Smt. Sarajbashini Ghosh vs Baijnath Pandey and Others

Wort, J.—It is unfortunate in this case that the learned Judges in the Courts below did not decide all the questions which arose in the case. It is possible that the parties themselves limited the case to the question whether the transaction of 2nd June 1927 was a lease or a usufructuary mortgage. But having regard to the view that we take, a number of other questions must necessarily be decided.

The plaintiff who is the appellant was a lessee under a lease at some date after 2nd June 1927 and claimed to be an assignee of the rights of the grantor of the deed of 2nd June 1927. I have alredy indicated that the plaintiff contends and the defendants deny that that document was a usufructuary mortgage and that was the question upon which the decision of the learned Judge in the Court below depended as I have already said and repeat. Now if the decision were otherwise, a question immediately arises as to whether the plains tiff was entitled to have an account as he claimed and to redeem the mortgage which he said the transaction was on the footing of that account. He based his contention on Regn. 3 of 1872 (the Santal Parganas Settlement Regulation), Clause 6 which makes provision that Courts having jurisdiction in the Santal Parganas shall observe certain rules as regards usury. The clause is mandatory. It is necessary therefore if the transaction was a usufructuary mortgage and if the consideration therein named was a loan that the Judge should have considered in these circumstances whether the matter came within Clause (6) of that Regulation. That substantially is the plaintiff''s case.

It is true that the transa2ction of 1927 was for a period of 11 years, and if the contention of the plaintiff, appellant is right and Clause (6) of Regn. 3 of 1872 applies, it will apply in spite of the contract between the parties that the transaction (whatever it may have been) should inure for that period.

There are several answers to that argument by the defendant respondents one of which I have already indicated, namely that it was a lease and not a usufructuary mortgage. The second contention (I do not see how it helps the respondents) was that an alienation of this kind, even if it were a mortgage, was contrary to the regulation. I think in the circumstances however that question does not arise. The other argument put up in this Court by the respondents was that the action itself was incompetent as not being brought within the period provided by Clauses (24) and (25) of the Regulation.

The argument was this that in the Record of Rights, the entry in which was conclusive, subject to the provision to which I have just referred, the plaintiff''s predecessor or assignor was recorded as a tenant under this lease of 1927, and that was conclusive for the purposes of this action. That being the argument a number of questions arose: whether this was an application under the regulation to have the entry in the record set aside; and whether it was brought within the period limited by the regulation.

Before these matters are discussed, it is necessary to decide in the first place whether the learned Judge in the Court below was right in coming to the conclusion that the transaction of June 1927 was a lease or a usufructuary mortgage. If the finding of the learned Judge is right, that is to say, that it is a lease, the questions which I have just mentioned do not arise. The respondents rely on the terms of the document itself. There is no doubt that authorities on this question do not help to any material extent and the decision must depend to a very large extent on the terms of the document. That being so the respondents rely upon a number of provisions in the document for the contention that the transaction was a lease and not a mortgage.

The first provision relied upon is that the occupation by the so-called mortgagee should be for a fixed period of 11 years. The second is the repeated reference to this transaction as an ijara. Item 3 relied upon is the provision in para. 6 of the document which sets out the various items of accounting showing the net profit on the land to be Rs. 103-1-9 and then the statement to this effect: "Hereafter if the said profit decreases or increases I shall not be competent to make any claim in respect thereto". That it is said is an agreement disallowing the mortgagor an account which is quite contrary to the ordinary conditions of a usufructuary mortgage. The other item relied upon is found in para. 8 of the document which provides :

As a seourity for payment of this amount, I mortgage the fixed annual profit of Rs. 103-1-9 due from you for repayment of the said debt, i.e., according to the term of the ijara patta, the total sum of Rs. 103-1-9 will be credited towards the debt due to you.

It is said that what was mortgaged was not an interest in the land but merely the net profit derived therefrom; and, further, the clause to which I have just referred is relied upon as showing that the sum of Rs. 103 was due from the mortgagee to the mortgagor as rent and he was to retain it against the indebtedness of the mortgagor to the extent of Rs. 800. It is impossible in my judgment to decide the question whether this was a mortgage or a lease merely by the description given to it--the substance of the transaction must be looked at. If the transaction was one of mortgage, the fact that it was called a lease would be quite irrelevant.

In my judgment quite clearly this is a mortgage; whether it is a usufructuary mortgage or an anomalous mortgage does not in this case fall to be determined. First of all there is an advance of Rs. 800 made to the mortgagor and secondly there is a repayment to the mortgagee of the Rs. 800 at the rate of Rupees 103-1-9 for a period of 11 years. The difference between the Rs. 800 and approximately Rs. 1100 which on the footing of this document the mortgagee will obtain is obviously for interest payable by the mortgagor to the mortgagee. The very essence of this transaction as I pointed out is one of a loan and security, and in my judgment the argument that no interest in the land has been mortgaged, but merely the net profit, is an argument which cannot be supported. The interest which has been mortgaged here is the interest ordinarily mortgaged in the case of a usufructuary mortgage, that is to say, the interest which the mortgagee obtained by going into possession and paying himself from the usufruct. The fact that there is a period fixed does not preclude our coming to the conclusion that it was a usufructuary mortigage and not a lease. This is sufficiently indicated by a recent decision of their Lordships of the Judicial Committee of the Privy Council in Ram Narain Singh v. Adhindra Nath Mukherji AIR (1916) P.C. 119. Another case to which reference might be made in the circumstances, more particularly on the point that the substance of the transaction is to be looked at and not the description is that in Shah Mukhun Lall v. Baboo Sree Kishen Singh (1867) 12 M.I.A. 157. That being so and the transaction being that of a mortgage, the other questions to which I have referred immediately arise and the case cannot be determined without consideration of those matters.

It is said by Mr. Bose on behalf of the appellant that this was in the first instance an application to the Settlement Officer which application was transferred to the Civil Court for determination, the necessity for that application being that a part of the claim that the entry in the Record of Bights should be set aside. That question will have to be determined by the learned Judge in the Court below and also the question whether the application was made within six months as provided for by Para. 25 of the Regulation to which I have referred, as after that period such record shall be conclusive proof of the rights and custom therein recorded. If it has become conclusive by reason of lapse of time then whatever conclusion the Court might arrive at as to the nature of the document, if in fact the record states that the relationship between the mortgagor and the mortgagee is one of lessor and lessee, that record would be conclusive as I have already stated.

In those circumstances the matter must be remanded to the learned Judge for the determination of the following questions:

The first question to be determined would be what is the entry in the Record of Rights? If the entry is that the defendants are lessees contrary to our finding arrived at in this Court, the next question to be determined would be whether this is an application contemplated by the regulation to set aside the Record of Rights and whether such application has been brought in time. If the entry in the record is that it is a mortgage, then of course this point does not arise. The third question would be whether the mortgage of this interest is valid under the Regulation? If this question is answered in the negative, the action of the plaintiff would be entitled to succeed on the footing of the claim to possession. If the transaction being a mortgage is valid the next question arising would be, what interest is the defendant entitled to, and whether in the circumstances the profit which the defendant has made out of the property exceeds that which is allowable under Clause (6) of the Regulation? Incidentally in this connexion I would state that it is contended by the plaintiff that the defendant has dealt with the property and has thereby made a profit in excess of Rupees 300 provided for by the mortgage deed: there must be an enquiry into this question. There is no difficulty with regard to the period of eleven years fixed by the deed as the law is that in spite of the term fixed the plaintiff is entitled to reopen the transaction and to redeem the mortgage before the end of the term.

There is one matter which I should have stated perhaps more clearly than I have done and that relates to the position of the plaintiff. The plaintiff claims to be the assignee and entitled to the rights of the mortgagor. His possession in the first place was under a lease dated 1st March 1931. That seems to be the position in this case, and one of the material questions which will have to be decided by the Judge in the Court below is as to the plaintiff''s position and as to his claim to be the lessee with the assignment of the mortgagor''s rights.

The matter must go back to the Court below for the determination of these questions in accordance with law. Costs of this appeal will abide the result of the hearing in the Court below.

Yarma, J.

I agree.