TMI Blog1943 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the Registration Act or whether registration under the provisions relating to the registration of debentures of companies is sufficient. The facts which led up to this application are shortly these. The East Bengal Sugar Mills Limited was a company formed to build, equip and operate a sugar mill at Dacca in East Bengal. The appellants, K. Roy and Brothers are building contractors and they built the mill for the company. They were not paid for their work and the materials with the result that they eventually went to arbitration and secured an award for their debt. Whilst the mill was being built the company in order to equip it arranged to buy machinery from abroad and, to pay for the machinery, borrowed money on debentures issued to various persons. The applicant, Ramanath Das, was a director and one of the managing agents of the company. He took up 151 of these debentures, each of them for Rs. 500 and paid for them. With the money realised from the issue of these debentures the company paid for the machinery it had installed. The debentures were duly registered under section 109 of the Companies Act, but they were never registered under the provisions of the Registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. This debenture is one of a series of 200 debentures of Rs, 500 each numbered 1 to 200 inclusive of the company issued or about to be issued by the company for an aggregate amount of Rs, 100,000. The company shall be at liberty to issue further debentures of a like nature to rank pari passu with the debentures of these series. 2. The debentures of the said series whether original or not are all to rank pari passu as a first charge on the property hereby charged without any preference or priority one over another and such charge shall until the money hereby secured shall become payable, be a floating security and the company shall not create any mortgage or charge in priority to the said debentures. 3. The principal money hereby secured shall immediately become payable if the company make default for a period of three calendar months in the payment of any interest hereby secured and the registered holder thereof for the time being before such interest is paid by notice in writing to the company calls in such principal money or if a distress or execution is levied upon or against any of the property and the assets of the company and is not paid out or withdrawn within ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the effect of section 109(2) of the Companies Act, is to give any body who deals with the property notice that it has been made subject to a floating charge. It must be pointed out at once that as section 110( c ) indicates that only a general description of the property is required and there is nothing making it compulsory to give any further details of property, so that there is nothing in the registration under the Companies Act of these debentures which would inform any person exactly what the immovable property was that was charged. It should be remembered that under the provisions of section 109 a company is required to keep a register of its mortgages and charges specifically affecting property of the company and all floating charges on the undertakings or on any property of the company. That register would be kept, of course, at the company's head office. The purpose of the registration of debentures, charges, and mortgages under the Companies Act is to give notice to persons dealing with the company that there are certain encumbrances on its property. Those encumbrances can be discovered by a search of the registry of the place where the company is registered and by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in Part 5 "every document mentioned in section 17, sub-section (1), clauses ( a ) and ( b ), in so far as such document affects immovable property, shall be presented for registration at the sub-registry within whose sub-district the whole or some portion of the property to which such document relates, is situate." Section 49 provides: "No document required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered, shall ( a ) affect any immovable property comprised therein unless it has been registered." The purpose of the Registration Act as disclosed in its provisions is to provide information to people who may deal with property as to the nature and extent of the rights which persons may have affecting that property, in other words, to enable people to find out whether any particular piece of property with which they may be concerned has been made subject to some particular legal obligation. There are other purposes of the Registration Act.. One is to give solemnity of form and legal importance to certain classes of documents by directing that they shall be registered. For some purposes a document which is directed to be registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company to its property. It creates from the moment it was executed a floating charge over the whole of the company's property immovable and movable. That floating charge may become fixed on the happening of one of the events mentioned in condition 3 endorsed on the debentures, so that at the moment of issue there was a limitation of the right of the company to its immovable property contingent upon the happening of one of the events specified in the condition. A charge on the property is defined by section 100 of the Transfer of Property Act: "Where immovable property of one person is by 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 OB the property." Clearly there was a charge on the property here limiting the right of tbe company to that property and in my opinion, for that reason this document comes within the meaning of section 17(1)( b ) of the Registration Act, and ought, therefore, to be registered as regards the immovable property covered by it in the appropriate local registry under the Registration Act (Act XVI of 1908). It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date on which it was so presented shall, for the purposes of this section, have the same effect as the delivery and receipt of the instrument itself." There is no corresponding provision in the Indian Companies Acticle. India is a very much bigger country than Great Britain and Ireland and the distances of places apart may be so great as to make virtually ineffective the provisions for safety and warning which the Companies Act gives. I put one illustration to Mr. Roy in course of argument and it was this. Suppose that a company is registered in Bombay and has its head office in Bombay and that it is engaged in carrying on business throughout India. One of its places of business is in town far away say Madras or Calcutta or some other town in which mortgage of land by deposit of title deeds is made legal now or in the future by the Provincial Government under section 88 of the Transfer Property Act. The company is in difficulties and issues debentures by floating charge over the whole of its property in the form in which it has been done in this case. Those debentures will be registered with the Registrar of Companies in Bombay and a record of them will be kept in the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able property should be registered according to the provisions of law laid down in section 17 of the Registration Act, in addition to the provisions of the Companies Acticle. The provisions of the Companies Act are intended to protect people who have business dealings with companies and to warn them to the extent to which the companies have created obligations over their property. The provisions of the Registration Act are intended to protect all who may have dealings with land so that those persons, particularly those local persons, may have knowledge of the obligations which have been created over and in respect of the land. There is one other matter. A question arose in the Court below as to whether the machinery of the sugar mill was fixed to the soil of the buildings so as to be immovable property. The learned Judge did not find it necessary to decide that question owing to the view he took on the question whether the debentures should be registered or not. But he expressed the view that whether the machinery was immovable property or whether it was not, was a question of fact. I agree that it is a question of fact and it is for the learned Judge to determine whether a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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