Rigours of Rr. 8, 9 of Security Interest Rules, 2002 are not applicable in auction sale of movable properties

Plant and machinery fitted with nuts and bolts without intention to make it permanent attachment, cannot be treated as immovable property so as to attract rigours of Security Interest Rules of 2002, for conducting sale.

Debtor after availing the loan, purchased the machinery and fixed it with nuts and bolts in the leased premises to a foundation. But intention to make it permanent was not established. The premises in question were leased premise and the machinery can be detached by removing the nuts and bolts. Neither the machinery is fixed nor embedded, nor assimilated in a permanent structure. There as no evidence to the effect that it was a permanent structure so as to term it as immovable property.

Thus, once a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. An attachment of this kind without the necessary intent of making the same permanent cannot constitute permanent fixing, embedding or attachment in the sense that would make the machine part and parcel of the earth permanently. Therefore, the same cannot be treated as immovable property and it will be treated as movable properties.

The definitions under General Clauses Act and Transfer of Property Act in respect of ‘immovable property’ includes land, anything which is rooted in the earth as in the case of trees and shrubs, imbedded in the earth as in the case of walls or buildings etc. Thus, machinery fitted with nuts and bolts in the leased premises without an intention to make it permanent structure, cannot be termed as ‘immovable property’ therefore, the procedure laid down under Rules 8 and 9 of the Rules, 2002 for conducting auction sale would not be applicable.