The Judgment of the Court was as follows:—

Rankin, C.J:— The Imperial Bank of India appeals from an order, dated the 26th August 1929 made by my learned brother Mr. Justice Buckland upon an application for directions made by the liquidators in the winding up of the Bengal National Bank, Ltd.

In May 1923, the Imperial Bank advanced to the Bengal National Bank Rs. 10,00,000 upon the security of a debenture, dated the 4th May 1923 which purported to charge the whole undertaking, properties, assets and interests, present and future, including the uncalled capital, of the borrowing bank for the repayment of the loan with interest. In July of the same year, the Imperial Bank made a further loan of Rs. 10,00,000 upon the security of a debenture, dated the 4th August 1923, which also created a charge upon the whole of the undertaking, properties, assets and interests, present and future, including the uncalled capital of the borrowing Bank. These debentures were duly registered under the Companies Act with the Registrar of Joint Stock Companies, but neither debenture was registered under the Indian Registration Act of 1908 and it is this circumstance which gives rise to the question in the present case. On the 28th of April 1927, the Bengal National Bank suspended payment and the Imperial Bank appointed Receivers on that date. A debenture-holder's suit was instituted on the 26th May 1927. On the 1st of June 1927 the Court appointed certain persons to be Receivers in the debenture-holder's suit. On the 2nd of August of that year, a compulsory winding up order was made against the Bengal National Bank: the liquidators, with the exception of a. Mr. Carter, are also the Receivers appointed by the Court for the debenture-holders.

The present appeal arises out of an application by the liquidators for directions and the sole question before us has reference to the respective rights of the Imperial Bank and the Bengal National Bank, Ltd. (in liquidation) as regards cases in which the latter had given loans or overdrafts upon the security of title-deeds deposited with it. The question is whether the security held by the Imperial Bank extends to, and is effective over, the debts due to the Bengal National Bank from customers who had in this way obtained advances upon security and whether the Imperial Bank is entitled to the benefit of the security as part of the property charged by the debentures, in cases where possession of the title deeds was never given to the Imperial Bank. It appears that in some cases title deeds which formed security for overdrafts had been sub-mortgaged with the Imperial Bank by being deposited with it by the Bengal National Bank but these cases are excluded from the question which was raised before us upon this appeal.

The learned Judge took the view that whether or not the security held, by the Imperial Bank is valid and effective as regards the debts, it is not valid and effective as regards any title deeds originally deposited as security with the Bengal National Bank in cases in which possession of the title deeds was never given to the Imperial Bank.

Mr. Page for the Imperial Bank contended that it is against all principle to hold that the Imperial Bank has a right under its charge to the debts and yet has no right to the security given therefor. Mr. Ameer Ali, on behalf of the liquidators, did not contest that this position was difficult to maintain but contended that the question to be answered first is whether in the circumstances these secured debts are available at all to the Imperial Bank under their charge.

On this the argument for the liquidators is rested upon sec. 17 of the Indian Registration Act of 1908:—

“The following shall be registered, if the property to which they relate is situate in the District in which and if they have been executed on or after the date on which Act XVI of 1864 or the Indian Registration Act XX of 1866, or the Indian Registration Act VIII of 1871, or the Indian Registration Act, III of 1877, or this Act came into force namely;

(a) Instruments of gift of immoveable property: (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of Rs. 100 and upwards to or in any immoveable property.” By sec. 49 of the same Act “no document required by sec. 17 to be registered shall (a) affect any immoveable property comprised therein or…. (c) be received as evidence of any transaction affecting such property unless it has been registered.”

It is said that if it can be shown that a debt secured by mortgage upon immoveable property is, for the purposes of the Registration Act, immoveable property, the debentures held by the Imperial Bank can take no effect upon these mortgage debts. Now, that a mortgage debt is immoveable property for purposes of the Transfer of Property Act and the Indian Registration Act was held by this Court in the case of Sakhiuddin Saha v. Sonaullah Sarkar . In that case a debt secured upon mortgage was part of the property of a joint family and an instrument was tendered in evidence which purported to show that of a partition this asset had been allotted in severalty to one of the co-sharers. The document was not, registered and it was held that it could not be put in evidence. Richardson, J. pointed to the amendment of the Transfer of Property Act made by Act II of 1900 which excluded mortgage debts from the definition of “actionable claims”. He held that “it can hardly be supposed that debts secured by mortgages of immoveable property were excluded from the definition of actionable claims in order that they might pass by word of mouth without any writing. The inference would seen: to be that the legislature regarded such debts as immoveable property within the definition in sec. 3(25) of the General Clauses Act,” from which it would follow that a mortgage debt is within the definition of immoveable property in sec. 2(6) of the Registration Act of 1908. Again, in Perumal Ammal v. Perumal Naicker the instrument was an unregistered instrument purporting to make a gift to the Plaintiff of certain outstanding dues of the does, consisting of certain mortgage debts, book debts and promissory notes. Sec. 123 of the Transfer of Property Act requires gifts of immoveable property to be made by registered instruments. Accordingly the first question for decision was whether the gifts of the mortgages were to be held bad as gifts of immoveable property not made by registered instrument. Wallis, C.J reviewed the statute law and the authorities. He pointed out that before 1900 mortgage-debts could be transferred as actionable claims and on the transfer of the debts, the securities passed by operation of law; but that when, in 1900, secured debts were excluded from the class of actionable claims, the intention of the legislature must have been that in general mortgage-debts should only be transferred with the mortgagee's interest in the land and therefore by registered instrument. He held, however, that where the law still admits a separate transfer of the mortgage-debt, as by endorsement of a promissory note, or by attachment and sale under the Civil Procedure Code, the right to the security would pass with the right to the debt.

In Elumalai Chetty v. P. Balakrishna a Division Bench of the Madras High Court disagreed with the view that the endorsee for value of a negotiable instrument, the amount of which had been secured by mortgage by deposit of title deeds, could make any claim to enforce the mortgage in the absence of a registered instrument conveying the mortgage right to him. Krishnan, J., said, “It seems to me quite clear that a mortgage of immoveable property is itself immoveable property under, the Transfer of Property Act, whatever the form of the mortgage may be and a transfer of ownership of such a right fails under sec. 54 and will require a registered instrument for the purpose.” He held, however, that “the fact that the promissory note can be transferred by endorsement, it seems to me, does not make any real difference to the question before us. When the note amount is so transferred, it seems to me, it is not transferred an a secured debt at all. The Negotiable Instruments Act makes no provision with reference to securities. In my view it is only if the mortgage-debt is transferred as a secured debt that it will carry the securities with it, on the principle embodied in sec. 8, and not otherwise. Even in the case of a mortgage where there is no promissory note, it cannot, I think, be said that the law does not allow the mortgagee to transfer the debt as an unsecured or simple debt without a registered instrument if he thinks fit to do so. The security is for his benefit and he can give it up if he likes, and the transferee will then get the right to the debt but not to the security. Thus as regards transferability in law as an unsecured debt, a mortgage-debt for which a negotiable instrument has been taken does not seem to me to differ fundamentally from one where none such has been taken. In my view, in either case, if the debt is transferred by endorsement or otherwise, without the transferor taking care to transfer the mortgage right by registered instrument, the debt and the security will get dissociated and the security may possibly cease.”

Now, it may be as well with reference to the case before us to make clear two matters. For the purpose of getting a complete register of titles to land and interests in land, the legislature has not required that equitable mortgages by deposit, if made in Calcutta, should come upon the register at all, and they do not come upon the register unless the contract is contained in an instrument in writing. If the mortgage is made by deposit of title deeds in Calcutta, the immoveable property which thus becomes the subject-matter of the security may be situate anywhere in British India. The Registration Act, however, requires many instruments to be registered if they effect transactions with reference to immoveable property, although the transactions are not necessarily required to be carried out by written instruments at all, and sec. 48 gives priority to registered instruments as against an oral agreement or declaration. This brings many transactions upon the register but in addition to this purpose a main purpose of the Act is to prevent, a party from setting up forged or false instruments by rendering inadmissible in evidence instruments which have not, within a limited time, been taken to the registry and authenticated. This second purpose may be thought to be attained in the case of securities granted by companies by the provisions of sec. 109 of the Indian Companies Act, but it is clear upon the face of the Registration Act sec. 17, that there is no special treatment for such securities on account of the Company Register.

In the second place, the only parties before us upon this summons are the Imperial Bank on the one hand and the Bengal National Bank by its liquidators on the other. We cannot, on this appeal, deal with any argument such as that indicated in the passage which I have quoted from the judgment of Krishnan, J., to the effect that the debt and the security having become dissociated, the Bengal National Bank's customer or borrower is in a position as against that Bank to say that his security is no longer available to it but has ceased altogether to have effect. Whether there is any ground in law or in fact for such a contention, must be decided in a proceeding to which the customer in a party. Any direction to be given upon the summon before us must proceed upon the assumption that as against its customer the Bengal National Bank is still entitled to the debt and the security; and on this assumption, the question is as to the respective rights of the debenture-holders and the unsecured creditors of the Bengal National Bank.

I turn now to examine the matter from this point of view. Act IV of 1882 deals with transfer of property and “transfer of property” by sec. 5 means “an act by which a living person conveys property, in present or in future to one or more other living persons, or to himself and one or more other living persons.” Sec. 7 says that a transfer may be made of property either wholly or in part and either absolutely or conditionally and sec. 8 says that unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. “Sale” is defined by sec. 54 as “a transfer of ownership in exchange for a price” and such transfer in the case of tangible immoveable property of the value of Rs. 100 and upwards, or in the case of a reversion or other intangible thing, is to be made only by a registered instrument. It is not unimportant to observe that this provision applies only to cases of sale. A “mortgage” is defined as “the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced, etc.” Where the principal sum secured is Rs. 100 or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses (sec. 59) “but nothing in this section shall be deemed to render invalid mortgages made in the towns of Calcutta, Madras, Bombay, etc., by delivery to a creditor or his agent of documents of title to immoveable property, with intent to create a security thereon”. Sec. 100 provides for the case where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage. In that case there is said to by a charge. “Lease” is defined by sec. 105 as the “transfer of a right to enjoy immoveable property”. Leases from year to year, or for more than a year or reserving a yearly rent can be made only by registered instrument. Exchange by sec. 118 can only be made in manner provided for the transfer of property by sale. “Gift” is “a transfer of existing moveable or immoveable property made voluntarily and without consideration.” Save that the gift of moveable property may be made by delivery, a gift must be effected by registered instrument (sec. 123). Actionable claims do not include claims to a debt secured by a mortgage of immoveable property, or by hypothecation or pledge of moveable property but sec. 130 provides that the transfer of an actionable claim shall be effected only by the execution of an instrument in writing.

Now cl. (25) of sec. 3 of the General Clauses Act (X of 1897) does not define immoveable property but states that it shall include land, benefits to arise out of land and certain other things. I think we may safely reject the idea that a mortgage is a “benefit to arise out of land” within the meaning of this clause. Sec. 3 of the Transfer of Property Act does not affect the matter before us. Cl. (6) of sec. 2 of the Registration Act, save that it throws some light on the expression “benefits to arise out of land,” takes us no further. “Immoveable property” includes “land”—that is all. Now we know from sec. 58 of the Transfer of Property Act that by a mortgage the mortgagee has “an interest in specific immoveable, property” and if we assume, as we fairly may, that an interest in immoveable property is immoveable properly, we may proceed to a further inference that if he wants to sell, sub-mortgage, lease, exchange or make a gift of his interest he must do so by registered instruments as provided in the Act. Partition, release, surrender, are all forms of transfer of immoveable property but so as far as the Act is concerned they come under no restrictions and by sec. 9 “a transfer of property may be made without writing in every case in which a writing is not expressly required by law”. In this category also come charges of immoveable property. The Act does not address itself to the question how is a mortgage right to be charged or even to the question how is any immoveable property to be charged. Whether a charge is a transfer or is not a transfer at all, the Act puts no restrictions upon the manner in which charges can be made or given over immoveable properly. It recognises by sec. 100 that by the act of the parties immoveable property may be made security for the payment of money in ways which do not amount to a mortgage, but it does not limit or define those ways.

In Mulraj v. Vishwanath the Judicial Committee dealt with the question of the manner in which a charge could be given over an actionable claim. The Appellant had in 1909 taken what was in form an absolute assignment in writing of the monies payable under a policy of insurance. The Respondents claimed that in 1904 the assured had deposited the policy with them as security for a debt then existing and for any indebtedness which might subsequently arise. The deposit was unaccompanied by anything in writing. Lord Moulton said: “In the present case the Respondent bases his claim of a deposit of the policy and not under a written transfer, and claims that this creates a charge on the policy. The section specifically enacts that such a proceeding shall not have any such effect; such a charge can only be created by a written document. It follows, that the Respondent acquired no right whatever to the policy or its proceeds by reason of the deposit.” Thus the Board rejected the Respondent's contention that sec. 130 as amended in 1900 referred to the transfer of absolute rights and not to the creation of a mere charge.

When we turn to the Registration Act, we find that the language of cl. (b) of sub-sec. 1 of sec. 17 is not limited expressly by reference to particular kinds of transfer. An instrument comes within cl. (b), if it purports or operates to create, declare, assign, limit or extinguish any right, title or interest to or in immoveable property. The words “any right, title or interest” are intended to be very wide—they are the words usually employed to denote what passes upon an execution sale. In drawing a distinction between a charge and a mortgage it has often been said that while a mortgage—even a simple mortgage—involves the transfer of an interest in specific immoveable property, a charge transfers no such interest. The entire interest remaining in the owner, the consequence has been drawn that a charge cannot be enforced against a purchaser for value without notice. [Ryosuddi v. Kali Nath (5), Gobinda v. Dwarka Nath (6) and Akhoy Kumar v. Corp. of Calcutta (7)]. Even so however I think a mere charge on immoveable property is within the clause of sec. 17. It in a right in immoveable property—a right to have it brought to sale to realise a sum of money to be paid to the charges.

I cannot say that I have been able to find any real authority upon the point. An opinion to this effect was intimated by Richards, J. in Maina v. Bachchi but in that case he held that a charge was good against a purchaser for value without notice. Again Bengal Banking Corporation v. Mackertich (9) was a case of an agreement “to assign by way of mortgage”. It is certainly true that by a charge the title is not transferred; on the other hand as Cotton, L.J, said in Ashworth v. Mania , “If a charge, then it was an interest”. Again while the language of cl. (b) of sec. 17 is too general to be read as stopping short an a point between a simple mortgage and a charge, it must be admitted to by a defect in the Transfer of Property Act that it maintains a distinction between these two species—a distinction with important consequences—while in no way exhibiting the differentia.

For the like reason, under sec. 49 of the Registration Act a Plaintiff who sues to enforce a charge on land created by an instrument must be taken to put forward the instrument as affecting the land or as evidence of a transaction affecting the land. The language of sec. 49 has given rise to considerable difficulty, but I think it safe to say that cls. (a) and (c) have reference to the fact that certain kinds of transfer of immoveable property can only be effected by written instruments (e.g, sale, mortgage other than mortgage by deposit, lease, gift); whereas in other cases, (e.g partition, surrender, release) the transaction is not required to be in writing but, if it is in writing, the instrument is required to be registered. Cl. (a), as I think, deals with the former case, cl. (c) with the latter. In either case the circumstance which subjects the instrument to the requirement of registration is that it purports or operates to create, declare, assign, limit or extinguish a right, title or interest to or in the immoveable property. It is this which makes the registration necessary and if it be not registered, it is in this that the instrument is to fail of its effect. The right, title or interest is, an a consequence, not created, declared, assigned, limited or extinguished even although no written instrument was necessary. The Registration Act is not to be defeated in such a case by a contention to the effect that as no written instrument was necessary, the transaction itself is independent of the written instrument which can be regarded simply as evidence thereof. Cl. (c) makes the instrument inadmissible as evidence of the transaction. Unless, therefore, there has in fact been a transaction independent of the written instrument, and capable of proof without the evidence thereof, the right, title or interest in question has not been created, declared, assigned, limited or extinguished. This is the principle which in my judgment must be applied to these debentures so far as they purport or operate to create a right in immoveable property.

The language of the debentures, as is usual, is very wide but we must now test the argument on behalf of the liquidators by asking ourselves whether if the debentures had purported merely to confer a charge over the Bengal National Bank's book-debts or ledger balances or overdrafts, they would be an effective charge over any sums repayable in respect of loans given upon security of title deeds. I put aside the suggestion that either in the General Clauses Act or in the Registration Act there is anything to the effect that a mortgage-debt is not a debt or that it is nothing but an interest in land. I accept as correct the view that the word “operate” in the phrase “purport or operate” in cl. (b) of sec. 17 of the Registration Act refers to the immediate intention of the instrument and not to ultimate consequences or collateral effects. [Jiwan Ali v. Basa Mal (11)]. For simplicity we may take first the case of a loan originally advanced by the Bengal National Bank upon security of title deeds before the date of these debentures. Is there anything to show that a charge cannot be given over such a debt by an instrument in writing but unregistered? As the debt is not an “actionable claim,” it is not touched he Ch. VIII of the Transfer of Property Act and even the requirement of an instrument in writing does not apply to any transfer of it. It is not possible on the face of the Transfer of Property Act to maintain that a debt or any other form of property cannot be transferred unless it has been specially made transferable and a special method provided by the Act. Secs. 6 and 9 are express to the contrary. If in 1900 the Legislature meant to enact that no debt, if secured, should be transferred save by transfer of the security and in manner prescribed for a transfer of the security, one method of procedure would have been to say so. If the idea was that when such a debt ceased to be an “actionable claim” an intending transferor, minded to deal with it as a debt, would be paralysed by the absence of a special provision applicable to the case, I think this reasoning omitted to notice a salient feature of the Act. The position however was this. The Act as it then stood appeared to provide two ways in which mortgages could be assigned—one by registered instrument with or without other safeguards, the other by mere assignment of the debt which under sec. 8 drew after it the security. The provisions of secs. 54 and 59 were brought to nothing by Ch. VIII and sec. 8. This moreover was not the whole of the difficulty. I here was trouble over the question whether the provisions of the then existing sec. 135 should apply to assignments of mortgages and over the right of officers of the Court to take such an assignment in view of sec. 136. [See per Prinsep, J., in Muchiram v. Ishan Chunder (12)]. The arguments in favour of regarding mortgage-debts as coming under Ch. VIII may have been right or wrong, but they had always been resisted on the ground that in Ch. IV there were special provisions for mortgages and a special procedure for recovering money due thereon and that the object of the legislature was to make a simple law dealing exhaustively with this subject and to provide once for all in this chapter if the Act for all matters relating to mortgages of immovable property.

In settling this controversy the Legislature may well have thought that if mortgage-debts were excluded from the class of actionable claims, they would no longer escape the provisions of Ch. IV. It was open to it especially as sec. 135 was being abrogated to leave such debts in the class of actionable claims but to provide that when dealt with as such, the transfer should not carry the security under sec. 8. It was, as it seems to me, careful to avoid such a divorce between debt and security, doubtless thinking that it is one thing for an informal transfer to fail of effect and another thing for an informal transfer to destroy the asset.

Now the judgments in Sakhiuddin Saha v. Sonaullah Sarkar (Richardson, J.) and Perumal Ammal v. Perumal Naicker (Wallis, C.J) proceed upon the basis that it is more reasonable to hold that the provisions in Ch. IV of the Transfer of Property Act are intended to have effect over all mortgages and dealings with mortgage rights than to hold that transfer of such rights may in effect be made by move oral assignment and in a manner not specifically provided by the Act or any other law applicable thereto. The draftsmanship of 1900 is not too good but so far the intention of the Legislature can be discerned and I think it is impossible to resist this argument. No doubt a mortgagee may release his security and then proceed to assign by unregistered instrument and if ever such a transaction is met with, it will give rise to little difficulty. But the giving up of the security in a transaction between himself and the mortgagor. The permissible method of transfer would seem to depend upon what the debt in fact is and it is just because on principle the security must follow the debt that the debt must be dealt with as Ch. IV provides, if it is in fact secured. We are not here concerned with promissory notes or sales in execution. Putting aside transfers which come under any special law I agree with the view taken by Wallis, C.J, of the intention of the Transfer of Property Act, viz., that in general mortgage-debts should only be transferred by way of sale, sub-mortgage, exchange, or gift with the mortgagee's interest in the land and therefore (speaking broadly) by registered instrument. Perumal Ammal v. Perumal Naicker . The view taken by Krishnan, J., in Elumalai's case seems to me to depend upon the supposition that the debt will not draw after it the security unless the case comes within the penultimate clause in sec. 8 of the Transfer of Property Act or unless the debt is transferred as a secured debt. But no statute has said so and between assignor and assignee, elementary principle is all the other way. Moreover if a secured debt is to be dealt with as unsecured, it is being dealt with either as an actionable claim (so that sec. 8 would apply) or as an innominate form of property free even from the provisions of Ch. VIII which cannot have been intended.

It seems to me that the same reasoning must apply to a charge so that a debt secured upon specific immoveable property, while it can without writing be charged as an interest in land, must be charged by a registered instrument if it is to be charged by an instrument at all. If it cannot be charged as an actionable claim, it must be charged as an interest in land under the Transfer of Property Act which deals both with charges and with this kind of interest in land. The decision of Richardson, J., already cited was in a case of partition and the Transfer of Property Act does not deal with partition by any special provisions. It is true that the language of sec. 49 appeal's to be exceeded if this view is right, but it is not really exceeded if we are obliged to regard the mortgage-debt solely as part of the mortgagee's interest which is an interest in land, or as transferable or chargeable only as attendant thereupon, and not as a right independent thereof. It cannot, I think, be that though the debt cannot be charged on its own account as an actionable claim, it will be divorced from the security and charged by an informal document which cannot take effect upon an interest in land.

Coming now to the case of debentures, the third and fourth clauses of sub-sec. (2) of sec. 17 of the Registration Act make it clear that, save as therein provided, debentures are subject to the same requirements in the matter of registration as other forms of non-testamentary instruments, There is no room here for some such reason as was employed by the Court of Appeal in Standard Manufacturing Co., (13) where it was held that debentures did not corner within the earlier Bills of Sale Acts. Sec. 137 of the Transfer of Property Act provides that nothing in Ch. VIII applies to stocks, shares or debentures or to instruments which are for the time being by law or custom negotiable or to any mercantile document of title to goods. The meaning of this section seems to be that debentures and certain other things may be transferred otherwise than in the manner provided by sec. 130 and that the effect of the transfer is not controlled by the subsequent sections. I do not think it has reference to debentures considered as transfers but only as the subject-matter of a transfer. But if a mortgage-debt is not an actionable claim, nothing would seem to depend upon the decision of this point. Again, the fourth proviso to sec. 109 of the Indian Companies Act seems merely to mean that a mortgage or charge granted by a company is not to be deemed to be an interest in immoveable property merely by reason that it comprises or takes effect over debentures held by the Company and that such debentures constitute a charge on immoveable property of the Company issuing the same. The proviso is taken from the English Companies Act and has reference solely to the purposes of sec. 109, though it may well be that cases under the Statute of Mortmain [Merers v. Perigall (14) and under sec. 4 of the Statute of Frauds Driver v. Broad (15)] drew attention to the need for this proviso.

It is necessary, however, to consider the effect of sec. 17 of the Registration Act upon a floating charge over the whole undertaking, properties, assets and interests, present and future, of the issuing company. The opening words of sec. 17 make the liability to registration depend upon the district in which the immoveable property is situate. There are no such words in sec. 18. Sec. 21 deals with non-testamentary documents relating to immoveable property—a phrase which is wider than the scope of sec. 17. It provides that no non-testamentary document relating to immoveable property shall be accepted for registration unless it contains a description of such property sufficient to identify the same. By sec. 28 all the documents required to be registered under sec. 17 and three classes of documents which under sec. 18 are registrable at the option of the party, are required to be presented for registration in the office of the Sub-Registrar within whose sub-district the whole or some portion of the property to which the document relates, is situate. By sec. 51 all documents or memoranda registered under secs. 17 and 18 which relate to immoveable property and are not Wills, are required to be registered in Book No. 1, and by sec. 55 an index is to be kept of the names of the parties and another index shall contain such particulars mentioned in sec. 21—that is particulars of the description of the property— as the Inspector General from time to time directs. By secs. 64 and 65 the Sub-Registrar, where the whole of the property is not within his own Sub-District has to make a memorandum and send it to every other Sub-Registrar in whose Sub-District any part of the property in ??? or the Registrar of every District in which any part of the property is situate. These last are provisions upon which the utility of registration almost entirely depends and sec. 21 should be considered with reference to them.

Now a floating charge is a present charge though it does not finally attach or crystallize upon any specific property until the happening of some event which puts an end to the right of the Company to deal with the property in the course of its business. I will not here set out the descriptions given of a floating charge by Lord Macnaghten in Tailby v. The Official Receiver (16), Government Stock, etc., Co. v. Manila Railway Company (17) and Illingworth v. Holsworth (18) as these have often been repeated, but in Evans v. Rival Granite Quarries, Ltd. , Buckley, L.J, summarising the decisions, said “A floating security is not a future security, it is a present security which presently affects all the assets of the Company expressed to be included in it. On the other hand it is not a specific security. The holder cannot affirm that the assets are specifically mortgaged to him. The assets are mortgaged in such a way that the mortgagor can deal with them without the concurrence of the mortgagee. A floating security is not a specific mortgage of the assets plus a license to the mortgagor to dispose of them in the course of his business but is a floating mortgage applying to every item comprised in the security but not specifically affecting any item until some event occurs or some act on the part of the mortgagee is done which causes it to crystallize into a fixed security.” The two debentures now before the Court charge the Company's property and assets, present as well as future. In the absence of a stipulation to qualify the elasticity of the floating charge, it leaves the Company at liberty to create specific mortgages or charges in priority to itself [Florence Land Company (20) and Colonial Trust (21)] but it is not uncommon to insert in a debenture words to the effect that the floating charge is not to authorise the Company to create any mortgage or charge ranking in priority to the debenture. Of the two debentures before us, one contains such a restriction though the other does not.

In applying sec. 17 of the Registration Act to such instruments as these, it is difficult to deny that the requirement of registration must attach to all specific property capable of identification at the date of the execution of the instrument and that as regards immoveable property of every sort of which the Company was at that time possessed, the instrument in the absence of registration cannot take effect I am not prepared to hold that although a specific mortgage of such property would require registration a charge given upon such property would be exempt from this requirement by reason merely of the fact that the right of the Company to use its assets in the course of its business is a condition of the charge. Registration of a floating charge with respect to specific immoveable property is by no means without its use.

Again, speaking still of specific property ascertainable at the date of a debenture, it is to be observed that future interests in property may be created or transferred (cf. sec. 5 of the Transfer of Property Act), and that cl. (b) of sub-sec. (1) of sec. 17 of the Registration Act contains the words “in present or in future…. whether vested or contingent.”

Even so, however, the application of the Registration Act to debentures bristles with difficulties. The language, the machinery and the objects of the Registration Act would seem to confine sec. 17 to property which is specific in the sense of being ascertainable and capable of identification at the date of the instrument. The two debentures before us give no particulars of any property and I do not see how either instrument could have been accepted for registration by any Sub-Registrar, except indeed upon the footing that there is nothing on their face to show that the Bengal National Bank had any immoveable property, on which footing they could have been registered in Book 4.— “A floating charge on the undertaking or property of the Company” is a form of charge recognised by the Statute Book as may be seen from cl. (e) of sec. 109 of the Indian Companies Act. It is of the essence of such a charge that it will take effect over property which may in the future be acquired in the course of trading; that is to say, over property which cannot possibly be identified at the time of the creation of the charge. As the word “debenture” does not necessarily import a charge of this character, there is room for a contention to the effect that this form of charge is outside the requirements of the Registration Act, both upon a strict construction of its language and also upon the consideration that the machinery of the Registration Act cannot cope with it, there being no certainty whether the property affected would turn out to be property in one part of India or another, or whether it would be derived from A or from B. To uphold this contention would, however, make a very serious breach in the Registration system, and in so far as a debenture creates a charge upon immoveable property possessed by the Company at the time of the instrument, the breach would seem to be unnecessarily wide. In the present case, for example, it seems more reasonable to hold that to make these debentures effective over the immoveable property held by the Bengal National Bank in 1923, they should have contained a sufficient description of such property and should have been registered accordingly.

It may, however, be contended that under sec. 21 a document which creates interest in immoveable property should be refused registration altogether unless all the immoveable property comprised in it can be, and is, identified, Alternatively it may be contended that these debentures cannot take effect as regards immoveable property ascertainable and identifiable in 1923, but that they are good as regards property since acquired but not capable of identification at the time; that is all property which is excluded by the test quod cerium reddi potest.

I did not understand the learned Advocate for the Imperial Bank to advance either of these contentions before us, and in the present case I am not prepared to give effect to them. By the decree, dated the 6th May 1929, made in the Debenture-holder's action, it was declared “And the Plaintiff Bank by its Advocate admitting that by reason of the fact that the two debentures in the plaint in this suit mentioned having not been registered in accordance with the provisions of the Indian Registration Act of 1908, the said debentures did not operate to affect any immoveable property of the Defendant Bank, it is declared that the said debentures constitute charges upon all the undertakings, property, assets, including uncalled capital, of the Defendant Bank other than the immoveable property of the Defendant Bank.” The contention of the debenture-holders before us has throughout been that their security takes effect upon the debts which draw after them the securities given therefor; and that it is possible in law to create such a charge otherwise than an a charge upon the Bengal National Bank's interest in the immoveable property. This contention failing, it appears to me that the proper direction to be given upon the summons now before us on appeal is that the Imperial Bank is not entitled by virtue of the said debentures to any charge upon the sums payable to the Bengal National Bank in respect of advances or upon its security therefor in any case in which such advances were, at the date on which the charge created by the said debentures ceased to float, secured by the deposit of title deeds and such title deeds had not at the said date been deposited with the Imperial Bank.

I would only add that I greatly regret this conclusion.

The Appellants must pay the liquidators their cost of this appeal. The liquidators may take their attorney and client costs out of the assets of the Bengal National Bank in due course of administration.

C.C Ghose, J.:— I agree

Messrs. Morgan & Co., Solicitors for the Appellant.

Messrs. Orr Dignam & Co., Solicitors for the Respondents.