Floating charge registration and implied authority determine whether company security binds the liquidator and the lender.

A document securing a loan over present and future fluctuating company assets can create an immediate charge if the instrument and surrounding evidence show an intention to secure the debt at once. Where the security leaves the company free to use the assets in the ordinary course of business, it is treated as a floating charge and, if not registered within the required time, is void against the liquidator. The chairman who executed the document was also treated as having implied authority to bind the company because the board had sanctioned the borrowing and he was managing its affairs.

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Issues: (i) Whether the document executed in respect of the loan of Rs. 5,000 created an immediate charge over the company's assets. (ii) Whether the charge, if created, was void for want of registration as a floating charge. (iii) Whether the chairman who executed the document had authority to bind the company.

Issue (i): Whether the document executed in respect of the loan of Rs. 5,000 created an immediate charge over the company's assets.

Analysis: The language of the instrument, read with the surrounding evidence, showed an intention to secure the loan at once over identified assets of the company. The absence of an entry in the books or a charge register did not outweigh the direct evidence supporting the execution and effect of the lien document.

Conclusion: A charge was created by the instrument in favour of the lender.

Issue (ii): Whether the charge, if created, was void for want of registration as a floating charge.

Analysis: The charge covered present and after-acquired assets of a fluctuating kind used in the film business, while leaving the company free to carry on its ordinary business. It therefore answered the characteristics of a floating charge. As it was not registered within the statutory time, the security could not prevail against the liquidator under the Companies Act.

Conclusion: The charge was a floating charge and was void against the Official Liquidator for non-registration.

Issue (iii): Whether the chairman who executed the document had authority to bind the company.

Analysis: The chairman had been entrusted with the conduct of the company's affairs, the borrowing had been sanctioned by board resolution, and the surrounding facts showed at least implied authority to raise the loan and execute the security. The company was therefore bound by his act as a matter of authority, although the security itself failed for want of registration.

Conclusion: The chairman had implied authority to execute the document on behalf of the company.

Final Conclusion: The lender's security failed in law because it was an unregistered floating charge, so the claim to priority over the company's assets was rejected in favour of the liquidator.

Ratio Decidendi: A charge over present and future fluctuating assets, leaving the company free to deal with them in the ordinary course of business, is a floating charge and, if not registered as required by the Companies Act, is void against the liquidator.

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