UNION OF INDIA AND ANR vs ALLIAGE ENGINEERING INDIA PVT LTD

$~38
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 1093/2024 & C.M.Nos.64550-64552/2024
UNION OF INDIA AND ANR …..Appellants
Through: Mr.Akshay Amritanshu, senior panel counsel with Ms.Swati Mishra, Ms.Drishti Saraf and Ms.Pragya Upadhyay, Advocates.
versus
ALLIAGE ENGINEERING INDIA PVT LTD …..Respondent Through: None
% Date of Decision: 05th November, 2024
CORAM: HON’BLE THE CHIEF JUSTICE HON’BLE MR. JUSTICE TUSHAR RAO GEDELA
JUDGMENT
MANMOHAN, CJ : (ORAL)
1.
Present appeal has been filed challenging the order dated 08th July, 2024 passed by the learned Single Judge in W.P. (C) No.12695/2022 whereby the learned Single Judge directed the Appellants to make necessary amendments on their website to allow applications under Form CHG-1 to be processed without requiring the digital signatures of the company against whom the charges are to be registered under Section 78 of the Companies Act, 2013 (hereinafter referred to as the ‘Act’).

2.
Learned counsel for the Appellants states that according to the scheme of the Act, in order to register a charge, the applicant has to submit Form CHG-1 digitally within the stipulated time, otherwise the application for

LPA 1093/2024

Page 1of4

registration of charge cannot be considered or processed to register a charge. However, instead of filing the CHG-1 Form, the Petitioner/Respondent wrote to Appellant No.2 to register the charge by way of letter dated 04th May, 2022 and as a result, the charge had not been registered as neither was the due process followed nor was the application made within the stipulated time.
3.
He states that even though several applications for registration of charge under Section 78 of the Act have been processed by the Appellants where Form CHG-1 has been submitted without affixing the digital signatures of the charge creator, yet the Petitioner/Respondent had alleged that due to mandatory requirement of affixing the digital signature of the charge creator, the Petitioner/Respondent was unable to submit the CHG-1 Form to register the charge under Section 78 of the Act.

4.
He states that the learned Single Judge took note of the fact that the digital signature (DSC) of the charge creator was not warranted by the Appellants while applying under Section 78 of the Act and yet relied on the assumption that the applicants filing under Section 78 of the Act were facing hardships in registering the charge without affixing the signatures of the charge creator.

5.
He states that the learned Single Judge failed to consider that a working mechanism for applying for registration of charge under Section 78 of the Act without affixing the signature of the charge creator is already in place and therefore, such directions could not have been issued to the Appellants.

6.
He submits that Section 398(1)(a) read with Section 400 of the Act authorises the Central Government to design and make rules with respect to

LPA 1093/2024

Page 2of4

documents that may need to be furnished for process of application of charge and further empowers the Government to decide electronic forms as an exclusive mode of application. Therefore, according to him, as form CHG-I is an exclusive electronic form required to be submitted for registration of charge under Sections 77 and 78 of the Act, the Appellants cannot be directed to explore and provide for alternate methods of registration as the same would be contrary to the position established under the law.
7.
Having heard learned counsel for the appellant, this Court is of the view that Section 78 of the Act is resorted to only after a company has failed to register a charge as mandated under Section 77 of the Act – thereby indicating a lapse or refusal on the part of the company to fulfil its statutory obligations. In such cases, expecting a person in whose favour the charge is created to obtain digital signatures from the company itself contradicts the very scenario Section 78 is designed to address. This stance is further supported by the instructions for form CHG-1, which do not explicitly accommodate situations where the company’s cooperation can be presumed absent. Therefore, insisting on digital signatures in the form from a company who is refusing to register the charge in such circumstances would unduly hinder the rights of charge holders to secure their interests when a company defaults on their statutory duty under Section 77 of the Act.

8.
Consequently, this Court is in agreement with the view of the learned Single Judge that the requirement for digital signatures from the company, while filing form CHG-1 under Section 78 of the Act, should not be insisted upon.

LPA 1093/2024

Page 3of4

9.
Further just to say that the stipulated requirement is not being insisted upon is not sufficient. Many law abiding citizens not familiar with the way the department works may not even apply under Section 78 of the Act for registration of the charge after seeing the format of form.

10.
Consequently, this Court finds no ground to interfere with the impugned order. Accordingly, the present appeal along with the applications is dismissed.

MANMOHAN, CJ
TUSHAR RAO GEDELA, J NOVEMBER 05, 2024 KA
LPA 1093/2024

Page 4of4