Ramdhan Puri vs Bankey Bihari Saran

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1958 Supreme(SC) 90

SUPREME COURT OF INDIA
23rd May, 1958
P.B. GAJENDRAGADKAR, A.K. SARKAR, K. SUBBA RAO AND VIVIAN BOSE JJ.
Ramdhan Puri, Appellant
Versus
Bankey Bihari Saran and others, Respondents.
Civil Appeal No. 239 of 1954.
Advocates appeared
Mr. Purshottam Tricumdas, Senior Advocate (Mr. S. P. Varma, Advocate, with him), for Appellant; Mr. S. P. Sinha, Senior Advocate, (Mr. R. C. Prasad, Advocate, with him), for Respondents (Nos. 1-4, 8-10, 13 & 14).

Advocates:
PURSHOTTAM TRIKAMDAS, R.C.Prasad, S.P.SINHA, S.P.Varma

Headnote:Rule to determine whether the unsufructuary mortgage is mortgage or lease - Mortgagee in possession — essential conditions for applicability of the provisions as contained in section 77 rendition of accounts by the mortgagee to mortgagor - Usufructuary mortgage or anomalous mortgage - Rule to determine whether the usufructuary mortgage is mortgage or lease

       – The only guiding rule that can be laid down on the subject is that the intention of the parties must be looked into and the “once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called” – See decision in the case of Ramdhan Puri v. Bankey Bihari Saran, AIR 1958 SC 941 = 1959 SCJ 121 = 1959(1) Mad LJ (SC) 53 = 1959 SCA 110.

       – Section 76(g) imposes a liability on a mortgagee to keep full and accurate accounts supported by vouchers. So too, he is under a statutory liability under clause (h) to debit the net receipts of the mortgaged property in deduction of the amount of interest and where such receipts exceed any interest due, in reduction and discharge of the mortgage money and to pay the surplus, if any, to the mortgagor. Therefore every mortgagee in possession is bound to keep clear, full and accurate accounts and to render the accounts to the mortgagor in the manner prescribed in clause (h). But Section 77 enacts an exception to the mortgagee’s liability under clauses (g) and (h) of Section 76. Under Section 77, if there is a contract between the mortgagor and the mortgagee. Whereunder it is agreed that the receipts of the mortgaged property should, so long as the mortgagee is in possession of the property, be taken in lieu of interest and a defined portion of the principal, the mortgagee is freed from the statutory liability to keep accounts or to render accounts to the mortgagor in the manner prescribed under clauses (g) and (h) of Section 76 of the Act. This is so because, the receipts are set off against the interest, to insist upon the mortgagee to keep accounts or render accounts to the mortgagor would be an empty for formality. The essential condition for the application of this Section is that the receipts of the property should be taken in lieu of interest or in lieu of interest and a defined portion of the principal – See decision in Ramdhan Puri v. Bankey Bihari Saran, AIR 1958 SC 941 = 1959 SCJ 121 = 1959(1) Mad LJ (SC) 53 = 1959 SCA 110.

       – Whether the transaction is a usufructory mortgage or an anomalous mortgage, in the circumstances of the case, there will not be any difference in the matter of rendition of accounts, for in the ultimate analysis, the true construction of the relevant terms of the document would afford an answer to the question raised – See decision in the case of Ramdhan Puri v. Bankey Bihari Saran, AIR 1959 SC 941 = 1949 SCJ 121 = 1959(1) Mad LJ (SC) 53 = 1959 SCA 110.

       – The only guiding rule that can be laid down on the subject is that the intention of the parties must be looked into and “once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called – see decision in the case of Ramdha Puri v. Bankey Bihari Saran, AIR 1958 SC 941 = 1959 SC J 121 = 1959 (1) Mad LJ (SC) 53 = 1959 SCA 110.

Judgment

K. SUBBA RAO, J. : This appeal by certificate under Art. 133 (1) (a) of the Constitution of India is directed against the judgment and decree of the High Court of Judicature at Patna setting aside those of the Subordinate Judge, Gaya, in a suit for redemption of an usufructuary mortgage.

2. Deokinand, the common ancestor of plaintiff-respondents 1 to 4 and pro forma respondents 6 to 12, executed a document dated August 20, 1923, in favour of Mahant Tokhnarain Puri of Nadra, the predecessor-in-interest of defendant 1, hypothecating eight annas milkiat share in mauza Lodipur, Mahimabigha, Tauzi No. 4246 for the purpose of discharging a debt of Rs. 31,701 payable by him to the Mahanth. There are conflicting versions in regard to the nature of this transaction - respondents claim it to be an usufractuary mortgage, while the appellant asserts it to be a lease. The plaintiff- respondents instituted Title Suit No. 4 of 1945 in the Court of the Additional Subordinate Judge IV Gaya, for redemption of the said document on the basis that it was an usufructuary mortgage, for rendition of accounts and for the recovery of surplus profits due to them. The appellant pleaded, inter alia, that the suit for redemption was not maintainable as the document was not a mortgage but a lease, that on the assumption that it was a mortgage it would only be an anomalous mortgage in respect whereof there was no statutory liability to render accounts to the plaintiff, that even if it was an usufructuary mortgage, it was governed by the provisions of S. 77 of the Transfer of Property Act taking the mortgage out of the purview of S. 76 (d) and (g) of the said Act.

3. It is not necessary to particularize other defences as nothing turns upon them in the appeal. The learned Sub ordinate Judge held that the document created an usufructuary mortgage and not a lease and that S. 77 of the Transfer of Property Act applied to the document exonerating the appellant from any liability to render accounts, in the result, the learned Subordinate Judge gave a conditional decree in favour of respondents 1 to 4 for possession on their depositing in Court a sum of Rs. 26,839-7-0 within six months from the date of the decree. The plaintiff-respondents preferred an appeal against that decree to the High Court at Patna. The High Court agreed with the learned Subordinate Judge that the document was an usufructuary mortgage but differed from him on the question of applicability of S. 77 of the Transfer of Property Act. The High Court set aside the decree of the learned Subordinate Judge and passed instead a preliminary decree for redemption and sale on default of payment : the decree also directed the rendition of accounts between the parties in the light of the directions given in the judgment. The second defendant against whom the decree was passed preferred the above appeal.

4. The point to be first decided is whether the transaction is a lease as contended by the contesting respondents. The only guiding rule that can be extracted from the cases on the subject is that the intention of the parties must be looked into and that once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called (See Ghosh on Mortgages, V. Edition, Volume I, page 102). Let us now examine the terms of the document Exhibit A (3) to ascertain the intention of the parties. The document was obviously not drafted by a trained mind. It appears to be a confused product of one of those village document-writers. We shall read the document, omitting the recitals not material to the question raised : The first part of the document recited that the executant was heavily indebted to the other party under mortgage bonds and also otherwise and that common friends settled that a part of the properties mortgaged should be let out in ijara with possession at a lower rate of interest so that "the increment of interest may be checked and the present neces

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