Registration of Charges (Sections 77–87) →

Sections 77 to 87 of the Companies Act, 2013 form a self-contained code on the registration of charges — the mechanism by which a company's secured borrowings are made transparent to the world. The architecture is simple but exacting. A company that creates a charge over its property must register the particulars with the Registrar of Companies within a strict statutory window; if it does not, the charge is good between the parties as a contract but worthless against the liquidator and other creditors when the company collapses. Around that central rule the Act builds a scaffolding of duties, fallbacks and remedies: the charge-holder's own right to register, the deemed notice that registration confers, the two parallel registers of charges, the recording of satisfaction, the appointment of receivers, the Central Government's power of rectification, and the penalty for default.

The topic sits at the intersection of company law and the law of secured credit, and it is a perennial favourite in judiciary and CLAT-PG papers because the section numbers carry sharp, memorisable consequences. To place it in context, it builds on the foundational material in our notes on the introduction to the Companies Act and the key definitions, and it presupposes the registration architecture established at the incorporation stage.

What is a charge — Section 2(16)

The starting point is the statutory definition. Section 2(16) of the Companies Act, 2013 defines a "charge" as an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage. Three features of the definition deserve emphasis. First, a charge is a species of security interest — it is created to secure the repayment of a debt or the performance of an obligation, not as an outright transfer of ownership. Second, the subject matter is wide: it reaches the property, the assets, or the whole undertaking of the company, tangible or intangible. Third, the definition expressly includes a mortgage, so the registration regime captures both legal and equitable mortgages of company property.

The classic common-law statement of what a charge is comes from National Provincial and Union Bank of England v. Charnley, [1924] 1 KB 431. Atkin LJ held that "where in a transaction for value both parties evince an intention that property, existing or future, shall be made available as security for the payment of a debt, and that the creditor shall have a present right to have it made available, there is a charge." The emphasis on intention and a present right to have the property made available is what distinguishes a charge from a mere personal promise to pay. The Indian definition in Section 2(16) is consistent with this substance-over-form approach — what matters is whether an asset has been earmarked as security, not the label the parties use.

Fixed and floating charges

Charges are conventionally divided into fixed and floating. A fixed charge attaches to a specific, identified asset — land, a building, a particular machine — from the moment of its creation; the company cannot dispose of that asset free of the charge without the chargee's consent. A floating charge, by contrast, hovers over a shifting class of assets — typically stock-in-trade, book debts and other circulating capital — leaving the company free to deal with those assets in the ordinary course of business until the charge crystallises. Crystallisation occurs on a defined event — the company ceasing business, the appointment of a receiver, the commencement of winding up — at which point the floating charge fastens on the assets then comprised in the class and converts, in effect, into a fixed charge over them.

The distinction has practical bite for registration. Both fixed and floating charges over company property require registration under Section 77; the statute draws no line between them for that purpose. The Act in fact captures a long catalogue of security forms — mortgages of immovable property, hypothecation of movables, pledges, charges on book debts, and charges on intangibles such as goodwill and intellectual property — and the duty to register attaches uniformly. The English authority of Dublin City Distillery Ltd v. Doherty, [1914] AC 823, while primarily a pledge case, illustrates the older judicial concern, now codified in the registration scheme, that securities over company assets be made ascertainable to outsiders rather than concealed.

The duty to register — Section 77

Section 77 is the heart of the chapter. Sub-section (1) imposes on every company creating a charge — within or outside India, on its property or assets or undertaking, whether tangible or otherwise, and wherever situate — the duty to register the particulars of the charge, signed by the company and the charge-holder together with the instruments creating it, with the Registrar within thirty days of its creation. The duty is cast on the company, and the registration is in the prescribed form (CHG-1 for charges other than debentures, CHG-9 for debentures) with the prescribed fees.

The certificate of registration issued under Section 77(2) is conclusive evidence that the requirements of the Act as to registration have been complied with. It is the document the charge-holder relies upon to establish that the security is good against the liquidator. Because the duty and the consequence of default are so closely linked, the section is best read as a single mechanism: register, obtain the certificate, and the charge is secure; fail to register, and the security evaporates at precisely the moment it is needed.

The time windows — 30 days, 300 days, 60+60

The timing rules are the most heavily tested part of the chapter, because they changed with the Companies (Amendment) Ordinance, 2018 (later the Companies (Amendment) Act, 2019). The structure is layered. The base period under Section 77(1) is thirty days from the date of creation of the charge — this is unchanged.

The first proviso creates two regimes for late filing, divided by the cut-off date of 2 November 2018. For a charge created before 2 November 2018, the Registrar may, on an application, allow registration within a total period of 300 days of creation on payment of additional fees. For a charge created on or after 2 November 2018, the Registrar may allow registration within sixty days of creation on payment of additional fees; and the second proviso permits, where registration is not made even within that sixty days, a further period of sixty days on an application supported by payment of ad valorem fees as prescribed. In short, the modern outer limit is 60 + 60 = 120 days for post-Ordinance charges, against the older 300-day ceiling.

1. 0–30 days: registration in the ordinary course with normal fees.
2. Charge created before 2 Nov 2018: up to 300 days from creation, on application, with additional fees.
3. Charge created on or after 2 Nov 2018: up to 60 days from creation with additional fees, and a further 60 days thereafter on application with ad valorem fees.

Two points round out the timing rules. First, where registration is allowed within the further sixty-day window for a post-Ordinance charge, the company must, by the third proviso, satisfy the Registrar that the omission to file in time was accidental or that it is not expedient to register beyond that period. Second, the outer limits are jurisdictional — the Registrar has no power to condone delay beyond them. Once they expire, the only route left is rectification by the Central Government under Section 87, and even that does not reopen the basic period of limitation; it addresses omissions and misstatements, not chronic delay.

The consequence of non-registration — Section 77(3)

The sting is in sub-section (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 appointed under the Companies Act or the Insolvency and Bankruptcy Code, 2016, or any other creditor, unless the charge is duly registered under sub-section (1) and a certificate of registration has been issued under sub-section (2). The effect is dramatic: an unregistered charge is void against the liquidator and other creditors. The charge-holder who neglected to register is thrown into the pool of unsecured creditors and loses priority over the very asset it bargained for.

Section 77(4) supplies the crucial counterweight. Non-registration destroys the security, not the debt. The underlying contract of loan survives, and the company remains personally liable to repay. So a borrower cannot turn its own lender's clerical failure into a windfall escape from repayment; it simply means the lender ranks pari passu with unsecured creditors instead of ahead of them. This division — security void, debt alive — is the single most examinable proposition in the chapter, and it tracks the position long settled under the corresponding provision of the Companies Act, 1956.

The charge-holder's right to register — Section 78

Because the company holds the primary duty, the law must guard the lender against the company's inertia or bad faith. Section 78 does this. Where a company fails to register the charge within the period specified in Section 77, the person in whose favour the charge is created — the charge-holder — may apply to the Registrar for registration of the charge, along with the instrument creating it, in the prescribed form and on payment of the prescribed fees. The Registrar must, before registering, give notice to the company; and unless the company itself registers the charge or shows sufficient cause why it should not be registered, the Registrar may, on an application by the charge-holder, allow registration within fourteen days of the notice on payment of fees.

Section 78 then gives the charge-holder a right of recoupment: where registration is effected on the charge-holder's application, the charge-holder is entitled to recover from the company the amount of fees and additional fees paid to the Registrar. The provision is a practical recognition that the lender has the strongest interest in registration and should not be left at the mercy of a borrower that is unwilling or unable to act.

Application to acquired property and modification — Section 79

Section 79 extends the Section 77 machinery to two further situations. The first is where a company acquires property that is already subject to a charge — here the company must register the charge as though it had created it, so that a charge does not escape the register merely because it pre-dated the company's acquisition of the asset. The second is where there is a modification in the terms or conditions or the extent or operation of any registered charge — for instance, a change in the principal secured, the rate of interest, or the assets covered. A modification must be registered in the same way and within the same time windows as the creation of a charge. The drafting device is economical: Section 79 simply provides that the provisions of Section 77 relating to registration shall apply mutatis mutandis to these cases.

Registration as notice — Section 80

Section 80 codifies the doctrine of constructive notice for registered charges. It provides that where any charge on the property or assets of a company is registered under Section 77, any person acquiring such property, assets, or undertaking, or any part thereof, or any share or interest therein, shall be deemed to have notice of the charge from the date of such registration. The register of charges is a public document, and a subsequent purchaser or lender is fixed with knowledge of what an inspection would have revealed — whether or not it actually inspected.

This is the same constructive-notice logic that underpins the company's public documents generally, explored in our note on the doctrine of constructive notice and indoor management, and it dovetails with the priority effect of registration. Because everyone is deemed to know of a registered charge, the registered charge-holder ordinarily defeats a later transferee who cannot plead absence of notice. Section 80 thus converts the mechanical act of registration into a substantive shield, and it is the doctrinal bridge to the question of priority between competing securities.

The two registers — Sections 81 and 85

The Act maintains two parallel registers, and candidates routinely confuse them. Section 81 requires the Registrar to keep, in respect of every company, a register containing the particulars of the charges registered, in the prescribed form. This Registrar's register is open to inspection by any person on payment of the prescribed fee, and it is the public-facing record on which the constructive notice under Section 80 operates.

Section 85, by contrast, requires every company to keep at its registered office a register of charges in the prescribed form (Form CHG-7), containing the particulars of all charges and of all property acquired subject to a charge, together with the instruments creating the charges. The company's register and the instruments are open to inspection during business hours by members and creditors without fee, and by any other person on payment of a fee. The mnemonic is straightforward: Section 81 — Registrar's register; Section 85 — company's register. Both must be maintained; neither substitutes for registration under Section 77.

Satisfaction of charges — Sections 82 and 83

When the secured debt is repaid, the charge must be discharged on the record, or the asset will appear encumbered indefinitely. Section 82 requires a company to give intimation to the Registrar of the payment or satisfaction in full of any registered charge, in the prescribed form (CHG-4), within thirty days from the date of such payment or satisfaction. The Registrar, on receiving the intimation, gives notice to the charge-holder calling for a show cause within the prescribed time as to why payment or satisfaction should not be recorded; and if no cause is shown, enters a memorandum of satisfaction in the register. Where the charge-holder confirms the satisfaction, the Registrar may record it without the show-cause step.

Section 83 empowers the Registrar to act even without intimation from the company. The Registrar may, on evidence to his satisfaction, enter in the register a memorandum of satisfaction that the debt for which the charge was given has been paid or satisfied in whole or in part, or that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property. The Registrar must inform the affected parties of any entry so made. Section 83 is the safety valve for the common situation where a company, having repaid its loan, simply neglects to file CHG-4 — the charge-holder or other interested party can move the Registrar directly.

Receiver and rectification — Sections 84 and 87

Section 84 deals with the appointment of a receiver or manager. Where a person obtains an order for the appointment of a receiver of, or a person to manage, the property subject to a charge, or appoints such a receiver or manager under powers in an instrument, that person must give notice of the appointment to the company and the Registrar within thirty days, and the Registrar enters the particulars in the register of charges. On ceasing to act, the receiver or manager must likewise give notice, which is also entered. The provision keeps the public register current as to who is in control of the charged assets.

Section 87 confers on the Central Government the power of rectification. On being satisfied that the omission to register a charge within the time required, or the omission or misstatement of any particular with respect to a charge or its modification or satisfaction, was accidental or due to inadvertence or some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders, or that it is just and equitable to grant relief on other grounds, the Central Government may order that the time for registration be extended or the omission or misstatement be rectified. Critically, after the 2019 amendment, Section 87 is confined to rectification of omissions and misstatements in matters of satisfaction and particulars; it is no longer a route to condone delay in the original registration of a charge, because the timing of registration is now governed exhaustively by the provisos to Section 77.

Penalty for contravention — Section 86

Section 86 supplies the sanction. If any company is in default in complying with any of the provisions of this Chapter (Sections 77 to 87), the company is liable to a penalty, and every officer of the company who is in default is liable to a penalty as prescribed. Following the Companies (Amendment) Act, 2019, Section 86 also added a sub-section creating an offence where a person wilfully furnishes false or incorrect information, or knowingly suppresses any material information, required to be registered under Section 77 — such a person is liable for fraud under Section 447. This elevates a deliberately false charge filing from a regulatory lapse to a serious offence, reflecting the legislative concern with the integrity of the public register.

Charges and the Insolvency Code

The registration regime has acquired fresh significance under the Insolvency and Bankruptcy Code, 2016, because the consequence in Section 77(3) now extends expressly to a liquidator appointed under the IBC. The leading illustration is the decision of the National Company Law Appellate Tribunal in Volkswagen Finance Pvt. Ltd. v. Shree Balaji Printopack Pvt. Ltd., decided on 19 October 2020. There, a vehicle financier holding a hypothecation charge that was registered under the Motor Vehicles Act, 1988 but not registered with the Registrar of Companies under Section 77 was denied secured-creditor status under Section 52 of the IBC in the corporate debtor's liquidation. The NCLAT held that registration with the ROC under Section 77 is mandatory for a charge-holder to be treated as a secured creditor before the liquidator; registration under another statute does not cure the omission.

The position is more nuanced during the resolution stage. Several NCLAT benches have taken the view that non-registration of a charge under Section 77 is not, by itself, fatal to a creditor's classification as a "secured creditor" under Section 3(30) of the IBC during the corporate insolvency resolution process, where the definition turns on the existence of a security interest rather than on its registration. The reconciling thread is that registration is indispensable when the matter reaches a liquidator — that is the precise situation Section 77(3) addresses — whereas the resolution process may look to the substance of the security interest. Candidates should hold both propositions: registration is mandatory against the liquidator under Section 77(3), and registration is not, of itself, a guarantee of priority over a pre-existing first charge.

Exam takeaways and recurring distinctions

A handful of propositions recur across judiciary and CLAT-PG papers. First, the section map: 77 (duty and consequence), 78 (charge-holder's right), 79 (acquired property and modification), 80 (notice), 81 (Registrar's register), 82–83 (satisfaction), 84 (receiver), 85 (company's register), 86 (penalty), 87 (rectification by Central Government). Second, the time windows: 30 days base; 300 days for pre-2 November 2018 charges; 60 + 60 days for charges on or after that date.

Third, the void-against-liquidator rule in Section 77(3), tempered by Section 77(4) which keeps the debt alive — security gone, loan recoverable. Fourth, the two registers — Section 81 (Registrar) versus Section 85 (company) — a classic trap. Fifth, who registers — primarily the company under Section 77, with the charge-holder's fallback under Section 78. Sixth, the post-2019 narrowing of Section 87, which can no longer be used to condone delay in original registration. Carry these six anchors and the chapter is exam-secure.

To consolidate the surrounding doctrine, read this chapter alongside our notes on the core definitions and the procedure for incorporation, and return to the Companies Act hub for the full chapter sequence on share capital, debentures and winding up that gives charge registration its commercial setting.