NO DSC IS REQUIRED TO BE AFFIXED IN FORM CHG-1 IF THE FORM IS FILED BY A CHARGE HOLDER IF BORROWER REFUSES TO COOPERATE WITH THE FILING OF FORM CHG-1 –DELHI HIGH COURT

 

NO DSC IS REQUIRED TO BE AFFIXED IN FORM CHG-1 IF THE FORM IS FILED BY A CHARGE HOLDER IF BORROWER REFUSES TO COOPERATE WITH THE FILING OF FORM CHG-1 –DELHI HIGH COURT

In Union of India vs Alliage Engineering India Pvt Ltd (Delhi High Court, Nov 5, 2024), the court unanimously held that when a charge-holder files Form CHG-1 under Section 78 of the Companies Act, they are not required to have the company's Digital Signature Certificate affixed to the form.

KEY TAKEAWAYS

CONTEXT:

Section 77 mandates the company to register a charge via CHG‑1. If the company fails to do so, Section 78 enables the charge-holder to register the charge independently

ISSUE:

The MCA portal typically requires the company’s DSC for CHG‑1, but the charge-holder, lacking that, was unable to submit.

SINGLE JUDGE RULING:

It dispensed with the requirement, allowing charge-holders to file without the company’s DSC

DIVISION BENCH UPHELD:

 

The Division Bench agreed: Insisting on the company's DSC in these circumstances defeats the purpose of Section 78, as the very situation is one where the company has defaulted.

 

OUTCOME:

 The appeal by the Union of India was dismissed, and the charge-holder’s right to register under Section 78 without company DSC was affirmed.

 

It is to be noted that what about the requirement of bankers DSC on CHG-4 forms, especially old dormant cases where the bank even is non existent in India as they might have amalgamated with some other banks.

 

R V SECKAR FCS,LLB

 

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