Procedure To Remove a Charge on Your Movable Property

Introduction

A charge on movable property is a security interest that is created to secure the payment of a debt. It is a common practice in banking transactions where a borrower pledges movable property as collateral to a lender. If you have a charge on your movable property, it means that you have pledged your property as security for a loan or debt. In this article, we will discuss how to remove a charge on your movable property.

Law for Secured Transaction on Movable Property  

The law for secured transactions on movable property is governed by the Transfer of Property Act, 1882. According to Section 100 of the Act, a charge is created when the immovable property of one person is made security for the payment of money to another person. The Act also defines movable property as property that is not immovable property.

What are the Steps to Remove a Charge on Your Movable Property?

If you have a charge on your movable property and you want to remove it, you need to follow these steps:

Step 1: Repay the Debt  

The first step to removing a charge on your movable property is to repay the debt for which the charge was created. Once you have repaid the debt, the lender will release the charge on your movable property.

Step 2: Obtain a No Objection Certificate (NOC)  

After you have repaid the debt, you need to obtain a No Objection Certificate (NOC) from the lender. The NOC is a document that states that the lender has no objection to releasing the charge on your movable property.

Step 3: File an Application with the Registrar of Companies (ROC)  

Once you have obtained the NOC from the lender, you need to file an application with the Registrar of Companies (ROC) to remove the charge on your movable property. The application should include the following documents:

• Copy of the NOC obtained from the lender
• Copy of the certificate of registration of the charge
• Copy of the resolution passed by the board of directors authorizing the removal of the charge
• Any other documents required by the ROC

Step 4: Verification by the ROC 

After you have filed the application with the ROC, the ROC will verify the documents submitted by you. If the ROC is satisfied with the documents, it will issue an order for the removal of the charge on your movable property.

FAQs on Removing Charge on a Movable Property

1. Can I remove a charge on my movable property without fulfilling my outstanding debt or obligations?

In most cases, it is unlikely to remove a charge without fulfilling your outstanding debt or obligations. Charges serve as security for the lender or as a means of resolving legal disputes. Therefore, settling the debt or resolving the underlying issue is typically a prerequisite for removing the charge.

2. How long does the process of removing a charge on movable property usually take?

The duration of the process can vary depending on factors such as the complexity of the charge, the responsiveness of the parties involved, and the jurisdiction’s legal requirements. It is advisable to consult legal professionals who can provide a more accurate estimate based on your specific circumstances.

3. Do I need legal assistance to remove a charge on my movable property?

While legal assistance is not always mandatory, it is highly recommended, especially if the situation involves complex legal disputes or if you are unsure about the legal requirements and procedures. An attorney specializing in property law can provide valuable guidance, ensure compliance with legal obligations, and represent your interests throughout the process.

4. Will removing the charge affect my credit score or financial standing?

Removing a charge from your movable property can have positive implications for your credit score and financial standing. It signifies that you have resolved the outstanding issue and have regained full control over your assets. However, it is essential to monitor your credit report to ensure that the charge’s removal is accurately reflected and that there are no other discrepancies affecting your creditworthiness.

5. What happens if the charging party refuses to remove the charge?

If the charging party refuses to remove the charge without a valid reason, it may be necessary to seek legal recourse. Consult with an attorney who can assess the situation, review the relevant documentation, and advise you on the appropriate legal steps to take. Resolving the matter through negotiation, mediation, or, if necessary, litigation may be required to achieve the desired outcome.

Conclusion  

Removing a charge on your movable property can be a complex process, but it is important to follow the legal procedures to ensure that the charge is removed properly. The process involves repaying the debt, obtaining an NOC from the lender, filing an application with the Registrar of Companies, and verification by the Registrar of Companies. It is important to note that the process may vary depending on the jurisdiction and the type of movable property. Therefore, it is advisable to seek legal advice before proceeding with the process.

Suggested Read: How to Remove a Charge on Your Immovable Property?