Sections 83 and 84 of Companies Act, 2013: Satisfaction of Charge and Appointment of Receiver or Manager
Sections 83 and 84 of the Companies Act, 2013 form part of Chapter VI dealing with registration of charges. Section 83 empowers the Registrar of Companies to make an entry recording satisfaction or release of a registered charge even where the company has not given the usual intimation. Section 84 deals with intimation of the appointment and cessation of a receiver or manager in relation to property subject to a charge.
Meaning of a Charge under the Companies Act
A "charge" is defined in Section 2(16) of the Companies Act, 2013 as an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage. Registration of charges provides a public record of security interests affecting company property.
Section 83 - Power of Registrar to Make Entries of Satisfaction and Release
Section 83 is titled "Power of Registrar to make entries of satisfaction and release in absence of intimation from company." It applies where sufficient evidence concerning a registered charge is produced to the satisfaction of the Registrar even though the company itself has not sent the relevant intimation.
When can the Registrar act under Section 83?
Under Section 83(1), the Registrar may act on evidence satisfactory to him in relation to a registered charge where:
- the debt for which the charge was created has been paid or satisfied, either wholly or partly; or
- part of the charged property or undertaking has been released from the charge; or
- part of the charged property or undertaking has ceased to form part of the property or undertaking of the company.
In such circumstances, the Registrar may make an appropriate memorandum in the register of charges recording satisfaction in whole or in part, release of the relevant property, or the fact that the property has ceased to form part of the company's property or undertaking.
No Company Intimation Required for Exercise of Section 83 Power
An important feature of Section 83 is that the Registrar's power may be exercised notwithstanding the absence of an intimation from the company. The provision therefore enables the register of charges to reflect the actual position when satisfactory evidence establishes payment, satisfaction or release.
Notice to Affected Parties
Section 83(2) requires the Registrar to inform the affected parties within thirty days after making the entry in the register of charges maintained under Section 81(1).
Section 84 - Intimation of Appointment of Receiver or Manager
Section 84 is titled "Intimation of appointment of receiver or manager." The provision applies where a receiver or a person to manage property subject to a company charge is appointed either pursuant to an order or under a power contained in an instrument.
Section 84(1): Notice of Appointment
Where a person obtains an order appointing a receiver, or a person to manage property subject to a charge of a company, or makes such an appointment under a power contained in an instrument, notice of the appointment must be given to:
- the company; and
- the Registrar of Companies.
The notice must be given within thirty days from the date of the order or the making of the appointment and must be accompanied by a copy of the relevant order or instrument.
On payment of the prescribed fee, the Registrar registers the particulars of the receiver, person or instrument in the register of charges.
Section 84(2): Cessation of Receiver or Manager
When a receiver or manager appointed for the purposes covered by Section 84(1) ceases to hold that appointment, the person so appointed must give notice of the cessation to the company and the Registrar. The Registrar is then required to register the notice.
Form CHG-6 and Rule 9
The procedural requirements relating to notice of appointment or cessation of a receiver or manager are prescribed under the Companies (Registration of Charges) Rules, 2014. Rule 9 provides for notice in Form CHG-6.
Form CHG-6 is used for reporting the appointment or cessation of a receiver or manager in circumstances covered by Section 84. The applicable form, filing procedure, fee and current MCA requirements should be checked on the Ministry of Corporate Affairs portal before filing.
Difference Between Sections 82, 83 and 84
Section 82: deals principally with the company's obligation to report satisfaction of a registered charge.
Section 83: empowers the Registrar to record satisfaction or release on satisfactory evidence even when the company has not sent the relevant intimation.
Section 84: deals with notice and registration relating to the appointment and cessation of a receiver or manager over property subject to a charge.
Practical Importance of Sections 83 and 84
Accurate entries in the register of charges are important to companies, lenders, creditors, investors and other persons who need to determine whether company assets remain subject to a registered security interest.
Section 83 provides a mechanism for correcting the practical position where satisfactory evidence establishes payment, satisfaction or release despite the absence of company intimation. Section 84, on the other hand, promotes transparency when control or management of charged property passes to a receiver or manager.