# Registration of Charge by the Charge Holder (Section 78)

## 1. When Does Section 78 Kick In?

Section 78 acts as a safety net. If the company fails to register the charge within the 30-day window under Section 77, the charge-holder may step in and register the charge with the ROC on their own initiative.

## 2. ROC's Procedure on Receiving the Charge-Holder's Application

1. The ROC issues a notice to the company asking whether the company objects.

2. If the company raises no objection within the stipulated time, the ROC permits registration within 14 days of issuing the notice, on payment of prescribed fees.

## 3. When Will ROC Refuse the Charge-Holder's Application?

The ROC will not allow the charge-holder to register the charge if the company:

has itself already registered the charge, OR
shows sufficient cause as to why the charge should not be registered.

## 4. Right of Recovery of Fees

If the charge is registered on the strength of the charge-holder's application, the charge-holder is entitled to recover from the company the fees and additional fees paid to the ROC for the registration.

## 5. Why This Section Exists

The charge-holder's economic interest is to ensure the charge appears on the public register so that priority over later creditors is secured. Without Section 78, an uncooperative or negligent company could leave the lender exposed.

Worked example

### Example 1

Example 1 — Step-in by lender: Bank B creates a charge against ABC Ltd on 1st May. ABC Ltd does not file CHG-1 by 31st May. Bank B applies to the ROC under Sec 78. The ROC issues notice to ABC Ltd; the company does not object. Within 14 days, the ROC registers the charge. Bank B can recover the filing fees from ABC Ltd.

### Example 2

Example 2 — Company's objection blocks the lender: Suppose ABC Ltd responds to the ROC saying the charge has been satisfied prior to the lender's application and produces evidence. The ROC may treat this as 'sufficient cause' and refuse registration on the lender's application.

⚠️ Common exam mistakes

Thinking Sec 78 lets the charge-holder bypass the company's 30-day duty — it only kicks in after the company defaults.
Forgetting that the company is given a chance to object via the ROC's notice; the charge-holder cannot register unilaterally without this notice step.
Missing the lender's statutory right to recover ROC fees from the company.

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

Section 78 – Where a company fails to register the charge within the period of thirty days referred to in sub-section (1) of section 77, the person in whose favour the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge, within such time and in such form and manner 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.

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