Embedded printing machinery treated as immovable property, so the mortgage did not breach the investment restriction.

Machinery embedded in the earth and used as a press was treated as immovable property where its annexation was permanent and intended for the beneficial use of the undertaking. Applying the settled test on the nature and object of annexation and the intention of the parties, the Court noted that the security for the loan had been stamped and registered as a mortgage of immovable property. As the mortgage was therefore over immovable property, the investment restriction under rule 101 was not breached, and refusal to approve the gratuity fund on that ground was unsustainable.

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Issues: Whether the printing machinery mortgaged by the trust, being embedded in the earth and used as a press, was immovable property so that the investment restriction under rule 101 was not violated and approval of the gratuity fund could not be refused on that ground.

Analysis: The decisive question was the character of the security taken for the loan of Rs. 75,000. The document had been treated by both parties as a mortgage of immovable property, stamped and registered accordingly. Applying the settled test that the nature and object of annexation, the intention of the parties, and whether the attachment is permanent for the beneficial enjoyment of the property are material, the Court held that machinery embedded in the earth for use as a press in the undertaking was part of immovable property. Since the mortgage was thus over immovable property, the alleged breach of rule 101 did not arise.

Conclusion: The mortgage was of immovable property, rule 101 was not breached, and the refusal to grant approval for the earlier period was unsustainable.

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