Decided on July 05,1963

RAMAN PILLAI Respondents

Referred Judgements :-



- (1.)The only point for decision in this Civil Revision Petition is whether a mortgagee lessor is entitled to sue for rent after Act 31 of 1958 came into force. The property in respect of which the plaintiff petitioner sought to recover rent was mortgaged by the defendants to the plaintiffs predecessor in interest and taken back on lease. The court below held that as a result of sub-s.(6) of S.11 of Act 31 of 1958, the mortgage and lease arrangement became transmuted into a simple mortgage and that the mortgagee could sue only for the mortgage money and interest. The suit was accordingly dismissed. The plaintiff has therefore preferred this Civil Revision Petition.
(2.)The learned Munsiff observes in Para.5 of the judgment:
It was admitted by plaintiffs learned counsel that the mortgage and lease transactions in question became a simple mortgage by operation of the provisions of the Statute.

The only point taken in the court below was that the defendants had forfeited all benefits under the Act by six consecutive defaults in payment of instalments of the debt as provided in S.4 of the Act. Notwithstanding this, counsel for the petitioner contended that the mortgage and lease transaction could not be treated as a simple mortgage except for the purpose of payment of the mortgage debt and that until it was so paid, the relation of mortgagor and mortgagee should be deemed to subsist. Reliance was placed on the decision in Kumari Ittaman v. Bhaskara Menon ( 1953 KLT 89 ). That was a case which arose under Act 18 of 1114 (Cochin) which did not contain a provision similar to S.11(6). The explanation to S.9 of Act 18 of 1114 (Cochin) merely provided that the provision for scaling down of interest on debts would apply to arrears of rent payable by the mortgagor to mortgagee on a lease back of the mortgagee property. It was also argued that the two transactions of usufructuary mortgage and lease are treated as a simple mortgage by a legal fiction and that a legal fiction should be limited to the purpose for which it was created and should not be extended beyond that legitimate field. Counsel relied on the decision of the Supreme Court in the Bengal Immunity Co. case ( AIR 1955 SC 661 ), in support of this proposition. The argument was that the fiction was created only for the purpose of repayment of the debt and that so long as that was not done, it could not be applied to the mortgage and lease which were to be treated as independent transactions. The controversy is not about the principle stated above but about the purpose for which the fiction was created by S.11(6). I am unable to accept the argument that the fiction should be limited to the stage of payment of the mortgage debt. S.11(6) provides:

(6) Nothing contained in sub-s.(2) to (5) shall apply to mortgages where the property mortgaged has been leased back to the mortgagor by the mortgagee and to such mortgages the following provisions shall apply: -

(a) the mortgage shall be deemed to be a simple mortgage from the date of the lease back and the provisions of this Act shall apply to the debt covered by the mortgage;

(b) the interest payable on the mortgage amount after the commencement of this Act shall be at five per cent per annum.

The exempted clauses (2) to (5) relate to discharge of the debt when the transaction is a usufructuary mortgage. Clause (a) of sub-s.(6) enacts that the provisions of the Act shall apply to the debt covered by the mortgage. Clause (b) provides that interest payable on the mortgage debt after the commencement of the Act shall be 5 percent per annum. In view of this, it is impossible to conceive that a claim for rent survives. There is nothing in S.11(6) which restricts the scope of the fiction in the manner stated by the petitioner. It must therefore be held that the claim for rent is not sustainable and that the decree dismissing the suit must be confirmed.

(3.)The Civil Revision Petition fails and is dismissed, but in the circumstances, I make no order as to costs.

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