23 May 1958
Supreme Court
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MAHANT RAMDHAN PURI Vs BANKEY BIHARI SARAN & OTHERS

Case number: Appeal (civil) 239 of 1954


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PETITIONER: MAHANT RAMDHAN PURI

       Vs.

RESPONDENT: BANKEY BIHARI SARAN & OTHERS

DATE OF JUDGMENT: 23/05/1958

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. GAJENDRAGADKAR, P.B. SARKAR, A.K. BOSE, VIVIAN

CITATION:  1958 AIR  941            1959 SCR 1085

ACT:        Deed, construction of-Mortgage or  lease-Accounts-Mortgagee,        if bound to render account--Transfer of Property Act (IV  of        1882), ss. 76 and 77.

HEADNOTE: D executed a document in favour of M hypothecating an  eight annas  share in a village for the purpose of  discharging  a debt of Rs. 29,496 payable by him to Al.  In respect of this property there was a pre-existing think in favour of j for a period  of 9 years, under which D took Rs. 2,205  as  peshgi money without interest and the annual rent was fixed at  RS. 2,205.   The document provided that (i) interest at 1/2  per cent. per month was payable on the sum Of Rs. 29,496 ;  (ii) (luring  the  subsistence of the thika M would  receive  the rent from j and appropriate Rs. 1,769-12-o towards  interest and pay Rs. 435-4-o as rent to D ; (iii) after the expiry of the  thika M would take physical possession of the land  and appropriate the produce towards interest and Pay Rs. 435-4-o as rent to D; (iv) on the expiry of the thika M would  repay the  peshgi amount of Rs. 2,205 to j and this sum was  added to principal amount due ; (v) on the expiry of 15 years,  or after  the  extended  period,  D  would  repay  the   entire principal  amount;  (vi)  and  the  property  was  given  as security  for the amount payable by D. The  respondents  who are successors of D instituted a suit for redemption on  the basis that the transaction was a usufructuary mortgage,  for rendition  of accounts and for recovery of surplus  profits. The  appellant, successor of M, contended that the suit  for redemption was not maintainable as the transaction was not a mortgage  but  a lease, and that even if it was  a  mortgage there  was no statutory liability to render accounts as  the document provided that the receipts were to be taken in lieu of interest and the case was governed by S. 77, Transfer  of Property Act : Held,  that the transaction was a mortgage and not a  lease. The  guiding rule of construction is that the  intention  of the parties must be looked into and that once there is  debt with security of land for its redemption the arrangement  is a mortgage by whatever name it is called.

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Held,  further, that there was a contract between the  mort- gagor  and  the  mortgagee  within the  meaning  Of  S.  77, Transfer  of  Property Act to the effect that  the  receipts from the mortgaged property be taken in lieu of interest and consequently   the  mortgagee  was  not  liable  to   render accounts.  The stipulation 1086 in the document for payment of Rs. 435-4-0 to the  mortgagor was  a  personal obligation of the mortgagee and  he  had  a right  to take the entire receipts from the land in lieu  of interest.   Though  the rate of interest is  stated  as  per cent.  per month it was mentioned to enable the  parties  to approximately  fix  the  amount to be  appropriated  by  the mortgagee  from  and  out  of the  rent  received  from  the thikadar.   The  mere  fact of the mention of  the  rate  of interest  could not make s. 77 inapplicable in view  of  the clearly expressed intention of the parties. Pandit Bachchu Lal v. Chaudhri Syed Mohammad Mah, (1033)  37 C. W. N. 457, referred to.

JUDGMENT: CIVIL APPELATE JURISDICTION: Civil Appeal -No. 239 of 1954. Appeal from the judgment and decree dated December 12, 1950, of  the Patna High Court in Appeal from Original Decree  No. 188  of  1945 arising out of the judgment and  decree  dated December   18,  1945,  of  the  Court  of   the   Additional Subordinate  Judge, IV Class, Gaya, in Title Suit No.  4  of 1945. Purshottam Tricumdas and S. P. Varma, for the appellant. S.P. Sinha and R. C. Prasad, for respondents Nos. 1-4, 8- 10, 13 and 14. 1958.  May 23.  The Judgment of the Court was delivered by SUBBA RAO J.-This appeal by certificate tinder Art. 133  (1) (a)  of  the Constitution of India is directed  against  the judgment and decree of the High Court of Judicature at Patna setting  aside  those of the Subordinate Judge, Gaya,  in  a suit for redemption of an usufructuary mortgage. Deokinand, the common ancestor of plaintiff-respondents 1 to 4  and  proforma respondents 6 to 12,  executed  a  document dated  August 20, 1923, in favour of Mahant Tokhnarain  Puri of   Nadra,  the  predecessor-ininterest  of  defendant   1, hypothecating  eight annas milkiat share in  mauza  Lodipur, Mahimabigha, Tauze No. 4246 for the purpose of discharging a debt of Rs. 31,701 payable by him to the Mahanth.  There are conflicting  versions  in  regard  to  the  nature  of  this transaction-respondents claim it to be a usufructuary 1087 mortgage, while the appellant asserts it to be a lease.. The plaintiff-respondents instituted Title Suit No. 4 of 1945 in the Court of the Additional Subordinate Judge 1V, Gaya,  for redemption  of the said document on the basis that it was  a usufructuary mortgage, for rendition of accounts and for the recovery  of  surplus profits due to  them.   The  appellant pleaded,  inter alia, that the suit for redemption  was  not maintainable  as the document was not a mortgage but  lease, that on the assumption that it was a mortgage it would  only be  an anomalous mortgage in respect where of there  was  no statutory  liability  to render accounts to  the  plaintiff, that even if it was a usufructuary mortgage, it was governed by  the provisions of s. 77 of the Transfer of Property  Act taking the mortgage out of the purview of s. 76 (d) and  (g) of the said Act. It  is  not  necessary to particularize  other  defences  as

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nothing  turns  upon  them  in  the  appeal.   The   learned Subordinate   Judge  held  that  the  document   created   a usufructuary mortgage and not a lease and that s. 77 of  the Transfer of Property Act applied to the document exonerating the appellant from any liability to render accounts.  In the result,  the  learned Subordinate Judge gave  a  conditional decree  in  favour of respondents I to 4 for  possession  on their depositing in Court a sum of Rs. 26,839-7-0 within six months  from  the  date  of  the  decree.   The   plaintiff- respondents  preferred an appeal against that decree to  the High Court at Patna.  The High Court agreed with the learned Subordinate  Judge  that  the  document  was  a  sufructuary mortgage   but  differed  from  him  on  the   question   of applicability of s. 77 of the Transfer of Property Act.  The High  Court set aside the decree of the learned  Subordinate Judge and passed instead a preliminary decree for redemption and sale on default of payment: the decree also directed the rendition  of accounts between the parties in the  light  of the directions given in the judgment.  The second  defendant against  whom  the  decree was passed  preferred  the  above appeal. The point to be first decided is whether the transaction  is a  lease  as contended by the contesting  respondents.   The only guiding rule that can be extracted 1088 from  the cases on the subject is that the intention of  the parties  must be looked into and that ’once you get  a  debt with   security  of  land  for  its  redemption,  then   the arrangement  is  a mortgage by whatever name it  is  called’ (See  Ghosh on Mortgages, V Edn., Vol. 1, p. 102).   Let  us now  examine  the  terms of the document Exhibit  A  (3)  to ascertain  the intention of the parties.  The  document  was obviously not drafted by a trained mind.  It appears to be a confused  product of one of those village  document-writers. We  shall  read  the document,  omitting  the  recitals  not material  to  the  question raised: The first  part  of  the document recited that the executant was heavily indebted  to the other party under mortgage bonds and also otherwise  and that  common friends settled that a part of  the  properties mortgaged  should be let out in ijara with possession  at  a lower  rate of interest so that ’the increment  of  interest may be checked and the present necessities may be met ".  It was also stated in the document that in respect of the  said property there was a pre-existing thika (lease) dated  April 21,  1922,  in  favour of Munshi  Dodraj  Lal  alias  Munshi Jatadhari  Lal, for a period of 9 years and that  under  the said  lease, Rs. 2,205 was taken by the executant as  peshgi money  without interest and the rent was fixed at a  sum  of Rs. 2,205.  Then the document proceeds to state thus: " In respect of Rs. 29,496 the total sum of peshgi money, he should,  for  the  satisfaction  of  interest  thereon,  get executed  a usufructuary mortgage deed bearing a lower  rate of interest in respect of 8 annas share i. e., half share in mauza  Lodipur  Mahima Bigha, principal  with  dependencies, together      known      and     unknown      tola       and totals  ..................................for  term  of   15 years  on  fixing  Rs. 2,205 as the  annual  rental  and  by getting mortgaged there. under 8 annas proprietary interest, thikadari interest together with peshgi money and the  right to   receive  thikadari  rent  from  the   said   thikadars. Accordingly,  at  the  request  and  entreaty  of  me,   the executant, the said Mahanthji took pity at my condition  and agreed  to  my  request and got ready  to  get  usufructuary mortgage deed executed.  Therefore, 1, the executant, 1089

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"..................  have voluntarily let out in ijara  with possession the whole and entire 8 annas i. e., half of Mauza Lodipur Mahima Bigha.....for   a   peshgi   money   of   Rs. 31,701that Rs. 29,496, the peshgi money bearing interest  at 1/2  per  cent. per month and Rs. 2,205, tile  peshgi  money without interest, at an annual rental of Rs. 2,205 including revenue and cesses, for a term of 15 years, commencing  from 1331 Fasli to 1345 Fasli ............... and have put him in possession  and  occupation  of the ijiara  property  as  my representative.  It is desired that the said ijaradar should enter  into and remain in possession and occupation  of  the ijara  property and so long as the thika of’  Munshi  Dodraj Lal alias Jatadhari Lal  .................................is intact  and  in force, he should realize the rent  from  the above-named thikadars and their heirs and representatives in accordance with the stipulations made in the thika patta and kabuliat  as representative of me, the executant, and  bring it  into his possession and use, that is to say, on his  own authority he should set off Rs. 1,769-12-0 on account of the interest  on the peshgi money bearing interest mentioned  in this deed, year after year, and pay the remaining sum of Rs. 435-4-0,  the amount of rent due by the ijaradar, i.e.,  the reserved  rent,  to  me, the executant,  and  my  heirs  and representatives  The ijaradar should not make  any  default. If he does so, he and his heirs and representatives shall be held liable to pay interest at 1/2 per cent. per month." Then  the document proceeds to incorporate the terms  agreed upon by the parties, to take effect after the termination of the thikadari interest.  It is stated: "  The  ijaradar  of  this  ijara  deed  or  his  heirs  and representatives  on his own authority shall be competent  to bring  the thika property into his sir possession  as  ijara property  as  a  representative of  me,  the  executant,  in accordance  with  the  stipulations made in  the  patta  and kabuliats  after setting off Rs. 2,205 the peshgi money  due to  the thikadars by me, the executant, against  the  annual thikadari  rent.   The  said ijaradar should  make  his  own arrangement  for the cultivation of the ijara property,  get it cultivated 1090 by  others, realise the nakdi and jinsi income of the  ijara property  from  the tenants and appropriate the  produce  of both the shares thereof. 1, the executant, and my heirs  and representatives neither have nor shall have any right, claim and. demand in respect of tile produce or the income of  the ijara  property so long as the ijara deed is  intact  except getting  Rs.  435-4-0,  the  rent  after  the  payment   and deduction of interest on the peshgi money bearing interest." The  document  then allocates the liability  in  respect  of improvements  and sums spent in regard to boundary  disputes to  one or other of the parties to the document and then  it continues to state: " The peshgi money amounting to Rs. 31,701 with and  without interest  as mentioned in this ijara deed has been  realized from the ijaradar in this manner that I allowed Rs.  28,246, the  amount  of  loan principal  with  simple  and  compound interest  as per account given below after remission of  the interest  due to the ijaradar under all the  three  mortgage bonds  to be set off against the peshgi money by  getting  a note  made to that effect on the back of the  said  mortgage bonds which I allowed to remain with the ijaradar as a proof of  pavnient of the peshgi money covered by this  deed   The term  of this ijara deed with possession shall terminate  in the month of Jeth, 1345 Fasli, when 1, the executant, or  my heirs  and representatives shall repay Rs. 31,701 being  the

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peshgi  money  with and without interest mentioned  in  this deed in cash and in one lump sum to the said ijaradar or his heirs and representatives, 1 shall bring the ijara  property into my sir possession.  If I do not repay the peshgi  money with and without interest on the expiry of the term of  this ijara deed with possession, then, till the repayment of  the whole  and  entire peshgi money with and  without  interest, this ijara deed with possession shall precisely with all the stipulations  remain in force and intact. 1, the  executant, or  my heirs and representatives shall not put  forward  any sort  of  claim or demand in respect of an increase  in  the produce save and except the claim 1091 for    getting   rent   as   fixed   and    the    mentioned above...... ................................................ in  security  of  the payment of the peshgi  money  with  or without  interest  mentioned  in  this  ijara  deed  I,  the executant, have mortgaged, hypothecated, encumbered and made liable  the ijara property.  I do hereby make a  trustworthy declaration  that  till the repayment of the  entire  peshgi money  of  the ijaradar I shall not in any way  directly  or indirectly on any allegation mortgage, hypothecate. encumber and transfer the ijara property." The  gist of the aforesaid transaction may be  stated  thus: The  executant  was indebted to the other party in  a  large amount  under  mortgage bonds ’and otherwise.   Through  the intervention of common friends, with a view to salvage  some property,  the  amount due from the executant to  the  other party was fixed in the sum of Rs. 29,496 and it was  settled that half share in mauza should be given as security to  the other  party.  At the time of the execution of the  document there was an outstanding thika document in favour of a third party, whereunder the said party advanced a sum of Rs. 2,205 to the executant and agreed to pay Rs. 2,205 as annual rent. As  the other party agreed to discharge the advance paid  by the  third party to the executant, the right to collect  the rent from him was also agreed to be given as security to the other  party.  With the result, the executant  received  Rs. 31,701  under  the document, out of which  Rs.  29,496  bore interest  at  i per cent. per month and Rs.  2,205  did  not carry  interest, presumably because the other party did  not actually  pay  the amount to the  executant.   The  document divided  the  transaction into two parts.   The  first  part dealt  with  the  terms governing  the  parties  during  the subsistence  of  the  thikadari interest;  the  second  part mentioned the terms binding on the parties after the  expiry of  the said interest.  During the first period,  the  other party  would receive the annual rent of Rs. 2,205  from  the thikadars, set off Rs. 1,769-12-0 on account of interest  on the peshgi money bearing interest and pay the 139 1092 remaining  sum  of  Rs.  435-4-0 as  reserved  rent  to  the executant.   After the expiry of the thikadari  interest  in 1338 Fasli, the other party would take actual possession  by setting off Rs. 2,205 the peshgi money due to the  thikadars by the executant, against the annual thikadari rent.   After getting  possession of the ijara property, the  other  party would make arrangements for its cultivation and  appropriate the  produce towards interest, paying the executant  only  a sum  of Rs. 435-4-0 as rent.  The previous deeds  were  dis- charged and endorsements to that effect made on the back  of the  documents.  If the debt was not discharged within  1345 Fasli,  it was agreed that till the repayment of the  entire peshgi money, the ijara deed with possession would precisely

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with  all  stipulations  remain in force  and  intact.   The executant,  in express terms, undertook not to  put  forward any  sort of claim or demand in respect of the  increase  in the  produce  except and save to get rent as  fixed  in  the document. From the aforesaid summary of the recitals in the  document, the  following  facts emerge: (1) The executant  owed  large sums  of  money to the other party; (2) interest  at  i  per cent.  per  month was agreed to be paid on the  sum  of  Rs. 29,496,  i.e.,  on the entire consideration  excluding  that amount which was advanced by the thikadars to the executant; (3) the manner of discharging the debt was prescribed in the document,  namely,  that  during  the  subsistence  of   the thikadari  interest, the other party would receive the  rent from the thikadars and appropriate Rs. 1,769-12-0 on account of  interest  and pay a sum of Rs. 435-4-0 as  rent  to  the executant  and  that  after  the  expiry  of  the  thikadari interest, the other party would take physical possession  of the  land and appropriate the produce towards  interest  and pay only a sum of Rs. 435-4-0 as rent to the executant;  (4) on  the  expiry  of 15 years period or  after  the  extended period, the executant would pay the entire principal  amount to  the  other  party; (5) 8 annas share in  the  mauza  was specifically given as security for the amount payable by the executant.  Under the document, there was a relationship  of creditor and debtor between the 1093 parties  and  the  property was given as  security  for  the payment  of the amount advanced with interest.   Though  the document is described as a cowle, the parties, who have  had earlier  transactions,  must  be deemed to  have  known  the nature of the transaction they were entering into.  In clear and  express  terms the nature of the transaction  has  been stated in more than one place.  The executant, requested the other  party, in respect of the advance amount and  interest to get executed by him a usufructuary mortgage deed  bearing a  lower rate of interest in respect of the 8  annas  share. After  mentioning the various terms, the executant  restated the intention of the parties in the following terms: "In  security  of the payment of the peshgi  money  with  or without  interest  mentioned  in this  ijara  deed,  I,  the executant, have mortgaged, hypothecated, encumbered and made liable the ijara property." Therefore, whatever ambiguity there might be in the recitals that  was dispelled by the unambiguous declaration  made  by the parties that the property was given as security for  the loan and the document was executed as a mortgage.  The  gist of  the document was not a letting of the premises,  with  a rent  reserved, but a mortgage of the premises with a  small portion  of the income of it made payable to the  plaintiff. There is, therefore, no scope for the argument in this  case that  the document is a lease and not a mortgage.  We  hold, agreeing  with  the  High  Court, that  the  document  is  a mortgage and not a lease. Even  so,  it was contended by the learned Counsel  for  the appellant  that the document did not create an  usufructuary mortgage  but only an anomalous mortgage.   This  contention was  raised  as  a foundation to the argument  that  if  the document   was  an  anomalous  mortgage,  the   rights   and liabilities of the parties would be governed by the terms of the contract between them and not by the provisions of s. 76 of  the  Transfer of Property Act.  The  question  does  not really  fall  to  be  decided in  this  case.   Whether  the transaction  is  a  usufructuary mortgage  or  an  anomalous mortgage, in the circumstances of the case, there will

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1094 not  be  any  difference  in  the  matter  of  rendition  of accounts,  for  in  the  ultimate  analysis,  as  we   would presently show, the true construction of the relevant  terms of  the  document  would afford an answer  to  the  question raised.   We  shall,  therefore,  proceed  to  consider  the question on the alternative basis. If  it was a usufructuary mortgage, it is contended  by  the appellant  that he was not liable to render accounts to  the mortgagor,  as, Linder the mortgage deed, he was  authorized to take the receipts in lieu of interest within the  meaning of  s.  77 of the Transfer of Property  Act.   The  relevant provisions of the Transfer of Property Act are as follows: "Section  76: When during the continuance of  the  mortgage, the mortgagee takes possession of the mortgaged property,- (g)he  must keep clear, full and accurate accounts of  all sums  received  and spent by him as mortgagee, and,  at  any time  during  the  continuance of  the  mortgage,  give  the mortgagor,  at  his request and cost, true  copies  of  such accounts and of the vouchers by which they are supported; (h)his  receipts  from the mortgaged property,  or,  where such  property  is  personally  occupied  by  him,  a   fair occupation-rent  in respect thereof, shall, after  deducting the  expenses  properly incurred for the management  of  the property  and  the collection of rents and profits  and  the other  expenses  mentioned  in  clauses  (c)  and  (d),  and interest thereon, be debited against him in reduction of the amount  (if any) from time to time due to him on account  of interest  and, so far as such receipts exceed  any  interest due,  in  reduction or discharge of the  mortgage-money  the surplus, if any, shall be paid to the mortgagor; "  Section 77: Nothing in section 76, clauses (b), (d),  (g) and (h), applies to cases where there is a contract  between the  mortgagee and the mortgagor that the receipts from  the mortgaged  property  shall, so long as the mortgagee  is  in possession of the property, be taken in lieu of interest  on the principal money, or in lieu of such interest and defined portions of the principal." 1095 Section  76(g)  of the Transfer of Property  Act  imposes  a liability on a mortgagee to keep, full and accurate accounts supported  by  vouchers.  So too, he is  under  a  statutory liability  under cl.  ’h’ to debit the nett receipts of  the mortgaged  property  in deduction of the amount due  to  him from  time  to time on account of interest  and  where  such receipts exceed any interest due, in reduction and discharge of the mortgagemoney and to pay the surplus, if any, to  the mortgagor.   Therefore,  every mortgagee  in  possession  is bound  to  keep  clear, full and accurate  accounts  and  to render   the  accounts  to  the  mortgagor  in  the   manner prescribed  in cl.  ’h’.  But s. 77 enacts an  exception  to the  mortgagee’s liability under cls. (g) and (h) of s.  76. Under  that section (s. 77), if there is a contract  between the  mortgagor  and the mortgagee, whereunder it  is  agreed that the receipts of the mortgaged property should, so  long as the mortgagee is in possession of the property, be  taken in lieu of interest and a defined portion of the  principal, the mortgagee is freed from the statutory liability to  keep accounts  or  to  render accounts to the  mortgagor  in  the manner  prescribed  under cls. (g) and (h) of s. 76  of  the Act.   This is so because, the receipts are set off  against the   interest,  and  there  is  nothing  to  account   for. Therefore, to insist upon the mortgagee to keep accounts  or render  accounts to the mortgagor would be an  empty  forma- lity.   The essential condition for the application of  this

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section is that the receipts of the property should be taken in  lieu  of interest or in lieu of interest and  a  defined portion  of  the principal.  The contention of  the  learned counsel  for  the respondents is that  unless  the  contract authorizes the mortgagee to take the entire receipts in lieu of  interest or in lieu of interest and defined portions  of principal,  this section cannot be invoked; for it  is  said that the principle behind the section is that one is set off against  the other, with the result, there is nothing to  be accounted  for,  whereas if only a part of the  receipts  is agreed  to  be  paid towards interest or  in  lieu  of  such interest and defined portions of the"-principal, there would be  surplus in the hands of the mortgagee, which would  have to be 1096 accounted  for.   On  the  basis  of  that  distinction,  an argument  is advanced to the effect that, as in the  present case, the mortgagee had to pay a sum of ]Is. 435-4-0 to  the mortgagor, he was not authorized by the mortgagor tinder the agreement  to take the entire receipts in lieu of  interest, etc.,  within  the  meaning  of s. 77  of  the  Transfer  of Property  Act.  To put it differently, the argument is  that out  of the receipts from the mortgaged property  a  portion was  paid to the mortgagor and the mortgagee was  authorized to take only the balance in lieu of interest and, therefore, there  was  no  contract  between  the  mortgagor  and   the mortgagee for the latter taking the entire receipts in  lieu of interest.  We find it difficult to accept this  argument. Under Exhibit A(3), the mortgagee undertook an unconditional obligation  to  pay a sum of Rs. 435-4-0 in respect  of  the property mortgaged to him.  This obligation was not made  to depend upon the receipts from the property in the possession of the mortgagee.  Whether there was yield from the land  or not, he had to make the payment to the mortgagor.  Though he had to pay the rent as a consideration for his enjoyment  of the  land as a mortgagee, his liability did not depend  upon the  receipts  from the land-he had to pay, receipts  or  no receipts.   His  liability  was also  not  confined  to  the receipts, for he was under a personal obligation to pay  the amount  to the mortgagor.  On the other hand, the  mortgagee was expressly authorized to take the entire income from  the land  and  appropriate  the same towards  interest  and  the mortgagor  agreed not to put forward any claim or demand  in respect of any increase in the produce.  Shortly stated, the mortgagee was under a personal obligation to pay Rs. 435-4-0 to the mortgagor and had a right to take the entire receipts from  the  land  in lieu of interest.  It  is  not  a  case, therefore,  where receipts from the mortgaged  property  are divided  between mortgagor and mortgagee, but one where  the mortgagee  pays  a  specified amount to  the  mortgagor  and appropriates  the entire receipts in lieu of interest.   We, therefore, hold that, under the mortgage deed, Exhibit A(3), there is a contract between the 1097 mortgagee  and the mortgagor within the meaning of s. 77  of the  Transfer  of  Property  Act, to  the  effect  that  the receipts from the mortgaged property should be taken in lieu of interest. Relying  upon  the  judgment of the High  Court,  a  further attempt was made by the learned Counsel for the  respondents to contend that the mention of a specified rate of  interest in  the  document is indicative of the fact that  under  the document the mortgagee, would have to take only such part of the  nett receipts sufficient to discharge the interest  and credit the balance to the mortgagor.  The mere mention of  a

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rate  of interest does not necessarily lead to  the  conclu- sion.  The rate of interest may be stipulated for estimating the amount payable towards interest so that the parties  may visualize whether the nett receipts could reasonably be  set off  against the interest.  The rate may also be  given  for other reasons. The  Judicial Committee, in Pandit Bachchu Lal  v.  Chaudhri Syed  Mohammad Mah (1), held that notwithstanding  the  fact that  a  particular rate of interest was  mentioned  in  the mortgage deed, there was a contract within the meaning of s. 77  of  the Transfer of Property Act.  It was a  case  of  a mortgage  with possession and a particular rate of  interest was  mentioned in the mortgage deed.  There was a  provision for  repayment of the principal either in whole or  in  part before the stipulated period, but it was otherwise  provided that  the mortgagee should appropriate the  surplus  profits towards  interest,  he having no claim to interest  and  the mortgagors  having  no  claim to  the  profits.   The  Privy Council  held, on a construction of the mortgage deed,  that the said deed contained a contract within the meaning of  s. 77 of the Transfer of Property Act, 1882. In  Exhibit A-3, though the rate of interest is stated at  i per  cent. per month, it was obviously mentioned  to  enable the   parties  to  approximately  fix  the  amount   to   be appropriated  by  the  mortgagee from and out  of  the  rent received  from  the thikadar.  No doubt, the  same  rate  of interest is also mentioned when the (1)  (1933) 37 C.W.N. 457. 1098 parties  are dealing with their rights after the  expiry  of the thikadari interest, but in more than one place they have stated  in  clear and unambiguous terms that  the  mortgagee could appropriate the produce towards interest and that  the mortgagor would not put forward any sort of claim or  demand in  respect of any increase in the produce.  In view of  the clearly  expressed intention of the parties, we cannot  hold from  the mere fact that the rate of interest  is  mentioned that  the document does not come under the purview of s.  77 of the Transfer of Property Act.  We hold that s. 77 of  the Transfer  of  Property  Act  applies  to  the  document  and therefore the mortgagee is not liable to render any  account to the mortgagor. On  the footing that the mortgage is an anomalous  mortgage, we  arrive at the same result.  The learned Counsel for  the appellant  contends  that if the mortgage  is  an  anomalous mortgage, the parties are only governed by the provisions of s.  98  of  the  Transfer of Property Act  and  not  by  the provisions of s. 77 of the Act.  Section 98 says: "  In  the  case of an anomalous mortgage,  the  rights  and liabilities  of  the parties shall be  determined  by  their contract  as evidenced in the mortgage-deed, and, so far  as such contract does not extend, by local usage. The question whether this section excludes the operation  of other  relevant provisions of the Act, including s.77,  need not be considered in this case, for, whether s.77   applies, as the learned Counsel for the respondents contends, or  the terms  of  the  contract  would govern  the  rights  of  the parties,  as the learned counsel for the  appellant  argues, the result would be the same for the question to be  decided is  whether under the terms of the mortgage,  the  mortgagee has  the  right to appropriate the entire nett  receipts  in lieu  of  interest,.  We have already held that  in  Exhibit A(3)  not  only  there  is such a recital  but  there  is  a specific term whereunder the mortgagor expressly agreed  not to claim any produce received by the mortgagee.  Whether  s.

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77 applies or not, under the express terms of the contract, 1099 the  appellant  is  not liable to render  accounts  for  the excess receipts. No  other  point is raised before us.  In  the  result,  the decree  of  the  High Court is set aside  and  that  of  the Subordinate Judge is restored.  The appellant will have  his costs throughout. Appeal allowed.