Write notes on the following: (iii) Consequence of non-registration of Charge

Section 77(3) provides that notwithstanding anything contained in any law for the time being in force, no charge created by a company shall be taken into account by the liquidator or any other creditor unless it is duly registered under sub-section (1) and a certificate of registration of such charge is given by the Registrar under sub-section (2) of section 77. Where a charge is not registered with the ROC, it shall be void against the liquidator and another creditor of the company. Void against the liquidator means that the liquidator on winding up of the company can ignore the charge and can treat the creditor concerned as unsecured creditor. But, the non-filing or non-Registration of a charge does not make it invalid against the company as a going concern; however it is only at the time of liquidation, that it becomes void against the liquidator and the creditors. Further, section 86 provides that if any company contravenes any provision pertaining to registration of charge, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.