Floating charge requiring registration is void when unregistered; deposit into general funds creates creditor rights, not a trust.

An unregistered floating charge created over present and future machinery, permitting change in assets and company control, is a floating charge requiring statutory registration and is therefore void for want of registration; consequence: the purported second charge is invalid. A deposit of Rs. 50,000 paid into the company's general accounts with an express obligation to repay with interest constituted a debtor creditor relationship rather than trust property; consequence: the depositor is an ordinary creditor with no preferential claim. The appeal was dismissed, leaving the official liquidator's determinations intact.

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Issues: (i) Whether the appellants' unregistered charge on machinery (purported second charge) is valid; (ii) Whether the Rs. 50,000 deposited with the company was held on trust entitling the appellants to a preferential repayment.

Issue (i): Whether the appellants' unregistered charge on machinery (purported second charge) is valid.

Analysis: The charge created by clause 14 was assessable by the established tests for floating charges: it covered a class of present and future assets, the assets charged would change in the ordinary course of business, and the company retained power to carry on its business until enforcement. These features identify the charge as a floating charge. As a floating charge it required registration under the statutory provision cited; absence of registration renders such a charge void.

Conclusion: The appellants' charge on the machinery is not valid and is void for want of registration.

Issue (ii): Whether the Rs. 50,000 deposited with the company was held on trust entitling the appellants to preferential repayment.

Analysis: The deposit was paid into the company's general accounts, the agreement provided for repayment and for payment of interest by the company, and the parties treated the deposit as creating a debt secured by charge rather than as a segregated fund. There was no stipulation that the sum be kept separate or not to be utilised by the company. Comparable authorities establish that, on such facts, the depositor remains a creditor rather than a trustee entitled to a preferential claim.

Conclusion: The Rs. 50,000 was not trust money; the appellants are ordinary creditors and have no preferential claim.

Final Conclusion: The appeal is without merit and is dismissed with costs, leaving the Official Liquidators' determinations intact.

Ratio Decidendi: An unregistered floating charge is void under the relevant provision of the Companies Act, and a deposit paid into a company's general funds coupled with an express obligation to repay with interest establishes a debtor-creditor relationship rather than a trust giving rise to a preferential claim.

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