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PETITIONER: PUZHAKKAL KUTTAPPU

       Vs.

RESPONDENT: C. BHARGAVI AND OTHERS

DATE OF JUDGMENT22/09/1976

BENCH: GOSWAMI, P.K. 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]

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           (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

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       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

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       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

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       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-

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       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