The details of how the registration of charges done under companies act
(This post elucidates the entire process of creation of charge or modification of charge and satisfaction of charge and the requirement of information in the form of a resolution passed in the Board meeting) According to Section 77 of the Companies Act, every company that creates a charge shall register the same with the Registrar…
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Right of Appropriation and the rule in Clayton’s Case?
In the case of running accounts like current accounts or cash credit accounts, normally there is no specific appropriation of funds to exact debit. In such cases, it is the first item on the debit side that is discharged or reduced by the first item on the credit side. This principle was originally formulated in…
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Law Relating to Securities and Modes of Charge: Mortgage and Other Types of Securities
When banks lend money, they need assurance that the loan will be repaid. This assurance often comes in the form of securities—assets pledged by the borrower that the bank can claim if repayment fails. The law relating to securities and modes of charge provides the legal framework for creating, protecting, and enforcing these rights. For…
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What is Mortgage Backed Security (MBS)?
A mortgage-backed security (MBS) is a bond type security in which the collateral is provided by a pool of mortgages. For example, A borrows money from Bank ‘B’ mortgaging his house to Bank ‘B’. The Bank ‘B’ sells the mortgage to a company ‘C’ (which may be a government agency or investment bank or private…
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Key Sections, Definitions & Provisions under the Negotiable instrument Act 1881
The Negotiable Instruments Act, 1881 provides a robust legal framework that safeguards both banks and customers during transactions involving cheques, bills of exchange, and promissory notes. Its provisions ensure trust, reliability, and legal recourse in case of disputes, making it a cornerstone of the Indian banking system. Purpose of the Act The primary intent of…
Difference between first charge, second charge and pari-passu charges explained
Charge creation means the establishment of the lender’s right over specified assets of the borrower in order to recover principle and interest in default from the borrower. The charge can be created against the same assets by more than one lender. The lender in whose favour charge is first created is called the holder of…
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