Kamat, J.@mdashThree proceedings: a) O. P. 9632 of 1983 -D with C. M. P. 29571 of 1983, b) Second Appeal 218 of 1983 with C. M. P. 5818 of 1983 and c) C. R. P. 283 of 1984 - B, are placed before us in pursuance of a referring order dated November 1, 1991 (Coram: Kalliath and Manoharan, JJ.) doubting the correctness of the decision reported in 1974 KLT 879 (Moidu v. Mammunhi Beary and others) holding that the compensation for improvements is certainly not part of the "mortgage money" as defined in the second paragraph of Section 58 (d) of the Transfer of Property Act, as such payment of compensation is not secured by the deed and there is only a promise to pay it along with the mortgage money. Referring Court has taken the view for our consideration that payment of compensation for improvements at the time of redemption will not change the character of the transaction being a usufructuary mortgage as such payment is an implicit term of usufructuary mortgage.
Factual Matrix
Subject matter and parties in O. P. 9632 of 1983 - D and Second Appeal 218 of 1983 - above items (a) and (b) are same.
2. Properties belonging to one Subraya Shanbhogue, under a Possessory Mortgage dated October 3, 1923 for Rs. 12,500/- came into possession of Sadashiva Shanbhogue and Keshava Shanbhogue. The document is "Illidarwar" deed. Some of the properties were thereafter leased in 1951 in favour of D. Rama Bhat-husband of Laxmi Amma-respondent No: 1 in (a) and (b). There was partition between two mortgagees. A. Narayana Rao-petitioner and appellant before us on February 28, 1971 purchased equity rights of redemption and in February 1972 thereafter for Rs. 35,000/- allegedely obtained possession of mortgaged properties as the mortgage was redeemed and extinguished. As the properties were in possession physically of Laxmi Amma the said Narayana Rao filed suit No: 136 of 1972 in the Munsiff Court at Kasardgod for possession and mesne profits against Laxmi Amma. It was contended that Laxmi Amma and others were only lessees under the Possessory mortgage and not entitled to fixity of tenure or other benefits under the Kerala Land Reforms Act, being specifically excluded from the operation of Chapter II of the Act in view of Section 3 (5) of the said Act. Laxmi Amma contended that the original mortgagees under the Illidarwar were themselves "Deemed Tenants" and therefore she was entitled to tenancy right under the Act.
3. The Munsiff Court by the judgment dated October 31, 1977, while dis missing the suit in Para 12 recorded the following conclusion:
Apparently an illidarwar is a mortgage and Ext. A4 appears as a mortgage. But often a transaction treated as an illidarwar may be a lease when the purpose for which the transaction is entered into may be taken as the criterion for considering whether the transaction is in fact a mortgage or a lease. u/s 3 proviso to clause 5, tenancies created by mortgagees in possession or persons deriving title from such mortgagees are exempted from the exemptions mentioned in Chapter II of the Land Reforms Act, provided that tenancies are created in Malabar. From the provisions of Section 5 of the State Re-organization Act, 1956 it is clear that though Kasaragod Taluk was not known as part of the Malabar province since the coming into force of the said Act that Taluk also will be known as Malabar. So under the provisions of the Land Reforms Act a tenancy created by a mortgagee in possession will be treated as-lease for the purpose of the said Act. Further u/s 10, a person holding land situated in any part of the Taluk of Hosdrug or Kasaragod to which Malabar Tenancy Act 1929 did not extend in a transaction described in the document evidencing it as an illidarwar, but not being a usufructuary mortgage as defined in the transfer of property Act 1882 will be deemed as tenant. Therefore there is no doubt as to the status of anardarwar under the Land Reforms Act, if he is not a usufructuary mortgage.
4. The petitioner/appellant''s Appeal No: 20 of 1980, by the judgment dated December 8, 1982 was dismissed. What is important to note is that the only ground that was urged was that the mortgage deed Ext. A4 is a usufructuary mortgage and the tenancy created by mortgagee in possession is not having the protection of the Kerala Land Reforms Act. This is evident as we have examined from the following observations:
Several grounds were raised in the appeal and the only ground argued is that the mortgage deed Ext. A4 is usufructuary mortgage and the tenancy created by the mortgagee in possession is not having the protection of the section 13 of the K.L.R. Act. The respondent''s counsel argued that the mortgage deed Ext. A4 is an illidarwar as defined in Section 10(v) of the K.L.R. Act and hence Ext.A4 illidarwar deed is not a redeemable mortgage. The tenancy created by the mortgagees in possession will not be hit by Section 3 (5) of the K.L.R. Act. The right claimed by the plaintiff on the basis of Exts. A1 and A2 is not attacked by the respondent. A finding with respect to the mortgage deed dated 3-10-1993 will clinch the points raised in this appeal.
5. Second Appeal No: 218 of 1933-A arises as above. In the meantime Laxmi Amma and others had initiated proceedings before the Land Tribunal u/s 72B of the Land Reforms Act for grant of certificate of purchase on the basis of deemed tenancy and it was granted. A. Narayana Rao preferred appeal to the appellate authority at Kasaragod and therein prayed for stay as the Second Appeal on the question being pending in this Court. The appellate authority rejected prayer for stay and this is the subject matter of O. P that is connected.
6. Since proceedings of Second Appeal and O. P. are referred to this Bench, by an order dated November 3, 1993 of the Division Bench (Coram T. L. Viswanatha Iyer and P. Krishnamoorthy, JJ.) proceedings of C. R. P. No: 283 of 1984 are also ordered to be heard along with the above proceedings.
7. Revision Petition relate to a suo motu action initiated u/s 72C of the Kerala Land Reforms Act for assignment of right, title and interest of the land owners to the revision petitioner and "respondents 3 and 4. It is their case that under the registered illidarwar deed dated June 11, 1945 they were put in possession and have been thereafter in continuous possession and have effected vast and valuable improvements, It is contended that the document is not a usufructuary mortgage as defined under the Transfer of Property Act and the revision petitioner and respondent Nos: 3 and 4 are entitled to the benefits of the provisions of the Kerala Land Reforms Act, as per Section 10 (v) of the said Act, entitled to the assignment of the jenm rights.
8. The proceedings were contested by respondents 1 and 2 contending that the document dated June 11, 1945 (Ext. A1) is a usufructuary mortgage and the right of the mortgagor now vesting in them, there is a legal right in them to redeem the same.
9. The Land Tribunal. Kasaragod, by order dated June 17, 1978 held that the document (Ext. A1) is not a usufructuary mortgage and as the revision petitioner and respondents 3 and 4 are cultivating tenants are entitled to the assignment of Jenm rights in their favour. The appellate authority under the Kerala Land Reforms Act reversed the said decision in Appeal No: 2399 of 1982 on November 22, 1983 leaving the revision petitioner and respondent No. 3 and 4 to approach this Court in revision u/s 103 of the said Act.
10. Although the referring judgment has canvassed the view that payment of compensation for improvements at the time of redemption is an incident of a usufructuary mortgage and has doubted contrary view to that extent in the decision reported in Moidu V. Mammunhi Beary and others (1974 KLT 879), a reason for reference, it must be said that it is assumed everywhere, even in the decisions cited, that the documents in question are usufructuary mortgages and what is usufructuary mortgage is not examined in the light of the provisions of law with reference to the text of the documents and, what is more important and relevant is the statutory requirements of Section 10 (v) of the Kerala Land Reforms Act 1963.
11. Since there was a long travel through the statutory provisions and case law, it would be-essential, on the basis of admitted pleadings and proved facts, to revert attention and to concentrate on the most relevant statutory provision of Section 10(v) of the Kerala Land Reforms Act, which inter alia, fixes the legal approach. With benefit, the said provisions are
S. 10(v): A person holding land situate in any party of the taluk of Hosdurg or Kasaragod to which the Malabar Tenancy Act, 1929, did not extend, under a transaction described in the document evidencing it as bhogya, otti nattotti, arwar, illidarwar or krithasartha illidarwar, but not being a usufructuary mortgage as defined in the Transfer of Property Act, 1882.
There is no dispute that the lands in both the proceedings axe situated in the area to which the Malabar Tenancy Act, 1929 did not extend. There is no dispute that the documents Ext. A1 in CRP and Ext. A4 in Second Appeal are the documents described as Illidarwars.
12. This would take us to examine what would be an usufructuary mortgage as defined under the Transfer of Property Act, 1882 as per the provisions of law concerned and to apply the said provisions to the texts of the documents, apart from the consideration of the provisions of the Kerala Land Reforms Act, 1963 independently and separately, as the facts, admitted and proved, of the Second Appeal, it is contended, confer Deemed Tenancy rights on the claimants in regard there to. We would-first consider the legal provision as to what are, -and what are not, the legal requisites of "usufructuary mortgage".
13. Mortgages are defined in Section 58 of the Transfer of Property Act 1882 and it would be necessary to consider "usufructuary mortgage" "and anomalous mortgage" in comparison as we are concerned with possessory mortgage. Analysis of Section 58 (d) provides the following ingredients, namely, (a) delivery of possession or a binding in regard thereto (b) authority to the mortgagee to retain possession until payment of mortgage money and to receive the rents and profits; and (c) the rents and profits are to be appropriated in lieu of interest or in payment of the mortgage money in part or in whole in regard to either of them. As defined above in Section 58 (g) of the Transfer of Property Act, 1882, any other manifestation would classify the document as "Anomalous Mortgage". Statutory limitation fixed by Section 10(v) of the Kerala Land Reforms Act, 1963, would confine the Court to fix limits of consideration as to whether a document is "usufructuary mortgage" or not to the above considerations.
14. It would be of benefit to consider the other relevant provisions of Chapter IV of the Transfer of Property Act 1882. Section 59A of the Act enacts that the mortgagees shall be deemed to include persons deriving title from them. The right to redeem, u/s 60 of the Act, accrues when the principal mortgage money becomes due, when only the possession of the property is to be delivered. However, a look at Section 62 of the Act, it accrues only when the mortgage money is paid, as per the provisions thereof. With regard to the improvements to mortgaged property, u/s 63A, in the absence of the contract to the contrary, such improvements were necessary to preserve the property from destruction or deterioration, the mortgagor shall be liable to pay costs thereof. It is obvious that these provisions do not relate to the usufructuary mortgages, as the usufructuary mortgage authorises the mortgagee to retain possession and to receive usufruct of the property in lieu of interest till the money is paid. The usufructuary mortgage as defined does not contemplate any other contract to the contrary as defined under the Transfer of Property Act 1882, which is required to be seen with reference to the application of Section 10 (v) of the Kerala Land Reforms Act, 1963.
15. At this stage, it would be appropriate to spell out distinction between "usufructuary mortgage"and "anomalous mortgage". It is necessary condition of the usufructuary mortgage that the mortgage money including interest should be realised out of the usufruct and it guts redeemed the moment the money is tendered. However, if the mortgage money and including interest under the document could be rightfully recovered, the transaction would amount to an anomalous mortgage. If the principal amount and/or interest are secured and the mortgagor takes liability under the document, the transaction, would be an anomalous one. To this effect, the decision of the Rajasthan High Court (F.B.)
16. In fairness, submissions are made and must be mentioned transgressing the limits prescribed by Section 10 (v) of the Kerala Land Reforms Act 1963 placing reliance on provisions of Section 2 of Transfer of Property Act 1882 to the effect that incidents allowed by the law time being in force creating any rights are not affected. It was contended that the documents known and styled as Illidarwars are recognized as usufructuary mortgages only and for this reference was made to a treatise on Malabar and Aliyasanthana Law-by Sundara Aliyar-pages 319 as well as 449. In view of the use of the term "usufructuary mortgage" used in Section 10 (v) of the Land Reforms Act, 1963 to be as defined under the Transfer of Property Act 1882, it is not possible to extend the travel beyond and around. Therefore, decisions cited and submissions made in the said direction do not need reference and discussion. It is for this reason also that submission made in regard to entitlement to costs of improvement as incident to the usufructuary mortgage on principles of equity, relying on the decision of the Madras High Court 26 Indian Cases (1915) 184 - Chetty v. Animal would not hold water; nor even the decision of Travancore-Cochin High Court-Full Bench AIR 1951 T. C 109 (F.B.) Chandi Avira v. T. Varkey recognizing custom prevalent in Malabar, Cochin and Travancore regarding the right of possessory mortgage to get value of improvements effected, independent of agreement to that effect can be considered to have any legal force, when provisions of Section 10 (v) of the Kerala Land Reforms Act require consideration of their proper legal application.
17. This leads us to conclude the legal position for the purpose of considering application of Section- 10 (v) of the Kerala Land Reforms Act, 1963 that the document must be a usufructuary mortgage as defined u/s 58(d) of the Transfer of Property Act 1882. The document introducing any conditions other than those covered by Section 58 (d) of the Act could not be regarded as a usufructuary mortgage, but an anomalous mortgage. To illustrate; if the document introduces a personal covenant enabling the mortgage to demand the mortgage money at a particular date and the document fixes a time limit, it would not be a usufructuary mortgage. We approve the Division Bench division of our Court 1990 (l)KLN 18 - K. Venkatramana Bhat v. Pakkria. in regard to the conclusion recorded in para 14 of the said decision. Similarly, if the document also introduces other elements regarding the improvements, payments and creates rights in regard thereto therein, the document would come out of the purview of the definition of usufructuary mortgage and would have to be termed and classified as anomalous mortgage. Contrary view therefore would be unsustainable.
18. In this legal background if the documents-Ext. A1 in C. R. P. No. 283 of 1984-B and Ext. A4 in S. A. 218 of 1983-D are taken up for examination, they cannot be regarded as usufructuary mortgages as defined u/s 58(d) of the Transfer of Property Act 1882. Document Ext. Al, firstly, fixes the time to enjoy properties for a term of 25 years on illidarwar rights; secondly, creates a personal covenant to pay value of improvements as decided by four respectable persons, and thirdly, after the period of 25 years or when the mortgagee demands the mortgage, money payment of not only the mortgage money but also value of improvements are agreed as the terms of the document. Similarly, the position as regards the document Ext. A4 in S. A. 218 of 1983 - B is not different. There is a period of 90 years. The value of improvements in regard to the payment is created as the charge also. These documents therefore cannot be regarded as usufructuary mortgages.
19. Additionally, as far as Second Appeal and O. P. are concerned, there is one more aspect staring in the face of the record. We have already at the outset reproduced the findings and discussion of the courts below. The trial court, in para 12, has recorded a finding that the tenancies created by mortgagees in possession or persons deriving title from such mortgagees are exempted as per Chapter II of the Kerala Land Reforms Act, 1963. The fact that the properties are situated at Kasaragod and further that it was not a part of the Malabar province is not disputed in view of the relevant statutory provisions. We have quoted the finding, ad verbatum, hereinbefore.
20. The said finding is not challenged in the appellate court in view of the fact (as recorded in para 7 of the appellate judgment-quoted in extenso hereinbefore that the only point argued before the appellate court was that the mortgage deed Ext. A4) is a usufructuary mortgage and tenancy created would not get protection of the Kerala Land Reforms Act 1963.
21. That apart, the defendant in the suit is the wife of Rama Bhat who was the tenant of the mortgagees covered by Ext. A4. Section 2(57) of the K L.R. Act defines tenant as a person who has agreed to pay rent for his being allowed to possess or enjoy the land by a person entitled to lease the land and includes the heir or legal representatives or any person deriving rights through any such person. So unless a tenant under a mortgagee is otherwise exempted from the benefits of the Act such a tenant would be entitled to fixity of tenure as contemplated in Section 13 of the K. L. R. Act. It cannot be contended that the tenant under a mortgagee in this case would fall within Section 3 (v) of the Act because in Clause 1 of the first proviso of Section 3 (v) tenancies created before the commencement of K. L. R. Act in "Malabar" have been excluded. The word "Malabar is defined in Section 2 (34) os the K. L. R. Act as "Malabar District" referred to in sub-section (2) of Section 5 of the States Re-organisation Act, 1956. Kesaragod Taluk within the territorial limits of which the property in question is situated falls within the Malabar District as defined in the States Re-organisation Act. Thus the defendant in this case is a tenant entitled to fixity of tenure even de hors Section 10 (v) of the K. L. R. Act.
22. The result of the above discussion leads to the dismissal of the two proceedings, S. A. No. 218 of 1983-A: O. P. No. 9632 of 1983-D; and C. R. P. No. 283 of 1984-B be disposed of accordingly, with consequential orders on interlocutory applications therein. The documents (Ext. A 1 in CRP 283 of 1984-B and Ext. A 4 in Second Appeal No. 218 of 1983-A) are not usufructuary mortgages and therefore Laxmi Amma and others, even independently, are entitled to fixity of tenure under the Kerala Land Reforms Act, 1963. The two references are answered accordingly. There shall be no order as to costs in all the proceedings.
