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Jnan Chand Chugh Vs. Jugal Kishore Agarwal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKolkata High Court
Decided On
Case NumberSuit No. 659 of 1959
Judge
Reported inAIR1960Cal331
ActsTransfer of Property Act, 1882 - Sections 2, 3, 3(26) and 8; ;Registration Act - Section 2(6); ;Code of Civil Procedure (CPC) , 1908 - Sections 11, 21 and 120
AppellantJnan Chand Chugh
RespondentJugal Kishore Agarwal and ors.
DispositionSuit dismissed
Cases ReferredHariram Saraogj v. Rameswar Lal
Excerpt:
- g.k. mitter, j.1. this is a suit for a declaration that the decrees passed by this court on 20-1-1958 and 18-8-1958 in suit no. 1182 of 1957 are invalid and illegal and not binding on the plaintiff, for an injunction restraining the defendants from enforcing the said decrees or taking any steps thereunder and for other incidental reliefs.2. the facts of the case fie in a very short compass. the plaintiffs father ratan chand chugh deceased entered into an agreement on 9-6-1953 with the defendants herein whereby the latter agreed to lend to the borrower from time to time as and when required a total sum of rs. 1,00,000/ for the purpose of the borrower's business. there is a recital in this document that in order to secure the proposed loan the borrower had agreed to execute, whenever called.....
Judgment:

G.K. Mitter, J.

1. This is a suit for a declaration that the decrees passed by this Court on 20-1-1958 and 18-8-1958 in suit No. 1182 of 1957 are invalid and illegal and not binding on the plaintiff, for an injunction restraining the defendants from enforcing the said decrees or taking any steps thereunder and for other incidental reliefs.

2. The facts of the case fie in a very short compass. The plaintiffs father Ratan Chand Chugh deceased entered into an agreement on 9-6-1953 with the defendants herein whereby the latter agreed to lend to the borrower from time to time as and when required a total sum of Rs. 1,00,000/ for the purpose of the borrower's business. There is a recital in this document that in order to secure the proposed loan the borrower had agreed to execute, whenever called upon, a formal legal charge over his entire machinery and fixtures as specified in the schedule to the document. In pursuance of the above agreement and in consideration of a sum of Rs. 1,00,000/- the plaintiffs father Ratan Chand Chugh executed a mortgage in favour of the defendants herein of properties set out in the schedule to the deed of 4-8-1953. The mortgage was registered in Book No. 1 of the Registrar of Assurances, Calcutta. Ratan Chand Chugh was the sole proprietor of the Arim Tin and Steel Works at 258/4 Upper Circular Road, Calcutta, which is beyond the local limits of the original jurisdiction of this Court. The deed was in the form of an English mortgage to secure a sum of Rs. 1,00,000. Ratan Chand was only a monthly tenant of the land on which the factories stood. The properties charged include hinges, pull drawers, door bolts and belt lacing and machinery, described more fully in the schedule to the deed, As a matter of fact there are two factories one at the premises already mentioned and the other at 246, Maniktola Main Road, Calcutta, also situate outside the original jurisdiction of this Court. Below the list of machinery given in the schedule there is an endorsement reading 'machinery, fixtures at premises No. 246, Maniktola Main Road and 258/4, Upper Circular Road, Calcutta'. The only other thing of any significance mentioned in the deed is a statement that

'if the properties hereby granted or any portion thereof be at any time acquired by the State of West Bengal or any public or corporate body or legal authority for any public purpose then the amount of compensation money awarded in respect of such acquisition shall be applied towards the payment of costs and then towards the interest and the balance, if any, towards the payment of the principal money for the time being due under these presents without further consent of the mortgagor and the mortgagee shall be entitled to receive the said compensation money and appropriate the same'.

3. On 5-7-1957 the mortgagee filed a suit on the mortgage with leave under Clause 12 of the Letters Patent on the ground that the money was advanced in Calcutta and the mortgage executed within the jurisdiction of this Court. The prayer in the plaint was that a mortgage decree should be passed in Form No. 5 or 5A of Appendix D to the first schedule of the Code of Civil Procedure. Immediately thereafter the mortgagee applied to this Court for the appointment of a Receiver. The mortgagor filed an affidavit-in-opposition thereto contending, inter alia that this Court had no jurisdiction to try the said suit inasmuch as the properties mortgaged were heavy machinery imbedded and permanently attached to and fixed in the earth and were, immoveable property. Bose J., who heard the application, appointed the Official Receiver a Receiver over the mortgaged properties. The plaintiff preferred an appeal therefrom taking the same point as to jurisdiction. Thereafter there was a compromise between the par-tics whereby a preliminary mortgage decree was made on consent on 20-1-1958, the plaintiff undertaking to withdraw the said appeal. A final decree was passed on the basis of the, said preliminary decree on 18-8-1958.

4. The present suit was filed on 20-5-1959. In paragraph 1 of the plaint it is pleaded that the plaintiffs father created an English Mortgage in favour of the defendants

'of several plants and heavy machinery permanently imbedded and fixed by bolts and nuts to concrete foundations at the factory lands situate at premises No. 258/4, Upper Circular Road and 246, Maniktola Main Road, Calcutta both outside the jurisdiction of this Court. The said plants and machinery were at all material times and are permanent fixtures to the said lands (situate wholly outside the said jurisdiction) and arc immovable properties and not chattels'.

As such it is contended by the plaintiff that suit No. 1182 of 1957 was and is a suit for land situate wholly outside the jurisdiction of this Court: as such the decrees mentioned are nullities. It is not necessary to take notice of other allegations made in the plaint to the effect that the plaintiff had no independent legal advice while consenting to the decree in the previous suit and that his consent was wrongfully obtained and procured by the defendants without disclosing that this Court had no jurisdiction to pass the decree because the plaintiff had appeared in the previous suit through a solicitor and had taken a specific objection as to the jurisdiction of the Court.

5. By the written statement filed herein the defendant deny that the plants or machinery which formed the subject-matter of the mortgage were permanently imbedded in the earth or were permanently fixed to the land as alleged. The defendants contend that the plants and machinery were not and are not immovable properties but were and are trade fixtures installed in the said factories by the plaintiff and/or his father for the purpose of their business and not for any beneficial enjoyment of the land on which they stood. In any event the defendants contend that this suit is barred by the principles of res judicata or doctrines analogous thereto.

6. The following issues were settled:

1. Are the mortgaged properties immoveable properties as alleged in paragraph 1 of the plaint?

2. (a) Was suit No. 1182 of 1957 -- a suit for land?

2. (b) Did tin's Court have jurisdiction to try the said suit?

3. Is this suit barred by res judicata or principles analogous thereto?

4. To what relief, if any, is the plaintiff entitled?

7. The plaintiff examined one Jyotirmoy Dasgupta who said in his examination-in-chief that he was a technician employed by the plaintiff as works manager of the factories mentioned. He claimed to have worked there for five years continuously and to have intimate knowledge of the machinery and the building. The machinery, according to him, were for the purpose of metal shaping and electro plating. He was shown the mortgage deed and he described the machinery item by item. He said that the machines have their foundation in the earth and they were fixed by bolts and nuts to concrete bases imbedded in the earth. He added that each machine stood on legs with holes in them and were fixed to the foundation by means of bolts imbedded in the concrete and nuts fixing the legs to the concrete foundation. These machines were worked by electric power. To a question put by the Court the witness said that the machines could not be removed easily from the foundation. In cross-examination he said that cement concrete was first laid in the earth to form the foundation, then before the concrete had become quite dry bolts were put in position so that they would go through the legs of the machine through the holes made for the purpose. When the concrete was quite dry the machines were put in position and fixed to the foundation by screwing the nuts from above on to the bolts. Usually, according to the witness, when a machine has to be removed all that has to be done is to undo the nuts and lift the machine from the foundation, but the witness added that in some cases the concrete foundation has to be disturbed to take the machine out. He explained this by saying that sometimes in case of machines which have to undergo a great deal of vibration the legs too are imbedded in the concrete foundation to a depth of a lew inches. This, according to him, would usually happen in the case of small machines. The witness said that sometime after the factory was started it was found that water would collect on the floor and the surface of the floor had to be raised, to prevent water soiling the machines. His attention was drawn to the Smithy furnace which he said was built on the floor and did not require any bolts or nuts to keep it fixed. The witness was shown some photographs of the machines which were taken very recently. Shown photograph No. 8 which was a 49 ton power press, the witness said that bolts and nuts could not be seen on the photo. This however does not seem to be correct because at least two pairs of bolts and nuts are visible and the other two would be in such position that the photograph would not show them. The witness said that the major portions of the bolts were inside the concrete foundation and only a small portion of it would protrude above it so that the machine could be fixed by the nuts. Photograph no. 7 is of the rolling machine situate in factory No. 2: the bolts and nuts of this machine are not visible, according to the witness, but are imbedded in the earth to prevent the vibration of the machine. It was suggested by cross-examining counsel that they could not be seen because they were covered up with earth. The attention of the witness was drawn to the photographs one by one and a suggestion made that they were all fixed by means of bolts and nuts and could be removed by undoing the nuts. It appears to me that in the case of most of the machines the suggestion is correct, while it may be that in case of one or two of the machines the legs of the machines themselves have got imbedded in the earth.

8. The defendants examined one Stefen Schonbrenner who was an engineer of Messrs. Francis Klein and Co. Ltd. He produced the catalogue of his Company which contains pictures of some of the machines of the kind appearing in the photographs exhibited by the plaintiff. According to him these machines could be easily removed by unscrewing the nuts and the method of fixing them to the earth was by putting the bolts in the concrete foundation so that they got imbedded therein and then putting the machines on the floor so that they could be fixed to the bolts by screwing the nuts thereon, The second witness on behalf of the defendant was Chunilal Agarwala a brother of the three defendants. He said that he had seen all the machines mentioned in the schedule to the mortgage deed. According to him the legs of the machine should not be covered with cement because they would become unworkable. He claimed to be the owner of a factory himself and as such to have knowledge of the working of the machines and how they are fixed to the earth. In cross-examination he said that he did not know who had built the structure of the defendant's factory but he was aware that the land had been leased on a monthly basis.

9. The first question for the determination is whether the former suit was a suit for land. If the answer to the question is in the affirmative this Court had no jurisdiction to entertain the suit. But a question would then arise as to whether notwithstanding that the former suit was a suit for land the plaintiff is estopped from raising that controversy in this suit. So far as Clause 12 of the Letters Patent is concerned this Court would have had jurisdiction to try the suit if only the land or other immovable property be situate within the local limits of the ordinary original jurisdiction of this Court. The Letters Patent do not define what land or immovable property is and for that we have to refer to other provisions of the law. The Transfer of Property Act docs not give a definition of immovable property but only states that it does not include standing timber, growing crops or grass. For the purpose of the Transfer of Property Act the expression '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 walla or buildings; or

(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.

The definition of immovable property in the Registration Act though not exhaustive is certainly more helpful. The expression 'immovable property' for the purpose of the Registration Act

'includes land, building, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land and things attached to the earth or permanently fastened to anything which is attached to the earth but not standing timber, growing crops or grass'.

'Moveable property' according to the Registration Act

'includes standing timber, growing crops and grass, fruits upon and juice in trees and property of every other description except immovable property'. According to the General Clauses Act immovable property includes lands, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth and move-able property means property of every description except immovable property.

10. As land or immovable property has not been defined in the Letters Patent, to find out whether there has been a transfer of an interest in immovable property one has to refer to the Transfer of Property Act. If the definition of immovable property in the last mentioned Act had been self-sufficient no other piece of legislation need have been examined. Looking at Section 4 of the General Clauses Act one finds that the definition of immovable property in Section 3 will apply to the Transfer of Property Act, which is a Central Act made after 3-1-1868, unless there is anything repugnant in the subject or context. The effect therefore is that by virtue of the combined operation of Section 2 of the Transfer of Property Act and Sections 3 and 4 of the General Clauses Act, 'immovable property' includes land, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth but does not include standing timber, growing crops or grass. So far as the expression 'attached to the earth' is concerned it occurs only in two sections of the Transfer of Property Act, namely, Sections 8 and 108 clause (h). But as a result of the above amalgamation the meaning of the expression 'attached to the earth' given in Section 3 of the Transfer of Property Act is attracted to all immovable property referred to in the said Act, 'Immovable, property', therefore, for the purpose of the Transfer of Property Act, includes things attached to the earth or things permanently fastened to anything attached to the earth within the meaning of the expression 'attached to the earth' given in the Transfer of Property Act. So interpreted the definition of immovable property for the purpose of the Transfer of Property Act becomes almost the same as that given in the Registration Act except that the incidents such as 'hereditary allowances, rights to ways, lights, ferries, fisheries' expressly mentioned in the Registration Act are absent in the Transfer of Property Act. But these incidents are probably also brought in by virtue of Section 8 of the Transfer of Property Act.

11. We, therefore, have to see whether the machinery in this case can be said to have been attached to the earth or permanently fastened to anything attached to the earth within the meaning of the expressions in the Transfer of Property Act and the General Clauses Act. It cannot be said that they are rooted in the earth nor can it be said that they are imbedded in the earth. It may be that the legs of one or two of the machines in this case look as Sf they have become imbedded in the earth as a result of the raising of the floor but there is no evidence before me that the idea or intention of the mortgagor in this case was to imbed them in the earth so that they could not be removed without breaking the concrete foundation. Except in the case of the furnace which appears to have been built in the soil itself all the other machinery appear to me to have been put on the floor of the factory on beds of concrete prepared for them and fastened down to the concrete bed by bolts and nuts, the bolts being firmly fixed in the concrete and passed through and projected beyond the holes in the machines. The object of the fastening was only to prevent the machines from vibrating inasmuch as they have to be worked by electric power conveyed to them from exterior sources. Nor, in my opinion, can it be said that the machines were attached to the concrete foundation laid in the earth for the permanent beneficial enjoyment either of the concrete foundation or of the soil in which the same was laid. The object of fastening the machinery to the land was not for the permanent beneficial enjoyment of the land but for the purpose of obtaining steadiness in the machinery while working for polishing and shaping things and earning profit thereby. From the photographs exhibited in this case it does not appear that the building or the structure put up to house the machinery was of a permanent nature at all. Even the brick in the walls do not seem to be laid with any idea of permanence: the top portion of the walls and the roots are of corrugated iron sheets and the whole structure seems to have been put up only for the purpose of somehow keeping out wind and water. The reason is obvious; the land was held on the basis of a monthly tenancy and but for the legislation now in force the tenant could be asked to quit on a few months' notice at the most. The whole building seems to me to have been put up in such a way that it could be dismantled and removed elsewhere at a short notice and without much expense.

12. If the intention of the person erecting the structure within which the machinery was housed, was to pull down the structure, it required, at a short notice and without a great deal of expense can it be said that his intention at the time of fastening, the machines to the earth or to the concrete bed was, to fasten the same for the permanent beneficial enjoyment of the land? To my mind, the answer can only be in the negative. In my view, the owner of the machines knew very well that his interest in the land was precarious and uncertain while his interest in the machinery was absolute and permanent and it must be inferred in this case that his intention was to remove the machines elsewhere, if necessary, without much trouble or expense.

13. Though there are one or two indications to the contrary, it is my view, taking all the documents into consideration that the idea of the borrower was to create a charge on the machinery unconnected with his interest in the land. The agreement of 9-6-1953 shows that the financiers had agreed to lend a sum of Rs. 1,00,000/- to the borrower for the purpose of the latter's business and the borrower had agreed to create, whenever called upon, a formal legal charge over his entire machinery and fixtures as specified in the schedule to the document. So far as the deed of mortgage is concerned it undoubtedly is in the form of an English, Mortgage purporting to convey and grant unto the mortgagee the estate, right, title and interest of the mortgagor subject to the provision for redemption. This is certainty very unusual in. the case of a mortgage of movables. So is the provision in the document of mortgage entitling the mortgagees to receive the compensation money in case the property was acquired by the State of West Bengal or any public or corporate body for any public purpose. It is well known that movable property is seldom, if ever, acquired by the Government. Again, one cannot lose sight of the fact that the document was registered in Book 1 kept under Section 51 of the Registration Act which is meant to be a 'Register of non-testamentary documents relating to immovable property'. It was also argued by counsel for the plaintiff that the prayer in the former suit was for a decree under the provisions of Order 34 of the Civil Procedure Code which relates to immovable properties. It must not be forgotten that the former suit was filed with leave under Clause 12 of the Letters Patent and the jurisdiction of this Court sought to be attracted on the ground that money had been advanced in Calcutta, that the agreement dated 9-6-1953 was executed in. Calcutta and that the deed of mortgage was executed in Calcutta within the jurisdiction of this Court. If, according to the financiers the former suit was a suit for land leave under Clause 12 of the Letters Patent was wholly immaterial if the land or the immovable property was situate outside the jurisdiction of this Court, It must be taken that the financiers were aware that the property lay outside the local limits of the original jurisdiction of this Court.

14. It is not open to the parties to treat movable property as immovable property if the property was not in fact immovable. The intention evinced at the time when the loan was created or when the document recording the loan was executed or registered is not material. The test, in my view, is the object with which the machinery was affixed to the land and the manner in which it was affixed. If the mode of attachment was imbedding in the earth as in the case of walls and buildings or if the object of attachment was for the permanent beneficial enjoyment of the land to which it was attached then the property would be immovable property within the meaning of Section 3 of the Transfer of Property Act but not otherwise.

15. I was referred to several English decisions on this point to which I shall presently refer. The first case was that of Wake v. Hall, (1883) 8 AC 195. There the appellants had brought an action to recover damages from the respondents in respect of trespasses upon the appellants' land for the wrongful destruction and removal by the respondents of buildings on the land. The respondents were miners working under customs established by the High Peak Mining Customs and Mineral Courts Act 1851,

'They had lawfully erected machinery and buildings necessary thereto on surface land of which the miners were entitled to the exclusive use for mining purpose but the freehold of which belonged to others. The buildings were attached so as to be part of the soil, and so that they could not be removed without some disturbance, which would not amount to a destruction of the soil. The buildings were from the first intended to be accessory to the smiling, and there was nothing to show that the property in them was intended to be irrevocably annexed to the soil'.

The appellants lost before the trial Court and then before the Court of Appeal: they also lost before the House of Lords. In the opinion of Lord Blackburn (page 201) some of the buildings 'at least the chimney, pumping-engine house and bed were so attached to the soil which belonged to the plaintiffs as to be, whilst they so continued attached part of that soil'. According to his Lordship (page 203) the question to be decided was whether ' when the defendants had a right to erect such buildings on the plaintiff's soil they, whatever then intention might be, made the materials the property of the owners of the soil in such a sense that the defendants could not at any time remove them'. His Lordship referred to the case of Elwes v. Mawe, 2 Sm. L. C, 7th Ed 185 and the general rule there stated 'that whatever is annexed to the realty becomes part of it, and the person who was the owner of it when a chattel loses his property in it, which immediately vests in the owner of the soil. Quicquid plantatur solo, solo cedit'. Although he was prepared to accept the first part of the above he dissented from the latter portion and said that it was not borne out by the authorities cited. The dictum of his. Lordship which has been approved of and applied in later cases appears at page 204 of the judgment--

'Whenever the chattels have been annexed to the land for the purpose of the better enjoying the land itself, the intention must clearly be presumed to be to annex the property in those chattels to the property in the land, but the nature of the annexation may lie such as to shew that the intention was to annex them only temporarily; and there are cases deciding that some chattels so annexed to the land as to be, whilst not severed from it, part of the land are removable by the executor as between him and the heir **** the degree and nature of the annexation is an important element for consideration; for where a chattel is so annexed that it cannot be removed without great damage to the land, it affords a strong ground for thinking that it was intended to be annexed in perpetuity to the land'.

16. Reynolds v. Ashby and on 1904 AC 466 was an authority relied on strongly by counsel for the plaintiff. One Holdway who was the lessee of land for 99 years built a factory on it for a joinery business. He mortgaged the premises to one Burrows together with the buildings, fixtures, machinery and fittings erected thereon. After creating two further mortgages he entered into a hire-purchase agreement with Reynolds whereby the latter agreed to let machinery to be used in the factory which was to become the property of Holdway as soon as all the payments were made, with a proviso that if default was made in punctual payments of the instalments the hiring might be determined and possession of the machinery taken by Reynolds. In pursuance of this agreement heavy carpenter's tools were put up on the ground floor of the factory on beds of concrete prepared for them and secured in the same manner as the machinery in this case. The second mortgagee took possession of the premises under his mortgage followed by the appellant Reynold's giving a notice to Holdway determining the hiring and demanding return of the machinery. The third mortgagee took transfers of the prior mortgages and refused to deliver possession. The appellant Reynolds then brought the notice against the mortgagee claiming the machinery or damages; the plaintiff lost the action both in the trial court and in the Court of Appeal and preferred an appeal to the House of Lords. The Earl of Halsbury was not satisfied with the mode in which the case had been disposed of and observed that there were various modes by which trade fixures could be protected from being absorbed by the owner of the freehold or by a mortgagee and that there might be a contract either express or implied between the parties interested in such a transaction to save machinery from being absorbed either by a creditor or the landlord but as there did not appear anything in the case from which such a contract could be implied he would not dissent from the judgment in appeal. Lord Macnaughten observed that the Jaw with regard to fixtures as between mortgager and mortgagee was not very satisfactory but mischief would be created it a departure was made from the law as laid down in the case of Mather v. Frazer, (1856) 2 K. and J. 536. According to Lord James:

'the weight of authority is in favour of the view that these machines must be held to be affixed to the building so as to pass under the mortgage as being a portion of the factory.'

According to Lord Lindley the purpose for which the machines were obtained from the appellant was to complete and use the buildings as a factory and

'the concrete beds and bolts prepared for them negatived any idea of treating the machines when fixed as movable chattels.'

Lord Lindley observed that a long series of decisions of the highest authority laid down conclusively that 'as between a mortgagor and a mortgagee machines, fixed as these were to land mortgaged, pass to the mortgagee as part of the land.' His Lordship added that it was not possible to reconcile all the cases of fixtures but

'in dealing with them attention must be paid not only to the nature of the thing and to the mode of attachment, but to the circumstances under which it was attached, the purpose to be served, and last but not least to the position of the rival claimants to the things in dispute.'

17. Counsel for the plaintiff relied strongly on the observation of Lord Lindley but it should be noted that in India the rule of English Common Law as applied to fixtures either as between landlord and tenant or as between mortgagor and mortgagee has no application after the enactment of the T. P. Act and other statutes. It should be noted that even in England the old rule that 'whatever is annexed to the land becomes a part of the land' has been considerably relaxed.

18. Thus in re De Falbe, Ward v. Taylor (1901) 1 Ch. 523 it was held that valuable tapestries brought by the tenant into the demised premises did not become a part of the freehold and in Spyer v. Phillipson, (1931) 2 Ch. 183 valuable ornamental panelling, chimney and fire place affixed by the tenant in the premises which he had taken on lease for 21 years by screwing them on to wooden plugs inserted in the wall for the purpose, were held not to become the landlord's fixtures and as such liable to be removed by the tenant at any time during his possession before the expiration of his term.

19. In Thakoor Chunder Poramanick v. Ramdhone Bhuttacharjee, 6 Suth WR 228, Sir Barnes Peacock, C. J. refused to apply the English Law of fixtures. In Mofiz Sheikh v. Rasik Lal Ghos ILR 37, Cal 815 where a tenant who was sued for damages for having cut down a tree planted by his grandfather by the landlord was held to have been entitled to do so by a bench consisting of Mukherjee and Carnduff JJ. The tenancy had come into existence before the passing of the Transfer of Property Act and the Bengal Tenancy Act was not applicable to it. It was argued on behalf of the landlord that the English law of fixtures should be followed as based on justice, equity and good conscience. This was negatived by the bench which observed that

'it is difficult to appreciate upon what intelligible principle a tenant may be compelled to leave on the land trees grown and structures erected by him for his own benefit'.

It was also pointed out that rule in 2 Sm. LC 7th Ed. 185 was not followed in the United States of America and was against the law of fixtures as known to Hindu Law or Muhammadan Law. It was further pointed out that in Ismai Kani Rowthen v. Nazarali Sahib, ILR 27 Mad 211 Bhashyam Ayyangar, J. had refused to adopt the English doctrine of fixtures.

20. In Macleod v. Kikabhoy Khushal, ILR 25 Bom 659, one Vishram Meghji, the owner of a flour mill charged all the machinery engines, plant, stock, trade fixtures, chattels and effects then standing or being in or upon or belonging to or used in connection with the flour mill as security to the plaintiff for the repayment of the money advanced with covenant not to remove any of the chattels off the premises without the plaintiffs consent. Maghji became insolvent; his estate vested in the Official Assignee. The plaintiff claimed the property which was subsequently sold with his consent and without prejudice to his claim. The plaintiff claimed the sale proceeds. Russell, J. decided in the plaintiff's favour as to such of the articles as were fixed on the ground and rejected it as to such as were not so fixed. The evidence as to annexation to the earth was meagre but Jenkins, C J. held that 'looking to the fact that the insolvent who erected them was only a monthly tenant I am unable to hold that they were permanently fastened to the earth'. With regard to a number of the articles therefore he held that the Official Assignee had a good title but with regard to the rest he repelled the claim,

21. In Chaturbhuj Morarji v. Thomas J. Bennett, ILR 29 Bom 323 Jenkins. C. J. said that the word fixture was not a familiar word in India and the maxim 'Quicquid plantatur solo solo cedit' on which the law of England as to fixture seems to have been originally founded, has never received so wide an application hero as there.

22. In Firm Subramanian v. Chidambaram Servai, AIR 1940 Mad 527 the question was whether a security bond pleading an oil engine installed as part of a cinema could be deemed to be a transaction relating to immovable property so as to attract the provisions of explanation 1 to Section 3 of the Transfer of Property Act. It was found that the engine was installed by making a concrete base fitted with bolts and attaching the engine to the bolts by means of nuts. Wadsworth, J. who tried the case said that in deciding the question regard must be had not merely to the nature of the attachment by which the cumstances in which it came to be fixed, the title of the person fixing it in the immovable property and the object of the transaction. His Lordship held that it could not have been the intention of the parties to bring about a transaction relating to immovable property, for the defendants were in daily expectation of being evicted from the premises and they could not give to the plaintiff any rights of a valuable nature in the immovable property as such. The security bond was held not to be one relating to immovable property, although the document was registered.

23. The last case was approved of by a Division Bench of the Madras High Court in Mohammed Ibrahim v. Northern Circars Fibre Trading Co. : AIR1944Mad492 . In this ease a bone crushing mill was located in the premises of a factory. The machinery of the milt was installed on a small cement platform to which it was fixed by means of bolts at the four corners. It was also held in position by being attached to iron pillars fixed in the ground to a depth of nearly 6 or 7 feet. Before the purchase of the factory and the mill located in it by the owner the site and land on which the factory stood and the machinery of the mill belonged to two different persons. The owners entered into an agreement with plaintiffs 2 to 4 who were carrying on business under the name and style of the Northern Circars Fibre Trading Co. for a period of two years. It was a term of the agreement that the moneys invested by the plaintiff No. 1 would be a first charge on the assets of the firm. Thereafter the owners executed a mortgage of their property. The agreement with the Northern Circars Fibre Trading Company was not registered. The question was whether registration was necessary because the document purported to create a right, title or interest in immovable property. The learned fudges pointed out that movable property might become immovable property by being directly attached to the earth or being fastened to something which was attached to the earth. It was held by them that in order to arrive at a finding there should be an enquiry directed not only to see whether the attachment was direct or indirect but what was the nature of the attachment and what was its object and purpose. They approved of the judgment in : AIR1940Mad527 and observed that

'the more important test is to ascertain the intention of the person concerned when he attaches and instals his own machinery to the land or building. The intention may be express or implied from the circumstances in which he attaches the machinery'.

They took the view that 'when the owner purchases the land and the machinery, he cannot be said to have the same intention which his vendor had. Before this purchase the site and the land on which the factory stood belonged to one of four partners of a firm which owned the machinery. The learned Judges said that there was no reason whatever, for thinking that the owner intended to keep the two things apart and therefore they came to the conclusion that the plant and machinery of the bone mill were immovable property so annexed to tho floor of the factory as to become a part of it.

24. Counsel for the plaintiff cited two other cases in support of his contention that the machinery was immovable property. The first case was that of Rudhsing Balchand v. Arnhold and Co., 39 Cal WN 1018. A company called the Sirajgung Industrial Development Co. Ltd. entered into an agreement with Arnhold and Co. by which the latter supplied them with some electrical machinery and plant outside the ordinary original jurisdiction of the High Court. The document executed was a trust receipt which left possession of the property in the hands of the vendor. Thereafter the company raised money on a mortgage of the plant and machinery by executing a document in favour of the plaintiff Budhsing Balchand. It was recited in the document of mortgage that the properties were un-encumbered. Arnhold and Co. filed a suit against Sirajgung Industrial Development Co. Ltd., and obtained an ex parte decree without impleading the mortgagee. One of the points taken by Arnhold and Co. in the suit filed by the mortgagee was that it was one for land and ought not to succeed. At the hearing the plaintiffs amended the plaint and prayed for a declaration that they were the mortgagees of the engines, plants, machinery, etc., mentioned in the plaint and for an injunction restraining Arnhold and Co., from selling the same. The property set out in the schedule to the mortgage deed included Diesel Oil Engines, electric generators, sheds measuring 42' x 25' with their equipments and other smaller buildings, utensils and furniture in the office room and workshop, etc. The learned Judge recorded a finding that the heavy engine, machinery, etc., were very carefully and permanently installed and established on the plaintiff's land round and above which the power house had been built. The machinery and plant was erected and embedded in beds of concrete. He referred to the judgments in 1904 AC 466 and (1856) 2 K and J 536, and observed (page 1023)

'it seems to me that what we have to look at here when we are dealing with this question of whether machinery and plant ought to be looked upon as land, is the intention between the mortgagor and the mortgagee when they entered into the covenant of mortgage. No mortgagee would be such a fool as to lend money on a small piece of perhaps inexpensive land unless, in the particular circumstances of this case, it was backed up by this valuable machinery as a going concern'.

He held that the plaintiff's prayer as far as engines, plants and machinery were concerned must fail.

25. With respect to his Lordship it does not appear to me to be correct to say that the relevant point of time at which the intention of the mortgagor has to be considered is when the mortgage is created. According to the cases it appears to me that the relevant period is when the machinery is brought on the land and fixed up for the purpose of running. Further the case does not seem to help the plaintiff in view of the finding of the learned Judge mentioned above that 'the machinery was permanently installed on the land round and above which the power house had been built' -- this obviously means that the machinery was being made a part of the land.

26. The only other case cited on behalf of the plaintiff was that of Secy, of State v. Tarak Chandra . This case turned on the interpretation of the, word 'land' for the purpose of the Land Acquisition Act, I of 1894. Proceedings had been taken by the Improvement Trust to acquire land on which the respondents as tenants had set up an oil mill plant. It was shown that the plant had been installed by a previous tenant about 25 years before the acquisition. It consisted of a boiler and an engine with a water heater, a large number of ghunnies, a forge and a lathe. The judicial Committee observed that 'The boiler stood on masonry and was built round almost to the top with masonry walls having flues at the top and sides. The engine was fixed to a masonry foundation by bolts, plates and nuts'. The President of the Improvement Trust Tribunal had held by his award that the machinery was 'land' within the definition given in the Act as it was 'permanently fastened to things attached to the earth'. An appeal preferred therefrom to the High Court was dismissed. In the judgment of the Board their Lordships did not think it necessary to add anything to what was said by the President of the improvement Tribunal. According to the Judicial Committee the word 'permanently' as used in the Act was an antithesis to 'temporarily' and it was this observation which was sought to be relied on by the counsel for the plaintiff. But if the facts stated above are taken into consideration there is no room for doubt that the boiler was so fixed to the masonry as to be considered a part of it or at least permanently affixed to it and the engine, ghunnies etc. taken with the boiler made one composite whole.

27. The evidence in this case does not show that the machinery, etc. were installed in a factory with any idea of permanence. As I have said above a reference to the photographs will show that the structure was of the flimsiest kind, not put up with any idea of permanence and it is significant that the structures were not included in the security at all.

28. Moreover, the important test is what was the intention of the owner when bringing the machinery on the land and setting the same up. The owner has not been orally examined in this case. It is admitted that he had only a monthly tenancy. The nature of the structure in which the machinery was housed shows that the object was somehow to keep off wind and water. In my view, it is clear that the owner did not want to make the machinery a part of the land at all. The above is sufficient to dispose of the suit. Once it is held that the machinery was not immovable property or land within the meaning of Clause 12 of the Letters Patent it follows that the suit of 1957 was filed in a Court of competent jurisdiction. In my view even if I held that the machinery was immovable property this suit would still be incompetent and be barred by the doctrine of res judicata. If the former suit was a suit for recovery of money secured by a charge or mortgage of movable property situate outside the territorial jurisdiction of this Court the suit would' still be a good suit in view of the allegation in the plaint that a part of the cause of action for the suit, namely, the lending of the money and the execution of the instrument of mortgage had taken place within such jurisdiction. It was up to the defendant in the former suit to contend that the property in respect of which a declaration of charge was sought for was immovable property beyond the ordinary original jurisdiction or this Court. As a matter of fact such a plea was taken in opposition to the application for the appointment of a Receiver but it was not pressed further in that the defendant did not file a written statement but consented to a decree being passed against him. The defendant cannot now be allowed to raise the plea over again that the property in the earlier suit was immovable property.

29. Several decisions were cited by counsel for the plaintiff in support of his argument that if it be found that the decree in the former suit related to immovable property situate outside the jurisdiction of this Court it must be treated as a nullity and declared to be void notwithstanding the fact that the defendant was a party to the consent decree in the former suit. Strong reliance was placed on the judgment in Rajlakshmi Dassee v. Katyayani Dassee, ILR 38 Cal 639. There the dispute related to the property of one Rajballav Seal who had died in the year 1870 leaving a Will. Litigation with regard to the property started in the year 1890. In the year 1903 Katyayani brought a suit against her brother and the grandsons of Rajaballav by a daughter, for possession of the estate left by the deceased. Katyayani was the widow of one Jogendra who had been taken in adoption by the third wife of Rajballav under a power given by the will. The suit was decreed in 1905: an appeal therefrom was preferred to the Court of District Judge by the grandsons and others. In that appeal a petition of compromise was filed whereby the property of Rajballav was defined in certain shares, Katyayani getting only six annas thereof Rajlakshmi, the only child of Katyayani, brought a suit against her mother and her maternal grand-father Kanailal Sen and the grandsons of Rajballav and others for a declaration that the consent decree was not binding on her and for other reliefs. On the face of it Rajlakshmi who was a stranger to Katyayani's suit could not he bound by the decree therein unless as a reversioner she was BO bound by a lawful and bona fide compromise entered into by her mother as a Hindu widow. The following passage from the judgment of Mookerjee and Carnduff, JJ. relied on by the plaintiff occurs at page 668:

'If a court has no jurisdiction, its judgment is not merely voidable, but void, and it is wholly unimportant how precisely certain and technically correct its proceedings and decisions may have been; if it has no power to hear and determine the cause, its authority is wholly usurped and its judgments and orders are the exercise of arbitrary power under the forms, but without the sanction of the law. *** If a Court assumes to act where it has no jurisdiction, its adjudications are all utterly void and have 116 effect either as an estoppel or otherwise. From this point of view, the consent-decree is entirely unavailing for want of jurisdiction, and consequently neither binds nor bars the plaintiff: Kalka Parshad v. Kanhaya Singh 7 N. W. P. 99. The case before us is, indeed, really much stronger than any to which we have referred, because here the plaintiff was not a party to the proceedings in which the consent-decree was made'.

The learned Judges held that the former suit had been under valued and as such the appeal to the District Judge was wholly without jurisdiction, the appeal lying direct to the High Court. The original suit was not incompetent because even if under-valued it was within the jurisdiction of the Subordinate Judge who heard it. The learned Judges pointed out that they were not called upon to consider what the effect of such lack of jurisdiction would he upon the decree in so far as the parties thereto were concerned and held that so far as the stranger was concerned he could obviously ask for a declaration that the decree was a nullity because it was made by a Court which had no jurisdiction over the subject matter of the litigation.

30. One of the judgments referred to in the above case and cited by counsel for the plaintiff is that of Gurdeo Singh v. Chandrikah Singh, ILK 66 Cal 193. Here a suit was instituted originally in the Court of the Subordinate Judge of Shahabad. The District Judge transferred the case to his own court in exercise of the powers conferred by Section 25 of the Code of Civil Procedure. Subsequently, the District Judge transferred the case to the First Subordinate Judge as he himself was about to proceed on leave. The case was tried by the latter and no abjection was taken by either of the parties to the effect that the Subordinate Judge had no jurisdiction to try the case. On an objection being taken to the want of jurisdiction on the part of the Subordinate judge the High Court held that under Section 9 of Act XII of 1887 the District Judge had administrative control over all the Civil Courts within the local limits of his jurisdiction and he had inherent power to transfer the case from his own court to that of a Subordinate Judge, especially when the order was for the benefit of the litigants and for the speedy determination of the matter. It was also held that under Section 18 of Act XII of 1887, the Subordinate Judge had jurisdiction over the subject-matter of the litigation and therefore it was not a case of absolute want of jurisdiction but only an irregular assumption of jurisdiction and the defendants having waived their right to take exception to the power of the Subordinate Judge to try the cause they could not complain of it afterwards. That case is however, really an authority for the proposition that if the exercise of jurisdiction be irregular there may be a waiver of it by the failure to take objection at the proper stage.

31. Several derisions were cited at the bar which turned on the interpretation of Section 11 of the Suits Valuation Act and Section 21 of the Civil Procedure Code. The latter section would certainly have to be considered if it was applicable to this Court in the exercise of its original jurisdiction. As it is I do not think it necessary to take note of these judgments.

32. Counsel for the plaintiff cited a passage from the judgment in Pease v. Chaytor, (1863) 122 ER 233. The passage relied on occurs at pages 240 and 241 and is an extract from the judgment of the Exchequer Chamber in Bunbury v. Fuller, (1853) 9 Ex 111--

'It is a general rule, that no Court of limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the limit to its jurisdiction depends, and however its decision may be final on all particulars, making up together that subject-matter which, if true, is within its jurisdiction, and, however, necessary in many cases it may be for it to make a preliminary inquiry, whether some collateral matter be or be not within the limits, yet, upon this preliminary question, its decision must always be open to inquiry in the superior court.'

To my mind this passage has no application here at all. It relates to the issue of a writ of certiorari where an inferior Court exercises jurisdiction wrongfully and usurps jurisdiction not given to it by law.

33. In Mohanlal v. Benoy Krishna, : [1953]4SCR377 where the question was whether the Asansol Court could execute a decree after it had sent to the High Court a document which purported to be a certificate under Section 41 of the C. P. C. The Judges of the Supreme Court were unanimous in holding that the Court had jurisdiction to do so although the reasoning of Das J., as he then was, was different from that adopted by Ghulam Hasan, J. Mahajan and Bose, JJ. did not deliver separate judgments but were content to say that the decision could be rested on either of the grounds put forward by the other two Judges. Ghulam Hasan, J. expressly held that a wrongful decision on a question of law would be res judicata.

34. Mr. Ray relied on a judgment of Sen , J. in Hariram Saraogj v. Rameswar Lal, 49 Cal WN 354 where his Lordship held that it was not open to a party to question a mortgage decree passed by this Court in a former suit on the ground that no part of the property was situate within such jurisdiction. The point as to jurisdiction was not taken in the written statement in the former suit which had been brought with leave under Clause 12 of the Letters Patent on the basis that the security included the leasehold interest of a Calcutta property. The mortgagor plaintiff in the suit before Sen J. contended that the leasehold interest had ceased to exist before the institution of the mortgage suit and as such the decree in the former suit was a nullity. Sen, J. observed that

'there is a clear distinction between an erroneous decree and a decree passed without jurisdiction. The Court undoubtedly had jurisdiction vested in it to decide the issue whether the leasehold still Sub-sisted or not. Indeed it was bound to decide that issue if it was raised. Having jurisdiction to decide this question any decision made, be it right or wrong, would be one made in the exercise of the Court's jurisdiction. It cannot therefore be said that such a decision is that of an incompetent court'.

Really his view was the same as that of Ghulam Hasan, J. in the Supreme Court.

35. If the issue as to jurisdiction depends on the determination of an issue of fact and if the defendant fails to raise an objection on that ground or having raised it docs not press it he ought not to be allowed to raise the point in a subsequent suit. He cannot be heard to contend that the decision in the former suit ought to be set aside because the Court had decided wrongly on the question of jurisdiction. There must be a finality to litigation and the doctrine of res judicata is one of the salutary principles by which this object is achieved. Indeed if it were otherwise a party would go on filing suits one after another even though he had lost the prior suits. The same, result ought to follow in the case where a question of law is involved as in one where the decision in the former suit involves the determination of a question of fact. In this case it was upto the borrower to show in the former suit that the nature and the mode of annexation of the machinery to the earth and the intention which he had at the time oi fastening the same to the earth was to make the machinery immovable property within the definition given in the Transfer of Property Act and the General Clauses Act. He failed to file a written statement in the former suit and submitted to a decree which must be taken to mean that the adjudication was on the basis that the property was movable property. The former decree therefore implies that the intention of the borrower while fixing the machinery to the earth was to treat the same as movable property. The borrower cannot now turn round and say that his intention was different or that the mode or nature of annexation of the machinery was not that what he had said or ought to have said in his defence in the former suit. I do not think the position can be better summed up than is done in Hulsbury's Laws of England, 3rd Edition. Vol. 15 pages 204-205 in the following sentences:

'In order that estoppel by record may arise out of a judgment the Court which pronounced the judgment must have had jurisdiction to do so. The lack of jurisdiction deprives the judgment of any effect, whether by estoppel or otherwise and this rule applies even where the party alleged to be estopped himself sought the assistance of the Court whose jurisdiction is impugned. ***** The absence of a condition necessary to found jurisdiction to make an order or give a decision, deprives the order or decision of any conclusive effect; but it is otherwise where the order is good on its face and the Court adjudicating has jurisdiction to determine the existence or not of the condition, and the party denying its existence has neglected his opportunity of raising the objection at the hearing'.

In my view the suit has no merits and the issues raised must be answered as follows:

Issue 1 -- The properties mortgaged are not immovable property.

Issue 2(a) -- Suit No. 1182 of 1937 was not a suit for land.

Issue 2(b)--This Court had jurisdiction to try the said suit.

Issue 3 -- This suit is barred by the principles of res judicata.

Issue 4 -- The suit must be dismissed with costs.Certified for two counsel.


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