Registration for charges on immovable property and permanently affixed machinery remains mandatory despite company filings.

A debenture that purports to create a charge over immovable property requires registration under the Indian Registration Act; registration of the charge with the Registrar of Companies is not an adequate substitute because the companies filing provisions contemplate only general particulars and do not sufficiently identify the property. On the evidence, the plant and machinery were embedded or permanently fastened for the permanent working of the oil mill, so they formed part of the immovable property despite being physically detachable. The result was that the third series of debentures did not validly charge the immovable property, and the debenture holders were treated as unsecured creditors.

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Issues: (i) Whether the third series of debentures created a valid charge on the company's immovable property without registration under the Indian Registration Act; (ii) whether the plant and machinery of the company were movable property so as to escape the requirement of such registration.

Issue (i): Whether the third series of debentures created a valid charge on the company's immovable property without registration under the Indian Registration Act.

Analysis: Section 109 of the Indian Companies Act, 1913 requires registration of mortgages and charges with the Registrar of Companies, but the particulars contemplated by Section 110(c) are only of a general description and do not sufficiently identify the immovable property charged. A debenture that purports to create a floating charge over immovable property falls within Section 17(1)(b) of the Indian Registration Act, which makes registration mandatory for instruments creating or affecting rights in immovable property. Registration under the Companies Act was therefore not an adequate substitute for registration under the Registration Act.

Conclusion: The third series of debentures did not create a valid charge on the company's immovable property without registration under the Indian Registration Act.

Issue (ii): Whether the plant and machinery of the company were movable property so as to escape the requirement of such registration.

Analysis: The evidence showed that the plant and machinery were embedded in the earth or permanently fastened to things attached to the earth within the meaning of Section 2(6) of the Indian Registration Act. Mere removal by unscrewing bolts and nuts did not make them movable when they were installed for the permanent working of the oil mill and not for temporary use. Their physical setting and intended use made them part of the immovable property of the company.

Conclusion: The plant and machinery were immovable property and not movable property.

Final Conclusion: The declaration sought by the official liquidator was rightly granted, and the holders of the third series of debentures were held to be unsecured creditors only.

Ratio Decidendi: A debenture creating a charge on immovable property requires registration under the Indian Registration Act, and machinery permanently affixed for use in a factory is immovable property even if it can be detached physically.

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