Decided on October 04,1968



- (1.) A tenant -so I have eventually found him to be, in this appeal -seeks to resist the execution of a decree for redemption of a mortgage, and in so doing, has raised the ancient and never finally resolved question of how to tell a mortgage from a lease. The clarification by Judges of the juridical ideas behind the two does not yet serve to give us simple litmus tests by which a given transaction may be said to be this or that. The legislature, by insensible degrees and sometimes by revolutionary leaps, has endeavoured to give protection to tenants and in that process has brought in categories, otherwise understood to be mortgages for classification as tenancies. The same legislature, in its compassion towards debtors, has attempted to save mortgagors in their unfortunate lot as debtors and allowed them to redeem their property on concessional terms from creditors figuring as mortgagees. This cross-ruff has produced provisions of law of which section 2 (22) of The Kerala Land Reforms Act, 1963 (Act 1 of 1964) and Section 5 of The Kerala Agriculturists Debt Relief Act, 1958 (Act 31 of 1958) are excellent examples. Quite often, as in the case of Ext. P-l in this appeal, the transaction partakes of the character of a lease and of a mortgage and Courts, confronted with these mongrel deeds, have attempted to separate the ingredients and sometimes hair-split, with the result that the observations made by Ghosh several decades ago hold good even today. The learned author states: "on the question whether a transaction amounts to a mere lease or mortgage, or whether it partakes of the character of both, a crowd of cases has accumulated in the law reports which would require a catalogue as long as that in the second book of the Illiad, and I may add without offence, as dry as Homer's list. But I confess I have not been able to unearth any definite rules from the mass of case law in which the question is buried. " (Law of Mortgages in India pp. 134-135 3rd Edn.)Even Full Bench rulings have attempted to simplify the law and to produce clear tests but the difficulty still persists. The traditional way to tackle the question is to itemise the features pro and con and find out the resultant force, whether in favour of a mort- gage or of a lease. Let us proceed that way. The document describes the transaction as Otti, which bespeaks a mortgage, with an implied right of sale and therefore goes against the transaction being treated as a lease. The other features are evident from the following extracts from Ext. P-l: (Extracts being in vernacular are omitted in this report -Ed.)The properly, a waste land 6 acres in extent, was transferred in 1080, on otti. The recitals, notwithstanding the label, eloquently testify to the transaction being a tenancy, in large part or predominantly. For, the primary purpose of the transaction is to make over possession of a waste land to another for the purpose of making improvements,. after protecting the holding with stone-walls, he is asked to take the income, plant it with cocoanut trees, jack trees and other like trees, presumably fruit-bearing trees, and construct a homestead. He is to pay a small rent after adjusting the interest of the ottiyartham. There is the further provision that at the expiry of the 12 years (which is the customary period in a lease, and may not be incompatible, I must say, with a mortgage) either a renewal or surrender of possession is lo follow. The object, as I understand it, was to enable a cultivator to get into possession of a waste land and to enjoy it by planting it up and making a homestead there for himself and continue, after the customary period of 12 years, by getting renewals thereof. It is true that there is an advance of Rs. 325/- and the transaction styles itself an Otti. But it is difficult to say that it is a borrowing and not an advance being received by the landlord. It is equally difficult to say that the name of the deed is fatal to its complexion as a lease. However, in the light of the fairly elaborate arguments advanced, it is only proper to consider, in a brief way, the recent rulings relevant to the point.
(2.) RAMAN Nayar J. , who wrote the leading judgment in both the Full Bench decisions cited before me, reported in Kunhiparan v. Venki teswara Naickan, 1967 ker LT 616 = (AIR 1968 Ker 38) (FB) and Krishnan Nair v. Sivaraman Nambudiri, 1967 Ker LT 78 = (AIR. 7067 Ker 270) (FB) as also the judgment in the oft-cited ruling in Hussain Thangal v. Ali, 1961 Ker LT 1033 -had to consider in C. M. A. 135 of 1063 a transaction of Otti, with fairly comparable terms as Ext. P-l in our case. It must however be remembered that his Lordship pronounced judgment in that case as early as 6th November, 1963, while the Kull Bench decisions were rendered a few years later. After setting out the terms of the transaction, Raman nayar, J. , observed: "undoubtedly we have here a transfer for consideration by a landlord of an interest in specific immovable property, the incidents of which transfer include - (a) a right in the transferee to hold the said property liable for the consideration paid by him; (b) the liability of the transferor lo pay the transferee interest on such consideration; and (c) payment of micliavaram and renewal on the expiry of a specified period. (I regard the annual payment of 3 1/2 fanams by the transferee to the transferor as michavaram, none the less so for this being for the proportionate michavaram due from transferor to the jenmi as a charge on the properly. It is residual rent -see the definition of 'rent' in Section 3 (25) of Act 7 of 1963. But I must confess that it seems to me that in specifying the payment of michavaram as an incident of a kanarn both Act 4 of 1961 and Act 7 of 1963 like their forbear, the Malabar tenancy Act, really beg the questions. For they define michavaram as what is agreed to be paid periodically by a kanomdar so that to find that a particular payment is michavaram you have first to find that the transaction is a 'kanom'.)The only other requirement necessary to make the transaction a kanom within the meaning of the first part of the definition in Section 3 (8) of Act 7 of 1963 is that the transfer should be for the transferee's enjoyment. Of that there can be, I think, little doubt notwithstanding that the consideration of Rs. 140 must have been very nearly the market value of the land -although the land is 3 acres in extent it was only Cherikkal land and the transaction was in 1905 when land was cheap; and practically the whole of the income was to be appropriated for interest. For, the recitals in the document indicate that the transfer was, so that the transferee may improve and enjoy the land rather than that he should hold it as security for a loan; else it was not necessary to specify that he was to enclose and terrace the land, plant fruit trees thereon and live in it. It would have sufficed to say that he was to be in possession. Another circumstance which shows that the transaction was a kanom rather than a mortgage is the provision for renewal which though perhaps not altogether inconsistent with a mortgage is characteristic of a lease. That the transaction is called an Otti and not a kanom or kanapattom is of no significance since the definition says that the document may describe the transaction as kanom or kanapattom or by any other name. " I must however point out that there is a crucial change -so the Full Bench rulings have said -in Act I of 1964, in defining kanom in that "or by any other name" has been deleted now, while these words were present in the corresponding provisions viz. , Section 3 (8) of Act 7 of 1963. Although I am not quite convinced that the legislature deliberately wanted to insist on the document describing transactions as kanom or kanapattorn, I am bound by the Full Bench ruling. But the argument that because the document calls a transaction an Otti, therefore Section 2 (22)cannot, in its first paragraph, take in such a transaction and cannot, in the second paragraph relating to the non-Malabar area, take it in either because there is no payment of customary dues contemplated in the deed, becomes unavailing, when we remember that what does not become a kanom under Section 2 (22) of the Act may still become a tenancy under Section 2 (57) of the Act, as the Full Bench ruling in 1967 Ker LT 78 = (AIR 1967 Ker 270) (FB) has convincingly pointed out.
(3.) MANY decisions, reported and unreported, have adopted approaches to the question of mortgage or lease which sometimes conflict with one another and often turn upon the particular facts of each case. To distil principles of general application, one has to study the two recent Full Bench rulings reported, in 1967 ker LT 78 = (AIR 1967 Ker 270) (FB) and 1967 Ker LT 646 = (AIR 1968 Ker 38) (FB ). The propositions laid down there are binding, and even if sometimes too abstruse, abstract and recondite, are the most comprehensive and fruitful judicial effort in this field of law, if I may say so with great deference. A few later rulings seeking to annotate the observations of the Full Bench were brought to my notice by respondent's counsel but I prefer to go by the Full Bench decisions themselves.;

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