IN THE HIGH COURT OF KERALA AT ERNAKULAM
SA.No. 841 of 1997()
1. BABY
... Petitioner
Vs
1. OMANA
... Respondent
For Petitioner :SRI.PIRAPPANCODE V.SREEDHARAN NAIR
For Respondent :SRI.S.RAJEEV
The Hon'ble MR. Justice P.BHAVADASAN
Dated :09/06/2010
O R D E R
P. BHAVADASAN, J.
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S.A. No. 841 of 1997
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Dated this the 9th day of June, 2010.
JUDGMENT
In a suit for redemption, the defendants set up
a claim of tenancy. The matter was referred to the Land
Tribunal concerned for a decision on the claim of fixity of
tenure. The Land Tribunal concerned on a consideration
of the relevant documents came to the conclusion that
the transaction is a mortgage and not a lease and
therefore declined fixity of tenure to the defendants.
The finding of the Land Tribunal was returned to the civil
court. The Munsiff’s Court adopted the finding of the
Land Tribunal and held that the defendants are not
entitled to fixity of tenure and thereafter decreed the suit
granting value of improvements to the defendants.
2. The defendants carried the matter in appeal
as A.S. 83 of 1994 before the Sub Court,
Thiruvananthapuram. The lower appellate court on an
S.A.841/1997. 2
independent consideration of the same documents came to
the conclusion that the transaction is only a mortgage and
not a lease as contended by the defendants. Accordingly,
the decree of the trial court was confirmed. Aggrieved, the
defendants have come up in appeal.
3. The following questions of law have been
formulated in this Second Appeal:
“(a) Are not the defendants entitled to fixity of
tenure on the basis of Ext.A1 document?
(b) Whether the courts below were justified in
holding that Ext.A1 document was executed as
security when the recitals of the said document
and intention of the parties clearly spell out
tenancy.
) Are not the defendants entitled to fixity of
tenure in the light of the decision reported in 1975
KLT 1.
(d) Is the finding regarding value of
improvements supported by evidence?”
S.A.841/1997. 3
3. The learned counsel appearing for the
appellants contended that the courts below have erred in
law in construing Ext.A1 document as a mortgage, whereas
it actually evidences as a transaction of lease. Though
Ext.A1 is nomenclatured as ottikuzhikanam, a reading of the
document will clearly show that the transaction was for
enjoyment of the property. According to learned counsel,
the fact that the transferee is entitled to make
improvements in the property and construct buildings is a
clear indication of the fact that the transaction is a lease.
Learned counsel relied on the definition of ‘ottikuzhikanam’
as contained in Section 2(39A) of the Kerala Land Reforms
Act and contended that the transaction can only be a lease.
Considerable reliance was placed on the decision reported in
Raman Pillay Kesava Pillay v. Kochukunju Sankaran
(1972 K.L.T. 589(F.B.))
4. Per contra, learned counsel appearing for the
respondents pointed out that a reading of the documents
will clearly show that the transaction is nothing but a simple
S.A.841/1997. 4
mortgage, possession having granted to the transferee. The
mere fact that the mortgagee is allowed to make
improvements and also to construct a building does not
change the character of the transaction. Learned counsel in
support of his contention relied on the decision reported in
Vivekanandan v. Sadasivan (1975 K.L.T. 1)
5. The issue involved is regarding the construction
of Ext.A1 document. Simply because the document is
nomenclatured as ottikuzhikanam does not lead to the
conclusion either way, that is it is a mortgage or a lease.
The well settled principle is that the document has to be
read as a whole and then a conclusion has to be drawn as to
whether it is a lease or a mortgage. The distinction between
a mortgage and a lease is well settled. While the transfer of
interest in the case of a lease is for enjoyment of the
property, in the case of mortgage, it is as security for a debt
incurred by the mortgagor. The relevant portion of Ext.A1
reads as follows:
S.A.841/1997. 5
”
6. The debt incurred is a sum of Rs.400/- and the
extent of property transferred is only 20 cents. One may at
once notice that the transaction was of the year 1961.
Rs.400/- for 20 cents was a huge amount at that point of
S.A.841/1997. 6
time. The document contains an express provision of
surrender on payment of the mortgage amount and it is also
stated that if any building has been put up by the
mortgagee, he is entitled to remove the same.
7. In the decision reported in Raman Pillay
Kesava Pillay v. Kochukunju Sankaran (1972 K.L.T. 589
(F.B.)) it was held as follows:
“To attract S.2(22) there must be the transfer
of an interest in an immovable property to another
person for the latter’s enjoyment; to be more
precise the purpose of the transfer must be the
enjoyment of the property by the transferee. If,
on the other hand, the object of the transer is to
constitute the concerned property a security for
the consideration received by the transferor the
resulting transaction is only a possessory
mortgage, and the subsequent possession or
enjoyment of the property by the transferee is
only an incident of the transaction and not its
purpose. The question to be considered is
whether Exts.P3, P4 and P5 satisfy this crucial
test. It is not possible to spell out from the
express provisions of the three deeds any
S.A.841/1997. 7
intention on the part of the parties to create a
landlord tenant relationship. The holding
transferred is a paddy land measuring one acre
and 36 cents, and within a short span of two years
and two months it was subjected to three
successive charges. The total consideration
exceeds sircar rupees 1408, which is by no means
a small amount considering the purchase value of
money as obtained on the dates of the loans.
From Ext.P5 it could be seen that the transferee
Raman Pillai advanced from his pocket an amount
of Rs.373.14 chms, for managing certain other
properties of the transferor Illom. It is not
probable that the Illom could have thought of
charging its immovable property for such a
comparatively small amount if it was in a position
to discharge the debt by ready payment. The
provision in the deeds prohibiting the transferee
from; demanding repayment of the advances is
ore indicative of the financial strain the transferor
was undergoing than as the expression of his
intention to assume the role of a generous
landlord. Similarly, the reservation of an annual
michavaram is not repugnant to the concept of an
otti transaction. Michavaram in such a context
S.A.841/1997. 8
merely represents the balance of the profits of the
property to which the owner is entitled, after
meeting the interest charges due on the principal
advanced. In view of the express terms used in
these transactions as well as the attendant
circumstances we are satisfied that the transfers
in this case were not for the purpose of enjoyment
of the property by the transferee, but only for the
purpose of securing the advances received under
the respective transactions. It follows that the
transaction evidenced by the documents could not
be deemed to be kanoms within the meaning of
S.2(22).”
In the decision reported in Vivekanandan v. Sadasivan
(1975 K.L.T. 1) it was held as follows:
“In examining such a transaction there are
two stages. At the first stage the document must
be read as a whole and in its entirely giving due
weight to every term in it and the nomenclature of
the document and keeping in mind the
surrounding circumstances. If on a reading of the
document in the manner indicated above, it is
evident that there has been a transfer for
S.A.841/1997. 9
enjoyment for rent or other consideration, then
the transaction is a lease and no further question
arises. Such cases, where it is possible and the
first stage, to reach the conclusion that the
transaction is a lease, are very rare, and occur but
seldom. The expressions “to any extent a lease”
or whether “a lease at all…” occurring in
paragraphs 5 and 6 of the judgment in Krishnan
Nair v. Sivaraman Nambudiri will be applicable
only to those transactions of the kind mentioned
above and not to other composite transactions. In
the case of ‘other composite transactions’ which
are referred to in paragraph 15 of the judgment in
Hussain Thangal v. Ali and again in paragraph 10
of the judgment in Krishnan Nair v. Sivaraman
Nambudiri, that is, transactions other than those
where it is evident that the transfer was for
employment already referred to , the question
whether the transaction evidences a lease or a
mortgage will have to be determined by taking
into consideration all th factors which are
pertinent and by applying the tests detailed in
paragraph 6 of the judgment in Hussain Thangal v.
Ali, read in the light of the modifications made in
paragraph 9 of the judgment in Krishnan Nair v.
S.A.841/1997. 10
Sivaraman Nambudiri in regard to the fourth test,
and bearing in mind the observations in paragraph
8 of the same judgment in regard to the second
test. On applying the procedure indicated above
if it is found that the elements of a lease
predominate so as to justify the inference that the
dominant intention was to transfer the property
for enjoyment, the transaction must be held to be
a lease. On the other hand, if the predominant
elements indicate a transfer by way of security,
then the transaction must be held to be a
mortgage.”
Section 2(39A) of the Kerala Land Reforms Act reads as
follows:
” “Ottikuzhikanam” means a transfer for
consideration by a person to another of any land
other than nilam for the enjoyment of that land
and for the purpose of making improvements
thereon, but shall not include a mortgage within
the meaning of the Transfer of Property Act,
1882.”
S.A.841/1997. 11
8. A reading of the above provision shows that
ottikuzhikanam means the transfer of a property for
consideration for the enjoyment of that land and for the
purpose of making improvements thereon. That means it
should have all the characteristics of a lease as known in
law. The definition extracted above clearly shows that it
does not take in a mortgage within the meaning of Transfer
of Property Act. As already noticed, if on a construction of
the terms of the document one comes to the conclusion that
the transfer is for the purpose of enjoyment then it is a
lease. If the purpose of transfer is to hold it ad a debt, the
transaction is a mortgage. In the case on hand, it has to be
noticed that there is no provision for payment of any
premium or rent or interest. True, the mortgagee is allowed
to make improvements in the property and to construct
building therein, but they are only incidental to a mortgage.
The dominant purpose is not for enjoyment of the property,
but as a security for the debt incurred by the mortgagor.
Viewed from this angle, the decision in Raman Pillay
S.A.841/1997. 12
Kesava Pillay’s Case relied on by the learned counsel for
the appellants is of no help to them and does not take a
different view.
9. The contention of the defendants in the suit
that they are entitled to fixity of tenure or kudikidappu were
found against by the Land Tribunal. The lower appellate
court has observed that the mere direction to pay Sirkar tax
cannot be treated to be “other consideration” in view of the
decision reported in Kunhamina Umma v. Paru Amma
(1971 K.L.T. 163). The lower appellate court has construed
the document in its entirety and has come to the conclusion
that the purpose of transaction is as a security for the debt
and the transaction evidences mortgage only. The finding
arrived at by the courts below seems to be quite appropriate
and in consonance with the terms of the document. No
interference is called for with the finding of the court below.
10. It is unfortunate that the defendants thought
it unnecessary to adduce evidence regarding the value of
improvements. Therefore the trial court, in the absence of
S.A.841/1997. 13
any evidence in that regard, granted a sum of Rs.100/- as
value of improvements. The lower appellate court also
considered this issue and found that in the absence of any
evidence the defendants are not entitled to get more
amount in that regard.
The result of the above discussion is that the
Second Appeal is without any merit and it is liable to be
dismissed. I do so confirming the judgments and decrees of
the courts below. There will be no order as to costs.
P. BHAVADASAN,
JUDGE
sb.