Debenture charges can attach to debts as movable assets even when they fail over immovable security for lack of registration.

A debenture charge may validly attach to debts as movable assets even where it cannot operate on immovable property for want of registration under the Registration Act. The instruments were effective as charges on the company's undertaking, but not to the extent they purported to affect the land security comprised in deposited title deeds. The legal distinction between the debt and the immovable security meant that failure to create a charge over the property did not defeat the charge over the debts themselves or the sums later realised from them, including from a debtor, guarantor, or sale of the security.

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Issues: Whether debentures creating a floating charge, though ineffective to charge immovable property because they were not registered under the Registration Act, nevertheless created a valid charge over the debts due to the company and over sums realised from those debts or their securities.

Analysis: The debentures were duly registered under the Companies Act as charges on the company's undertaking, but, so far as they purported to affect immovable property, they were outside the operation of the debenture holders' rights because of non-registration under the Registration Act. That, however, did not exhaust the effect of the instruments. Debts due to the company were movable assets and remained separate from the immovable property taken as security for them. The inability to reach the land security did not destroy the charge over the debts themselves. The Transfer of Property Act permitted transfer of property of that kind, and the amended provisions governing actionable claims and transfers supported the view that the charge could attach to the debts while not extending to the immovable security.

Conclusion: The debentures did not create any charge over the immovable property comprised in the deposited title deeds, but they did create a valid charge over the debts due to the bank and over sums realised in satisfaction of those debts, whether from the debtor, a guarantor, or sale of the security.

Final Conclusion: The appellant was entitled to the benefit of the debts owing to the bank and of the proceeds realised towards those debts, notwithstanding the failure of the debentures to operate upon the immovable property itself.

Ratio Decidendi: A debenture charge may validly attach to debts as movable assets even where it cannot operate upon the immovable property given as security for those debts, because debt and security are legally distinct.

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