Applicability Form 8 - car loans

[Asked by Guest]

Is filing of Form 8 (registration of charge) with Registrar of Companies applicable in case of car loans which are secured by hypothecation of cars acquired on Equitable Monthly Installment (EMI) system ?

[Mukesh Kumar]

As per the provisions of section 124 of the companies act, 1956 - charge includes mortgage. Further as per section 125 of the companes act, 1956, pledge of any movable property is not subject to the provisions of charge. Since hypothication is not a mortgage but a pledge of movable property, the same shall be out of the provisions of charge under chapter V of the companies act, 1956.

AI Summary

Hypothecation of vehicles is treated as pledge of movable property, so registration of charge under company law not applicable.
Hypothecation of vehicles acquired on EMI is characterised as a pledge of movable property rather than a mortgage; pledges of movable property fall outside the statutory charge regime, so registration formalities for charges (Form 8) under Chapter V are not applicable to such car loans.