P.D. Joseph vs Kedanhath Mehomood

V. Ramkumar, J.—The common defendant in O.S. Nos. 634 of 1991 and 106 of 1993 on the file of the Subordinate Judge''s Court, Kozhikode is the appellant herein. O.S. No. 631 of 1991 was one for redemption of Ext.A1 mortgage dated 02.03.1988 and for recovery of the possession of the plaint schedule property consisting of a single room which was formerly two rooms situated at Kariakunnu desom, Kasaba amsom in the heart of Calicut Corporation.

The case of the plaintiffs can be summarized as follows:

The plaint schedule building originally belonged to P.G. Gopalakrishnan and P.G. Perumal. When they were in need of Rs. 3,500/-, they borrowed the said amount from the defendant and mortgaged the plaint schedule building to the defendant. The time stipulated for the mortgage was three years. The surplus profit fixed under the document was Rs. 900/- per month. There is a stipulation in Ext.A1 mortgage for redemption of the mortgage. The defendant has been in possession of the property on the basis of Ext.A1 mortgage in which he is also an executant. Subsequent to Ext.A1 mortgage, the plaint schedule building has been transferred by P.G. Gopalakrishnan and P.G. Perumal to the plaintiffs as per Exts. A3 and A4 sale deeds dated 25.01.1989 and 24.02.1989. The right to redeem the mortgage and collect surplus profits from the defendant was also given to the plaintiffs. The factum of purchase by the plaintiffs was intimated to the defendant as per Ext.A6 lawyer notice dated 17.03.1989. The defendant has not been paying the surplus profits from February, 1989 onwards. Even though the plaintiffs requested the defendant to receive the mortgage money and redeem the mortgage, the defendant has not complied with the said request. To Ext.A5 lawyer notice, the defendant has caused a reply notice raising untenable contentions alleging that he is a lessee enjoying the plaint schedule building as a tenant and that neither the plaintiffs nor the prior landlords had mortgaged the plaint schedule building to the defendant at any point of time. The period of Ext.A1 mortgage expired on 02.03.1991. The defendant is liable to pay surplus profit of Rs. 28,800/- for the past 32 months. Hence the suit for redemption.

O.S. No. 106 of 1993 filed by the very same plaintiffs for recovery of arrears of surplus profits at the rate of Rs. 900/- from February, 1989 onwards for four months totaling to Rs. 3,872/- with interest thereon.

Both suits were resisted by the defendant contending inter alia as follows:

The suits are not maintainable either in law or on facts. It is not correct to say that the plaint schedule building was mortgaged to this defendant by P.G. Gopalakrishnan and P.G. Perumal after borrowing Rs. 3,500/- fixing a surplus profit of Rs. 900/- per month. P.G. Gopalakrishnan and P.G. Perumal obtained the property from their father late Govindan Nair. Since this defendant was in need of starting a business of vending vegetables in the Calicut market, he took the plaint schedule building on lease from Govindan Nair in the year 1978 on a monthly rent of Rs. 750/- and paying an advance amount of Rs. 3,500/-. He is the licence holder in respect of the business carried on in the plaint schedule property. In the year 1981, the rent was enhanced to Rs. 870/- and in the year 1984, it was again enhanced to Rs. 900/-. When the room was entrusted to this defendant as a lessee, a document was got executed and registered stating that it was prepared only for evading the Corporation tax and that it will not be acted upon. When the rent was enhanced in the year 1981 and further enhanced in the year 1984 also, similar documents were got executed. Later on, in the year 1988, Ext.A1 registered document was executed in the name of Gopalakrishnan and Perumal who are the legal representatives of Govindan Nair. Even though this defendant had put his signature in Ext.A1, the said document has not been acted upon. The transaction was really a lease transaction and the defendant is a building tenant from the year 1978 onwards and his status is not that of a mortgagee under Ext.A1 which is only a sham document. This defendant has been paying the monthly rent regularly. The advance amount has not been returned so far. There was no mortgage by the prior title holders of the plaintiffs as alleged in the plaint. There is no mortgagor - mortgagee relationship between the plaintiffs and this defendant. A sum of Rs. 2,700/- being the rent for three months kept in arrears, was sent by this defendant to the plaintiffs. But the same was refused to be received. This defendant is liable to be evicted from the plaint schedule building only in accordance with the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965. The plaintiffs are not entitled to realise any amount by way excess profit. Both the suits are liable to be dismissed with costs.

O.S. Nos. 634 of 1991 and 106 of 1993 were tried jointly. On the side of the plaintiffs, two witnesses was examined as PWs 1 and 2 of whom PW1 is the 1st plaintiff and PW2 is Perumal who is one of the two sons of Govindan Nair, the previous owner. Exts.A1 to A6 were marked. On the side of the defendant, he examined himself as DW1 and got marked Exts. B1 to B7.

The learned Subordinate Judge, after joint trial, as per common judgment dated 30.07.1994 decreed both the suits as prayed for after holding that Ext.A1 is a loan transaction as contended by the plaintiffs and not a rental arrangement as was canvassed by the defendant. Hence these appeals.

I heard Senior Adv. Shri. M.C. Sen appearing for the common appellant and Shri. Jayesh Mohan Kumar appearing for the common respondents/plaintiffs.

The learned Senior Advocate appearing for the common appellant made the following submissions before me in support of the appeals:

The specific case of the appellant/defendant is that he took the plaint schedule building on lease from Govindan Nair, the previous owner in the year 1978 paying an advance of Rs. 3,500/- and agreeing to pay a monthly rent of Rs. 750/-. The rent was subsequently enhanced to Rs. 870/- in the year 1981 and to Rs. 900/- in the year 1984. It is also specifically pleaded that a registered document styled as a mortgage deed was executed in the year 1978 in order to avoid the Corporation tax. It is further alleged that the said document was executed only to convince the Corporation Authorities and the document so executed was a sham and nominal document not intended to be acted upon. Similar documents were executed in the year 1981 and in the year 1984 as and when the rent was enhanced. PW2 Perumal, who is one of the sons of Govindan Nair, has admitted that the defendant has been in the shop from the year 1978 onwards and doing vegetable business therein. The testimony of PW2 reinforces the defendant''s contention. PW1, the 1st plaintiff does not have any direct knowledge about the transactions in question since he is only a subsequent assignee. The defendant when examined as DW1 has spoken in terms of his case. In Hathika v. Padmanabhan 1994 (1) KLT 345, it has been held that oral evidence is admissible to contradict or vary the terms of the document reduced to writing, if the contention of the party is that the document was a sham and nominal one not intended to be acted upon. In Narayana Rao v. Laxmi Amma 1994 (2) KLJ 88, a Division Bench of this Court has adumbrated the incidents of an anomalous mortgage. If the transaction is intended by the parties for the enjoyment of the property by the transferee and not intended solely to secure the amounts advanced by the transferee, then it is a lease See Kunhiparan v. Venkiteswara Naicken 1967 KLT 646 FB. It is the intention of the parties coupled with the surrounding circumstances which are to be considered by the court which interpreting the document. See Frenchikkose Thommi and Others Vs. Chacko Devasia and Others, and Subramania Iyer Pattar and Others Vs. K.R. Anantanarayana Iyer and Another, . Calicut is the only place in Kerala where circumventing the provisions of the Rent Control Act parties enter into mortgage transactions.

I am afraid that I cannot agree with the above submissions. As rightly submitted by the learned Senior Advocate, it is the intention of the parties which has to be gathered to understand the real nature of the transaction entered into between them. Where the terms are express and clear, the intention of the parties has to be gathered from the document itself. It is only when the terms of the document are ambiguous that the court is entitled to look into the surrounding circumstances. See Hathika v. Padmanabhan 1994 (1) KLT 345. The plaint schedule building admittedly belonged to Govindan Nair, the father of Gopalakrishnan and Perumal. Both Govindan Nair and Gopalakrishnan are no more. Perumal who was the only surviving owner, was examined on the side of the plaintiffs as PW2. He has admitted that he knows the defendant from the year 1978 onwards. He has specifically admitted that in the year 1978, the document created in the name of the defendant was a possessory mortgage given by his father Govindan Nair. He further deposed that the defendant surrendered the mortgage in the year 1981 after repaying the mortgage money and that there is a registered document evidencing the said surrender.

The appellant examined as DW1 had admitted during his cross examination that the document which was registered after three months of the entrustment in the year 1978 was a mortgage deed. He would further concede that the surrender deed was also a registered document. According to him, the plaint schedule building was thereafter mortgaged to one Haris and after Haris surrendered the property it was mortgaged to Joseph Paul (who is none other than his own son) as per a registered document. DW1 further admitted that Joseph Paul also surrendered the property and that it was after the surrender by Joseph Paul that Ext.A1 document was executed by Gopalakrishnan and Perumal. Ext.A1 itself recites that the property which was mortgaged to Joseph Paul was redeemed on 01.03.1988.

The recitals in Ext.A1 unequivocally indicate that the transaction which was entered into was a loan transaction whereby a debtor-crditor relationship was created between the defendant on the one side and Gopalakrishnan and Perumal on the other side. The amount which was borrowed as per the recital in Ext.A1 is Rs. 3,500/-. Rs. 900/- was fixed as the surplus profit payable by the mortgagee monthly. The defendant/mortgagee has been permitted to appropriate interest for the mortgage amount. The mortgagee has to pay the current charges. Ext.A1 is a registered document and the defendant has admitted that he has also put his signature therein as one of the executants. His further case that it was after the registration of Ext.A1 that he singed the document, cannot be believed for a moment and was rightly rejected by the court below. From a reading of the recitals in Ext.A1, the only conclusion which is possible is that it is an out and out possessory mortgage clearly covered by the decision in Gilbert v. Vivekanandan 1988 (1) KLT 50. The trial Judge who had the unique advantage of seeing the witnesses and assessing their credibility, has chosen to believe the version given by the plaintiffs'' witnesses in preference to the interested testimony of the appellant examined as DW1. I see no reason to differ from the conclusion reached by the court below. Both the suits were rightly decreed as prayed for. No interference is called for in these appeals which are accordingly dismissed. However, in the circumstances of the case, the parties shall bear their respective costs in these appeals.

Dated this the 2nd day of June, 2009.