Object falling because of gravity and penetrating another object

I've converted your comment into an answer ;)

There was no script involved. I realized if in collider I enable trigger, it doesn't collide naturally. Now it works fine.

[Edit in response to Bunny] Collider/trigger is a little confusing for someone with a more gamey background. Unity "triggerBoxes" are commonly known as Bounding Volumes and Kill Volumes. Colliders in UnReal appear to be nothing like them -- they are a detail setting on the model, without direct control of the geometry such as Unity has/requires. In Torque, colliders are created in the modelling program, also nothing like Bounding Volumes.

Unity seems like it was written by people who think more like programmers. The code for colliders/triggers is 99% the same, so no components with the familiar Bounding Volume name -- instead isTrigger colliders.

@Owen Reynolds : I'm not sure what you're referring to ( i haven't used UnReal yet ;) ). A collider is usually a bounding volume. Every collider in Unity have also a bounds property that gives you the AABB of that collider. Same for Renderer which gives you the AABB of the model-geometry. Even the Mesh itself have it's own bounding box and is not related to the colliders or something else.

Unity strictly seperates the model from it's collider (since a collider is a pure logical thing for collisions). You can also use a meshcollider but use a different mesh as mesh-source for the collider (e.g. a simpler mesh).

The isTrigger option turns the collider into something totally different. It's not a collider for the physics system anymore. It's just an area / volume that can detect other colliders.