Totaram vs Pancham Singh

Shivdayal, J.—Totaram mortgaged a house to Pancham Singh on Sept. 24,1955 for Rs. 1,500 and executed on the same day a rent note reserving a monthly rent of Rs. 15.

On the basis of the rent note the Plaintiff brought the suit for ejectment and recovery of arrears of rent. The Defendant resisted the suit inter alia on the ground that the rent note was only a part and parcel of the mortgage transaction and that no decree for ejectment could be passed nor was he liable to pay interest at a rate higher than the maximum chargeable under the Madhya Bharat Interest Act, 1956.

The trial Judge accepted the contention of the Defendant and dismissed the suit for ejectment and passed a deree for Rs. 189-8-0 as areas of interest Rs. 6 per annum.

The Plaintiff appealed from that decree. The Additional District Judge Morena has allowed it and has passed a decree for ejectment as also for Rs. 363-12 0 on account of arrears of rent.

On a perusal of the mortgage-deed and rent note it is quite clear that the mortgagor undertook to pay Re. 1 per month as interest on Rs. 1,500 the principal mortgaged money, that the mortgagor executed a rent note for Rs. 15 which was equivalent to the amount of interest and it accrued due every month, that the mortgage-deed and the rent note were both executed on the same day; that the mortgagor made himself personally liable by incorporating a personal covenant to pay the entire mortgage money due within 5 years and in default made not only the mortgaged property but also his other properties and his person liable.

Reading the mortgage deed arid the rent note together there is on manner of doubt that both the documents constitute but one transaction.

It is a well established rule of construction of deeds that the object of interpreting a written instrument is to discover the real intention of the parties. What the Court has to strive for is not to sacrifice the substance of the matter for its form. It is the substance, not so much the form, which determines the nature of the transaction which which is deposited in it. The Court is entitled to hold that a transaction which appears from the deed is only a legal mask for quite another sort of transaction, it must clear off the mask to see the real face of the transaction notwithstanding that the mask is legally perfect in itself. Fulfillment of certain formalities and the apparent form of the document cannot save the veil being torn off and discarded. Their Lordships observed in Shantabai Vs. State of Bombay and Others, , "the true nature of a document cannot be disguised by labelling it something else." See also 11 "Halsrbury(sic) (Salmond) 389, 390, Paragraphs 638 and 639.

Sir Charles Odger in his book on Construction of Deed and Statutes writes.

......... as to the deeds the rule is that, all the deeds relevant to the transaction are to be read together ......... the deeds need not be executed simultaneous, so long'' as the Court, having regard to the circumstances, comes to the conclusion that the series of events represents a single transaction between the same parties.

It was laid clown in Smith v. Chadwick (1882) 20 Ch D. 27 by Jessel, M.R.: "the doctrine as to contemporaneous documents rests on this, that when documents are actually contemporaneous i.e two deeds executed of the same moment, a very common case or within so short an interval, that having regard to the nature of the transaction the Court comes to the conclusion that the series of deeds represents a single transaction between the same parties, it is then that they are all treated as one order(sic); and of course one deed between the same parties may be read to show the meaning of a sentence, and may be equally read although not contained in one -deed, but in several parchments if all the parchments together in the view of the Court make up one document for this purpose" (pages 62-63) See also the dissenting judgment of Fletcher Moulton L.J. Manes(sic) v. Whiteley (1912) 1 Ch. D. 735 (754)(sic) which was approved by the House of Lords in (1914) A.C. 132. Referring to Rajendra Prasad v. Gupal Prasad 57 I.A. 296, it is laid down by the Supreme Court that in construing a document the fundamental rule is to ascertain the intention, from the words used:

The surrounding circumstances are to be considered but that is only for the purpose of finding out the intended meaning of the words which have actually been employed" ( Ram Gopal Vs. Nand Lal and Others, ).

I may also refer to Nanekeshwar Prasad and Another Vs. Nand Gopal Ram and Others, (Fazal Ali C.J. and Sinha J. as their Lordships were there); 1949 MBLR 365; 1955 MBLJ 1368.

Shri Anand has referred to me only one decision and that is Thommen Varkey Vs. Govindan Nair Madhavan Nair and Others, . That case has no application here because it does not appear from the judgment that there was any stipulation for payment of interest in the mortgage deed nor was any rate of interest therefore fixed.

Since I bold that the rent note was only a device for payment of interest monthly and regularly, what was payable as rent was in reality and in the eye of law only interest. That being so the provisions of the Madhya Bharat Interest Act are attracted. The Plaintiff is not entitled to Rs. 360 that amount will have to be reduced to Rs. 180 because the maximum interest allowable on a secured debt is 6% per annum.

As regards ejectment, it is clearly provided in the rent note that the tenant (mortgagor) would be liable to ejectment if he did not pay rent (interest) regularly. In this case it has been found by the Courts below that the mortgagor did not pay interest as promised in the rent rote. The mortgagee is, therefore, entitled to possession. It is not correct to think that even where the rent note is a part and parcel of the mortgage transaction, payment of interest at recurring intervals fixed in the deed cannot be enforced or that the mortgagee cannot recover possession from the mortgagor in default of payment of interest when there are stipulations to that effect. All that the Court has to do in such a case is to engraft the terms of the rent note on those of the mortgage. The decree for ejectment has, therefore, to be upheld.

From what I have said above, it is unnecessary to go into any other question for the decision of this appeal. However, Shri Sharma contends that the suit was not maintainable because the Plaintiff''s notice terminat ed the tenancy on 27-8-57 while the Defendant was asked in the same notice to pay the arrears of rent within one month and this notice was served on 29-7-57. The argument is that tenancy could not be determined before the expiry of one month from the date of the notice. In my opinion the contention is wholly untenable. Determination of tenancy is governed by the provisions of the Transfer of Property Act. In the present state of the law, the landlord has to prove two things in order to get a decree for ejectment: (1) that the tenancy has been determined and (2) that there is one or more ground existing u/s 4 of the Accommodation Control Act. Here both the conditions were satisfied, that is, the tenancy was determined on 23-8-57 according to the requirements of Section 106 of the T. P. Act; and ground u/s 4 (a) of the Accommodation Control Act is also available to the Plaintiff because the Defendant failed to pay rent within one month. But since I have held that the lease is only a part and parcel of the transaction, the provisions of the Madhya Bharat Accommodation Control Act do not come into play at all. Shri Sharma cannot have it both ways. The Madhya Bharat Interest Act applies only if the rent note is a part of the same transaction as the mortgage; the provisions of the Accommodation Control Act would have applied if I hold that the rent note was an independent transaction creating the relationship of the landlord and tenant.

In the result this appeal is partly allowed. The decree for ejectment is maintained. The decree for arrears of rent is reduced to Rs. 180. Each party shall get from the other pro-port portionate costs throughout.