KORAN NAMBIAR Vs. KUNHI KANNAN NAMBIAR

JUDGEMENT

(1.) The suit which has given rise to this appeal was one for redemption of mortgage. The facts necessary for the decision of the appeal may be briefly stated. On 28-6-1930 one Krishnan Nambiar, the predecessor-in-interest of the plaintiff, mortgaged with possession the properties described in the plaint schedule to one T. D. Nair for a sum of Rs. 6000. Ext. Al is copy of the deed of mortgage. As it was found that the income from the properties would not be sufficient to cover the interest on the whole sum advanced, it was provided in Ext. Al that the income was to be appropriated in lieu of interest on Rs. 4000 and that interest at a rate of 71/2 per cent per annum on the balance viz., Rs. 2000 was to be paid by the mortgagor. The properties were leased back to the mortgagor on the same day for a rent of Rs. 300. As the mortgagor-lessee defaulted payment of rent, the mortgagee sued in O. S. No. 544 of 1931 of the District Munsiffs Court of Cannanore for recovery of the same. On 14-3-1936 Krishnan Nambiar executed another mortgage Ext. B34, for a sum of Rs. 1775, the consideration being mainly made up of the rent payable to the mortgagee. Ext. B34 contained a provision for sale of the properties. Krishnan Nambiar surrendered possession of the properties to the mortgagee on the same day. The plaintiff sued for redemption claiming that the amounts under the two deeds were liable to be scaled down under the Madras Agriculturists Relief Act, 1938. The defendant, the successor-in-interest of the mortgagee denied this claim and contended that he was entitled to the whole mortgage money as well as compensation for improvements effected by him. The Trial Court passed a preliminary decree for redemption directing the plaintiff to deposit (1) Rs. 6000 under the mortgage Ext. Al, (2) Interest on Rs. 2000 from 1-10-1937 at 61/4 per cent till 22-3-1938 & thereafter 51/2 per cent per annum, (3) Rs. 1775 due under Ext. B34 with interest thereon at 51/2 per cent, (4) Rs. 522-4-0 towards assessment on the lands paid by the mortgagee, (5) Rs. 33-12-0 towards Jenmis rent and (6) Rs. 355-10-11 towards compensation for improvements. It was held that Rs. 4000 out of the consideration under Ext. Al and Rs. 1775 under Ext. B34 were not affected by the Madras Agriculturists Relief Act and were not liable to be scaled down. The plaintiff has therefore preferred this appeal from the decree.

(2.) The only point in dispute now is regarding the applicability of the said Act to the two sums exempted by the decree of the Trial Court. It has been repeatedly held by the Madras High Court that in the case of a mortgage with possession where the mortgagee is under no liability to account for the profits, the debt is not liable to be scaled down under the Act. See Jagannatha Iyengar v. Senniveera Chettiar (1941 M. W. N. 271) and Manavala Ayyar v. Muhammad Yoosaf ( AIR 1943 Mad. 100 ). Learned counsel for the appellant contended that Ext. A1 has not been correctly construed by the court below. According to him a sum of Rs. 300 alone out of the profits was to be appropriated by the mortgagee towards interest on Rs. 4000 and this indicated that the mortgagee was liable to account for the profits. This argument is based on an incorrect translation of Ext. Al. We examined the original deed in Malayalam and what is provided therein is that the profits were to be appropriated towards interest on Rs. 4000 as the same was insufficient to satisfy the interest on the whole sum. The deed in our opinion does not provide for taking an account of the profits at the time of redemption and the provision to enjoy the properties in lieu of interest on Rs. 4000 does not lend itself to the construction that the income taken by the mortgagee is treated as amount or other thing paid within the definition of interest in S.3 (iii-a) of the Act.

(3.) The amount under Ext. B34 also cannot be affected by the Act as the amount represents rent payable by the mortgagor under the lease arrangement. The mortgage and lease cannot be treated as a single transaction for the purpose of the Act so as to view the rent as interest. The appellant may have become entitled to relief if sub-section 9 (a) of S.9 A which treats the rent payable by the mortgagor-lessee to the mortgagee-lessor as interest were applicable to this case. Sub-section 10 of S.9 A provides that nothing contained in the said section except sub-sections 1 & 2 would apply to any mortgage in respect of property situated in the South Canara District or in Chirakkal and other Taluks in the Malabar District. The properties which form the subject matter of this litigation are in Chirakkal taluk. Learned counsel for the appellant pointed out that according to the original Bill which later became the amending Act of 1948 an explanation had been added to the definition of interest in S.3 by which rent payable by the mortgagor-lessee was to be treated as interest and that this explanation was dropped later in view of the provisions in S.9 (A). We have to construe the sections as they now stand and in view of the exemption referred to earlier regarding properties in Chirakkal taluk, the appellant is not entitled to any relief.