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Harilal Bhagwanji Vs. Shastri Hemshanker Umiyashanker - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 49 of 1956
Judge
Reported inAIR1958Bom8; (1957)59BOMLR881; ILR1958Bom765b
ActsTransfer of Property Act, 1882 - Sections 4, 58, 105 and 107; Code of Civil Procedure (CPC), 1908 - Order 34, Rule 14; Registration Act - Sections 49
AppellantHarilal Bhagwanji
RespondentShastri Hemshanker Umiyashanker
Appellant AdvocateA.R. Baxi and ;J.R. Nanavaty, Advs.
Respondent AdvocateM.P. Thakker, Proxy for ;P.G. Oza, Adv.
Excerpt:
.....in occupation of separate portions of premises mortgaged tenants of mortgagor on date of mortgage--rent note executed by mortgagor in favour of simultaneously with mortgage deed in respect of portion occupied by mortgagor in premises--rent payable by mortgagee and the other tenant to be credited towards interest on mortgage amount--rent payable by mortgagor under rent note equivalent to amount of interest on mortgage sum after taking into account rent payable by mortgagee and the other tenant and credited towards interest--suit by mortgagee against mortgagor on rent note for possession of premises and for arrears of rent--whether relationship of landlord and tenant created between and mortgagor--maintainability of suit for eviction.;the defendant mortgaged with possession his house to..........himself occupying the remaining part of the house. simultaneously with the mortgage, by a rent note ex. 6, executed on the same day, the portion of the house in the defendant's occupation, was leased back to him by the plaintiff for a term of six months, the rent stipulated being rs. 24-4-0 per month. the plaintiff sued the defendant for possession of the said portion and for arrears of rent on the strength of the rent note. the defence was that the rent note was a nominal document executed for securing payment of interest, that no relationship of landlord and tenant was created and that the plaintiff could not therefore sue for eviction nor for rent on the strength of the rent note. it was contended that the principal money and interest were to be realised from the mortgage.....
Judgment:

1. This appeal arises out of a suit for eviction and arrears of rent, Defendant Harilal Bhagwanji mortgaged with possession the house in suit to the plaintiff Hem-shanker Umiyashanker for Rs. 7500/- by a deed of mortgage, Ex 5, dated 23-8-52. The mortgage sum was to carry interest at nine per cent, and the principal sum and interest were charged on the mortgaged property and the period for redemption was fixed at one year. A portion of the house was already in the occupation of the plaintiff as the defendant's tenant on a monthly rental of Rs. 15/- and another portion was let out to one Mansukhlal on Rs. 17/- a month, the defendant himself occupying the remaining part of the house. Simultaneously with the mortgage, by a rent note Ex. 6, executed on the same day, the portion of the house in the defendant's occupation, was leased back to him by the plaintiff for a term of six months, the rent stipulated being Rs. 24-4-0 per month. The plaintiff sued the defendant for possession of the said portion and for arrears of rent on the strength of the rent note. The defence was that the rent note was a nominal document executed for securing payment of interest, that no relationship of landlord and tenant was created and that the plaintiff could not therefore sue for eviction nor for rent on the strength of the rent note. It was contended that the principal money and interest were to be realised from the mortgage property and a suit for rent alone, which was in reality interest, could not lie. These contentions of the defendant have been rejected by both the lower Courts and they have passed a decree for eviction and for arrears of rent and the defendant has therefore come in second appeal.

2. The first point made by Mr. Baxi for the appellant is that the mortgage deed, Ex. 5, and the rent note, Ex. 6, were part of the same transaction, that the rent note was merely a device to secure payment of interest and that it did not create any relationship of landlord and tenant between the parties, and in support of this contention Mr. Baxi has pointed out that both the documents were executed on the same day and were simultaneous. But as to this Mr. Thakker appearing for the respondent has urged that the term of the two documents is not co-extensive, viz., that whereas the period for redemption fixed in the mortgage deed is one year, the term of the lease is six months, and therefore this is a circumstance pointing against the two documents being part of the same transaction. The fact that the two documents had varying periods of operation will not however make any difference in determining the question whether they formed part of the same transaction or not : See Kultyal v. Sanjiva Rao, : AIR1952Mad877 (A). The next circumstance is that there was no delivery of possession and whatever transference of possession was there, was on paper. No liability was thrown on the mortgagee-plaintiff tor recovery of rent except that Mansukhlal was to pay rent to the plaintiff instead oi to the defendant and that rent was to be taken towards interest. No doubt, the mortgage deed recites that the plaintiff could let out the property to anyone he liked but since the property was already wholly occupied the question of leasing it out to tenants was not seriously in the contemplation of the parties. It is significant that the rent to be realised from the tenant, meaning Mansukhlal, was to be credited towards interest and the rent payable by the plaintiff himself was also similarly to be credited towards interest. But the most significant circumstance is that the rent payable by the defendant under the rent note was fixed with a view to making up the interest on the mortgage sum at nine per cent. That interest came to Rs. 56-4-0 and after taking into account Rs. 17/- payable by Mansukhlal and Rs. 15/- payable by the plaintiff, the balance viz., Rs. 24-4-0 was fixed as the rent under the rent note, Ex. 6, which means that the rent fixed was equivalent to the interest on the mortgage sum. Evidently therefore the rent note was merely a device to secure payment of interest, for else there is no valid explanation for fixing Rs. 24-4-0 as rent of the portion of the house in the defendant's occupation. The rent reserved being equivalent to the interest on the mortgage sum is held to be an important circumstance to prove that it was merely a device for securing payment of interest. (See Bhaichand Kirparam v. Ranchhoddas Manchha-ram AIR 1921 Bom 285. That was no doubt a case where a decree for rent had already been obtained and the mortgage property had been sold in execution of the decree, all the same, it was held that the sale was not legal in view of the provisions of Order 34, Rule 14, Civil Procedure Code, though their Lordships declined to set it aside for other reasons.

3. Another circumstance is that the property in suit was given in security not only for the principal amount secured but also for the interest accruing thereon and this again is a vital factor in support of the defendant's plea that the two documents formed part of one and the same transaction. This was so held in Ramnarain Pasi v. Sukhi Tiwary AIR 1957 Pat 25. That the rent was so fixed as to make it equivalent to the interest per month and that interest was charged on theproperty itself are in themselves circumstances sufficient to prove that the rent note was in the nature of a machinery for the purpose of realising the interest due on the mortgage. This view finds support from Baijnath Prasad v. Jang Bahadur Singh, : AIR1955Pat357 (D). There the mortgagor took back a lease of the mortgaged property by executing a kirayanama in favour of the mortgagee and the so-called rent payable under it in fact represented interest payable on the. mortgage money and not rent for use and occupation. It was held that the kirayanama was merely a device for regular payment of interest on the mortgage and not a lease of the property and the mortgagor could not therefore be deemed to be a tenant of the mortgagee and the mortgagee was not entitled to evict him. The mortgagee in that case had previously obtained a decree for arrears of rent but that was held to be of no consequence.

4. Therefore in view of the aforesaid facts and circumstances the only inescapable conclusion is that the two documents, exhibits 5 and 6, formed part of one and the same transaction, that the passing of the rent note was merely a device to ensure regular payment of interest and that no relationship of landlord and tenant was at all intended to be created thereby and none was created. It follows therefore that the plaintiff is not entitled to enforce the rent note and recover possession of the premises in the occupation of the defendant.

5. The second contention made by learned counsel for the defendant is that under para 2 of Section 107 of the Transfer of Property Act, the rent note Ex. 6, requires to be registered even though it might be for a term of less than a year. It is urged that if an instrument is effected then it requires registration and since under Section 4 of the Transfer of Properly Act. Section 107 of the Act is to be read as supplemental to the Indian Registration Act, the instrument (Ex. 6) will fall within the scope of Section 49 of the Registration Act and will not be admissible as evidence of any transaction affecting any property comprised therein and will not affect such property. There is, no doubt, some force in this contention but in the view I am taking on the first point, viz., that exhibit 6 did not create any relationship of landlord and tenant, I do not propose to consider this contention on its merits.

6. It was finally urged by Mr. Baxi that as no relationship of landlord and tenant wascreated between the parties, the plaintiff is not entitled to recover any rent. That is no doubt technically correct, but even in the view that the lease was merely a device for securing payment of interest, a decree for the sum due can be given and there have been several instances in which a decree for rent has been passed. It is another matter whether the decree can be executed in view of the provisions of Order 34, Rule 14, Civil Procedure Code. I understand from Mr. Baxi that the plaintiff in this case has taken out execution of the decree in this case (stay of execution not having been sought and not given) and as the matter has now come to this Court in appeal, I do not express any opinion as to whether a decree for rent passed in such circumstances can be executed or not. All the same, there can be no valid objection to giving a decree for rent on the footing that it really represents interest payable by the defendant. In : AIR1957Pat24 (C), it having been found that the lease was invalid as being not in conformity with the requirements of Section 107, Transfer of Property Act, the defendant was made to pay compensation to the plaintiff for use and occupation of the house and a decree was given on that footing. In any view therefore, the decree for rent does not call for interference in appeal.

7. For the abovesaid reasons I allow this appeal in part in so far as it relates to the eviction of the defendant from the suit property and I set aside that part of the decree and dismiss the plaintiff's suit for possession. The decree awarding arrears of rent will stand. In the circumstances of the case, the parties will bear their own costs of this appeal.

8. Appeal allowed in part.


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