Do you wish to file satisfaction of charge ?
Satisfaction of a charge signifies that the charge holder releases the charge on the property. A property charged in favor of any person can never be freed from the charge unless the charge holder releases the same. When a charge on a property is created by a company for the due repayment of the certain accounts secured by the charge. If the company repays all the dues, the amount secured by the charge becomes Nil.
However it is the charge holder who should release the charge. Complete satisfaction of the charge is different from completely settling amounts secured by the charge or amounts owning on the security of charge. The charge holder discharges the company on the ground that the purpose for which the charge is created no longer exists.
If charge holder refuses to issue a letter or memo declaring satisfaction of charge, there may be some delay or legal proceedings in relation thereto. However as the amount secured by the charge or amount owing on the security of the charge will be Nil. The existence of the charge does not really matter as the charge holder will have nothing (no cause of action) to enforce the charge.
Filing particulars of the satisfaction of a charge is essential not only for the compliance of statutory provisions contained in Section 82 of the companies act 2013. But also for the purpose of removing the charge ID from its live position. Whenever any person carries out an inspection of documents at the MCA portal.
He can see list of charges on the properties of the company which are subsisting. If satisfaction of a charge filed, it will show as if a charge is subsisting and alive. If it remains in the MCA’s records, there will be difficulty in creating further charges on the same properties. When a charge is satisfied, it is akin to saying that the charge holder is satisfied.
When a charge is satisfied, file the particulars of complete satisfaction of the charge with ROC using e-Form CHG-4 which is known as the ‘Memorandum of Satisfaction of the Charge’. Mention in the said e-Form, particulars of the charge holder or asset reconstruction company. The date of creation of the original charge, date of last modification to that charge, the amount secured by the charge, any amount in foreign currency secured by the charge and the date of satisfaction.
The company or the charge holder is entitled to file this e-Form. Attach the copy of the letter of the charge holder stating that the charge has been fully satisfied. Ensure that the letter of the charge holder mentions the amount secured by the charge and the date of the complete satisfaction. As time limit of 30 days prescribed in section 82 of the 2013 act runs from the date of satisfaction. It is necessary to ensure that the date is mentioned in such letter of the charge holder.
If the intimation about satisfaction of a charge is not filed in e-Form CHG-5 within 30 days of the satisfaction of the charge, up to a period of 300 days from the date of satisfaction. It is possible to get the delay condoned by the ROC using the same e-Form CHG-5 but after paying the additional fee.
This procedure is similar to what happens when the particulars of a charge or its modification are not filed within the 30 days period specified in section 77 of the 2013 act. Similarly if the delay is beyond 300 days, application must be made to the central government in e-Form CHG-8 duly paying the requisite fee.
Also ensure that the said e-Form CHG-4 filed electronically is digitally signed by the company and the charge holder.
The ROC will record the satisfaction of the charge and issue a memorandum of satisfaction of charge in e-Form CHG-5 under his signature.
Where the charge holder is not issuing a letter stating that the charge is satisfied, section 83 of the 2013 act will come to the rescue of the rescue of the company. Which part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking, Registrar has powers to record satisfaction of the charge.
It may be noted that the powers of the ROC under section 83 of the 2013 act. It can be invoked by the charge holder or any other party too even though the company has not compiled with the provisions of section 82 of the act by filing form no. CHG-4. Such a party could be a party who is an acquirer or assignee of a property. In such a case too, the ROC will record the satisfaction of the charge ans issue a memorandum of satisfaction of charge in e-Form CHG-5 under his signature.
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