Mathura Pandey vs Chandrika Rai and Others

Dawson-Miller, C.J.—The only question for decision in these appeals is whether certain documents which have been referred to as rehan deeds and which are so described therein are mortgages or leases. The predecessor-in-interest of the plaintiffs appears to have executed three such documents in favour of the predecessor-in-interest of the defendants whereby certain land was put into their possession in consideration of a certain advance, the conditions being, generally, that the proceeds of the property should be taken by the lender in lieu of interest, that a certain rent should also be paid to the borrower, that the property should be redeemed at a date roughly about eighteen months after the execution of the deed with power to redeem in Jeth of any following year upon payment of the principal sum advanced. There was a further stipulation that in the event of the rent not being paid it should carry interest at 2 per cent. per mensem and should be set-off against the debt when the final settlement came to be made at the end of Jeth in any year. There was a further provision as to what was to happen in the case of dispossession of the rehandars, it being provided that in such a case the lender should be competent to realise the entire amount with interest at 2 per cent. from the date of dispossession. Finally the deed contains a provision to this effect. "In security of this debt we mortgaged the rehan property and we shall not encumber it until re-payment of the rehan money; we have, therefore, executed this rehan deed so that it may be of use when required." Both the Trial Court and the learned Subordinate Judge on appeal decided that this document was a mortgage and not a mere lease and that, therefore, the mortgagors were entitled to redeem, as they claimed in the plaint in the suit, upon a deposit of the amount advanced.

From this decision of the Subordinate Judge the present appeals have been brought. It is contended as was contended in the Court below that the document is really a lease and not a mortgage. I do not think that any general rules can be laid down covering all such cases. Each of these documents must be looked at and construed according to the tenor of the document. There are, however, certain principles which govern the Court in determining cases of this sort and those principles have, in my opinion, been accurately stated by the learned Subordinate Judge who in a very careful and lucid judgment has referred to the salient features of the document and then laid down the principles which ought to be followed in construing documents of this sort. He says and I cannot do better than quote from his judgment. "It is clear that every case has to be dealt with on its own facts. A mortgage sometimes bears much closer affinity to certain forms of leases from which it is not often easily distinguishable. The sole criterion for distinguishing a lease from a mortgage, is, I think, to see whether the transfer is made to secure the re-payment of a debt and whether there is a power of redemption reserved to the lesser either expressly or impliedly so that it distinctly appears that the parties themselves in fact intended the transaction to be in the nature of mortgage." And applying those principles, he came to the conclusion that the documents in these cases were purely mortgages and not leases. The learned Judge has also pointed out the salient features of the documents; they are in the same tenor. The documents, he says, recite that the creditors were to cultivate the areas and appropriate the produce in lieu of interest, that they were to pay annually to the executants a certain specified amount as rent, that on non-payment of the stipulated rent the executants would be entitled to get interest at 2 per cent. per mensem and when they paid the principal sum at the end of Jeth they were to get possession of the rehan lands, and that if any portion of the annual rent remained unpaid by the creditors, the executants would be entitled to deduct that sum from the principal amount at the time of repayment, and if the principal amount was not re-paid on the due date the executants would be at liberty to re-pay the same at the end of Jeth any year following and to enter into possession, in case the creditors were dispossessed from the land by the acts of the executants the former would be entitled to realise the whole money with interest at 2 per cent. per mensem from the date of dispossession till the realisation of their dues, and finally as security the lands specified were hypothecated to the defendants.

It seems to me that upon the facts stated and having regard to the stipulations in the documents in question, these lands were clearly hypothecated to the lenders for the purpose not only of securing the interest on their loan but also for the purpose of securing the re-payment of the principal sum advanced. In fact they could remain in possession of this property for ever provided the loan was not re-paid. The mere fact that if they did not pay their rent this might be taken into account when the reckoning came does not appear to me to make any difference to the nature of the transaction. It was clearly not one of those cases where only an advance is made and by the end of a specified number of years the land shall he taken back by the borrower, the loan being treated as having been paid off principal and interest, by the profits. Such cases are regarded merely as case of payment of rent in advance and are clearly not mortgages. In the present case those features are clearly absent. The land appears to me to have been mortgaged for a double purpose, both for securing the payment of interest, or rather as it is put, in lieu of interest, and also for securing the re-payment of the principal sum advanced.

I see no reason to differ from the judgment of the learned Subordinate Judge and I think that these appeals should be dismissed with costs.

Foster, J.

I agree.