HARILAL BHAGWANJI Vs. SHASTRI HEMSHANKER UMIYASHANKER

JUDGEMENT

(1.) THIS appeal arises out of a suit for eviction and arrears of rent, Defendant Harilal Bhagwanji mortgaged with possession the house in suit to the plaintiff Hem-shanker Umiyashanker for Rs. 7500/- by a deed of mortgage, Ex 5, dated 23-8-52. The mortgage sum was to carry interest at nine per cent, and the principal sum and interest were charged on the mortgaged property and the period for redemption was fixed at one year. A portion of the house was already in the occupation of the plaintiff as the defendant's tenant on a monthly rental of Rs. 15/- and another portion was let out to one Mansukhlal on Rs. 17/- a month, the defendant himself occupying the remaining part of the house. Simultaneously with the mortgage, by a rent note Ex. 6, executed on the same day, the portion of the house in the defendant's occupation, was leased back to him by the plaintiff for a term of six months, the rent stipulated being Rs. 24-4-0 per month. The plaintiff sued the defendant for possession of the said portion and for arrears of rent on the strength of the rent note. The defence was that the rent note was a nominal document executed for securing payment of interest, that no relationship of landlord and tenant was created and that the plaintiff could not therefore sue for eviction nor for rent on the strength of the rent note. It was contended that the principal money and interest were to be realised from the mortgage property and a suit for rent alone, which was in reality interest, could not lie. These contentions of the defendant have been rejected by both the lower Courts and they have passed a decree for eviction and for arrears of rent and the defendant has therefore come in second appeal.

(2.) THE first point made by Mr. Baxi for the appellant is that the mortgage deed, Ex. 5, and the rent note, Ex. 6, were part of the same transaction, that the rent note was merely a device to secure payment of interest and that it did not create any relationship of landlord and tenant between the parties, and in support of this contention Mr. Baxi has pointed out that both the documents were executed on the same day and were simultaneous. But as to this Mr. Thakker appearing for the respondent has urged that the term of the two documents is not co-extensive, viz. , that whereas the period for redemption fixed in the mortgage deed is one year, the term of the lease is six months, and therefore this is a circumstance pointing against the two documents being part of the same transaction. The fact that the two documents had varying periods of operation will not however make any difference in determining the question whether they formed part of the same transaction or not : See Kultyal v. Sanjiva Rao, AIR 1952 Mad 877 (A ). The next circumstance is that there was no delivery of possession and whatever transference of possession was there, was on paper. No liability was thrown on the mortgagee-plaintiff tor recovery of rent except that Mansukhlal was to pay rent to the plaintiff instead oi to the defendant and that rent was to be taken towards interest. No doubt, the mortgage deed recites that the plaintiff could let out the property to anyone he liked but since the property was already wholly occupied the question of leasing it out to tenants was not seriously in the contemplation of the parties. It is significant that the rent to be realised from the tenant, meaning Mansukhlal, was to be credited towards interest and the rent payable by the plaintiff himself was also similarly to be credited towards interest. But the most significant circumstance is that the rent payable by the defendant under the rent note was fixed with a view to making up the interest on the mortgage sum at nine per cent. That interest came to Rs. 56-4-0 and after taking into account Rs. 17/- payable by Mansukhlal and Rs. 15/- payable by the plaintiff, the balance viz. , Rs. 24-4-0 was fixed as the rent under the rent note, Ex. 6, which means that the rent fixed was equivalent to the interest on the mortgage sum. Evidently therefore the rent note was merely a device to secure payment of interest, for else there is no valid explanation for fixing Rs. 24-4-0 as rent of the portion of the house in the defendant's occupation. The rent reserved being equivalent to the interest on the mortgage sum is held to be an important circumstance to prove that it was merely a device for securing payment of interest. That was no doubt a case where a decree for rent had already been obtained and the mortgage property had been sold in execution of the decree, all the same, it was held that the sale was not legal in view of the provisions of Order 34, Rule 14, Civil Procedure Code, though their Lordships declined to set it aside for other reasons.

(3.) ANOTHER circumstance is that the property in suit was given in security not only for the principal amount secured but also for the interest accruing thereon and this again is a vital factor in support of the defendant's plea that the two documents formed part of one and the same transaction. This was so held in Ramnarain Pasi v. Sukhi Tiwary, AIR 1957 Pat 25 (C ). That the rent was so fixed as to make it equivalent to the interest per month and that interest was charged on the property itself are in themselves circumstances sufficient to prove that the rent note was in the nature of a machinery for the purpose of realising the interest due on the mortgage. This view finds support from Baijnath Prasad v. Jang Bahadur Singh, AIR 1955 Pat 357 (D ). There the mortgagor took back a lease of the mortgaged property by executing a kirayanama in favour of the mortgagee and the so-called rent payable under it in fact represented interest payable on the. mortgage money and not rent for use and occupation. It was held that the kirayanama was merely a device for regular payment of interest on the mortgage and not a lease of the property and the mortgagor could not therefore be deemed to be a tenant of the mortgagee and the mortgagee was not entitled to evict him. The mortgagee in that case had previously obtained a decree for arrears of rent but that was held to be of no consequence.