1. The principal question arising in this second appeal is whether in a suit for rent upon a rent-note without any prayer for possession it is open to a defendant-tenant to plead under Section 10A of the Dekkhan Agriculturists' Relief Act that the plaintiff was not an owner of the property but was merely a mortgagee by reason of a transaction of sale which was in reality a mortgage. Both the Courts below have held that this can be done, and they have found as a fact that the transaction pleaded was a mortgage and have allowed redemption on payment of the amount found due on taking accounts. The plaintiff bought the property from defendant No. 2 in 1933. The defendant says that in effect he remained in possession after the sale. However that may be, it is not disputed that in July, 1935, defendant No. 2 and also defendant No. 1 executed a rent-note in favour of the plaintiff for nine months at a rent of Rs. 40 together with one hundred mangoes, and in 1936 this arrangement was renewed for a further eleven months on the same terms. The rent has not all been paid, and the plaintiff has brought the present suit for a sum of Rs. 85, representing two years' rent. Defendant No. 1 put in no written statement; but defendant No. 2 said in his written statement that the defendants were in possession of the property as owners and that the rent-note was not a true rent-note but had been passed merely for the payment of rent in lieu of interest upon a mortgage; and it was stated that the plaintiff had no right to claim rent on the basis of the rent-note. Defendant No. 2 accordingly asked to be allowed to redeem the mortgage on payment of the amount found due on taking accounts; and, as I have said, this was allowed. The plaintiff has come in second appeal on the ground that Section 10A does not contemplate the conversion of a suit for rent into one for redemption.
2. The reasoning of the lower appellate Court is that although Section 10A can only be applied to suits falling within Clauses (w) or (y) or (z) of Section 3 of the Dekkhan Agriculturists' Relief Act [as was stated in Tarachand v. Bala : (1938)40BOMLR974 still the suit has been converted into one falling within Clause (z), and the Courts can therefore go into the real nature of the transaction pleaded. But this reasoning is really beside the point. Admittedly the defendants cannot succeed unless they bring their defence within the provisions of Section 10A of the Act. That section permits a Court to determine the real nature of a transaction and admit evidence of any oral agreement or statement which could not otherwise be admitted by reason of Section 92 of the Indian Evidence Act 'whenever it is alleged at any stage of any 'suit' or proceeding to which an agriculturist is a party that any transaction in issue...was a transaction of such a nature that the rights and liabilities of the parties thereunder are triable wholly or in part under this Chapter (which means under Chapter III of the Dekkhan Agriculturists' Relief Act). The meaning is perfectly clear. For the section to be applicable it is only necessary that an agriculturist shall be a party to the suit and that there shall be in issue some transaction which was entered into by the agriculturist and is of such a nature that the rights and liabilities of the parties thereunder are triable wholly or in part under Chapter III of the Act : see Hallappa v. Irappa : (1922)24BOMLR406 . It is argued that the suit itself as distinct from the transaction pleaded must be one to which Chapter III applies, and for this reliance is placed on Tarachand v. Bate. But assuming this to be the effect of that decision, there is the authority of Gautam v. Malhari (1916) 18 Bom. L.R. 247 to show that the nature of the suit is determined not so much by the frame of the plaint as by the allegations of both the parties to the suit. The point of the contention is that a suit for rent falls under Clause (x) of Section 3 and does not fall under Clause (w), (y) or (z) of Section 3; and Section 12, which is part of Chapter III, provides only for suits falling under Clauses (w), (y) and (z). But the provisions of Chapter III are not confined to suits covered by Clauses (w), (y) and (z) of Section 3. This is made clear by the authority of Hallappa v. Irappa, which the learned Judges who decided Tarachand v. Bala sought to distinguish. Hallappa v. Irappa was a suit for partition in which one of the defendants claimed to resist the partition on the ground that he was a purchaser; the plaintiff thereupon pleaded that the transaction of purchase was really a transaction of mortgage, and his plea was accepted.
3. It is also argued that, even assuming the conditions of Section 10A to be fulfilled, a conversion of this kind is still not contemplated by Section 10A, or indeed by any other section of the Dekkhan Agriculturists' Relief Act. What has been done here is to convert a plaintiff's suit for rent into a defendant's suit for redemption, and it is a fact that there are no express words anywhere in the Act authorising such a substitution. But ill. (a) to Section 10A of the Act, which refers to a suit for possession by a landlord of land held on lease, suggests that the Legislature has interpreted its own enactment as authorising a conversion of this kind; and provided that the conditions expressly laid down in the section are fulfilled, it would be difficult to say that the conversion was illegal.
4. The real question arising in this appeal is whether the conditions are or are not fulfilled. The first essential condition to the application of Section 10A is that, whatever may be the nature of the suit, the transaction of which the Court is asked to determine the real nature must be a transaction in issue. Illustration (a) to the section relates to a suit for possession of land held on lease; and a transaction which would give the landlord a right to possession only as a mortgagee liable to be redeemed as distinct from an owner would, if pleaded and provable, obviously be a transaction in issue. At first sight it is not easy to see how any such transaction can be put forward as a good defence to a suit for rent on a rent-note which is not also a suit for possession. The rent must be paid; and whether it is rent pure and simple or rent in lieu of interest on a mortgage is immaterial, since in either case it is rent which the tenant is bound to pay. So that at first sight it is difficult to see how the transaction which defendant No. 2 put forward in his written statement can be regarded as a transaction in issue within the meaning of Section 10A. The question is whether the defence of sale and mortgage could really make any difference to the amount payable to the plaintiff. The written statement does not say that the defendants were not bound to pay rent; what it says is that the rent was in lieu of interest. But the existence of a relationship of mortgagor and mortgagee is not inconsistent with the simultaneous existence of a relationship of landlord and tenant. It is argued that the meaning of the written statement is that if the defendants were mortgagors, then what they had to pay would be interest and not rent, and the plaintiff would be suing not for rent but for interest and his suit for rent would not be a good suit. The written statement says that interest by way of rent has been paid for three years. But whether recovery was of rent or whether it was of interest does not seem from the written statement itself to be material since the defendant does not suggest that his payments had the effect of reducing the capital and so reducing the annual interest or rent payable for the years in suit. Obviously the defendants should have been required to make the position clearer than was done in the written statement. That they were not asked to make their position clearer is probably due to the failure of the Courts below to appreciate the necessity for the transaction pleaded to be a transaction in issue. Nevertheless the Courts below do seem to have accepted the position that the amount payable to the plaintiff could not be determined without taking accounts of the mortgage; and on the materials before us we are not prepared to say that in this respect they were wrong.
5. Taking it that this transaction is really a transaction in issue, then on the interpretation of the section given in Hallappa v. Irappa read with Gautam v. Malhari we have no difficulty in finding that the second condition for the application of Section 10A has been fulfilled in this case, since the transaction is one which the Courts might examine according to the provisions of Chapter III, it being a transaction which would fall within the provisions of the Chapter if it were the basis of a suit.
6. On the merits of the case the Courts below have found that the transaction pleaded in defence was in fact a mortgage rather than a sale, and after hearing arguments on behalf of the plaintiff in this appeal we do not find that there is any question of law involved which would justify us in interfering in second appeal with the finding of the Courts below in this respect. We therefore take it that the transaction was in fact a mortgage and that the amount due on taking accounts is the amount found due by the Courts below.
7. Defendant No. 1 put in no contentions, and it is suggested that the suit ought not to have been dismissed as against him. But the suit was dismissed against him on the ground that he was only a nominal party to the rent-note, and with that finding we see no reason to disagree. The appeal must therefore be dismissed, with costs in one set payable to defendant No. 2.