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Issues: (i) Whether a debenture creating a floating charge over existing immovable property of a company required registration under the Registration Act despite registration under the Companies Act; (ii) whether the holders of the debentures were secured creditors in respect of movable property only.
Issue (i): Whether a debenture creating a floating charge over existing immovable property of a company required registration under the Registration Act despite registration under the Companies Act.
Analysis: An ordinary charge on immovable property is compulsorily registrable, and a floating charge does not escape registration merely because it is created under company law. The debenture charged the company's undertaking and all its property, present and future, and in so far as it covered immovable property existing at the date of creation, it operated as a non-testamentary instrument creating or limiting a right in immovable property within section 17(1)(b) of the Registration Act. Registration under the Companies Act served a different purpose and did not displace the mandatory requirements of the Registration Act. Non-registration therefore attracted the consequence under section 49.
Conclusion: The charge created by the debentures was registrable under the Registration Act and was ineffective as against the company's immovable property for want of such registration.
Issue (ii): Whether the holders of the debentures were secured creditors in respect of movable property only.
Analysis: The parties accepted that the movable property was not compulsorily registrable under the Registration Act. The controversy as to whether particular items were movable or immovable was left for determination on remand, but the general principle was that movable property did not fall within the compulsory registration requirement relied upon against the debenture holders.
Conclusion: The debenture holders were secured creditors in respect of movable property, while their security did not extend to immovable property not validly registered.
Final Conclusion: The appeal succeeded in part, with the declaration modified so that the debenture holders retained secured status only as to movable property.
Ratio Decidendi: A floating charge created by a debenture on immovable property already in the company's ownership is a registrable instrument under the Registration Act, and non-registration renders the charge ineffective against that immovable property.
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