MOHAMMED IBRAHIM Vs. NORTHERN CIRCARS FIBRE TRADING CO

JUDGEMENT

(1.) The appellant in this appeal was defendant 5 in the suit out of which it has arisen. He is the assignee of a mortgage decree obtained by defendant 3 on a mortgage executed on 6 July 1934 by defendants 1 and 2 over the property known as the South India Bone Mills at Samalkot. The property comprised land as well as the plant and machinery installed thereon for the manufacture of bone meal. The mortgagors were the owners of three other mills also with which however we are not concerned in this appeal. Prior to the execution of the mortgage aforesaid, the mortgagors had on 16 November 1933 entered into an agreement with plaintiffs 2 to 4 who were carrying on a business under the name of the Northern Circars Fibre Trading Company, Coconada , which was plaintiff 1 in the suit. By this agreement defendant 2 who was doing business in the name of C. Raju, Import and Export Company, Coconada, impleaded as defendant 1 to the suit, entrusted the management of his several mills to plaintiff 1 for a period of two years. The Northern Circars Fibre Trading Company, who were thus entrusted with the management, undertook amongst others to invest a sum of Rs. 25,000 in cash in the business and this amount was to carry interest at 12 per cent. per annum. They were referred to in the agreement as the dubashees. It was a term of the agreement that "the monies invested by the dubashees shall be a first charge on the assets of the firm." The plaintiffs instituted the suit for the recovery of a sum of Rs. 66,746-9-9 as due to them in respect of the moneys invested by them in the business together with interest and the commission earned by them. They also claimed to be entitled to a first charge on the machinery in the mills, the stock-in-trade and the goodwill of the business. The agreement of 16 November 1933 had not been registered under the provisions of the Registration Act, but the plaintiffs claimed that the provisions of the agreement relating to the charge were nonetheless effective in so far as the moveables , viz., the plant and machinery and the stock-in-trade were concerned.

(2.) Subsequent to the institution of the suit a compromise was arrived at between the plaintiffs and defendants 1 and 2 by which these defendants agreed to pay plaintiffs 2, 3 and 4 a sum of Rs. 35,000 in full satisfaction of the claim in suit. Defendants 3 and 4 who were not parties to the compromise contended that the dubashee agreement in so far as it purported to give the plaintiffs a charge over the plant and machinery in the South India Bone Mills at Samalkot was invalid for want of registration because the said plant and machinery were immovable property. The suit was first tried in July 1937 by Mr. Bhaskara Reddi , the then Subordinate Judge who pronounced judgment on 19 July 1937 dismissing the suit on the ground that though the agreement purported to create a charge over moveables as well as immovable properties it was invalid for want of registration not only in respect of the immovable properties but also in respect of the moveable properties because the two sets of properties were inseparable from one another and the charge therefore failed in its entirety. The plaintiffs appealed to this Court in A. S. No. 320 of 1937. The judgment of. the Subordinate Judge was reversed and the case was sent back for rehearing, this Court holding that it is possible to separate the moveable and immovable assets and the charge should be regarded as valid in so far as the moveables were concerned. The ease then came up before Mr. R. M. V. S. Rao for fresh trial and he pronounced his judgment on 23 December 1941 decreeing the suit in so far as the plant and machinery installed in the mill were concerned on the ground that they constituted moveable and not immovable property. Defendant 5 who, as we have said, is the assignee of the mortgage decree obtained by defendant 3, has preferred this appeal.

(3.) The only question raised in the appeal is whether the Subordinate Judge is right in holding that the machinery installed in the premises of the factory at Samalkot is move-able property. The learned Judge has found that the main machine is installed on a small cement platform to which it is fixed by means of bolts at the four corners. It is also held in position by being attached to iron pillars fixed in the ground to a depth of nearly 6 or 7 feet. At the same time, he was of opinion that the machine can be dismantled into parts and conveniently removed as it is not difficult to break the platform and pull out the iron pillars to which the machine is screwed down. He came to the conclusion that the machinery was moveable property by asking himself the question whether the mill (machinery) existed for the land or the land existed for the mill (machinery), that is whether the mill is of primary importance and the land only of secondary importance in this ease or vice versa. His view appears to be that the bone mill stands imbedded in and attached to the earth not for the beneficial enjoyment of the land in which ease alone it should be regarded as immovable property but for the beneficial enjoyment of the mill itself which therefore remained notwithstanding the attachment moveable property only. After the best consideration we can give to the question we are of opinion that the learned Judge's decision cannot be supported. The real question which falls to be decided in this appeal is whether the writing evidenced by the dubashee agreement, referred to above, is required by law to be registered because it purports to create a right, title or interest in immovable property of the value of Rs. 100 and upwards. It is common ground that the value of the machinery is more than Rs. 100 and if it is immovable property, the agreement requires registration in order that the charge may take effect. If the machinery however is moveable property, the agreement does not, of course, require registration. "Moveable property" is defined in Section 2, clause (9), Registration Act, as including, standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other description, except immovable property. The machinery in question not falling within any of the enumerated species of moveable property, referred to in the section, it becomes necessary to enquire whether it is property of a description other than immovable property. Turning to the definition of "immovable property" in Clause (6) of the same section we find it is stated that it includes land, buildings... and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass. From this definition it is clear that what is really moveable property may become immovable property if it is attached to the earth or permanently fastened to anything which is attached to the earth. The Transfer of Property Act, 1882, relating to transfers of immovable property contains in Section 3 a definition of the expression "attached to the earth" for purposes of that Act. The definition is this: attached to the earth means-(a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. It was argued for the appellant that the question whether the dubashee agreement requires to be registered or not is primarily to be decided on the language of the definition of "immovable property" contained in the Registration Act rather than on that to be found in the Transfer of Property Act. The Transfer of Property Act, it will be remembered, governs charges created on immovable property. Section 100 states that, Where immovable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained which apply to a simple mortgage shall, so far as may be, apply to such charge.