Charges: Satisfaction and Rectification

In one line

When a charge is paid off the register must be cleared, and the Chapter provides four ways of doing it: the company's own intimation, the Registrar's own entry on evidence, the company's internal register kept for inspection, and, where something went wrong, rectification by the Central Government.

In exam wording: under section 82(1) a company shall give intimation to the Registrar, in the prescribed form, of the payment or satisfaction in full of any charge registered under this Chapter, within thirty days from the date of such payment or satisfaction.

Why the law has this at all

A register of charges that records only creations is worse than no register at all. It would show, after a few years, a company weighed down by security that had long since been discharged, and every lender and buyer reading it would price the company wrongly. Clearing the register is therefore as much a part of the publicity system as filling it.

But the interests are the reverse of those in registration. There, the company had every reason to delay and the lender had every reason to file, which is why s.78 gives the lender his own application. Here the company has every reason to file, because the entry that a charge is discharged improves its position, and the charge holder may have reason to resist, because a memorandum of satisfaction entered wrongly destroys his security on the face of the register.

That reversal explains the shape of s.82. The company gives the intimation; the Registrar then notices the charge holder to show cause within a period not exceeding fourteen days; and only if no cause is shown does the memorandum go in. It also explains the exception: where the intimation is in the specified form and signed by the charge holder, no notice is needed, because the person who would object has already consented.

Section 83 exists because neither party can always be relied on, and s.87 exists because registers, being made by people, contain mistakes.

Section 82: the company reports satisfaction

82(1): the duty and the time. A company shall give intimation to the Registrar, in the prescribed form, of the payment or satisfaction in full of any charge registered under this Chapter, within thirty days from the date of that payment or satisfaction.

A proviso allows the Registrar, on an application by the company or the charge holder, to permit the intimation to be made within three hundred days of the payment or satisfaction, on payment of such additional fees as may be prescribed.

Two points that decide questions. The period is thirty days, extendable to three hundred, and the three hundred days survives here although it was cut out of s.77 for creation by the 2019 amendment. And the application for the extension may be made by either the company or the charge holder, which is unusual and is the counterpart of the charge holder's application in s.78.