There are 2 kinds of charges that can be put on the assets of a company, are a floating charge and a fixed charge.
2.1 Fixed Charge: This is usually related to the concept of a mortgage in which a charge is created on a particular property against which money is advanced by the creditor. However, a fixed charge is usually used in other instances of an ordinary mortgage. From a business perspective, it puts a restriction on the alienation of property against which such a fixed charge exists. It could also have the effect of hampering the business activities due to this reason.
2.2 Floating Charge: A floating charge can be considered as a liquid charge against any assets that the company may acquire or dispose of. This charge can be said to be on the general property owned by the company. A floating charge affords the company more flexibility with respect to the acquisition and alienation of property. In Panama, New Zealand & Australia Royal Mail Co, re A steamship company had issued a debenture in which the charge was against the assets of the company. There was a fixed period and schedule of payment for the same. However, before the debenture matured the company had wound up. The debenture owners wanted to enforce their debenture instruments. The court in this case held that a floating charge is general in nature and floats over all the property of the company. It does not attach itself to any specific property.
A charge which is a “specific charge” which is created by a debenture, which required that the book debs which have been charged by the instrument not be disposed before the collection and that the proceeds were to be paid in the account of the charge bank. However, since the charge which has been created allows for the free use of the company property, yet it imposes a restriction on the disposition of property. Therefore, the charge created is a floating charge and not a fixed charge
When a debenture creates a floating charge, it allows a company to create subsequent specific charges against assets. Such a charge which is created later on is a fixed charge and is accorded priority over a floating charge over the assets of the company. This is despite the creditor being aware of the prior floating charge which exists over the property of the assets. This condition of awareness of the creditor will not disqualify the creditor from the priority status which is accorded by the fixed charge. The only restriction on the company is from creating any further specific charge against specific assets of the company. In all such cases, registration of a notice of charge shall amount to constructive notice to any prospective debenture holders under Section 80 of the Companies Act.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.