Chapter 6: Registration of Charges - Test 2: answer key

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

Scenario. Vardhman Steel Ltd. (VSL), a public company, created a charge on its factory land and machinery in favour of PNB Housing Finance Ltd. (PHFL) on 1st February 2026 to secure a term loan of ₹15 crore. The charge was not registered within the statutory period of 30 days. On 15th March 2026, PHFL, realising the company's oversight, applied to the Registrar of Companies (ROC) under Section 78 for registration of the charge. The ROC issued a notice to VSL on 20th March 2026, asking the company to show cause why the charge should not be registered. VSL responded on 25th March 2026, stating that it had already initiated the registration process and that PHFL's application was unnecessary. However, VSL had not actually filed any documents. The ROC, after considering the response, registered the charge on 5th April 2026 and informed VSL. PHFL paid a registration fee of ₹50,000 and additional fees of ₹20,000. PHFL then demanded reimbursement from VSL, which the company refused. Meanwhile, on 1st April 2026, a third party, Mr. Arun, purchased a portion of VSL's factory land from the company without checking the ROC register. After the purchase, Mr. Arun discovered that the land was subject to PHFL's charge. He claimed that since he was unaware of the charge, it should not be enforceable against him. VSL argued that Mr. Arun should have inspected the register and that he is deemed to have notice of the charge from the date of its registration.

In the case of Vardhman Steel Ltd., PHFL applied to the ROC under Section 78 for registration of the charge after the company failed to register it within 30 days. What is the correct procedure the ROC must follow upon receiving PHFL's application?

1. The ROC must give notice to the company, and if no objection is received, register the charge within 14 days after giving notice. (correct answer)
2. The ROC must immediately register the charge without any notice to the company.
3. The ROC must refer the matter to the Tribunal for approval before registration.
4. The ROC must reject the application if the company has started the registration process, even if incomplete.

Answer: A — The ROC must give notice to the company, and if no objection is received, register the charge within 14 days after giving notice.

Explanation. Section 78 provides that on receipt of an application from the charge-holder, the Registrar shall give a notice to the company. If no objection is received, the Registrar shall allow registration within 14 days after giving notice. Option (a)) correctly states the procedure. Option (b)) is wrong because the company must be heard. Option (c) is incorrect; no Tribunal approval is required. Option (d) is wrong because the ROC has discretion to register if the company fails to show sufficient cause.

Where it goes wrong. Students may think the ROC can register immediately without notice or that the company's incomplete action bars the charge-holder.

Authority. Section 78 of the Companies Act, 2013

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

PHFL paid a registration fee of ₹50,000 and additional fees of ₹20,000. It demanded reimbursement from VSL, which refused. Can PHFL recover these fees from VSL?

1. No, because the charge-holder voluntarily made the application and must bear the costs.
2. Yes, Section 78 expressly entitles the charge-holder to recover from the company the amount of any fees or additional fees paid to the Registrar. (correct answer)
3. Yes, but only if the company had consented to the application.
4. No, because the fees are prescribed and cannot be recovered from the company.

Answer: B — Yes, Section 78 expressly entitles the charge-holder to recover from the company the amount of any fees or additional fees paid to the Registrar.

Explanation. Section 78 provides that in case registration is effected on an application made by the holder of charge, such person shall be entitled to recover from the company the amount of any fees or additional fees paid by him to the Registrar for the purpose of registration of charge. Option (b) is correct. Options (a), (c), and (d) contradict the express statutory right.

Where it goes wrong. Students may overlook the charge-holder's statutory right to reimbursement under Section 78.

Authority. Section 78 of the Companies Act, 2013

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

Mr. Arun purchased a portion of VSL's factory land on 1st April 2026 without checking the ROC register. The charge was registered on 5th April 2026. Mr. Arun claims he had no notice of the charge. Is he deemed to have notice?

1. No, because he purchased the property before the charge was registered, so he is not affected.
2. Yes, from the date of registration of the charge, i.e., 5th April 2026, and he cannot claim ignorance after that date.
3. No, because the charge was registered after he purchased the property. (correct answer)
4. Yes, from the date of creation of the charge, i.e., 1st February 2026.

Answer: C — No, because the charge was registered after he purchased the property.

Explanation. Section 80 provides that any person acquiring property subject to a registered charge shall be deemed to have notice of the charge from the date of such registration. Since Mr. Arun purchased the property on 1st April 2026, before registration on 5th April 2026, he is not deemed to have notice as of the purchase date. However, after registration, the charge becomes public notice. The correct answer is (a) because the deemed notice operates only from the date of registration, and Mr. Arun acquired the property before that date. Option (b) is incorrect because it applies notice from the registration date but ignores that he purchased earlier. Option (a)) is partially correct but incomplete. Option (d) is wrong because deemed notice starts from registration, not creation.

Where it goes wrong. Students may think deemed notice dates back to creation of charge, or that it applies retrospectively to prior purchasers.

Authority. Section 80 of the Companies Act, 2013

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

VSL argued that Mr. Arun should have inspected the register and is deemed to have notice of the charge. However, the charge was registered on 5th April 2026, and Mr. Arun purchased on 1st April 2026. Which statement correctly reflects the law on deemed notice under Section 80?

1. Deemed notice applies from the date of creation of the charge, so Mr. Arun had notice.
2. Deemed notice does not apply if the purchaser did not actually inspect the register.
3. Deemed notice applies to all persons dealing with the company, regardless of the date of acquisition.
4. Deemed notice applies from the date of registration, but only to persons acquiring property after that date. (correct answer)

Answer: D — Deemed notice applies from the date of registration, but only to persons acquiring property after that date.

Explanation. Section 80 states that where a charge is registered, any person acquiring the property shall be deemed to have notice of the charge from the date of such registration. Therefore, deemed notice operates prospectively from the registration date. Mr. Arun acquired the property before registration, so he is not deemed to have notice. Option (d)) is correct. Option (a) is wrong because notice starts from registration. Option (c) is too broad. Option (b)) is incorrect; deemed notice does not depend on actual inspection.

Where it goes wrong. Students may confuse the date of creation with the date of registration for deemed notice.

Authority. Section 80 of the Companies Act, 2013

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

Scenario. Suryodaya Finance Ltd. (SFL) had extended a working capital loan of ₹10 crore to Aarambh Textiles Ltd. (ATL) on 1st January 2026, secured by a first charge on ATL's stock and receivables. The charge was registered on 25th January 2026. Over the next few months, several changes were made to the loan agreement: (i) On 1st March 2026, the interest rate was increased from 9% to 10.5% per annum; (ii) On 15th April 2026, the repayment schedule was revised, extending the tenure by one year; (iii) On 1st May 2026, SFL assigned its rights under the charge to another lender, ABC Bank, with ATL's consent. ATL registered the change in interest rate on 25th March 2026 (within 30 days) and the revised repayment schedule on 10th May 2026 (within 30 days). However, the assignment of rights to ABC Bank was not registered. The ROC, during a routine inspection, noticed the unregistered assignment and issued a notice to ATL. ATL contended that the assignment did not amount to a modification of the charge and therefore did not require registration. Meanwhile, a creditor of ATL, Mr. Bansal, who had obtained a decree against the company, sought to attach the stock and receivables. ABC Bank claimed priority as the assignee of the charge, even though the assignment was unregistered.

ATL increased the interest rate on the loan from 9% to 10.5% on 1st March 2026 and registered the change on 25th March 2026. Is this change a 'modification' requiring registration under Section 79?

1. Yes, a change in the rate of interest (other than bank rate) is a modification requiring registration. (correct answer)
2. No, because a change in interest rate is not a modification of charge.
3. Yes, but only if the change is approved by the ROC.
4. No, because the change was registered within 30 days.

Answer: A — Yes, a change in the rate of interest (other than bank rate) is a modification requiring registration.

Explanation. Section 79(b) requires registration of any modification in the terms or conditions, extent or operation of a charge. Rule 6 clarifies that variation in the rate of interest (other than bank rate) is a modification. Therefore, the change from 9% to 10.5% is a modification and requires registration. Option (a)) is correct. Option (b)) is wrong. Option (c) is incorrect; no ROC approval is needed, only registration. Option (d) is irrelevant; the question is whether it is a modification, not whether it was timely.

Where it goes wrong. Students may think interest rate changes are not modifications, or confuse registration with approval.

Authority. Section 79(b) of the Companies Act, 2013; Rule 6 of the Companies (Registration of Charges) Rules, 2014

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

SFL assigned its rights under the charge to ABC Bank on 1st May 2026. ATL did not register this assignment. ATL contends that assignment is not a modification. Is ATL correct?

1. Yes, assignment of rights is not a modification of charge.
2. No, even if the rights of a charge-holder are assigned to a third party, it is regarded as a modification. (correct answer)
3. Yes, because the assignment was with the company's consent.
4. No, but the assignment only requires intimation to the ROC, not registration.

Answer: B — No, even if the rights of a charge-holder are assigned to a third party, it is regarded as a modification.

Explanation. The study material clarifies that even if the rights of a charge-holder are assigned to a third party, it will be regarded as a modification. Therefore, ATL's contention is incorrect. Option (b) is correct. Option (a) is wrong. Option (c) is irrelevant; consent does not negate the need for registration. Option (d) is incorrect; registration is required, not just intimation.

Where it goes wrong. Students may not realise that assignment of charge rights constitutes a modification.

Authority. Section 79(b) of the Companies Act, 2013; Study Material, Chapter 6

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

The revised repayment schedule was registered on 10th May 2026, within 30 days of the modification on 15th April 2026. However, the loan was a working capital loan repayable on demand. Does the change in repayment schedule require registration?

1. Yes, all changes in repayment schedule require registration.
2. Yes, but only if the change exceeds one year.
3. No, change in repayment schedule is not a modification if the loan is repayable on demand. (correct answer)
4. No, because working capital loans are exempt from charge registration.

Answer: C — No, change in repayment schedule is not a modification if the loan is repayable on demand.

Explanation. The study material lists changes in repayment schedule as a modification, but expressly excludes working loans which are repayable on demand. Since the loan is a working capital loan repayable on demand, the change in repayment schedule is not a modification requiring registration. Option (c)) is correct. Option (a) is too broad. Option (b)) is not a statutory exception. Option (d) is false; working capital loans can be secured by charge.

Where it goes wrong. Students may overlook the exception for working capital loans repayable on demand.

Authority. Section 79(b) of the Companies Act, 2013; Rule 6 of the Companies (Registration of Charges) Rules, 2014

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

ABC Bank claims priority as the assignee of the charge, even though the assignment was unregistered. Mr. Bansal, a decree-holder, attached the stock and receivables. Who has priority?

1. ABC Bank, because it is the assignee of the original registered charge.
2. Mr. Bansal, because decree-holders always have priority over charge-holders.
3. ABC Bank, because assignment does not affect the validity of the original charge.
4. Mr. Bansal, because the assignment was not registered, and the charge as modified by assignment is not valid against him. (correct answer)

Answer: D — Mr. Bansal, because the assignment was not registered, and the charge as modified by assignment is not valid against him.

Explanation. Since the assignment of the charge is a modification requiring registration, non-registration means the modification is not valid against creditors. Mr. Bansal, as an attaching creditor, would have priority over the unregistered assignment. Option (d)) is correct. Option (a) is wrong because the assignment was not registered. Option (c) is incorrect; assignment without registration does not bind third parties. Option (b)) is too absolute; priority depends on registration.

Where it goes wrong. Students may think the original registration covers subsequent assignments without fresh registration.

Authority. Section 79(b) of the Companies Act, 2013; Section 77(3) of the Companies Act, 2013

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

Scenario. Prakash Ispat Ltd. (PIL) created a charge on its office building in Mumbai in favour of ICICI Bank on 1st June 2026 for a loan of ₹20 crore. The charge was registered on 28th June 2026. On 1st August 2026, PIL modified the charge by reducing the loan amount by ₹5 crore due to partial repayment, and the modification was registered on 20th August 2026. On 1st September 2026, ICICI Bank assigned the charge to HDFC Bank. PIL did not register the assignment. On 15th September 2026, a prospective buyer, Ms. Nair, entered into an agreement to purchase the office building from PIL. She inspected the ROC register on 20th September 2026 and found the charge in favour of ICICI Bank (the original charge), but no entry for the assignment to HDFC Bank. She completed the purchase on 1st October 2026. Later, HDFC Bank sought to enforce the charge against the property, claiming that it had acquired all rights under the charge. Ms. Nair argued that she had no notice of HDFC Bank's charge because the register showed ICICI Bank as the charge-holder. The ROC had not updated the register to reflect the assignment. The question arises whether Ms. Nair is deemed to have notice of the assignment, and whether HDFC Bank can enforce the charge against her.

PIL reduced the loan amount by ₹5 crore on 1st August 2026 due to partial repayment. This was registered on 20th August 2026. Is this reduction a modification requiring registration?

1. Yes, a partial release of the charge on a particular asset or property is a modification. (correct answer)
2. No, because reduction of loan amount is not a modification.
3. Yes, but only if the reduction exceeds 50% of the original loan.
4. No, because partial repayment automatically reduces the charge without registration.

Answer: A — Yes, a partial release of the charge on a particular asset or property is a modification.

Explanation. The study material includes partial release of the charge on a particular asset or property as a modification. Reducing the loan amount due to partial repayment effectively reduces the extent of the charge, requiring registration. Option (a)) is correct. Option (b)) is wrong. Option (c) invents a threshold. Option (d) is incorrect; registration is required.

Where it goes wrong. Students may think partial repayment automatically adjusts the charge without registration.

Authority. Section 79(b) of the Companies Act, 2013; Rule 6 of the Companies (Registration of Charges) Rules, 2014

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

ICICI Bank assigned the charge to HDFC Bank on 1st September 2026, but PIL did not register the assignment. Ms. Nair inspected the register on 20th September 2026 and found only ICICI Bank as charge-holder. She purchased the property on 1st October 2026. Is Ms. Nair deemed to have notice of HDFC Bank's charge?

1. Yes, because the assignment was valid between the banks, and she should have enquired further.
2. No, because the register did not reflect the assignment, and she is entitled to rely on the register. (correct answer)
3. Yes, because deemed notice under Section 80 applies to all charges, whether registered or not.
4. No, because she purchased the property after the assignment, so she had constructive notice.

Answer: B — No, because the register did not reflect the assignment, and she is entitled to rely on the register.

Explanation. Section 80 deems notice only of charges that are registered. Since the assignment (which is a modification) was not registered, the register did not show HDFC Bank as charge-holder. Ms. Nair is entitled to rely on the register and is not deemed to have notice of the unregistered assignment. Option (b) is correct. Option (a) is wrong; no duty to enquire beyond register. Option (c) is false; deemed notice applies to registered charges. Option (d) is incorrect; constructive notice does not arise from unregistered assignments.

Where it goes wrong. Students may think deemed notice extends to unregistered modifications or that a purchaser must enquire beyond the register.

Authority. Section 80 of the Companies Act, 2013; Section 79(b) of the Companies Act, 2013

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

The ROC had not updated the register to reflect the assignment to HDFC Bank. What is the statutory duty of the ROC regarding the register of charges under Section 81?

1. The ROC has no duty to update the register; it is the company's responsibility.
2. The ROC must publish the register in the Official Gazette.
3. The ROC must keep a register of charges containing particulars of all charges registered under Chapter VI. (correct answer)
4. The ROC must inspect the company's premises to verify charges.

Answer: C — The ROC must keep a register of charges containing particulars of all charges registered under Chapter VI.

Explanation. Section 81(1) states that the Registrar shall keep a register containing particulars of the charges registered under Chapter VI in the prescribed form and manner. Option (c)) is correct. Option (a) is wrong; the ROC is responsible for the register. Option (b)) is not required. Option (d) is not a statutory duty under Section 81.

Where it goes wrong. Students may confuse the company's register under Section 85 with the ROC's register under Section 81.

Authority. Section 81 of the Companies Act, 2013

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

Ms. Nair inspected the register on 20th September 2026. Under Section 81(2), what is the right of inspection of the register of charges kept by the ROC?

1. Only members of the company can inspect the register.
2. Inspection is allowed only with the prior approval of the company.
3. Only creditors of the company can inspect the register.
4. Any person can inspect the register on payment of the prescribed fees. (correct answer)

Answer: D — Any person can inspect the register on payment of the prescribed fees.

Explanation. Section 81(2) provides that the register kept by the ROC shall be open to inspection by any person on payment of such fees as may be prescribed. Option (d)) is correct. Options (a) and (c) restrict the right incorrectly. Option (b)) is wrong; no company approval is needed.

Where it goes wrong. Students may think inspection is limited to members or creditors, or requires company consent.

Authority. Section 81(2) of the Companies Act, 2013

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

Scenario. A company created a charge on 1st January 2026 and registered it on 25th January 2026. The company modified the charge on 1st February 2026, and the modification was registered on 28th February 2026. A third party acquired the property on 15th February 2026. Does the third party have deemed notice of the modification?

A company created a charge on 1st January 2026 and registered it on 25th January 2026. The company modified the charge on 1st February 2026, and the modification was registered on 28th February 2026. A third party acquired the property on 15th February 2026. Does the third party have deemed notice of the modification?

1. No, because the modification was registered after the third party acquired the property. (correct answer)
2. Yes, because the modification was registered on 28th February 2026 and notice relates back to the date of modification.
3. Yes, because the original charge was registered and the third party is deemed to have notice of all subsequent modifications.
4. No, because the third party acquired the property before the modification was created.

Answer: A — No, because the modification was registered after the third party acquired the property.

Explanation. Deemed notice under Section 80 operates from the date of registration of the charge or modification. The modification was registered on 28th February 2026, after the third party acquired the property on 15th February 2026. Therefore, the third party is not deemed to have notice of the modification. Option (a)) is correct. Option (b)) is wrong because notice does not relate back. Option (c) is too broad. Option (d) is incorrect; the modification was created on 1st February 2026, before the acquisition, but not registered.

Where it goes wrong. Students may think deemed notice of modifications applies from the date of modification rather than registration.

Authority. Section 80 of the Companies Act, 2013; Section 79 of the Companies Act, 2013

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

Scenario. Sunrise Ltd. failed to register a charge within 30 days. The charge-holder applied under Section 78. The ROC gave notice to the company on 1st March 2026. The company did not respond. By what date must the ROC register the charge?

Sunrise Ltd. failed to register a charge within 30 days. The charge-holder applied under Section 78. The ROC gave notice to the company on 1st March 2026. The company did not respond. By what date must the ROC register the charge?

1. Within 7 days from the date of notice.
2. Within 14 days after giving notice to the company. (correct answer)
3. Within 30 days from the date of the charge-holder's application.
4. Within 60 days from the date of creation of the charge.

Answer: B — Within 14 days after giving notice to the company.

Explanation. Section 78 provides that if no objection is received from the company, the Registrar will register the charge within a period of 14 days after giving notice to the company. Option (b) is correct. Option (a) is too short. Option (c) is not the statutory period. Option (d) is irrelevant.

Where it goes wrong. Students may confuse the 14-day period with other timelines in the chapter.

Authority. Section 78 of the Companies Act, 2013

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

Scenario. A company created a charge on its machinery on 1st April 2026. The charge was registered on 30th April 2026. On 15th May 2026, the company changed the rate of interest from 10% to 11%. The change was not registered. What is the consequence of non-registration of this modification?

A company created a charge on its machinery on 1st April 2026. The charge was registered on 30th April 2026. On 15th May 2026, the company changed the rate of interest from 10% to 11%. The change was not registered. What is the consequence of non-registration of this modification?

1. The company is liable to a penalty of ₹1 lakh only.
2. The original charge becomes void.
3. The modification is void against the liquidator and creditors. (correct answer)
4. The modification is automatically effective without registration.

Answer: C — The modification is void against the liquidator and creditors.

Explanation. Section 79 applies the provisions of Section 77 to modifications. Therefore, non-registration of a modification renders it void against the liquidator and creditors, similar to non-registration of a charge. Option (c)) is correct. Option (b) is too broad; the original charge remains valid. Option (a)) understates the consequence; penalty is separate. Option (d) is false; registration is mandatory.

Where it goes wrong. Students may think non-registration of modification only attracts penalty without affecting validity against third parties.

Authority. Section 79(b) of the Companies Act, 2013; Section 77(3) of the Companies Act, 2013

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

Scenario. PQR Ltd. created a charge on 1st June 2026 and registered it on 25th June 2026. On 1st July 2026, the company altered the terms of the charge to include an additional asset as security. This modification was not registered. A creditor who had lent money to PQR Ltd. on 15th July 2026 claims priority over the additional asset. Is the creditor's claim valid?

PQR Ltd. created a charge on 1st June 2026 and registered it on 25th June 2026. On 1st July 2026, the company altered the terms of the charge to include an additional asset as security. This modification was not registered. A creditor who had lent money to PQR Ltd. on 15th July 2026 claims priority over the additional asset. Is the creditor's claim valid?

1. No, because the modification was part of the original charge and is automatically registered.
2. Yes, but only if the creditor had actual notice of the modification.
3. No, because the creditor should have checked the register and is deemed to have notice.
4. Yes, because the unregistered modification is void against the creditor who acquired rights after the modification. (correct answer)

Answer: D — Yes, because the unregistered modification is void against the creditor who acquired rights after the modification.

Explanation. The modification (adding an asset) required registration. Since it was not registered, it is void against creditors who acquired rights after the modification. The creditor lent on 15th July 2026, after the modification. Option (d)) is correct. Option (a) is wrong; modifications are not automatic. Option (c) is incorrect; deemed notice applies only to registered charges. Option (b)) is wrong; actual notice is not required for voidness.

Where it goes wrong. Students may think deemed notice covers unregistered modifications or that the original registration extends to later modifications.

Authority. Section 79(b) of the Companies Act, 2013; Section 77(3) of the Companies Act, 2013

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

Scenario. A charge-holder applied under Section 78 for registration of a charge. The ROC registered the charge and issued a certificate. The company later claimed that the charge-holder's application was invalid because the company had already filed the charge on the same day. What is the effect of the ROC's registration?

A charge-holder applied under Section 78 for registration of a charge. The ROC registered the charge and issued a certificate. The company later claimed that the charge-holder's application was invalid because the company had already filed the charge on the same day. What is the effect of the ROC's registration?

1. The registration is valid, and the certificate is conclusive evidence of compliance. (correct answer)
2. The registration is invalid because the company had already filed the charge.
3. The registration is valid only if the company consented.
4. The registration is void ab initio because of duplicate filing.

Answer: A — The registration is valid, and the certificate is conclusive evidence of compliance.

Explanation. The ROC's registration, once done, is valid and the certificate is conclusive evidence of compliance. If the company had already filed, the ROC would not have proceeded, but if it did, the registration stands. Option (a) is correct. Option (b) is wrong; the ROC's act cannot be collaterally attacked. Option (c) is incorrect; company consent is not required for the charge-holder's application. Option (d) is false.

Where it goes wrong. Students may think duplicate filing invalidates the registration.

Authority. Section 78 of the Companies Act, 2013; Rule 6 of the Companies (Registration of Charges) Rules, 2014

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

Scenario. ABC Ltd. created a charge on 1st August 2026. The charge-holder applied under Section 78 on 15th September 2026. The ROC gave notice to the company on 20th September 2026. The company objected on 25th September 2026, showing sufficient cause why the charge should not be registered. What can the ROC do?

ABC Ltd. created a charge on 1st August 2026. The charge-holder applied under Section 78 on 15th September 2026. The ROC gave notice to the company on 20th September 2026. The company objected on 25th September 2026, showing sufficient cause why the charge should not be registered. What can the ROC do?

1. The ROC must register the charge despite the objection.
2. The ROC shall not allow registration by the charge-holder if the company shows sufficient cause. (correct answer)
3. The ROC must refer the matter to the Tribunal.
4. The ROC must cancel the charge-holder's application and impose a penalty.

Answer: B — The ROC shall not allow registration by the charge-holder if the company shows sufficient cause.

Explanation. Section 78 provides that the Registrar shall not allow registration by the charge-holder if the company itself registers the charge or shows sufficient cause why such charge should not be registered. Option (b) is correct. Option (a) is wrong; the ROC must consider the objection. Option (c) is incorrect; no Tribunal involvement. Option (d) is not provided.

Where it goes wrong. Students may think the ROC must always register on the charge-holder's application, ignoring the company's right to object.

Authority. Section 78 of the Companies Act, 2013

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

Scenario. A company created a charge on 1st July 2026. The charge was not registered. On 1st September 2026, the company was wound up. The charge-holder claims priority over other creditors. Can the charge-holder enforce the charge?

A company created a charge on 1st July 2026. The charge was not registered. On 1st September 2026, the company was wound up. The charge-holder claims priority over other creditors. Can the charge-holder enforce the charge?

1. Yes, because the charge was created before winding up.
2. Yes, because the charge-holder can register the charge even after winding up.
3. No, because the unregistered charge is void against the liquidator and other creditors. (correct answer)
4. No, because the charge-holder did not apply under Section 78.

Answer: C — No, because the unregistered charge is void against the liquidator and other creditors.

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 (c)) is correct. Option (a) is wrong; creation alone does not suffice. Option (b)) is incorrect; post-liquidation registration is not permitted. Option (d) is irrelevant; the charge was never registered.

Where it goes wrong. Students may think creation before winding up protects the charge-holder, or that late registration is possible.

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

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

Scenario. A company modified a charge on 1st May 2026 by changing the repayment schedule. The modification was registered on 20th May 2026. A third party acquired the property on 10th May 2026. Is the third party deemed to have notice of the modification?

A company modified a charge on 1st May 2026 by changing the repayment schedule. The modification was registered on 20th May 2026. A third party acquired the property on 10th May 2026. Is the third party deemed to have notice of the modification?

1. Yes, because the modification was registered within 30 days and notice relates back to the date of modification.
2. No, because the modification was not registered at all.
3. Yes, because the original charge was registered and the third party is deemed to have notice of all changes.
4. No, because the third party acquired the property before registration of the modification. (correct answer)

Answer: D — No, because the third party acquired the property before registration of the modification.

Explanation. Deemed notice applies from the date of registration. The modification was registered on 20th May 2026, after the third party acquired the property on 10th May 2026. Therefore, the third party is not deemed to have notice. Option (d)) is correct. Option (a) is wrong because notice does not relate back. Option (c) is too broad. Option (b)) is factually incorrect; the modification was registered, albeit later.

Where it goes wrong. Students may think registration within 30 days gives retrospective deemed notice.

Authority. Section 80 of the Companies Act, 2013; Section 79 of the Companies Act, 2013