Velu Mudaliar and Others vs Rajaram karayalar

Ramaswami, J.—This is an appeal preferred against the decree and judgment of the learned District Judge of Tirunelveli in A. S. No. 199 of 1951 confirming the order of the learned District Munsif of Tenkasi in O. P. No. 14 of 1950. The short facts are: The respondent before me usufructuary mortgaged the properties to the appellants'' father apparently on the understanding that they were his separate properties. Subsequently there was a suit by the son of the mortgagor and the mortgagee lost half of the properties after enjoyment of the properties for one year. Then this application was filed by the appellants for a declaration of the amount due to them under the usufructuary mortgage under S. 9-A of Madras Act IV of 1938.

Of the two points taken in both the lower Courts and here the first is that this particular usufructuary mortgage is exempted from S. 9. A (10) (ii) (b).

It is urged that during the period between 1937 to 1944 there was a sub-mortgage by the mortgagee and that this sub-mortgage is also a transfer of limited interest within the meaning of S. 58 of the Transfer of Property Act and would therefore come within the phrase "the mortgagee has transferred wholly or in part the mortgagee''s rights in the property."

In regard to this objection, the learned District Munsif repelled it in the following terms:

The language used is that the mortgagee should have transferred either wholly or in part, the mortgagee''s rights in the property. A case where a part of the forthright has been wholly transferred would answer the requirement of this clause. The legal connotation of the word ''transfer'' is in my view, absolute and unqualified. The word ''''transferred" is certainly not equivalent to the word "encumbered". An encumbrance may, no doubt, be described as the transfer of a limited interest in property but for that reason the word "encumbrance" cannot be equated with the word ''transfer''. An encumbrance imports the notion of a constricted transfer. In other words, the transfer of a truncated right in property is denoted by the term ''encumbrance''. The words ''wholly or in part'' qualify the extent of the hypotheca that is transferred and not the amplitude of the right therein. If the legislature had used the words ''encumbered, either wholly or in part, the mortgagee''s rights'' it might give support to the contention that it intended to embrace not only assignments of the mortgagee''s rights but also sub-mortgages of the mortgagee''s rights."

The learned District Judge in appeal agreed with the conclusion of the learned District Munsif but pointed out that the use of the word "encumbered" could not be considered to be appropriate and that on the other hand we must construe whether the interpretation that a sub mortgage is also a transfer of limited interest within the meaning of S. 58 of the Transfer of Property Act, is applicable in the context of this case. The learned District Judge also pointed out that what the legislature has contemplated is an outright transfer and not a sub-mortgage and that the transfer need not be of the mortgagee''s rights in the entirety of the hypotheca, and that is what is intended by the words ''either wholly or in part'', because if we hold that the saving clause contained in S. 9-A (10) (ii) (b) will apply also to a sub-mortgage by a mortgagee of his entire rights in the hypotheca, it would give rise to difficulties in applying the saving clause. The saving clause says that the main provisions will not apply to such part of the mortgaged property which has been transferred. Therefore the learned District Judge remarks:

In the case of sub-mortgage by the mortgagee bow are we to fix the value of the part which has been transferred by the sub-mortgage.

The difficulty will become greater if the sub mortgage is itself only a simple mortgage with interest accruing from time to time in which case the value of the sub-mortgage right will be fluctuating. Therefore the proper interpretation to be given in the context of the case is to construe the words ''transferred in part'' to mean transfer of the entirety of the mortgagee''s right in part of the hypotheca and in which case there would be no such difficulty in applying the saving clause. The learned District Judge further pointed out that the correct meaning of the saving clause must be as indicated by the learned District Munsif and it is also clear from the proviso in the succeeding clause, for instance, the proviso says that the transferee shall not be entitled to recover anything more than the value of the consideration for the transfer. This proviso would be quite appropriate if the transfer is of the entire mortgagee''s rights in part of the hypotheca. But it will not be appropriate if the mortgagee transfers only a limited right and creates a simple sub-mortgage of his rights in the entire hypotheca, in which case the proviso would merely entitle him to recover the principal amount which was advanced for the Sub mortgage. That would be unjust because there is the question of interest also and there is no reason why he should be deprived of his interest. Then when we come to the succeeding clause it appears to indicate the same thing, because it speaks of the property being leased back to the mortgagor and the transferee recovering such rents, if any, due on such lease. This undoubtedly shows, as mentioned by the learned District Judge, only the normal case of the transfer being an outright or absolute transfer of either whole or part of the hypotheca. Finally the learned District judge concluded that it seemed to him reasonable and proper to construe the words ''wholly or in part'' occurring under S. 9-A (10) (ii) in the same sense in which they have been used in S. 9-A (10) (ii) (a), because it is clear that in the preceding CI. (a) the words "wholly or in part" are used only with reference to the extent of the hypotheca and not the extent of the rights of the mortgagee in the hypotheca. I entirely agree with the reasoning of the learned District judge and hold that exemption pleaded on this ground must fail.

The second objection raised is hat because the entire properties hypothecated have been enjoyed by the mortgagee only for a period of one year on account of the mortgagor''s son filing a partition suit and getting half of the properties, S. 9-A (10) (ii) (b) would not be applicable. I am unable to subscribe to that pro- position, because such a construction would be entirely contrary to the spirit of the Act as well as the letter which says that the 30 days period for working out the mortgage has to be calculated only with reference to the property actually enjoyed by the mortgagee under the terms of the mortgage. In this case what happened is on account of the fact that half of the properties have been lost by the mortgagee by reason of the partition suit filed by the mortgagor''s son, and so both the Courts below have exempted half of the principal from being scaled down by applying the 30 years rule to that part of the properties only which have been enjoyed throughout from the time of the mortgage. The usufructuary mortgage after ail is only a security for fencing monies and that security is not destroyed in any way by proper reliefs being granted in regard to the portion of the principal which the mortgagee has lost. 1 do not see any reason why this great beneficial measure for rehabilitation of the ryots in South India should be construed in such a manner as to work out hardship in the deserving cases like that of the respondent before me. Therefore the second objection also fails.

Finally, it is pressed before me that a sum of Rs, 200 which seems to have been spent by the mortgagee for defending his title in the partition suit, O. S. No. 198 of 1942, which was filed by the mortgagor''s son for his half share in the properties, should be given credit. The learned District Judge has rightly pointed out that under S. 9-A (8) only the costs of improvements, if any, effected by the mortgagee to the property mortgaged can be claimed but not'' such litigation expenses. This does not mean that the mortgagee is without remedy. He can wait till a suit for redemption of the mortgage is filed by the mortgagor for possession of the properties, which he cannot obtain by merely securing this declaration under S. 9.A and then ask for inclusion for the amount he has spent in defending his title in the partition suit. In the result, this appeal is disposed of accordingly. Each party will bear his own costs throughout,