1. This reference raises two questions, (1), whether Exhibit A is an anomalous mortgage within the meaning of Section 93 of the Transfer of Property Act and (2), if it if, whether effect is to be given to the stipulation for the execution of a sale deed by the mortgagor in favour of the mortgagee on default of payment within the stipulated time, although this stipulation amounts to a clog on the statutory right of redemption conferred by Section 60 of the Act. As regards the first question, there are four classes of mortgages defined in Section 58:--(1) simple mortgages, (2) mortgage by conditionals sale, (3) usufructuary mortgage and (4) English mortgage. Section 98 also recognizes two further clases of mortgages, viz., a combination of (1) and (3), a simple mortgage and a usufructuary mortgage, or a combination of (2) and (3), a mortgage by conditional sale and a usufructuary mortgage ; and it is only to mortgages which do not come within any of these six classes that the provision in Section 98, that the rights and liabilities of the parties shell be determined by their contract as evidenced in the mortgage deed, and, so far as snob, contract does not extend, by local usage, is made applicable. Now in all mortgages including mortgages of the six classes already referred to, the rights and liabilities of the parties are determined by their contract as evidenced in the mortgage-deed, except in so far as any of the terms of the contract may be opposed to the provisions of the Act or otherwise illegal. The Legislature apparently considered that the provisions of the Act, including the statutory right of redemption conferred on the mortgagor by Section 60, should be made applicable to the four classes of mortgages defined in Section 58, which include the usual forms of mortgage, and to the two combinations mentioned in Section 98, so as to override any terms in the mortgage-deed inconsistent with the Act, but that it would be safer to leave other forms of mortgage, which may be regarded as anomalous and are so referred to in the beading to Section 98, to be governed by the provisions of the mortgage deed or local usage, and in effect to exempt them from the operation of the Act to this extent at any rate that the terms of the contract or the local usage applicable thereto should override the general provisions of the Act. The general rule being that, except in this particular case, the provisions of the Act should override the terms of the mortgage contract, the Court should, I think, satisfy itself that the particular mortgage cannot fairly be brought within any of the six specified classes of mortgages before holding it to come within the rule of exception created in favour of anomalous mortgages. Doming now to Exhibit A, I am dearly of opinion that it is not a mortgage by conditional sale within the meaning of the definition in Section 58(c) of the Transfer of Property Act, The provision that, in default of payment on or before the stipulated date, the mortgagor shall execute a deed of sale in favour of the mortgagee, no doubt brings it within the description given by Sir Charles Turner in Ramasami Sastrigal v. Samiyappanayakan 4 M. 179 of a conditional mortgage as understood in Southern India before the passing of the Act, but we are governed by the terms of Section 58 and as pointed out by Sadasiva Aiyar, J. in Srinivasa Aiyangar v. Radhakrishna Pillai 22 Ind. Cas. 54, Clause (c) seems to have been expressly framed so as to exclude the Hindu form of mortgage by conditional sale from the definition of mortgage by conditional sale in the Transfer of Property Act, with the result that the provision as to a future sale must be regarded overridden by the statutory right of redemption conferred by Section 60. Pattee Mahamad v. Sheikh Davood 30 Ind. Cas. 569 is to the same effect, and, both on the construction of the Act and on these authorities, I am of opinion that Exhibit A is not a mortgage by conditional sale within the. meaning of Sections 50 and 98. This, however, does not conclude the question, as we have still to see if Exhibit A comes within any of the five remaining classes, one of which is a combination of a simple mortgage and a usufructuary mortgage. How, if we take the first part of Exhibit A with its covenant to repay with interest at one per cent, an the date fixed and the stipulation that on failure to pay on that date, the mortgagor is 'to give up the land as sold to yon fur the amount then outstanding due to you and execute a proper sale-deed,' it contains all the essentials of a simple mortgage with an illegal colg on the equity of redemption superadded. If now we take the second part of the instrument and read with the recital of the mortgage debt at the beginning, it provides ''Possession of the property having been delivered to you on this very date, you shall henceforth enjoy the property as you please and shall yourself pay Rs. 6-3-0 due to Government every year without giving any consideration whatever for every year.' Here we have all the essentials of a usufructuary mortgage as defined in station 58(d), as the property is delivered to the mortgagee and he is authorised to receive the rents and profits accruing from the property and to enjoy them subject to the payment of land revenue without accounting for them. The deed does not say expressly he is to appropriate them in lieu of interest,' but an express statement to that effect in the mortgage deed is not necessary to make a usufructuary mortgage as defined in Section 58(d), because, as by the terms of the instrument, they are not to be appropriated in satisfaction of the principal, the only inference must be that they are to be appropriated by the mortgagee himself in consideration of his advance, which is another way of saying that they are to be appropriated in lieu of interest. Reading the two parts of the document together, the mortgagee gets, in addition to the rate of interest provided in the first and simple mortgage part of the document, the enjoyment of the rents and profits provided in the second and usufructuary part which must in my opinion be regarded as by way of further interest. In any case Exhibit A, as I have pointed cut, contains expressly or impliedly all the essentials of a simple mortgage and also of a usufructuary mortgage with a clog on tie equity of redemption superadded, and amounts, in my opinion, to a combination of a simple mortgage and a usufructuary mortgage within the meaning of Section 98. My answer, therefore, is, that the stipulation in Exhibit A which fetters the equity of redemption is invalid as opposed to Section 60 of the Transfer of Property Act, which admittedly governs all mortgages bet the residuary class of mortgages defined in Section 98.
2. It is, I agree, possible to deal with this reference en the ground that Exhibit A is not an anomalous mortgage and without expressing any opinion as to whether Section 9d of the Transfer of Property Act is controlled by Section 60.
3. The terms of the document are given in the order of reference. It is clear that the sale provided for in it is future and not ostensible ; and there is, therefore, no question of a mortgage by conditional sale. It is next material that the provision for a sale must for the present purpose be dismissed from consideration. For such provision, standing in a mortgage of one of the normal forms defined in Section 58 or in one of the combinations of them specified in Section 58, would operate as a restraint on the right of redemption and, whether the prohibition of restraints on redemption implied in Section 60 is or is not applicable to anomalous mortgages, the settled principle that sash a provision is inoperative in a normal mortgage cannot be evaded by the classification of all mortgages containing a restraint as on that ground anomalous. Our conclusion as to the character of the transaction must accordingly be reached with reference only to the remainder of the document, the provision by the mortgagor to pay on a specified date and the transfer of possession to the mortgagee.
4. Such a promise and such a transfer would prima facie be characteristic respectively of a simple and of a usufructuary mortgage and occurring in one document, of a combination between the two. But the learned Judges in their orders of reference are unwilling to recognize Exhibit A as including a simple mortgage, because possession is transferred, or a usufructuary mortgage, because profits, are net appropriated in lieu of interest or the mortgage money.
5. The words of the definition of a simple mortgage in Section 58(b) 'without delivering possession of the mortgaged property' no doubt at first sight support the first of these objections. But, with all deference, if combinations between the forms of mortgage are to be recognized at all to any purpose, same departure from the definitions most in all or almost all cases be condoned; and there seems to be no reason on principle why it should not be, so long as the substantial character of each of the mortgages combined is preserved and, although no such question arises in the present case, so long as no legal relation of ft different kind is introduced. The alternative involved in strict adherence to the definitions is that the combinations contemplated are only between one mortgage and the other in succession, the right to the remedy under the one being lost, when the mortgagee elects or in constrained by the contract to avail himself of the remedy under the other. But, if the simple mortgage is regarded, as it easily may be, as superseding the usufructuary at the moment, when the right to bring the property to sale is exercised and the mortgagee's possession ends in favour of the auction purchaser, the distinction between the successive and simultaneous existence of obligations under the two is of little practical importance. Certainly that distinction has been disregarded by this Court in Ramayya v. Guruva 14 M. 232 and Kangaya Gurukal v. Kalimuthu Annavi 27 M. 526 and the judgment of Sadasiva Aiyar, J., in Srinivasa Aiyangar v. Radhakrishna Pillai 22 Ind. Cas. 54 ; and in my opinion no reason has been shown for dissent from these decisions.
6. To turn to the other aspect of the transaction as usufructuary mortgage, there is no doubt nothing explicit in Exhibit A to connect the mortgagee's possession with an appropriation of the profits to interest. But 1 am with all respect unable to follow Krishnan, J., in his surmise that ,they would be devoted entirely or almost entirely to the payment of revenue, since there is no reason for assuming that money was advanced on property which it would not, be profitable to enjoy. In the absence of any other explanation, there is no reason against and every reason in favour of the view that the profits were to be set against interest in addition to that expressly stipulated for in the document. Section 58(d) no doubt refers only to appropriation of profits in lieu of interest or in payment of the mortgage money or partly in lieu of interest and partly in payment of the mortgage money, not, as here, in part-payment of interest alone. But appropriation in part-payment of interest might be the result, wherever the stipulation is for an account to be taken as Section 73(b) provides; and such appropriation, therefore, does not appear inconsistent with the definition or with the character of Exhibit A as a combination of a simple and usufructuary mortgage with which we are concerned.
7. I concur in the opinion proposed by the learned Chief Justice.
Seshigiri Aiyar, J.
8. I am under the impression that both the learned Judges who referred this ease have came to the conclusion that the mortgage we are dealing with is an anomalous one and that it does not come within the four classes of original mortgages and the two elapses of combined mortgages referred to in Section 98 of the Transfer of Property Act. If they wanted our ruling on the construction of the document, they would not have framed the question as .they have done, as, if the transaction is rot anomalous, there can be no question that the condition would be invalid. However, as both the learned Chief Justice and Mr. Justice Old field are of opinion that it is still open to us to consider the nature of the transaction, I shall very shortly state my view of it.
9. I respectfully agree with my Lord that this is not a mortgage by conditional sale. The transaction which Sir Charles Turner examined in Ramasami Saslrigal v. Samiyappanayakan 4 M. 179 was undoubtedly one which prior to the passing of the Transfer of Property Act was regarded in this country as a conditional mortgage, that is, a mortgage with a condition for selling the property, which condition executed itself on default being made. But the definition of a mortgage by conditional sale as given in Section 58 of the Transfer of Property Act apparently does not include the ancient forms of conditional mortgage within it. There must be an ostensible sale to begin with, and as this document neither ostensibly nor otherwise purports to be a sale-deed, t feel no doubt that it does not satisfy the requirements of a mortgage by conditional sale. What was pressed on us was that the transaction in question is a combination of a simple aid a usufructuary mortgage. Before examining the terms of the document I may state briefly the principles which, in my opinion, ought to guide Courts in construing transactions of this kind. In the first place, Courts should not be astute to take a transaction out of the category of recognised mortgages. In the second place, the essential elements of the transaction should be examined to find out whether the constitnent parts of the recognised mortgages are found in it. The third principle is that in finding whether there has been a combination or not, the intention of the parties must be given paramount weight to. No doubt it is not merely the language in which the document is worded that should conclude Courts. It is really the substance of the transaction that should be looked into.
10. Bearing these principles in mind, I shall proceed to examine the nature of the transaction before us. I am clear that the elements of a simple mortgage are there. There is a time fixed for payment. There is astipulation for default, etc. The really difficult question is whether there ere stipulations in the document which bring it within the definition of a usufructuary mortgage. On this point I have very grave doubts whether the essential characteristic of a usufactuary mortgage is to be found in this document. The element of possession is there, but the usufruct must be intended by the parties to be applied towards principal, interest or both. It has been suggested that the direction to pay the Government revenue is virtually an allocation of the usufruct for a portion of the interest by paying the Government revenue. Unfortunately, the document distinctly states that interest at 12 per cent. shall continue to be paid independently. In my opinion, the stipulation to pay the assessment was inserted to relieve the mortgagor from the obligation to pay it and not adjudicating that the payment of it was an appropriation towards any portion of interest. I am of opinion that the document is wanting in this essential condition relating to usufructuary mortgages. I have, therefore, great hesitation in holding that the main requirements of a usufructuary mortgage are satisfied by this transaction. However, as both the learned Chief Justice and Mr. Justice Old field have come to the conclusion that the transaction in question is one of the recognised combinations of mortgages and as on a question of construction the interpretation of one document is not ordinarily a precedent for construing another document, I am not prepared to differ from the conclusion. There can be no doubt, that if this is a combination of a simple and a usufructuary mortgage, Section 60 of the Transfer of Property Act would apply.
11. I shall next proceed to deal with the question which I think was really referred to us. I entirely agree with the learned Chief Justice that the classes of mortgages which do not come within the class of original mortgages and of the two combined mortgages are not affected by Section 60 of the Transfer of Property Act. The language of Section 98 to my mind seems dear. It declares that the contract between the parties should be given full effect to, and that where there is no contract, local usage should govern the rights of the parties. If we read into this section the provisions relating to the rights and liabilities of mortgagor and mortgagee elsewhere enacted, we shall render the section nugatory. It was suggested in the course of the argument that he use of the word 'mortgage' indicates that anomalous mortgages are within Clause (a) of Section 53. I am unable to accept this contention. The essentials of the mortgages for enforcing which the Legislature has provided are defined in that clause. We are not entitled to extend snub, provisions to transaction of the kind now in question because the expression mortgage is applied to them. The result of such a process would be this--in regard to each one of them, we can separate the enforceable portion from what are considered illegal or unenforceable and treat them as falling under one or the other of the classes of recognised mortgages.
12. There are two dangers to be avoided--one, the conversion of every mortgage into what we want it to be and the other, of giving a premium to ingenuity which would get round the Act by wording the document in such a manner as to elude the, definition of the recognised mortgages. The true rule is to examine the document to find out whether the essentials of one of the four classes of mortgages are existent in it. If they are, then we should treat the rest as surplusage and ignore them; but when it is not possible to bring' the document into any of, the recognised categories, one should not, by ignoring what the parties intended to be governed by make a new mortgage for them.
13. The Legislature by referring to the four classes of mortgagee and to some combinations of them must be taken to have intended that all other forms of mortgages not falling within those enumerated categories are beyond the pale of the provisions enacted for the enforcement of mortgages. That seems to me to be the plain reading of the section, but as doubts have been entertained on this mode of construction, I propose to deal with the history of legislation which led up to the enactment of Section 98.
14. The principle enunciated in Noakes & Co., Ltd. v. Rice (1902) A.C. 24 , by Lord Macnaghten that redemption is of the very nature and essence of a mortgage, as mortgages are regarded in equity and that it is inherent in the thing itself is not applicable, apart from the Statute law, to this country. Before fully referring to Pattabhiramier v. Vencatarow Naickem 13 M.I.A. 560 where the Judicial Committee drew attention to this view, I shall briefly consider the Hindu Law on the subject. In the above case, their Lordships said generally that the ancient law of India was not in favour of the view of the Suddar Adalut that every mortgage is subject to redemption. Smriti writers, as a general rule, hold that, after a lapse of time, the pledger loses his right to redeem the pledge. Manu lays down, the mortgaged premises for being long held in mortgage shall not cease to be subject to mortgage and as such incapable of being sold. See Chapter VIII, Section 143. When Vignaneswara wrote his commentary on the Yagnavalkya Smriti, there was apparently a considerable change in the feelings of the people on this question. Referring to Manu's view, the author of Mitakshara says that the text should be confined to the subject of 'pledge for use' and should not be extended to ordinary pledges. Then he says, referring to the text of Vrihaspati, 'Gold having doubled and the stipulated period having expired, the creditor becomes owner of the pledge after the lapse of fourteen days'. 'A question arises that the pledge is forfeited is not consistent because there is neither a gift nor sale, etc., by which the right of the debtor can cease. Neither is there an acceptance nor purchase, etc., by which the right to the creditor can accrue and that it is also contrary to the text of Manu.' Then he proceeds to answer this Poorvapaksha (objection) in these terms: 'It is a well-known popular notion that a transfer by pledge is a qualified cause of the loss of right; and the acceptance of a pledge, the qualified cause of the creation of right. Consequently after the debt has doubled and the stipulated time has arrived, the right to satisfy the debt ceases by virtue of this text that the debtor's right is lost for ever and that of the creditor accrues.'
15. Nothing can be clearer than this. Thus, in the opinion of Vignaneswara, the right of the creditor to redeem, is lost after the stipulated time. Passages from other Smrities can be quoted to the same effect. What I want to emphasise is this, that the principle that redemption is of the essence of a mortgage was not recognisad by the Hindu sages; on the other' hand, they seem to have given more sanctity to freedom of contract than was done in England, If the ancient texts are examined, it will be found that the idea of security which in England seems to underlie the principle of redemption is restricted in India to retention of property until a stipulated time. This view was referred to by the Judicial Committee in Pattabhiramier v. Venctarow Naicken 13 M.I.A. 560 . Their Lordships said: 'What is known in the law of England as equity of redemption depends upon the doctrine established by Courts of Equity, that the time stipulated in the mortgage-deed is not of the essence of the contract. Such a doctrine was unknown to the ancient law of India.' In the case before them, the document was very similar to what we are dealing with ; and it was held that the mortgagor was not entitled to redeem after the stipulated period had expired.
16. In Thumbusaumy Moodelly v. Hossain Rowthen 3 Suth. P.C.J. 198 1 the Judicial Committee introduced some reservations on account of the fact that, in Madras, a course of decisions had sprung up on the primer that once a mortgage is always a mortgage; but their Lordships reiterated their view that this special doctrine of the Court of Equity was not the law of India. At the same time, they suggested to the Legislature that an Act should be passed for regulating the rights of, the parties to mortgage. This invitation was adopted and Act of IV of 1882 was passed. In my opinion, having regard to the Indian theory regarding mortgages and having regard to the exposition of that theory by the Judicial Committee, Section 9i should be regarded as a residuary section which was intended to leave to parties their unfettered right to be controlled by the terms of the contract independently of the provisions of law relating to the classes of mortgages recognised in the Act.
17. One or two decision subsequent to the two Privy Council decisions ought to be referred to Bapirazu v. Kamarazu 1 Ind. Dec. 574 is a very important one. That was a decision of Sir Charles Turner and Innes, J. That case was very similar to the present one. Innes, J., after reviewing the earlier authorities in Madras, held that no right of redemption subsisted after the period had expired and that the principle of Pattabhiramier's case 13 M.I.A. 560 governs the transaction. He said: 'The principle of the decision in Pattabhiramier's case 13 M.I.A. 560 as explained by the case of Thumbusawmy Moodelly v. Hossain Rowthen 3 Suth. P.C.J. 198 is clearly that doctrines such as that of the equity of redemption and other doctrines foreign to the ancient law of country should not be permitted to stand in the way of giving effect to the dear intention of the parties as expressed in the written instrument,' Turner, C.J. said I am of the came opinion.' This decision was in April 18S1. Sir Charles Turner was one of the Commissioners along with two others who were entrusted with the task of drafting the Transfer of Property. Bill It is wall known that the report with a draft bill was sent up to the Government of India in 1879. It was at this interesting stage that the ease in Bapirazu v. Kamarozu 1 Ind. Dec. 574 was decided.
18. I may also point cut that in Perlathail Subba Rao v. Mankude Narayana 1 Ind. Dec. 913, another decision before the Transfer of Property Act, the learned Judges held that the usage of the parties should govern the rights and not the principles relating to redemption. Then we come to Perayya v. Venkata 4 Ind. Dec. 281. In that case there are some observations which are of a general character. Apparently there was no contention in that case that the mortgage was an anomalous one, because the learned Judges say: 'It was conceded that if there was otherwise a right of redemption, that right is extinguished by the Act of the parties within the meaning of the proviso to Section 60.' The main argument before the learned Judges seems to have been that, as there was a contract to the contrary, Section 60 was excluded. Moreover, we have not got the language of the document and I am not satisfied that that was not a ease which would have been covered by the combinations referred to in Section 98. In my opinion, therefore, this decision does not affect the present ease. Subsequent to this decision, there have been a fairly large number of rulings in which it was held that the contract of the parties should be the guiding element, Raman hair v. Vasudevan Namboodripad 27 M. 26 and Gopalan Nair v Kunhan Menon 30 M. 300 were eases of Kanom mortgages which were held to be anomalous mortgages and to have been governed by the usage of the district.
19. In Visvalingam Pillai v. Palaniappi Chetty 8 M.L.J. 113 the principle underlying Section 98 was expressly recognised. In Srinivasa Aiyangar v. Radhakrishna Pillai 22 Ind. Cas. 54 the learned Judges impliedly held that, if the mortgage in question was not covered by Section 99, there will, be no right of redemption. Pattee Muhamad v. Sheikh Davood 30 Ind. Cas. 569 is an express decision on the point, Badal Molla v. Chemai Mondul 40 Ind. Cas. 894 is another to the same effect.
20. I do not think that such a large number of decisions should be overruled. I am inclined to think that they rest upon the basis which was outlined by the Judicial Committee in the case in Pattabhiramier v. Vencatarow Naickcem 13 M.I.A. 560 . If in a given case, there is a likelihood of hardship, it is for the Legislature to intervene.
21. I am, therefore, of opinion that Pattee Muhamad v. Sheikh Davood 30 Ind. Cas. 569 is right and that the mortgagor is not entitled to claim redemption in oases of anomalous mortgages.