Re : Hypothecation and Mortgage of Charge

[Deep Vaghela]

Hello,

 

I just have one query. If possible please guide us.

 

We entered into a Joint Deed of Hypothecation on  20.04.2016 with Consortium Lenders amounting to Rs. 353.00 crores and created a Charge with Registrar of Companies on 24.05.2016.

 

Now as per Sanction terms, we entered into Mortgage by way of Memorandum of Deposit of Titles for that  same Consortium Lending.

 

In this matter I am of the view that the earlier charge created needs to be modify but the Bank says that as this is fresh documents we need create a new charge.

 

I believe that if we create a new charge then two charges of Rs. 353 crores will be reflecting in ROC while the actual scenario is that the lending amount is only Rs. 353.00 crores.

 

Kindly guide as per law what will be the case. Whether we need to create separate charge for this Mortgage by way of Memorandum of Deposit of Titles or we can modify the earlier charge filed with Registrar of Companies.

[Sakshi Vaid]

Hi Deepa,

You are right. The charge needs to be modified or else two charges will show up with ROC.

 You could reason with  Banker's that in their opinion when is the charge required to be modified. 

Please explain them that when there is a change in terms and conditions(which could be anything, change in terms of sanction or increase/decrease in hypothecated property/title deeds etc) of the charge created already, Form CHG-1 is filed. 

if there is enhancement in the same facility, then also same charge will be modified. 

but if its all together another facility then, you need to file fresh form CHG-1. 

in the Form CHG-1 you prepare, do remember to mention in details of property on which charge is created that-

1. assets as per DOH dated...

2.....MOE details [ that on both these items charge is created securing the said loan facility]

i am sure this will work out.

thanks& regards

Sakshi Vaid

Sakshi Vaid

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[ACS suresh chaudhary]

Dont let the bank to do so. I spend considerable time and energy in rectifying the mistake. whenever the nature of security changes the charge need to be modified and not fresh charge be created. It will result in index of charge with two amount for same loan which appears to the public that double the actual amount of loan has been taken. Also charge need to be modified within the prescribed time limit.

Do all the communication on mail and quote the relevant law to the banking rm.dont yield to their mistake.

[ACS suresh chaudhary]

The mail I exchanged with  Bank RM (a CA) for rectification of index  of charge on MCA portal and get the same done successfully with 4 months of follow up: 

Dear Sir

Modification of charge is a stage subsequent to creation of charge.

Creation of equitable mortgage is a further development and thus a modification of charge subsequent to creation of charge by Hypothecation.

If the nature of security changes then modification of charge took place and not a creation of fresh charge.

Thus, the process to be followed was to file CHG-1 for creation of charge by hypothecation and then subsequently another CHG-1 for modification of charge by equitable mortgage.

But your  professional has filed the subsequent CHG-1(equitable mortgage) for creation of charge instead for modification of charge .As a result two charge of the same amount has been created and recorded in index of charges of MCA.

Whenever a charge is modified a star * appears on the date of charge modified with comment that charge has been modified, only date changes and the amount remains the same.

Our Company has availed CC facility of only 12 crore and not 24 crore(Two charges of 12 crores) as visible on index of charges. so I request you to get the one charge of 12 crore be removed from the index of charges on MCA portal.

On Tuesday, June 21, 2016 at 9:58:33 AM UTC+5:30, Deep Vaghela wrote: