JUDGMENT Iqbal Ahmad, C.J., Ganga Nath and Braund, JJ. - This is an appeal against the order of the learned Company Judge. It arises out of an application made by the Appellants u/s 183 of the Indian Companies Act. The Appellants were appointed managing agents by the Indra Sugar Works Ltd. under an agreement, dated the 22nd of December, 1934. According to the agreement, the Appellants deposited Rs. 50,000 with the Company as security for the fulfilment of their obligations under the agreement. The Company was ordered to be wound up by this Court on a petition of the Appellants and liquidators were appointed. The liquidators called on all creditors to establish their debts. The Applicants claimed that the Company were indebted to them to the extent of Rs. 55,437-8-0. They further claimed that in respect of this sum they were preferential creditors and held a charge on the machinery and other goods of the Company. The Official Liquidators allowed the Petitioners' claim for Rs. 52,694-8-0, but disallowed their claim that the sum of Rs. 50,000 which constituted the "security deposit" was held by the Company as a trust fund and ought to be repaid in fact to the Petitioners with interest in priority to the creditors. Against this order the Applicants made an application to this Court u/s 183 of the Indian Companies Act. The learned Company Judge upheld the order of the Official Liquidators See 1938 A.W.R. (H C) 553. It is against this order that the present appeal has been filed. 2. It has been contended on behalf of the Appellants that under clause 14 of the agreement the amount of security money was a second charge on the machinery and other goods of the Company. The agreement is not registered. It has been contended on behalf of the Official Liquidators that the charge is invalid for want of registration u/s 109(1)(c). It is contended on behalf of the Appellants that the machinery was not immovable property and therefore the charge was valid so far as the machinery was concerned. The following issue was remitted to the learned Company Judge for a finding: Whether and to what extent, the charge of the Appellants on the machinery, though unregistered, is valid? 3. It is contended on behalf of the Appellants that the machinery was not immovable property and therefore the charge was valid so far as the machinery was concerned. The following issue was remitted to the learned Company Judge for a finding: Whether and to what extent, the charge of the Appellants on the machinery, though unregistered, is valid? 3. The learned Company Judge's finding is "that the charge of the Appellants on machinery is not valid at all." This finding has not been challenged before us. Clause 14 of the agreement "that the amount of security money will be the second charge on the machinery and other goods of the Company" purported to create a charge, that is, a charge which would fasten on to the property that might exist when the time arrived for the charge to be enforced. In the case of the AIR 1931 245 (Privy Council) the principal tests as to whether a charge is a floating one or not were laid down by their Lordships of the Privy Council. They are: (1) Is it a charge upon all or a certain class of assets, present or future? (2) Would the assets charged in the ordinary course of business be changed from time to time? (3) Has the Company power until such step is taken by the chargees to carry on the business of the Company in the ordinary way? 5. If these tests are applied to the present charge, there can be no doubt that the charge was a floating one. This being so, the charge is void u/s 109 for non-registration. 6. It was further contended for the Appellants that the money deposited by the Appellants with the Company was trust money and as such, was not part of the assets of the Company and should be returned to them. It is not disputed that this money was deposited by the Appellants themselves in the general accounts of the Company, It was agreed between the parties that the Appellants would get interest on this money and that the money would be a second charge on the machinery and other assets of the Company. These circumstances clearly point to the intention of the parties at the time the money was deposited. These circumstances clearly point to the intention of the parties at the time the money was deposited. They leave no room for doubt that the parties never intended that this money was to be kept aside in trust for the Appellants or that it was not to be utilised by the Company for any purpose. 7. A similar question arose in Annapurna Company, Ltd. re : Dr. S.S. Tug (1925) 24 ALJ 347. There by an agreement entered into between Dr. Tug and the Company the latter agreed to employ Dr. Tug's son. Dr. Tug and his son agreed to furnish security for Rs. 10,000 which money was to be repaid by the Company on the expiry of the term of employment. It was further provided that, in case the Company went into liquidation, Dr. Tug and his son would have the position of a preferential claimant. It was held there that the agreement in question did not create a trust or anything in the nature of a trust and that Dr. Tug was merely a creditor of the Company, as the document contained no direction that the money handed over by him was to be kept aside in trust for him or was not to be utilised by the Company for any purpose. 8. The same view was taken by the Bombay High Court in the case of G.K. Malvankar v. The Credit Bank of India Ltd. (1914)27 Ind. Cas. 343 and In Re: Manekji Petit Manufacturing Co. Ltd., AIR 1932 Bom 311 9. Learned Counsel for the Appellants relies on the case In the matter of Hindustan Commercial Bank (India) Ltd. AIR 1938 Mad. 651. This case is distinguishable inasmuch as there the money was placed in a fixed deposit account in the name of the employee, who deposited the money apart from the funds of the Bank. 10. Learned Counsel for the Appellants relies on the case In the matter of Hindustan Commercial Bank (India) Ltd. AIR 1938 Mad. 651. This case is distinguishable inasmuch as there the money was placed in a fixed deposit account in the name of the employee, who deposited the money apart from the funds of the Bank. 10. We think that every case of this kind will fall to be considered on its own facts and circumstances In the one before us, we find two indications that it was not within the contemplation of the parties to the transaction that the sum of money in question should be treated as a segregated trust fund--first the provision contained in the agreement of the 22nd December, 1934, that its repayment should be secured by a charge on the Company's assets and secondly, the provision for the payment of interest by the Company. The former, if not wholly inconsistent with the constitution of a trust fund, at least points to the view that the money was to be "repaid" in the sense that it would constitute a "debt" from the Company to the Petitioners. The latter provision also, in our view, points strongly in the same direction, as, if the fund had been a trust fund, the interest it earned would itself belong to the Petitioners and no question of the payment of interest by the Company would arise. 11. We think that a fair test of whether a sum of money of this kind is to be held as a trust fund or not is to ask whether, in the circumstances, it was intended that it should remain a segregated fund, or whether it should, on payment, become the property of the Company and be compensated for by the Company's express or implied covenant to repay it in exactly the same way as the customer's deposit in a Bank creates the relationship of debtor and creditor. We think that the circumstance that it passed into the general assets of the Company and was utilised by them for their general purposes is a strong indication that the latter view is the correct one, as the first duty of a 'trustee' is to avoid mixing the trust funds with his own or to use them for other than trust purposes. 12. 12. For these reasons, therefore, we find that the money deposited by the Appellants was not trust money and the Appellants have no preferential claim. 13. There is no force in the appeal. It is therefore ordered that it be dismissed with costs.