PATHUMMA HAJUMMA Vs. KALLIANI

JUDGEMENT

(1.) A Full Bench of this court in Kriyhnan Nair v. Sivaraman Namboodiri ( 1967 KLT 78 ) has exhaustively dealt with the tests that may normally be adopted to find out whether the transaction which is contended to be a lease and not a mortgage is in fact one such. Dealing with this and particularly with a transaction which may be a composite transaction embodying both the characteristics of a lease and mortgage, the Full Bench said

(2.) Based on this decision it has often been contended that a transaction is partly a lease and partly a mortgage and therefore should be found to be a lease. While this may be true in a case Where there are several items of properties and the transaction may be one of mortgage in regard to some items and lease in regard to others, it is difficult to appreciate how under the same transaction in regard to the same property there can be both a mortgage and a lease. It is true that the document may have characteristics of a mortgage and may possibly satisfy some of the tests which may go to construe the document as a mortgage and it may equally well be that some of the characteristics indicate that it is a lease. These are matters which may arise in the course of the process of construction. These will have bearing on the final decision to be reached as to whether the document is a mortgage or lease. But the court will have to find finally that the document evidences either a mortgage or a lease and not that it is both. Therefore, to conceive of a transaction as one predominantly a lease or predominantly a mortgage is not, it appears to me an easy concept. The question would be whether it is a lease or a mortgage having regard to the terms of the document.

(3.) I understand the dictum of the Full Bench to mean that if there are characteristics some of which indicate that the transaction is a mortgage but there are some other characteristics which indicate that it is a lease the document should be considered as a lease or in other words, if the characteristics of lease are shown to be present in regard to a transaction irrespective of the question whether there are some characteristics of mortgage also the document should be construed as a lease. It is very easy to conceive of such a case. While in a lease there is a transfer of enjoyment from the lessor to the lessee and there is a similar transfer in a possessory mortgage too, the distinction between these two cases is, that in the case of the lease the transfer is for enjoyment while in the case of mortgage the transfer is for securing the mortgage money though enjoyment is also necessarily involved in the transfer. That is why we normally look into the circumstances under which the transaction comes into being. We look Into the purpose for which it was brought about to see whether the idea was that the property was to be transferred for the purpose of enjoyment or the idea was that the transfer was to be made to secure the money received under the mortgage. May be that in a particular case both these intentions may be discerned in the transfer. The transferor may intend to transfer the property for enjoyment and the transferee may take with that intention. It may also be that at the same time transferor may want to raise some money on the security of the property and therefore normally what we would apply as a test to find out whether it is a mortgage, if applied, would indicate that there are elements of mortgage also in the transaction. It is not possible in such a case to say that the transaction is a mortgage though a debtor creditor relationship is intended to be created. Though the document is executed also with a view to raise funds, if at the same time there is an idea that there should be a transfer for enjoyment, the document has the characteristics of both mortgage and lease. It is not unusual to see cases where properties have all along been enjoyed by lessees and such lessees are approached by the lessors for further advances for the purpose of discharge of their debts. In such cases even if the lessee takes an usufructuary mortgage of the same property it may not always be that the transferor intends to change the tenure in regard to the property; it may not be that he may want the tenant to hold under another relationship, but at the same time he may want to raise money for meeting his commitments and in such cases it is easy to find an intention to create a debtor creditor relationship as well as intention to transfer property for enjoyment. It may appropriately be asked in these cases whether the transaction is a lease or mortgage. If one applies the simple test as to whether the intention of the document was to raise money to pay off debts that may be satisfied. But it will have to be said that, that too was the intention though parties also wanted a transfer of the property for enjoyment. Such a transaction where the characteristics of both lease and mortgage are present may be said to be a composite transaction. If that is the case, so long as the elements of both lease and mortgage are present; the document has to be construed as a lease. That, according to me, is the interpretation to be put on the observations of the Full Bench in Krishnan Nair v. Sivaraman Namboodiri (1967 KLT 78).