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Konthalavalli Achi Vs. T.S. Ayyadarai Odayar and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberLetter Patent Appeal No. 88 of 1956
Judge
Reported inAIR1962Mad21
ActsMadras Agriculturists Relief Act, 1938 - Sections 9-A
AppellantKonthalavalli Achi
RespondentT.S. Ayyadarai Odayar and ors.
Cases ReferredIn Nagaraja Dikshitar v. Sundaresa Sastrigal
Excerpt:
.....act (iv of 1938), section 9a--applicable to all mortgages where mortgagee is in possession of mortgaged property--scope of sub-sections 10(ii)(a) and (b) ; the terms of section 9-a of the madras agriculturists relief act (iv of 1938) are wide enough to bring within its ambit not merely the usufructuary mortgage as defined is section 58-d of the transfer of property act (iv of 1882), but other mortgages which involve a transfer of possession of the property to the mortgagee, e.g., mortagage by conditional sale, simple mortgage, usufructuary, etc. section 9-a will apply to all mortages by virtue of which the mortgagee is in possession of the property mortgated.; thirumalpad v. krishnan nair (1956) 2 m.l.j. 46 overruled.; the exemption clause contained in sub-section 10(ii)(a) of..........apply to all mortgages by virtue of which the mortgage is entitled to remain in possession of the property mortgaged or only to usufructuary mortgages as defined in s. 58(d) of the transfer of property act.2. whether s-9a(10)(ii)(a) would apply to all sales of equity of redemption, whether by act of parties or by operation of law, that take place during the specified period or only to sales effected by act of parties.3. whether s. 9-a(10)(ii)(b) would cover cases of all alienations of the mortgagor's right, be it a sale or merely a mortgage, or only to cases where there has been an absolute transfer of the mortgage's right either in whole or part.(7) the madras agriculturists, relief act 1938, which statutorily wiped out the outstanding interest and provided for the application of the.....
Judgment:
(1) This appeal, which involves the determination of certain important questions in the construction of Sect. 9-A of the Madras Agriculturists Relief Act, 1938 (referred to as the Act) arises out of a suit for redemption for a usufructuary mortgage instituted by the first respondent. One Kandaswami, who was the original owner of the properties concerned in the suit, created thereon in favour of the appellant on 26th April 1927, a mortgage with possession for securing a loan of Rs. 6000. The document of mortgage stipulated that the mortgagor was to pay and redeem the properties within a period of three years, and that the mortgagee was to retain possession of the properties enjoying the usufruct till redemption. The mortgagee who obtained possession, leased back the properties to the mortgagor.

(2) On the day following the mortgage, on 27-4-1957, Kandaswami executed a second but simple mortgage over the same properties in favour of Janaki, the daughter of the appellant. Some years later, the appellant who borrowed certain monies from the 8th defendant executed a simple mortgage in favour of the latter over some of her properties, one of the items mortgaged being the first mortgage right of the appellant over the suit properties. That document is dated 19-4-1961. Thus a sub-mortgage was created over the suit property on that day.

(3) In the same year Janaki filed a suit on the basis of the mortgage (second mortgage in her favour) O. S. No. 273 of 1941 on the file of the District Munsif's Court, Mannargudi. In due course she obtained a decree, and brought the suit properties to sale. The first respondent purchased the suit property in the court sale that ensued subject to the usufructuary mortgage dated 26-4-1927, for a sum of Rs. 3000. Thereafter, he, as the owner of the equity of redemption instituted the suit out of which this appeal arises.

(4) In the plaint the first respondent claimed that he was an agriculturist entitled to the benefits of the Act, and that in view of the fact that 27 years had elapsed since the date of the mortgage, the mortgage amount payable would be only Rs. 400 (2/30 of Rs. 6000) the balance of the debt having been statutorily discharged by the provisions of S. 9-A of the Act. The appellant did not deny the fact that the first respondent was an agriculturist, but she contested the claim to redeem at the reduced amount on the ground that the scaling down provisions contained in the Act would not apply to the present case by virtue of the exemption provided in S. 9-A(10)(ii)(a) and (b). It was also claimed that the first respondent had defaulted in the payment of rent, and that at least 3 years rent which was in arrears should be directed to be paid as a condition of redemption. The learned Subordinate Judge accepted the first respondent's case that the mortgage debt should be scaled down and that only a sum of Rs. 400 was payable; he also accepted the case of the appellant in regard to the arrears of rent due, which he ascertained at Rs. 990 and passed an appropriate preliminary decree for redemption. Both the appellant and the first respondent respectively filed an appeal and a memo of cross objections to this court from the decree in so far as it was against them. Rajgopala Aiyangar, J., before whom the matter came up for hearing, upheld the view of the trial court that the mortgage debt stood discharged to the extent of 28/30 thereof. The learned Judge, however, vacated the decree for arrears of rent, as in view there was no evidence to support that claim. On the former aspect of the case the learned Judge held that neither of the clauses in sub-secs 10(ii)(a) and (b) would apply to the present case, and that there was noting to prevent case, and that there was nothing to prevent the operations of S. 9-A(3) on the mortgage debt. The correctness of that view is challenged in this appeal by the mortgage.

(5) When the appeal came up before us, the learned counsel for the appellant took yet another point, namely, that S. 9-A would apply to usufructuary mortgages strictly so called coming within the definition of the term in Sect. 58 (d) of the Transfer of Property Act and the suit mortgage which contained a personal covenant and was only in anomalous mortgage would not come within its ambit so as to entitle the mortgagor to claim the benefit of S. 9-A. This contention was not raised at earlier stages of this litigation. But the point taken is directly covered by the decision of a Bench of this court in Tirumalpad v. Krishnam, 1956-2 Mad LJ 46 : (AIR 1958 Mad 117). Doubts have, however, been expressed as to the correctness of that decision. As the point involved is one of importance we permitted learned counsel to raise the objections notwithstanding the fact that it was not taken earlier than now.

(6) The contentions raised in support of the appeal are reflected in the following questions which have to be considered.

1. Whether S. 9A of the Act will apply to all mortgages by virtue of which the mortgage is entitled to remain in possession of the property mortgaged or only to usufructuary mortgages as defined in S. 58(d) of the Transfer of Property Act.

2. Whether S-9A(10)(ii)(a) would apply to all sales of equity of redemption, whether by act of parties or by operation of law, that take place during the specified period or only to sales effected by act of parties.

3. Whether S. 9-A(10)(ii)(b) would cover cases of all alienations of the mortgagor's right, be it a sale or merely a mortgage, or only to cases where there has been an absolute transfer of the mortgage's right either in whole or part.

(7) The Madras Agriculturists, Relief Act 1938, which statutorily wiped out the outstanding interest and provided for the application of the rule of damdupet on certain debts due from agriculturists, did not apply to mortgages by virtue of which the creditor was entitled to remain in possession of the mortgaged property without there being any stipulation as to interest. Section 10(2)(1) of the Act expressly exempted from the operation of the scaling down provisions such mortgages. Legislation was, however, enacted subsequently granting relief to indebted agriculturists, who had executed what in common parlance was known as usufructuray mortgages. Act 23 of 1948 which amended the Act, contained S. 9-A which provided for a statutory discharge of mortgage with possession in which thee was no stipulation as to payment of interest. It is needless to point out that where interest had been stipulated, the debtor could obtain relief under the original Act itself.

Sec. 9-A an enacted by amending Act 23 of 1948 was repealed and re-enacted with certain modifications by Act 24 of 1950, the relevant portion of which will be set out hereafter. The principle underlying this section is that the creditor should not get more than what the rule of damduput permits and a mortgage in possession could be reasonably expected to realise by 30 years enjoyment of the mortgaged property, the principal amount and also interest equal to that amount. Broadly stated, the section provides for complete discharge of the debt where a mortgagee has been in enjoyment of the property for 30 years, where the period of enjoyment is less than that period the mortgage amount will be reduced proportionately. The mortgagor is enabled to redeem the property without any payment where the mortgagee has been in possession for 30 years and more. In case the period of enjoyment is less, the mortgagor can pay a proportionate amount of principal sum and redeem notwithstanding any stipulation in the deed as to the time for redemption. The section is enacted in general terms, but the context it is clear that it would apply only where the debtor is an agriculturist. It does not apply to mortgages executed after 30-9-1937.

(8) The provision was undoubtedly intended to benefit the agriculturists debtor; its unrestricted operation is capable of resulting in unintended benefits to some or hardships to some others. As we stated earlier prior to the enactment of Sec. 9-A mortgages with possession where to interest was stipulated were exempt from the operation of the original Act. Therefore nobody would or could have anticipated at that time such an expropriatory legislation, but on the contrary mortgagors and mortgages would have entered into transactions on the faith of the protection offered under S. 10(2) of the Act. Transfers for consideration of the enquiry of redemption or of the mortgagee's right might have taken placed. It was essential that safeguards should be made in such cases. Section 9-A, therefore provides for certain exemptions, two of which we have to refer to while dealing with the later two of the questions stated above.

(9) It will be convenient at this stage to refer to the relevant portion of Sec. 9-A.

"S. 9-A(1) 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.

(A) Where no rate of interest is stipulated for as due to the mortgagee or

(b) where a rate of interest is stipulated for as due to the mortgagee in respect of the principal amount secured by the mortgage or any portion thereof in addition to the usufruct from the property or in respect of any other sum payable to the mortgagee by the mortgagor in his capacity as such.

Explanation : A mortgage shall be deemed to be in possession of the property mortgaged to him or any portion thereof, notwithstanding that he has leased it to the mortgagor or any other person.

2...................

3. Where the mortgagee has been in possession of the whole of the property mortgaged to him for an aggregate period of less than 30 years, the mortgagor shall not be entitled to redeem the mortgage, unless he pays to the mortgagee.

(i) the difference between the principal amount secured by the mortgage and an amount bearing to the principal amount the same proportion as the period during which the mortgagee has been in possession bears to thirty years;

(ii)......... and

(iii) all other sums payable to the mortgagee by the mortgagor in his capacity as such, together with interest, if any due thereon."

Sub-sec 10 : Nothing contained in this section, except sub-secs (1) and (2) shall apply to any mortgage

(i)...............

(ii)............... in the case mentioned below-

(a) where during the period after the 30th September, 1937 and before the 30th January 1948 the equity of redemption in the property subject to the mortgage has devolved either wholly or in part on a person, by or through a transfer inter vivos either from the original mortgagor or from a person deriving title from or through such mortgage otherwise than by a transfer inter vivos then to the whole or such part, as the case may be;

(b) where, during the period aforesaid the mortgagee or any of the sucessors-in-interest has transferred either wholly or in part mortgagee's right in the property bona fide and for valuable consideration, then to the whole or such part, as the case may be :

Provided that the transferee of a mortgagee shall not be entitled to recover in respect of such mortgage, anything more than the value of the consideration for the transfer; but nothing herein contained shall in cases where the property or portion thereof has been leased back to the mortgagor, affect the right of the transferee to recover the rent, if any, due under the lease, if such rents have not become barred by limitation under any law for the time being in force;

(c) where the mortgagee's interest in the property subject to the mortgage or any part of such interest belonged to, or developed on two or more persons and during the period aforesaid, a partition has taken place among such persons, then to the whole or such part of the interest as the case may be."

The first of the questions set out above concerns the interpretation of Section 9-A (1) which makes the provisions of the section applicable to all mortgages by virtue of which the mortgagee is in possession of the property. The terms of the section are wide enough to bring within its ambit not merely the usufructuary mortgage as defined in S. 58(d) of the Transfer of Property act but other mortgages which involve a transfer of possession of the property to the mortgagee, e.g., mortgage by conditional sale, simple mortgage usufructuary etc. In 1956-2 Mad LJ 46 : (AIR 1958 Mad 117), a Bench of this court had to consider whether the provisions of S. 9-A would apply to a Malabar othi which partook the character of a mortgage as well as of a lease. The distinctive features of such an othi are that the mortgagee is entitled to remain in possession of the property and the mortgage can be redeemed after a period of 12 years; the mortgagee has a right of pre-emption as well. There are also certain other features which need not be referred to now. The learned Judges held that the transaction in that case did not partake the character of a usufructuary mortgage, pure and simple, but was an anomalous mortgage. They further held that the scaling down provisions contained in S. 9-A would apply only to usufructuary mortgages coming within the definition of the term in S. 58(d) of the Transfer of Property Act.

(10) Substantially three reasons have been given for restricting the application of S. 9-A to usufructuary mortgage alone. The first is that S. 9A as enacted by Act 24 of 1950 is not different in regard to its scope from its precursor, namely, S. 9-A of Act 23 of 1948, and as the latter provision expressly dealt only with usrfructuary mortgages properly so called, the operation of the latter should be restricted likewise. We are by no means sure that such a method of approach is at all permissible where the terms of S. 9-A an enacted in Act 24 of 1950 are clear and explicit, expressly stating that they apply to all mortgages with possession. But even assuming that the previous history of the section can be looked into to ascertain its scope the view taken that S. 9-A as enacted by Act 23 of 1948 applied only to usufructuary mortgages does not appear to be correct. The section and its marginal note no doubt referred only to usufructuay mortgages; but appended to the section was an explanation which stated that the term "usufructuary mortgage" as used in the section meant " a mortgage by virtue of which the mortgagee is in possession of the property mortgaged where no rate of interest is stipulated as due to the mortgagee." When Act 24 of 1950 redrafted and enacted S. 9-A in its present form, the terms of the explanation were incorporated in the body of the section after deleting the term 'usufructuary mortgage', thus making the intention of the legislature more clear than before.

(11) The second reason given for adoption of a construction restricting the operation of S. 9-A is, that the statement of objects and reasons of Act 23 of 1948 showed that an unlimited scope was not intended by the draftsman. Where the terms of the section are clear as in this case, there is no scope for referring to the statements of objects and reasons as an aid to interpretation. It is no doubt true that in certain cases, the circumstances attending the enactment of a statute can be looked into for the purpose of ascertaining the mischief which is intended to remedy, the cure provided therefor with a view to adopt such interpretation as would carry out the true intent. But those considerations do not exist here. Further, there is nothing in the statement of objects and reasons to indicate that the term "usufructuary mortgage" was not to include other mortgages under which the mortgagee is allowed to be in possession of the property. On the other hand, the Select Committee's report specifically stated that a usufructuary mortgage under S. 9-A had not the same meaning that it had under the Transfer of Property Act.

(12) The learned Judges then relied on the marginal note to the section as indicating its scope. The marginal note is found in the present section is a reproduction of the marginal note contained in Act 23 of 1948, namely, "special provision in respect of usufructuary mortgage". In the earlier Act the term "usufructuary mortgage" had been defined; but that has been repealed as the same had been incorporated in the enacting part of Act 24 of 1950. In so doing the draftsman appears to have forgot to amend the marginal note suitably. That, however, cannot affect the interpretation of the section. The marginal note which is not a part of the section can afford no aid to the construction of it, particularly when there is no ambiguity. The learned Judges were alive to this principle, but they regarded that the marginal note "would be of some assistance to show the drift or trend of the section to elucidate and illumine the meaning when there is any doubt." The words of the section, in our opinion, are precise and unambiguous and there is no justification for seeking any aid for its interpretation from other sources. We are, therefore, of opinion that the reasons which inducted the learned Judges in 1956-2 Mad LJ 46 : (AIR 1958 Mad 117) to give a restricted operation to S. 9-A cannot be accepted and that the section will apply to all mortgages by virtue of which the mortgagee is in possession of the property mortgaged.

(13) It then becomes necessary to consider whether the suit mortgage is exempted from the operation of the scaling down provisions contained in sub-sec (10) (ii) (a). For the appellant it contended that the exemption clause contained therein would cover not only a sale inter partes whereby the mortgagor conveyed the equity of redemption to another but to involuntary sales (e.g court sales) as well. This contention did not find acceptance with Rajagopala Aiyangar, J., who agreeing with the observations of Krishnaswami Nayudu, J, in Benjamin v. Devadoss, , held that the provisions of sub-sec

(10) (ii) (a) would have only a limited application to a sale of equity of redemption inter partes. was a case where there was a court sale of a mortgage's right'; in considering the applicability of sub-sec (10) (ii) (b) the learned Judge held that the term "transfer" occurring in that sub-section should be the result of an act of the parties. In arriving at the conclusion the learned Judge relied on the use of the word "transfer" in sub-sec (10) (ii) (a). Reference was also made to S. 5 of the Transfer of Property Act, where transfer was defined as the act of the parties where the term "inter vivos" was employed. With great respect to the learned Judge we cannot agree with this method of interpretation. The Transfer of Property Act relates only to transfers by act of parties and not to those by operation of law; the definition of the term 'transfer' contained in S. 5 thereto which is statedly made for the purpose of that enactment, cannot, where the context does not justify, apply to the Madras Agriculturists Relief Act which is a special statute aiming at giving relief to certain agriculturists debtors and which provides also for certain safeguard against an unrestricted application of its expropriatory provisions. It is a well accepted principle of interpretation that the meaning of the term used in a statute depends largely if not wholly on the context and its collocation, etc. As stated in Craig's Statute law, 5th Edn. Page 160.

"Except in mathematics' said Grove J., in Wakefield Local Board v. Lee, (1876) 1 EX D 336 at p. 343, it is difficult to frame exhaustive definition of the words' consequently as the court said in R. V. Hali (1822) 1 B and C 123, at p. 136, the meaning or ordinary words when used in Act of Parliament is to be found not so much in the strict etymological propriety of language, nor even in the popular sense as in the subject or occasion on which they are used and the object which is intended to be attained.

Sub-sec 10 (ii) (a) of S. 9-A says "where...... the equity redemption has devolved..... on a person by or through a transfer inter vivos...... from the original mortgagor." The terms "inter vivos" means between living persons; but the section does not merely refer to a transfer inter vivos thereby implying that the transaction should be made between the persons named in a document as vendor and purchaser. It speaks of a devolution by transfer from the mortgagor and employs the passive voice suggesting thereby that it would comprehend cases where there has been no act of the mortgagor. The terms of sub-clause (a) is in contrast with that in the succeeding sub-clause (b) which expressly says where "mortgagee,...........has transferred." It is implicit that "devolution by transfer inter vivos" is used in contradistinction with devolution under law and should therefore include all cases of transfer whether it be by the act of the party or a forced one under the law. That this view conforms to the object of the exemption contained in sub-sec 10 (ii) will be clear from the following.

A person who purchased the equity of redemption in a property subject to a usufructuary mortgages (during the period mentioned in the sub-section) whether by private treaty or in court auction, would have assumed that the entire mortgage amount should be paid to obtain redemption having regard to then existing law and would have stipulated or bid at the auction at a price after making full allowance for the mortgage amount. If the scaling down provisions were to apply to such a case, it is not the agriculturist debtor that would benefit (for he had parted with or lost his interest) but the purchaser who did not pay the full price for the property. Sub-sec 10 (ii) provides an exemption from the operation of the statutory discharge enacted for earlier. On principle there can be no distinction between a case of a private and a compulsory sale of the equity of redemption, for in either case the scaling down provision would only benefit the purchaser. Indeed there is greater reason for not giving the benefit of the scaling down provisions to a court auction purchaser than to a private purchaser, for it is possible to conceive that in certain circumstances a private purchaser might be obliged to transmit the benefit of the scaling down to his vendor, while in the former case the benefit of the reduced liability would be purely an unexpected one to the purchaser at the court side. Sub-sec 10 was enacted to cure a mischief which an unrestricted application of S. 9-A might entail. The principle of interpretation as stated by Lord Lindley M. R., in Thomson v. Lord Clanmorris 1900-1 Ch 718 at p. 725 is :

"In construing any statutory enactment regard must be had not only to the words used but to the history of the Act and the reasons which led to it being passed. You must look at the mischef which had to be cured as well as the cure provided."

The mischief sought to be remedied was to prevent a undeserved benefit to a purchaser; the cure provided could be effective only if the auction purchasers are also bought within it. In our opinion, the reason behind sub-sec 10 (ii) (a) and the construction thereof after giving effect to the presence of the words "devolution by transfer from the mortgagor', alike point to the conclusion that the legislature did not intend to make any distinction between a purchaser from the mortgagor and one who obtained the equity of redemption in a court sale. We are unable to accept the view expressed by Krishnaswami Nayudu, J., in and of the decision of Rajagopala

Aiyangar, J., on this point as correct.

(14) What them remains to be considered is whether the suit mortgage could be held to be exempt from being scaled down by virtue of sub-sec 10 (ii) (b), by reason of the fact that the appellant had during the period specified therein created a sub-mortgage in favour of the 8th respondent. It is contended for the appellant that a mortgage of the mortgagee's right would be a transfer of the part of the mortgagee's right and that therefore, sub-sec 10 (ii) (b) would save the debt from being scaled down. We cannot agree that the creation of a mortgage would amount to a transfer either of the whole of part or the property mortgaged. A mortgage is a transfer either of the whole or part or the property mortgaged. A mortgage is a transfer of an interest in property. When a mortgagee right by way of security for the debt. A transfer of an interest in the property by way of security will not be the same as the transfer of it in part. Further the word "transfer" as used in sub-sec 10 (ii) can only mean the transfer of the entire interest of the owner whether it be in the whole of the property or of a part of it. For example sub-clause (a) to which reference had been made already refers to devolution by transfer, the term "devolution" implying that the entire interest has been transmitted. A similar interpretation has to be given to clause (b) as well.

In Velu Mudaliar v. Rajaram Karalayar 69 Mad LW 248, Ramaswami, J, held that the provisions of sub-sec 10 (ii) (b) would not be attracted where the mortgagee merely created a sub-mortgagee. This view was affirmed later by Govinda Menon and Ramswami, JJ., in Rajagopala Naidu v. Kunjammal, 1956-1 LJ 589, where it was observed that a transfer in whole of the mortgagee's rights, meant an absolute conveyance or renunciation of the whole bundle of rights of the mortgagee in the entire mortgaged property. The learned Judges also pointed out how a country conclusion would give rise to anomalies. In Nagaraja Dikshitar v. Sundaresa Sastrigal, 1958-2 Mad LJ 557, Panchapakesa Aiyar, J., followed that decision and held that the execution of a sub-mortgage by the mortgagee would not amount to a transfer of the rights of latter in whole or in part. Agreeing with the view of the learned Judges stated above, we are of opinion that the terms of sub-sec. 10 (ii) (b) will not be attracted to this case.

(15) In view, however, of the fact that our answer to the second question is in favour of the appellant, the mortgage debt will not be saved from the operation of Sec. 9-A(3) and that the entire mortgage money had to be paid by the first respondent before he can be allowed to redeem the mortgage.

(16) The other objection taken by the appellant to the judgment of Rajagopala Aiyangar, J., namely, whether the first respondent is liable for any amounts as appears of rent, remains to be considered. The appeal will be adjourned to 23rd January 1961 for determination of that question and for final disposal before a Division Bench.

(17) Answer accordingly.


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