Charges 

S 2(16) of the CA provides that for the purposes of registration under the Act ‘charge includes mortgage’. In the context of advances to companies, a charge may be classified as (1) fixed charge (2)floating charge.

Fixed charge-A charge is fixed when it is made specifically to cover definite & ascertained assets of permanent nature like land, building, or heavy machinery. A fixed charge passes legal title to certain specified assets & precludes the Co from selling the property charged without the consent of the charge holder. Floating charge-is a charge on a class of assets, which may be present or future & which changes from time to time in the ordinary course of business. e.g. stock in trade. The Co can deal with the property subject to a floating charge in any manner it likes. The idea of a floating charge is to allow a Co to carry on its business in the ordinary course as if no charge has been created; thus the Co deals with its property so charged in any manner it likes until the charge attaches or crystallizes.

Characteristics of floating charge. It is a charge on a class of assets, present, and future. The class of assets charged is one which in the ordinary course of business is changing from time to time. Until some steps are taken to enforce the charge, the company may continue to deal with the assets charged in the ordinary course of business. It is created by a deed & must be registered with the ROC. Gov. Stock Co v. Manila Railway-Lord Macnaughten observed: A floating security is an equitable charge on the assets for the time being of a going concern. the essence of such a charge is that it remains dormant until the undertaking ceases to be a going concern or until the person in whose favor the charge is created intervenes. Co can even create a specific mortgage of the property already subject to a floating charge without the consent of the holders of the charge & the registered mortgage shall have priority over the charge-Wheatley v. Sibstone Co.

Registration of charges

S 77-A Co-creating a charge within or outside India, on its property or assets or any of its undertakings has to register the particulars of the charge together with the instruments if any creating the charge. The particulars of the charge must be signed by the Co & the charge holder. A Co must file the particulars of the charge with the registrar within 30 days of its creation. It shall be filed in the prescribed form along with prescribed fees in the prescribed manner If a Co fails to register the charge within a period of 30 days, the person in whose favor the charge is created may apply to the ROC for registration within such time & in such form as prescribed & the registrar on such application within a period of 14 days after giving notice to the Co, allow such charge or shows sufficient cause why such charge should not be registered. In case a registrable charge is not registered within the prescribed time & a certificate of registration of such charge is not given by the ROC, it shall become void against the liquidator & creditor of the Co. Deutsche Bank v.S.P Kale.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.