Charge on book-debts depends on the property's character when the security is created, not on later emergence of debt rights.

The Chancery Division considered whether a letter of authority over export credit guarantee rights created a registrable charge on book-debts under the Companies Act, 1948. It held that the relevant inquiry is the character of the property at the date the security is created; a contract that merely may later give rise to a book-debt does not fall within the provision. On the evidence, the rights were not treated as book-debts when the instrument was executed, so no charge on book-debts arose. The instrument was nevertheless treated as an assignment by way of charge rather than an absolute assignment.

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Issues: (i) Whether the letter of authority dated 23 January 1961 constituted a charge on the company's book-debts within section 95 of the Companies Act, 1948. (ii) Whether the instrument was an assignment by way of charge or an absolute assignment.

Issue (i): Whether the letter of authority dated 23 January 1961 constituted a charge on the company's book-debts within section 95 of the Companies Act, 1948.

Analysis: The relevant enquiry was whether, at the date of creation of the charge, the subject matter comprised book-debts. On the evidence, the rights under the export credit guarantee policy were not treated in practice as book-debts at the date of the letter of authority, nor before liability was admitted and quantified, and not even after that stage. The statutory question turned on the character of the property charged at the date of creation, not on whether the contract might later produce a book-debt. A contract which merely may in future result in a book-debt is not, for that reason alone, a charge on book-debts within section 95.

Conclusion: The instrument was not a charge on book-debts within section 95 of the Companies Act, 1948.

Issue (ii): Whether the instrument was an assignment by way of charge or an absolute assignment.

Analysis: This point was argued as an alternative basis for excluding section 95, but it was unnecessary to decide it for the disposal of the action. The Court nevertheless stated that the letter of authority beyond question represented an assignment by way of charge.

Conclusion: The instrument was an assignment by way of charge, not an absolute assignment.

Final Conclusion: The plaintiffs failed because the letter of authority did not create a registrable charge on book-debts, and the action was dismissed with costs awarded against the first defendant as ordered.

Ratio Decidendi: For section 95 of the Companies Act, 1948, the character of the charged property must be determined at the date of creation of the security; a contract that does not then comprise a book-debt is not brought within the provision merely because it may later give rise to one.

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