Sections 77 to 87 | Companies (Registration of Charges) Rules, 2014 | CHG Forms
Sections 77 to 87 of the Companies Act and the Companies (Registration of Charges) Rules, 2014 establish the complete legal framework governing the creation, registration, modification and satisfaction of charges, including the use of CHG forms. A charge—fixed or floating—must be registered within the prescribed timelines through CHG-1 or CHG-9, failing which it becomes void against creditors and the liquidator, though the underlying debt remains enforceable. Charge-holders may also independently register the charge under Section 79 if the company defaults. Priority is determined by registration date, subject to exceptions for government and workmen dues; floating charges crystallise on specified trigger events. Satisfaction must be filed in CHG-4, after which a CHG-5 certificate is issued. Unregistered or delayed charges may be rectified by the Central Government through CHG-8 if the omission was accidental or not prejudicial. Companies must also maintain statutory registers, comply with penalties for non-filing, and follow specific rules for foreign instruments and pre-existing charges on acquired property.
What is a Charge?
An interest created on property, including a mortgage.
Types of Charges
- Fixed Charge – on fixed assets (land, building).
- Floating Charge – on current assets.
Example: Raw material of ₹10 lakhs; floating charge of ₹5 lakhs that must never fall below ₹5 lakhs.
Floating charge crystallises when:
- Company goes into liquidation
- Company stops business
- Creditors enforce security
- Any agreed event happens
Priority Rule:
Registered (secured) creditors > Floating charges
But Government dues + employee dues always first.
Section 77 – Duty to Register Charges
- Register within 30 days of creation (normal fee).
- Extra 30 days with additional fee.
- Further 60 days with ad valorem fee.
Forms
- CHG-1 – Registration/modification (other than debentures)
- CHG-9 – Registration/modification of debentures
- CHG-2 – Certificate of registration of charge
Unregistered Charges (Section 87)
Can be registered later by applying to Central Government (RD) in CHG-8 if:
- Omission was accidental
- Sufficient cause exists
- Not prejudicial to creditors
Order to ROC in INC-28.
Section 79 – When Charge-Holder Registers
If company fails to register:
1. Charge-holder applies to ROC.
2. ROC issues 14 days’ notice to the company.
3. Company may register or give valid reason.
4. If company fails, ROC registers.
5. Charge-holder may recover expenses from company.
6. ROC will issue certificate in CHG-3.
Consequences of Non-Registration
1. Void against liquidator
2. Void against creditors (later registered charge gets priority)
But debt still enforceable against the company.
Section 82 – Satisfaction of Charge
- Company must file CHG-4 within 30 days (ROC may allow up to 300 days).
- ROC notifies charge-holder for 14 days.
- If no objection → satisfaction registered → CHG-5 issued.
Special Points – CHG-4 (Section 83)
- If CHG-4 is signed by charge-holder, no 14-day notice required.
- ROC may allow extension up to 300 days.
- If charge-holder files directly → ROC accepts immediately.
- ROC issues CHG-5.
Additional Point – Rule 3(4): Instrument Outside India
Copy may be verified by:
1. Common seal
2. Director or Company Secretary
3. Authorized officer of charge-holder
4. Any person interested in the mortgage
Section 80 – Date of Notice of Charge
Once registered → deemed notice to the world.
Section 81 – Register of Charges by ROC
- Available on MCA website
- Deemed register
- Open for inspection (charge-holder free; others with fee)
Section 84 – Appointment of Receiver/Manager
File with ROC in CHG-6 within 30 days.
Section 85 – Company’s Own Register of Charges
- Maintain register in CHG-7 permanently
- Preserve instrument for 8 years
- Keep at registered office under custody of CS (if any)
Section 86 – Penalties
- Company: up to ₹5 lakh
- Officer: ₹50,000
- Continuing default: ₹500 per day
Section 87 – Rectification by Central Government
CG may allow late registration even if:
- Time under Section 77 expired
- Time under Section 78 expired
- Charge created long ago
- Omission was accidental or due to misstatement
Priority Rules
Floating Charge Priority Exception
Floating charge will get priority if company contractually promises not to create a higher-ranking fixed charge.
Government + Workmen Dues
Always have statutory priority.
Registration of Existing Charge on Acquired Property
If a company buys property with an already existing charge → must register as if it created it.
Priority Based on Registration Date
Priority = date of registration, not date of creation.
Bad Faith Exception
A later charge-holder loses priority if:
- He had actual notice of earlier unregistered charge
- Acted in bad faith
CHG Forms Summary
- CHG-1 – Registration/modification
- CHG-2 – Certificate of registration
- CHG-3 – Certificate of modification
- CHG-4 – Satisfaction (full/part)
- CHG-5 – Satisfaction certificate
- CHG-6 – Receiver/manager appointment
- CHG-7 – Register of charges (company)
- CHG-8 – Application to CG (condonation)
- CHG-9 – Debenture-related charges
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