JUDGMENT- The short but rather interesting question that arises for consideration in this Special Civil Application is whether the transaction evidenced by the document executed by land-owner Chandulal in favour of the petitioner Jaideo purporting to be a Patte-Khat is of the nature of a lease or a mortgage.2.Thefacts giving rise to this Special Civil Application are as follows The respondent No 1 and his father Chandulal instituted a suit in the Court of the Civil Judge Junior Division Akot against the petitioners Jaideo and Sadashiv In that suit the petitioners filed written-statement claiming that the land in dispute namely 4 acres of land from Survey No 340 admeasuring 8.16 acres assessed at Rs 32 was in their possession as the tenants in pursuance of the contract under a deed dated 11-6-1957 styled as Patte-khat and that therefore they were entitled to a status of the tenants under the provisions of the Bombay Tenancy Act.Before the Additional Tahsildar (Agricultural Lands Tribunal) Akot evidence was adduced on behalf of the petitioner No 1 and on behalf of the landholder Chandulal (the father of the respondent No 1) By his order dated 30-11-1971 the Additional Tahsildar repelled the contention raised on behalf of the land-owner Chandulal that the transaction between the petitioner No 1 and Chandulal was a money-lending transaction and that the deed (Exh.So far as the finding recorded by the learned Additional Tahsildar is concerned the learned Sub-Divisional Officer Akot set aside the finding recorded by the Additional Tahsildar and held that the transaction between Chandulal and petitioner Jaideo was a mortgage transaction.The learned Member of the Maharashtra Revenue Tribunal Nagpur did not give any reasons for his conclusion except observing that the the field was given for liquidation for an amount of Rs 1500 and that the decision of the Sub-Divisional Officer was correct.The findings recorded by the Sub-Divisional Officer Akot and the learned Member of the Maharashtra Revenue Tribunal Nagpur holding that the transaction is in the nature of a mortgage are set aside.The learned Member of the Maharashtra Revenue Tribunal Nagpur did not give any reasons for his conclusion except observing that the the field was given for liquidation for an amount of Rs 1500 and that the decision of the Sub-Divisional Officer was correct.The findings recorded by the Sub-Divisional Officer Akot and the learned Member of the Maharashtra Revenue Tribunal Nagpur holding that the transaction is in the nature of a mortgage are set aside.Agricultural Lands Tribunal is restored.Petition allowed.
Cases Cited:
ILR. 11 Bom. 462.
ILR 25 Allah. 115.
AIR 1971 S. C. 1575.
AIR 1977 SC 105.
AIR 1957 AP 504.
AIR 1952 SC 205.
24 Calcutta Series 272.
AIR 1956 Bom. 625.
1962 NLJ 419.
JUDGMENT
JUDGMENT:- The short but rather interesting question that arises for consideration in this Special Civil Application is whether the transaction evidenced by the document executed by land-owner Chandulal in favour of the petitioner Jaideo purporting to be a 'Patte-Khat' is of the nature of a lease or a mortgage.
2. Thefacts giving rise to this Special Civil Application are as follows: The respondent No. 1 and his father Chandulal instituted a suit in the Court of the Civil Judge, Junior Division, Akot, against the petitioners Jaideo and Sadashiv. In that suit, the petitioners filed written-statement claiming that the land in dispute, namely, 4 acres of land from Survey No. 340 admeasuring 8.16 acres assessed at Rs. 32 was in their possession as the tenants in pursuance of the contract under a deed, dated 11-6-1957, styled as 'Patte-khat' and that, therefore, they were entitled to a status of the tenants under the provisions of the Bombay Tenancy Act. On that contention, the learned civil Judge framed issues in the suit and ordered that the three issues as mentioned below should be referred for being dealt with by the Tenancy Court at Akot:
"Issue No. 3: Dodefendants prove that defendant No. 1 got the suit field on lease in 1957 for a period of 9 years as pleaded in para 2 of the written-statement, Exh. 20?
Issue No. 4: Do they also prove that defendant No. 1 also obtained the suit field on lease for 1966-67 and 67-68 onpayment of the lease amount in cash to plaintiff No. 17
Issue No 5: Do they also prove that defendant No. 1 is a tenant ofthe suit held"?
While drawing up an order to be issued to the Naib-Tahsildar, Tenancy, Akot the following two issues alone came to be referred for findings to the Naib-Tahsildar, Akot:
"Issue No.3: Do defendants prove that defendant No 1 got the suit field on lease in 1957 for a period of 9 years as pleaded in para 2 of the written statement, Exh. 20?
Issue No. 5: Do they also prove that defendant No. 1 is a tenant of of the suit field?"
It appears that possibly through inadvertence, no reference was made in respect of Issue No. 4 which was also specifically directed to be referred to the Tenancy Authorities by the Civil Judge, Akot.
3. On receipt of the reference, Revenue Case No. 22/59(13)/71-72 came to be registered. Before the Additional Tahsildar (Agricultural Lands Tribunal), Akot, evidence was adduced on behalf of the petitioner No. 1 and on behalf of the landholder, Chandulal (the father of the respondent No. 1) By his order dated 30-11-1971, the Additional Tahsildar repelled the contention raised on behalf of the land-owner Chandulal that the transaction between the petitioner No. 1 and Chandulal was a money-lending transaction and that the deed (Exh. T-1) was executed as a mortgage. The learned Additional Tahsildar in his order referred to the fact that petitioner No. 1 Jaideo had advanced a sum of Rs. 1500 in cash to Chandulal before the Sub-Registrar in consideration of the deed in question.
4. It appears that there were two more deeds executed on the same date, namely, 30-7-1962 before the expiry of 9 years stipulated in the first deed dated 11-6-1957. Under the first of these two subsequent deeds, namely, Exh. T-2, in consideration of Rs. 100 the executant Chandulal gave the land for cultivation to petitioner Jaideo for the year 1966-67 i.e. for a year after the expiry of the period of 9 years provided under the first deed Exh. T-1. Under the second deed, namely, Exh. T-3, the executant Chandulal in consideration of Rs. 100 gave the land for cultivation to petitioner Jaideo for the year 1967-68. The learned Additional Tahsildar in his order observed that even after the expiry of these two years, the land continued with defendant Jaideo and that his name was recorded as a tenant. He also observed that defendant Jaideo had no money-lending business. He referred to certain criminal proceedings between the petitioner Jaideo and Chandulal, and ultimately found that the petitioner Jaideo was in possession of the land and that he was a tenant of the land under section 6 of the Bombay Tenancy Act (Vidarbha Region). The learned Additional Tahsildar was of the view that the deed in question namely, the document Exh. T-1 dated 11-6-1957 could not be proved to be a deed other than a lease-deed in view of the provisions in section 91 of the Indian Evidence Act. Observing that the evidence given by Kisanlal (Chandulal's son) was unreliable, the learned Additional Tahsildar held that the land in question was leased out to defendant Jaideo in 1957.
5. The land owner Chandulal and Kisanlal preferred an appeal against the said finding of the Additional Tahsildar being Revenue Appeal No. 15/59(30)/71-72. So far as the finding recorded by the learned Additional Tahsildar is concerned, the learned Sub-Divisional Officer, Akot, set aside the finding recorded by the Additional Tahsildar and held that the transaction between Chandulal and petitioner Jaideo was a mortgage transaction. The grounds for his finding were as follows:
1. Respondent Jaideo admitted in his cross-examination that the so-called lease deeds are mortgage-deeds.
2. The so called lease-deeds themselves indicate that they are actually the mortgage-deeds.
3. The suit field was given to respondent No. 1 in return for some money advanced by the appellant.
4. The mortgage nature of the transaction was further indicated by the lump-sum payment, though lease-money is usually paid annually and not for 9 years in advance.
All these grounds are to be found in para 4 of the order of the learned Sub-Divisional Officer, Akot.
6. The petitioners preferred a revision application before the Maharashtra Revenue Tribunal. The learned Member of the Maharashtra Revenue Tribunal upheld the finding of the Sub-Divisional Officer, Akot, by giving his reasons in para 4 of his order as follows:
"Jaideo and Sadashiv were not held to be the tenants. They were held only to be the mortgagees in possession. The field was given for liquidation of an amount of Rs. 1500 owed by Chandulal to Jaideo. Jaideo was to have cultivated the field for 9 years from 1957-58 to 1965-66. Therefore, the appellate Court held that it was not a transaction of lease but it was merely a mortgage, with possessory rights. The decision of the Sub-Divisional Officer was correct and the same is upheld."With the short reasoning, as above, the learned Member of the Maharashtra Revenue Tribunal, Nagpur, rejected the revision application.
8. As against this, Mr. M.T. Dharmadhikari, the learned Counsel for the respondents, submitted that the transaction evidenced by deed, Exh. T-1 dated 11-6-1957 was in essence a transaction of mortgage; that petitioner Jaideo had advanced an amount of Rs. 1500 as loan to executant Chandulal and that the transaction was entered into as an arrangement for satisfaction of that loan. According to Mr. Dharmadhikari, some recitals in the deed pointed out to the fact that it was the mortgage transaction.
9. The learned Counsel on both the sides in support of their submissions placed reliance on some decisions of the Supreme Court and the High Courts, including a few decisions of this Court. Of course, the observations in each case have to be understood in the context of the facts and the circumstances obtaining in that particular case. I would however briefly refer to the relevant observations in some of the cases cited by the learned Counsel. Before I do so, it would be convenient to notice the definition of the term 'lease' as defined in section 105 of the Transfer of Property Act. That definition reads as under:
"105: "Lease": A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms."It would appear from the above definition that the consideration for a lease is either premium or rent. Premium is the price paid or promised in considera-tion of the demise. It is well settled that if the consideration is premium alone as in the instant case, the transaction may be either a lease or a usufructuary mortgage depending upon the circumstances of the case.
10. Now, the term 'mortgage' is defined in section 58 of the Transfer of Property Act. The definition reads as under:
"58. 'Mortgage', 'mortgagor', 'mortgagee', 'mortgage-money', and 'mortgage-deed':
(a) A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, of the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee as mortgagee, the principal money and interest of which payment is secured for the time being are called the mortgage-money; and the instrument (if any) by which the transfer is effected is called a mortgage-deed."It will appear from the above definition that in order to constitute a mortgage, there must be a transfer of an interest in the property for the purpose of securing the payment of money advanced or to be advanced by way of loan etc.
11. The first case relied upon on behalf of the petitioners is the case of this Court in Abdulbhai v. Kashi1. In that case, in 1862, A, in consideration of a debt of Rs. 150, passed to B, a writing in the nature of a debt-note. It provided inter alia that B, should hold and enjoy a certain piece of land belonging to A for twenty years, that at the end of that period the land should be restored to A, free from all claims for payment of the principal or interest of the debt of Rs. 150; that if B planted vines, he should be at liberty to retain the land so planted after the lapse of the twenty years as a tenant at Rs. 50 per annum.
12. According to the terms of this agreement, B, continued in possession of the land till 1882, when A, treating the transaction as a mortgage, brought this suit for redemption. It was held by the Division Bench of this Court that on the construction of the document (debt-note) the contract between the parties was not a mortgage and that the defendant had a right to retain occupation at least of the vineyard, subject only to a rent of Rs 50 a year. There was no stipulation for interest, nor was there any agreement for the payment of Rs. 150 in any case. Mr. Chandurkar placed reliance upon this case to show that in this case the transaction was entered into for a consideration of Rs. 150 owed by the plaintiffs' (owners of the land) father to the defendant and the land was given to the defendant for holding and enjoying the same in consideration thereof. In that case, it was contended for the plaintiffs that the transaction being essentially a mortgage, the agreement for a tenancy of undefined duration after a lapse of 20 years was void as fettering the right of redemption necessarily incidental to a mortgage. The Division Bench of this Court as indicated above held that the initial transaction was not a mortgage.
13. Reliance was then placed by Mr. Chandurkar on the decision of the Privy Council in Nidha Sah and another v. Murli Dhar2. In that case, one Indarjit Lal, representing himself to have absolute proprietary right in certain villages, executed an instrument purporting to be a mortgage of them with possession to one Ishri Sah for a period of 14 years by which it was provided that on the expiration of the term the mortgagor "shall come in possession of the mortgaged villages without settlement of accounts, that on the expiration of the term, the mortgagee shall have no power whatever in respect of the said estate, and after the expiration of the term that mortgage-deed shall be returned to the mortgagor without his accounting for paying the mortgage money secured under the document." It appears that the deed was executed in consideration of advances which had been made to the plaintiff by the defendant, and the deed purported to be a mortgage-deed. Their Lordships of the Privy Council observed:
"This instrument, though it is called a mortgage, and though it will be convenient to follow the nomenclature used in the document itself and in the pleadings and judgments in the Courts below, is not a mortgage in any proper sense of the word. It is not a security for the payment of any money or for the performance of any engagement. No accounts were to be rendered or required. There was no provision for redemption expressed or implied. It was simply a grant of land for a fixed term free of rent in consideration of a sum made up of past and present."
Mr. Chandurkar laid emphasis on the observations that it was simply a grant of land for a fixed term free of rent in consideration of a sum made up of past and present advances.
14. The decision of the Supreme Court in Mangala Kunhamina Umma and others v. Puthiyavetttil Paru Amma3 was also relied upon. It is observed there:
"The test to be applied in determining if a document is a lease or mortgage is whether the purpose of the transaction is enjoyment of the property by the transferee or whether it is intended to secure the repayment of debt by transfer of interest in the property. The mere description of the deed as kanem kushikanam will not be decisive of the essence of the transaction. The circumstances and the conduct of the parties are always a very useful guide in ascertaining the true character and content of the transaction. 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 granter, cannot be construed as a payment of rent or michavaram to the granter."
One more decision of the Supreme Court in Fuzhakkal v. C. Bhargavi4 was also relied upon on behalf of the petitioners. Their Lordships of the Supreme Court observed there:
"In construing a document, it is always necessary tofind 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. How, the parties or even their representatives-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."It was further observed there that 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.
15. One more decision that was relied upon for the petitioners and which requires to be noted is that of Andhra Pradesh High Court in P. Sitaramamna v. P. Ankaish5. There, the parties had named the deed in question as a premium lease, there were no words indicating that the land should constitute security for the debt though future interest was mentioned and the whole of such interest was assessed at a consolidated sum and treated as part of the money advanced by the lessees to the lessors. It was held that the document was a lease and not a mortgage. These are some of the decisions relied upon on behalf of the petitioners. Mr. Dharmadhikari, the learned counsel for the respondents, cited the decision of the Supreme Court in Mahabir Gope and others v. Harbans Narain Singh and others6. The point for consideration in this decision was whether the mortgagee could in view of the terms of the mortgage deed grant leases of the land for period extending beyond the period of mortgage. It was held on the construction of the deed that mortgagee could not do so. Mr. Dharmadhikari, the learned counsel for the respondents, invited my attention to this decision with a view to point out to the observations of the Privy Council (quoted in this case) in the case reported in Bengal Indigo Company v. Roghobur Das1 where their Lordships of the Supreme Court observed:
"A zuri-peshgi lease is not a mere contract for the cultivation of the land at a rent, but is a security to the tenant for his money advanced." Speaking about the leases before them, their Lordships observed:
"the leases in question were not mere contracts for the cultivation of the land let; but that they were also intended to constitute, and did constitute, a real and valid security to the tenant for the principal sums which he had advanced, and interest thereon. The tenants' possession under them was, in part at least, not that of cultivators only, but that of creditors operating repayment of the debt due to them, by means of their security."
16. Reliance was also placed on behalf of the respondents on the decision of a Single Judge of this Court in Apaya Dundyappa v. Govind Dattatraya8. In that case 'A' executed a document in favour of 'B' under which possession of land was transferred to B on receipt of Rs. 1,000 from him. Although period of 10 years was mentioned in the deed, B was to pay Khand or rent to A and he was not entitled to bring the property to sale. B was to hand over possession to A not at the end of the term but on return of consideration to him by A sometime after the end of the term. It was held that the property was made security for payment of money and the transaction was obviously a usufructuary mortgage and not a lease. In this case, the circumstance that the executant had stated that he had obtained the amount of the document, namely, Rs. 1,000 "upon his land", was taken into consideration while holding that it was a mortgage. Secondly, the further circumstance that even though there was a period of 10 years mentioned in the document for which the transferee was to pay rent to the transferor the transferee was not to hand-over the possession of the land to the transferor at the end of that period. On the contrary, the transferee was to remain in possession till the return of consideration to him by the transferor Under these circumstances, it was held that the property was made security for payment of money and the transaction was, therefore, obviously a usufructuary mortgage and not a lease.
17. A question whether a transaction amounts to a lease or a mortgage has to be determined on the construction of a document and surrounding circumstances. The test to be applied in determining whether a document is a lease or a mortgage is whether the purpose of the transaction is enjoyment of the property by the transferee or whether it is intended to secure the repay ment of debt by transfer of interest in the property. In constrains a document, it is necessary to find out the intention of the party executing it The intention has to be gathered from the recitals in the document and surrounding circumstances. How the parties treated the transaction is also a relevant factor, though the nomenclature used or the label given by the parties or the scribe to the deed may not be decisive or conclusive In case where a document appears to be on the face of it of a composite character disclosing features of both mortgage and lease, what was the predominent intention of the parties has to be found out. In order that the transaction should be a mortgage it is necessary that the trailer of the property has to be made as a security for the debt, it is not sufficient that the consideration for the document consists of a debt or a past debt. The existence of a debt or a past debt is not decisive of the matter as would appear from the decision of the Supreme Court in Fuzhakkal Kuttappu v. C. Bhargavi. What is necessary to be seen is whether the purpose of the transaction was enjoyment of the property by the transferee or whether it was intended to secure the repayment of debt by transfer of interest in the property? Whether the transferee was to remain in possession for a fixed period irrespective of the question whether the amount paid by him was satisfied or not or whether the transferee was to remain in possession till the amount was satisfied from the income of the property would be a relevant circumstance. The latter circumstance would indicate that the transfer is in the nature of the mortgage. Whether there was right of the personal decree against the transferor a right to sell the property delivered in case the debt was not discharged are also relevant circumstances to be taken into consideration The question whether the deed was drafted by a lawyer with a legal implication of the mortgage or by a Bond Writer is also a factor to be considered in determining the true nature of the transaction.
18. In the light of this position of law, emerging from the definition of the terms 'Lease' and 'mortgage' and decisions of the Supreme Court and the High Courts referred to above, we shall now proceed to consider whether the transaction evidenced by the document (Exh. T-1) dated 11-6-1957 is a transaction in the nature of a mortgage or in the nature of the lease. The document is headed as dataimg/1979017cmhjrpmh0446a.png My attention was invited to the definition of
"Once you get a debt with security of land for its repayment, then the arrangement is a mortgage by whatever name it is called."However, it is clear from the above observations that two things have to concur for rendering a transaction a mortgage. Firstly, there must be a debt and secondly, there must be security of the land for its repayment. The passage relied upon from Mulla's Transfer of Property Act contains a statement based upon some decided cases to the effect that where a document does not show that there was a transfer of interest in the property for securing the payment of a debt but simply asked the lessee to quit the land without any payment on the part of the lessor at the expiry of the term of the lease, it would be a lease and not mortgage.
22. As I have pointed out above, there is no indication in the document that the lands were transferred for securing a debt. All that the document shows is that the transferor has received a certain amount of consideration and the transferee was to remain in enjoyment of the land for a certain definite period without there being any liability on him to maintain accounts or without there being any liability on the transferor to pay the balance amount in case the amount initially paid by the transferee was not fully satisfied. There was no right of sale of the property. The document taken as a whole, therefore, 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. At the costs of repetition, I would say that the expression "in satisfaction of the consideration" would not by itself indicate that the amount paid was a loan and that the land was transferred as security for that loan. There being no any other circumstance to point out to the fact that there was transfer of land for securing the debt the description of the document as a Patte-Khat will have to be taken into consideration as a circumstance for ascertaining what was the dominant intention of the parties. In view of this position, I am of the view that the two tenancy authorities, namely, the Sub-Divisional Officer, Akot, and the learned Member of the Maharashtra Revenue Tribunal Nagpur. clearly erred in holding that the transaction was of the nature of a mortgage.
23. The learned Counsel for the respondents, Mr. M.T. Dharmadhikari, submitted that when the two authorities below held that the transaction was in the nature of a mortgage, it was a finding of fact and does not call for interference in this Special Civil Application. This would ordinarily have been so. However, it appears from the orders of the authorities below that they have not applied their mind to the facts of the case and relevant legal position. The learned Member of the Maharashtra Revenue Tribunal disposed of the matter in controversy in a very brief para, being para. No. 4 in his order observing that,"The field was given for liquidation of an amount of Rs. 1,500 owed by Chandulal to Jaideo. Jaideo was to have cultivated the field for 9 years from 1957-58 to 1965-66. Therefore, the appellate Court held that it was not a transaction of lease but it was merely a mortgage, with possessory rights. The decision of the Sub-Divisional Officer was correct and the same is upheld."With this cryptic reasoning, the learned Member of the Maharashtra Revenue Tribunal concluded his finding that the decision of the Sub-Divisional Officer, Akot, was correct and was liable to be upheld.
24. Now, coming to the finding reached by the learned Sub-Divisional Officer, Akot, I have already set out the grounds on which he held that it was a mortgage transaction. The first ground on which the finding was based was that the respondent before him, namely, the petitioner in this petition had admitted in his cross-examination that the so called lease deeds were indeed mortgage-deeds. The learned counsel for the petitioners submitted that there was no such admission. The learned counsel for the respondents could not point out to me any such admissions from the record. The other grounds on which the finding was reached by the Sub-Divisional Officer have been stated by me above. It would appear from these grounds that the learned Sub-Divisional Officer, Akot, also did not apply his mind to the facts of the case and the position of law that has to be borne in mind while deciding the question. He relied upon a decision in Namdeo Tukaram v. Vithoba Fakira9 which appears to be a decision of the Maharashtra Revenue Tribunal, Nagpur. What is observed therein is that when the transaction is essentially one of loan and the Patta is executed by the debtor in favour of the creditor as a security for that amount. Such Patta does not create the relationship of landholder and tenant, that it amounts to a sort of mortgage although the document is styled as Patta. As I have observed above, each case depends upon its own facts and circumstances. The terms of a particular document and the surrounding circumstances have to be taken into considera-tion. No proper decision can be reached in a given case without giving proper consideration to the terms of the document, the surrounding circumstances and the intention of the parties that can be deduced therefrom. The learned Member of the Maharashtra Revenue Tribunal, Nagpur, did not give any reasons for his conclusion except observing that the "the field was given for liquidation for an amount of Rs. 1500 and that the decision of the Sub-Divisional Officer was correct". The decision of the Sub-Divisional Officer as seen above does not rest on an attempt to construe the terms of the document and to take into consideration the surrounding circumstances and decide the point in issue with reference to the relevant provisions of law. In view of this position, I think that the finding reached by the two authorities below is vitiated by an error apparent on the face of the record. That decision, therefore, will have to be set aside and in view of the foregoing discussion, it will have to be held that the transaction evidenced by document Exh. T-1 dated 11-6-1957 is a lease. The finding recorded by the learned Tahsildar (Agricultural Lands Tribunal), Akot, will have to be upheld.
25. In the result, this petition is allowed. The findings recorded by the Sub-Divisional Officer, Akot and the learned Member of the Maharashtra Revenue Tribunal, Nagpur, holding that the transaction is in the nature of a mortgage are set aside. The finding recorded by the Additional Tahsildar, Akot, i.e. Agricultural Lands Tribunal, is restored.
In the circumstances of the case, no order as to costs.