What Is Satisfaction of Charge? Section 82

Satisfaction of charge under section 82 is the step that closes the loop opened when a company registered a charge. Once the secured debt is paid off, the company has thirty days to tell the Registrar, and the Registrar then gives the lender a chance to object before the entry is cleared.

The satisfaction of charge section 82 timeline

Section 82(1) puts the duty on the company: it shall give intimation to the Registrar, in the prescribed form, of the payment or satisfaction in full of any charge registered under Chapter VI, within thirty days from the date of that payment or satisfaction.

Act 1 of 2018, section 20, made two changes to this sub-section with effect from 5 July 2018. It omitted certain words from the main limb, and it inserted the proviso that now carries the extension.

That proviso is worth reading closely for who may apply. The Registrar may allow the late intimation on an application by the company or the charge holder. The duty in the main limb sits on the company alone, but the relief is available to either side.

The show cause notice, and the exception that skips it

Section 82(2) is the safeguard for the lender. On receiving the intimation, the Registrar shall cause a notice to be sent to the holder of the charge, calling on him to show cause within such time not exceeding fourteen days as may be specified, as to why payment or satisfaction in full should not be recorded as intimated.

What happens next splits two ways:

The proviso to section 82(2) removes the notice step entirely in one case: it is not required where the intimation to the Registrar is in the specified form and signed by the holder of the charge. A lender who signs the intimation has already said what the notice would have asked.

When the Registrar acts on his own

Section 82(4) makes clear that nothing in section 82 affects the Registrar's power to make an entry in the register of charges under section 83, or otherwise than on receipt of an intimation from the company.

Section 83(1) is that power. On evidence being given to his satisfaction with respect to any registered charge, the Registrar may enter a memorandum in the register notwithstanding that no intimation has been received from the company, in either of two situations:

• (a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or
• (b) that part of the property or undertaking charged has been released from the charge, or has ceased to form part of the company's property or undertaking

Note the difference in reach. Section 82 deals only with payment or satisfaction in full. Section 83 lets the Registrar record partial satisfaction and partial release as well, which is why a register entry can move without any filing by the company.

Section 83(2) then requires the Registrar to inform the affected parties within thirty days of making the entry in the register of charges kept under section 81(1).

Getting an entry corrected

Section 87 gives the Central Government a rectification power that covers both the timing and the content of these entries. On being satisfied that the omission to give intimation of payment or satisfaction within the required time, or the omission or misstatement of any particulars in a filing about a charge, a modification, a memorandum of satisfaction or another entry made under section 82 or section 83, was accidental or due to inadvertence or some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders, it may direct that the time be extended or the omission or misstatement rectified.

The application may be made by the company or any person interested, and the direction may be on such terms and conditions as the Central Government deems just and expedient.

Why a cleared charge matters to an outside reader

An open charge on the Registrar's record is a claim on a company's assets. A memorandum of satisfaction is the public statement that the claim is gone. Because section 82 gives the company thirty days and the proviso stretches that to three hundred, the register can show a charge that has already been repaid, which is the single most common reason a charge search overstates what a company still owes.

Section 83's independent power is the partial correction to that: a Registrar who has evidence can move the entry without waiting for the company.

Where this sits in the disclosure picture

• What is registration of charges covers section 77, the duty that puts the charge on the register in the first place.
• How to check a company's registered charges covers the section 81 register these memoranda are entered in, and who may inspect it.
• What is the company's register of charges covers the parallel register the company keeps at its own registered office under section 85.
• What is pledge invocation covers the SEBI-side disclosure when security over promoter shares is enforced rather than released.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.