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1972 DIGILAW 107 (KER)

RAJAMMA v. BHAIMIKUTTY

1972-06-06

N.D.P.NAMBOODIRIPAD

body1972
Judgment :- 1. These two appeals arise out of two suits for redemption of a mortgage dated 14 111100 (marked in the case as Ext. PI3). The appellants are the assignees of the equity of redemption with respect to different portions of the mortgage holding, while the defendants are the representatives-in-interest of the mortgagee. A decree for redemption granted by the trial court was modified by the appellate court to the limited extent that the defendants-mortgagees are entitled to fixity of tenure under Act 1 of 1964 as amended by Act 35 of 1969. 2. It is agreed to by both sides that if Ext. P13 is a possessory mortgage simpliciter the trial court's decree has to be restored. The question, therefore, is whether Ext. P13 is a possessory mortgage as alleged by the plaintiffs or whether it partakes the nature of a lease as contended for by the mortgagees-defendants. The salient features of the document in dispute may be briefly stated. The document is nomenclatured as possessory mortgage. The mortgage is in respect of 4 acres and 45 cents of land; and the consideration is Rs. 6,000/-. Rs. 4,000/- is reserved with the mortgagee to pay off a prior mortgage, and another Rs. 1,000/-is earmarked for payment of arrears of interest due under the earlier mortgage. The balance of Rs. 1,000/-is recited to be borrowed for the purposes of the illom of the executants. There it a term of 12 years for which the property is to be enjoyed as mortgagee The mortgagor is to retain possession of the jack trees and mango trees which stood on the property. On the basis of the income from the yielding coconut trees the pattom is specified as 164 3/4 fanams while the value of other non-yielding trees is estimated at 2851/2 British rupees. The transferee is to appropriate the pattom stipulated and also the other income towards the interest due on the mortgage amount and also to pay the sircar tax on behalf of the transferor. The transferee is allowed to plant trees for which at the time of redemption value will be paid at the market rate. As far as existing trees are concerned the compensation payable will be only one - fourth of the pattom to be estimated then as exceeds the pattom stipulated under the deed. The transferee is allowed to plant trees for which at the time of redemption value will be paid at the market rate. As far as existing trees are concerned the compensation payable will be only one - fourth of the pattom to be estimated then as exceeds the pattom stipulated under the deed. There is no provision for payment of any residuary rent, but the transferee has to give 500 cadjans, 31/2 rupees towards 'onakazcha' and 100 bananas for onam. There is an indemnity against encumbrance other than specifically recited. Similarly the transferee has to indemnify the transferor for losses consequent upon the non-discharge of the prior encumbrance and for which amount is reserved with the transferee. It is also specifically stated that the mortgage amount of Rs. 6,000/-will be a charge on the property transferred. 3. It is only rarely that we come across two identical documents with reference to the contents and the circumstances under which they were executed. Consequently, in considering a deed judicial precedents can, at best, be only an aid to construction. Authorities were cited at the bar where documents of this category were construed with special reference to the relevant provisions of Act 1 of 1964. In Hussain Thangal v. Ali (1961 KLT. 1033) the two tests laid down to determine whether a transfer is for enjoyment or by way of security, in other words whether the transaction is essentially a lease or a loan were: (1) the label given to the transaction in the deed itself, and (2) the ratio which the consideration advanced bears to the value of the property transferred, a higher ratio being indicative of a loan and therefore of a mortgage and a lower ratio of an advance to secure due payment of the rent. The question again came up for consideration in a Full Bench of this court in Krishnan Nair v. Sivaraman Nambudiri (1967 KLT. 78). After referring to the tests enumerated in Hussain Thangal v. Ali (1961 KLT. 1033), the learned Chief justice held: "But, as a variation of the second test there enumerated, namely, the ratio which the consideration advanced bears to the value of the property transferred, a higher ratio being indicative of a loan and therefore of a mortgage and a lower ratio of security for rent and therefore of a lease. 1033), the learned Chief justice held: "But, as a variation of the second test there enumerated, namely, the ratio which the consideration advanced bears to the value of the property transferred, a higher ratio being indicative of a loan and therefore of a mortgage and a lower ratio of security for rent and therefore of a lease. I might mention the ratio which the amount periodically payable to the transferor bears to the rental value of the property, a higher ratio being indicative of a lease and a lower of a mortgage. If the property transferred is much more than is necessary for securing the amount advanced, ordinarily the income from the property will be much more than the interest payable on the money advanced so that the balance payable to the transferor after appropriating the interest would bear a high ratio to the income" Unfortunately since there is no evidence in this case as to the value of the mortgage holding at the relevant time it is not possible to apply the test relating to the ratio between the mortgage money and the mortgage holding. As far as the other test is concerned the position in this case is entirely in favour of the mortgagor because under Ext. P13 the entire income is to be appropriated towards interest on the mortgage amount and no residuary rent is payable to the mortgagor-Trie only other liability of the mortgagee is to pay the land tax. In Kunhamina Umma v. Paru Amma (1971 KLT. 163) the Supreme Court held as follows: "A mere direction to pay the revenue of the property by the grantee, particularly when no payment is stipulated to be made to the grantor or when the payment is not directed to be made out of anything which is due or payable to the grantor, cannot be considered as a payment of rent or michavaram to the grantor." Consequently, if the question is a simple one of applying the test laid down by the Full Bench in the case referred to above, it has only to be held that Est. P13 is only a mortgage and not a lease. But the matter does not rest there. The Full Bench held further that there can be cases where a transaction can be a composite transaction embodying both a mortgage and a lease. P13 is only a mortgage and not a lease. But the matter does not rest there. The Full Bench held further that there can be cases where a transaction can be a composite transaction embodying both a mortgage and a lease. The court observed: "If it is at least in part a lease, no matter how small a part, the person holding under it would be a tenant entitled to fixity under S.13 so that redemption of the part which is a mortgage, no matter how predominant a part, would not entitle the mortgagor to obtain possession which is what a plaintiff suing for redemption normally wants. Therefore, the proper question to be asked in such cases is whether the transaction is, to any extent, a lease. If it is, then by reason of the fixity given by S.13 of the Act the transferor cannot recover possession even if the transaction be at the same time a mortgage which he is entitled to redeem. The question would not be whether the transaction is predominantly a lease or predominantly a mortgage but whether it is a lease at all." 4. In view of the dictum in the Full Bench case, it is therefore necessary to consider whether under Ex, P13 any element of lease could be spelled out. The provision in the deed which is relevant in this connection is that relating to the provision whereby the transferee is allowed to plant trees. The question is whether such a provision would import into the deed the elements of a lease. In Jagadamma v. Raghavan pillai (1970 KLT. 469) a Division Bench of this Court held that the provisions for planting coconut and jack trees and pepper vines, digging a well, constructing a new house etc., clearly indicate that the intention of the parties to the document was the enjoyment of the properties by the transferee, and consequently a tenancy will be created. This dictum is held to be an addition to the ratio in the Division Bench ruling in Mathai Thomas v. Yohannan Kunjamma (1972 KLT. 1). It was strenuously contended by the appellants that a contrary position finds support in Balakrishnan v. Parameswaran Namboodiri (1968 KLT. 128). This dictum is held to be an addition to the ratio in the Division Bench ruling in Mathai Thomas v. Yohannan Kunjamma (1972 KLT. 1). It was strenuously contended by the appellants that a contrary position finds support in Balakrishnan v. Parameswaran Namboodiri (1968 KLT. 128). In Para.8 of that judgment the effect of an express permission given to the transferee was considered; and the court concluded as follows: "The grant of permission to do what he is empowered by law to do as a mortgagee cannot affect the nature of the transaction being a mortgage." It appears that this decision Is not specifically referred to In Jagadamma v. Raghavan Pillai (1970. KLT. 469) and Mathai Thomas v. Yohannan Kunjamma (1972 KLT. 1.) I am nevertheless bound by the Division Bench decision. Hence, in view of the provision for effecting improvements contained in Ext. P13 it has to be held that there is an element of lease in Ext. P13 transaction; and as such the defendants are entitled to protection, as held by the lower court. The decision of the court below is, therefore, confirmed and these appeals are dismissed. In the circumstances of the case, I make no order as to costs.