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High CourtDivision BenchAppeal dismissed

Cherumanalil Lakshmi and Ors. v. Mulivil Kunntiioamkandy Narayani and Ors.

Case / Petition Number:Civil Appeal No. 567 of 1964
Neutral Citation:[1967] 1 S.C.R. 315

Case Details & Bench

Court
High Court
Hon'ble Judges
  • K. N. WANCHOO
  • J.C. SHAH
  • R. S. BACHAWAT
Judgment Date
1966-09-12
Court Decision / Holding
The appeal is dismissed with costs; The Court held that the transactions were kanam‑kuzhikanam and not usufructuary mortgages.
Final Disposition
Appeal dismissed

Parties to the Case

Appellants / Petitioners

  • CHERuMANALIL LAKSHMI AND ORS.

Respondents

  • MULIVIL KUNNTIIOAMKANDY NARA YANI AND ORS.

Legal Representation & Advocates

Counsels for Petitioners

  • • H. R. Gokhale
  • • A. G. Puddissery

Counsels for Respondents

  • • P. Ram Reddy
  • • K. P. Madham Menon
  • • A. V. V. Nair

Case Synopsis & Summary

This Civil Appeal concerns the proper taxonomic description of certain land-transfer arrangements under the Kerala Land Reforms Act, 1963 (Act 1 of 1964). Ex. A‑1 (dated March 26, 1900) and Ex. B‑1 (dated March 27, 1900) demised suit lands along with fruit-bearing trees for 24 years. The documents describe the arrangements as kanam and kanam‑kuzhikanam, with kanartham as the consideration and a provision for the transferee to appropriate income in lieu of interest. The transferees could enjoy the lands during the term and hold them after expiry until payment of the kanam amounts and the value of planted trees, and subsequent instruments repeatedly recited that Exs. A‑1 and B‑1 were kanam‑kuzhikanam transactions. None of the instruments recited security for debt, nor did they purport to secure debts by mortgage, otti, panayam or kyvasam panayam. The Kerala High Court and Trial Court had treated the arrangements as mortgages in appearance, but the question for the Supreme Court was whether they fall within kanam‑kuzhikanam under s. 2(23) of Act 1 of 1964. The Court held that the transactions satisfy the kanam‑kuzhikanam criteria, exclude mortgage status under the proviso to s. 2(23), and are lease‑like transfers that confer tenancy rights. Consequently, the appeal was dismissed with costs.

Provisions of Law Cited

Malabar Land Reforms Act, 1963 (Act 1 of 1964) s. 2(23)Malabar Land Reforms Act, 1963 (Act 1 of 1964) s. 13Malabar Land Reforms Act, 1963 (Act 1 of 1964) s. 2Malabar Land Reforms Act, 1963 (Act 1 of 1964) s. 2(57)Section 12 of the Malabar Land Reforms Act (proviso context)Malabar Tenancy Act, 1929 (Madras Act 14 of 1930) s. 3(15)Transfer of Property Act, 1882 s. 58(d)

Legal Doctrines & Maxims

  • Kanam‑kuzhikanam is a lease; it transfers the right to enjoy the property rather than an interest in the property.
  • A usufructuary mortgage transfers an interest in property to secure debt.
  • The essential distinction is substance over mere nomenclature; the label given by the parties is relevant but not conclusive.
  • If a document is described as kanam‑kuzhikanam, that is strong indication of its nature, and s. 12 allows inquiry into substance only when the document is a mortgage; if the true construction is kanam‑kuzhikanam or lease, s. 12 has no application and the document must be read as per its tenor.

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contended that Exs. A‑1 and B‑1 created usufructuary mortgages and sought redemption and recovery of the lands. They argued that these instruments were mortgages securing kanam amounts and thus should be treated as mortgages under the Transfer of Property Act; the documents themselves did not recite debt security and were styled as kanam deeds rather than mortgages. They urged that fixation of tenure under the Kerala and Malabar tenancy framework did not apply to kanam transactions that were mortgages in substance.

Contentions of Respondents

The respondents contended that Exs. A‑1 and B‑1 were kanam‑kuzhikanam within s. 2(23) of Act 1 of 1964, satisfying the conditions for kanam‑kuzhikanam: transfer of lands with fruit trees for the purpose of planting trees, receipt of kanartham, right to hold after expiry until payment of kanam amounts, and fijo of tenure under the Malabar Tenancy Act. They argued that, though resembling mortgages in some respects, the arrangements are leases that confer tenancy rights rather than mortgage interests; the documents described the transfer as kanam, which is persuasive evidence of their true nature, and the proviso to s. 2(23) excludes only genuine usufructuary mortgages.

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Extracted Judgment Text

Exact text extracted from official judgment records.

314 CHERuMANALIL LAKSHMI AND ORS. _v._ MULIVIL KUNNTIIOAMKANDY NARA YANI AND ORS. _September_ 12, 1966 [K. N. WANCHOO, J.C. SHAH AND R. S. BACHAWAT, JJ.] , # ## _Kera/a_ _Land_ _Rl!forms_ _Act_ (l _of_ 1964), _s._ _2(23)-Ma/abar_ _Land_ _Tenures-Difiercnce between_ _usufrucruary_ mortga~e _and_ _kana1n.kuzhika-_ _nam._ The suits, lands, together with the fruit-bearing trees standing thereon, were demised for ·a period of 24 years under two documents which specified the _kananham_ _(kanam_ amount). The documents did not contain any recital that they created security for repayment of a debt nor pur#### ported to be transactions for secwing debts such as a morl;lage, otti, _panayam_ or _kyyasampanayam._ The transferees were entitled to enjoy the lands with the standing trees, plant other fruit-bearing trees thereon, appropriate the income of the lands in lieu of interest on the _kmiam_ amounts, and to lwld the lands even after the expiry of 24 years until p-Jyment of the _kanam_ amounts and the value of trees planted. The documenis were styled _kanam_ deeds and one of them explicitly statec,1 that the demise> were in _kanam-kuzhikanam_ right. Subsequent documents also all recited that the transactions were _kanam-kuzhikana1n_ transactions. HELD : 1lJc transactions were _kanam-kuzhikanam_ and \\ [1] crc not lLSufructuary mortgages. [316 B-C] A _kanam-kut.hikanam_ and a U'iufructuary mortgage have many common features. Both of them involve transfer of posses.ion on payment of money by the transferee. set off profits against interest, and retenuon of possession until repayment of the money. The essential distinction between them is that the _kanam-kuzhikananr_ is. a lease, and is, therefure .i transfer of a right to enjoy the property, whereas. a mortgage is a transfer of an interest in the property for securing the repayment of a debt. [316 B.CJ B #### c I> E CLVIL APPELLATE JURISDICTION : Civil Appeal No. 567 of 1964. Appeal by special leave from the judgment and decree dated June 22, 1961 of the Kerala High Court in A. S. No. 243 F of 1955(M). _H._ _R. Gokhale_ and _A._ _G._ _Puddissery,_ for the appellants. _P._ _Ram Reddy,_ _K._ _P. Madham Menon_ and _A._ _V. V._ _Nair,_ for respondents Nos. 2 to 13. The Judgment of the Court was delivered by G Badlawat, J. The question in this appeal is whether Ex. A-1 dated March 26, 1900 and Ex. B-1 dated March 27, 1900 were kanam-kuzhikanam transactions, or whether they created usufructuary mortgages. The appellants sued for redemption and recovery of the suit lands alleging that Exs. A-1 and B-1 created w;ufructuary mortgages. The respondents claimed that they H were kanam-kuzhikanamdars and entitled to fixity of tenure under s. 21 read withs. 3 (15) of the Malabar Tenancy Act, 1929 (Madras Act 14 of 1930). The trial Court upheld the respondents' conkn A B #### c D E F G H LAKSHMI _v._ NARAYAN! _(Bachawat,_ _l.)_ 315 tion and dismissed the suit. Qn appeal, the Kerala High Court affirmed this decree. The appellants now appeal to this Court by special leave. During the pendency of this appeal, the Kerala Land Reforms Act, 1963 (Act 1 of 1964) came into force. It is common case before us that the appeal must be disposed of in accordance with the provisions of Act 1 of 1964. In this appeal, the respondents claim that they are the holders of kanam-kuzhikanam within the meaning of s. 2(23) of this Act. Section 13 of Act 1 of 1964 gives to every tenant fixity of tenure in respect of his holding and forbids resumption of the holding except as provided in ss. 14 to 22. Section 2 is the definition section. By s. 2(57), a tenant means any person who has paid or has .agreed to pay rent or other consideration for his being allowed by another to possess and enjoy the land of the latter and includes _inter alia_ a kanam-kuzhikanamdar. Section 2(23) reads : "kanam-kuzhikanam" means and includes a transfer by a landlord to another person of garden lands or of other lands or of both, with the fruit-bearing trees, if any standing thereon at the time of the transfer, for the enjoyment of those trees and. for the purpose of planting such fruit-bearing trees thereon, the incidents of which transfer .include (a) a right in the transferee to hold the said lands liable for the consideration paid by him or due to him; which consideration is called 'kanartham'; and (b) the liability of the transferor to pay to the transferee interest on the kanartham unless otherwise agreed to by the parties ; Provided that a usufructuary mortgage as defined in the Transfer of Property Act, 1882 (Central Act 4 of 1882), shall not be deemed to be a kanamkuzhikanam ;" Exhibits A-1 and B-1 demised the suit lands together with the fruit-bearing coconut, arecanut and jack trees standing thereon for a period of 24 years. The transfer was for the enjoyment of the lands with the standing trees and for the purpose of planting fruit-bearing trees thereon. The kanam amount or the kanartham under Ex. A-I was Rs. 5,000/- and under Ex. B-1 was Rs. 600/-. The transferees were entitled to appropiiate the income of the lands in lieu of interest on the kanam amounts and to hold the lands even after the expiry of 24 years until payment of the kanam amounts and the value of the trees planted by them. Thus, all the conditions of a kanam-kuzhikanam mentioned in the main part of s. 2(23) were satisfied. Nevertheless, in view of the proviso M15Sup.Cl/66-7 316 SUPllBME OOUkT l.EPOllTS (1967] l S.C.R. ###### to s. 2(23), the transactions would not be kanam-kuzhikanam if it is shown that they were by way of usufructuary mortgages as defined in s. 58( d) of the Transfer of Property Act, 1882. A kanamkuzhikanam and a usufructuary mortgage have many common features. Both the transactions involve or may involve transfer of possession on payment of money by the transferee, set-off of profits against interest and retention of possession until repayment of the money. In spite of their close resemblance, the essential distinction between the two types of transactions must not be overlooked. A kanam-kuzhikanam is a lease, and is, therefore, a transfer of a right to enjoy the property. A mortgage is a transfer of an interest in the ·property for securing the repayment of a debt.. The purpose of one is to enable enjoyment of the property by the transferee, that of the other is to secure the debt. On the question whether a transaction is a kanam-kuzhikanam or a usufructuary mortgage, the name given to it by the parties ###### is a relevant, t)lough not always a decisive, consideration. If the parties described the transaction to be a kanam-kuzhikanam it is a valuable indication that they intended it to be such and not ###### a usufructuary mortgage. If the document purports to be a mortgage, s. 12 of the Act allows the parties to prove that it is, in substance, a kanam-kuzhikanam or other lease. But if the document purports to be or is, on its true construction, a kanamkuzhikanam or other lease, s. 12 has no application and full effect must be given to the document according to its tenor. Both Exs. A-1 and B-1 were styled kanam deeds. Exhibit A-1 stated that the demise was in Kettiyadakkam kanam right. "Kottiadaki" means "took possession". The expression "kettiyadakkam kanam" may mean a usufructuary mortgage, but this is not its necessary or invariable meaning. Exhibit B-1 explained Ex. A-1. Exhibit B-1 explieitly stated that the demises under Ex. A-1 and B-1 were in kanam-kuzhikanam right. Exhibits A-I and B-1 read together show that both the transactions were kanam-kuzhikanam. The subsequent documents, Exs. B-2, B-5, B-8, B-9, and B-10 executed between 1921 and 1944 all recited that Exs A-1 and B-1 were kanam-kuzhikanam transactions. 'Exhibits A-I and B-1 did not contain any recital showing that they created security for repayment of a debt. Significantly, the parties did not describe the transactions to be a mortgage, _otti,_ _panayam_ or a _kyvasam_ _panayam._ Instead, they described the transactions as kanam-kuzhikanam and the amounts paid to the transferees as k~artham. Exhibits A-I and B-1 did not purport #### to be and were not transactions for securing debts. We agree with the Courts below that the transactions were kanamlcuzhikanam and were not usufructuary mortgages. In the resuh, the appeal is dismissed with costs. _Y.P.S._ _A.ooeal_ _dismissed._ A B ##### c 1> E ### ' G H