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CASE NO.: Appeal (civil) 5392  of  1997

PETITIONER: NARAYANARU THRIVIKRANARU

       Vs.

RESPONDENT: V.MADHAVAN POTTY AND OTHERS

DATE OF JUDGMENT:       10/02/2000

BENCH: D.P. Wadhwa &  Syed Shah Mohammad Quadri

JUDGMENT:

Thomas J. L...I...T.......T.......T.......T.......T.......T.......T..J

   Appellant won the cause at all the tiers in the judicial hierarchy  during  trial stage but the fruits of the  decree which  he earned thereby are still eluding him.  The  decree is practically rendered nonest during execution stage as the High  Court  upheld  t  he  contentions  of  the  contesting respondents  in  disregard  of the  contrary  findings  made during trial stage.  The order so passed by a learned single judge of the High Court of Kerala is now being challenged in this appeal by special leave.

   Facts,  spread  over to a wide range of period  covering more  than half a century by now, can be stated as  follows: In  1943  a  document (Ex.  P1) was executed styling  it  as "Otti  and Kuzhikanam" in favour of the first respondent  in respect  of  the suit propert es.  In fact those  properties were  outstanding  on lease with the respondent  before  the execution  of Ex.P1.  A suit for redemption of mortgage  was filed  by  the appellant, claiming to be entitled to  redeem the mortgage, on the premise that Ex.  P1 was a us fructuary mortgage.   First respondent, after admitting the  execution of  Ex.P1, contended that it was not meant to terminate  the earlier  lease  arrangement and hence he continued to  be  a lessee  of  the  property notwithstanding the  execution  of Ex.P1.   The t ial court found that first respondent was  in possession  of the land as mortgagee and not as lessee.   On the  strength  of  such a finding the trial court  passed  a decree  for redemption of the mortgage on condition that the mortgage  amount  and value of the i provements effected  by the first respondent on the property should be paid to him.

   First respondent filed a regular appeal against the said judgment  before  the  sub-Court and that court  upheld  the decree  passed  by the trial court.  He then filed a  second appeal before the High Court of Kerala.  As per the judgment dated 12.1.1967 the Hi gh Court dismissed the second appeal. Thus,  the  decree  for redemption of  the  mortgage  became final.

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   It  was  in  the second round of  the  litigation,  when appellant moved for execution of the decree after depositing the  entire amount due thereunder that he had to face harder hurdles.   The  Kerala Land Reforms Act (for short the  Act) came  into force in the m eanwhile which conferred fixity of tenure  on tenants of agricultural lands.  First  respondent raised  a  contention, in the execution court, that he is  a tenant  on the land and is hence entitled to the  protection envisaged  in the Act.  The execution court eferred the said question  to the Land Tribunal as provided in Section 125(3) of  the  Act  for a decision on the aforesaid claim  of  the first  respondent.  The Land Tribunal answered the reference against  the  first respondent and forwarded the records  of the  case  back to the execution court.  On the strength  of the  finding so recorded by the Land Tribunal the  execution court  directed delivery of the suit property to be given to the appellant as per its order dated 30.11.1995.

   First  respondent filed a revision before the High Court challenging  the  said  order of the executing  court.   The revision  was  allowed by the High Court as per order  dated 12.1.1996  rendered by a learned single judge who set  aside the order of the executio n court, which is being challenged now.

   We  heard the arguments of Mr.  C.S.Vaidyanathan, Senior Advocate  for  the  appellant and  Mr.   P.   Krishnamurthy, Senior  Advocate for the first respondent.  Another  written submission  has  been  put in by the advocate on  behalf  of respondent  Nos.  3 and 4, thoug h they did not contest  the case at any earlier stage.  All of them were duly considered by us.

   Learned  single judge, in the impugned order, held  that the  earlier lease (which existed prior to Ex.P1) in  favour of  the  first  respondent did not come to  an  end  despite execution  of  Ex.P1.  The following are the main  reasoning adopted by the learned sing le judge:

   "There is nothing on record to show that they had agreed to  surrender tenancy right on the execution of the mortgage deed.  Lease was a valuable right.  In the case of mortgage, mortgagor  was  having  the right to  redeem  the  mortgage. There  is  nothing on ecord to show that the lessees in  the instant case were conscious of the possibility of redemption of  the  mortgage  by  the   mortgagor  when  they  executed Ottikuzhikanam  deed  in 1943.  So also, there is  no  clear statement  in  the Ottikuzhikanam deed of 1943 t at  parties wanted  to terminate their earlier relationship of  landlord and  tenant.  The fact that parties were aware that for  the termination of leasehold right a document to that effect has to  be  executed  is evident by the  execution  of  document No.1159  o  1943  when they wanted  to  terminate  leasehold interest  in respect of 53 cents of properties comprised  in Sy.No.43.   In  such  a situation, if they had  intended  to terminate  leasehold  interest  in  respect  of  the  decree schedule properties, there should have een a release deed of leasehold  interest or should have made necessary statements in  the Ottikuzhikanam deed expressing their clear intention to  give an end to the lease arrangement.  In the absence of such  clear statements in the Ottikuzhikanam deed, I ind  it difficult to hold that the leasehold interest was terminated by the execution of document No.1158 of 1943."

   It  was  not open to the High Court to consider at  this

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stage,  whether Ex.P1 did not come into force or whether the earlier  lease survived the transaction covered by the  said document.  Those were the points hotly disputed during trial stage  of  the same li tigation and definite  findings  have been  made thereon by the trial court.  Those findings  were against  the first respondent which were confirmed in appeal and  they  have become final.  However, learned counsel  for the first respondent contended that Secti n 12(1) of the Act enabled    the   parties   to    re-agitate   such    issues notwithstanding  any finding made in the judgment.  We will, therefore  examine the said provision.  Section 12(1) of the Act reads thus:

   "12.   Right  to prove real nature of transaction.-  (1) Notwithstanding  anything in the Indian Evidence Act,  1872, or  in any other law for the time being in force, or in  any judgement,  decree or order of court, any person  interested in  any land may prove hat a transaction purporting to be  a mortgage,  otti karipanayam, panayam, nerpanayam or  licence of  that land is in substance a transaction by way of kanam, kanam-kuzhikanam,  Kuzhikanam,  verumpattam or other  lease, under which the transferee is entitled t fixity of tenure in accordance  with  the  provisions of section 13 and  to  the other rights of a tenant under this Act."

   It  enables  any person interested in the land to  prove that  a  transaction  purporting  to be a  mortgage  is,  in substance,  a transaction by way of lease.  The non-obstante limb  of the Section insulates a transaction which  purports to  be a mortgage, from any other law or judgment or decree. What is saved thereby is "the transaction purporting to be a mortgage." But that saving clause is not a carte blanche for ignoring  the transaction altogether.  Section 12 of the Act does  not permit the court to superse e the findings made by the  Court  to the effect that the earlier lease came to  an end  with the execution of the transaction which purports to be  a mortgage.  In other words, what section 12 entitles  a person  is  to prove the real substance of the  transacti  n covered  by  Ex.P1,  albeit  the  ostensible  tenor  of  the document.   Hence  the  finding  of the High  Court  in  the impugned order cannot be salvaged with the aid of Section 12 of the Act.

   Learned  counsel for the first respondent then contended that  even  apart  from the reasoning made in  the  impugned order  first respondent can establish that Ex.P1 is really a lease.   On  the  language of Section 12 of the  Act  it  is possible  to  concede such a right to the first  respondent, but  the  question is whether first respondent succeeded  in establishing that the transaction covered by Ex.P1 is really a  lease  or that first respondent is a tenant of  the  suit properties.

   A  "tenant"  is defined in Section 2(57) of the  Act  as including  an "Ottikuzhikanamdar." This item was inserted in the  inclusive definition of "tenant" as per Act 35 of 1969. It  means  that a person holding land  under  Ottikuzhikanam arrangement  would be a tenant.  Now it is necessary to know what  is  meant  by  "Ottikuzhikanam."  That  expression  is defined  in Section 2 (39A) as under:  39A.   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

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not include a mortgage within the meaning of the Trans er of Property Act, 1882."

   The above definition recognises that there are two types of "Ottikuzhikanam." One type would be a mortgage within the meaning  of Transfer of Property Act.  It is clear that  the said  type of "Ottikuzhikanam" is specifically excluded from the  ambit  of th definition.  It is the other  category  of non-mortgage  "Ottikuzhikanam" alone has been brought within the purview of the definition.  So, even if the nomenclature of  the  transaction is "Ottikuzhikanam" it should not be  a mortgage, if the transaction is t fall within the purview of the definition.

   In  this  context  it is pertinent to  remind  that  the finding  entered by all the courts during the trial stage in this  case  is that Ex.P1 is a mortgage.  Such a finding  is binding  on  the parties to this lis as a normal  rule,  but Section 12 of the Act enable d the first respondent to prove that Ex.P1, in substance, is not a mortgage even in spite of such   a  finding.   However,   first  respondent  has  only endeavoured  to  show that the earlier lease survived  Ex.P1 and not that Ex.P1 is not a mortgage.

   One  question  is to be answered, if the parties  wanted the  earlier relationship to continue;  Why should they have changed  from lease to "Otti and Kuzhikanam" in 1943 by  the execution  of Ex.P1?  We did not get any satisfactory answer to  the said question.  In this context we cannot forget the fact  that  during the said period of 1943 a lease of  land, whether  it  was  agricultural  land or  otherwise,  had  no special  protection  either  legislative  or  otherwise.   A usufructuary  mortgage  was during then comparative  y  more durable  than  a lease since a mortgagee could  continue  in possession  until the mortgage debt was paid off.  A lessee, during  those  period  was  vulnerable to  eviction  by  the landlord  at  any time.  A tenancy right  acquired  superior position  vis-Ã -vis he usufructuary mortgage only many years later.  Thus usufructuary mortgagee was in a better position than  a  lessee during 1943.  Hence when parties decided  to change  from lease to "Ottikuzhikanam" in 1943 it must  have been because they definitely meant or the change.

   The  mortgage  amount stipulated in Ex.P1 was  Rs.850/-. Learned  single judge of the High Court highlighted the cash payment  made  on  the  date of execution  of  the  deed  as Rs.100/-  and  observed  that  "the amount  so  advanced  is negligible  when  compared  with th e value  of  1.78  acres covered by the document." The said reasoning is very tenuous as  the actual mortgage amount reserved in the document  was Rs.850/- out of which the mortgagor had acknowledged receipt of Rs.750/- which was payable by him to the mortga ee by way of value of improvements.  The said amount of Rs.850/- could not  be  described as negligible by any standard during  the year  1943 in respect of an agricultural land comprising  of 1.78 acres situated in a rural area.

   Another feature to be noticed is that in Ex.P1 there was no  stipulation to pay rent to the landowner.  The mortgagee was  permitted  to utilize the property on the  strength  of Rs.850/- which the mortgagor had acknowledged to be the debt due  from  him  to the mortgagee.  This feature  has  to  be juxtaposed  with the recital in the earlier lease deed  that the lessee should pay rent to the landlord.

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   Thus,  the recital in Ex.P1 including its  nomenclature, and  the amount of mortgage debt are poignantly in favour of holding the transaction to be a mortgage and not a lessee.

   Hence, the finding made by the Court in this case during the  trial stage, which is binding on the parties, cannot be disturbed.  The decree holder is, therefore, entitled to the fruits of his hard-earned decree.  The impugned order of the High  Court  is li able to be set aside.  In the  result  we allow  this appeal and set aside the order of the High Court now  under challenge and the revision petition filed by  the first  respondent in the High Court would, therefore,  stand dismissed.

CHEERANTHOODIKA AHMMEDKUTTY AND ANR. VS PARAMBUR MARIAKUTTY UMMA AND OTHERS