S. Srinivasa Aiyangar and Others vs Radhakrishna Pillai

Sadasiva Aiyar, J.—This is an appeal against an Order of remand. The appellants are the defendants.

The plaintiff sued for redemption of a mortgage created in 1884. This mortgage document (Exhibit A) begins by calling itself a usufructuary

mortgage and in two or three places in the course of the deed, it is expressly called a usufructuary mortgage deed. It, however, contains a clause

that if the mortgage amount was not paid on a date which is stipulated in the document at an interval of exactly nine years from the date of the

document the mortgage was to work itself out as a sale for the principal '' amount due on the mortgage bond. Possession was given to the

mortgagee in accordance with the nature of the document and its spirit. At the end, there is a covenant to this effect. "" I, the mortgagor, shall pay to

you the costs of the construction of earth work . etc., on the date fixed for redemption as per your accounts along with the mortgage money.

The question is, what is the nature of this document? It is contended by the appellant''s learned Vakil that this is a combination of three kinds of

mortgages, a simple mortgage, a usufructuary mortgage and a mortgage by a conditional sale. The plaintiff''s contention, on the other hand, is that it

is a usufructuary mortgage with a covenant at the end clogging the equity of redemption. I am inclined to think that it is a combination of a simple

mortgage and a usufructuary mortgage with a covenant clogging the equity of redemption. I think it cannot be called a mortgage by a conditional

sale, as it was executed after the Transfer of Property Act came into force, and it does not come within the definition of a mortgage by a

conditional sale found in Section 58 Clause (c) of the Transfer of Property Act. There is no ostensible sale of the mortgaged property on the date

of the document. It is what was known as the Hindu form of a mortgage by a conditional sale before the Transfer of Property Act was enacted ;

but it seems to me that the definition given in Section 58 Clause (c) of the Act was expressly framed so as to exclude this Hindu form of mortgage

by conditional sale from the definition of mortgage by conditional sale in the Transfer of Property Act, That Hindu form of mortgage by conditional

sale which began as a mortgage and worked itself out as a sale on breach of certain conditions by the mortgagor formed the subject of several

decisions of the High Courts and the Privy Council, and because much confusion resulted from conflicts between those decisions, their Lordships

of the Privy Council expressly stated in Thumbusatni Moodely v. Hussain Rowthen ILR (1875) M. 23. ""An Act"" of the Legislature "" affirming the

right of the mortgagor to redeem until foreclosure by a judicial proceeding, and giving to the mortgagee the means of obtaining such a foreclosure,

with a, reservation in favour of mortgagees whose titles, under the law as understood before 1858, had become absolute before a date to be fixed

by the Act, would probably settle the law without injustice to any party."" I think that the Transfer of Property Act, so far as the Hindu form of

mortgage by conditional sale was concerned, treated it as a mortgage either simple or usufructuary according to its terms and treated the condition

as to its afterwards working out as a sale as not enforceable by enacting Section 60 in the Act which gives to mortgagors generally a right to

redeem. A mortgage deed which begins as a mortgage transaction cannot, in my opinion, be called a mortgage by conditional sale, though it is a

mortgage which gives the mortgagee after a certain time and on breach of certain conditions by the mortgagor a right to claim a title as vendee. It is

a mortgage with a clause providing for a future conditional sale and not a mortgage by means of a present sale transaction.

If, then, this document is not a mortgage by conditional sale it is clearly a usufructuary mortgage according to the definition in Section 58 Clause

(d) of the Transfer of Property Act. I think, that as there is the covenant at the end by the mortgagor which expressly says, "" I shall pay some

monies along with the mortgage money on the date of redemption"" the document might according to its literal construction be treated as containing

a personal covenant to pay the mortgage money; and following Rama Brahmam and Others Vs. Venkatanarasu Puntulul and Others, I would hold

that, owing to the existence of that covenant, it is also a simple mortgage. Hence the document becomes a combination of a simple and

usufructuary mortgage.

It was next contended that even a combination of a simple and a usufructuary mortgage is an anomalous mortgage under the definition of Section

98 of the Transfer of Property Act. That section is as follows: "" In the case of a mortgage not being a simple mortgage or a mortgage by

conditional sale, an usufructuary mortgage an English mortgage or a combination of the first and third, or the second and third, of such forms; the

rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage deed, and so far as such contract does not

extend, by local usage."" The construction sought to be put by the appellant''s learned Vakil upon this section is that the words "" in the case of a

mortgage being"" should be understood before the words, ""a combination of the first and third."" I do not think that this is a reasonable construction

of the section. I think the meaning is "" or in the case of a mortgage not being a combination etc.

Reliance was placed upon the decision in Amarchand v. Kilamorar ILR (1903) B.600. In that case the respondent was not represented, and I

think that that case was wrongly decided. Reference was also made to Ramayya v. Guruva ILR (1890) M. 232. No doubt there is an observation

in that case that the Subordinate Judge who decided the case in the Lower Court treated the mortgage in question in that case as an anamolous

mortgage; but I do not think that the learned judges of this Court intended to state that that opinion of the Subordinate Judge was correct. Again,

reference was made to Ammanna v. Gurumurthi ILR (1892) M. 64. There is an observation there that the transaction evidenced by the document

in question in that case was a mortgage by way of conditional sale as defined in Section 58, Clause (c) of Act IV of 1882. That observation was

not necessary for the decision in that case, and with the greatest respect I dissent from that observation, though it seems to be accepted without

criticism by Shephard and Brown (Page 238) and by Gour (paragraph 1044) in their Commentaries on the Transfer of Property Act. In the result I

hold that the mortgage deed in this case is not an anamolous mortgage as defined in Section 98 of the Transfer of Property Act, but it is a

combination of a simple mortgage and an usufructuary mortgage and hence that it is redeemable. That in the case of such a mortgage, the

provisions of Section 60 would apply seems to me to be clear from the observations in p. 707 of Macpherson in his book on the Law of

Mortgage. The case in Perayya v. Venkata ILR (1888) M. 403 also shows that the right of redemption is not extinguished by the existence of a

covenant at the end of the mortgage deed similar to the terms given in the present mortgage deed. See also Ankimer v. Subbiah ILR (1911) M.

744 where even less onerous terms were held not to destroy the right of redemption.

In this view, it is not necessary for me to consider the question whether the learned District Judge was right in his view that, even if it was an

anamolous mortgage, Section 60 of the Transfer of Property Act would allow the mortgagor to redeem the mortgage and that the terms of Section

98 should be read subject to the provisions of Section 60 and other sections of the Transfer of Property Act; I need only, say that I would find it

very difficult to hold that the express terms of Section 98 which are intended to apply specially to anamolous mortgages can be controlled by the

provisions of previous sections of the Act which deal with other matters.

In the result I would dismiss the appeal with costs.

Spencer, J.

I agree with my learned brother in the interpretation he has put on Section 98 of the Transfer of Property Act. I find it quite impossible to read

the words "" or a combination of the first and third, or the second and third, of such forms"" as not being governed by the negative which comes at

the beginning of the sentence. If a different construction is to be put upon this section it would be necessary to imply the words ""in the case of

between the words "" or"" and ""a combination"" etc. This would be a violation of the meaning of the plain English of the sentence. I am unable to

follow the statement of the learned Judges who decided Amarchand v. Kilamorar ILR (1903) B. 600 that a combination of a simple mortgage and

a usufructuary mortgage is an anamolous mortgage provided, for by Section 98. Mr. Gour in paragraph 1603 of his book on the Law of Transfer

in British India treats this statement as an oversight and in paragraph 1606 speaks of there being six and only six forms of mortgages eliminated by

this section from the category of anamolous mortgages.

As regards the mortgage deed Ex. A, as I read the document I am inclined to treat it as either a usufructuary mortgage deed with a clause

containing a clog on the equity of redemption, or a usufructuary mortgage deed combined with a mortgage by conditional sale. In either case, it will

be subject to the conditions of Section 60 of the Transfer of Property Act, and no act of the parties other than a transaction outside the mortgage

deed itself will extinguish the right of redemption. Vide Perayya v. Venkata ILR (1888) M. 403.

The words which provide for the payment of repairs, improvements etc., along with the mortgage money are evidently intended to take effect

in the event of the mortgage being redeemed. I do not consider that they constitute a personal undertaking to pay, nor are there any other words in

this document which can be construed as a personal covenant, express or implied to pay the mortgage money. Compare Gopalasami v.

Arunachella ILR (1892) M. 304. In this respect this case may be distinguishable from that of Kangayya Gurukkal v. Kalimuthu Annavi ILR (1903)

M. 526, in which a personal promise to pay was contained in the words "" We shall cause Rs. 200 to be paid and we shall redeem our land.

If Section 58 Clause (c) of the Transfer of Property Act is to be read strictly, it is necessary that there should be an ostensible sale of the

mortgaged property to constitute a mortgage by conditional sale. There are no words in Ex. A which by themselves create a sale; but the

document implies that, if payment is not made by the stipulated date, the property shall be held and enjoyed by the mortgage as if he had obtained

it by absolute sale. In some cases, such words have been treated as a mortgage usufructuary by conditional sale. Instances are given in paragraph

1605, p. 1025 of of Mr. Gour''s book. The next paragraph describes anamolous mortgages.

In Tukaram v. Ramchand ILR (1901) B. 252, the document which passed the ownership of the property usufructuarily mortgaged in case of

failure to pay the mortgage money on the prescribed date, was construed, as an anamolous mortgage. But in that case, the usufructuary-mortgage

seems to have been combined with a lease and that may have led the learned Judges to treat it as an anamolous mortgage. Whether the present

document be treated as an usufructuary mortgage combined with a mortgage by conditional sale, as the Lower Appellate Court treated it, or an

usufructuary mortgage with a clog on the equity of redemption, in either case, the Judgment of the Lower Appellate Court will have to be upheld

and this appeal dismissed with costs, and I therefore, agree in the order proposed by my learned brother.