1. The plaintiff is the appellant in both the appeals, and had, on 10-6-1121, demised the plaint A schedule items for a year to the first defendant. The lease, Ext. A, is a registered deed; and there under the lessee had stipulated an annual pattern of 190 paras of paddy, payable in Kanni and Makaram. The lessee had further offered the plaint B schedule property, which belongs to the lessee, as security for the due payment of the pattom. This part of Ext. A is important, and the following is the relevant extract from the translation furnished to us by the parties' learned advocates :
'..... If the pattom is kept in arrears, the same will be paid with interest according to law, and the properties will be kept and taken care of by me without any damage to the survey stones and the boundaries. For the arrears of pattom and interest thereon and for the expenses of realisation of the same, if any incurred, the property held by me as per kanam document No. 1515/1101 and mortgaged by me to Krishnan Thampi for Rs. 2000/-, and described as item 5 in the schedule here below, is hypothecated subject to the said mortgage for Rs. 200/-, and you can, therefore, realise the arrears of pattom and interest and other amounts by sale of whatever rights I have on the said item 5, from me personally, and from other properties belonging to me.'
Though the lease was only for a year, the first defendant had, after the period, continued in possession, and had as well made default in payments of rent. The appellant, therefore, instituted O. S. No. 488 of 1124 to recover the pattom for 1123 and 24, and later instituted O. S. No. 264/ 1950 for the pattom of 1125. In both the suits the appellant has claimed enforcement of the charge, and has impleaded 12 persons, the 12th defendant being the subsequent mortgagee of the plaint B Schedule property. The aforesaid mortgagee has contended that he never knew about the lease before the institution of the suit, and the first defendant had in 1122 executed a usufructuary mortgage, whose consideration was advanced in order to discharge the hypothecation, debt of 1120 as well as for the tarwad necessities of the 1st defendant. The 12th defendant has also put forward the claim that he had a prior charge by subrogation.
2. The trial court had found that the appellant had a prior charge to the extent of Rs. 300/-, for which alone stamp value was paid in the leasedeed, and that the 12th defendant was not entitled to any priority by subrogation. As regards the price for paddy, the trial court found that the appellant could only get the price prevailing for the pattom payable during those months. Thereafter the appellant preferred A. S. No. 31/51 against the decree in the suit, which was to recover the pattom of1125; and A. S. No. 32/51 against the decree which was in respect of the pattom for 1123 and 1124; and asked for a first charge on the B schedule property for arrears of all the years. The 12th defendant also filed a cross-objection in A. S. 32/51 praying disallowance of the charge given to the appellant; and, alternatively, for the priority in his own favour as regards the amount paid to discharge the hypothecation debt of 1120.
The lower appellate court dismissed A. S. 31/51 82/51, and allowed the 12th defendant's cross-objection. The aforesad judgment rests on the finding that, charging the B schedule property would not endure beyond the period, for which the A schedule property had been leased by Ext. A. The lower appellate court has further held that the lease and the mortgage, being separate bargains, the latter would not be automatically renewed, because Section 59 of the Transfer of Property Act required all mortgages exceeding Rs. 100/- to be through registered documents. Two appeals were filed in the Travancore-Cochin High Court, S. A. 512/54 being against the decree in A. S. 32/51 and in O. S. 488/1124, and S. A. 511/54 against the decree in A. S. 31/51 and O. S. 264/50. The learned Judge thought that the three questions of stamp, of subrogation, and of the security for the rent not extending beyond the express period given in the document, to be of importance; and therefore, referred the appeals to a Division Bench. The learned Judges of the Bench also thought the questions to be of substantial importance, and referred them to the Full Bench; and hence the appeals have been argued before us.
3. The only issue argued before us is whether the charge on the plaint B schedule properly would continue to be operative beyond the period mentioned in Ext. A, and we find the decisions on the legal point not to be unanimous. One view is that the security for the rent does not extend beyond the period mentioned in the lease, should the tenant continue in possession, and a fresh lease with the consent of the landlord, arises under Section 116 of the Transfer of Property Act. Such an opinion been held in Kutti Umma v. Madhava Menon, 11 Mad LJ 186, Mamambath Pettiyeth v. Cheria Uthalamma, 16 Ind Cas 560 (Mad), Rama Vadhyar v. Krishnan Nair, AIR 1926 Mad 398 and Gnanadesikam v. Antony, AIR 1934 Mad 458). The reasoning on which the view rests is that, all the terms of the expired lease do not extend to the new lease, and the charge, being separable collateral security, would not cover the new promise. Another reason in support is that a charge on immovable property must comply with the statutory provisions for creating charges, and the lessee's possession after the expiry being under a new lease from year to year the old charge would not cover the fresh jural relations without complying with the statutory requirement. The other view is that the security for the payment is closely linked with the liability to pay, and would accompany the rate, the time and other stipulations: concerning the rent, all of which extend to the new lease due to the possession of the property leased being retained after the expiry of the period fixed under the lease deed. According to this view the security is a continuing guarantee for the discharge of the obligation to pay the rent, and would endure so long as the liability to pay continues. This had been consistently held by the Cochin High Court and in Devaki Amma v. Ramachandra Kammathi, 1955 Ker LT 173 : ((S) AIR 1955 Trav-Co 146) (FB), where the learned Judges found the charge under the expired lease to be available beyond the period of the lease. The view of the Travancore High Court had not been consistent, and the Madras High Court also in Ramakrishna v. Bargavi Amma, AIR 1947 Mad 424, has held that the provisions securing rent upon immovable property in a lease for a term applied to the holding after the perod had expired. In thse circumstances, thse appeals had been referred to the Full Bench, and particularly because the correctness of the observation in Devaki Amma's case (1955 Ker LT 173 : ((S) AIR 1955 Trav-Co. 146) (FB), that the security for the arrears of rent extends beyond the period even when the earlier lease and charge be under the Transfer of Property Act, wag found doubtful. It is, however, clear that the choice of either of the aforesaid views would be unnecessary, where the lessor be claiming the benefit of the charge during the period, which is enlarged by a statute, and the legal position in this case is such. Ext. A had been executed when the Cochin Verumpattomdars Act, No. VIII of 1118 was operative: and Section 4 of the Act reads as follows:--
'Notwithstanding any law, custom or contract to the contrary, every verumpattomdar shall have fixity of tenure in respect of his holding and shall not be evicted therefrom except as provided inSection 8 of this Act.'
In such a case the reasons, on which the terms of the expired lease bave been held not to extend to the new, become irrelevant, because the further possession rests not on any contract; but the period of the lease is enlarged under the statutory provision. Therefore, no difficulty of the security under the old contract being, without conforming to the statutory provisions extended to new tenancy arises. Yet the jural relation under the lease continues, is extended beyond the agreed period, and the relation of the landlord and tenant ceases to be terminable on the expiryof the period mentioned in the lease; The legal position is then that the time limit mentioned in the lease becomes inoperative but the security for the due payment of rent does not immediately perish. It survives because it is attendant on the liability to pay the rent, which is continued; and such surviving obviously would continue so long as the liability exists. Therefore, the security would be alive for the whole of the statutory period, and this appears to us to be the inevitable consequence of the contractual obligation to pay rent being continued under the statutory tenancy.
4. Now it is well settled that all rules concerning ordinary leases do not apply to tenancies, whose periods are enlarged by the statute. In Morrison v. Jacob, (1945) 2 All ER 430, the question considered was whether a tenant, holding after the expiration of the lease, from whom the landlord had accepted rent, but protected by the Rent Restriction Act, became a tenant from year to year and entitled to six months' notice. It was held that no common law tenancy was created, and, therefore, notice to quit was unnecessary. In Baldeodas v. G. P. Sonavalla, AIR 1948 Bom 385, a tenant of certain premises, governed by the Bombay Rent Control Act, continued in possession after, the termination o his tenancy by notice to quit; and it was held that the acceptance of the rent by the landlord cannot be treated to be only on the basis of Section 116 of the Transfer of Property Act, and the position of law has altered since the Act. Finally, in Madhavan Nair v. Ankan, 1961 Ker LT 704 :(AIR 1962 Kerala 55), one of us had held that the effect of the statute prohibiting eviction of the tenant, is statutorily to continue the tenancy, even though the lease has been determined; and, in such a case, the effect of the provision is to revive the tenancy between the lessee and the landlord.
5. The position, therefore, is that S, 4 of the i Verumpattomdarg Act, had converted the lease into a 'statutory tenancy' even during the period under the. lease, which is continued after the period had expired, and no new lease is created, which should have a new registered document to sustain the security for its rent. It is further clear that the rent the parties had agreed, the time of its payment andi its quantity continue, because the statute has not varied such obligation, It is equally certain, that this obligation is extended and tne security is closely linked with obligation. It follows that the contractual obligation to pay rent having been extended, the security for the rent being paid cannot be limited to the period under the lease. Therefore, the security On surviving the periods becoming in operation would continue so long as the obligation to pay the rent lasts. We do not say that such duration cannot by express or necessary implication be limited, but the extract given earlier in the judgment shows the undertaking not to be so curtailed and is intended to cover the duration of the liability. Therefore, so long as the rent under the lease be payable, the security to guard against the failure to pay would also continue. It was -argued that the statute gives its own security for the rent and such a conclusionin these circumstances would not be justified. Further security is not, however, prohibited and we do not see how the parties in these circumstances are precluded from adding to their statutory guarantee. Therefore, the ground, on which the lower appellate court had allowed the appeals fails.
6. It is also clear, that the security is in wide terms, and to hold its being limited to the amount for which the stamp on the document had been paid would not be correct. In the context we feel the trial court has erred in holding the appellant's right of security over the B schedule property to be limited to Rs. 300/-only and the whole of the arrear of rent found due would he recoverable from the aforesaid property.
7. Lastly the lower appellate, court has declined to extend the benefit of subrogation to the 12th defendant, and we feel the decision to be correct, because the earlier mortgage had been extinguished and has not been kept alive by a registered document in favour 06 the 12th defendant, Therefore, the claim for subrogation fails.
8. In the result, we vacate the decrees, by the lower appellate court, and restore those of the trial court with the modification of all the rent amount decreed in favour of the appellantbeing recoverable from the plaint B schedule property. The Second Appeals are, therefore, accordingly allowed, with costs.