Krishnan Padamanabhan vs K. Krishna Pillai

Varadaraja Iyengar, J.—This second appeal is by the 1st Defendant and raises a question of the applicability of the Holdings (Stay of Execution Proceedings) Act VIII of 1950.

The decree in the case was for redemption of Ext. I Otti deed dated 23-2-1119. The 1st Defendant raised the question that Ext. I must bo taken to be a Kanapattom within the meaning of the Explanation to Section 2 of the Act or alternatively it must be taken to create a leasehold right with premium, in either of which case his possession will stand protected under the Act. Both the courts below have found that Ext. A is neither a Kanom nor a lease with premium -and disallowed the 1st Defendant''s objection, to -delivery, and hence this second appeal.

The property had been outstanding on Kanapattom under Ext. Ill, dated 19-8-1074 in the first instance. Ext. Ill was subsequently renewed by Ext. IT, dated 2-12-10941, Ext. II being the Ethirdeed. The Defendant had purchased the rights of the tenant under Ext. II in court auction and had subsequently ''obtained from the Jenmi- Ext. I Otti deed in question. Now Ext. I is executed for a consideration of B. Rs. 84 which consisted Qf the original consideration under Ext. "II as well as the value of improvements effected on the property till Ext. I date.

As the income from the property more than covered the interest due to the 1st Defendant upon this sum of Rs. 84 provision was made for payment of the balance of the income after setting off the interest in michavarom by the mortgagee to the mortgagor. There"was also provision for payment of Onakazhacha and other perquisites by the mortgagee to the mortgagor. Ext. I reserves a term of 6 years, which may however be ignored if the michavaram or other dues were defaulted.

Learned Counsel for the 1st Defendant in the first part of his argument laid stress upon two circumstances. Firstly that Ext. II though styled as a Kanom was referred to in Ext. I as as an Otti and that therefore the nomenclature of Ext. I as Otti was unimportant as between the parties .and there could be nO difficulty in construing it as a Kanom. Secondly that the michavaram payable to the mortgagor under Ext. I arrangement amounting to the considerable sum of Rs. 84 per annum was specially secured by pledge of separate property of , the mortgagee.

This meant that a creditor debtor relationship which was characteristic of a mortgage was practically absent and it was rather the other way about, under Ext. I and it was possible to say that the lease aspect was more predominant"; than the mortgage aspect. Learned Counsel saidj that the absence of a term of 12 years or more in Ext. I did not necessarily preclude Ext. I from'' being a Kanom transaction.

Now this question of a Kanom or otherwise for purpose of the Holdings (Stay of Execution Proceedings) Act has already come up for definite consideration before this Court in the Full Bench decision in Sanku Krishnan v. Hari Prabhu Govinda Prabhu, 1952 Ker LT 224; (AIR 1952 Ker 333) (A). Two Important aspects of a Kanom were laid down in that case. They were (1) that the income from the property will generally have no proposition to the interest which tho Kanom tenant has to realise for the amount advanced by him a long .pattom being usually fixed as payable to. the jenmi, and (ii) the right of the tenant to bo in possession of the property for a period of not less than 12 years.

And if these main features were available, the nomenclature of the document would not be given much importance. Applying theso tests In this case we see that the michavarom of 84 rupees per annum is equivalent to the mortgage amount itself, that is to say, there is rather a very high pattom and not the low pattom laid down as a test of Kanom by tho Pull Bench decision. Ext. I does not also stand the test as to the 13 years term laid down by the Full Bench decision.

One other test laid down in a later case reported in Thomman Kunju Naina v. State, 8 DLR 227 TO : AIR 1953 Ker 225) (B), is that there must be a covenant for renewal or payment of renewal fees for the transaction to be a Kanom for purpose of the Act. Ext. I does not stand this test also. Finally one may well ask why when the property was outstanding on Kanapattom demise Ext. II, the parties went out of the way to have the renewal as a Otti under Ext.I The parties apparently meant what they said. I hold therefore that there is n0 substance in the argument that the transaction must be taken to b" a Kanom within the meaning of the Act.

The next question is whether Ext. I could be taken to be a lease with premium. In toe case of a lease with premium, the premium is the, price paid or promised in consideration of; ttjtj demise. But if the indebtedness continues dew* pite the grant of the lease then the transaction is in effect a mortgage. So it was held in Nidha Sah v. Murli Dhar, ILR 25 All 115 (PC) (C), that a grant of land rent-free for fourteen years in consideration of a debt to the grantee at the time of execution was not a mortgage, as no accounts were to be taken and the land was not security for the debt.

On the other hand in Venkateshwara v. Kesva Shetty, ILR 2 Mad 187 (D), the Plaintiff borrowed Rs. 1400 from the Defendant and leased him a piece of land and a warehouse. It was agreed that the rent of the warehouse should be Rs. 16-12-0 per mensem and that the Defendant should retain Rs. 14 as interest on the advance and pay Rs. 2-12-0 as rent to the Plaintiff. The warehouse was destroyed by Are after four years and the Defendant ceased to pay Rs. 2-12-0 as rent.

On the Plaintiff suing to recover possession for non-payment of rent, it was held dismissing the suit that the Defendant was entitled to possession as mortgagee, on the footing that the gist of the agreement was not a letting of the premises with a rent reserved, but a usufructuary mortgage of the premises with a certain small portion of the income of it made payable to the Plaintiff. As observed by Ghosh on mortgages once you get a debt with the security of land for its repayment then the arrangement is a mortgage by whatever name it is called.

Where however a lease does not intend to create the relationship of debtor and creditor and reserves no .right of redemption to the lessor, but simply asks the lessee to quit the land without any payment on the part of the lessor at the expiry of the term of the lease, it is a lease and not a mortgage. See AIR 1937 146 (Oudh) .

On the facts here the amount of Rs. 64 which forms the consideration under Ext. I is charged on the property and is repayable at time of redemption and also bears interest. There is thus a definite indication of a usufructuary mortgage and not a lease with premium.

The decisions of the courts below are therefore right and the second appeal is accordingly dismissed with costs.