) read with Rule 4 requires that where the instrument or deed relates to property situated in India (whether wholly or partly), the copy shall be authenticated by a certificate issued under the hand of any director or company secretary of the company or an authorised officer of the charge-holder. The company secretary's certificate is therefore valid. Option (a)) correctly states the law. Option (b)) is too broad, as it does not mention the authorised officer alternative. Option (c) is incorrect because the company's director or secretary can also verify. Option (d) is wrong because verification is a separate requirement from signing the instrument.

Where it goes wrong. Students often assume that only the charge-holder can verify, or that signing the instrument eliminates the need for verification.

Authority. Section 77 of the Companies Act, 2013; Rule 4 of the Companies (Registration of Charges) Rules, 2014

Question 2 · 2 marks · Chapter 6: Registration of Charges · medium

Pragati Commercial Bank Ltd. (PCBL) wrote to the ROC on 5th June 2026, requesting registration of the charge in its favour, even though AGL had filed the charge on 25th May 2026. Which of the following is the correct legal position regarding PCBL's application under Section 78?

1. PCBL's application is maintainable because a charge-holder can always apply to the ROC if it apprehends delay.
2. PCBL's application is not maintainable because Section 78 applies only when the company fails to register the charge within 30 days of creation. (correct answer)
3. PCBL's application is maintainable only if the ROC rejects the company's filing.
4. PCBL's application is maintainable because the charge-holder has an independent right to register the charge at any time.

Answer: B — PCBL's application is not maintainable because Section 78 applies only when the company fails to register the charge within 30 days of creation.

Explanation. Section 78 provides that where a company fails to register the charge within the period of thirty days referred to in Section 77(1), the person in whose favour the charge is created may apply to the Registrar for registration. Since AGL filed the charge on 25th May 2026, within 30 days of creation (20th April 2026), there was no failure. Therefore, PCBL's application is not maintainable. Option (b) is correct. Option (a) is wrong because the right is not unconditional. Option (c) is incorrect because Section 78 is triggered by the company's failure, not by ROC rejection. Option (d) is wrong because the charge-holder's right is contingent on the company's default.

Where it goes wrong. Students may think the charge-holder can independently register the charge at any time, ignoring the precondition of the company's failure.

Authority. Section 78 of the Companies Act, 2013

Question 3 · 2 marks · Chapter 6: Registration of Charges · hard

AGL modified the charge on 1st July 2026 by enhancing the loan amount by ₹3 crore but filed the form only on 20th September 2026. The ROC initiated penal action. Which of the following statements is correct regarding the consequences of this delay?

1. No penalty is attracted because the modification was filed within 60 days of the modification.
2. The modification is void ab initio, and the original charge becomes unenforceable.
3. The company is liable to a penalty of ₹5 lakh and every officer in default to ₹50,000, as the modification was not registered within 30 days. (correct answer)
4. The company can regularise the delay by filing Form CHG-1 with ad valorem fees without any penalty.

Answer: C — The company is liable to a penalty of ₹5 lakh and every officer in default to ₹50,000, as the modification was not registered within 30 days.

Explanation. Section 79 requires modifications to be registered in accordance with Section 77, i.e., within 30 days. The modification was agreed on 1st July 2026 but filed on 20th September 2026, beyond 30 days (and even beyond the extended 60-day period). Section 86(1) imposes a penalty of ₹5 lakh on the company and ₹50,000 on every officer in default for contravention of Chapter VI. Option (c)) is correct. Option (a) is wrong because the 60-day extension applies only to charges created on or after 02.11.2018, and even then, additional fees are required; here the delay exceeds 60 days. Option (b)) is incorrect because non-registration does not make the modification void ab initio; it affects enforceability against creditors. Option (d) is wrong because ad valorem fees do not automatically exempt from penalty.

Where it goes wrong. Students may confuse the extension periods and forget the mandatory penalty under Section 86.

Authority. Section 79 of the Companies Act, 2013; Section 86 of the Companies Act, 2013

Question 4 · 2 marks · Chapter 6: Registration of Charges · medium

The ROC issued a certificate of registration in Form CHG-2 for the original charge. Subsequently, for the modification, the ROC issued a certificate in Form CHG-3. What is the evidentiary value of the certificate of modification (CHG-3)?

1. It is conclusive evidence only for the original charge, not for the modification.
2. It is merely a prima facie evidence and can be rebutted by the company.
3. It has no evidentiary value unless ratified by the Tribunal.
4. It is conclusive evidence that the requirements of Chapter VI regarding registration of modification have been complied with. (correct answer)

Answer: D — It is conclusive evidence that the requirements of Chapter VI regarding registration of modification have been complied with.

Explanation. Rule 6(2) provides that where the particulars of modification of charge are registered under Section 79, the Registrar shall issue a certificate of modification in Form CHG-3. Rule 6(3) states that the certificate shall be conclusive evidence that the requirements of Chapter VI and the rules made thereunder as to registration of modification have been complied with. Therefore, Option (d)) is correct. Options (b), (c), and (d) understate or misstate the conclusive evidentiary value.

Where it goes wrong. Students may think the certificate is only prima facie evidence or that it requires judicial ratification.

Authority. Rule 6 of the Companies (Registration of Charges) Rules, 2014

Question 5 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Zenith Agro Tech Pvt Ltd. (ZATPL), a private company dealing in agricultural machinery, had borrowed ₹8 crore from Krishi Vikas Bank (KVB) on 10th January 2026, creating a charge on its factory land and building situated in Nashik. The charge was duly registered with the ROC on 5th February 2026. On 1st March 2026, ZATPL acquired a parcel of agricultural land from a third party, Mr. Deshmukh, which was already subject to a registered charge in favour of another bank, Sampatti Bank, for a loan of ₹2 crore. The sale deed, executed on 1st March 2026, explicitly mentioned the existence of the charge, and the sale was effected with the permission of Sampatti Bank. ZATPL's directors believed that since the charge was already registered in the ROC's records (albeit in the name of the previous owner), no further action was required. However, the ROC issued a notice to ZATPL on 15th April 2026, pointing out that the company, as the acquirer of the property subject to a charge, had a duty to register the charge in its own name under Section 79 read with Section 77. ZATPL argued that the registration in the seller's name was sufficient compliance. During the same period, ZATPL also modified the terms of its existing charge with KVB on 1st May 2026, changing the rate of interest from 9% to 10.5%. The company filed Form CHG-1 for this modification on 25th May 2026. The ROC accepted the form but issued a certificate of modification in Form CHG-3. ZATPL questioned why a separate certificate was necessary when the modification was filed in the same form as the original charge. The company also failed to file the instrument of charge for the newly acquired property, leading to a dispute regarding the consequences of non-registration of the charge on the acquired property, especially in the event of liquidation of ZATPL.

ZATPL acquired agricultural land from Mr. Deshmukh, which was already subject to a registered charge in favour of Sampatti Bank. ZATPL's directors argued that since the charge was already registered, no further action was required. Is this contention correct under Section 79?

1. No, the company acquiring the property must get the charge registered in its own name in accordance with Section 77. (correct answer)
2. Yes, because the charge is already in the ROC's records and continues without any fresh registration.
3. Yes, because the sale was made with the permission of the charge-holder, which automatically transfers the charge.
4. No, the company must apply to the Central Government for rectification of the register.

Answer: A — No, the company acquiring the property must get the charge registered in its own name in accordance with Section 77.

Explanation. Section 79(a) provides that the provisions of Section 77 relating to registration of charges shall apply to a company acquiring any property subject to a charge. Therefore, ZATPL, as the acquiring company, must register the charge in its own name. The fact that the charge was already registered in the seller's name does not absolve the acquirer. Option (a)) is correct. Option (b)) is wrong because the registration is owner-specific. Option (c) is incorrect because permission to sell does not transfer the registration obligation. Option (d) is irrelevant; rectification under Section 87 is for different defaults.

Where it goes wrong. Students may assume that an existing registration continues automatically upon transfer of the property.

Authority. Section 79(a) of the Companies Act, 2013

Question 6 · 2 marks · Chapter 6: Registration of Charges · medium

ZATPL modified its existing charge with KVB on 1st May 2026 by changing the rate of interest. The company filed Form CHG-1 on 25th May 2026, and the ROC issued a certificate in Form CHG-3. ZATPL questioned the need for a separate certificate. Which statement correctly describes the ROC's action?

1. The ROC was wrong to issue CHG-3; the modification should have been recorded in CHG-2.
2. The ROC was correct because Rule 6 mandates the issue of a certificate of modification in Form CHG-3 for modifications registered under Section 79. (correct answer)
3. The ROC should have issued a fresh certificate of registration in CHG-2 for the modified charge.
4. No certificate is required for a change in the rate of interest.

Answer: B — The ROC was correct because Rule 6 mandates the issue of a certificate of modification in Form CHG-3 for modifications registered under Section 79.

Explanation. Rule 6(2) explicitly states that where the particulars of modification of charge are registered under Section 79, the Registrar shall issue a certificate of modification of charge in Form CHG-3. The ROC's action is therefore correct. Option (a) is wrong because CHG-2 is for registration of a charge, not modification. Option (c) is incorrect for the same reason. Option (d) is wrong because any modification, including a change in interest rate, requires registration and a certificate.

Where it goes wrong. Students may confuse Form CHG-2 (registration) with CHG-3 (modification).

Authority. Rule 6(2) of the Companies (Registration of Charges) Rules, 2014

Question 7 · 2 marks · Chapter 6: Registration of Charges · hard

ZATPL failed to file the instrument of charge for the newly acquired property (from Mr. Deshmukh). What is the consequence of non-registration of this charge in the event of liquidation of ZATPL?

1. The charge remains valid and enforceable against the liquidator because it was already registered by the previous owner.
2. The liquidator must automatically register the charge within 30 days of liquidation.
3. The charge becomes void against the liquidator and other creditors, and Sampatti Bank will be treated as an unsecured creditor to the extent of the unregistered charge. (correct answer)
4. The charge is valid but the company is liable to a penalty of ₹1 lakh.

Answer: C — The charge becomes void against the liquidator and other creditors, and Sampatti Bank will be treated as an unsecured creditor to the extent of the unregistered charge.

Explanation. Section 77(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 and a certificate of registration is given by the Registrar. Since ZATPL failed to register the charge in its own name as required by Section 79(a), the charge is void against the liquidator. Option (c)) correctly states the consequence. Option (a) is wrong because the previous registration does not protect the acquirer. Option (b)) is incorrect; the liquidator has no such duty. Option (d) misstates the penalty and the effect.

Where it goes wrong. Students may underestimate the effect of non-registration upon liquidation and assume the charge survives due to prior registration.

Authority. Section 77(3) of the Companies Act, 2013

Question 8 · 2 marks · Chapter 6: Registration of Charges · medium

For the modification of the charge with KVB (change in interest rate from 9% to 10.5%), ZATPL filed the form on 25th May 2026. The modification was agreed on 1st May 2026. Was the filing within the prescribed time?

1. No, because the modification required prior approval of the ROC before filing.
2. No, because it was filed after 24 days, which exceeds the 21-day limit.
3. Yes, because modifications have a 60-day filing window.
4. Yes, because it was filed within 30 days of the modification. (correct answer)

Answer: D — Yes, because it was filed within 30 days of the modification.

Explanation. Section 79(b) applies the provisions of Section 77 to modifications, meaning the form must be filed within 30 days of the modification. The modification was on 1st May 2026 and the filing on 25th May 2026—24 days later—is within 30 days. Option (d)) is correct. Option (b) invents a 21-day limit. Option (c) confuses the extension period (60 days) with the original period. Option (a)) is wrong because no prior ROC approval is required for filing.

Where it goes wrong. Students may incorrectly apply a 60-day window to all modifications or invent a shorter period.

Authority. Section 79(b) of the Companies Act, 2013; Section 77(1) of the Companies Act, 2013

Question 9 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Vayu Renewables Ltd. (VRL), a company engaged in wind energy generation, had created a floating charge on its stock of turbine components and trade receivables in favour of Urja Finance Ltd. (UFL) on 1st February 2026 to secure a working capital loan of ₹5 crore. The charge was registered with the ROC on 28th February 2026. On 1st April 2026, VRL defaulted on its repayment obligations, and UFL decided to enforce the security. The floating charge crystallised on 1st May 2026. VRL also faced a winding-up petition filed by another creditor on 15th June 2026. The ROC, upon receiving information about the crystallisation and the winding-up proceedings, sought to verify whether the charge had been properly registered and whether the crystallisation required any separate intimation. VRL contended that since the floating charge was already registered, the crystallisation did not necessitate any further filing. Meanwhile, UFL, realising that the company was in distress, filed an application under Section 78 to register the charge itself, claiming that VRL had failed to comply with certain conditions. However, the ROC pointed out that the original charge was already registered within 30 days, and therefore Section 78 was not applicable. UFL argued that the charge had become fixed upon crystallisation, and this change in the nature of the charge required a fresh registration. The ROC also noted that the company had not filed any intimation regarding the crystallisation. The company's legal team argued that the crystallisation of a floating charge is an automatic consequence of default and does not require a separate registration under Section 77. The ROC, however, was of the view that any modification in the terms or operation of the charge, including crystallisation, must be registered.

VRL created a floating charge on its stock and receivables, which was registered on 28th February 2026. Upon default, the charge crystallised on 1st May 2026. Does the crystallisation of a floating charge require a fresh registration under Section 77?

1. No, crystallisation is an automatic consequence of default and does not require fresh registration, though the charge-holder may inform the ROC. (correct answer)
2. Yes, because crystallisation converts the floating charge into a fixed charge, which is a new charge.
3. Yes, because every change in the nature of a charge must be registered within 30 days.
4. No, because floating charges are exempt from registration altogether.

Answer: A — No, crystallisation is an automatic consequence of default and does not require fresh registration, though the charge-holder may inform the ROC.

Explanation. Crystallisation of a floating charge occurs automatically upon default or liquidation, and it does not create a new charge requiring fresh registration. The charge was already registered. However, the charge-holder may inform the ROC for record. Option (a)) correctly states the position. Option (b)) is wrong because crystallisation is not a new creation. Option (c) is incorrect because not every change requires registration; only modifications to terms/conditions/extent/operation do. Option (d) is false; floating charges are registrable.

Where it goes wrong. Students may think crystallisation is a modification requiring registration, or that floating charges are unregistrable.

Authority. Section 77 of the Companies Act, 2013; Study Material, Chapter 6

Question 10 · 2 marks · Chapter 6: Registration of Charges · medium

UFL filed an application under Section 78 to register the charge itself, claiming that VRL had failed to comply with certain conditions. However, the original charge was already registered on 28th February 2026, within 30 days of creation (1st February 2026). Is UFL's application maintainable?

1. Yes, because the charge-holder can apply if it believes the company has not complied with conditions.
2. No, because Section 78 applies only when the company fails to register the charge within 30 days, which is not the case here. (correct answer)
3. Yes, because the crystallisation created a new charge that was not registered.
4. No, because only the company can apply for registration of a charge.

Answer: B — No, because Section 78 applies only when the company fails to register the charge within 30 days, which is not the case here.

Explanation. Section 78 is triggered only when the company fails to register the charge within 30 days. Here, the charge was registered within 30 days (creation on 1st Feb, registration on 28th Feb). Therefore, UFL's application is not maintainable. Option (b) is correct. Option (a) is too broad. Option (c) is wrong because crystallisation does not create a new charge requiring registration. Option (d) is false; the charge-holder can apply under Section 78 when the company defaults.

Where it goes wrong. Students may overlook the precondition of the company's failure under Section 78.

Authority. Section 78 of the Companies Act, 2013

Question 11 · 2 marks · Chapter 6: Registration of Charges · hard

The ROC sought to verify whether the crystallisation of the floating charge required any separate intimation. VRL argued that no intimation was necessary. Which statement is legally accurate?

1. Crystallisation must be intimated to the ROC in Form CHG-1 within 30 days.
2. Crystallisation is a modification of charge and must be registered in Form CHG-3.
3. Crystallisation does not require any intimation, but if the charge-holder enforces the security, the fact may be noted in the register. (correct answer)
4. Crystallisation automatically converts the charge into a fixed charge, and the company must file Form CHG-4.

Answer: C — Crystallisation does not require any intimation, but if the charge-holder enforces the security, the fact may be noted in the register.

Explanation. Crystallisation is not a registrable event per se. The charge was already registered. No separate intimation is mandated, although the ROC may record the fact if informed. Option (c)) is correct. Option (a) is wrong because no Form CHG-1 is required for crystallisation. Option (b)) is incorrect because crystallisation is not a modification under Section 79. Option (d) misuses Form CHG-4 (which is for satisfaction of charge).

Where it goes wrong. Students may confuse crystallisation with modification or satisfaction of charge.

Authority. Section 77 of the Companies Act, 2013; Study Material, Chapter 6

Question 12 · 2 marks · Chapter 6: Registration of Charges · medium

VRL faced a winding-up petition. If the floating charge had not been registered, what would be the effect in liquidation?

1. The charge would be valid because floating charges are exempt from registration during liquidation.
2. The charge would be valid but the company would be liable to a penalty of ₹10 lakh.
3. The liquidator would automatically register the charge within 30 days.
4. The charge would be void against the liquidator and other creditors, and the charge-holder would rank as an unsecured creditor. (correct answer)

Answer: D — The charge would be void against the liquidator and other creditors, and the charge-holder would rank as an unsecured creditor.

Explanation. Section 77(3) provides that an unregistered charge is void against the liquidator and other creditors. The charge-holder becomes an unsecured creditor. Option (d)) is correct. Option (a) is false; floating charges are registrable. Option (c) is wrong; the liquidator has no duty to register. Option (b)) misstates the consequence and penalty.

Where it goes wrong. Students may think floating charges have a privileged status in liquidation.

Authority. Section 77(3) of the Companies Act, 2013

Question 13 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Suragni Textiles Ltd. created a charge on its factory premises on 1st January 2026 and registered it within 30 days. Later, the company realised that the instrument filed with the ROC contained a typographical error in the description of the property. The company wants to rectify the error. Which of the following is the correct procedure?

Suragni Textiles Ltd. created a charge on its factory premises on 1st January 2026 and registered it within 30 days. Later, the company realised that the instrument filed with the ROC contained a typographical error in the description of the property. The company wants to rectify the error. Which of the following is the correct procedure?

1. The company can apply to the Central Government in Form CHG-8 for rectification of the register. (correct answer)
2. The company must file a fresh Form CHG-1 for the creation of charge.
3. The company must file Form CHG-4 for satisfaction and re-register the charge.
4. The company can simply file a corrigendum with the ROC without any prescribed form.

Answer: A — The company can apply to the Central Government in Form CHG-8 for rectification of the register.

Explanation. Section 87 empowers the Central Government to order rectification of the register of charges in cases of omission or misstatement of particulars. The application is made in Form CHG-8. Option (a)) is correct. Option (b)) is wrong because a fresh CHG-1 is for a new charge. Option (c) is incorrect; CHG-4 is for satisfaction. Option (d) is not a prescribed procedure.

Where it goes wrong. Students may confuse rectification with fresh registration or satisfaction.

Authority. Section 87 of the Companies Act, 2013; Rule 12 of the Companies (Registration of Charges) Rules, 2014

Question 14 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Nirvan Foods Ltd. created a charge on its movable assets on 1st March 2026 and filed Form CHG-1 on 10th April 2026. The ROC allowed the registration after collecting additional fees. On 1st May 2026, another creditor obtained a decree against Nirvan Foods Ltd. and attached the same assets. The charge-holder claims priority over the attaching creditor. Which statement is correct regarding the priority?

Nirvan Foods Ltd. created a charge on its movable assets on 1st March 2026 and filed Form CHG-1 on 10th April 2026. The ROC allowed the registration after collecting additional fees. On 1st May 2026, another creditor obtained a decree against Nirvan Foods Ltd. and attached the same assets. The charge-holder claims priority over the attaching creditor. Which statement is correct regarding the priority?

1. The charge-holder has priority because the charge was created before the attachment.
2. The subsequent registration of the charge does not prejudice the right acquired by the attaching creditor before the charge was actually registered. (correct answer)
3. The attaching creditor loses priority because the charge was eventually registered.
4. Priority depends on the date of the loan agreement, not registration.

Answer: B — The subsequent registration of the charge does not prejudice the right acquired by the attaching creditor before the charge was actually registered.

Explanation. The proviso to Section 77(1) states that any subsequent registration of a charge shall not prejudice any right acquired in respect of any property before the charge is actually registered. Since the charge was registered on 10th April 2026, and the attaching creditor acquired rights on 1st May 2026 (after registration), the charge-holder would normally have priority. However, if the attachment had occurred before registration, the attaching creditor would prevail. Option (b) correctly states the statutory rule. Option (a) is too simplistic. Option (c) is wrong. Option (d) is incorrect.

Where it goes wrong. Students may think creation date alone determines priority, ignoring the protection for rights acquired before registration.

Authority. Section 77(1) of the Companies Act, 2013 (proviso)

Question 15 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Prakash Power Ltd. created a charge on its assets on 15th December 2025 and registered it on 20th January 2026. The ROC issued a certificate of registration. Later, it was discovered that the company had submitted a forged instrument. What is the effect of the certificate of registration?

Prakash Power Ltd. created a charge on its assets on 15th December 2025 and registered it on 20th January 2026. The ROC issued a certificate of registration. Later, it was discovered that the company had submitted a forged instrument. What is the effect of the certificate of registration?

1. The certificate is conclusive evidence even if the instrument is forged.
2. The certificate is conclusive evidence only if the instrument is genuine.
3. The certificate is void ab initio because it was obtained by fraud. (correct answer)
4. The certificate can be cancelled by the ROC without any application.

Answer: C — The certificate is void ab initio because it was obtained by fraud.

Explanation. While Rule 6(3) states that the certificate is conclusive evidence of compliance with the requirements of Chapter VI, this presumption is rebuttable if the certificate is obtained by fraud or forgery. A forged instrument vitiates the registration. Option (c)) is correct. Option (a) is too absolute; conclusive evidence does not protect fraud. Option (b)) is not the legal test; the certificate is conclusive unless fraud is established. Option (d) is incorrect; cancellation requires legal proceedings.

Where it goes wrong. Students may treat the certificate as absolutely conclusive even in cases of fraud.

Authority. Rule 6(3) of the Companies (Registration of Charges) Rules, 2014; Section 77 of the Companies Act, 2013

Question 16 · 2 marks · Chapter 6: Registration of Charges · medium

Scenario. Dharam Livestock Ltd. had hypothecated its livestock to a bank, and the charge was registered. The company repaid the loan and disposed of the livestock but failed to file the satisfaction of charge within 30 days. The ROC came to know of the repayment. Can the ROC make an entry of satisfaction in the register of charges without intimation from the company?

Dharam Livestock Ltd. had hypothecated its livestock to a bank, and the charge was registered. The company repaid the loan and disposed of the livestock but failed to file the satisfaction of charge within 30 days. The ROC came to know of the repayment. Can the ROC make an entry of satisfaction in the register of charges without intimation from the company?

1. No, the ROC can act only upon intimation from the company.
2. Yes, but only after issuing a show-cause notice to the company and obtaining its consent.
3. No, only the charge-holder can apply for satisfaction.
4. Yes, under Section 83, the ROC may make an entry of satisfaction on evidence being shown to its satisfaction, even without intimation from the company. (correct answer)

Answer: D — Yes, under Section 83, the ROC may make an entry of satisfaction on evidence being shown to its satisfaction, even without intimation from the company.

Explanation. Section 83 empowers the Registrar to make entries regarding satisfaction and release of charge even if no intimation has been received from the company, provided evidence is shown to the Registrar's satisfaction. Option (d)) is correct. Option (a) is wrong because Section 83 dispenses with company intimation. Option (c) is incorrect; the ROC can act suo motu. Option (b)) is not a statutory requirement.

Where it goes wrong. Students may think the ROC is passive and can act only on company intimation.

Authority. Section 83 of the Companies Act, 2013

Question 17 · 2 marks · Chapter 6: Registration of Charges · medium

Scenario. Kaveri Constructions Ltd. created a charge on 1st August 2026 and filed the particulars on 20th August 2026. The ROC discovered that the instrument was not authenticated as required. What is the consequence of this defect?

Kaveri Constructions Ltd. created a charge on 1st August 2026 and filed the particulars on 20th August 2026. The ROC discovered that the instrument was not authenticated as required. What is the consequence of this defect?

1. The ROC may allow the company to rectify the defect by filing a properly authenticated instrument. (correct answer)
2. The registration is invalid, and the charge is void.
3. The charge is automatically registered, and the defect is curable only by paying a fine.
4. The company must file a fresh Form CHG-1 with a new fee.

Answer: A — The ROC may allow the company to rectify the defect by filing a properly authenticated instrument.

Explanation. If the instrument is not properly authenticated, the ROC may allow the company to rectify the defect, as the registration is not automatically invalid. Option (a)) is correct. Option (b)) is too harsh. Option (c) is not accurate; payment of fine alone does not cure verification defects. Option (d) is unnecessary; rectification is possible.

Where it goes wrong. Students may think a verification defect renders the registration void.

Authority. Section 77 of the Companies Act, 2013; Rule 4 of the Companies (Registration of Charges) Rules, 2014

Question 18 · 2 marks · Chapter 6: Registration of Charges · medium

Scenario. Meghna Pharma Ltd. created a charge on its patents (intangible assets) on 1st June 2026. The charge was not registered. The company argues that since the patents are intangible, registration is not required. Is this argument valid?

Meghna Pharma Ltd. created a charge on its patents (intangible assets) on 1st June 2026. The charge was not registered. The company argues that since the patents are intangible, registration is not required. Is this argument valid?

1. Yes, because only tangible assets can be charged.
2. No, Section 77 applies to charges on property or assets, whether tangible or otherwise, and situated in or outside India. (correct answer)
3. Yes, because patents are not considered 'property' under the Companies Act.
4. No, but registration is optional for intangible assets.

Answer: B — No, Section 77 applies to charges on property or assets, whether tangible or otherwise, and situated in or outside India.

Explanation. Section 77(1) explicitly covers charges on property or assets, whether tangible or otherwise. Patents are intangible assets and are therefore covered. Registration is compulsory. Option (b) is correct. Options (a) and (c) misstate the law. Option (d) is wrong because registration is mandatory, not optional.

Where it goes wrong. Students may think intangible assets are exempt from charge registration.

Authority. Section 77(1) of the Companies Act, 2013

Question 19 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Surya Energy Ltd. created a charge on 1st September 2026 and filed it on 25th September 2026. The ROC issued a certificate of registration. Later, the company defaulted, and the charge-holder sought to enforce the charge. A third party challenged the charge on the ground that the underlying instrument was not stamped. Does the certificate of registration cure the stamping defect?

Surya Energy Ltd. created a charge on 1st September 2026 and filed it on 25th September 2026. The ROC issued a certificate of registration. Later, the company defaulted, and the charge-holder sought to enforce the charge. A third party challenged the charge on the ground that the underlying instrument was not stamped. Does the certificate of registration cure the stamping defect?

1. Yes, because the certificate is conclusive evidence of compliance with all requirements.
2. Yes, because the ROC's scrutiny includes stamp duty verification.
3. No, the certificate conclusively proves compliance with Chapter VI requirements, but it does not cure defects under other laws such as stamp duty. (correct answer)
4. No, because the charge is void if the instrument is unstamped.

Answer: C — No, the certificate conclusively proves compliance with Chapter VI requirements, but it does not cure defects under other laws such as stamp duty.

Explanation. The certificate of registration is conclusive evidence that the requirements of Chapter VI and the rules made thereunder have been complied with. It does not cure defects under other statutes, such as insufficient stamping. Option (c)) is correct. Option (a) overstates the effect. Option (b)) is incorrect; the ROC does not adjudicate stamp duty. Option (d) is too broad; unstamped instruments may be admissible on payment of duty and penalty.

Where it goes wrong. Students may think the ROC certificate validates all legal formalities, including stamping.

Authority. Rule 6(3) of the Companies (Registration of Charges) Rules, 2014

Question 20 · 2 marks · Chapter 6: Registration of Charges · hard

Scenario. Trishul Infra Ltd. created a charge on its assets on 1st October 2026. The company filed the charge on 5th November 2026. The ROC registered it after collecting additional fees. On 1st December 2026, the company went into liquidation. The liquidator refuses to recognise the charge. Is the liquidator's refusal valid?

Trishul Infra Ltd. created a charge on its assets on 1st October 2026. The company filed the charge on 5th November 2026. The ROC registered it after collecting additional fees. On 1st December 2026, the company went into liquidation. The liquidator refuses to recognise the charge. Is the liquidator's refusal valid?

1. No, because the charge was registered before liquidation.
2. Yes, but only if the liquidator obtains a court order.
3. No, because the ROC's acceptance of additional fees validates the charge retrospectively.
4. Yes, because the charge was not registered within 30 days, and the delay makes it void against the liquidator. (correct answer)

Answer: D — Yes, because the charge was not registered within 30 days, and the delay makes it void against the liquidator.

Explanation. Section 77(3) provides that a charge is void against the liquidator unless it is duly registered and a certificate is given. Although the charge was registered (albeit late) before liquidation, the provision requires due registration. Late registration does not cure the voidness against the liquidator. Option (d)) is correct. Option (a) ignores the requirement of timely registration. Option (c) is wrong; additional fees do not retrospectively validate. Option (b)) is incorrect; the liquidator can act without a court order.

Where it goes wrong. Students may think registration at any time before liquidation protects the charge.

Authority. Section 77(3) of the Companies Act, 2013