Corporate guarantee and registration of charge with roc
Anand Sharma
(Querist) 19 May 2015
This query is : Resolved
Is it necessary to register charges with RoC in case when a company is giving corporate guarantee. Kindly substantiate your reply with proper authority of law. (The query is in relation to the Companies Act, 1956) Thank You.
Guest
(Expert) 19 May 2015
Academic query. Being a student, you have to substantiate your answer to the academic query with proper authority of law, not the experts here.
Anand Sharma
(Querist) 19 May 2015
Respected Sir,
I not a student. This was the practical difficulty faced by me while working on a project as I was not able to strengthen my assumption derived from section 125 of earlier Act and Section 77 of the present Act with proper precedent.
malipeddi jaggarao
(Expert) 20 May 2015
What is your assumption? Come out with full facts. If a Company gives Corporate Guarantee, it has to be necessarily register the charge with ROC. All liabilities of the company are to be registered with ROC. Giving Corporate Guarantee is a contingent liability and this charge has to be registered with ROC. What exactly your confusion?
Anand Sharma
(Querist) 20 May 2015
Respected Sir,
I would like to draw your attention towards certain facts as they are no more mere assumptions.
1. we don't need to get the charge register if it is contingent (Williams V. Burlington Investment Ltd. (1977) )
2. when a company gives a corporate guarantee it is not necessary to get the same register.(The very same view is taken by the Indian Courts. In Patil’s case The Hon’ble Company Law Board was of view that “Guarantees do not require registration under Section 125 of the Act. It is in this connection, reference may be made to the decision in Paul and Frank Ltd. v. Discount Bank (Overseas) Ltd. and the Board of Trade [1967] 37 Comp Cas 76 {Ch D), wherein it has been held that contracts of insurance, guarantee, indemnity, etc., do not require registration”.)
But in general practice financial institutions requests for creation of charge. Thus, here comes the doubt/conflict.
I more thing i would like to add apart from this query. We all are professionals, we don't work just for money. In our profession knowledge is of paramount importance. Thus, it is a humble request from Dhingra Sir and Goyal Sir to participate in these kind of conversation to guide a junior like me.
malipeddi jaggarao
(Expert) 20 May 2015
Mr.Anand Sharmaji, whether the query is based on a practical problem or just to enrich your knowledge?
I have provided practical solution. You can further study and enlighten us also.
T. Kalaiselvan, Advocate
(Expert) 24 May 2015
Despite this being an academic query, our expert Mr. Malipeddi Jagga Rao has given adequate opinion/advise to the extent possible in this portal, for further issues the services of an expert consultant outside can be availed on payment of his fee.
