Companies Act Section 83

Comprehensive Explanation of Section 83 of the Companies Act: Power of Registrar to Make Entries of Satisfaction and Release in the Absence of Intimation from the Company

Section 83 of the Companies Act provides the Registrar with the authority to record the satisfaction and release of registered charges, even in cases where the company has not formally notified the Registrar of such developments. 

This provision ensures that the register of charges remains up to date based on available evidence, without relying solely on the company’s initiative. 

The section is divided into key subsections, which outline the scope of the Registrar’s powers and the associated procedural requirements.

Subsection (1): Authority of the Registrar to Make Entries in the Register of Charges

Under subsection (1), the Registrar is granted discretionary power to update the register of charges when presented with sufficient and satisfactory evidence regarding the status of a registered charge. The key aspects of this authority are as follows:

1. Circumstances Under Which the Registrar May Act

The Registrar may exercise this power when evidence is provided that sufficiently demonstrates any of the following circumstances related to a registered charge:

(a) Payment or Satisfaction of the Debt Secured by the Charge

If it is established that the debt for which the charge was originally created has been either fully or partially paid or satisfied, the Registrar is empowered to update the register accordingly.

This ensures that the records reflect the actual status of the obligation and prevent discrepancies between the company’s financial records and the register of charges.

(b) Release of Charged Property or Undertaking

Where it is demonstrated that a portion of the company’s property or undertaking, which was previously subject to the charge, has been released or is no longer considered part of the company’s assets, the Registrar is authorized to record this change.

This may occur in cases where a company disposes of an asset that was originally secured under a registered charge or where a lender agrees to release certain assets from the charge while maintaining security over other assets.

2. Nature of the Entry in the Register of Charges

Based on the evidence presented, the Registrar may make one or more of the following entries in the register:

(a) Memorandum of Satisfaction

If the debt has been fully or partially satisfied, the Registrar may enter a memorandum of satisfaction, indicating the extent to which the charge has been discharged.

This helps in maintaining transparency in the company’s credit status and obligations.

(b) Note on Release of Property or Undertaking

If a portion of the secured property or undertaking has been released, the Registrar may enter a note specifying that the particular asset is no longer subject to the charge.

This ensures that third parties reviewing the register have accurate and current information regarding the extent of the charge’s coverage.

3. No Requirement for Formal Intimation from the Company

A key feature of this provision is that the Registrar is not dependent on a company’s formal intimation to update the register of charges.

The power granted under this section enables the Registrar to act proactively based on independent evidence or information received from sources such as creditors, financial institutions, or other relevant entities.

Subsection (2): Obligation to Notify Affected Parties

Once the Registrar makes an entry in the register of charges under subsection (1), the law imposes an obligation to notify the relevant parties about this update. The following procedural requirements apply:

1. Timeline for Notification

The Registrar is required to notify the affected parties within a period of thirty (30) days from the date of making the entry in the register.

This notification ensures that all concerned stakeholders, including the company and its creditors, are aware of the changes recorded in the official register.

2. Purpose of Notification

The notification serves as a formal communication to interested parties regarding the modification in the register of charges.

It provides an opportunity for any affected party to verify the accuracy of the entry and raise concerns if discrepancies exist.