Form 8 for Car Loan

[kanak jain]

Dear All

 

 

 

A Company have taken Car Loan (purchase of Car by financing from Bank) as on 29/3/11.

 

 

And Company have received Leter of hypothecation (for car loan), sanction letter of car loan, agreement of Guarantee.

 

 

Now plz send me procedure for creation of charge, and documents required (attatchment for form 8) for this purpose.

 

 

Thanks

 

Kanak Jain

 

 

[Vivek Hegde]

Dear Member, you have to attach the letter of hypothecation as the
document creation of charge and file Form 8

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*Warm Regards

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
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Koramangala, Bangalore-560034
Mob: 09019756940/09900898223*
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[CS Arvind]

Dear Members,

Do we at all need to create charge and file Form 8 for car loan?

Hypothecation letter and the registration certificate of car would
bear the hypothecation details; hence filing form 8 may not be
necessary.

Please share your views.

Regards- Arvind

On Apr 19, 8:50 pm, Vivek Hegde <vivekhegde1...@gmail.com> wrote:
> Dear Member, you have to attach the letter of hypothecation as the
> document creation of charge and file Form 8
>

> *Note: Beware of one website by namewww.myzamana.comwhich can hack your

> mail details (as mine) and send mail to all your contacts which
> is ridiculous and unacceptable. If any mail is sent from my ID please ignore
> that. I am trying to resolve the issue. Thanks ..!*
>
> *

> *- Hide quoted text -
>
> - Show quoted text -

[Vivek Hegde]

Dear Mr. Arvind

Creation of charge is mandatory.

Nowadays, banks are taking the matter regarding creation of charge very lightly, in case of vehicle loan, for the simple reason that the RTO Registration Certificate Book carries the name of the lender and hence in case of default in repayment, the Bank can simply walk (drive) away with the car. 

Section 142 of the Act clearly mandates a penalty upon the company and its officers for failure to register the charge. Penalty prescribed is Rs.5000/- per day. 

I have heard somebody who have faced a notice from the ROC for non-registration of a vehicle loan by the company. They had to go to CLB for condonation. 

So please take these Banks headon and insist on completing the charge documentation.

Note: Beware of one website by name www.myzamana.com which can hack your mail details (as mine) and send mail to all your contacts which is ridiculous and unacceptable. If any mail is sent from my ID please ignore that. I am trying to resolve the issue. Thanks ..!

[Narayan S]

Hi

 

U/s125(4)(e) of the Companies Act, 1956 a charge not being a pledge on movable property of company is required to be registered under the said Act. In the instant case, the car has been hypothecated to the bank. In a case law Ideal Bank Ltd.(in liq.) vs. Pride of India Pictures Ltd. (in liq.) it was held that hypothecation amounts to pledge though constructive and hence registration of charge is not required. However, such charge can nevertheless be registered by the ROC if applied for as per clarification given by DCA. (refer pp 1495 -A. Ramaiya' guide to CA-2006 edn.)

Regards

S.Narayan

 

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Regards
S.Narayan

[Bidu Bhusan Dash]

Dear Members

As per section 125 of the Companies Act,1956 every charge created by a Company and being a charge on which any property of the Company is conferred thereby be void against against the liquidator and any creditor of the Company unless charge has been filed with the Registrar for registration.

This section is applies to a charge on any movable property of the Company, as Company is taking a loan from the bank and purchase a car, so it is a movable property of the Company, in that understanding  the charge should be regd with the ROC.

Regards

Bidu

[Vivek Hegde]

Dear Narayan

Yes. I got the said clarification from DCA. I fully agree with you.

But I wonder how ROC can send a notice for non registration of Charge for vehicle loan..!

Thanks for your clarification.

Vivek

[Thirupal Gorige]

Dear Friends,   As per my understanding   Pledge means physical deliver (possession) of the subjected/charged property (generally movable properties such as fixed deposites etc) with or without document. In those cases, registration of charge is not required. The very reason is lender holds the property and can confiscate at any point of time, if loan is not repaid within stipulated time. It is more or less a what all gold loan companies do.   Whereas hypothecation means an endorsement over the title/physical assets of the company/ on separate deeds ( generally on book debts) etc. No physical deliver is given to the lender. The asset is used  by the borrow company. Hence it requires the filing of form 8 (for interest of general public) u/s 125 for creation of charge on car etc  despite of endorsement on RC and over the vehicle, since the car is possessed and used by the company.   ROC will come to know from the balance sheet about the creation of the charge on assets of the company,  The company is supposed to disclose these this things on notes to accounts.    Regards    G.Thirupal Company Secretary # 13/22, 1st Cross, Krishnamurthy L/O Tavarekere Main Rd, DRC POST B'lore-560029 Cell:+91 94483 84064  LL: +91 80 6532 2360     --- On Wed, 20/4/11, Vivek Hegde <vivekhe...@gmail.com> wrote:

[Rudra Alok]

Dear Mr. Thirupal, 

Nice analysis for difference between pledge and hypothecation ... but you missed a very vital point that the genesis of hypothecation is from pledge only (Ref: Anson ) .... and as per disclosure of information by Kanak Jain .... analysis and reasoning and reference of S. Narayan is absolutely correct. 

Regards,

-------------------

Alok

[kanak jain]

Thanks to all

 

 

So finally there is no requirement of creation of charge, and not required to file form 8 with ROC.

 

please clear, I m so confused

 

 

 

Regards

 

CS Kanak

[ankit misra]

Dear Kanak,

In simple words, you need to file Form 8 with ROC because car is at the possession of Company. So simply, it is hypothecation instead of pledge.

Kindly refer sec. 125 (4)(e).

thanks & regards,

Ankit Misra

Mob. No. 9839750527

[Bidu Bhusan Dash]

Members,

Then what is the final thing, Still it needs some more discussion................

Regards

-- 

Bidu Bhusan Dash
Company Secretary

[Vivek Hegde]

Dear Member

I think Mr. Narayan has clarified the things in detail. There is no confusion. 

If the Bank insists or if the Company voluntarily wants to file Form 8 it can proceed. ROC will register the same.

Or do not bother to file. It is not a non compliance on the part of the Company.

Vivek

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[Rudra Alok]

Final thinking is .... 

[1] You can have bare reading of the Section and your own perception. No body can stop you from that.

[2] You have to understand relative terms for correct understanding "when charge is required to be registered" .. must understanding of the terms ... pledge, hypothecation, charge, mortgage, guarantee, lien, etc., 

If you do not understand or try to understand ... nobody can help you ... only GOD grace is required ... 

Anyways, for all who do not understand ... 

[1] safe course of action is to register it ...at least you will have peaceful mind. But it increases document handling, cost, and your compliance process along with time ... choice is yours

Amen!!!!!!!

Regards,

------------------

Alok

      

[esha sharma]

No need of confusion here Friend

As you are creating a charge on the assets of company you have to get it registered with ROC by filing form-8.So just go ahead with that process and file the same within stipulated period otherwise you have to go for condonation of delay before CLB.

[Rudra Alok]

Dear Shri Vivek Jee

I am always a non-supporter of Study Circle Meetings, because of the fact ... whenever I attended .. I got no value addition for me ... and wastage of time. I had always in my mind... God in these two hours .. I would have added so many new valuable things .... BUT

Now I strongly feel Study Circle Meetings should be must .. for all CS pass-outs ... having experience less than 5 years ... say for instance 15 meetings in a year .... after going through level of queries and so fancy replies .... ICSI has no option .... but to upgrade its members via seminars and SCM compulsorily  

[ankit misra]

Dear Mr. Rudra,

You are of the opinion that Charge is not required to be created in this case. But will you kindly elaborate me that where is it written that charge is not required to be created in case of hypothecation.

As per section 125 (4) (e), it is mentioned that ' this section applies to the : a charge, not being a pledge, on any movable property of the company'

Kindly clarify this.

[Vivek Hegde]

Kindly refer the reply given by Mr. Narayan.

In a case law Ideal Bank Ltd.(in liq.) vs. Pride of India Pictures Ltd. (in liq.) it was held that hypothecation amounts to pledge though constructive and hence registration of charge is not required. 

Hope it clarifies.

[Rudra Alok]

Dear Mr. Ankit,

Good question ... but unfortunately I can't match your knowledge level mate ...Kindly excuse ... I am sure other members will help you out .... I take back my replies.

I promise .. from tomorrow onwards ... no replies from my side and creating confusion in well settled law of :

[1] Ratio Decidendi and

[2] of course Stare decisis.

Thanks & regards,

------------------------------

Alok

[ankit misra]

Mr. Alok,

As per your reply, it appears that you are somewhere and somehow making fun of me. I acknowledge that you have better knowledge in this case than me since my company yet not taken such loan, but it is not a very good form of responding to a professional at such an integral platform. 

This is a discussion platform and members do have different views from one another. Pls dont make any aggressive reply at this platform.

Kindly consider my message in correct way.

[Rudra Alok]

Dear Mr. Ankit,

[1] Certainly ... I am a beginner in this field. Regarding knowledge ... I don't think I have that much, each day I am learning from members like you. So from the bottom of my heart; I am thankful to all of you members of this forum.

[2] Regarding making fun ..... well I accept .. I am a damn aggressive guy by action ... but whoever knows me personally or closely.... they know ....I always make fun of myself ... rather than others.

[3] Regarding responding ... my communication is pretty weak ...and I am always confused kind of individual .. regarding .....what should be the proper words to convey in effective and polite ways. Might be because of the fact...... I belong from a State where "English language" is being taught by teachers ...who themselves do not know .. what...how and so on....... 

[4] Kindly do not take otherwise ... I do agree we are different personalities and our views, opinions can be different. 

But my dear friend...... this hard truth ... one side calling ourselves as a professionals and concept not clear on certain basics of India Contract Act (part and parcel of CS Entrance level .. during my time it was "Foundation".... what it is now ... no idea at all) .... certainly not excusable for a person like me. 

As....... I mentioned in earlier email ... will not interact on this respected platform anymore .. will keep my words,........ hope integrity, respect, moral, and enthusiasm will not be hampered further.     

P.S. ..... kindly ignore spelling mistakes, grammatical errors ... since i do not have habit for proof reading while circulating emails in forums. 

Thanks & regards,

Alok    

[shailesh goyal]

Hi..

I think we need to take some clarification from MCA regarding Hypothecation and Pledge.

Mr. Narayan has stated rightly that a CHARGE not being a pledge on movable property of company is required to be registered under the said Act. secondly he has given reference of a case in which it has been held that hypothecation amounts to pledge, but still this ruling will be prevailing in that particular state only in which it was held.

To some extent i agree with Mr. Thirupal Gorige who stated that since in Hypothecation, borrower  is not required to give possession of movable property to lender, hence in public interest and to avoid any fraudulent transaction on the same property, it is always advisable to get the charge registered with ROC.

As per my understanding, Hypothecation is not pledge rather it is a method of creation of charge. U/s125(4)(e) of the Companies Act, 1956 a charge not being a PLEDGE on movable property of company is required to be registered under the said Act. On the plain reading of section, it appears that one need to register the charge.

On the other side since some senior members are of the view that borrower is not required to register the charge, so i'll suggest to seek clarification from MCA on this point as ultimately its time consuming job for borrowers after receiving notice from ROC/MCA.  

Regards
Shailesh Goyal
Shailesh Goyal & Associates
30/1574, IIIrd Floor
Naiwala, Karol Bagh
Delhi-110005

[CS A Rengarajan]

earlier we have discussed several times.Filing of form 8 for car loan is only optional and mandatory if the bank insists we need to create a charge.We go by bank sanction.  Again it depends upon company's profile  and review by banks

 

regards

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