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1938 Supreme(Mad) 276
IN THE HIGH COURT OF MADRAS
Varadachariar, J.
Pachigolla Satyanarayanamurthy
Versus
Chavala Gangaya and Ors.
Decided On : 21.09.1938
The court's decision emphasized the importance of considering the specific circumstances and legal provisions, such as the Transfer of Property Act, in determining the inclusion of machinery in a security created by mortgages.
Headnote:
Mortgages - Machinery - Transfer of Property Act - Section 70, Section 3, Section 8, Section 108(h) - The court held that the machinery pertaining to the Sheller system was not included in the security created by the mortgages as it was not satisfied that the site to which the machinery was attached was comprised in the mortgages to the plaintiff. The court also found that the machinery was dealt with independently of the building and only as movable property, and the mere connection of the Sheller system with the pre-existing Huller system did not bring it within the security created by the mortgages.
Fact of the Case:
The appeal arose from a suit for the recovery of money due under mortgages. The dispute related to the extent of the property comprised in the mortgages in plaintiff's favor, particularly the machinery pertaining to the Sheller system.
Finding of the Court:
The court held that the machinery pertaining to the Sheller system was not included in the security created by the mortgages.
Issues: The question for determination was whether the plaintiff could claim that the machinery pertaining to the Sheller system was included in the security.
Ratio Decidendi: The court considered the provisions of the Transfer of Property Act, particularly Section 70, Section 3, Section 8, and Section 108(h), and found that the machinery was not included in the security due to various factors, including the site attachment and the independent treatment of the machinery as movable property.
Final Decision: The appeal failed and was dismissed with costs of respondents 3, 5, and 7.
Varadachariar, J.
1. This appeal arises out of a suit for the recovery of money due under certain mortgages executed by defendants 1 and 2 in favour of the plaintiff between June 1927 and June 1928-Exs. A to D series. Defendants 3, 5 and 7 are the contesting defendants and the dispute between the plaintiff and the defendants relates to the extent of the property comprised in the mortgages in plaintiffs favour.
2. The plaintiffs mortgages comprise properties described in three Schedules A, B and C. Schedule A relates to certain house property with which we are not concerned. Schedule B refers to a tiled building which was being constructed on a site belonging to Gangachalam and others and purports to pass the walls, beams, door frames, etc., of the building. From the body of Ex. A it will be seen that this site had been taken on lease for a period of 12 years for the purpose of constructing a building thereon for a rice mill. Schedule C comprises an engine which is said to be known by the name of Sree Kanakadurga Rice Mill and the various parts of the machinery pertaining to the engine or to the Huller which was then intended to be set up to work with the help of the engine. The concluding words of the C Schedule refer to all samans connected with the rice mill and other samans necessary to fit up the mill and the Huller and all accessories. There is also a clause to the effect that if the mill should be fitted up in some other place, the property should nevertheless continue to be under the mortgage. It is admitted that for some time the concern was working only as a Huller. In the latter part of 1928, the mortgagors decided to work as a Sheller also with the power derived from the engine. For purchasing the Sheller and for incidental purposes, they borrowed moneys from defendants 3, 5, 7 and certain others under Exs. I and II in July and November, 1928. In due course, the Sheller was also set up in the shed that had already been constructed and the third defendant admits in his deposition that the Sheller system was fixed in the earth that it was connected by a belt with the Huller system and that power from the same engine was used for working both the systems. It also appears from the evidence that the Sheller system can be separated from the Huller system merely by removing the belt and that for accounts purposes, the two systems are kept distinct. On the above facts, the question for determination is whether the plaintiff can claim that the machinery pertaining to the Sheller system is also comprised in his security. The learned Subordinate Judge has held that it is not. The plaintiff has appealed and contends that it should be held to be included in the security.
3. In support of the appellants contention, Mr. Lakshmanna relied on Section 70 of the Transfer of Property Act and the decisions in Bank of Upper India v. The Administrator-General of Bengal I.L.R.(1917) 45 Cal. 653 R.M.P.M. Chettiar Firm v. Siemens (India), Ltd. I.L.R.(1933) 11 Rang. 322 Punjab and Sind Bank v. Kishen Singh-Gulab Singh I.L.R.(1934) 16 Lah. 881 and Nannu Mal v. Ram Chandra I.L.R.(1930) 53 All. 334 (F.B.). It does not seem to us necessary for the purpose of this ease to consider whether and how far the rules of the English law governing fixtures are to be followed in this country. It is sufficient to say that in respect of particular species of transfers, the Legislature has made express provisions In the Transfer of Property Act, see for instance Section 8 and Section 108, Clause (h). We are prepared to assume that in certain circumstances, machinery existing in the mortgaged premises on the date of the mortgage and even machinery subsequently installed there may pass under a mortgage of the premises. But the question will, in our opinion, have to be determined in each case in the light of various facts. It may not be possible always to treat machinery brought into a building as an "accession" within the meaning of Sections 63 and 70 of th
