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Issues Involved:
1. Whether the transaction in question was a charge or an assignment under Section 79 of the Companies Act, 1929. 2. Whether the receiver is entitled to a set-off against the amount claimed by the sub-contractor. Issue-Wise Detailed Analysis: 1. Whether the transaction in question was a charge or an assignment under Section 79 of the Companies Act, 1929: The primary issue was to determine if the transaction was a charge on book debts requiring registration under Section 79 of the Companies Act, 1929. Section 79 states that a charge shall be void if not registered. The court examined whether the transaction was a charge or an assignment. The transaction involved a letter authorizing payment to the sub-contractor from the London County Council. The court noted that the document was an absolute assignment of part of a debt due in the future, not a hypothecation. The court emphasized that the substance of the transaction, not the form, determines its nature. The court referred to the principles in Saunderson & Co. v. Clark and Tailby v. Official Receiver, which highlighted that the nature of a transaction is one of substance. The court concluded that the transaction was an assignment, not a charge, as it provided an equitable claim on the fund when it came into existence, rather than creating a security interest. The appellant's argument that the assignment of part of a debt should be considered a charge was rejected. The court found no authority or precedent suggesting that Section 79 covers absolute equitable assignments. The court cited Romer, L.J., in Inglefield, Ltd., distinguishing between transactions of sale and mortgage or charge, supporting the view that the transaction was an assignment. The court concluded that the transaction was not a charge within the meaning of Section 79 and thus did not require registration. Consequently, the appeal on this ground was dismissed. 2. Whether the receiver is entitled to a set-off against the amount claimed by the sub-contractor: The second issue concerned whether the receiver could claim a set-off against the amount due to the sub-contractor for expenses incurred in completing the contract. The court discussed the receiver's argument that the sub-contractor should give credit for the receiver's expenses in completing the work, as the fund from which the payment was to be made only came into existence due to the receiver's actions. The court found no equity supporting the receiver's claim for a set-off. The receiver had repudiated the letter of assignment and completed the contract for the benefit of the debenture-holders, not out of kindness to the sub-contractor. The court noted that the company was contractually bound to complete the work for the London County Council, and the receiver's actions were in line with preserving the company's goodwill and fulfilling contractual obligations. The court rejected the argument that the sub-contractor should give credit for the receiver's expenses, as the receiver acted for his own purposes. The court also dismissed the notion that it would be inequitable to allow the sub-contractor to receive payment when they had not completed the work, emphasizing that any cross-claim in damages for breach of contract should be pursued separately. The court concluded that the receiver had no right to claim a set-off against the amount due to the sub-contractor. The appeal on this ground was also dismissed. Conclusion: The court dismissed the appeal with costs, affirming that the transaction was an assignment, not a charge, and rejecting the receiver's claim for a set-off.
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