Section 100 of the Transfer of Property Act
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This article is written by Disha Lohiya, a student pursuing B.A.LL.B. from National Law University, Jodhpur. In this article, she discusses the provisions related to Charge under Section 100 of Transfer of Property Act, 1882.


Charge is a concept which is defined under Section 100 of Transfer of Property Act, 1882 [1] (hereinafter TPA) and its registration is covered under Companies Act, 2013. [2] A charge is an interest or a right which is created over an asset or a property. It can be either on immovable property like land or building or on movable property like a car, gold etc.

“Charge” as defined in TPA, 1882

Section 100 of the TPA, 1882 defines charge as, “Where immovable property of one person is by an act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.

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Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.” [3]

Essentials Of a Valid Charge

There are certain essentials which need to be fulfilled to create a valid charge.

Immovable property

  • The charge must be created against an immovable property which can be a current or future property belonging to the borrower.

It is nothing but a device to create security which can be enforceable in court. [4] To create charge against immovable property, it is necessary that it should be in written form. [5] The most essential thing to be kept in mind is that there must be a clear intention to use the property as a security for the payment of the money. [6]

  • A charge cannot be created if the immovable property is not owned by the person from whom the payment is due.

For example- A wife sought for the creation of a charge on house property in a maintenance suit. The court held that since the property was neither constructed nor owned by the husband, no charge can be created against such property. [7]

Does not amount to a Mortgage

  • A charge is not a mortgage as there is no transfer of property nor any right is transferred but a personal obligation is created or a right to payment out of a specified property is generated. [8]
  • It has been specifically mentioned in section 100 that a charge doesn’t amount to mortgage, although all the provisions which apply to a simple mortgage shall also be applicable to charge. [9] In simple mortgagee, the mortgagor is not required to give the possession of his property to the mortgagee. Under a mutual agreement, it is decided that if the mortgagee fails to pay the money within the prescribed time period, then the property can be sold as per the law. There is a transfer of an interest in the property in a simple mortgage, but there is no such transfer in a charge. Despite this difference, the section says that “The provision hereinbefore contained which apply to a simple mortgage shall, so far may be, apply to charge.”
  • A charge is a wider term as it also includes a mortgage i.e. every mortgage is a charge but not every charge is a mortgage. [10] 

The Calcutta High Court held that:

“If an instrument is expressly stated to be a mortgage and gives the power of realization of the mortgage money by the sale of the mortgaged premises, it should be held to be a mortgage. The fact that the necessary formalities of due execution were wanting would not convert the mortgage into a charge. If, on the other hand, the instrument is not on the face of it a mortgage, but simply creates a lien, or directs the realization of money from a particular property, without reference to sale, it creates a charge.” [11]
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The charge created by an act of parties 

  • The parties themselves create a charge by entering into an agreement. No particular form of words or language is required to create a charge.

It will be sufficient to create a charge if it can be seen from the document that there is a clear intention to use the property as a security for the payment of the money, without transferring any interest or right in the property. [12] 

The remedy of the holder of the charge is against the property charged only. [13]

For example- A inherited a property from his grandmother. He receives a certain amount of rent from that property. Now on his own volition, he executed an agreement to pay a certain portion of the rent to B. B will have a charge over the said property.

In the said transaction A doesn’t owe any money to B nor does B have any right over the rent accruing from that property. But by entering into an agreement for payment of some amount to B, A by his own act has created a charge over the property which can be duly enforceable by B if A fails on his part.

Charges arising by operation of law

  • A charge can also be created by the operation of law. It means the charge is created without the will or intention of the parties, but the law enforces them to comply with certain obligations.

For example- B made full payment of purchase money to A in advance. But A is neither transferring the property nor registering it in the name of B. A charge will be created by the operation of law over the said property in favour of B.


Section 100 provides two exceptions under which no charge can be created. They are as follows:

  1. The charge which is created on an immovable property which is also a trust property in favour of a trustee for incurring expenses in the execution of his trust i.e. maintaining the trust property.

For example- A and B entered into an agreement for the transfer of a property with a condition that B will maintain A’s grandson C, from the rent occurring out of the said property until C turns 18. The expenses incurred by B will be a charge upon the trust property, but this charge cannot be enforced by selling the said property as it would lead to the destruction of the trust which is prohibited under Section 32 of Trust Act. [14]

B can only be reimbursed from the income coming out of such property and can stop any further disposition of the property until his expenses are paid.

2) A property upon which a charge had been created is brought by a person in consideration without having any notice of the said charge, then such charge cannot be enforced against him.

Types of Charge

Fixed Charge

  • The charge is created over ascertainable assets i.e. land, building, machinery, goodwill, copyright etc.
  • At the time of the creation of the charge, there is a clearly specified and defined property, the identity of which doesn’t change during the period of the loan.
  • In such an arrangement, the borrower is only left with the possession of the asset and the lender has full control over the asset.
  • The borrower doesn’t have the right to sell, transfer or dispose of and prior permission is required.
  • There is an obligation to pay off the due amount first.

Floating Charge

  • The charge is created over unascertainable assets i.e. assets, vehicles, debtors, etc.
  • It is dynamic in nature i.e. the value and quantity fluctuate periodically.
  • The borrower has the right to sell, transfer or dispose of and no prior permission is required.
  • No obligation to pay off the due amount first.

Crystallization is a process in which the floating charge is converted into a fixed charge. It generally occurs when:

  • The borrower defaults on payment and the lender takes action to recover the debt.
  • At the time of winding up of the company.
  • The company ceases to exist or carry on the business.
  • Appointment of a receiver by court.

Registration of Charges 

Under section 77 of the Companies Act, 2013 every company creating a charge shall register the particulars of charge signed by the company and its charge-holder together with the instruments created. [15]

Therefore all types of charges are required to be registered in accordance with the Act, whether created within or outside India.

A company must file with the Registrar detailed information of the charge, along with the Charge Instrument or its authenticated copy, in respect of certain charges, within 30 days of the creation of a charge. If it is not filed, it shall be void as against the liquidator and any other creditor of the company. This does not, however, mean that the charge is altogether void and the debt is not recoverable. So long as the company does not go into liquidation, the charge is good and maybe enforced. [16]

Condonation of Delay

If the registrar is satisfied that the company had sufficient reason for not filing the details and instrument of charge within 30 days of the formation of such charge, then it can allow for such registration after 30 days but within 300 days after the creation of the charge. The request for extension shall be submitted in Form No. CHG-10 and shall be accompanied by a statement from the corporation signed by the secretary or director claiming that owing to such late filing, the rights of the intervening creditors of the company shall have no adverse impact. If the corporation fails to file the charge even during this three-hundred-day span, it may ask the Central Government to prolong the duration in compliance with Section 87.

Difference between Mortgage and Charges

A mortgage is a legal process whereby a person borrows money from another person and secures the repayment of the borrowed money and also the payment of interest at the agreed rate, by creating a right or charge in favour of the lender on his movable and/or immovable property. [17] 

According to Section 58 of the Transfer of Property Act, “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.” [18]





Defined in section 100 of the Act.

Defined under section 58 of the Act.


Interest is created in the property for the payment of the debt and there is no transfer of any interest.

It involves the transfer of ownership interest in an immovable property.


It is created either by an act of parties or operation of law.

It can be created by an act of parties.


Registration is compulsory only when it is created by the act of the parties.

Registration must be under the Transfer of Property Act. It is compulsory.


Time is infinite and can continue forever.

Time is fixed in a Mortgage.


Personal liability is created only when a charge is created by an agreement.

There is a creation of personal liability unless excluded by an express contract.


Right in personam i.e. enforceable against a person.

Right in rem i.e. enforceable against the world.


It can be in oral and written form.

It must be in writing.

While differentiating between charge and mortgage, the Supreme court in JK(Bombay) Private Ltd v New Kaiser-I-Hind Spinning and Weaving Co Ltd held that:

“While in the case of a charge, there is no transfer of an interest of property or any interest therein, but only the creation of a right of payment out of the specified property, a mortgage effectuates the transfer of property or an interest therein. No particular form of words is necessary to create a charge and all that is necessary is that there must be a clear intention to make a property security for payment of money in praesenti.” [19]


Hence, every mortgage is a charge but not every charge is a mortgage. A charge is an interest created over an immovable property for securing payment of the amount which is due to the party. The property is not transferred to the lender and only interest is created. It is neither a lien nor a mortgage but some properties of both are present in a charge. 


 [1] Section 100, Transfer of Property Act, 1882.

 [2] Section 77, Companies Act, 2013.

 [3] Supra, note 1.

 [4] Jnanendra Nath v Sashi Mulch AIR 1940 Cal 60, (1940) 44 Cal WN 240, 186 IC 333.

 [5] Mulla, The Transfer of Property Act 741 (10th Edition, LexisNexis Butterworths)2005.

 [6] Ray Chand v Basappa AIR 1941 Bom 71.

 [7] Vasantha v Chandran AIR 2002 Mad 214, p 216.

 [8] Gobinda Chandra v. Dwarka Nath,(1908) ILR 35 Cal 837(cited in

 [9] Mulla, The Transfer of Property Act 742 (10th Edition, LexisNexis Butterworths)2005.

 [10] Ibid.

 [11] Matlub Hasan v Mt Kalawati 147 IC 302, AIR 1933 All 934.

 [12] Ray Chand v Basappa AIR 1941 Bom 71.

 [13] Mulla, The Transfer of Property Act 741 (10th Edition, LexisNexis Butterworths)2005.

 [14] Section 32, Trust Act,1882.

 [15] Section 77 of the Companies Act, 2013.

 [16] Ibid.

 [17] Debi Singh And Ors. vs Jagdish Saran Singh AIR 1952 All 716.

 [18] Section 58, Transfer of Property Act, 1882.

 [19] JK(Bombay) Private Ltd v New Kaiser-I-Hind Spinning and Weaving Co Ltd, 1970 AIR 1041.

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