Kharag Narayan vs Dwarka Prashad Singh

Facts.--The defendants first party executed a mortgage in favour of one Holloway in the year 1897. They also executed a lease in his favour in respect of certain Khudkhasht lands of theirs. Defendant No. 13 was the successor in title of Holloway. The defendants first party executed another mortgage in the year 1909 for discharging a mortgage of the year 1902. The mortgagees filed a suit on the mortgage of 1909 impleading the defendant''s first party and other persons who were either prior mortgagees or purchasers or subsequent mortgagees. The trial Court dismissed the claim.

Das, J.

[His Lordship stated facts and dealt with certain matters not material for our report and proceeded.]

The next question is whether defendant No. 13 has occupancy rights in 220 bighas, 9 kathas and 13 1/4 dhurs of land comprised in the mortgage security. The claim of defendant No. 13 arises in this way. One Holloway advanced Rs. 15,400 to the defendants first party on the 10th October 1897. As security for the money advanced, the defendants first party executed a mortgage bond in his favour in respect of certain properties specified therein. They also executed a lease in respect of 220 bigbas, 9 kathas, 13 1/4 dhurs, of khudkbast land belonging to the defendants first party. Defendant No. 13 represents the interest of Holloway. The patta executed by the defendants first party in favour of Holloway makes it perfectly clear that the lease was executed as a security for the loan advanced. The lease was for twenty years, from 13051324, for the purpose of cultivating indigo; but Exhibit F, the patta, shows that this lease was granted as a security for the loan of Rs. 15,400 advanced by Holloway to the defendants first party and that the object of the lease was not to create the relationship of landlord and tenant but to provide a security as between debtor and creditor. In my opinion Exhibit D. the mortgage deed, Exhibit E, the ekrarnama, and Exhibit F, the lease, must be taken and read as one transaction; and, when so read, there is no difficulty in coming to the conclusion that the transaction was a transaction between debtor and creditor, and not a transaction between lessor and lessee.

That being the governing intention between the parties to the contract, the question arises whether the lessee entered into possession in the capacity of mortgagee or in the capacity of raiyat Mr. Sultan Ahmed on behalf of defendant No. 13 has contended before us that Holloway was already in possession as a jotedar. There is no evidence in support of this argument except the stray statements of Bhairo Dayal and Bansi Rai, two of the witneses examined on behalf of defendant No. 13. There is, however, no documentary evidence in support of this evidence and I am not prepared to act upon it. Mr. Sultan Ahmed relied upon the case of Ramdhari Singh v. M.H. Mackenzie 10 C.W.N. 351 in support of his argument that a raiyat by taking a zarpeshgi lease of land of which he was then put in possession does not divest himself of his right to acquire a right of occupancy. That decision has not been followed in the subsequent decisions of the Calcutta High Court and of this Court, and I am not prepared to follow it. It was laid down by Chapman and Atkinson., JJ., in Sheo Sahay Misir v. Bajo Singh [1917] P.H.C.C. 271 that the "primary object of the zarpeshgi Jease is not to create the relationship of landlord and tenant but to provide a security as between debtor and creditor. That being the governing intention between the parties to the contract it is clear that the zarpeshgidars entered into possession in the capacity of mortgagees and not as raiyats; and consequently they are not entitled to claim occupancy rights although there was a letting of the land in the sense that they were required by the terms of the zarpeshgi lease to cultivate the lands and to pay merely a nominal annual rent." The leading case on the subject is that of Bengal Indigo Co. v. Raghobur Das [1897] 24 Cal. 272 which lays down that where the leases are not mere contracts for the cultivation of the land but are intended to constitute and do constitute a real and valid security to the tenant for the principal sums which he had advanced, and interest thereon, the tenant''s possession under the documents is in part at least not that of a cultivator only but that of a creditor operating repayment of the debt due to them by means of their security. The question to my mind, is to see whether the relationship between Holloway and the defendants first party was that of lessor and lessee or that of mortgagor and mortgagee. As soon as we find a debt and a security for the debt, the transaction is one of mortgage, by whatever name it may be called by the parties; and once you get a mortgage, there is no difficulty in working out the rights of the parties. As Lord Macnaughten pointed out in Noakes & Co. Ltd. v. Rice [1902] A.C. 24, "Redemption is of the very nature and essence of a mortgage, as mortgages are regarded in equity. It is inherent in the thing itself. And it is, I think, as firmly settled now as it ever was in former times that equity will not permit any device or contrivance designed or calculated to prevent or impede redemption." Lord Macnaughten added that it followed as a necessary consequence that when the money secured by a mortgage of land was paid off, the land itself and the owner of the land in the use and enjoyment of it must be as free and unfettered to all intents and purposes as if the land had never been made the subject of the security. In my opinion it is impossible to hold that defendant No. 1 has acquired any rights of occupancy in these lands.

The last question is as to interest. The interest in the bond is 24 per cent, per annum with yearly rests. No evidence was adduced by the plaintiffs to prove that this was the market rate of interest on a transaction of this nature. That being so, the interest must be calculated at the market rate of interest. We think that the plaintiffs are entitled to interest at the rate of 12 per cent, per annum with yearly rests.

There are various defendants who have various rights in these properties which have not been deter-mind by the learned Subordinate Judge. Before this case is finally disposed of, the rights of these parties must be determined.

We allow the appeal, set aside the judgment of the Court below and remand the case to the learned Subordinate Judge for disposal of those issues which have not been disposed of by him and to pass a decree in accordance with this judgment. The appellants are entitled to the costs of this appeal from defendant No. 13. So far as the costs in the Court below are concerned, they are entitled to them from defendants first party and are entitled to add them to their mortgage security.

Ross, J.

I agree.