Charge on Vehicle by a company

[kumar basant]

Dear Friends

Can a company create a charge on a vehicle purchased out of loan taken from a Bank for the aforesaid purpose only.

Is there any clarification/notification/circular as per which it is not required to create a charge on vehicle purchased.

Please enlighten.

--
Regards,

CS Kumar Basant Bhagirathi

[Jayashree Chandrasekaran]

creation of charge on vehicles is not mandatory but it depends on the
banker...some bankers are insisting and when they insist it it better
to create
Jayashree

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C.JAYASHREE
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[Abhishekh Kanoi]

Sometime bankers are also not advise to create a chareg on a vechicle brought out of loan.

 

Also the statutory auditor of the Company during the course of audit considered teh laon amount as secured loan.

 

Therfore, in my opinion, it is better to create a charge on teh vehicle brough out of loan after consulting the same with the baker.

 

Moreover, kindly refer Section 125(4)(e) of the Companies Act, 1956. According to it, it is necessary to create a charge.

 

Regards,

 

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CS Abhishekh Kanoi
Hand-Phone-+91-9811660240
Alternate Email: csabhish...@gmail.com
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[ravi p]

I have some additional points on why bankers doesnot insist on creating charge on vehcile loan under section 125 of Comapanies Act 1956:

 

1.  For Motor vehciles purchased on loan basis, charge is already created under "Motor Vehciles Act". Therefore Banker's don't insist on creation of charge under Companies Act. 

 

 The charge is created mainly to have the  right to recover money based on the asset mortgaged.  This is taken care under Motor Vehicles Act.

 

Member views on this welcome

 

Regards

 

Ravi P 

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From: Abhishekh Kanoi <corporates...@gmail.com>
To: csmy...@googlegroups.com
Sent: Fri, 11 June, 2010 12:24:30 PM
Subject: Re: [CSMysore] Charge on Vehicle by a company

[Vikas Saraogi]

Mr. Ravi has rightly guided.

Sincerely
Thanks&Regds
Vikas Saraogi

[kumar basant]

Mr. Ravi

Can you please elaborate it more for Motor vehciles purchased on loan basis, charge is already created under "Motor Vehciles Act"?

Regards

CS Kumar Basant Bhagirathi

[Vikas Saraogi]

Dear Basant

 

charge is created on motor vehicles in the form of hire purchase and hence no need to create charge in ROC.

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[Narayan S]

Dear Member

 

These cases fall under hypothecation which is also a kind of pleadge and is exempt from registration.

 

Though it is exempt if either the company or interested party want to register the charge it can do so eventhough companies Act exempt it.

 

The ROC themselve shall advice upon registration that any future modification or satisfaction of the charge to be intimated for their records.

 

It depends upon how you are going to treat it.

 

Regards

S.Narayan

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Regards
S.Narayan

[Manpreet Singh]

Dear 
 
In my opinion, hypothecation is not a pledge. The intention of the law to exclude pledge from registration with ROC is that the creditor/lender is on safe side as in pledge the possession of the property transfers to the lender but its not the same in hypothecation. In hypothecation, possession remains with the borrower and to secure it, registration is essential. though in common practice also Bank force to create charge on hypothecation.
 
other views are solicited.

[Ganesh Kumar]

I agree with all views expressed and am adding a few more points.   If an hire purchase agreement is entered into then it does not require creation of a charge since it is a contract to buy the property and the ownership is vested only on fulfilment of all the terms of the contract. Whereas an hypothecation agreement is entered into only after the ownership is established.     So the essence is whether the company owns the property for it to create a charge.   Regards   Ganesh --- On Fri, 6/11/10, Manpreet Singh <manpreetsi...@gmail.com> wrote:

From: Manpreet Singh <manpreetsi...@gmail.com> Subject: Re: [CSMysore] Charge on Vehicle by a company

[kumar basant]

As I have mentioned earlier there is no hire purchase.

Question was can charge be created on vehicle purchased from loan taken from the bank