# Application for Registration of Charge by the Charge-Holder (Section 78)

## Background

Normally, it is the duty of the company to register the charge under Section 77. However, if the company fails to do so, the law gives an opportunity to the charge-holder to take action to protect his security interest.

## Procedure under Section 78

1. Who may apply: The person in whose favour the charge is created (the charge-holder) may apply to the Registrar.

2. What to file: Application along with the instrument of charge within the prescribed time, form and manner.

3. Notice to Company: On receipt of the application, the Registrar shall give a notice to the company.

4. Time for Registration: If no objection is received from the company, the Registrar may allow such registration within 14 days after giving notice to the company, on payment of prescribed fees.

5. When Registrar shall NOT register on charge-holder's application:

The company itself registers the charge, OR
The company shows sufficient cause why such charge should not be registered.

## Recovery of Fees

Where registration is affected on the charge-holder's application, the charge-holder is entitled to recover from the company the amount of:

Fees paid, and
Additional fees paid

to the Registrar for the purpose of registration of charge.

## Practical Significance

This provision protects creditors from a defaulting company that neglects its duty to register the charge — without registration, the security would become void on liquidation.

Worked example

### Example 1

Example: ABC Ltd. obtains a loan of ₹50 lakhs from XYZ Bank on 1st January and creates a charge but fails to file Form CHG-1. On 15th February, XYZ Bank files an application with the Registrar under Section 78 along with the instrument of charge. The Registrar serves notice on ABC Ltd. ABC Ltd. does not raise any objection within 14 days. The Registrar allows registration. XYZ Bank later recovers the registration fees and additional fees from ABC Ltd.

⚠️ Common exam mistakes

Thinking Section 78 replaces Section 77 — it is only a fallback when the company defaults.
Assuming charge-holder bears the cost — fees can be recovered from the company.
Forgetting the 14-day window applies after notice is given to the company.
Believing the Registrar is bound to register on a charge-holder's application — registration can be refused if the company shows sufficient cause.

Bare-Act text Section 78 · The Companies Act, 2013 · click to expand

Where a company fails to register the charge within the period of thirty days referred to in sub-section (1) of section 77, without prejudice to its liability in respect of any offence under this Chapter, the person in whose favour the charge is created may apply to the Registrar for registration of the charge along with the instrument creating such charge, within such time, in such form and on payment of such fees, as may be prescribed and the Registrar may, on such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, allow such registration on payment of such fees, as may be prescribed.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Application for Registration of Charge by Charge-Holder (Section 78)

Worked example

⚠️ Common exam mistakes