1. This Letters Patent Appeal arises out of a suit filed to eject the defendants, who are in possession under what is called a Khandagutta cowle of a land described as carpenter's service inam. This land was in 1915 the property of a minor named Satyanarayana and in that year his mother as his guardian executed the document in question, Ex. I to the first defendant, of whom the second and third defendants are brothers. The document has been abstracted in paragraph 8 of the District Munsif's judgment. A sum of Rs. 693 was received for the purpose of paying certain debts and in consideration of it the first defendant was put in possession for 33 years. In 1920 the Government resumed and fully assessed this inam and regranted it on patta to Satyanarayana. At about the same time Satyanarayana was sued, and this property was attached under the decree, sold in Court auction and purchased by the plaintiff in the present suit. He has endeavoured to show that the instrument under which the defendants are in possession is invalid and now appeals against a judgment which upholds it.
2. The question which first arises is whether Ex. I is a mortgage or a lease. It is, as we have said, called a Khandagutta cowle, which appears to mean a lease for a fixed premium. At any rate, whatever the meaning of the word 'Khandagutta', 'cowle' ordinarily denotes a lease and not a mortgage. On the other hand, in the body of the document it is recited that the land has been 'mortgaged' to the first defendant for a period of 33 years and reference is made to 'discharging the aforesaid debt.' But again, the sum of Rs. 693 is to carry no interest and is to be extinguished by a cist or rent of Rs. 21 per annum, which for the 33 years would amount to this figure. The transaction in most respects resembles that considered by a Full Bench of this Court in a Reference under Stamp Act, Section 461. It was held that that document was a usufructuary mortgage and not a lease. In one important respect however there is a difference, namely, that the rents and profits in the other document were to go in satisfaction not only of the principal amount but of the interest thereon. That was a fairly plain indication that the money advanced was regarded as a debt, not as a premium. The learned Judge who dealt with this point on second appeal in this case was of opinion that the considerations which weighed with the Privy Council in holding that the document in Nidha Sah v. Murli Dhar (1902) L.R. 30 IndAp 54 : I.L.R. 25 All. 115 was not a mortgage should, prevail here too, and we agree with him, in holding that the document in that case was not a mortgage in any proper sense of the word, their Lordships say:
It is not a security for the payment of any money or for the performance of any engagement. No accounts were to be rendered or required. There was no provision for redemption expressed or implied. It was simply a grant of land for a fixed term free of rent in consideration of a sum made up of past and present advances. We consider that Ex. I is what it is entitled, a lease for a fixed premium.
3. The next question is whether this transaction is of a kind prohibited by Section 5 of the Madras Hereditary Village Offices Act (III of 1895), which lays down that the emoluments of village-offices shall not be liable to be transferred or encumbered in any manner whatsoever. The words 'transferred or encumbered' have received judicial interpretation by a Bench of this Court in Kshetrabaro v. Harikristna I.L.R. (1909) 33 Mad. 340 : 20 M.L.J. 417. In that case a permanent lease of lands forming the emoluments of an office was in question. The learned Judges held that the occurrence of the words 'or encumbered' after 'transferred' showed that the latter word did not include the transfer of an interest such as is acquired by a mortgage and which leaves the ownership in the transferor. The inference was that, when it is said that the emoluments are not liable to be transferred, what is prohibited is a transfer of ownership. Thus even the grant of a permanent lease would not fall within the section. This case has been followed by another Bench in Kammara Peda Subbayya v. Kararha Chennappa (1914) 28 M.L.J. 303 where a lease for 45 years with the provision that the rent should go in deduction of the debt, very similar to the present lease, was held not to fall within Section 5 though it might be voidable after the death of the grantor. In neither of these cases has the policy underlying the terms of Section 5 been adverted to. The intention of the rule, we take it, is to ensure that the property which furnishes the emoluments of the office is not so dealt with as to put an end to those emoluments either permanently, as in the case of an outright sale, or for a term of years, as in the case of a mortgage. This safeguard is necessary not only to conserve the emoluments for successors to the alienor but so that he himself may derive an annual income from the property; because a holder of a service inam who is allowed to enjoy by anticipation the receipts of a number of years, and appropriate the money, say, to debts already incurred, is not likely to render a satisfactory service. In the present case it will be apparent that the transaction, though it may be technically a lease, has in practice all the consequences of a mortgage; and we were at first so impressed with the disadvantages of permitting such a transaction that we were tempted to hold that a lease of this kind, which afforded no annual income, would fall within the mischief of the rule. Some support for such a position is to be found in Sundara Raju Dikshatulu v. Seshadri Dikshatulu (1927) 54 M.L.J. 76, were in dealing with a very similar lease of some hereditary archaka service inam lands the learned Judges expressed the view that the real question to be considered was whether the transaction in effect placed the income from the lands beyond the disposal of the holder of the office and prevented him from enjoying the emolument, which were intended to go to the holder of the office in order to enable him to discharge his duties properly. In that case however the terms of a statutory provision were not in question. But here, if once it is held that certain types of leases offend against the section, while others do not, it will be difficult to place any definite construction upon the words 'liable to be transferred or encumbered'. Further, apart from this statutory provision, the Government have other methods of dealing with such a case and in fact in the present instance have accepted this alienation as a ground for resuming this inam. Accordingly we think there is no sufficient ground for differing from the cases cited above which hold that leases are excluded from the operation of the section. We hold that Ex. I is not void upon this ground.
4. That is all that we have to decide so far as the case went before the Courts below. But another question has been raised here namely, the effect of the resumption of the inam upon the validity of the lease. In deciding this point it is essential to ascertain what it was exactly that was resumed. It may very well be that when the land itself is resumed by Government, fully assessed, and regranted, whether to the original holder or to some other persons, it comes to the pattadar stripped of all prior interests and encumbrances whatsoever. This is the principle upon which such cases, as Subramania Aiyar v. Onnappa Goundan : (1920)39MLJ629 and Sadasivarayudu v. Venkataswami (1931) 62 M.L.J. 598 were decided. In the former case it is expressly found that the grant was of the soil and not of the melwaram only. A contrary view has certainly been taken in Venkatappa Charyulu v. Royappa Reddi I.L.R. (1920) 44 Mad. 550 on the principle that the Government in making the resumption merely stands in the shoes of the previous holder. It may be a question whether or not the Government is bound in such a case by engagements entered into by the inamdar, but we do not need to go to the length of this decision in the circumstances of the present case. We think it is clear that what was resumed was not the land itself but only the remitted assessment. A reference to Section 13(ii) of Act III of 1895 and to paragraph 3 of the Board's standing Order 55 will show that for purposes of resumption an inam is presumed to comprise the net assessment on the land, except where there is prima facie evidence that the land too is included. That this presumption was acted on in the present case appears clear from the terms of the order Ex. A, which directs that the resumed land should be fully assessed and that ryotwari patta should be issued in the name of the persons possessing occupancy rights. It necessarily follows, we think, that if the resumption and regrant involved no more than terminating the inam by the imposition of full assessment, it cannot have operated to extinguish any engagements entered into by the holder of the land before resumption took place. We think therefore that the appellant has failed to show that the lease under which the defendants are in possession is invalid. We may add that he purchased the property in Court auction with his eyes open to the existence of this lease, which is recited in his sale certificate.
5. We dismiss the appeal with costs.