What a charge on a company means, and why an unreleased one costs you

Somebody owes you money, or is about to. Before you decide what that is worth, there is one question the public record answers precisely and almost nobody asks: who is already ahead of you in the queue?

That is what a charge is. A lender’s registered claim ticket over the company’s stuff. If the company runs out of money, the holders of registered charges are paid out of the charged assets first, and everybody else divides what is left.

It is free to look up. It takes about a minute. And the way it works has one asymmetry that costs ordinary people real money.

The plain version

A company borrows. The lender wants security, so the company gives the lender a claim over something: the factory, the machinery, the stock, the book debts, sometimes just about everything it owns. That claim is a charge.

The company then has to tell the Registrar of Companies about it, and the Registrar records it in a public register. Anyone can read that register.

Two consequences follow, and they are the whole of the practical point:

• A registered charge tells the world that the asset is spoken for.
• A creditor without one ranks behind a creditor with one. If you are holding an unpaid invoice, you are the second kind.

Where to look, and why you are entitled to

On the MCA portal, search a company under Master Data Services and the result comes back on three tabs. The middle one is the Index of Charges. It works from a company’s CIN or an LLP’s LLPIN, and MCA serves it without a fee.

Two things about it are worth fixing in your head before you read one, because both catch people out.

It is not one of the eight document categories you pay for. Those are the View Public Documents sets, and charge instruments sit in one of them. The Index of Charges is the free summary view, on a different part of the portal. If you have paid ₹100 and are looking for the index in what came back, you are looking in the wrong place; if you only want the index, you never needed to pay. Our guide to downloading MCA documents covers the paid route.

The statute prescribes a fee, and MCA does not charge it. Section 81(2) and rule 7(2) both make inspection available “on payment of fee”. In practice the tab is served to the general public for nothing. Useful to know, because a free facility offered beyond what the rule requires is a facility that could be withdrawn or metered without anyone amending anything.

That tab is not a convenience feature. It is the statutory register. Rule 7 of the Companies (Registration of Charges) Rules 2014 provides that the particulars of charges maintained on the MCA portal “shall be deemed to be the register of charges for the purposes of Section 81 of the Act”, and section 81 itself says:

(2) A register kept in pursuance of this section shall be open to inspection by any person on payment of such fees as may be prescribed for each inspection.

By any person. You do not need a reason, a relationship, or permission.

There is a harder reason to look than entitlement, and it is section 80:

Where any charge on any property or assets of a company or any of its undertakings is registered under section 77, any person acquiring such property, assets, undertakings or part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of such registration.

Deemed to have notice. Once a charge is registered, the law treats you as knowing about it, whether or not you looked. Not checking does not leave you neutral, it leaves you fixed with knowledge you do not have. That is the difference between the index being useful and the index being something you cannot afford to skip before you buy an asset from a company.

There is a second register worth knowing about, because it holds more. Under section 85 every company must keep its own register of charges at its registered office in Form CHG-7, along with a copy of each instrument creating a charge. And section 85(2) says that register is open for inspection during business hours:

(a) by any member or creditor without any payment of fees; or (b) by any other person on payment of such fees as may be prescribed

If you are a creditor of the company, you have a statutory right to inspect its charge register, for free, at its registered office. Very few suppliers chasing a payment know this. Form CHG-7 has seventeen columns, and two of them require the company to record the reasons for any delay in filing.

The clock on registering one

Section 77(1) puts the duty on the company:

It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation

Thirty days by right. Then, for charges created on or after 2 November 2018, the provisos allow the Registrar to permit registration within sixty days on additional fees, and to allow a further sixty days after that on payment of ad valorem fees. That structure was put in by section 11 of the Companies (Amendment) Act 2019, given effect from 2 November 2018.

So for any charge created today the outer limit is 120 days, and after that there is no route back. Charges created before that date had a longer, now closed, 300-day window.

If the company does not file, the lender can. Section 78 lets the charge holder apply to the Registrar, and the proviso entitles that person to recover the fees from the company. A competent lender does not rely on the borrower’s diligence.

What happens when nobody registers it

This is the part that gets misquoted constantly, because people cite one sub-section and stop. Read both:

(3) Notwithstanding anything contained in any other law for the time being in force, no charge created by a company shall be taken into account by the liquidator appointed under this Act or the Insolvency and Bankruptcy Code, 2016, as the case may be, 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).

(4) Nothing in sub-section (3) shall prejudice any contract or obligation for the repayment of the money secured by a charge.

So an unregistered charge does not void the loan. The lender can still sue on the debt. What it loses is the ability to have the security counted by a liquidator or against a competing creditor. In a liquidation it effectively stands in the unsecured queue with everyone else.

Tribunals have applied that strictly. In an appeal decided by the National Company Law Appellate Tribunal on 19 October 2020, Company Appeal (AT) (Insolvency) No. 02 of 2020, the tribunal held that where a charge had not been registered under section 77(1), the creditor could not be treated as a secured creditor, notwithstanding that its security had been perfected under a different statute. An appeal against that decision was admitted by the Supreme Court in January 2021 and we have not found a final judgment in it, and later tribunal benches have read section 77(3) more narrowly in the context of a resolution process rather than a liquidation. The safe statement, and the one nobody disputes, is the core of it: an unregistered charge is not counted by a liquidator.

The asymmetry that actually costs people money

Here is the thing worth carrying away from this page.

Creating a charge is tightly policed. Releasing one is not.

Registration of a new charge now has a hard 120-day stop. Satisfaction, by contrast, runs on a much looser regime. Section 82 gives the company thirty days from payment to tell the Registrar, and its proviso lets the Registrar allow the intimation within three hundred days on an application by the company or the charge holder. Beyond three hundred days it is still not lost: rule 12, as substituted in 2019, lets the Central Government direct an extension on an application in Form CHG-8 under section 87.

And crucially, nothing removes a charge on its own. There is no expiry, no lapse, no effluxion of time. Read the whole of Chapter VI and the Charges Rules and a charge leaves the register by exactly three routes, all of them requiring somebody to act:

Route	Who acts	Form
Section 82	The company, or the charge holder	CHG-4
Section 83	The Registrar, on evidence being given	none
Section 87	The Central Government, on application	CHG-8

Rule 10(4) puts it beyond doubt for the company’s own register: “The register of charges shall be preserved permanently.”

So a loan repaid in 2014 can still show as an open charge in 2026, because the party with the duty to file is the party with the least reason to bother once the money is back.

How common is that? A regulator’s answer

We do not have a count of stale charges and we are not going to invent one. But the problem was serious enough that the Reserve Bank of India legislated against it. Its circular of 13 September 2023 on the release of property documents on repayment requires regulated lenders to:

release all the original movable / immovable property documents and remove charges registered with any registry within a period of 30 days after full repayment/ settlement of the loan account

That is one obligation covering both the papers and the register, not two. And where the delay is the lender’s, it must compensate the borrower ₹5,000 for each day of delay. The directions apply wherever the release fell due on or after 1 December 2023.

A central bank does not attach a per-day penalty to a problem that does not exist. That directive covers personal loans by RBI-regulated lenders rather than every charge on every company, so read it as evidence of the pattern rather than a measurement of it.

The practical upshot for you: an open charge is a registered claim, not proof of a live debt. Treat it as a question to ask, not a conclusion to draw.

What the filing actually contains

The index gives you the summary. The charge documents themselves, filed on Form CHG-1, contain a great deal more, and they are in the Charge Documents category of a company’s file.

CHG-1 captures the date of the instrument, the description of the property charged from a fixed taxonomy that runs from immovable property through inventory and receivables to uncalled share capital, the charge holder and its category, the maximum amount secured, whether the charge is held by a consortium and whether the holders rank pari passu, and the principal terms including the rate of interest and the repayment term.

One field deserves special mention. The form asks whether the property being charged is not registered in the name of the company, and if so, in whose name it is. That is the kind of thing you would never think to ask and would very much want to know.

Reading the index, pattern by pattern

The tab gives a company eleven columns: a serial number, the SRN, the charge ID, the charge holder’s name, dates of creation, modification and satisfaction, the amount, an address, whether the charge was registered by another entity, and the asset holder’s name.

There is no status column. Nothing on the tab says “open” or “satisfied”. You work it out from one field: if Date of Satisfaction is empty, the charge is still on the register. That is the whole test, and it is why the next table reads the way it does.

What you see	How to read it
No charges at all	No registered secured borrowing. Also possibly less collateral behind the business than you assumed
Several charges, all satisfied	Borrowed and repaid, and somebody filed. A well-run file
Open charges, all several years old	Ordinary secured borrowing, or stale entries nobody released. Ask
A new charge in the last few months	The company has recently pledged assets to raise money
Several new charges in quick succession	Read alongside the accounts and the filing history
A charge over “book debts” or receivables	Directly relevant if you are a trade creditor. The money owed to them is already pledged
A receiver appointed (Form CHG-6)	Filed by an outsider, not the company. Take it seriously

That last row is worth knowing about. Under section 84, whoever obtains an order appointing a receiver or manager over charged property, or makes such an appointment under an instrument, must notify the company and the Registrar within thirty days. The duty sits on the appointer, not the company, so a CHG-6 on a file is a signal somebody outside the company chose to send.

What the register will not tell you

How much is still owed. The amount secured is a ceiling, not a balance. A ₹5 crore charge may secure ₹40 lakh of remaining principal, or nothing at all.

Whether the asset is worth anything. No valuations here.

Whether an unregistered charge exists. By definition, an unregistered charge is not on the register. Section 77(3) reduces the incentive to leave one unregistered, and it does not eliminate the possibility.

And nothing about unsecured lending. Loans without security create no charge and leave no trace.

Nor every security interest that exists. MCA’s own charge page carries a link out to CERSAI, the central registry of securitisation and asset-reconstruction security interests, and invites you to check the charges registered there for the same company. The registry is telling you, on its own page, that its index is not the whole picture.

And MCA does not vouch for it. The Master Data Services pages carry their own banner: “Master Data V3 Beta Version (Under Testing - Not to be used for statutory/ legal purposes)”. Read that against rule 7, which deems those same particulars to be the section 81 register, and you have the register’s operator telling you not to rely on the register for legal purposes. Both things are true at once. For a commercial decision the tab is the best free signal available; for anything that has to stand up formally, get the charge documents themselves.

What to do with it

1. Check the index of charges before you extend credit, pay a deposit, or buy an asset. Free, one minute, and the only free field that tells you about ranking.
2. Note which are open and how old they are. Old and open is a question, not an answer.
3. If a charge covers receivables or stock, and you are a supplier, understand that you are lending against assets a bank has already claimed. The full picture on a debtor reads charges alongside the accounts and the filing history.
4. Buying equipment or a vehicle from a company? Check charges first, and note that the ROC index is not the register that decides it: for a vehicle that is the registration certificate, and for plant it is the Central Registry. What to check before you buy a machine or a vehicle covers both, and the same logic applies before you pay any deposit.
5. If you are a creditor, remember section 85(2). You can inspect the company’s own register of charges, free, at its registered office.
6. Pull the CHG-1 itself if the amount matters. The index summarises; the form has the terms. It is one of the categories any ROC search report is expected to cover properly.

Contraventions of the charge provisions now carry a civil penalty under section 86, ₹5 lakh on the company and ₹50,000 on each officer in default, since the Companies (Amendment) Act 2020 took effect on 21 December 2020. That is the company’s problem. Yours is simpler: find out who is in front of you before you join the queue.

Written by the Entiva team, who read Indian company filings for a living. Not legal advice.