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42 Debenture is a means of raising funds by any one
but generally by companies in the interest of trade, commerce and industry. It includes
debenture stock, bonds and any other securities of a company whether constituting a charge
on the assets of the company or not. In modern commercial usage a debenture denotes an
instrument issued by the company, normally- but not necessarily- called on the face of it
a debenture and providing for the payment of, or acknowledging the indebtedness in, a
specified sum at a fixed date, with interest thereon. It usually - but not necessarily
gives a charge by way of security- and is often, though not invariably, expressed to be
one of a series of like debentures.
But the term, as used in modern commercial parlance, is of extremely elastic character.
'Bond' is a generic term. It is an obligation, a contract or an agreement, to pay money or
to do other thing. No precise form of words is necessary to create a bond. It is an
instrument whereby a person .obliges himself to pay money to another, on condition that
the obligation shall be void if a specified act is performed or is not performed, as the
case may be. To be a 'bond' the executor of the instrument must expressly undertake to pay
money as an obligation arising out of the instrument. It shall not be a matter to be
inferred. Generally accepted, the definition of 'bond' is that it is a certificate or
evidence of a debt.
Security has reference to written instrument and such instruments are usually for the
payment of money or to evidence a debt; they are more than a mere promise of the debtor to
pay generally liability and have as collateral to such instruments pledges of property or
some additional obligation. The 'security' is something beyond mere liability, the payment
of which is in some way secured.
