Difference Between Assignment And Charge



The charges are defined under the Companies Act and the government under the Section 77,[1] Section 78, Section 79,[2] Section 89[3] and the rules 2014. The company has the right to borrow monies by providing the security to the assets and may create a lien on the properties.[4] The company also has the right to issue debentures so that the funds can be raised which can carry right interest in the assets are the properties of the company.

The security which is given to a person for securing the loans and debentures under the mortgage of assets is known as charge. A company has the right to borrow the security for its borrowing.[5] When they both existing and future property is agreed to be available as a security for the repayment of test then the creditors have the right to make it available as there is charge created. According to Section 2(16) of the Act, “charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage”.[6] In the case of Dublin City Distillery Co. v. Deherty,[7] It was stated that charge include any portable charger whether this can be created by an instrument in writing or by the deposit of the title deed.[8]


There are two types of charges-


 Fixed charge is a type of charge which is created so that assets can be covered. It is a type of security which is there under the terms of certain specific property.[9] Fixed Charges is  a  charge fixed  or  specific  when  it  is  made  specifically  to cover assets which are ascertainable and definite at the time of creating the charge e.g., land, buildings,  heavy  machinery etc.[10]


A floating charge is a charge which is totally different to the companies as a type of security. This type of charge is not attached to any definite property. A floating charge includes a charge which is on the class of assets which is present and future in the ordinary course of business and this changing from time to time.[11] “The essence of a floating charge is that the security remains dormant until it is fixed or crystallised”.[12] Floating charge is the present security. Floating charge can affect all the assets of the company. Floating Charge, on  the  other  hand,  is  not  attached  to  any  definite property  but  covers  property  which  is  of  a  fluctuating  nature  such  as  stock  in  trade.[13]  It is an equitable charge on the assets for the time being of a going concern.[14] It attaches to the subject charged  in  the  varying  condition  in  which  it  happens  to  be  from  time  to  time.  It is of this sense of such a charge that it remains dormant until the undertaking charged ceases to be a going concern, or until the person in whose favour the charge is created intervenes.[15]


As stated above the charges under the Companies Act or defined under Section 77[16], Section 78[17] and Section 79-

The charges are divided into three categories

  1. FORMS FOR FILING: CHG-1, CHG-4, CHG-6, CHG-8, CHG-9, CHG-10.


Within 30 days of treatment satisfaction should be full of any charge which is registered and the company shall get intimation of the same in CHG-4 along with the fee then the ROC will issue of certificate of registration on the satisfaction of a charged under the form number CHG-5.


The principle of assignment is recognized under Indian law and is applied by Indian courts. It derives its origin from English law. The words assignment means the transfer of rights and obligations held by one party to another party. The system of assignment is favoured under the common law such as there is no expressed prohibition against assignment in a contract.

However in India with the absence of specific laws under the transfer of a contract intention of the party has to be taken into the account. In the case of Khared and Co. Ltd v Ramon and Co. Pvt. Ltd,[18] it was stated that “as a rule, obligations under a contract cannot be assigned except with the consent of the promisee. Where such consent is obtained, it will be considered as a deemed novation, resulting in the substitution of liabilities and obligations to the assignee”. Assignment rights are usually limited pertaining to the licence of intellectual property rights and Technology.

[1] Section 77 of Companies Act, 2013
Duty to register charges, etc.
1.     It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrar within thirty days of its creation:
Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of three hundred days of such creation on payment of such additional fees as may be prescribed:
Provided further that if registration is not made within a period of three hundred days of such creation, the company shall seek extension of time in accordance with section 87:
Provided also that any subsequent registration of a charge(………)

[2] The provisions of section 77 relating to registration of charges shall, so far as may be, apply to—

(a) a company acquiring any property subject to a charge within the meaning of that section; or

(b) any modification in the terms or conditions or the extent or operation of any charge registered under that section.

[3] Declaration in respect of beneficial interest in any share.

  1. Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaration within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares.
  2. Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand(…..)

[4] Vishal Thakkar, “CHARGES” under The New Companies Act, 2013 (2015), https://www.linkedin.com/pulse/charges-under-new-companies-act-2013-vishal-thakkar (last visited Apr 19, 2017).

[5] Charges under companies act, 2013 , http://www.caclubindia.com/articles/charges-under-companies-act-2013-23073.asp (last visited Apr 9, 2017).

[6] Section 2(16) of Companies Act, 2013. 

[7] Dublin City Distillery Co. v. Deherty, 1914 AC 823.

[8] Id.

[9] Mr. M. Govindarajan, Provisions Relating to ‘Charges’ Under Companies Act, 2013 (2013), https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=5382 (last visited Apr 9, 2017).

[10] Admin, Creation of Charges under Companies Act, 2013 (2016), http://taxguru.in/company-law/creation-charges-companies-act-2013.html (last visited Apr 9, 2017).

[11] Creation of Charges under Companies Act, 2013, (2016), http://taxguru.in/company-law/creation-charges-companies-act-2013.html (last visited Apr 9, 2017).

[12] Supra note 6.

[13] “CHARGES” under The New Companies Act, 2013 (2015).

[14] Government Stock Investment Co. Ltd. V. Manila Rly. Co. Ltd., (1897) AC 81 Per Lord Macnaghten,

[15] Supra note 9.

[16] Supra note 1.

[17] Supra note 11.

[18] Khared and Co. Ltd v Ramon and Co. Pvt. Ltd, 1962 AIR 1810, 1963 SCR (3) 183.

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