Decided on September 27,1974



- (1.) THE question is whether Ext. P5 described as an'ottikuzhikanam' is a redeemable mortgage or a lease. THE trial court held that it was a mortgage and granted a decree for redemption of plaint item No. 1. In appeal filed by the 2nd defendant, the lower appellate court held that the plaintiff had not established his tile to the property and so the decision of the trial court was reversed and the suit was dismissed. THE appellate court did not find on the question whether Ext. P5 was a mortgage or a lease. In the second appeal which was heard by a learned single judge of this Court, title was found in favour of the plaintiff but the suit was dismissed on the ground that the transaction evidenced by Ext. P5 was a lease. Leave for appeal was granted by the judge and when the appeal by the plaintiff came up before a division Bench, the correctness of the view taken by the learned single judge that the payment of land revenue may well be treated as "other consideration" within the meaning of that term in S. 2 (57) of the Kerala land Reforms Act, 1963, for short, the Act, was doubted in view of the decision of the Supreme Court in Kunhamina Umma v. Paru Amma 1971 KLT 163 and it was further felt that the decision in Rev. Fr. Victor Fernandez v. Albert Fernandez 1971 KLT 216 required reconsideration. THE case was therefore directed to be placed before a Full Bench of five judges.
(2.) IT is necessary to read the whole of the document Ext. P5. I shall extract the document in an appendix to this judgment. Reliance on the provision in the document for payment of Sirkar-tax for holding that there was "other consideration" to satisfy S. 2 (57) of the Act, by the learned single judge, cannot be sustained in view of the pronouncement of the Supreme Court in Kunhamina Umma v. Paru amma 1971 KLT 163. The Full Bench decision in Rev. Fr. Victor Fernandez v. Albert Fernandez 1971 KLT 216 also, I think with great respect, has not been correctly decided. The document that was considered therein was styled as 'ottikuzhikanam" and the operative part of the document was to the effect. The Full Bench observed that "the words, in the operative portion of the document would put it beyond any doubt that the property was given for enjoyment. " S. 2 (39a) of the Act defines "ottikuzhikanam" and I shall read that section: "'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. "
(3.) IF the transaction is a mortgage within the meaning of the Transfer of Property Act, it will not be an 'ottikuzhikanam' as defined in the section. There can of course be a combination of a mortgage and a lease in that the elements of both may be present in a transaction. In most cases transactions styled as 'ottikuzhikanam' would at least be an anomalous mortgage as defined in S. 58 (g) of the Transfer of Property Act from the usual terms embodied in such documents. IF there is a lease element also present and the transfer is for the dual purposes of security and enjoyment, the further question whether the transferee would be a tenant under S. 2 (57) of the Act can arise and when that question arises it will have to be resolved on the basis of the principles which, I think, are fairly well settled by the decisions in hussain Thangal v. Ali 1961 KLT 1033 and in Krishnan Nair v. Sivaraman nambudiri 1967 KLT 78. I am unable to agree, with respect, that the expression 'ottikuzhikanam', whether it was used as the appellation given to the document, or when employed in the operative portion of the document as in Hanbpw ipgnimwhpsamsi Fgpxnxv. can be conclusive in determining the nature of the transaction. I would therefore overrule the decision in Rev. Fr. Victor fernandez v. Albert Fernandez 1971 KLT 216. The transaction evidenced by Ext. P5 can be termed to be a composite transaction in which the elements of a lease and those of a mortgage are present. In such cases "the correct approach is to take the terms of the document into consideration paying due heed to the label used, and ascertain from them whether the transaction is essentially a loan or a lease, in other words, whether the transfer is essentially for the purpose of security or for the purpose of enjoyment". (Paragraph 15 of the judgment in Hussain thangal v. Ali 1961 KLT 1033 ). And in Para. 10 of the Full Bench judgment in krishnan Nair v. Sivaraman Nambudiri 1967 KLT 78 it was said: "10. Apart from a composite transaction of the kind already mentioned, where a transfer of possession for enjoyment may be accompanied by a transfer of some other interest (in the instance mentioned, of the remainder after the lease created by the former transfer) by way of security for the loan advanced, it is theoretically possible for the same transfer to be for concurrent purposes, both for the purpose of enjoyment and for the purpose of security. In such a case, it might be necessary to find out the dominant or essential purpose; the other purpose would then be merely incidental, constituting an incident of the transfer rather than its purpose. But, generally speaking, if there is, in truth, a loan and a transfer of possession by way of security, that would be the real purpose of the transfer, and the enjoyment on the part of the transferee which this necessarily involves would be but an incident and not the purpose of the transfer. However, where the amount advanced is comparatively speaking insignificant, that would be an indication that the advance was not, in truth, by way of loan. In that event, a promise to repay, or a provision for recovery by sale would not make it a loan, and the courts would probably ignore such a provision even with out resort to S. 12 of the Act. " On a reading of the document bearing the above principles in mind, it appears to me that the conclusion to be reached is that the dominant and essential purpose of the transaction evidenced by Ext. P5 was to take a loan and to transfer an interest by way of security I shall refer to the terms of the document in detail after dealing with the contentions and after adverting to the decisions, relied on in support of those contentions.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.