Sheikh Dildar Hussain and Others vs Sheikh Saddip and Others

Wort, J.—The plaintiffs who are the appellants have been held by the learned Judge in the Court below to be mortgagees and not being registered, their action against the defendants for rent not maintainable. It has been decided in the Court below that contrary to the defendants'' contention the rent had not been paid. The only question therefore to consider in this Court is whether the learned Judge in the Court below, affirming the decision of the trial Court, was right in coming to the conclusion that the plaintiffs were in fact and in law mortgagees.

It would appear that they entered into possession as lessees in the year 1922; but from the document Ex. 1 in the case which is before us, it appears that a fresh arrangement was entered into two years after, wards. The original thika lease which was not produced in the Court below was cancelled and a fresh agreement was made.

From the different expressions used in the document it might be supposed on the one hand that the plaintiffs were lessees and on the other hand mortgagees; but the substance of the deed has to be looked to Para. 3 of the document recites the fact of the property being given in thika patta; and then in para. 4 it is recited that in order to meet legal necessities the grantor of this document borrowed Rs. 10,000. Certain details of that debt are recited. Then in para. 5 it states inter alia:

It was therefore finally settled between me and the said thikadars, the mahajans, that the jama of mauzas Chaurasa and Khotaul aforesaid be reduced from the jama entered in the said thika patta by Rs. 400; that a fresh annual jama of Rs. 4,000 be fixed, that after fixing the rate of interest on the bond money and the hand note money aforesaid, as well as on the money to be borrowed at the time of the execution of this sudbharna bond at 10 1/2 annas per hundred rupees per mensem the former thika patta dated 28th July 1922 aforesaid be cancelled and that a fresh sudbharna thika patta be executed, and both parties consented and agreed to the above.

I may observe in connexion with the argument addressed by the learned advocate for the appellants that the reservation of Rs. 4,000 annually as jama taken by itself is an indication that this transaction is a lease and not a mortgage. Para. 6 however recites that "I have therefore of my own free will and accord given in sudbharna 16 annas proprietary interest", etc and then at the end of the paragraph all sums of money which had been advanced by the plaintiffs are recited.

Then later in paragraph 8 come the terms of the transaction what may possibly be called the addendum clause. Para. 8 recites:

The said lessees should enter into possession and occupation of the leasehold properties, cultivate and cause proper cultivation to be made, etc, Out of Rs. 4,000, the fixed jama, the details regarding the period, jama and extent of share of which are given below, the said lessees will deduct each year on their own authority Rs. 1,675.

Then provision is made for a further deduction of Rs. 2,000 in para. 9 and the balance of Rs. 425 out of Rs. 4,000 is to be payable by the lessees and they shall pay the same year after year and instalment after instalment. The substance of the transaction is that after deduction of these various sums to which I have already referred against the interest, Rs. 425 is reserved as so called rent payable by the plaintiffs to the grantors. The important matter to be noticed is that there was a debt. Then we come in this connexion to para. 10 which gives the grantor the right to redeem before the expiration of the period provided by the document; and later on in para. 18 it is provided that:

In the event of non-payment of the entire peshgi money bearing interest, in the month of Jeth 1340 Fs. (the date of the expiration of the nine years) the entire rent, after deduction of the interest on the peshgi money bearing interest, whatever it will be, will have to be paid by the lessees, and until the payment of the entire peshgl money bearing interest, this sudbharna bond will continue to remain in force exactly with all the conditions laid down above.

In the argument Mr. Husnain on behalf of the respondents refers to the decision of this Court in Kesho Prasad Singh v. Chandrika Prasad Singh A.I.R.1923. Pat 122 where the same question come up for determination and Sir Dawson Miller in delivering the judgment made these observations, and if I may say so applied the well-known test applicable to cases of this kind for the purpose of determining whether the transaction was a mortgage or not. Sir Dawson Miller said as follows:

I do not propose to go through them in detail. I think the result of the authorities as well as of the text-books is that the test in such cases must be whether there is a secured debt and a right of redemption. In a zerpesbgi lease properly so called, there is an advance to the lessor in consideration of which the lessee is given possession of the land for a term during which he recoups himself for the sum advanced and interest out of the profits of the land of which he is put in possession. There is no question of redemption upon paying off an advance. The lease terminates at the expiration of the term and the lessor may re-enter as on the termination of any other lease. The re-entry does not depend upon the repayment of the advance.

Applying that test in this case, it seems clear that this is a mortgage; and the fact that there is a rent reserved of Rs. 425 being the balance of Rs. 4,000 does not preclude us from coming to that conclusion. It is true, as the learned advocate on behalf of the appellants contends, that some of the conditions of this transaction come within the provisions of Section 105, T.P. Act, where lease is defined as:

A lease of immovable property is a transfer of a right to enjoy such property, made for certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered, periodically or on specified occasions.

But the difference is that in the easel of a mortgage the debt owing by the mortgagor to the mortgagee is repayable to the mortgagees as in this instance, whereas a premium or payment of rent in advance in a transaction which in law is a lease would not be so repayable.

In my judgment, on the plain construction of this document, the plaintiffs were mortgagees and therefore they were precluded from suing for rent.

For these reasons the appeal fails and must be dismissed with costs. I should have mentioned that they were precluded from suing, by reason of Section 78, Land Registration Act.

Rowland, J.

I agree.