1. The appellant, who had secured a judgment and decree in his favour in O.S. No 134 of 1977 on the file of the Principal Munsiff, Belgaum, has preferred this appeal against the judgment and decree of the IV Additional Civil Judge, Belgaum,, in R.A. No. 86 of 1979, by which he has set aside that judgment and decree of the Munsiff. The respondent was the defendant in the suit.
2. The suit was for redemption of the suit schedule property, it being a non-residential premises situated at Belgaum City and said to have been mortgaged with possession to the defendant under a registered document dated 1-5-1974. According to the plaintiff it was a self-redeeming mortgage redeemable on or after 30-4-1976.
3. The defendant resisted the claim contending, inter alia, that the transaction was not a mortgage; that it was a lease; and that he and the plaintiff never intended that the transaction in question should be a self-redeeming mortgage and on the other they intended that to be an lease (para-11 of the written statement).
4. The learned Munsiff, as stated above, allowed the claim stating that it was a mortgage; that it stood redeemed and that possession of the suit property should be delivered to the plaintiff. He further directed the defendant to render accounts and allowed future mense profits to the plaintiff. This was the preliminary decree he had granted.
5. On appeal the learned Civil Judge, Who had formulated the only point it being, as to whether the court below had erred in holding that the suit transaction was self-redeeming mortgage and a lease, has held that it was a lease and not a mortgage.
6. The learned counsel for the appellant mainly urged two points. His first point was that the court below had erred in examining the nature of the document to find out as to whether it was a lease or a mortgage without there being any specific plea, as to the nature of the document, by the defendant. Secondly, according to him, that even otherwise the court below had erred in not noticing the fact of there being practically no evidence on behalf of the defendant in support of his plea that the transaction was a lease.
7. On the other hand, the learned Counsel for the respondent supported the judgment and decree of the first appellate court and took me through the document in question, and submitted that , looked at from any angle, in the background of the facts placed on record the transaction ought to be construed as a lease, and that the first appellate court has done the right thing.
8. In the first point raised by the learned Counsel for the appellant, there is no force. I have referred to the pleadings of the parties above, and the defendant has specifically taken the plea that the document in question was not a mortgage but a lease.
9. The document in question is P-10 in the suit. It is in Marathi, and a translation of the same in Kannada is placed in the record. It is described as a self-redeeming mortgage. It runs as follows: That since he (plaintiff) was in need of money to put up a house in the hittal (backyard), he, having borrowed RS.2800/-, had mortgaged the house to discharge the entire principal and interest; that the duration of the mortgage was from 1-5-1974 to 30-4-1976, and that at the end of the period the mortgage will get itself redeemed; that the mortgage-in-procession should not lease out the property but should use the same to carry on his business; that the mortgagor himself will pay house tax etc., and will get the building repaired; that after the period of mortgage is over the mortgagee should vacate and handover vacant possession of the, building; and the mortgagor would obtain possession thus handover to him.
10. It may be relevant to note that on similar terms and for a similar sum as stipulated at Ex. P-10 this very shop premises had been subjected to two similar transactions between the same parties previously for similar periods.
11. The bone of contention between the parties has to be resolved by a proper construction of Ex. P-10.
12. As observed by the Supreme Court in Fuzhakkal Kuttappu v. C. Bhargavi : 1SCR696 ' that nomenclature given to a document by the scribe or even by the parties is not always conclusive.' As further observed therein that ' in construing a document, it is always necessary to find the intention of the party executing it.' and that 'that intention has to be gathered from the recitals and the terms in the entire documents and from the surroundings circumstances.' It has been further observed that ' when there is a document of a composite character disclosing features of both mortgage and lease it need not be necessarily be taken as lease.' but, ' the court will have to find out the predominant intention of the parties executing the document viewed from the essential aspect of the reality of the transaction.' In that case the document had been described as an 'otti-deed.' The consideration was mostly past debt and only a small cash had been received on the date of the execution. The property had been given for 72 years. A fixed amount called 'purapped' was payable annually to the transferor. The Otti amount had to be repaid after the expiry of 72 years. There was no recital that the land had been given as security for the debt. In that case the supreme court held the transfer to be lease. The factors that weighed with the court to do hold were that the transferor had to pay a fixed annual 'purapped' ; and that the document did not contain any clause to the effect that the transfer of the properly was as a security for the debt. At para. 14 the Supreme Court observed as follows:
'Mortgages are not always simple English, or usufructuary or such other types as defined In Transfer of Property Act. They are anomalous than what is defined in the said Act. Even so, there is one more essential feature in a mortgage which is absent in a lease, that is the property transferred is security for the repayment of debt in a mortgage whereas in lease it is a transfer of a right to enjoy the property. We have seen that the essential feature of mortgage is missing in the document in question . We are therefore unable to come to the conclusion that it is a mortgage and not a lease.
This is a shop premises. The condition is that the transferee shall have to be in possession carrying on his business therein but should not lease it out. If he cannot remain in procession for some reason, what is the way out to him to realise the money supposed to have been lent? In Kameshwar Singh V. State of Bihar. : 37ITR388(SC) While constructing whether transaction involved therein was a mortgage or a lease, the Supreme Court at page 152 (of SCJ). (at P.1309) of AIR), has observed that 'there is no express term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct. There is no interest fixed or right or redemption granted. There is no provision for any personal liability in case any amount remained outstanding at the end of the term 28 years.' That transaction was held to be a lease. In the instant case also no rate of interest is fixed in the document and also it is not specifically stated that in case possession is not redelivered the transferor had the right to redeem the property.
13. It is admitted that the defendant is dealer in liquor. He has a wine shop in the premises and, as already stated, on two periods of two years each, prior to this period of two years, this non-residential premises had been given to the defendant on terms similar to those contained an EX.P.10. As observed in Mangala Kunhamina Umma v. Puthiyaveetil Paru Amma : 3SCR582 one of the tests to find out as to whether the transaction is a lease or a mortgage is, whether the purpose of the transaction is enjoyment of the property by transferee or whether it is intended to secure the repayment of debt by transfer of interest in the property. It is also further observed in that case that the 'circumstances and the conduct of the parties are always a useful guide in ascertaining the true character and content of the transaction.
14. In the instant case the predominant intention appears to be that the transferee should be in procession of this non-residential shop premises and the transfer does not appear to have been made to secure the repayment of debt. If all these features and the surrounding circumstances and the previous transaction between these parties are taken into consideration, the transaction in question appears to be a lease and not a mortgage. The finding of the Civil Judge that it is a lease is into liable to be disturbed.
15. Therefore, there being no merit in this appeal it is dismissed. However, parties are directed to bear their own costs.
16. Appeal dismissed.