Kesava Pillai vs Narayana Pillai

M. Madhavan Nair, J.—Heard the appellant''s counsel. The respondent-mortgagor applied to have a possessory mortgage for Rs. 646.62 and 397 parahs and 9 edangazbis of paddy, discharged as per Section 11 of the Kerala Agriculturists Debt Relief Act, 1958. In the application he commuted the paddy portion of the mortgage amount at the rate that prevailed on the date of the mortgage and fixed the quantum of the mortgage-debt on that basis. The appellant objected to the same and urged that the commutation shall be at the rate prevailing on the date of the application. The courts below allowed the respondent''s plea on the strength of Explanation II to Section 2(c) of the Act. Hence this Second Appeal by the mortgagee. The Learned Counsel for the appellant urges that in Ouseph v. Thomman (1954 K. L. T. 463) it has been laid down that in cases of redemption of mortgages the paddy consideration of the mortgage has to be commuted as on the day when redemption is actually sought by the mortgagor, and that that rule should be applied in this case also. I cannot accept this contention. That ruling only laid down the manner in which debts in kind may be commuted for purposes of discharge through court when there is no statutory provision therefor. It has no application to a case where a statute has laid down the particular mode of commutation as in Explanation II to Section 2(c) of the Kerala Agriculturists Debt Relief Act, 1958. The said Explanation reads:

Where the debt is a liability in kind, the value of the commodity shall be commuted at the market rate prevailing on the date on which the debt was incurred.

The Learned Counsel for the appellant then contended that the debt in this case must be deemed to have become payable only when redemption or discharge of the mortgage is sought by the mortgagor, and that the commutation should be worked out as on that date only. I cannot agree with this contention either. The expression used in the Explanation is "the date on which the debt is incurred". The debt in the mortgage transaction was incurred on the date when the mortgage was struck between the parties. The mortgage by the very definition is a transaction for securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. A debt is therefore an essential element in a mortgage transaction. There is no case that the instant mortgage was for purpose of securing any future debt or the future performance of any pecuniary engagement between the parties. The consideration for the mortgage has been accounted for on the date of the mortgage itself and therefore the debt in the mortgage has been incurred on the date of the mortgage itself. If so by the Explanation quoted above it follows that the commutation in this case has to be at the rate that prevailed on the date of the mortgage itself. The Learned Counsel for the petitioner lastly contended that the consideration of a mortgage is not a debt within the meaning of the Kerala Agriculturists Debt Relief Act, 1958. Section 2(c) of the Act defines:

''debt'' means any liability in cash or kind, whether secured or unsecured, due from or incurred by an agriculturist on or before the commencement of this Act, whether payable under a contract or under a decree or order of any court, or otherwise; and includes.

As the mortgage is essentially a transaction for securing a debt or a pecuniary liability the consideration thereof is well within this definition of ''debt'' in the Debt Relief Act. It follows therefore that the concurrent orders of the courts below in this case are correct. This Second Appeal has no substance. It is rejected.