Quick Summary
A charge is a right created by a borrower in favor of a lender over specific assets as security for repayment of a debt. Unlike a mortgage, it does not involve transfer of interest but creates an encumbrance on the property.
A charge is a right created by a borrower in favor of a lender over specific assets as security for repayment of a debt. Unlike a mortgage, it does not involve transfer of interest but creates an encumbrance on the property.
Key Characteristics
- Security interest without transfer of ownership
- Fixed charge on specific assets
- Floating charge on changing assets like inventory
Legal Framework
Satisfaction filed when debt is cleared
Key Points
- Security interest without transfer of ownership
- Fixed charge on specific assets
- Floating charge on changing assets like inventory
- Registration mandatory under Companies Act
- Charge holder gets priority in repayment
- Satisfaction filed when debt is cleared