The interpretation of rent and interest in a mortgage and lease transaction, and the applicability of Section 15 of Madras Act IV of 1938.

Wadsworth, J.

1. The petitioner in this case filed an application under Section 19 of Madras Act IV of 1938, praying that the amount due under a decree in favour of the respondent might be scaled down. The petitioner mortgaged his property to the respondent with possession and on the same day there was a lease back to the petitioner whereunder the petitioner was to pay rent to the respondent. He defaulted and in 1937 the mortgagee got a decree for the principal sum due under the mortgage and for the amount of rent due under the lease. In the lower Court the petitioner contended firstly, that the annual payments under this double transaction were interest and were to be scaled down as such and alternatively that these annual payments were rent to which Section 15 of the Act applied. The lower Court negatived both the contentions.

2. The contention that in a transaction of this kind the rent is really interest is no longer tenable so far as Act IV of 1938 is concerned since the decision in Abdul Khadir v. Subramanya Pattar AIR1940Mad946 . The lease, although contemporaneous with and closely related to the mortgage, must be regarded as a lease and the payment thereunder must be regarded as rent. If it is rent, then the only question remaining to be decided is whether it is rent payable to a jenmi or to an intermediary so as to attract the provisions of Section 5. The respondent is clearly not a jenmi so far as this land is concerned. The word "intermediary" is defined in the Malabar Tenancy Act as any person who, not being a jenmi, has an interest in land and is entitled by reason of such interest to possession thereof, but has transferred such possession to others. It seems to me that this definition clearly applies to the respondent. He is himself a transferee by way of mortgage from the jenmi and by reason of this mortgage he has an interest entitling him to possession of the land and has transferred the possession to which he is entitled to another The fact that this other is himself the jenmi will not prevent the respondent from being an intermediary so far as the words of the definition go. In fact the petitioner with reference to this land was the holder of two quite separate interests, viz., the original interest of the jenmi or mortgagor and the interest of the lessee derived from the mortgagee. By reason of the latter interest, he pays rent and the person to whom he pays it is a person who comes within the definition of "intermediary." The rent therefore falls within Section 15 of Madras Act IV of 1938, and the petitioner is entitled to relief under that section if he has made the required deposit within the time laid down.

3. The petition is therefore allowed with costs and the case is remanded to the lower Court for disposal in the light of this judgment.