Alavikutty v. Salmi — 1964 DIGILAW 315 (KER)

Judgment :- 1. The suit giving rise to these appeals was for redemption of three mortgages, Exx. Al, A2 and A3, of 24th February 1919, 24th February 1921 and 13th February 1922 respectively. There were three leases back, Exx. B1, B2 and B64, the first two of 24th February 1919 and the last one of 11th April 1921. The lower court found that Ex. A2 was wiped out under Madras Act IV of 1938; that the other two mortgages were subsisting, and that the plaintiffs had to pay the mortgage amounts thereunder. The lower court also found that the leases back and the mortgages were separate transactions. On that basis the plaintiffs claimed that since they deposited arrears of rent for six years, 1123 to 1128, all the prior arrears stood wiped out under the Malabar Tenancy Act. This plea was however not accepted by the lower court on the reasoning that though the mortgages and the leases back were separate transactions, the mortgagees were entitled to consolidate the mortgages and the arrears of rent, which were really arrears of interest on the mortgages. The plaintiffs further urged that they were entitled to the benefits of S.34 of Act IV of 1961 (now S.73 of Act I of 1964); and that they could deposit one year's rent and claim that all the subsequent arrears were also wiped out. This again was not accepted by the lower court. The plaintiffs' further contention was that the mortgage under Ex. Al was itself wiped out under S.9A of Act IV of 1938, which plea was again rejected. A minor plea, which was raised and rejected by the lower court, was that a promissory note for Rs. 1000/- handed over as further security on the date of Ex. A2 should be given credit in settling the amounts payable by the plaintiffs to the mortgagees. A.S. No. 497 of 1961 is by the plaintiffs; and their contentions therein are: (1) that the arrears of rent prior to 1123 need not be deposited; (2) that under S.73 of Act I of 1964 they are entitled to deposit one year's rent and claim discharge of all the arrears subsequent to 1128; (3) that the promissory note amount of Rs. 1000/- should be given credit; and (4) that Ex. Al should be held to have been wiped off under S.9A of Madras Act IV of 1938. 2. 1000/- should be given credit; and (4) that Ex. Al should be held to have been wiped off under S.9A of Madras Act IV of 1938. 2. The other appeal, viz., A.S. No. 449 of 1961, is by as many as 27 of the several defendants in the suit. They claimed fixity of tenure over the portions of the mortgage properties in their respective possessions and value of improvements thereon in the alternative. The lower court issued a fresh commission after Kerala Act XXIX of 1958 came into force and also awarded compensation under that Act; but, it rejected the claim for fixity of tenure. In appeal the two contentions raised by the defendants are: (1) that they are entitled to value of improvements under Act XXIX of 1958 and the report of the fresh commission should be rejected, as the commissioner did not value the improvements afresh, but merely adopted the earlier report; and (2) that they are entitled to fixity of tenure under Kerala Act I of 1964. On the first point, what appears is that, regarding the kuzhikoors (fruit bearing trees) the tables of prices published by the Government came into force subsequent to the disposal of the suit by the lower court; and that this Court should therefore re-value the kuzhikoors adopting those rates. But, it also emerges that the kuzhikoors form only a small portion of the improvements and that the major portion of the improvements are only buildings, in the valuation of which the tables have no relevancy. Again, the mode of valuation of buildings under the earlier Madras Act and Kerala Act XXIX of 1958 was the same; and therefore, the objection to the valuation by the fresh commission has no force. 3. We shall first take up A.S. No. 497 of 1961, the plaintiffs' appeal, and dispose of the less important of the questions. The promissory note for Rs. 1000/- was handed over as additional security along with Ex. A2. The note was executed by a Narayanan Nair, the karyastha of the original mortgagee, Krishna Variyar. The case of the plaintiffs is that the amount under the note must have been collected by the mortgagees and it should therefore be given credit. For collecting the promissory note an endorsement thereon was essential. In the plaint no allegation regarding such endorsement appears. The case of the plaintiffs is that the amount under the note must have been collected by the mortgagees and it should therefore be given credit. For collecting the promissory note an endorsement thereon was essential. In the plaint no allegation regarding such endorsement appears. It was not spoken to even in the chief-examination of the 1st plaintiff. Therefore, it is not established that the promissory note was endorsed in favour of the original mortgagee. There is also no evidence that the amount was paid by the executant of the note to the mortgagees. In this state of evidence, we have to agree with the finding of the lower court on this point. 4. Next we shall take up the question whether the plaintiffs are bound to deposit the arrears of rent prior to 1123. The learned Subordinate Judge considers this question under issue No. 7 and he concludes that though Exx. B1, B2 & B64 have to be treated as separate and independent transactions, independent of the mortgages, still, the mortgagees were entitled to consolidation of the arrears of rent along with the mortgage moneys. We do not propose to go into the correctness or otherwise of this reasoning. According to us, the matter is concluded by Ex. A10, the receipt passed by the mortgagees when they received the arrears of rent for six years from 1123 to 1128. The receipt recites that the arrears of rent are calculated and a portion is relinquished leaving Rs. 2000/- as the balance; and that that amount is received in full satisfaction. Of course, it is recited in Ex. A10 that the arrears calculated related to the years 1123 to 1128. Still, no reference is made regarding the prior arrears, if any. The Subordinate Judge discusses this matter in Para.54 of his judgment; and he reasons that if there was relinquishment of prior arrears, it would have been mentioned in the receipt. We do not agree. When the mortgagees received six years' rent and that also after relinquishing a portion thereof, it is too much to think that they retained their right to collect the earlier arrears. In our judgment, the effect of the recitals in Ex. A10 including the relinquishment of a portion of the arrears is that the earlier arrears, if any, were given up. In our judgment, the effect of the recitals in Ex. A10 including the relinquishment of a portion of the arrears is that the earlier arrears, if any, were given up. Otherwise, the mortgagees would have left the plaintiffs to deposit the arrears in court and claim relief as contemplated by the Tenancy Act. Therefore, we disagree with the Subordinate Judge on this point and hold that the plaintiffs are not bound to deposit any rent prior to 1123. 5. The next question we would consider is whether Ex. Al was wiped off under S.9A of Madras Act IV of 1938. The Subordinate Judge has answered this question in the negative relying on the Division Bench ruling of the Madras High Court in N.K. Rajaraja Varman Thirumalpad v. K.K. Krishnan Nair (AIR. 1958 Mad. 117). The Division Bench held that though the Malabar otti was only a mortgage, still, S.9A of Act IV of 1938 did not apply to it, as the section covered only usufructuary mortgages as defined by S.58 of the Transfer of Property Act. To come to this conclusion, the learned judges relied on the marginal note to S.9A. We do not think that this was right, since S.9A (1) recited that the section applied to all mortgages before a particular date and by virtue of which the mortgagee was in possession of the property mortgaged or any portion thereof. When the section was so clear that it applied to all possessory mortgages, there was no justification for considering the marginal note, and confining its operation to pure usufructuary mortgages as defined by the Transfer of Property Act. Since then, the same question was considered by a Full Bench of the Madras High Court in Konthalavalli Achi v. T.S. Ayyadurai Odayar (AIR. 1962 Mad. 21) and the Division Bench ruling already referred to was overruled. We have also a decision of our High Court on the question by Raman Nayar, J. in Pathukutty Umma v. Muhammad alias Koyakutty Naha (1961 KLT. 594). We are in entire agreement with these later decisions; and we hold that S.9A applies to Ex. Al, though the mortgage is not a usufructuary mortgage as defined under the Transfer of Property Act, but only an anomalous mortgage under which possession of the mortgaged properties passed to the mortgagee. 6. Mr. 594). We are in entire agreement with these later decisions; and we hold that S.9A applies to Ex. Al, though the mortgage is not a usufructuary mortgage as defined under the Transfer of Property Act, but only an anomalous mortgage under which possession of the mortgaged properties passed to the mortgagee. 6. Mr. Achutha Variyar, on behalf of the mortgagees, contends at this stage that either clause (b) or clause (c) of sub-section 10 (ii) of S.9A will apply to the present case, in which event again the mortgagors will not be entitled to the benefits of the scaling down provisions of the section. Clause (b) provides that where the mortgagee or any of his successors-in-interest has transferred either wholly or in part the mortgagee's rights bona fide and for valuable consideration, -then to the whole or such part, as the case may be, no benefits of scaling down under this section shall apply. The counsel points out that the original mortgagee, Krishna Variyar, created a sub-mortgage on his mortgage right and therefore the case comes under this clause. We do not agree. What this clause contemplates is a transfer, wholly or in part, of the mortgagee's rights and not a creation of a subsidiary right like a sub-mortgage over the mortgage right. In fact, the same argument appears to have been advanced before the Full Bench of the Madras High Court; and the Full Bench rejected the contention. Mr. Variyar then urges that clause (c), at any rate, must apply. This clause recites that where the mortgagee's interest or any part thereof belonged to, or devolved on, two or more persons and a partition took place among such persons, then, to the whole or such part of the interest, the scaling down provisions in S.9A shall not apply. This contention appears to be fully justified in the circumstances of this case. The mortgagee's right, after his death, devolved on his tarwad, wherein there was a subsequent partition, under which the mortgage right came to the present mortgagees. Therefore, we accept the contention that though S.9A applies, clause (c) of sub-section 10 (ii) thereof prevents the mortgagors from claiming any scaling down. 7. The last question in this appeal is whether the mortgagors are entitled to claim relief under S.73 of Act I of 1964. Therefore, we accept the contention that though S.9A applies, clause (c) of sub-section 10 (ii) thereof prevents the mortgagors from claiming any scaling down. 7. The last question in this appeal is whether the mortgagors are entitled to claim relief under S.73 of Act I of 1964. Sub-section 1 of the section provides that all arrears of rent accrued due from a tenant during the period and outstanding on the date specified in column 2 of the sub-section shall be deemed to be fully discharged by payment to the landlord or deposit in court of the amount referred to in the corresponding entry in column 3 together with interest within the period specified in column 4. The question is whether this provision can apply to the mortgagors in the present case. S.3 of the Act, dealing with exemptions, exempts in clause (v) of sub-section (1) thereof tenancies created by mortgagees in possession or by persons deriving title from such mortgagees from the operation of the provisions of chapter II of the Act. The proviso to clause (vii) of the same sub-section enacts that nothing in clauses (i) to (vii) shall affect the rights of persons, who were entitled to fixity of tenure immediately before 21st January 1961 under any law then in force. The effect of the exemption in clause (v) therefore is that the relief under S.73, which occurs in chapiter II, is not available to tenancies created by mortgagees in possession, unless the tenants claiming such relief were entitled to fixity of tenure immediately before 21st January 1961. Can it be said that the mortgagors in the present case had fixity of tenure? We think not. If, on the other hand, for instance, a tenancy was created by the mortgagees in favour of a third party, he was entitled to fixity of tenure under S.13 of the Malabar Tenancy Act in spite of and notwithstanding the redemption of the mortgages. To such a tenancy alone, created by the mortgagees, the provisions of chapter II can apply. To other tenancies created by the mortgagees the ordinary rule that on the termination of a limited owner's right the tenancies created by him must also come to end must apply; and there cannot be any fixity of tenure in such cases. If so, the contention of Mr. To other tenancies created by the mortgagees the ordinary rule that on the termination of a limited owner's right the tenancies created by him must also come to end must apply; and there cannot be any fixity of tenure in such cases. If so, the contention of Mr. Mohammed Naha, the learned counsel of the appellants, that the plaintiff-appellants are entitled to benefits of S.73 of the Act cannot be accepted. 8. Now we shall come to the appeal by the defendants. The main question urged by Mr. K.V. Suryanarayana Iyer on behalf of the appellants is that under S.106 of Act 1 of 1964 several of the appellants are entitled to continue on the lands in their possession on payment of rent under the contract of tenancy, because the tenancies were for commercial or industrial purposes. Mr. Mohammad Naha draws our attention to Cl. (ii) of sub-section 1 of S.3, which lays down that the provisions in chapter II will not apply to leases of buildings, shops or warehouses and sites thereof. But Mr. Suryanarayana Iyer urges that S.106 is not in chapter II; and that the non obstante clause in that section nullifies even the effect of the exemptions in S.3. This contention is quite plausible; but, we do not think it is necessary for us to express any opinion on this question in the present case. We have scrutinised the several written statements filed by the concerned defendant-appellants. There is no indication in any of these written statements that the leases alleged were for industrial or commercial purposes. On the other hand, what they indicate is that the leases were for putting up buildings, houses, etc. Mr. Suryanarayana Iyer then argues that at the time of filing the written statements the provision giving relief to tenancies for industrial and commercial purposes was not in force and therefore relevant pleas were not raised. The mere absence of plea is one thing; but the plea indicating a different purpose is quite another. The written statements mention purposes different from commercial or industrial purposes. Therefore, we do not think that the appellants are entitled to claim relief under S.106 of Act I of 1964. We may also point out that the learned Subordinate Judge has already granted fixity of tenure to holders of kudiyirippus and that is not questioned by the mortgagors. 9. The written statements mention purposes different from commercial or industrial purposes. Therefore, we do not think that the appellants are entitled to claim relief under S.106 of Act I of 1964. We may also point out that the learned Subordinate Judge has already granted fixity of tenure to holders of kudiyirippus and that is not questioned by the mortgagors. 9. Next we come to the question of valuation of the improvements under Act XXIX of 1958. Strictly speaking, the improvements were valued under the new Act after the issue of a new commission: and the tables published subsequently by the Government cannot have any effect on the valuation of the buildings. The tables can have bearing only on the valuation of the kuzhikoors; and the kuzhikoors covered only a relatively small portion of the improvements. In such circumstances, we do not think it is in the interest of justice to remand the case for a proper decree being passed regarding the value of the kuzhikoors. Mr. Mohammad Naha also agrees to pay enhanced compensation for the kuzhikoors to the extent of a third of their value as fixed by the lower court. 10. Regarding the buildings, it is brought to our notice that some of the buildings in the possession of some of the defendants were acquired by the Government and compensations were also awarded. In such cases, it is only just and proper that the compensations payable to the defendants are those amounts awarded by the Government: and regarding the other buildings the amounts awarded by the lower court will stand. 11. In the result, A.S. No. 497 of 1961 is dismissed with the only modification that the plaintiffs need-not deposit any arrears of rent for the period prior to 1123. A.S. No. 449 of 1961 is allowed in part to the extent, that for the buildings acquired by the Government and compensations awarded, the same amounts will be paid to the respective defendants. Regarding the other buildings, the values fixed by the lower court will stand. For the kuzhikoors, a third more of the values fixed by the lower court will also be paid by the plaintiffs. In the circumstances, all parties are directed to bear their respective costs in both the appeals.