PETITIONER:
PUZHAKKAL KUTTAPPU
Vs.
RESPONDENT:
C. BHARGAVI AND OTHERS
DATE OF JUDGMENT22/09/1976
BENCH:
GOSWAMI, P.K.
CHANDRACHUD, Y.V.
GUPTA, A.C.
CITATION:
1977 AIR 105 1977 SCR (1) 696
1977 SCC (1) 17
ACT
Interpretation--Document whether mortgage or lease
deed--Tests for determination of.
HEADNOTE
By a registered deed described as "otti deed" the otti
right in a piece of land had been transferred in 1894 to the
predecessors-in-interest of the appellant and of the re-
spondents by the janmi for a period of 72 years for a cer-
tain consideration. The document recited various debts in
respect of wet lands. the debt owed by the executants and
cash received from the transferee on that date. Possession
of the land was made over to the transferee giving him the
right to enjoy the land. The other terms of the deed were
that the transferee was required to appropriate the income
of the property to the interest on the amount advanced, to
pay land revenue; and a fixed amount to be paid by the
transferee to the transferor annually as "purappad", that
is, the net produce or net rent payable to the janmi after
deducting interest on advances made by the tenant and the
Government tax. In 1949 the appellant and the respondents
divided the property among themselves by metes and hounds
and in 1967 the appellant purchased Janman rights in the
entire land from the transferors for a small sum including
the otti debt with a view to become the owner and therefore
a mortgagor and thus get compensation with respect to the
3/4th share also. When the land was acquired by the Govern-
ment the appellant claimed the entire compensation, while
the respondents contended that the otti deed wan really a
lease deed and that as tenants in possession of the land
they would be entitled to the entire compensation under the
Kerala Land Reforms Act, 1963.
The trial court held that the document was a mortgage
while the High Court held it to be a lease.
Dismissing the appeal to this Court,
HELD: (1)(a) When there are some mixed elements in an
instrument disclosing features of mortgage as well as of
lease. the Court will have to find out the predominant
intention of the parties executing the document viewed from
the essential aspect of the reality of the transaction. [701
A]
(b) In construing a document it is always necessary to
find the intention of the party executing it. The intention
has to be gathered from the recitals and the terms in the
entire document and from the surrounding circumstances and
how the parties or even their representatives-in-interest
treated the deed in question. The nomenclature given to a
document by the scribe or even by the parties is not always
conclusive. The word ’otti’, used in the document, is not,
therefore, of much consequence. [698 F]
In the instant case the document taken as a whole lacks
the most essential ingredient of a mortgage, namely, that
the transfer of the property has to be made as a security
for the debt. The document stated that fixed rent was to be
paid annually in addition to the Government revenue which
the transferee was required to pay. This feature of payment
of rent tilts the balance in favour of construing the docu-
ment as a lease, coupled with the fact that the essence of a
mortgage being the transfer of immovable property as securi-
ty for the debt is absent. There is no right to sell the
property in ease the debt is not repaid. There is nothing to
show that the enjoyment of the usufract was intended to wive
out the debt in the long period of occupation. While there
was arrangement to pay a fixed annual "purappad" to the
transferor, such a sum was not
697
intended to be utilised towards reduction of the principal
debt. There is sufficient force in the contention of the
respondents that the transferors themselves treated this
document as a lease, for else, it could not be explained why
they would have parted with their Janmam right of the entire
property inclusive of the otti debt if they themselves
regarded this document as an instrument of mortgage.
(2) The High Court was, however, wrong in holding that
where the document was of a composite character disclosing
features of both mortgage and lease it must be taken as a
lease. [700 H]
Later Full Bench decision in Velayudhan Vivekanandan v.
Ayyappan Sadasivan, I.L.R. [1975] 1 Kerala 166, approved.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1815
1975.
(Appeal by Special Leave from the Judgment and Order
dated 22-8-74 of the Kerala High Court in Appeal Suit No.
165/71).
T.C. Raghavan, N. Sudhakaran and K. Rewal Kumar, for
the Appellant.
T.S. Krishnamurthy Iyer, T. Rajandra Choudhury and
Mrs. V.D. Khanna, for the Respondents.
The Judgment of the Court was delivered by
GOSWAMI, J. This appeal by special leave is directed
against the judgment of the Kerala High Court out of a
proceeding for opportionment of compensation under the Land
Acquisition Act.
Certain property measuring 2 acres 21 cents in R.S.
299/1 of Chevayur village was acquired by the Government.
The compensation which was awarded was a sum of Rs. 2859.88
including the solatium. There were five claimants clamour-
ing for the compensation. While the first claimant (herein-
after to be described as the appellant) claimed the entire
compensation after making allowance for a small sum of Rs.
437.50 in favour of the claimants 2to 4 (hereinafter to be
described as the respondents) the latter, on the other
hand, claimed the entire amount minus a sum of Rs. 350/-
which, according to them, was the entitlement of the appel-
lant. The acquired property originally belonged in janman
(freehold right) to one Vakeri Thannanone Raman Nair. After
his death the same was inherited by his heirs and legal
representatives. They assigned their Janmam right on Janu-
ary 14, 1967. in favour of the appellant. Based on such a
right the appellant is now claiming the aforementioned
compensation.
The earlier history of the property shows that the
’otti’ right in the land had been transferred to the Prede-
cessors-in-interest of the appellant and to those of the
respondents by the daughter of Vakeri Thannanone Raman Nair
and other heirs by a registered document of December 30,
1894, for a consideration of Rs. 650/-. The document is
marked as Ex. A-2. The entire controversy between
698
the parties will turn on the construction of the above deed
(Ex. A-2) as to whether it is a mortgage fir a lease.
Although, prior to the assignment of the Janman right in
favour of the appellant the parties, naturally, would have
been sailing on the same boat as to theft status under’
the deed, the acquisition of Janmam right by the appellant
in 1967 gave, him an opportunity to part company with the
respondents and to claim almost the entire compensation to
the deprivation of the respondents on the acquisition of the
larger estate into which the lesser estate had merged. The
respondents, therefore, threw down their gauntlet taking the
position that the document Ex. A-2 evidenced a transaction
of lease and they acquired tenant rights in the land. If
they succeed in this: plea, they will be entitled to almost
the entire amount of compensation under the Kerala Land
Reforms Act 1963 (Act 1 of 1964) and the appellant even with
the Janmam right will only get a pittance.
It may be noted that the appellant, had already got his
14th share of the otti right by partition some time in 1936
and there was a partition suit in 1949 when the appellant
and the respondents divided this property by metes and
bounds in the course of execution of a partition decree in
O.S. 32 of 1949.
We are required to construe the deed executed in the year
1894. The deed was not drafted by a lawyer conversant with
the legal implications of a mortgage or a lease but by a
bond-writer as perhaps was the usual practice in the fall of
the last century and continuing even upto the present times.
The deed was written in Malayalam and we have an agreed
translation of the document before us. The learned Judge of
the High Court being conversant with the language was natu-
rally in a better position to appreciate the significance in
the original document placed side by side with the translat-
ed exhibit.
In construing a document like the one before us it is
always necessary to find the intention of the party execut-
ing it. The intention has to be gathered from the recitals
and the terms in the entire document and from the surround-
ing circumstances. How the parties or even their represen-
tatives-in-interest treated the deed in question may also
be relevant. It is also well settled that the nomenclature
given to a document by the scribe or even by the parties
is not always conclusive. The word "otti", as such, used
in the document, is not, therefore, of much consequence.
Before we proceed further we may turn to the contents in
the document. The deed is described as an "otti deed"
executed by Nani Amma, Janmam holder and manager and
several other co-sharers in favour of Kesavan
Nambudiri. Next the document recites the various debts
including the kanom of Rs. 100/- in respect of seven items
of nilams (wet lands). The debt owed by the executants on
that date was Rs. 650/- covering all the outstanding dues
upto that date and Rs. 8910 cash received on that date from
the transferee. Having recited the consideration in the
deed as above the document concludes as follows :-
The "Mambakkad paramba (dry land). described in the
Schedule under, belonging to us in jenm (absolute)
699
right, with all the improvements therein has been demised
and given to your possession for a period of 72 years, you
may enjoy the paramba (dry land) with all the improvements
on otti right and after adjusting the interest on otti
consideration pay the purappad Rs. 3155 fixed to be paid
annually and also pay the revenue in our jema and obtain
receipt therefor. On the expiry of the said period, when
the otti amount is paid and the otti is redeemed, we shall
pay the value of improvements then found and fixed. We
hereby assure you that to our knowledge and belief there is
no other charge or liability on this property".
Apart from the document neither party adduced any
evidence before the court. From the contents of the docu-
ment it is clear that the consideration was predominantly
past debt and only a small sum of cash was received on
the date of its execution. Possession of the land was made
over to the transferee giving him the right to "enjoy" the
land. The transferee was required to appropriate the
income of the property to the interest on the amount ad-
vanced. The transferee was also to pay the land revenue to
the credit of the transferor. A fixed amount of Rs. 3155 was
to be paid by the transfered to the transferor annually as
"purappad". This word "purappad" means "the net produce or
net rent payable to the janmi after deducting interest on
advances made by the tenant and the Government tax*". The
debt of Rs. 650/- will remain unpaid even after the expiry
of 72 years when the said otti amount has to be repaid.
There is also an indication in the recitals that the proper-
ty will return to the transferor who "shall pay the value of
improvements then found and fixed". The is nothing in the
recitals to show that the land was given as security for the
amount of loan. There is no right of sale of the land
delivered to the transferee in case the debt is not dis-
charged. On the other hand, there is a clear recital about
the payment of annual rent by the transferee to the trans-
feror.
The trial court held the document to be a mortgage
whereas the High Court held it to be a lease. It is enough
to point out that the trial court was wrong in holding that
the transferee was to utilise the amount of Rs. 3-15-5 for
paying the land revenue. On the other hand, the document
stated that this amount of fixed rent was to be paid annual-
ly in addition to the Government revenue which the transfer-
ee was required to pay. This feature of payment of rent, in
this case, flits the balance in favour of construing the
document as a lease, coupled with the fact that the essence
of a mortgage being the transfer of immovable property as
security for the debt is conspicuous by its absence in the
detailed enumeration of the terms. Further, as stated earli-
er, there is no right to sell the property in case the debt
is not repaid. There is also nothing to show that the
enjoyment of the usufruct was intended to wipe out the debt
in the long period of occupation.
We find that after the expiry of the period of 72 years
mentioned in the document the appellant purchased the Janmam
right of the
* Aiyar’s Law Lexicon of British India, 1940, page 1050.
13-- 1234SCI/76
700
entire property in 1967 for a sum of Rs. 1000/- which in-
cluded the sum of Rs. 650/- which was the consideration in
Ex. A-2. The Kerala Land Reforms Act, 1963 (Act 1 of 1964)
had already been passed, by then. It would, therefore,
appear crystal clear that whoever be the janmi would be able
to get only an infinitesimal sum of compensation for the
property acquired and the major share, would go to the
tenants in possession under the aforesaid Act. It is not
disputed that the appellant got his 1/4th share of compensa-
tion of the acquired property in terms of the earlier parti-
tion to which we have already adverted. It was therefore, a
clever act1 on the’ part of the appellant to manage to the
Janmam right of the transferor in the year 1967, when per-
haps the proposal for acquisition of the land had already
been in the air, in order that he was able to claim the
remaining 3/4th share of compensation to which he would
otherwise be not entitled except to an insignificant extent.
The transferors, themselves, would be in no better position
after the Kerala Land Reforms Act. When, therefore, the
appellant offered to the transferors some money which the
latter would not otherwise have obtained, in view of the
provisions of law, the assignment of the Japnam right was
made in favour of the appellant. The transferors thus
walked out of the field leaving the future contest amongst
the transferees out of whom the appellant came to be the
Janmi. It is apparent that after the partition the appel-
lant would not stand to gain with regard to the 3/4th share
of the property, which is in dispute, by accepting the
document ,rs a lease since the respondents are the transfer-
ees in possession of this particular property. The appel-
lant, therefore had cast his lot in a gamble by purchasing
the Janmam right from the transferors in 1967. There is
sufficient force in the contention of the respondents that
the transferors themselves treated this document as a lease
for else it cannot be explained why they would have parted
with their Janmam right of the entire property for
Rs.1000/-, inclusive of the otti debt, if they themselves
had regarded this document as an instrument of mortgage.
There is another significant feature that while there
was arrangement to pay a fixed annual "purappad" to the
transferor, such a sum was not intended to be utilised
towards reduction of the principal debt. It is, therefore,
not possible to say that the High Court is wrong in holding
that the consideration of Rs. 650/- in the deed was intended
as a premium for the lease. There is also no evidence
whatsoever to indicate as to what the price of the land was
to determine the proportion between the amount advanced and
the value of the property. The document taken as a whole
lacks the most essential ingredient of a mortgage, namely,
that the transfer of the property has to be made as a secu-
rity for the debt.
The High Court has also noted that since the document
was of a composite character disclosing features of both
mortgage and lease it must be taken as a lease. We do not
think that the High Court is correct in this view. Indeed
the High Court in a later Full Bench. decision has not
accepted this view. (See Velayudhan Vivekanandan v. Ayyap-
pan Sadasivan). (1)
(1) I.L.R. [1975] 1 Kerala 166.
701
We are of opinion that when there are some mixed ele-
ments in an instrument disclosing features of mortgage as
well as of lease, the court will have to find out the pre-
dominant intention of the parties executing the document
viewed from the essential aspect of the reality of the
transaction.
Human transactions cannot be tied to textual defini-
tions. They have to respond to variable requirements under
different situations and often to the dictates of the party
at an advantage in the bargain. Mortgages are not always
simple, English, or usufructuary or such other types as
defined in the Transfer of Property Act. They are anomalous
too and sometimes more anomalous than what is defined in the
said Act. Even so, there is one most essential feature in a
mortgage which is absent in a lease, that is, that the
property transferred is a security for the repayment of debt
in a mortgage whereas in a lease it is a transfer of a right
to enjoy the property. We have seen that this essential
feature of a mortgage is missing in the document in ques-
tion. We are, therefore, unable to come to the conclusion
that it is a mortgage and not a lease.
In view of the foregoing discussion, we are not able to
hold that the High Court is not right in holding that the
document in question is a lease and not a mortgage. In the
result the appeal is dismissed.
We will, however, make no order as to costs.
P.B.R. Appeal dis-
missed.
702