9911796707
TMI Blog1983 (11) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the Fifth and Sixth Schedules to the I.T. Act, 1961. On 26th August, 1970, the petitioner created a fund known as " Cumi Employee Gratuity Fund " by executing an irrevocable trust, the sole purpose of which was the provision of gratuity to their employees then numbering about 1,354. On October 15,1970, the petitioner applied under r. 2(l) of Part C of the 4th Schedule to the 1st respondent herein for the grant of approval of the said fund. The 1st respondent required certain rectifications to be carried out in the deed of trust. Further, the Payment of Gratuity Act, 1972, enacted by Parliament had come into force on September 16, 1972, and as such it became necessary to make several adaptations in the trust deed to bring it in conformity to the provisions of the aid Act. Accordingly the petitioner executed a fresh deed of trust dated January 2, 1975, and applied for approval of the fund to the 1st respondent afresh on October 27, 1975. In the course of scrutiny of the petitioner's application dated October 27, 1975, the 1st respondent found that the trustees of the gratuity fund had granted a loan of Rs. 75,000 to M/s. Swadesamitran Ltd., a company engaged in the publication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Fund as and from August 26, 1970, was not granted. But the Fund was approved only with effect from January 2, 1975. Aggrieved by the refusal of the 1st respondent to accord approval to the Fund from August 26, 1970, the petitioner preferred an appeal to the 2nd respondent herein under r. 8 of Part C of the 4th Schedule of the I.T. Act contending, inter alia, that in constructing the mortgage deed dated November 3, 1970, the 1st respondent has committed an error of law and that, in any event, the grant of approval should be given at least from April 1, 1973, in accordance with the provisions of sub-s. (7) of s. 40A of the I.T. Act, 1961. The 2nd respondent, however, confirmed the order of the 1st respondent thereby refusing to accord approval of the Fund from any day prior to January 2, 1975. The petitioner has sought in this writ petition the quashing of the order of the 2nd respondent confirming the order of the 1st respondent. According to the petitioner, the impugned order of the 2nd respondent confirming the order of the 1st respondent is vitiated by errors of law and as such illegal and void for the following reasons : (1) The power conferred under r. 2 of Part C to Sch. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the trust has granted a loan of Rs. 75,000 to Swadesamitran Press on hypothecation of movable properties contrary to r. 101, the substantial question to be considered in this case is whether the mortgage obtained by the petitioner to secure the loan of Rs. 75,000 is a mortgage of immovable property as contended by the petitioner or whether it mortgage of movable property as has been held by the first respondent. It should be borne in mind that the relevant document evidencing the loan has been executed as a mortgage after paying the stamp duty treating it as a mortgage of immovable property. The document has been registered under the Registration Act, treating it as a document dealing with immovable property. Both the lender as well as the borrower have treated the property secured as an immovable property. In those circumstances we have to consider whether the loan granted is on the security of immovable property or not. In Mohammed Ibrahim v. Northern Circars Fibre Trading Co., AIR 1944 Mad 492, a Division Bench of this court has laid down the tests as to whether the movables attached to immovable property will itself become immovable property. In that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of the mill, the machinery which stood annexed to the floor of the factory should be treated as immovable property. In J. Kuppanna Chetty, A. Ramayya Chetty and Co. v. Collector of Anantapur, AIR 1965 AP 457, dealing with the definition of" immovable property " in s. 3(14) and the definition of " movable property " in s. 3(19) of the Madras General Clauses Act, 1891, it was observed that things attached to earth are not movable properties are clear from the combined reading of those definitions, but only immovable property and that same also follows from the definition of " immovable property " in s. 3 of the Transfer of Property Act and in s. 2(6) of the Registration Act since the definition of " immovable property " in the Madras General Clauses Act is in Pari materia with the definition in the Registration Act and the Transfer of Property Act, and machinery embedded in the earth for the beneficial enjoyment thereof is immovable property even under the Madras General Clauses Act. In that case a boiler engine and decorticator which were fixed and embedded in the factory building for the beneficial use of the building as a factory was held to be an " immovable property ", in add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Limitation Act, they have applied the definition of" movable " and " immovable " property occurring in the General Clauses Act and as per the said definitions it was held that the power house including the machinery will be only immovable property. In this case the security consists of the printing machineries which are embedded in the earth and is used as a press in the undertaking of Swadesamitran. Having regard to the fact that the owner of the machinery has embedded the same in the earth for the purpose of working his factory as a press, it should be taken to come within the definition of" immovable property ". Therefore, the mortgage should be taken to be of only immovable property. As already stated, the intention of the borrower as well as the lender at the time of the execution of the mortgage is to treat the machinery which is embedded in the earth as a permanent fixture and as such immovable property. Since the main question on which the application for approval was rejected for the period in question was on the ground that the mortgage was of movable property and as we have held that the mortgage is of immovable property, r. 101 cannot be taken to have been violat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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