P. Pushparajan v. Parambath Moidu

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE B.KEMAL PASHA FRIDAY, THE 10TH DAY OF MARCH 2017/19TH PHALGUNA, 1938 RSA.No. 428 of 2015 () ----------------------AGAINST THE JUDGMENT IN AS 7/2014 of SUB COURT, VADAKARA AGAINST THE JUDGMENT IN OS 183/2011 of MUNSIFF COURT, NADAPURAM APPELLANT(S)/APPELLANT/DEFENDANT: -------------------------------- P.PUSHPARAJAN, AGED 53, S/O.KUNHIRAMA KURUP, DOCTOR, RESIDING AT 'PUSHPALAYAM', KUNNUMMAL AMSOM, VATTOLI DESOM, VATAKARA TALUK, KOZHIKODE DISTRICT. BY ADVS.SRI.R.BINDU (SASTHAMANGALAM) SRI.PRASANTH M.P RESPONDENT(S)/RESPONDENT/PLAINTIFF: ----------------------------------- PARAMBATH MOIDU, AGED 71, S/O.AMMAD, RESIDING AT CHIRAKARA, KUTTIPURAM AMSOM, CHELAKKAD DESOM, VATAKARA TALUK, KOZHIKODE DISTRICT, PIN-673506. R1 BY ADV. SRI.T.KRISHNAN UNNI (SR.) R1 BY ADV. SRI.VINOD RAVINDRANATH R1 BY ADV. SRI.SAJU.S.A R1 BY ADV. SMT.MEENA.A. R1 BY ADV. SRI.K.C.KIRAN THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 10-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **[CR]** ## **B. KEMAL PASHA, J.** ................................................................ R.S.A. No. 428 of 2015 ............................................................... Dated this the 10[th] day of March, 2017 ## **J U D G M E N T** - (1) What has been created by the parties through Ext.A1, is a mortgage or lease? (2) Whether the version that the parties wanted to treat the transaction covered by Ext.A1 as a lease, is admissible in evidence? (3) Can the subsequent enhancements of the amount of monthly profits fixed in Ext.A1, amounts to novation? 2. Challenging the concurrent findings entered by the Munsiff's Court, Nadapuram in O.S.No.183/2011 followed by those of the Subordinate Judge's Court, Vadakara in A.S.No.7/2014, the defendant in the suit has come up in second appeal. R.S.A.428 of 2015 -: 2 :- 3. The suit is one for redemption of mortgage. The case of the plaintiff is that the scheduled shop room owned by the plaintiff was mortgaged to the defendant by accepting a mortgage amount of ₹1,500/- on 06.09.1988, by way of usufructuary mortgage, for a period of six months on a monthly profit calculated at ₹600/-. Subsequently, the monthly profit was increased to ₹1,075/-. Even after repeated requests and demands, the defendant has not cared to surrender vacant possession of the scheduled shop room and therefore, the plaintiff caused to issue Ext.A2 lawyer's notice. According to the plaintiff, the notice evoked a response in the form of a reply thereby resorting to false and untenable contentions, and hence the suit. 4. The defendant contended that the transaction in question was not a mortgage; whereas it is a lease. The plaintiff had rented out the scheduled shop room to the defendant on a monthly rent of ₹600/- initially, and thereafter the rent was enhanced to ₹1,075/-. Since that area comes R.S.A.428 of 2015 -: 3 :- within the notified area under the Kerala Buildings (Lease and Rent Control) Act, the suit is not maintainable. 5. The trial court by entering a finding that the transaction in question is a usufructuary mortgage, decreed the suit in terms of the plaint. Aggrieved by the same, the defendant preferred A.S.No.7/2014 before the lower appellate court. The lower appellate court found that the transaction in question is an anomalous mortgage and not a usufructuary mortgage, and by entering such a finding, the lower appellate court also concurred with the decree passed by the trial court, and hence this second appeal. 6. This Court has admitted this second appeal on the following substantial questions of law. “(i) Whether the findings of the courts below that Ext.A1 contained the ingredients of a usufructuary mortgage or anomalous mortgage, is legal and proper? (ii) Whether the courts below are legally R.S.A.428 of 2015 -: 4 :- correct in holding that the transaction between the appellant and the respondent was in the nature of a usufructuary mortgage or anomalous mortgage and not a lease as contended by the appellant? (iii) Whether the courts below are justified in not drawing adverse presumption against the plaintiff on the basis of the principles contained in illustration (g) to Section 114 of the Indian Evidence Act? (iv) Whether the courts below have appreciated the evidence on record properly and correctly while arriving at a conclusion that the appellant was a mortgagee and the plaintiff was entitled for a decree of recovery of possession on the strength of Ext.A1?” R.S.A.428 of 2015 -: 5 :- 7. Heard the learned counsel for the appellant and the learned counsel for the respondent. 8. The learned counsel for the appellant has argued that the plaintiff has not cared to enter the box and has not adduced any oral evidence. At the same time, the defendant was examined as DW1. According to the learned counsel for the appellant, the transaction in question is a lease arrangement between the parties, whereby the plaintiff had rented out the scheduled shop room to the defendant initially on a monthly rent of ₹600/-. Thereafter, when disputes arose between the parties regarding the enhancement of rent, a mediation was conducted and initially rent was enhanced to ₹875/- and subsequently once again the same was enhanced to ₹1,075/-. It is the case of the defendant that presently the defendant has been continuing in the scheduled shop room as a lessee under the plaintiff on a monthly rent of ₹1,075/- 9. The transaction in question was entered through R.S.A.428 of 2015 -: 6 :- Ext.A1 registered document dated 06.09.1988. The nomenclature of the document clearly shows that it was executed as if it was a deed of mortgage. On going through the terms and conditions contained in Ext.A1, it seems that by accepting an amount of ₹1,500/- as mortgage money, the plaintiff handed over the scheduled shop room to the defendant on an agreement that a monthly profit of ₹600/should be paid by the defendant to the plaintiff. The period of mortgage was fixed to be six months. 10. At the same time, it seems that after the said transaction, for the monthly payments made by the defendant to the plaintiff, the plaintiff had issued rent receipts. Had Ext.A1 been not there, there would not have been difficulty to treat the transaction as a lease, especially when rent receipts were issued by the plaintiff to the defendant on acceptance of monthly payments. 11. The crux of the matter involved in this case is a proper interpretation and construction of Ext.A1. It is trite R.S.A.428 of 2015 -: 7 :- law that in order to construe a document and to arrive at the real meaning of the terms and conditions contained in the document, the words used in the document should be examined. If there is ambiguity in the said construction or interpretation, then of course the conduct of the parties and the fact as to how the parties had understood the terms of the document at the time when they had executed the document etc. should be used as guidelines to reach to the real intention of the parties. When the words in the document are clear and not ambiguous, any other exercise is not possible. Normally, on interpreting such a document, if it does not give rise to any ambiguous terms, the subsequent conduct of the parties is of no relevance at all. 12. In the decision in _**Abdulla Ahmed v. Animendra Kissen Mitter** [AIR 1950 SC 15]_ rendered by the Constitution bench of the Apex Court, it was held in paragraph 23 as follows: _“The subsequent conduct of both the_ R.S.A.428 of 2015 -: 8 :- _parties to the agreement very strongly supports this view. The evidence of such conduct is relevant in this case because, as pointed out by Viscount Simon, L.C., in the case already referred to, the phrase "finding a purchaser" is itself not without ambiguity. Here the phrase is "securing a purchaser ". This phrase similarly is not without ambiguity. The evidence of conduct of the parties in this situation as to how they understood the words to mean can be considered in determining the true effect of the contract made between the parties. Extrinsic evidence to determine the effect of an instrument is permissible where there remains a doubt as to its true meaning. Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of the instrument. (Vide para. 343 of Hailsham Edn. of Halsbury, Vol. 10, p. 274).”_ 13. It is true that the nomenclature of the document, R.S.A.428 of 2015 -: 9 :- whatever it be, is not of much importance to construe the true nature of a document. Even if a document is captioned as a partition deed and its terms reveal an exchange, it should be treated as a deed of exchange. If the terms of such a document reveal as an assignment, then it should be an assignment deed, irrespective of the nomenclature of such a document. In _**Puzhakkal Kuttappu v. C. Bhargavi and others** [(1977) 1 SCC 17],_ it was held in paragraph 6 : _“In construing a document like the one before us it is always necessary to find the intention of the party executing it. The intention has to be gathered from the recitals and the terms in the entire document and from the surrounding circumstances. How the parties or even their representatives-in-interest treated the deed in question may also be relevant. It is also well settled that the nomenclature given to a document by the scribe or even by the parties is not always conclusive.”_ R.S.A.428 of 2015 -: 10 :- 14. The learned counsel for the respondent by relying on _**Puzhakkal Kuttappu**_ ( _supra_ ) has argued that one of the most essential features in a mortgage is absent in a lease, i.e., the property transferred is a security for repayment of debt in a mortgage; whereas in a lease, it is the transfer of right to enjoy the property. It is argued that in this case also, the transfer of possession of the shop room through Ext.A1 is nothing but the transfer of right to enjoy the property. 15. Going by the terms of Ext.A1, at the first blush, it may appear that it contains the terms of a lease, because of the fact that the monthly payment to be made by way of profit is ₹1,075/- whereas the mortgage money was only ₹1,500/-. Initially, the monthly payment was fixed at ₹600/-. Thereafter, it was enhanced to ₹875/- and finally, it was enhanced to ₹1,075/- per month. One may argue that it was as good as revision of rent and nothing but enhancement of monthly rent. More over, receipts were issued in the form of rent receipts for such payment. When such a discrepancy R.S.A.428 of 2015 -: 11 :- has occurred, in order to gather the intention of the parties and as to how the parties have understood the terms of the document, the oral evidence adduced by DW1 assumes much importance. 16. Had the defendant been not examined, a real interpretation and construction of Ext.A1 could have been done in the light of Exts.B1 to B11 rent receipts; but in this case such an exercise is not possible in view of the concrete oral evidence adduced by DW1 in cross-examination. The appellant as DW1 has clearly admitted that he knew that the transaction was a mortgage at the time of entering into the transaction and that he had willingly executed Ext.A1 by fully knowing the character and nature of the terms and conditions in Ext.A1. 17. It has been virtually admitted by him that the transaction was one of mortgage and he had entered into the mortgage transaction on his free will and volition. Such clear admissions have been repeatedly made in the cross R.S.A.428 of 2015 -: 12 :- examination of DW1. We need not travel any further to any other area to gather the intention of the parties or to ascertain as to how the parties understood the document at the time when they entered in the transaction. 18. Even though the learned counsel for the appellant has relied on the decision in _**Hathika v. Padmanabhan** [1994(1) KLT 345]_ , it does not enable the appellant to bring the transaction involved in this case to a lease. In Ext.A1 it has been clearly mentioned through a specific recital that in the event of failure of the mortgagor to redeem the mortgage by paying the mortgage money, the mortgagee can sue the mortgagor and in such case, he can realise the amount from the security, i.e. the scheduled shop room. When such a security is there, and the security has been given in respect of an amount, whether the loan amount is meagre or not, it assumes the characteristic of a mortgage. As rightly found by the lower appellate court, the transaction in question cannot be treated as a usufructuary R.S.A.428 of 2015 -: 13 :- mortgage, when such a power has been given to the mortgagee. Necessarily, the transaction in question therefore, assumes the status of an anomalous mortgage. 19. The question as to whether the subsequent enhancements of the payment of monthly profits fixed in Ext.A1 have any effect on the nature and characteristic of Ext.A1, has to be considered. Section 92 of The Indian Evidence Act provides that when the terms of any contract, grant or other disposition of the property, or any matter required by law to be reduced in the form of a document, have been proved, no evidence of any oral agreement or statement is permissible for the purpose of contradicting, varying, adding or subtracting the said written document. 20. In _**S. Sakthivel v M. Venugopala Pillai and others** [AIR 2000 SC 2633]_ , it was held that no parol evidence will be admissible to substantiate such an oral contract or disposition as against a document required by law to be reduced in the form of a document in writing. R.S.A.428 of 2015 -: 14 :- Ext.A1, being a deed of mortgage is a compulsorily registrable document. Therefore, there cannot be any doubt that it is a document required by law to be reduced in the form of a document in writing. In such case, the appellant cannot be heard to say that in spite of the execution of Ext.A1, there was an oral arrangement between them to treat the transaction as a rental arrangement. 21. The subsequent enhancement of the monthly payment also does not result in a novation through a different contract within the meaning of Section 62 of the Indian Contract Act. Ext.A1 is a document in writing and a registered one. In order to vary the said terms, the parties ought to have executed a written document, that too, a registered one. 22. From the discussions made above, this Court is satisfied that there is absolutely nothing to interfere with the findings entered by the lower appellate court. Matters being so, this second appeal is devoid of merits, and is only to be R.S.A.428 of 2015 -: 15 :- dismissed, and I do so. In the result, this Second Appeal is dismissed. In the nature of this appeal, the parties shall bear their respective costs. All the interlocutory applications in this appeal are closed. **Sd/- B. KEMAL PASHA, JUDGE.** ul/- // true copy // P.S. to Judge.