1. These are two connected Civil Miscellaneous Appeals arising from the judgment of the learned Subordinate Judge of Kozhikode in O.P. Nos. 21 and 23 of 1951.
2. The short point for determination both in the lower Court and here is whether a Malabar otti or othi is a usufructuary mortgage within the meaning of Section 9-A of the Madras Agriculturists' Relief Act IV of 1938.
3. The learned Subordinate Judge held that this othi is a usufructuary mortgage within the meaning of Section 9-A. Hence these two Civil Miscellaneous Appeals by the defeated mortgagees.
4. In order to find out whether an othi falls within the ambit of Section 9-A, we must first of all find out what the incidents of an othi are.
5. In Malabar the tenures as elsewhere fell roughly under three heads. There are a larger number of tenures extant even to-day though a larger number have become extinct. In fact the proceedings of the Court of Sadar Adalat at Madras noticed about 24 tenures. These tenures which extend from the simple lease or verumpattam to the most absolute alienation of Attiper fell into three heads as exhibited in the following table:
Tenures|______________________|___________________________| | |(1) Leases (2) Mortgages (3) Combination of| | (1) & (2)_________|_________ Chuntippanayam| | Totupanayam Kanam(Temporary) (Perpetual) Nilamuri or PuramkatamVerumpattam Atima or Kutima KutiyirumpadMelpatam Karippanayam or MelkanamKulikanom Anubhavam KaivasampanayamKulikanampattam UntarutippanayamVerumpattam Karam Kari or OttiKulikanam PerumarthamKutiyiruppu Jenma KoluMuttikanamKaraimaAri Jenmam
6. These tenures that gradually eat up the jenmi's right to absolute ownership-are said to be:
(1) Kulikkanam which is said to take away one-eighth of his rights.
(2) Kanam, which takes away one-fourth.
(3) Otti, which takes away one half.
(4) Ottikupuram, which takes away three-fourths.
(5) Jenmappanayam which takes away seven-eights, and
(6) Attipper, which extinguishes all his rights to abovesaid ownership of the property.
7. It is necessary to bear in mind carefully the characteristics of these peculiar tenures and secondly avoid being very largely influenced by the notions under the Transfer of Property Act leading one to affix rough and ready labels for them, corresponding to the designations given in the Transfer of Property Act, as by doing so considerable injustice may be done to landlords and tenants.
8. In this connection I am tempted to reproduce two extracts from two well-known authorities on Malabar tenures, viz., Major Walker and Sir Charles Turner, a former illustrious Chief Justice of this Court. Major Walker observes:
It is obvious from...the tenor of the deeds that considerable provision has been made in Malabar for the security of landed property. Its limits and rights are ascertained in almost every situation, with no small degree of exactness. There is great attention paid to protect it against encroachment, and to preserve all its privileges inviolate. In all the stages of conveyance, the most watchful jealousy is observable to prevent the possession being loaded with additional engagements, and to save it from total alienation. The conditions of each step are the subject of a new writing, in which they are recorded with precision. The allodial right is the one last parted with. The final act which is to make a complete transfer of the land and its privileges, must be executed before a number of witnesses, with the consent of the heir, with the knowledge of the sovereign, and concluded by an impressive ceremony. The whole cannot fail to convince us of the high estimation in which this species of property was held in Malabar....
9. Sir Charles Turner says:
In no country with which I am acquainted had the land tenure been more minutely systematised than in Malabar. Looking to the deeds which bear dates antecedent and subsequent to the Muhammadan invasion, and to the treatises on Malabar Law, which have survived that event, we find the jenmekkars in dealing with all subordinate holders of land, resorted to the use of documents. These documents declared the rights it was intended to convey, and if they did not express specifically the incidents of the several tenures they created, they were prepared in such a form as to leave it beyond dispute that they involved the incidents which the custom of the country attached to the tenures. These incidents were generally of a highly equitable character.
10. The art of conveyancing as pointed out by Mr. Padmanabha Menon in his History of Kerala was all but perfect in Malabar before the Stamp and Registration Laws came into force. These Acts and Regulations, not taking into account the various tenures extant in the country, prescribed stamp and registration fees for documents embodying certain specified transactions into the denomination of which parties had to reduce the original tenures. The Vyvahara Mala and Vyvahara Samudram, among the earlier, the Kshiti Ratnamala and others among the later treatises, contain rules of conveyancing and forms of deeds. In former times, these used to be learnt by heart by every boy attending the village schools. But, for the last half a century or so, the ancient system of education has been much neglected, and with the exception of a few old men to be met with here and there, no one knows at present exactly what the ancient forms were. The rules of conveyancing and the forms of deed contained in the Vyvahara Mala were thought to be so good by Colonel Munroe, British Resident in Travancore, who was also for some time in charge of the administration of the State, that he considered the Vyvahara Mala as fit for introduction into the Courts of Travancore. It is, however, a sealed book at present. The result is that, there being no legislative provisions which require definiteness and exactness in lease deeds which are of a complex nature, the writing really contains but part of the contract, the parties taking it for granted that custom will regulate everything for them and that local customs must be known to any and everybody who may at any time be called upon to decide any disputes between them. The result is perennial and distracting litigation which ruins both parties. (See Padmanabha Menon's History of Kerala, Volume 2, page 323).
11. Therefore, we must carefully understand the various kinds of mortgage tenures in use ranging from the simple mortgage redeemable at will to those that leave but little, if any, right subsisting in the mortgagor like Perumartkam.
12. There are seven different kinds of mortgages prevalent and they are:
(1) Chuntippanayam is a simple mortgage without possession. The land is here pledged as security for the repayment, with interest, for certain sums advanced, but the lender has no right to interfere in the management of the property.
(2) Totupanayam is where the mortgagor agrees to put the mortgagee in possession of the property mortgaged in case of default of payment of interest according to the stipulation in the deed. Where such stipulation exists, the lender can sustain an action for possession. In other cases, he must sue for the recovery of principal and interest of the loss, the land being liable in the event of the money not being paid.
13. Nilamuri or Kutiyirumpad is a simple mortgage without possession; the creditor under an arrangement with the mortgagor agrees to receive the rent produce of the land leased by the mortgagor to a tenant, in lieu of interest. Should the tenant fail to deliver the rent produce to the creditor, he can sustain an action only against his debtor, the landlord.
14. Karippanayam, Koluvirukkampanayam or Kaivasampanayam is a usufructuary mortgage, the mortgage enjoying the usufruct or part thereof, of the property in lieu of interest and accounting for the remainder to the mortgagor.
15. Untarutippanayam is a mortgage which redeems itself within a fixed period, the principal debt being liquidated by the surplus usufruct after payment of interest only.
16. Otti is a mortgage with possession, the mortgagee enjoying the entire produce of the land, the landlord merely retaining the proprietary title and the power to redeem after the lapse of 12 years. It carries with it a right of pre-emption in favour of the mortgagee. In Travancore, an otti does not differ from a usufructuary mortgage.
17. Perumartham is a mortgage in which the mortgagor receives the then full market value of the property, retaining the empty title of jenmi, and, in redeeming it, he repays not the amount originally advanced to him but the actual market value at the time of redemption.
18. Thus, it will be seen that without carefully studying the particular type of mortgage under consideration, we cannot label it under the categories familiar to us under the Transfer of Property Act and hold whether Madras Act IV of 1938 is or is not applicable. Therefore, I must now direct my attention to a study of the particular characteristics of this othi tenure.
19. The Malabar Lexicons as might be expected afford us no safe guide regarding the characteristics of an othi tenure because, naturally the Lexicons would only indicate the salient characteristic as it appealed to the lexicographer.
(1) Gundert: The Malayalam and English Dictionary (1872), page 179.
Othi : a tenure in which the jenmi yields to the tenant all the produce of the field in lieu of interest for his advances.
(2) Wilson : Glossary of Judicial and Revenue Terms (1855), page 384.
20. Otti : corruptly, Ootty, Tam.
A pledge, a pawn, a mortgage : in Malabar it especially designates a usufructuary mortgage, or one in which for consideration of a sum advanced on loan, the borrower makes over the land of which he is the hereditary proprietor to a temporary occupant, who receives the rent or profits in lieu of interest on his loan, paying the difference, if his receipts exceed the interest, to the proprietor : the borrower or lender may transfer the occupancy to a third party under certain conditions, but the latter is not at liberty to sell it, and is responsible for any damage done in the trees on the estate. The term is also sometimes used for the document of assignment or mortgage deed. (Although written Otti by all the best authorities, it is also written in Tam. and Mal. Orri, Orri both, however, being always pronounced Otti. In Mal., it also occurs, at least in composition, Atti, Otti, with the initial short vowel, or o and cerebral t. See Attiper (in Tam. and Kanar. the t is dental).
(3) Graeme's Glossary, of words and phrases relating to land tenures and assessment of Malabar (1882), pages 30 and 31, same as Logan's Malabar Manual, Appendix XIII-CCXI, Vol. II (Reprinted by Government of Madras (1951) in 2 volumes. From Dravidian otta (one, single), hence ottuka (to step aside make room for another and otti (the stepping aside to make room for another or perhaps (the substitution of one thing for another).
(4) Zacharias English and Malayam Dictionary (1907) : usufructuary : kanakkaran, kanari, ottikkaran; a that which is a kaham; that which is an othi.
(5) Bailey's Malayalam English Dictionary (1846), page 134 : Ottiyudi : A certain tenure of lands and gardens.
21. Turning to the case-law on the subject, the following information embodying; the case-law up to 1883 can be gathered from Cuddalore Ramachandra Aiyar's Manual of Malabar Law as administered by the Courts (Opp. 34 and following):
Otti, Veppu, Palishamadaku or Nerpalisha may be defined as a usufructuary mortgage giving the mortgagee possession and the entire produce of the land, the landlord merely retaining the proprietary title and the power to redeem. The term Veppu is in use in Palghat and Palishamadaku in Nedunganad and Walluvanad.
The same incidents are attached to an Otti tenure as to Kanom; and in addition, the Otti mortgagee has the right of pre-emption if the mortgagor wishes to dispose of the property, and the; right to advance any further loan if the jenmi be desirous or raising any such. (Proceedings Sudder Court, 5th August, 1856; 1 M.H.C.R. 261; S.A. 186 of 1862).
The reason for an Otti carrying with it the right of pre-emption and right to make further advance is apparent. An Ottidar advances almost the full value of the property and is in a position little short of that of a vendee. Having staked so much upon the property, it is quite intelligible that persons so situated should secure their holding from future disturbance by an understanding entered into at the time of the contract that they should have the option of making further advances, and that a customary rule should ultimately take the place of such an understanding so generally-entered into. (S.A. 75a of 1881).
An Otti mortgagee must, if the jenmi proprietor is desirous of obtaining a further advance by way of mortgage on the property, be allowed as a matter of right the option of making the advance himself, before the lands can be offered on superior mortgage and be made a valid security for an advance by a stranger; and there is no distinction between the rights of the first mortgagee before and. after the lapse of twelve years. During the continuance of a first Otti mortgage the jenmi is in the same position as regards his right to make a second Otti mortgage to a stranger after, as he was before, the lapse of twelve years from the date of the first mortgage. Ali Hussain v. Nillakanden (1863) 1 M.H.C.R. 356.
An Otti is a Kanom and something more and it cannot therefore be redeemed before the lapse: of twelve years from the date of its execution, unless it is otherwise provided for in the deed,. Eddathil Itti v. Kopashon Nayar (1862) 1 M.H.C.R. 122 and Kumini v. Pakram (1863) 1 M.H.C.R. 261.
An Otti mortgagee, like a Kanomdar, forfeits his right to hold for twelve years by denying his. jenmi's title. (2 M.H.C.R. 161).
An Otti-holder does not forfeit his right by endeavouring to set up further charges in answer to a. suit for redemption and failing to prove them, or by denying that assignment of his jenmi's title is valid because it was made without his consent in writing and in defeasance of his right of pre-emption without any previous offer to him. An Otti-holder may assert, his right to pre-emption and express his readiness and willingness to exercise it at the time that a suit is brought by a purchaser against him. for redemption. Ramasami v. Bhaskarasami I.L.R.(1879) Mad. 67 .
An Otti mortgagor is at liberty at any time to call on the Otti-holder to purchase the jenmi right, and on his failing to do so to sell the property to a stranger (Sudder Decision of 1857, 151). The option of exercising the right of pre-emption ought to be offered before assigning the property to a stranger. (Sudder Decision of 1859, 169).
An Otti mortgagee, if he avails himself of his right of pre-emption, must pay for pre-emption whatever sum is bona fide offered to the jenmi for the purchase, if he has the offer made to him by the jenmi and is rightly informed of the circumstances in reference to the offer. Public notice of, and the option of bidding at, a Court sale of the jenmi's rights do not constitute a valid offer of pre-emption so as to deprive the Otti-holder of his right of pre-emption, if he does not purchase the jenmi's rights. I.L.R. Mad. 198.
An Otti-holder must enforce his right of pre-emption within one year from the date of the registration of the jenmi deed, because the subject-matter of the sale being in the possession of the Otti-holder does not admit of 'physical possession' by the purchaser. (Act XV of 1877, Article 10, Schedule II).
The words 'actual possession' occurring in Article 10 of the second Schedule of the Limitation Act of 1871, mean the time when the equity of redemption is completely transferred to, and vested in the purchaser. I.L.R. All. 311
By the usage of Malabar an Ottidar is, like a Kanomdar, entitled to compensation for improvements effected by him during the continuance of the tenancy.
22. This information can be brought up to 1922 by a reference to P.R. Sundara Ayyar's (a former Judge of this Court), Malabar and Aliyasanthana Law (page 300 and following). In Mammali v. Kunhipakki Haji : (1912)23MLJ607 , the right of the ottidar is stated to consist in a right to elect where there has been an attempt on the part of the owner to sell the property to a third person whether he will buy it. The right may be waived. Ammotti Haji v. Kunhayan Kutti : (1892)2MLJ231 , Kanaran Nair v. Raman Nambiar (1893) 4 M.L.J. 46. An arrangement between the members of the family by which the property is set apart for some is not a transfer which would entitle the mortgagee to exercise the right of pre-emption (S.A. Nos. 1671 and 1672 of 1918). But a re-sale to the vendor does not affect the right of pre-emption brought into existence by the sale. (S.A. No. 1114 of 1917). The right, of pre-emption does not extend to involuntary sales. Vasudevan v. Ittiranchan Nair : (1918)34MLJ412 . Sundara Ayyar concludes his examination of othi mentioning 'Other names are vanimadaka and Mir Ozhikka otti. The last was the subject of consideration in Ryru Nambiar v. Kanara Kurup (1921) 42 M.L.J. 350 and their Lordships held that it was redeemable in the absence of clear evidence of usage to the contrary. Mattctti is a variety of this tenure that was considered in Keeran Avulle v. Chandra Sekharan Nambudiri (1890) 1 M.L.J. 485 See also Malabar Law and Custom by Lewis Moore, I.G.S. (3rd edition) pages 250 to 171; Logan's Malabar Manual, Appendix XIII, pages ccx to ccxii.
23. Having considered the peculiar characteristics of a Malabar othi, we have to consider whether this is a usufructuary mortgage contemplated under Section 9-A of the Madras Agriculturists' Relief Act. In this connection, I must notice one argument about whether there has been a change between Section 9-A as it stood before amendment and as it stands now after amendment in 1950. Originally Section 9-A stood as follows:
Where a usufructuary mortgage was executed at any time before the 30th September, 1947 and the mortgagee is in possession of the property mortgaged to him, the mortgagor shall be entitled to redeem the property....
Section 9-A as now amended stands as follows:
This section applies to all mortgages executed at any time before the 30th September, 1947 and by virtue of which the mortgagee is in possession of the property mortgaged to him or any portion thereof
24. The contention is that this section has been so widened that it will take in all types of mortgages including a usufructuary mortgage. The only necessary requisites now are stated to be that the mortgage should have been executed before the 30th September, 1947 and secondly, by virtue of that mortgage the mortgagee should be in possession of the property mortgaged to him, etc. This contention is not acceptable because the entire Section 9-A as it now stands amended when read in all its parts would appear only to cover as it did before a usufructuary mortgage contemplated in Section 9-A before this amendment; secondly, the Statement of Objects and Reasons which can be legitimately looked into for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the bill to introduce the same and the extent and urgency of the evil which he sought to remedy State of West Bengal v. Subodh (1954) 1 M.L.J. 314 : 1954 S.C.J. 127 : : 1SCR587 . (See also Ghose on the Interpretation of Indian Statutes based on Indian case law (1904), page 51; Narasimham : Interpretation of Indian Statutes (M.L.J. Publication), page 78; Swarup : The Interpretation of Indian Statutes (1952), page 180 and the catena of decisions cited at the foot of page 182) runs as follows:
The definition of 'usufructuary mortgage' in the Explanation to Section 9-A does not include either the case of a mortgagee who is in possession of a portion only of the property mortgaged to him or the case where the mortgage provides for the payment of interest either in respect of a subsidiary liability incurred by the mortgagee or in respect of die principal amount secured by the mortgage or any portion thereof, over and above the usufruct from the property. Clause 4 of the bill recasts Section 9-A so as to bring such cases also within its scope.
The other alterations made by the bill are purely consequential. (Published at page 273 of Part IV-A of the Fort St. George Gazette, dated 18th July, 1950).
25. It was also pointed out by the learned Advocate Mr. Kuttikrishna Menon that the marginal note to Section 9-A 'Special provision in respect of usufructuary mortgages' can be looked into. Though it forms no part of the section, it will be of some assistance inasmuch as it shows the drift or the trend of section and elucidates and illumines its meaning, when there is any doubt about the meaning of the words used. Though these marginal notes Marginal note disregarded in Longdon Griffith v. Smith (1950) 2 All E.R. 662 and R. v. Bates and Russel (1952) 2 All E.R. 842 and some help derived in Nicholson v. Fields (1862) 31 L.J. Ex. 233, Shffield Water Works Co. v. Bennett (1872) L.R. 7 Ex. 409 and Bushall v. Hammond (1904) 2 K.B. 567, Smith v. Portsmouth L.R. (1906) 2 K.B. 229 and Lord Goddard, C.J., in R. v. Surrey Assessment Committee L.R. (1948) K.B. 28 , could not be used for interpreting or curtailing the provision of a section where it is plain on the express language of it, it can be used to clear an ambiguity. It may be pointed out here that though in England the disposition of the Courts is generally to disregard marginal notes as of little guide to the construction of enactments, though at times it may throw light as a form of contemporaneous exposition. (Maxwell on Interpretation of Statutes, tenth edition, page.) 42-44, Craies on Statute Law, fifth edition, pages 183-184 and in America where the opinion is that marginal notes may be considered as an intrinsic guide to the interpretation of statutes if they constituted part of the original statute and apparently not if they had been inserted by editors of statutes for instance for the sake of convenience, (Crawford : The Construction of Statutes, Section 207, page 359). In this country different views have been held, one view Thola Udyar v. Sudai Udyan : AIR1940Mad8 , Balaji Singh v. Gangamma : AIR1927Mad85 , In re Natesa Mudaliar I.L.R. (1927) Mad. 156, Kesava v. Secretary of State (1918) 36 M.L.J. 222 : I.L.R. 42 Mad., Commn of U.R. v. Parasurama (1950) 1 M.L.J. 775 : I.L.R. (1950) Mad. 631 : Gammr. v. Umarbhi & Co. : 181ITR472(SC) , being that the marginal note is not a part of the statute and the Courts will neither regard them in construing the section nor treat them as an index to what the section was meant to apply, the other view Narayanaswami v. Rangaswami : AIR1926Mad749 , A.E. Smith, In re : (1923)45MLJ731 , Dattatrya v. State of Bombay : AIR1953Bom311 Ramsarandas v. Bhagawat : AIR1929All53 , Natanakya v. Shyansunder (1953) S.C.J. 201 : : 4SCR533 , being that urged by Mr. Kuttikrishna Menon.
26. There can be no doubt that notwithstanding the verbal changes between Section 9-A as it originally stood and as it now stands amended, the ambit of Section 9-A has not been enlarged and it is a provision only in respect of usufructuary mortgages.
27. Before entering into a discussion whether the Malabar othi tenure is a usufructuary morig ge or not as contemplated by Section 9-A of Madras Act IV of 1038, I must briefly refer to the contention of the learned advocate Mr. Kuttikrishna Menon that a Malabar othi is not a mortgage at all but only a perpetual lease. The learned advocate bases this contention on the ground that a mortgage in essence is a security device and that the othi in its essence is only a long term lease. It is quite true that the familiar definition of a mortgage as found in the standard text-books on the subject lend support to this view. In Fisher and Light-wood's Law of Mortgage (7th edition), Chapter I, page 3, a mortgage is defined as a form of security created by contract conferring interest in property defeasible that is, annullable) upon performing the condition to pay a given sum of money with or without interest or of performing some other condition. In essence, according to Fisher and Lightwood, mortgage is a security upon real or personal property for the payment of a debt. Cootes' treatise of the Law of Mortgages (9th edition) Volume I, page 6, defines a mortgage more elaborately, in the modern acceptation of the term, as a security created by contract for the payment of a debt already due or to become due or of a present or future advance effected by means of an actual executory conveyance of real or personal property charging the mortgaged property with the payment of the money secured redeemable in equity independently of such conditions and enforceable in default of such conditions and enforceable in default of paymentby foreclosure or sale in lieu thereof. Ghose on the Law of Mortgages in India (Lecture 3, page 68) says that a mortagage in our law means nothing more and nothing less that the pledging of specific property for the repayment of money or money's worth. The forms may vary but the transction in its essence is a mere pledge. The same concept is embodied in Section 58(a) of the transfer of Property Act and Section 58(d) defines a usufructuary mortgage. In all usufructuary mortgages, according to Section 58(d)(i) possession is delivered (ii) or agreed to be delivered expressly or by implication (iii) and to be retained till payment of the mortgage money. The rents and profits or any part thereof are:
(i) to be received; and
(ii) appropriated in lieu of : (a) interest or (b) mortgage money or (c) partly interest or (d) partly mortgaged money.
No time is ficed and there is no personal covenant. Put shortly thus, viz., that the essential characteristic of a mortgage differentiating it from other analogous transactins is that it is a security for a debt, the argument of the learned Advocate Mr. Kuttikrishna Menon would be irresistible because the Malabar othi has been in essence a lease almost in perpetuity. It is also quite true that in ascertaining whether a deed condessedly ambiguous means a usufructuary mortgage or a lease in perpetuity, the Judge should look to the document itself to judge what kind of transactin the parties had in view when they entered into it Lala Doul Narain v. Ranji Singh (1877) 1 C.L.R. 256, cited in Ashburner on Mortgages, Indian edition by the Rt. Hon'ble Ammer Ali, P.C., page 22.
28. But the 'mortgage', however, as pointed out by Ghose (dbid.) is word of many shades and nothing can be more distracting than the variety of senses in which the term is employed in English law and nothwithstanding the precision employed in Section 58 of the Transfer of Property Act, is capable of construction in Indian law. This is all the more so because in Malabar, anticipating the modern development in the United States, the security device of a mortgage has been adapted to meet various situations arising from the ownership of lands in direct cultivation and the necessity to borrow in the shape of advances, the safety of the investment. Adaptations of the security device by means of a mortgage by modern financing creating mompletely new situations retaining as their sole common characteristic the employement of the mortgage device is dealt with in Wiltsie on Mortgage (5th edition), Voume I (U.S.A.), page 2, SL, who concludes 'There is perhaps no field of law in which the evil of sanctifying definitions has been more manifest than that with which the law of mortgages is concered'. Therefore this othi, though it may be in essence nothing more than a long term or even what might have been considered at the time of its being entered into a perpetual lease employing as it does the device of mortgage security, is susceptible to the same rules of redemption. Theoretically the debt is still the core of the transaction; the pledge of the land is still no more than collateral. It is also too late in the day after the series of cases of this Court referred to above to maintain that the othi is not a mortg ge.
29. This conclusion that a othi is not taken out of the category of mortgages does not mean that it falls under Section 9-A of Madras Act IV of 1938 because that section contemplates only usufructuary mortgage defined under Section 58(d) of the Transfer of Property Act, and whose requisites have been set out above. The incidents of a Malabar othi have been set out above. The Malabar othi is therefore not a usufructuary mortgage simpliciter contemplated under Section 58(d) of the Transfer of property Act and Section 9-A of the Madras Act IV of 1938, but an anamolous mortgage covered by Section 58(g) of the Transfer of Property Act.
30. In the result, these appeals are allowed and O.P. Nos. 21 and 23 of 1951 are dismissed and in the circumstances without costs.
Govinda Menon, J.
21. I agree with the conclusion that the appeals should be allowed.