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1989 DIGILAW 548 (KER)

K. Venkataramana Bhat v. Pakkira

1989-12-14

P.K.SHAMSUDDIN, V.SIVARAMAN NAIR

body1989
JUDGMENT 1. The plaintiffs in O.S. No. 339 of 1974 on the file of the Munsiff's Court of Kasaragod are the appellants in this second appeal. 2. O. S. No. 339 of 1974 was filed for partition and allotment of 5/154 shares in the suit properties to the plaintiffs after permitting them to redeem the mortgage to the extent of their share or to the extent of 46/154 shares. 3. The plaint properties belonged to Ameyi Tharwad and were mortgaged by the karanavan of the said tharwad in favour of one Kunhikannan as per Ext. A-1, dated 11th April 1930. Respondents herein are the wife and children of Kunhikannan. The transaction under Ext. A-1 was described as avadhi illidarwar and according to the respondents, Kunhikannan acquired the equity of redemption from many of the members of the tharwad and 108 shares out of 154 shares in the equity of redemption came to vest in him. 4. The suit was resisted by the respondents who contended inter alia that the mortgage sought to be redeemed was really an illidarwar coming within the purview of S.10(v) of the Kerala Land Reforms Act (hereinafter referred to as 'the Act' for short) and hence they were entitled to fixity of tenure, that the suit was bad for non-joinder of parties as the holders of 46/154 shares in the equity of redemption were not impleaded, that they were entitled to value of improvements, that the plaint B schedule properties were not scheduled to the mortgage and hence were not available for partition and that the suit was liable to be dismissed. 5. Since tenancy under S.10(v) of the Act was set up, the trial court referred the question to the Land Tribunal. The Land Tribunal returned a finding that the defendants were deemed tenants within the purview of S.10(v) of the Act. On the basis of this finding, the trial court held that the defendants were cultivating tenants, and that the plaintiffs were not entitled to get separate possession of their 5/154 shares. Plaintiffs were allowed to redeem 46/154 shares of the plaint schedule properties by deposit of the requisite amount by plaintiffs. 6. Aggrieved by the judgment and decree of the trial court, both parties filed appeals. Plaintiffs were allowed to redeem 46/154 shares of the plaint schedule properties by deposit of the requisite amount by plaintiffs. 6. Aggrieved by the judgment and decree of the trial court, both parties filed appeals. A.S. No. 70 of 1979 was the appeal filed by the plaintiffs against the finding that defendants were cultivating tenants and were entitled to fixity of tenure and A. S. No. 74 of 1979 was the appeal filed by the defendants challenging that part of the decree granting the relief of redemption. 7. The learned Subordinate Judge disposed of both the appeals by a common judgment. A.S. No. 71 of 1979 was dismissed and A.S. No. 74 of 1979 was allowed. The learned Subordinate Judge held that the defendants are the holders of illidar tenancy and that the decree allowing redemption is unsustainable. Aggrieved by the judgment and decree of the learned Subordinate Judge, plaintiff have filed this second appeal. 8. Initially the second appeal came before Dr. T. Kochu Thomen (J), for hearing. The learned counsel for the appellants appears to have argued that the observations of the Division Bench in Moidu v. Mammunhi Beary 1974 KLT 879 doubting the correctness of the decision in Ganpathi Bhatta v. Umavathi 1965 KLT 903 that a contractual provision for payment of value of improvements will not take the transaction out of the ambit of S.58(d) of the Transfer of Property Act requires reconsideration. In view of the importance of the question, learned Judge referred the second appeal to be heard by a Division Bench. 9. In this second appeal, learned counsel for the appellants contended that, (1) Ext. A-1 transaction is not an illidarwar, but only an avadhi illidarwar. In view of the importance of the question, learned Judge referred the second appeal to be heard by a Division Bench. 9. In this second appeal, learned counsel for the appellants contended that, (1) Ext. A-1 transaction is not an illidarwar, but only an avadhi illidarwar. (2) The suit transaction will not come within the purview of S.10(v) of the Act being a usufructuary mortgage as defined in S.58(d) of the Transfer of Property Act, (3) 108 shares out of 154 shares of equity of redemption came to vest in defendants by virtue of purchase of shares of equity of redemption from most of the members by Kunhikannan and Kunhikanna, the predecessor of defendants and defendants became owners of the properties and therefore they cannot set up a plea of tenancy; (4) There is merger of illidarwar in the superior right of ownership and therefore illidarwar tenancy is extinguished; and (5) The finding of the Subordinate Judge that the suit is bad for non-joinder of parties is unsustainable since there is no bar in granting redemption even in cases where all the persons entitled to equity of redemption are not in the party array. 10. Ext. A-1 is in 'Kannada' and a translation of the material recitals in Ext. A-1 was made available. It shows that Ext. A-1 evidences an avadhi illidarwar for Rs. 844 for a term of 5 years. The document recites that property was put in the possession of the mortgagee. It also provides that the mortgagee was to enjoy the properties for a term of 5 years and after the term, when the mortgagor requires the property or when the mortgager demands the money on the date of Vishu of that year, the mortgagee shall give back the properties on payment of the money in lump sum. There is no provision for value of improvements in the document. 11. We shall now examine the points raised by the learned counsel for appellants. We are unable to accept the contentions of the learned counsel that transaction being an avadhi illidarwar will not fall within the purview of S.10(v) of the Act. In our view, merely because a term of 5 years is fixed in Ext. 11. We shall now examine the points raised by the learned counsel for appellants. We are unable to accept the contentions of the learned counsel that transaction being an avadhi illidarwar will not fall within the purview of S.10(v) of the Act. In our view, merely because a term of 5 years is fixed in Ext. A-1 or transaction is described as an avadhi illidarwar, it will not become any the less illidarwar if the transaction otherwise falls within the definition of illidarwar contained in S.10(v) of the Act. S.10(v) reads: "10. Certain other persons to be deemed tenants.-Notwithstanding anything to the contrary contained in any law, or in any contract, custom or usage, or in any judgment, decree or order of court, the following classes of persons shall be deemed to be tenants:- ** ** ** ** (v) a person holding land situate in any part of the taluk of Hosdurg or Kasaragod to which the Malabar Tenancy Act, 1929, did not extend, under a transaction described in the document evidencing it as bhogya, Otti, nattotti, arwar, illidarwar or krithasartha illidarwar, but not being a usufructuary mortgage as defined in the Transfer of Property Act, 1882." As transaction is described as illidarwar in Ext. A-1 further question to be considered is whether it is a usufructuary mortgage as defined in S.58(d) of Transfer of Property Act. S.58(d) of the Transfer of Property Act reads as follows: "58(d) Usufructuary mortgage.-Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of the mortgage money and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or in payment of the mortgage money, or partly in lieu of interest and partly in payment of the mortgage money, the transaction is called a usufructuary mortgage and the mortgagee an usufructuary mortgagee." 12. In Moidu's case 1974 KLT 879 (supra), a Division Bench of this court held that the transaction involved in that case was not a usufructuary mortgage on the ground that the mortgagee was authorised to retain possession of the mortgage holding not only till payment of mortgage money, but till payment of something more than that, namely, till the payment of value of improvements. Relying on S.62 of the Transfer of Property Act, the Division Bench observed that in the case of a usufructuary mortgage, the mortgagor is entitled to recover possession of the property when the mortgage money is paid by the mortgagee appropriating to himself the rents and profits derived from the property, where the mortgagee is authorised to resort to that method and in a case where he need appropriate rents and profits or part thereof towards only part of the mortgage-money, then if a term is prescribed for the payment of the mortgage money on expiry of that term and on payment of tender of the mortgage money or balance thereof, and therefore, if the mortgagee is authorised to retain possession of the mortgage holding not only till payment of mortgage money but till payment of something more than that, such a transaction will not be a usufructuary mortgage as defined in S.58(d) of the Transfer of Property Act. 13. In Ganapathi Bhatta's case 1965 KLT 903 also a transaction described as illidarwar came up for the consideration of Madhavan Nair (J). The document authorised the mortgagee to effect improvements on the property and provided that the mortgage money and the value of improvements would be paid simultaneously at the time of redemption. Madhavan Nair, J. held: "The fact that improvement of property has been provided for in a usufructuary mortgage would not therefore affect the nature of the mortgage. The distinctive test of a usufructuary mortgage is the absence of a right in the mortgagee to claim mortgage money against the mortgagor. There is no provision in Ext. P-6 entitling the mortgagee to claim the mortgage money from the mortgagor or to bring to sale the property for realisation of the mortgage amount. The distinctive test of a usufructuary mortgage is the absence of a right in the mortgagee to claim mortgage money against the mortgagor. There is no provision in Ext. P-6 entitling the mortgagee to claim the mortgage money from the mortgagor or to bring to sale the property for realisation of the mortgage amount. Considerable reliance was placed on the provision in the deed that on payment of the mortgage money on any Vishu Sankramana day after the expiry of the term (of ten years stipulated in the deed) the mortgage money together with the cost of improvements might be paid in a lump and the property redeemed. The very definition of a usufructuary mortgage in the Transfer of Property Act contemplates, as a feature of the usufructuary mortgage, a provision for retention of possession till payment of the mortgage money. No particular date is stipulated in Ext. P-6 for payment of the mortgage money. There is therefore no obligatory covenant on the part of the mortgagor to pay the mortgage money." In Moidu's case 1974 KLT 879 (supra), the Division Bench doubted the correctness of the observation that the provision to effect improvement on the property and for payment of value of improvements along with the mortgage money would not take the transaction out of S.58(d). The Division Bench pointed out the term mortgage money does not include compensation for improvements effected by the mortgagee. The Division Bench pointed out the term mortgage money does not include compensation for improvements effected by the mortgagee. In coming to this conclusion, the Division Bench noticed the provisions contained in S.63A(2) of the Transfer of Property Act, which provides for payment of value of such improvements as are necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of any public servant or public authority and not otherwise and pointed out that the statutory right of a mortgagee under S.63A(2) is only for 'proper cost' of the improvements effected in the circumstances detailed in that section and when a mortgage deed authorises mortgagee to effect improvements including improvement not covered by S.63A(2) and mortgagor promises to pay the compensation for the same along with the 'mortgage money', the obligation to pay such compensation arises out of contract of the parties and when the mortgagee is authorised to retain possession till payment of such compensation also, then that is a provision in derogation of the provisions of S.58(d) and 62 of the Transfer of Property Act and it will take the transaction beyond the terms of S.58(d). We are in respectful agreement with the view expressed by the Division Bench. 14. In Ext. A-1, there is a personal covenant enabling the mortgagee to demand the money on the date of Vishu. It is also significant that the property was put in the possession of the mortgagee for enjoyment of the property for 5 years and it was only after the term that the mortgagee could demand the mortgage amount. It is not a case where the mortgagee is authorised to retain possession until payment of mortgage money. We are therefore of the opinion that the transaction evidenced by Ext. A-1 is not an usufructuary mortgage as defined in S.58(d) of the Transfer of Property Act and that consequently the transaction would fall within the purview of S.10(v) of the Act. 15. Learned counsel for the appellants next contended that the defendants are in the position of owner since 108 shares out of 154 shares of equity of redemption vested in them and that therefore they cannot claim benefit of deemed tenancy. 15. Learned counsel for the appellants next contended that the defendants are in the position of owner since 108 shares out of 154 shares of equity of redemption vested in them and that therefore they cannot claim benefit of deemed tenancy. In support of this contention, learned counsel relied on a Division Bench ruling of this court in Manari Parvathy Amma and others v. Nellickal Parvathy Amma and others 1983 KLJ 62 where it was held that a member of a tarwad in possession of tarwad property cannot be considered to be a person in occupation of "the land of another" and that he is not entitled to claim the benefits of S.7 and 7B of Act 1 of 1964 as amended by Act 35 of 1969. The Division Bench also observed that under Marumakkathayam Law as it stood at the relevant time no member of a marumakkathayam tarwad had an alienable interest in the tarwad property and not even the karanavan was competent to create a lease in respect of his share in the tarwad properties. The ruling of this court in Yesodha v. Sankunni 1984 KLT SN 57 case No. 98 was also relied on by the learned counsel. In that case also, it was held that a member of the tarwad in possession of the tarwad property cannot be considered to be a person in occupation of properties of another and is not entitled to claim the benefits of S.7 of the Act. In our view, these decisions have no application to the facts of the case. In Venkappa Bhatta and others v. Gangadhara Bhatta and others AIR 1959 Ker. 112 a Division Bench of this court had occasion to consider a similar situation as has arisen in this case. The mortgagee became the owner of undivided 1/2 share of the mortgage property. Dealing with the purchase of a share of the mortgagor's right, this court observed as follows: "By virtue of their purchase under Ext. B-1 dated 9th March 1938, the family of the defendants (in other words, the mortgagee) became the owners of an undivided one half share of the mortgaged property. Dealing with the purchase of a share of the mortgagor's right, this court observed as follows: "By virtue of their purchase under Ext. B-1 dated 9th March 1938, the family of the defendants (in other words, the mortgagee) became the owners of an undivided one half share of the mortgaged property. By this Act there was a merger of the interests of the mortgagor and the mortgagee in respect of that half share and by reason of S.82 of the Transfer of Property Act (apart from the recitals in the document itself), an extinguishment of one half of the mortgage which thereafter attached only to the other half share. By the partition in their family under Ext. A-5 dated 25th February 1947, the defendants became the full owners of an undivided half share of the property covered by Ext. B-39, now free of that mortgage and became also the owners of the mortgage right in the remaining one half." In Moidu's case 1974 KLT 879 (supra) also a similar situation arose and the court held that if the mortgagee purchaser does not acquire title to a share of the property purchased, the mortgage in respect of that share will subsist, unless there are circumstances which will go to show that the mortgagee purchaser intended to wipe off the mortgage transaction by his purchase. 16. In Jyotish Thakur and others v. Tarakant Jha and others AIR 1963 SC 605 , the question of merger came up for consideration. The Supreme Court held: "........ The legal position as regards merger, apart from these statutory provisions, may be stated thus: That while the union of the superior and subordinate interests will not automatically cause a merger, merger will be held to have taken place if the intention to merge is clear and not otherwise. In the absence of any express indication of intention, the courts will proceed on the basis that the party had no intention to merge if it was to his interest not to merge and also if a duty lay on him to keep the interests separate. In deciding the intention of the party the court will have regard also to his conduct." It is in the interest of the defendants not to merge and therefore the court has to proceed on the basis that the party had no intention to merge. 17. In deciding the intention of the party the court will have regard also to his conduct." It is in the interest of the defendants not to merge and therefore the court has to proceed on the basis that the party had no intention to merge. 17. Again the question of merger came up for consideration of the Supreme Court in Gambangi Appalaswamy Naidu and others v. Behara Venkataramanayya Patro AIR 1984 SC 1728 . Dealing with the question, the Supreme Court held: "In our view there can be no merger of a lease and a mortgage, even where the two transactions are in respect of the same property. It is well settled that for a merger to arise, it is necessary that lesser estate and a higher estate should merge in one person at one and the same time and in the same right and no interest in the property should remain outstanding. In the case of a lease, the estate that is outstanding in the lessor is the reversion; in the case of a mortgage, the estate that is outstanding is the equity of redemption of the mortgagor. Accordingly there cannot be a merger of a lease and a mortgage in respect of the same property since neither of them is a higher or lesser estate than the other. Even if the rights of the lessee and the rights of the mortgagee in respect of a property were to be united in one person the reversion in regard to the lease and the equity of redemption in regard to the mortgage, would be outstanding in the owner of the property and accordingly, there would not be a complete fusion of all the rights of ownership in one person." In the instant case, the entire right of equity of redemption has not been vested in the respondents and therefore no question of extinguishment of mortgage right arises in the case. Further in the light of the principles enunciated in the above ruling of the Supreme Court, there cannot be any fusion of right of ownership and right as holder of illidarwar. 18. Learned counsel for appellants finally submitted that the lower appellate court acted illegally in dismissing the suit also on the ground that all persons who are entitled to equity of redemption are not in the party array. 18. Learned counsel for appellants finally submitted that the lower appellate court acted illegally in dismissing the suit also on the ground that all persons who are entitled to equity of redemption are not in the party array. It is true that in the decisions in Govindan v. Kunhan 1966 KLT 836 and Commissioner of Income Tax, Kerala v. K. Ahamed 1974 KLT 15 this court held that non-impleading of all the mortgagors is not fatal to a suit for redemption. But as pointed out by the learned counsel for the respondents, the prayer in the suit for partition and separate possession cannot be granted in the absence of all persons who are entitled to equity of redemption on the party array. In view of our finding that Ext. A-1 is an illidarwar, coming within the purview of S.10(v) of the Act, no decree for redemption, can be granted and the lower appellate court was justified in dismissing the suit. Foregoing discussion shows that there is no merit in the Second Appeal and it is accordingly dismissed. However, the parties will bear their respective costs.