1. This petition is directed against the judgment dated 22-9-1975 passed by the III Additional District judge, Bangalore, in H. R. C. Appeal No. 74 of 1975, reversing the order dated 1-1-1975 passed by the principal I munsiff, Bangalore in H. R. C. No. 981 of 1970.
2. On the contentions put forward by the parties in regard to jurisdictional fact whether there existed a relationship of landlord and tenant between the respondent and the petitioner, the principal I Munsiff, applying the principle laid down in the decision in Puttananjamma v. Channabasavanna (1965) 2 Mys LJ 792 and holding that the decision in Mathuralal v. Keshar Bai : 3SCR724 bad not overruled the decision in PuttananJamma's case, dismissed the application filed by the respondent under S. 21(1)(a) of the Karnataka Rent Control Act, 1961 (to be hereinafter referred to as the Act). The learned III Additional District judge has held that the principle laid clown by the Supreme Court in Mathuralal's Case governed the facts and circumstances of this case, and has allowed the appeal.
3. This revision petition has been filed under S. 50 of the Act as it stood prior to the amendment by Act No. 31 of 1975, In view of the decision of this Court in Channabasappa v. P. Shivayogoppa (1977) 1 Kant LJ 84 that after the repeal of S. 50 of the Act by the Amendment Ordinance 3 of 1975 and Act 31 of 1975, the revisional power of the High Court cannot be invoked as the section conferring the said power is no longer in the statute book, Sri K. V. Hegde, the learned Advocate appearing on behalf of the petitioner, prayed for permission to convert e petition into one under S. 115 of the Code of Civil Procedure. Such permission was granted in Channabasappa's case, and hence the permission sought for by Sri Hegde is hereby granted.
4. The undisputed facts are that the petitioner is the owner of the schedule premises. He executed a mortgage deed as per Ex. P. I on 19-2-1967 in favour of the respondent. On the very day, he executed a lease-deed as per Ex. P. 2 reserving monthly rent at Rupees 225/-. Both the deeds were registered at one and the same time.
5. On the respondent filing the application under S. 21 (1) (a) of the Act, the petitioner contended that the transactions depicted in Exhibits P. I and P. 2 really constitute only one transaction and he had not, as a
matter of fact, taken the schedule premises lease from the respondent but the amount shown to be rent in Ex. P. 2 was in fact interest stipulated on the mortgage amount of Rs. 15,000/- at 18% and as such there was no relationship of landlord and tenant between the respondent and himself. It was contended to the contra by the respondent
6. The relevant terms in Ex. P-1 the mortgage deed are as follows:
1. the mortgagee is to-day put in possession of the schedule property and the mortgagee shall have full power to enter upon and quietly enjoy the property and realise the usufructs;
2. the said sum of Rs. 15,000/- shall not carry any interest;
3. the mortgagor shall after the expiry of 4 years and before the completion of 5 years from this date shall redeem the mortgage. If by that period the mortgagor defaults, the mortgagee can sue for foreclosure;
4. The mortgagor himself will pay the municipal taxes and keep the premises in good repair and tenantable condition. In case the mortgagor fails to do so, and the mortgagee pays the municipal taxes and affects such improvements, the mortgagor binds himself to pay the mortgagee, the amount or amounts together with interest thereon at twelve per cent per annum.'
The lease deed Ex. P. 2 narrates a clear recital that the petitioner had taken the schedule premises on rent of Rs. 225/- per month from the respondent.
7. It is undisputed that the amount of rent stipulated at Rs. 225/- per month works out at 18 per cent per annum. On the principal amount of Rs. 15,000/which is the mortgage amount.
8 From the afore-mentioned terms in the mortgage deed, a clear indication is found that in regard to money spent by the respondent-in case he finds it necessary to do so because of the default of the petitioner towards payment of municipal taxes and effecting improvements in order to keep the schedule property in good repair and tenantable condition, the said amount would carry interest at 12%. Hence it follows that in case the parties had intended the rental mentioned in Ex. P. 2 to be in lieu of interest, it would have been calculated at the rate of 12% only and not at the rate of 18%. In this very connection, it is to be noted that the petitioner has not examined himself and has satisfied himself by examining his son who is also an attest or to both the documents exhibits P. I and P. 2. The son of the petitioner has sworn that the facts narrated in Ex. P. I depict the truth.
9. It is under the aforementioned facts and circumstances that the two documents Exhibits P. 1. and P. 2 are required to be interpreted to find out whether they form only one transaction or they are in fact two different transactions as depicted in them.
10. In Puttananjamma's case (1965-2 Mys LJ 792) the fact that the rent reserved under the lease deed worked out at exactly 12% of the mortgage amount, was considered to weigh in favour of interpreting the two documents viz., the mortgage deed and the lease deed concerned as only one transaction of mortgage.
11. In Mathuralal's case : 3SCR724 , the Supreme Court has considered the facts and circumstances in the decisions in Bhagwanji v. Hemshankar AIR 1953 Bom 8, Rarrmarain v. Sukhi : AIR1957Pat24 , Umeshwar Prasad v. Dwarika Prasad, AIR 1944 Pat 5 and Ganpat Turi v. Md. Asraf Ali : AIR1961Pat133 , and in contrast have also considered the facts and circumstances in the decisions in Jankidas v. Laxminarain and Lalchand v. Nenuram . In the first set of cases what was made out as two transactions as mortgage and lease-back was held to be in fact one transaction applying very principles 'Stated by this Court in Puttananjamma's case (1965-2 Mys LJ 792). In the second set of cases of Rajas than High Court, it was held to the contrary. The reasoning in the second set of cases has been excerpted by the Supreme Court as follows:
'Whether the two documents represent one transaction or two different transactions, a Court of law should be anxious to give effect to the terms in both the documents instead of being unduly critical about them ... Having secured the possession of the mortgage, the mortgagee is further entitled to lease it out even to the mortgagor. It is in the interest of the mortgagor that the property is leased out to him as he can better look after it. There is nothing objectionable in this, nor is there any statutory prohibition for such transactions. Now if the parties do this by executing proper documents, it is the duty of the Court of law to give effect to them.'
After excerpting the reasoning as above, the Supreme Court has laid down as follows in paragraph 15 of its judgment:
'In all such cases the leasing back of the property arises because of the mortgage with possession but we find ourselves unable to hold that the mortgagee does not secure to himself any rights under the deed of lease but must proceed on his mortgage in case the amount secured to him under the deed of lease is not paid. If the security is good and considered to be sufficient by the mortgagee there is no reason why he should be driven to file a suit on his mortgage when he can file a suit for realisation of the money due under the rent note, The position of the creditor is strengthened whereas in this case the interest on the amount of the mortgage is not the same as the rental fixed. If during the continuance of the security the mortgagee wants to sue the mortgagor on the basis of the rent note and take possession himself or to induct some other tenant thereby securing to himself the amount, which the mortgagor had covenanted to pay, there can be no legal objection to it. Under the provisions of Order 34 R. 4, he cannot deprive the mortgagor of his right to redeem excepting by proceeding on his mortgagee. Although we express no final opinion on this point, it may be that a mortgagee who secures a decree for payment of arrears of rent cannot put the property to sale for realisation of the amount decreed but there can be no objection to his suing for possession if the rent note entitles him to do so. So long as the mortgagor had a right to redeem the mortgage he can always pay off the mortgage and get back possession. This position would continue so long as the property is not sold under a final decree for sale under the provisions of O. 34, Civil Procedure Code.' (Underlining is mine)
It has been already pointed out that there is a term in Ex. P. 1 that in regard to moneys that the mortgagee would be spending for paying municipal taxes and effecting improvements the mortgagor was to return the same to the mortgagee with interest at 12%. That shows that the mortgagee was entitled to interest at 12% on the money spent by him. It therefore follows that the mortgagee was expecting a return of 12% only, not 18%. When that is so, the rental if the transactions depicted in Exhibits P. I and P. 2 were intended to be only one transaction of mortgage would have been calculated to work out at 12% on Rs. 15,000/- 'the mortgage amount. This fact weighs very much in favour of the contention of the respondent and adds to the reasoning found in the decisions of Rajas than High Court in Jankidas' case and Lalchand's case and approved by the Supreme Court in Mathuralal's case : 3SCR724 .
12. In the result, I agree with the conclusion of the learned III Additional District judge and dismiss this petition. No order as to costs.
13. Petition dismissed.