S.R. Leelavathi vs K. Veeresham

Nataraj Rangaswamy, J

This Regular First Appeal is filed by the defendant challenging the Judgment and Decree dated 18.11.2014 passed by the X Additional City Civil

and Sessions Judge, Bengaluru (CCH-26), in O.S. No.3496/2010, by which the Trial Court passed a decree of ejectment and passed an order

regarding mesne profits.

For the sake of convenience, the parties in this Judgment are referred to as they were arrayed before the Trial Court.

The suit filed by the plaintiff in O.S No.3496/2010 disclosed that the plaintiff being the owner of the suit schedule property had leased out the same

to the defendant in terms of a lease deed dated 17.03.2001 according to which the plaintiff had agreed to receive a sum of Rs.3,25,000/- as interest

free deposit for a period of three years and to rent out the suit premises to the defendant for a term of three years. It is stated that out of Rs.3,25,000/-

, the defendant paid a sum of Rs.2,50,001/- to the plaintiff and had passed on two cheques for the balance sum of Rs.75,000/-. The plaintiff stated that

these cheques were dishonoured due to insufficient funds and his attempts to recover back the funds failed. He stated that even after the expiry of the

term of the lease, the defendant failed to quit and deliver the vacant possession of the suit premises. He stated that the plaintiff issued a notice of

termination of the lease and that the same was served on the defendant. The defendant neither handed over the vacant possession of the premises nor

replied to the legal notice. Later in deference to the desire of the defendant, the plaintiff secured a demand draft for a sum of Rs.2,50,000/- to refund

the amount to the defendant. Despite the assurance of the defendant, she failed to vacate the premises. Thereafter, the defendant filed O.S

No.1447/2007 for perpetual injunction contending that she was in possession of the suit premises in terms of a mortgage deed dated 17.03.2001. The

suit filed in O.S No.1447/2007 was referred to the Bengaluru Mediation Centre. At the Bengaluru Mediation Centre, the plaintiff had agreed to settle

the dispute by paying a sum of Rs.4,50,000/- to the defendant and also drew a demand draft for a sum of Rs.4,50,000/-. The defendant failed to

honour the settlement that was arrived at before the Bengaluru Mediation Centre and therefore, the plaintiff was constrained to file a suit for

ejectment of the defendant from the suit premises and for recovery of a sum of Rs.6,48,000/- being mesne profits from April 2004 to September 2009

and till the date of delivery of possession and to direct the defendant to pay to the plaintiff a sum of Rs.2,60,000/- being the interest calculated on the

unpaid lease amount of Rs.75,000/- at the rate of 18% per annum from the date of the lease agreement i.e., 17.03.2001.

The defendant entered appearance and accepted that she was a tenant in the suit premises. She contended that she demanded the plaintiff to return

the entire lease amount of Rs.3,25,000/-, but the plaintiff has failed to repay the same, though the defendant was ready to vacate the premises and

hand over the keys. She contended that the settlement arrived at before the Bengaluru Mediation Centre was that she had agreed to receive

Rs.4,50,000/- excluding the lease amount of Rs.3,25,000/- but the plaintiff claimed that it included the lease amount and therefore, the settlement

arrived at before the Bengaluru Mediation Centre was not acceptable to the defendant. It is contended that the plaintiff had caused loss to the

defendant to the tune of Rs.3,20,200/-and therefore, she contended that the plaintiff was liable to indemnify the loss and sought for dismissal of the

suit.

The plaintiff filed a rejoinder denying the alleged loss caused to the defendant by the plaintiff.

Based on the above pleadings of the parties, the Trial Court framed the following issues:

“1) Whether the plaintiff proves that the defendant did not pay the balance amount of Rs.75,000/- towards interest free lease amount?

2) Whether the plaintiff proves that the defendant is liable to vacate the suit schedule premises?

3) Whether the plaintiff proves that the defendant is liable to pay sum of Rs.6,48,000/-towards mesne profits/damages?

4) Whether the plaintiff is entitled for sum of Rs.2,60,000/- towards interest on unpaid lease amount?

5) Whether the plaintiff is entitled for the relief of permanent injunction?

6) What order or decree?â€​

The plaintiff’s Power of Attorney was examined as PW1 and Exs.P1 to P10 were marked. However, the defendant was not examined and no

documents were marked for the defendant. The Trial Court based on the admission that the defendant was a tenant in the premises, passed a decree

dated 18.11.2014 and directed that the plaintiff was entitled to recover possession of the suit schedule premises from the defendant and the plaintiff

was entitled to mesne profit from 17.03.2004 till delivery of the vacant possession of the schedule premises from the defendant.

Being aggrieved by the Judgment and Decree of the Trial Court, the defendant has filed this Regular First Appeal. This Appeal was admitted by

this Court on 20.01.2015.

Heard the learned counsel for the appellant, learned counsel for the respondent, perused the Trial Court records and the Judgment of the Trial

Court.

The following points arise for consideration in this appeal:

(i) Whether Ex.P1 was in the nature of a lease deed or was it in the nature of a mortgage deed?

(ii) Whether the suit for ejection was maintainable or whether the plaintiff ought to have filed suit for redemption of the mortgage?

The points for consideration are answered as follows:

Point No1: Ex-P1 was in the nature of a lease and

Point No:2: Suit for ejectment was maintainable

The learned counsel for the appellant seriously contended that the lease deed at Ex.P1 was essentially a mortgage deed and therefore, the plaintiff

was not entitled to sue for ejectment as there was no jural relationship of landlord and tenant between the plaintiff and the defendant. The learned

Counsel also contended that the Trial Court did not give sufficient opportunity to the defendant to tender her evidence and submit her arguments. He

contended that in terms of the Order dated 05.11.2014, the Trial Court allowed the interlocutory application under Order 18 Rule 17 of the Civil

Procedure Code filed by the defendant to adduce her evidence and posted the case on 10.11.2014 for evidence of the defendant. On 10.11.2014,

there was no representation for the defendant. Thus, the Trial Court held that the defendant had no evidence to adduce and as the arguments were

already heard, the case was posted for Judgment on 15.11.2014. On 18.11.2014, the judgment was pronounced in the open Court. Thus, the defendant

contended that sufficient opportunity was not given to the defendant to lead evidence in the case.

The learned counsel for the appellant also relied upon the Judgment of the Hon’ble Apex Court in the case of Kolathoor Variath And

Another vs. Pairaprakottoth Cheriya Kumhahammad Haj ireported in AIR 1974 Supreme Court 689 to contend that in a suit for redemption of

mortgage, if the plaintiff cannot regain possession on the basis of an oral mortgage, it is open for him to recover the possession on the strength of his

title.

The learned counsel for the appellant next contended that Ex.P1 was not a document which could be marked in evidence and mere marking of a

document will not take away the admissibility of the document and the Trial Court ought not to have marked the document. He relied upon the

Judgment of this Court rendered in the case of K.Amarnath vs. Smt. Puttamma reported in ILR 1999 Kar 4634 and contended that the nature of the

document will have to be looked into instead of looking at the name given by the parties to the document. He relied upon the Judgment of this Court

rendered in the case of Anantswami vs. Smt. Radha Srinath and another reported in 2012 (4) Kar.L.J. 402 and contended that there was no

stipulation of the rate of rent. He also contended that under the Karnataka Rent Act, 1999, if the rent is more than Rs.3,500/- per month then only a

suit for ejectment is maintainable. Since no rent is prescribed under the agreement, he contended that a suit for ejectment is not maintainable and the

plaintiff has to either go before the Rent Court or file a suit for possession.

Per contra, counsel for the plaintiff / respondent submitted that the agreement at Ex.P1 was essentially an agreement of lease and not a mortgage

and there was no relationship of creditor and a debtor. He contended that in similar facts and circumstances, this Court in the case of K. Amarnath

vs. Smt. Puttammav reported in ILR 1999 KAR 4634 had held that the agreement in question is a lease and not mortgage. He also relied upon the

Judgment of the High Court of Delhi reported in the case of Sky Land International Pvt. Limited vs. Kavita P. Lalwani reported in 2012 (191) DLT

594 (Del) case.

I have given my anxious consideration to the submissions made by the learned counsel for the appellant and the learned counsel for the

respondent. The contention that the defendant was not given sufficient opportunity is liable to be rejected at the threshold as the Trial Court had given

an opportunity to lead evidence which she did not avail. Later on an application, the defendant was again permitted to lead evidence and she failed to

utilize the opportunity. Thus, the Trial Court held that the defendant did not have any evidence to adduce and thus posted the case for Judgment as it

had already heard the plaintiff. No exception can be taken to the disposal of the suit by the Trial Court. If the defendant has failed to utilize the

opportunity, she cannot complain that sufficient opportunity was not given to lead her evidence and thus, the contention of the defendant is wholly

unacceptable and is thus rejected.

It is seen from the written statement filed by the defendant that she admitted the execution of the agreement dated 17.03.2001 and she also

admitted that under the agreement dated 17.03.2001, no interest was to be paid by the plaintiff to the defendant on the amount paid under the lease.

This amount was to be paid back on handing over the vacant possession of the suit schedule property immediately after the expiry of the lease period.

The defendant categorically stated in her written statement as follows:

“the plaintiff is the absolute owner of the suit scheduled property and the defendant is the tenant in the said property. The plaintiff and

defendant are entered in to the mortgage agreement (Lease Agreement) on 17.03.2001 the plaintiff received Rs.3,25,000/- By cash as a

lease amount. The plaintiff received Rs.2,50,000/- in cash for the remaining balance lease amount of Rs.75,000/-defendant has issued two

cheques. It is submitted that though the defendant intimated the plaintiff not to present the said cheques for encashment, in spite of specific

instructions the plaintiff intentionally and deliberately presented the said cheques.â€​

Thus, the plaintiff and the defendant are in unanimity over the fact that the plaintiff is the landlord and the defendant is a tenant under the plaintiff.

They are also unanimous about the fact that the plaintiff had agreed to lease out the premises to the defendant for a total amount of Rs.3,25,000/-,

which was the interest free security deposit to be paid. The interest on the security deposit was agreed to be appropriated towards the monthly rent.

A perusal of the lease agreement at Ex.P1 would indicate as follows:

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This Court in the similar circumstances, in the Judgment rendered in the case of K.Amarnath vs. Smt. Puttamma reported in ILR 1999 Kar 4634

held as follows:

“16. Merely because an amount is advanced and possession is delivered, a transaction will not become a mortgage. As stated above,

mortgage contemplates the taking of a loan and delivering possession to secure payment of the loan, the relationship being that of a

creditor and debtor. On the other hand, in a lease for money advanced or deposit made, there is no relationship of debtor and creditor

between the landlord and tenant. In such a transaction, the tenant who desires to take the premises on lease, agrees to make a Deposit,

instead of making a monthly payment as rent, with the understanding that the landlord will continue to hold the said advance or deposit so

long as the tenant continues in possession and he should refund the same when the tenant vacates the leased premises. It may be noticed

that in such a transaction, the property is not given up security for the amount advanced. While the primary transaction in a mortgage is

advancing of a loan and securing the advance by an immovable property, in a lease against deposit, the primary intention is to make

available the premises to the tenant and receive the consideration therefor by way of interest free advance.

Let me examine the terms of the 'Bhogyada Kararu' to find out whether it is a lease or a mortgage. The document recites that the

respondent approached the petitioner's father with a request that she requires the premises for her residence and the petitioner's father

agreed to give the premises for the residence of the respondent in consideration of the respondent paying Rs.10,000/- with an

understanding that the said sum of Rs.10,000/- shall be repaid without interest on the respondent vacating and delivering vacant possession

of the premises in the same condition and in view of such payment, the respondent need not pay any rent for the premises. If it was a

mortgage, the recitals would have been that the petitioner's father approached the respondent for a loan and the respondent wanted

possession of the premises as security and petitioner's father agreed to take the loan and deliver possession of the premises as security. The

very fact that the respondent approached the owner requesting him to make available the premises for her residence and agreed to pay a

consideration of Rs.10,000/- as deposit to be held during the period of occupation and refundable on vacating the premises and the fact

that there is no reference to a request for any loan or the premises being held as a security for the amount discloses that the document was

a lease for deposit/advance, and not an usufructuary mortagage. Therefore, the description of the document as 'Bhogyada Kararu'

(usufructuary mortgage agreement) is misleading and not correct.â€​

This Court reiterated the very same position in the judgment rendered in the case of Anantswami v. Smt. Radha Srinath and Another reported in

2012(4) Kar.L.J. 402.

Going by the document at Ex-P1, it is evident that what was intended between the plaintiff and the defendant was a creation of a lease for a

lumpsum security deposit and was certainly not a mortgage and there was no relationship of the creditor and the debtor, which is the quintessential

feature of a mortgage. Consequently, the plaintiff was right in terminating the tenancy and calling upon the defendant to quit and deliver the vacant

possession of the suit schedule premises after the expiry of the lease period of three years.

The contention of the appellant - defendant is that the document could not have been marked in the evidence since the document was styled as a

mortgage deed and therefore, required compulsory registration under Section 17 of the Registration Act, 1908. It is true that Ex-P1 being a lease for

three years had to be compulsorily registered in terms of Section 17 of the Registration Act. Since the execution of Ex-P1 was admitted by the

defendant and as the defendant did not object the marking of the document, the same was marked. It is no doubt true that mere marking of a

document would not result in its admissibility. Admissibility is always a question that will be considered by the Court at the appropriate stage at the

time of proceedings. However, for collateral purpose of looking into the nature of possession of the suit property by the defendant, it was invariable

that this document had to be marked. The Trial Court had glossed over the fact that if Ex-P1 is a lease then under Section 30(b) of the Karnataka

Stamp Act, unless there is an agreement to the contrary, it is the lessee/ defendant who has to pay the stamp duty. Though, this Court noticed the loss

of revenue to the State, yet in order not to further burden the defendant, no order is passed in this regard.

In so far as the other question that the plaintiff may as well sue for possession, the defendant has categorically stated in her written statement that

she was a tenant in the premises, therefore, nothing required to be considered for a suit for possession to be filed based on the title.

In so far as the other question that the rent was not fixed under the lease agreement, and therefore, the Civil Court did not have jurisdiction to

entertain the suit for ejectment, it is relevant to note that the same argument would be pressed into service in the event the plaintiff filed an eviction

petition before the rent Court. The plaintiff had the option of electing between filing a suit for ejectment or to file an eviction petition under the

Karnataka Rent Act, 1999, to evict the defendant from the suit schedule premises. Since, the plaintiff has elected the remedy of approaching the Civil

Court for ejectment, I do not find anything unacceptable in this and therefore, the argument of the defendant does not deserve to be considered.

This Court would have directed the defendant to pay interest on the sum of Rs.75,000/- that was unpaid, but since the plaintiff has not filed an

appeal, but stated in the Court that he would be satisfied if the defendant is ordered to be evicted from the premises, this Court would not venture into

granting the relief that was sought for by the plaintiff.

Hence, for the aforesaid reasons, the Regular First Appeal fails and the same is dismissed.

Consequently, I.A. No.1/2015 for stay does not survive for consideration and the same stands rejected.