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Microlesson · 5-min read

Acquisition of Property Subject to Charge and Modification of Charge [Section 79]

# Acquisition and Modification of Charge [Section 79]

Section 79 extends the registration regime under Section 77 to two additional situations, ensuring all charge-related events are recorded with the ROC.

## Situation 1 — Company Acquires Property Subject to a Charge

When a company buys property on which a registered charge already exists:

  • If the property is sold with the permission of the charge holder, the acquiring company must register the charge under Section 77 in its own name.
  • The earlier charge is vacated (in respect of the old owner) and a new charge is created against the acquiring company.

## Situation 2 — Modification of an Existing Registered Charge

Any modification in the terms and conditions, extent, or operation of a registered charge must be registered with the ROC.

What counts as modification?

  • Variation in terms and conditions of the agreement.
  • Change in extent of the charge.
  • Change in operation of the charge (e.g., from floating to fixed).

The procedure follows Section 77 — same forms, timelines, and consequences.

## Certificate of Modification

On registration of the modification, the ROC issues a Certificate of Modification in Form CHG-3, which is conclusive evidence that all requirements relating to modification have been complied with.

Worked example

### Example 1

Example — Acquisition of Charged Property

P Ltd. owns a factory subject to a registered charge in favour of Bank C. With Bank C's permission, P Ltd. sells the factory to Q Ltd.

  • The charge against P Ltd. is vacated.
  • Q Ltd. must register the new charge on the factory in favour of Bank C under Section 77 within 30 days.
  • Form CHG-1 is filed for this fresh registration.

### Example 2

Example — Modification of Charge

M Ltd. had originally created a fixed charge of ₹2 crore on its plant in favour of Bank D. Two years later, the parties agree to increase the secured amount to ₹3 crore.

  • This is a modification (variation in the extent of the charge).
  • M Ltd. must file modification details with the ROC under Section 79 read with Section 77 (in Form CHG-1).
  • ROC issues Form CHG-3 as conclusive evidence of modification.

⚠️ Common exam mistakes

  • Believing that acquiring a property with an existing charge requires no fresh action — Section 79 mandates registration of a new charge by the acquiring company.
  • Treating a change in interest rate or repayment terms as something separate — it is a modification and triggers Section 79.
  • Confusing the certificate forms — CHG-2 is the certificate of registration of new charge; CHG-3 is the certificate of modification; CHG-5 is for satisfaction.
Bare-Act text Section 79 · Companies Act, 2013 · click to expand
Section 79 — The provisions of section 77 relating to registration of charges shall, so far as may be, apply to — (a) a company acquiring any property subject to a charge within the meaning of that section; or (b) any modification in the terms or conditions or the extent or operation of any charge registered under that section.
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