IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.BHAVADASAN WEDNESDAY, THE 9TH JUNE 2010 / 19TH JYAISTHA 1932 SA.No. 841 of 1997() -------------------- AS.83/1994 of PRL.SUB COURT,TRIVANDRUM OS.369/1985 of II ADDL.MUNSIFF'S COURT,NEYYATTINKARA .................... APPELLANT(S): APPELLANTS/DEFENDANTS 1, 2 AND 4 TO 7: ------------------------------------------------------------------------------------------- 1. BABY, DAUGHTER OF PACHY, KUZHIVILA VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 2. SREEDHARAN, SONOF KOCHUCHERUKKAN, KUZHIVILA VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 3. PADMINI, DAUGHTER OF BABY, MANKOOTTATHIL VEEDU, EDAKKODE DESOM,PALLICHAL PAKUTHY, PALLICHAL P.O. 4. JANARDHANAN, SON OF KALI, MANKOOTTATHIL VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 5. SIVARAJAN, SON OF KOCHUCHERUKKAN, KUZHIVILA VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 6. VALSALA, DAUGHTER OF BABY, KUZHIVILA VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. BY ADVS. SRI.PIRAPPANCODE V.SREEDHARAN NAIR, SRI.S.P.ARAVINDAKSHAN PILLAY, SRI.PIRAPPANCODE V.S.SUDHEER. Kss ..2/- ...2..... S.A.NO.841/19997 RESPONDENT(S): RESPONDENTS/PLAINTIFFS & 3RD DEFENDANT: ---------------------------------------------------------------------------------------------------- *1. OMANA, DAUGHTER OF RAJAMMAL, RESIDING AT KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. ( D I E D) - DELETED. **2. CHRISTUDAS, SON OF VEDANATHAN NADAR, RESIDING AT KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O.( D I E D) - RECORDED. *3, VIJAYAN, DAUGHTER OF RAJAMMAL, KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O., ( D I E D) - DELETED. 4. ANTONY, SON OF VEDANATHAN NADAR, KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 5. LEELA, DAUGHTER OF RAJAMMAL, KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 6. SUKUMAR NADAR, SON OF VEDANATHAN NADAR, KUZHIVILA PUTHEN VEEDU, EDAKKODE DESOM, PALLICHAL PAKUTHY, PALLICHAL P.O. 7. CHANDRIKA, DAUGHTER OF BABY, BLOCK NO.138, THONNAKKAL COLONY, THONAKKAL DESOM, CHIRAYINKIL P.O. * THE NAMES OF RESPONDENTS 1 AND 3 SHALL STAND DELETED FROM THE PARTY ARRAY AS PER THE VIDE SEPERATE ORDER DTD. 5/02/2009 IN S.A.NO.841/97. ** RESPONDENTS 4 TO 6 ARE RECORDED AS THE LRS OF DECEASED R2 AS PER THE ORDER DTD. 24/06/2009 VIDE MEMO C.F.2144/2009 DTD. 11/03/09. R4 TO R6 BY ADVS. SRI.S.RAJEEV, SRI.G.SREEKUMAR (CHELUR). R7 BY ADV. SRI.R.V.SREEJITH. THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 28/05/2010, THE COURT ON 09/06/2010DELIVERED THE FOLLOWING: Kss ORDER ON C.M.P.NO.2160/1997 IN S.A.NO.841/1997 DISMISSED 09/06/2010 SD/- P.BAVADASAN, JUDGE /TRUE COPY/ P.S.TO JUDGE Kss P. BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - S.A. No. 841 of 1997 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 9th day of June, 2010. JUDGMENT In a suit for redemption, the defendants set up a claim of tenancy. The matter was referred to the Land Tribunal concerned for a decision on the claim of fixity of tenure. The Land Tribunal concerned on a consideration of the relevant documents came to the conclusion that the transaction is a mortgage and not a lease and therefore declined fixity of tenure to the defendants. The finding of the Land Tribunal was returned to the civil court. The Munsiff's Court adopted the finding of the Land Tribunal and held that the defendants are not entitled to fixity of tenure and thereafter decreed the suit granting value of improvements to the defendants. 2. The defendants carried the matter in appeal as A.S. 83 of 1994 before the Sub Court, Thiruvananthapuram. The lower appellate court on an S.A.841/1997. 2 independent consideration of the same documents came to the conclusion that the transaction is only a mortgage and not a lease as contended by the defendants. Accordingly, the decree of the trial court was confirmed. Aggrieved, the defendants have come up in appeal. 3. The following questions of law have been formulated in this Second Appeal: “(a) Are not the defendants entitled to fixity of tenure on the basis of Ext.A1 document? (b) Whether the courts below were justified in holding that Ext.A1 document was executed as security when the recitals of the said document and intention of the parties clearly spell out tenancy. © Are not the defendants entitled to fixity of tenure in the light of the decision reported in 1975 KLT 1. (d) Is the finding regarding value of improvements supported by evidence?” S.A.841/1997. 3 4. The learned counsel appearing for the appellants contended that the courts below have erred in law in construing Ext.A1 document as a mortgage, whereas it actually evidences as a transaction of lease. Though Ext.A1 is nomenclatured as ottikuzhikanam, a reading of the document will clearly show that the transaction was for enjoyment of the property. According to learned counsel, the fact that the transferee is entitled to make improvements in the property and construct buildings is a clear indication of the fact that the transaction is a lease. Learned counsel relied on the definition of 'ottikuzhikanam' as contained in Section 2(39A) of the Kerala Land Reforms Act and contended that the transaction can only be a lease. Considerable reliance was placed on the decision reported in Raman Pillay Kesava Pillay v. Kochukunju Sankaran (1972 K.L.T. 589(F.B.)) 5. Per contra, learned counsel appearing for the respondents pointed out that a reading of the documents will clearly show that the transaction is nothing but a simple S.A.841/1997. 4 mortgage, possession having granted to the transferee. The mere fact that the mortgagee is allowed to make improvements and also to construct a building does not change the character of the transaction. Learned counsel in support of his contention relied on the decision reported in Vivekanandan v. Sadasivan (1975 K.L.T. 1) 6. The issue involved is regarding the construction of Ext.A1 document. Simply because the document is nomenclatured as ottikuzhikanam does not lead to the conclusion either way, that is it is a mortgage or a lease. The well settled principle is that the document has to be read as a whole and then a conclusion has to be drawn as to whether it is a lease or a mortgage. The distinction between a mortgage and a lease is well settled. While the transfer of interest in the case of a lease is for enjoyment of the property, in the case of mortgage, it is as security for a debt incurred by the mortgagor. The relevant portion of Ext.A1 reads as follows: S.A.841/1997. 5 “ 7. The debt incurred is a sum of Rs.400/- and the extent of property transferred is only 20 cents. One may at once notice that the transaction was of the year 1961. Rs.400/- for 20 cents was a huge amount at that point of S.A.841/1997. 6 time. The document contains an express provision of surrender on payment of the mortgage amount and it is also stated that if any building has been put up by the mortgagee, he is entitled to remove the same. 8. In the decision reported in Raman Pillay Kesava Pillay v. Kochukunju Sankaran (1972 K.L.T. 589 (F.B.)) it was held as follows: “To attract S.2(22) there must be the transfer of an interest in an immovable property to another person for the latter's enjoyment; to be more precise the purpose of the transfer must be the enjoyment of the property by the transferee. If, on the other hand, the object of the transer is to constitute the concerned property a security for the consideration received by the transferor the resulting transaction is only a possessory mortgage, and the subsequent possession or enjoyment of the property by the transferee is only an incident of the transaction and not its purpose. The question to be considered is whether Exts.P3, P4 and P5 satisfy this crucial test. It is not possible to spell out from the express provisions of the three deeds any S.A.841/1997. 7 intention on the part of the parties to create a landlord tenant relationship. The holding transferred is a paddy land measuring one acre and 36 cents, and within a short span of two years and two months it was subjected to three successive charges. The total consideration exceeds sircar rupees 1408, which is by no means a small amount considering the purchase value of money as obtained on the dates of the loans. From Ext.P5 it could be seen that the transferee Raman Pillai advanced from his pocket an amount of Rs.373.14 chms, for managing certain other properties of the transferor Illom. It is not probable that the Illom could have thought of charging its immovable property for such a comparatively small amount if it was in a position to discharge the debt by ready payment. The provision in the deeds prohibiting the transferee from; demanding repayment of the advances is ore indicative of the financial strain the transferor was undergoing than as the expression of his intention to assume the role of a generous landlord. Similarly, the reservation of an annual michavaram is not repugnant to the concept of an otti transaction. Michavaram in such a context S.A.841/1997. 8 merely represents the balance of the profits of the property to which the owner is entitled, after meeting the interest charges due on the principal advanced. In view of the express terms used in these transactions as well as the attendant circumstances we are satisfied that the transfers in this case were not for the purpose of enjoyment of the property by the transferee, but only for the purpose of securing the advances received under the respective transactions. It follows that the transaction evidenced by the documents could not be deemed to be kanoms within the meaning of S.2(22).” In the decision reported in Vivekanandan v. Sadasivan (1975 K.L.T. 1) it was held as follows: “In examining such a transaction there are two stages. At the first stage the document must be read as a whole and in its entirely giving due weight to every term in it and the nomenclature of the document and keeping in mind the surrounding circumstances. If on a reading of the document in the manner indicated above, it is evident that there has been a transfer for S.A.841/1997. 9 enjoyment for rent or other consideration, then the transaction is a lease and no further question arises. Such cases, where it is possible and the first stage, to reach the conclusion that the transaction is a lease, are very rare, and occur but seldom. The expressions “to any extent a lease” or whether “a lease at all...” occurring in paragraphs 5 and 6 of the judgment in Krishnan Nair v. Sivaraman Nambudiri will be applicable only to those transactions of the kind mentioned above and not to other composite transactions. In the case of 'other composite transactions' which are referred to in paragraph 15 of the judgment in Hussain Thangal v. Ali and again in paragraph 10 of the judgment in Krishnan Nair v. Sivaraman Nambudiri, that is, transactions other than those where it is evident that the transfer was for employment already referred to , the question whether the transaction evidences a lease or a mortgage will have to be determined by taking into consideration all th factors which are pertinent and by applying the tests detailed in paragraph 6 of the judgment in Hussain Thangal v. Ali, read in the light of the modifications made in paragraph 9 of the judgment in Krishnan Nair v. S.A.841/1997. 10 Sivaraman Nambudiri in regard to the fourth test, and bearing in mind the observations in paragraph 8 of the same judgment in regard to the second test. On applying the procedure indicated above if it is found that the elements of a lease predominate so as to justify the inference that the dominant intention was to transfer the property for enjoyment, the transaction must be held to be a lease. On the other hand, if the predominant elements indicate a transfer by way of security, then the transaction must be held to be a mortgage.” Section 2(39A) of the Kerala Land Reforms Act reads as follows: “ “Ottikuzhikanam” means a transfer for consideration by a person to another of any land other than nilam for the enjoyment of that land and for the purpose of making improvements thereon, but shall not include a mortgage within the meaning of the Transfer of Property Act, 1882.” S.A.841/1997. 11 9. A reading of the above provision shows that ottikuzhikanam means the transfer of a property for consideration for the enjoyment of that land and for the purpose of making improvements thereon. That means it should have all the characteristics of a lease as known in law. The definition extracted above clearly shows that it does not take in a mortgage within the meaning of Transfer of Property Act. As already noticed, if on a construction of the terms of the document one comes to the conclusion that the transfer is for the purpose of enjoyment then it is a lease. If the purpose of transfer is to hold it ad a debt, the transaction is a mortgage. In the case on hand, it has to be noticed that there is no provision for payment of any premium or rent or interest. True, the mortgagee is allowed to make improvements in the property and to construct building therein, but they are only incidental to a mortgage. The dominant purpose is not for enjoyment of the property, but as a security for the debt incurred by the mortgagor. Viewed from this angle, the decision in Raman Pillay S.A.841/1997. 12 Kesava Pillay's Case relied on by the learned counsel for the appellants is of no help to them and does not take a different view. 10. The contention of the defendants in the suit that they are entitled to fixity of tenure or kudikidappu were found against by the Land Tribunal. The lower appellate court has observed that the mere direction to pay Sirkar tax cannot be treated to be “other consideration” in view of the decision reported in Kunhamina Umma v. Paru Amma (1971 K.L.T. 163). The lower appellate court has construed the document in its entirety and has come to the conclusion that the purpose of transaction is as a security for the debt and the transaction evidences mortgage only. The finding arrived at by the courts below seems to be quite appropriate and in consonance with the terms of the document. No interference is called for with the finding of the court below. 11. It is unfortunate that the defendants thought it unnecessary to adduce evidence regarding the value of improvements. Therefore the trial court, in the absence of S.A.841/1997. 13 any evidence in that regard, granted a sum of Rs.100/- as value of improvements. The lower appellate court also considered this issue and found that in the absence of any evidence the defendants are not entitled to get more amount in that regard. The result of the above discussion is that the Second Appeal is without any merit and it is liable to be dismissed. I do so confirming the judgments and decrees of the courts below. There will be no order as to costs. P. BHAVADASAN, JUDGE sb. S.A.841/1997. 14 P. BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - - - - - - - S.A. No. 841 of 1997 - - - - - - - - - - - - - - - - - - - - - - - - - - JUDGMENT 09.06.2010