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Mattapalli Venkataratnam and ors. Vs. Tota Varahaliah and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1932Mad768; (1932)63MLJ310
AppellantMattapalli Venkataratnam and ors.
RespondentTota Varahaliah and anr.
Cases ReferredPratab Bahadur Singh v. Gajadhar Baksh Singh
Excerpt:
- - unless the mortgage in favour of the plaintiffs can be deemed to be an usufructuary mortgage, their present suit in ejectment must fail. these are the ingredients of a simple mortgage, and so far as these provisions are concerned, the deed sounds like a simple mortgage deed. a, which is clearly indicative of an intention to create an usufructuary mortgage. the delivery of possession of mortgaged property is recognised in the transfer of property act as a transfer of such an interest, for usufructuary mortgages clearly come within the general definition of a mortgage given in section 58(a). 8. as found in that deed, there is an express recital in ex......findings, he has dismissed the plaintiffs' suit without going into the other issues framed in the suit.4. plaintiffs' case is, that one venkataraghaviah became the owner of the suhjjands, and that by virtue of the two registered deeds (exs. a and b) executed by him in their favour, they must be deemed to be usufructuary mortgagees, entitled to collect the rents due by the defendants under ex. d, which were executed by them on 30th december, 1908, and to eject them from the suit lands, as the period of lease (15 years) granted to them under ex. d was over by the end of fasli 1334.5. so far as the suit lands are concerned, exs. a and b are both styled as deeds of mortgage with possession. there is no doubt, that on the dates of these deeds, the suit lands were in the qccupation of the.....
Judgment:

Sundaram Chetty, J.

1. The plaintiffs (appellants) have filed the suit out of which this appeal has arisen to recover possession of 51 acres and 20 cents of land in the village of Veeravaram, from the defendants, together with arrears of rent and mesne profits for the year 1925. Various contentions were set up by the defendants in their written statement. Issue 2 runs thus:

Whether the plaintiffs are entitled to eject the defendants and obtain possession.

2. The first part of issue 3 is:

Whether the defendants are tenants of plaintiffs,

3. These two points were found by the Subordinate Judge, against the plaintiffs, and, as a result of his findings, he has dismissed the plaintiffs' suit without going into the other issues framed in the suit.

4. Plaintiffs' case is, that one Venkataraghaviah became the owner of the suhjjands, and that by virtue of the two registered deeds (Exs. A and B) executed by him in their favour, they must be deemed to be usufructuary mortgagees, entitled to collect the rents due by the defendants under Ex. D, which were executed by them on 30th December, 1908, and to eject them from the suit lands, as the period of lease (15 years) granted to them under Ex. D was over by the end of fasli 1334.

5. So far as the suit lands are concerned, Exs. A and B are both styled as deeds of mortgage with possession. There is no doubt, that on the dates of these deeds, the suit lands were in the qccupation of the defendants as lessees under Ex. D. The position of the mortgagor was that of a lessor in respect of these lands when he created these mortgages. A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of a debt. Section 58 of the Transfer of Property Act defines four kinds of mortgages. The question for consideration is, whether the deeds, Exs. A and B, evidence any one of those mortgages, and if so, what kind of mortgage it is. It is contended for the defendants (respondents) that the mortgage created thereunder is only a simple mortgage, and therefore the plaintiffs are not entitled to ask for possession of the suit lands, ejecting the defendants therefrom. Unless the mortgage in favour of the plaintiffs can be deemed to be an usufructuary mortgage, their present suit in ejectment must fail. There is also a third alternative. If the deeds evidence a combination of simple and usufructuary mortgages, the mortgage would be an anomalous mortgage, in which case the intention of the parties should be gathered from the terms of the instrument as controlled by the provisions of the Act. The rights and liabilities of the parties have to be determined by their contract.

6. For a discussion of this question, it is enough if the provisions of Ex. A are referred to. Though it is styled as a mortgage with possession, there is an express covenant to pay the entire balance of principal and interest in 3 years, coupled with a further provision, that in case of default in such payment, the mortgagees may recover the money due, by means of the mortgaged property and also from the mortgagors personally. These are the ingredients of a simple mortgage, and so far as these provisions are concerned, the deed sounds like a simple mortgage deed. The more difficult question is, whether it evidences an usufructuary mortgage also. The definition in Section 58 (d) of e Transfer of Property Act (as it stood before the Amending Act XX of 1929) would apply to Ex. A. The transaction would be an usufructuary mortgage, where the mortgagor delivers possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage money and to receive the rents and profits accruing from the property, in lieu of interest, or in payment of the mortgage money. The delivery of possession of the mortgaged property is thus an essential ingredient of an usufructuary mortgage. It has to be seen whether the delivery of constructive possession of the mortgaged property, which the owner has at the time of the mortgage, as it is in the physical occupation of a tenant by reason of a lease having been previously granted to him for a term, would suffice to bring the transaction within the aforesaid definition. In the case reported in Palani v. Selambara I.L.R. (1886) 9 M. 267, relied on by the learned advocate for the appellants, the learned Judges have considered what would amount to delivery of possession of land, mentioned in Section 48 of the Registration Act. The learned Judges held, that it is not confined to delivery of actual or physical possession, but delivery of constructive possession, by directing the tenants in occupation to pay their rents to the vendee, and by the tenants agreeing to do so. The principle of the decision seems to be, that the transfer of such possession as the vendor had at the time of sale, according to the circumstances of the interest he had in the ^ property, would be delivery of possession within the meaning of that section. In the present case, the mortgagor has under the deed Ex. A transferred to the mortgagees the right to collect the rents due in respect of the suit lands from the tenants in occupation thereof, vis., the defendants, authorising them to receive the rents and appropriate the same towards interest and principal. It is alleged in para. 7 of the plaint that as soon as Ex A was registered, the mortgagor Venkata Raghavayya issued a registered notice to the defendants, directing them to pay the rents due as per the lease deed, Ex. D, to the mortgagees (plaintiffs). This fact is admitted by the defendants in para. 7 of their written statement, as also the fact of their having paid the rents to the 1st plaintiff accordingly for some years. In the face of these circumstances, we must take it, that there was delivery of constructive possession of the mortgaged lands, under Ex. D, which is as efficacious as delivery of actual physical possession, as was held in Palani v. Selambara I.L.R. (1886) 9 M. 267. There is a further provision in Ex. A, which is clearly indicative of an intention to create an usufructuary mortgage. On the date of this deed, the mortgagor was able to put the mortgagees in constructive possession only, and he did give such possession. According to the settlement with the mortgagees, he should also deliver them actual possession of the suit lands under this deed on the expiration of the term of lease granted to the defendants, and, for that purpose, a clause is added in Ex. D authorising the mortgagees to take possession from the tenants (defendants) and appropriate the rents and profits towards the mortgage debt.

7. The contention of Mr. Venkataramana Rao for the respondents, if I understood him aright, seems to be, that unless one is in actual physical possession of immovable property, there is no possibility for him to create an usufructuary mortgage. This argument is based on the view that delivery of possession mentioned in Section 58(d) can only mean delivery of actual physical possession. For the reasons stated by me, this view seems to be an untenable position. In dealing with an instrument analogous to Ex. A in some important features, which came up for consideration by a Full Bench of the Bombay High Court in Motiram v. Vitai I.L.R. (1888) 13 B. 90 Sargent, C.J., held that it came under the class of mortgages termed ' simple mortgages usufructuary ', one of the analogous mortgages referred to in Section 98 of the Transfer of Property Act. By reason of the covenant to pay within four years, the instrument partook of the character of a simple mortgage, but by reason of the clause, that in default of such payment, the mortgagee should take possession and management of the mortgaged property, it was also an usufructuary mortgage. The following observation of Birdwood, J., at page 100 is pertinent to the present case:

Where, however, a right of entry is given to the creditor, there is a transfer of an interest in immovable property just as much as if possession were actually transferred. The delivery of possession of mortgaged property is recognised in the Transfer of Property Act as a transfer of such an interest, for usufructuary mortgages clearly come within the general definition of a mortgage given in Section 58(a).

8. As found in that deed, there is an express recital in Ex. A also, viz., 'we have executed this mortgage deed with possession to you.' This shows that the intention of the parties was to create a possessory mortgage, though delivery of actual possession was to be on a future date. The view adopted in Motiram v. Vitai (1888) 13 B. 90 has been taken in the decision reported in Bishcshar Bakhsh Singh v. Debi Bakhsh Singh (1912) 17 I.C. 329, following the Privy Council decision in Pratab Bahadur Singh v. Gajadhar Baksh Singh (1902) L.R. 29 IndAp 148 : I.A.R. 24 A. 521 .

9. I am, therefore, of opinion that the deed Ex. A evidences a combination of a simple mortgage and an usufructuary mortgage. In their capacity as usufructuary mortgagees, the plaintiffs would be entitled to recover not only the rents due on the suit lands (as per Ex. D), but also to eject the defendants after the expiration of the term of their lease, and get possession of the same, for appropriating the profits thereof, towards the mortgage debt. Plaintiffs would, of course, not be entitled to eject the defendants, unless the mortgagor has such a right. But the learned Subordinate Judge has not gone into the question of the mortgagor's right to eject. Plaintiffs stand in the shoes of the mortgagor, and can enforce his right, in the present suit.

10. If the plaintiffs can eject the defendants on the strength of the title of the mortgagor to the suit lands, it is unnecessary to establish the relationship of landlord and tenant, between them and the defendants. I think, such a relationship has not been created, in the absence of a complete assignment of Ex. D in favour of the plaintiffs. But under the terms of Ex. A, the right to collect the rents is transferred to them, and even as transferees of an actionable claim, they would be entitled to recover the rents from defendants in this suit. The Lower Court has ignored this aspect completely, and non-suited the plaintiffs.

11. The finding of the Lower Court on the preliminary issue No. 2 is set aside. As I hold that the relationship of landlord and tenant as between the plaintiffs and defendants is not made out, I confirm the Lower Court's finding on the first part of the third issue.

12. I would set aside the decree of the Lower Court and remand the suit for trial on the other issues and disposal. The appellants will get their costs of this appeal from the respondents. The costs of suit will abide the result. The Court-fee paid on the memorandum of appeal will have to be refunded to the appellants.

Curgenven, J.

13. My learned brother, whose judgment I have had the advantage of reading, has given reasons, in which I concur, for holding that the mortgages created by Exs. A and B possessed an usufructuary character, although they may not have been usufructuary mortgages pure and simple, as defined in Section 55 of the Transfer of Property Act. There is, it is true, a covenant to pay the mortgage debt within three years but there is no reason for holding that a stipulation of that kind will deprive a mortgage of any usufructuary character which it would otherwise possess. I do not understand Mr. Venkataramana Rao to have gone so far as that. He rather took the line that a property under lease, as was this property, could not be usufructuarily mortgaged because no such possession as such a transaction would require could be given; that possession must be physical and actual, and not merely constructive. This is not, I think, a tenable view. The definition of an usufructuary mortgage already referred to expressly contemplates the mortgagee receiving 'the rents and profits accruing from the property', and there can be no ground for holding that a rent is not a form of usufruct equally with other receipts more directly derived from the land. In a case where property is under lease the mortgagor gives his mortgagee such possession as it is capable of, and the mortgagee, who takes possession by assuming the right to receive rents from the tenants, gains his usufruct in such form as the property is capable of yielding. These propositions appear to me elementary and in no need of support from authority. There can be no doubt that in the present case the plaintiff entered into possession as mortgagee, and indeed received rent from the tenants for several years. It has not been disputed that, granting the position 'set forth above, the plaintiff would be entitled to a decree for rent. It must follow, too, from his position as usufructuary mortgagee, that he has whatever power of ejectment might be exercisable by his mortgagor. I agree with the orders proposed by my learned brother.


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