Securing Debt In Corporate Insolvency: The Crystallisation Of Floating Charges Under Section 100 Of The Transfer Of Property Act, 1882
- IJLLR Journal
- 2 days ago
- 1 min read
Kanishk Kaushik, LL.B. (Hons.), Jindal Global Law School, O.P. Jindal Global University
ABSTRACT
A floating charge sits over a shifting pool of assets until some triggering event pins it down to what the company owns at that moment. This paper traces that process crystallisation through the framework of Section 100 of the Transfer of Property Act, 1882 and asks what happens to it once a company enters insolvency. Section 100 was drafted for immovable property in 1882, decades before Indian corporate finance began routinely securing loans against inventory and receivables so the statute never quite fits the transaction it is asked to govern. The paper follows that mismatch through the case law from the Supreme Court's account of what a charge actually is, through the priority rules under Section 48 of the Transfer of Property Act, to their collision with the Section 53 waterfall under the Insolvency and Bankruptcy Code, 2016. It argues that the current framework leaves secured creditors facing an unpredictable choice at the point of liquidation, and proposes three statutory interventions: codifying floating charges and their crystallisation triggers directly in statute, clarifying how Transfer of Property Act priority operates inside the Code's ranking tiers, and softening the subordination of a secured creditor's unrecovered balance.
