Law · Company Law & Security Creation
A company created a mortgage on its office to secure a bank loan. The mortgage documents were executed, but the company failed to file the 'Particulars of Charge' with the Registrar of Companies (ROC) within the prescribed time. Later, the company created a second mortgage on the same property with another lender who promptly registered it with the ROC. Shortly after, the company went into liquidation. Under the Companies Act, 2013, what is the legal position of the first bank regarding the property against the liquidator?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The first bank retains its secured status because the failure was an administrative oversight.
- 2The ROC registration is a mere formality and does not affect the rights of the first bank.
- 3The first bank's charge is void against the liquidator, and it will be treated as an unsecured creditor for that asset.✓
- 4The first bank has priority because its mortgage was created first in time.
Correct answer
The first bank's charge is void against the liquidator, and it will be treated as an unsecured creditor for that asset.
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