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Panangat Unneeran's son Ayyappan and Anr. Vs. Pozhankevil thekkemadathil Venkedeswara Naikkan and Anr. (02.08.1962 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKerala High Court
Decided On
Case NumberSecond Appeal Suit No. 688 of 1959
Judge
Reported inAIR1963Ker309
ActsTenancy Law; Kerala Agrarian Relations Act, 1961 - Sections 2(18); Transfer of Property Act, 1882 - Sections 58 and 105; Malabar and Aliyasanthana Law
AppellantPanangat Unneeran's son Ayyappan and Anr.
RespondentPozhankevil thekkemadathil Venkedeswara Naikkan and Anr.
Appellant Advocate K.P.G. Menon, Adv.
Respondent Advocate V.R. Venkitakrishnan and; K. Narayanan, Advs.
DispositionAppeal dismissed
Cases ReferredKarim v. Sales Tax Appellate Tribunal
Excerpt:
.....the legislature has by a side-wind made a sudden departure from the well understood incidents of a kanam transaction and introduced incidents which are per-haps inconsistent with the conception of a kanam as hitherto understood. there is a presumption that the legislature does not intend to overthrow the well established principles of common law unless the intention to that effect is put beyond doubt. muhammad, air 1914 mad 317. 10. if under the law, as existing on the date of act iv of 1961, the presence of a clause conferring a right of sale in a document was considered sufficient to take it out of the category of kanams, it would be rather surprising to think that the legislature introduced a sudden innovation in the concept of a kanam without clearly expressing its intention in that..........of the 1961 the right of sale of the property in the grantee is an essential ingredient of every kanam transaction. therefore the question which we have to decide in this appeal turns mainly on the interpretation to be given to these two rulings reported in 1961 ker lt 762 and 1961 ker lt 1033. 5. with respect to the first question, counsel argued that there is no distinction between a transfer of possession by way of security and transfer of possession by way of enjoyment in other words his contention was that the transfer of possession both under a mortgage and a lease is for the purpose of enjoyment, and the distinction that the transfer in one case is as security and in the other, by way of enjoyment is a distinction without a difference. i am not prepared to accept this.....
Judgment:

Mathew, J.

1. Defendants 2 and 4 are the appellants. This second Appeal has been referred to the Division Bench as the learned Single Judge before whom it came up for Hearing felt some doubts about the correctness of some of the rulings of this Court relating to the point under consideration. The short point which arises in this Second Appeal is whether the transaction evidenced by Ext. A-1, a karchit executed by the grantee to the grantor and Ext. B-1 a Kaivasapanayam executed by the grantor to the grantee, is a mortgage, or a kanam as defined in Act IV of 1961 (Kerala). The learned Munsiff held that it was a kanam and therefore decreed the suit only in respect of arrears of rent claimed. The learned Subordinate Judge, on appeal, held that the documents evidenced a transaction in the nature of 3 mortgage and granted a decree for redemption with consequential reliefs. This Second Appeal is, therefore, filed challenging the decision of the learned subordinate Judge.

2. The material provisions in the two documents are that a sum of Rs. 100/- has been advanced by the first defendant to the plaintiffs and in consideration thereon the property has been delivered to the first defendant on taivasapanayam. It is provided, that after appropriating Rs. 6/- towards interest on the advance the 1st defendant is to pay Rs. 3-10-0 for a period of one year from the 20th Mithunam 1120, Rs. 8-7-0 for the year commencing with the 20th Mithunam 1121, and Rs. 13-4-0 per annum after the 20th Mithunam 1122. The 1st defendant also undertakes to give on Navarathri day in Kanni every year one bunch of bananas worth Rs. 2/-. it is also provided in the document that if the 1st defendant were to effect improvements on the property he will be given one half the value of the same. The further provision is that if on demand after a period of three years the amount Is not paid the 1st defendant can realise the same by sale of the property.

3. The main point urged by counsel for the appellant is that these two documents evidence a kanam arrangement as defined in Section 2(18) of the Kerala Agrarian Relations Act, IV of 1961, and therefore no suit for redemption will lie.

4. On the rulings of this Court, I feel absolutely no doubt that the documents in this case do not evidence a kanam. But the learned Single Judge who referred the case apparently doubted the correctness of the rulings in Thangappan v. Ammalu Neithiaramma, 1961 Ker LT 762 and Hussein Thangal v. Ali, 1961 Ker LT 1033 in two respects. In the first place the learned Judge doubts the correctness of the test formulated for distinguishing between kanam as a transfer for enjoyment and a mortgage as a transfer by way of security. Secondly the learned Judge thinks that under the definition of the word 'Kanam' in Act iv of the 1961 the right of sale of the property in the grantee is an essential ingredient of every Kanam transaction. Therefore the question which we have to decide in this appeal turns mainly on the interpretation to be given to these two rulings reported in 1961 Ker LT 762 and 1961 Ker LT 1033.

5. With respect to the first question, counsel argued that there is no distinction between a transfer of possession by way of security and transfer of possession by way of enjoyment In other words his contention was that the transfer of possession both under a mortgage and a lease is for the purpose of enjoyment, and the distinction that the transfer in one case is as security and in the other, by way of enjoyment is a distinction without a difference. I am not prepared to accept this submission. A mortgagee in possession is not the beneficial owner of the usufruct of the property. The usufruct belongs to the mortgagor. The mortgagee receives it for the purpose of applying it towards the discharge of the mortgage amount and interest. But under a lease the usufruct belongs to the lessee and he enjoys it beneficially. He is not accountable for it. The word 'enjoy' means a beneficial occupation of the property with no liability to account. But the question still remains whether kanam is a lease in order that we may say that it is a transfer of a right to enjoy the property.

6. 'Kanam' has been variously defined. Simdara Iyer in his Malabar and Aliyasanthana Law, at page 290, observes as follows:

'Kanam is described, in the Sudder Court proceedings as mortgage with possession, the mortgagee recovering interest on the money he has advanced from the produce of the land and paying the net profits (micnavaram) to the landlord. It thus partakes of the character of both a lease and a mortgage. Sometimes the one character predominates; sometimes the other. In a kanam lease, the lease is the substantial thing, the security being a minor matter. In the case of a kanam mortgage, the amount advanced is substantial, the michavaram being but a trifling. This was the view propounded in Silapani v. Ashtamurthj (1880) ILR 3 Mad 382 (FB). The question that arose was one of limitation. As the parties had treated the transaction as one of mortgage, their Lordships applied Article 148. but since then all the kanams have been treated as mortgages.'

The learned author quotes some rulings in support of the proposition that kanam is more in the nature of a mortgage than a lease. Then he continues:

'Tenures resembling kanams are to be met with else-where also but the special feature in Malabar is that kanam tenure is the ordinary mode of enjoying land with the territorial magnates so that it is regarded in much the same light as leases from year to year elsewhere.'

S. 2(18) of Act IV of 1961 defines what a kanam is: ' 'Kanam' means the transfer for consideration in money or in kind or in both, by a landlord of an interest in specific Immovable property to another for the latter's enjoyment, whether described in the document evidencing me transaction as kanam or kanapattom, the incidents of which transfer include-

(a) a right in the transferee to hold the said property liable for the consideration paid by him or due to him;

(b) the liability of the transferor to pay to the transferee interest on Such consideration unless otherwise agreed to by the parties; and.....'

So, it is clear that kanam is a transfer of an interest in the property for its enjoyment. Although the distinction between a transfer for enjoyment and a transfer by way or security is real and material, to say that the distinction between a kanam and a mortgage lies in this will not carry us very far in construing a particular document, we have still to decide the further question whether the security or the lease element predominates and, that will depend ultimately upon the intention of the parties gather- able from the other terms in the document. The supreme Court has laid down this principle in Ramdhan Puri v. Bankey Bihari Saran, AIR 1958 SC 941:

'The only guiding rule that can be extracted from cases on the subject is that the intention of the parties must be looked into and that when once you get a debt with a security of land for its redemption the arrangement is a mortgage by whatever name it is called.'

The same view was expressed by Joseph J., in the decision reported in Karthiyani Amma v. Raghavan Pillai, 1962 Ker LT 380. The learned Judge observed;

'The only principle that can be deduced from mess decisions is that the Court should see whether the relation-ship created is that of the lessor and lessee or debtor or creditor.'

So we have to scrutinise the terms of the document in order to ascertain the intention of the parties whether they wanted to create a debtor and creditor relationship or not; and in ascertaining that intention certain tests have been laid down. That, if I may say so with respect, is the approach made by Raman Nayar, J., in 1961 Ker LT 1033. He formulated certain tests for finding out the intention of the parties whether the transfer is by way of enjoyment or as security. Some of the tests formulated by the learned judge are: the label given by the parties, the ratio which the consideration bears to the value of the property, the presence in the document of anything savouring of subjection on the part of the transferee to the transferor, the transferor's need for money, and whether the periodical payments are stated to be by way of residual rent or by way of profits.

7. Therefore my conclusion on this point is that the distinction between a transfer for enjoyment and a transfer by way of security is real and substantial. But in adjudging whether a particular transaction is in the nature of a mortgage or kanam, we will have to look to the terms of the document in order to ascertain the intention of the parties and in ascertaining the intention of the parties certain tests have been propounded, which tests are applied by Courts not as infallible guides, but as indications of we Intention of the parties to the document. That construction placed upon one document is no authority for the construction of another, is no doubt a truism. The courts, by construing similar documents between parties similarly situate have evolved these tests, and the justification for applying these tests in the construction of a particular document is stated thus by Howard W. Elphinstone in The Law QuarterlyReview Vol. I, Page 466 at p. 469:

'At first sight it may seem that cases of this naturefall under no rules, that you cannot construe one man's blunder by another man's blunder, we find however that there is a startling uniformity in error. The same words are omitted, the same superfluous words are inserted, and the same word is substituted for another, over and over again. Where we find the same blunder repeated time after time in an instrument of the same nature, and the same construction placed upon it by the Court, the conclusion is irresistible that that construction is correct: in other words we arrive at a rule of construction.'

8. Coming to the second point, whether the rignt of sale in the transferee is consistent with the transaction being a kanam, this is what Raman Nayar, J., says at page 1039 of 1961 Ker LT 1033:

'Anything in the nature of a covenant to pay entitling the transferee to ask for a return of his money otherwise than when the transferor seeks to recover the property. Usually this takes the form of a provision for recovery of the money by sale of the property.

This, it seems to me, would put it beyond doubt that the transaction is a loan and not a lease, and therefore a mortgage and not a kanam. The absence of such a provision would, however, be no pointer the other way for it would be quite consistent with a mortgage which is purely usufructuary.'

In 1961 Ker LT 762 Velu Pillai J., (one of us) considered the question and adopted the above dictum laid down by Raman Nayar, J. The same view was taken in Ammukutty Amma v. Ahammed, 1961 Ker LT 758 by Madhavan Nair, J. Now the contention of counsel on this point was that, under the definition of the word 'kanam' in Section 2(18), a right of sale in the grantee is an essential ingredient of every kanam transaction and that without a right in the transferee to sell the property, no transaction can be considered to be a kanam. Reliance was placed for this sub-mission upon Clause (a) of Section 2(18). Relevant part of Section 2(18) has already been quoted above. Clause (a) states that a right to hold the property liable for consideration is a necessary incident of a kanam transaction. Counsel submits that the right to hold the property liable for consideration means the right to sell the property which is subject to the liability. He relied upon the meaning of the term 'hold' in Black's Law Dictionary. It is to this effect:

'to hold means, to bind or oblige; to keep in custody or under obligation.'

There there is another meaning given by the same author:

'to hold means, to possess: to occupy, to be in possession and administration of.'

I think that the expression 'to hold' occurring in Clause (a) can mean only to possess or to occupy as that is more germane to the context and subject matter. I am not prepared to subscribe to the view that Clause (a) in Section 2(18) makes a right of sale in the grantee, an essential part of the definition of the word 'kanam'. The clause does not say so in express terms. It only confers a right to hold the property which is liable for the consideration. The fact that the property is liable for consideration does not mean that in all cases the property can be sold. There is no inherent right for sale merely because the properly is subject to a liability. That liability may also be discharged otherwise than by sale of the property. A right to retain the property until the liability is discharged by the obligor Is also a well-known method of securing the claims of the creditor. The most familiar instance is that of a usufructuary mortgagee whose only right is to retain possession of the properly until the mortgage amount is paid. Yet nobody has thought of contending that the property is not liable for the mortgage money because the mortgagee has no right of sale. Therefore the very premise of counsel that a right of sale is a necessary ingredient of 2 Kanam under Clause (a) is not established.

9. The clause is capable of being construed in a manner consistent with the incidents of Kanam as ordinarily understood in this country over the years. It is difficult to believe that the legislature has by a side-wind made a sudden departure from the well understood incidents of a kanam transaction and introduced incidents which are per-haps inconsistent with the conception of a kanam as hitherto understood. There is a presumption that the legislature does not intend to overthrow the well established principles of common law unless the intention to that effect is put beyond doubt. 'It is a sound rule' says Byles, J., In R. V. Morris, (1867) LR 1 CCR 90 at p. 95:

'to construe a statute in conformity with common law rather than against it except where and so far as the statute is plainly intended to alter the course of common law.'

It will be revolutionary change in our conception of Kanam, if the right of sale is made an essential ingredient of every kanam transaction. In Sridevi v. Virarayan ILR 22 Mad 350 it was held that a kanamdar has no right of sale of the property. That decision was quoted with approval in Chundam Veettil Pazhayottayil v. C.P.M. Muhammad, AIR 1914 Mad 317.

10. If under the law, as existing on the date of Act IV of 1961, the presence of a clause conferring a right of sale in a document was considered sufficient to take it out of the category of kanams, it would be rather surprising to think that the legislature introduced a sudden innovation in the concept of a kanam without clearly expressing its intention in that behalf.

11. The result of the construction suggested will be far reaching and to a certain extent anomalous. It will make all transactions which hitherto have been held to be kanams, not kanams. If a right of sale is an essential feature of a kanam transaction, no document which has not got that feature will be a kanam transaction. I do not think that the legislature intended to make such a wide departure in the definition of the word 'kanam'.

12. I see no reason to doubt the correctness of the rulings on this point. I, therefore, hold that a right of sale is one of the surest indications that the intention of the parties was to enter into a transaction other than a Kanam. In this view of the matter also I hold that the document under consideration is clearly not a kanam. I therefore, come to the conclusion that the appeal is without merit and it is hereby dismissed with costs. VELU PILLAI, J.;

13. I agree; I desire to add a few words of my own on the distinction between a mortgage and a kanam, which I had emphasised in 1961 Ker LT 762, but the soundness of which has been doubted in the order of reference, under the definition in Section 58 of the T.P. Act, a mortgage is a transfer for securing repayment of a loan, while under Section 2(18) of the Kerala Agrarian Relations Act, Act IV of 1961, a kanam is a transfer for enjoyment. A lease as defined by the Transfer of Property Act, is a transfer of the right to enjoy. In view of the common features thus presented by the definitions of a kanam and of a lease and of the differences exhibited by the definitions of a mortgage and of a kanam in the two enactments, I venture to think, that what the Supreme Court has observed, as extracted aboveby my learned brother, in AIR 1958 SC 941, while distinguishing a. mortgage from a lease, will apply with equal force in distinguishing a mortgage from a kanam. Their Lordships concluded:

'.....that the property as given was security forthe lease and the document was executed as a mortgage. The gist of the document was not a letting of We premises.....but a mortgage of the premises with a smallportion of the income of it made payable to the plaintiff.'

Though many of the cases on this topic decided by this Court have been by single Judges, quite recently in S.A. 872 of 1958 (Kerala) a Division Bench to which I was a party has affirmed this distinction. It seems to me, that the distinction is really based on and has reference to, the object underlying the transaction. In the face of these statutory provisions and of the judicial pronouncement of high authority, the contention is no longer open, that the distinction is not sound all because the term 'enjoyment may also connote some sort of 'possession'. Pushed to its logical extent, the appellant had perforce to contend, that even a sale is but a transfer for enjoyment without a right of resumption in the vendor. The definition in Section 55 of the Transfer of Property Act says no such thing, out defines sale, as 'a transfer of ownership in exchange for a price'.

14. In my opinion, the question for decision in the ultimate analysis is whether the transfer was by way of security or not, though it has been posed differently in decided cases, as whether the advance was by way of loan, or whether the relationship was that of debtor and creditor or of landlord and tenant. Simple as the question is, in whatever form it is formulated, in practice it is not always easy of solution, chiefly because the terms of the document, which in the generality of cases furnish the sole material for decision, are not so clear-cut, or precise. However, judicial decisions have evolved certain tests, not the least important of which, is that a right of sale is indicative of a mortgage, though its absence is not decisive the other way under all conditions and circumstances.

15. On the second aspect too, I am at one with my learned brother in thinking, that the expression 'to hold the said property liable for the consideration' cannot in the context of the definition be interpreted to mean, that there can be no kanam without the right of sale as one of its Incidents; yet that would be the logical result of accepting the contention of the appellant, because the term 'include' as used In the expression

'the incidents of which transfer include',

is not a word of 'enlargement' but means

'comprise, comprehend, embrace or involve',

taking these meanings from Black's Law Dictionary, 4thedition. With reference to the word 'including' a DivisionBench of this Court has observed quite recently in Karim v. Sales Tax Appellate Tribunal, Kerala, 1962 Ker LT 725that

'an additive power is not its necessary attribute.'

16. It is well to remember that 'kanam' as discussed above, has nothing to do with 'kanapattam' or any other demise governed by the Travancore Jenmi and Kudiyan Act, 1071, or the Kanam Tenancy Act, 1955, which has been specifically excluded from the scope of the definition in Clause (18) and has been treated separately in Clauses (24) and (34) of Section 2 of the Kerala Agrarian Relations Act, 1960.


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