Legal Question in Banking Law in India

Hello,

I just have one query. If possible please guide us.

We entered into a Joint Deed of Hypothecation on 20.04.2016 with Consortium Lenders amounting to Rs. 353.00 crores and created a Charge with Registrar of Companies on 24.05.2016.

Now as per Sanction terms, we entered into Mortgage by way of Memorandum of Deposit of Titles for that same Consortium Lending.

In this matter I am of the view that the earlier charge created needs to be modify but the Bank says that as this is fresh documents we need create a new charge.

I believe that if we create a new charge then two charges of Rs. 353 crores will be reflecting in ROC while the actual scenario is that the lending amount is only Rs. 353.00 crores.

Kindly guide as per law what will be the case. Whether we need to create separate charge for this Mortgage by way of Memorandum of Deposit of Titles or we can modify the earlier charge filed with Registrar of Companies.

Regards,

ACS Deep Vaghela


Asked on 6/20/16, 10:16 pm

2 Answers from Attorneys

1) The first charge created was against hypothecation of moveable goods

as primary security is Floating charge.

2) The second charge is EM by deposit of title deeds as collateral security

is not an extension of hypothecation limits but Fixed charge.

3) As such separate charge by way of EM has to be created as opined by the

Bank with ROC. The charges covered are against sanctioned limit of Rs.353

crores only.

4) In the event of borrowers default, the lender exhausts his recourse against

hypothecation followed by EM of property as per the outstanding balance.

5) Instead of EM, Banks now prefer Registered Mortgage to ensure the title

of the property in view of real estate boom scams.

Read more
Answered on 6/20/16, 10:50 pm
Fca Prashant Chavan Expert Edge LLP

21.06.2016

Dear Deep.

You should convince the Bank that since there is no change in the limit, the existing agreement should be modified to include the amendments.

Regards,

Read more
Answered on 6/21/16, 2:04 am


Related Questions & Answers

More Banking Law questions and answers in India