KANDULA VENKIAH ALIAS PADMANABHUDU Vs. DONGA PALLAYI

JUDGEMENT

(1.) This reference raises two questions, (1), whether Exhibit A is an anomalous mortgage within the meaning of Section 93 of the Transfer of Property Act and (2), if it if, whether effect is to be given to the stipulation for the execution of a sale deed by the mortgagor in favour of the mortgagee on default of payment within the stipulated time, although this stipulation amounts to a clog on the statutory right of redemption conferred by Section 60 of the Act. As regards the first question, there are four classes of mortgages defined in Section 58:--(1) simple mortgages, (2) mortgage by conditionals sale, (3) usufructuary mortgage and (4) English mortgage. Section 98 also recognizes two further clases of mortgages, viz., a combination of (1) and (3), a simple mortgage and a usufructuary mortgage, or a combination of (2) and (3), a mortgage by conditional sale and a usufructuary mortgage ; and it is only to mortgages which do not come within any of these six classes that the provision in Section 98, that the rights and liabilities of the parties shell be determined by their contract as evidenced in the mortgage deed, and, so far as snob, contract does not extend, by local usage, is made applicable. Now in all mortgages including mortgages of the six classes already referred to, the rights and liabilities of the parties are determined by their contract as evidenced in the mortgage-deed, except in so far as any of the terms of the contract may be opposed to the provisions of the Act or otherwise illegal. The Legislature apparently considered that the provisions of the Act, including the statutory right of redemption conferred on the mortgagor by Section 60, should be made applicable to the four classes of mortgages defined in Section 58, which include the usual forms of mortgage, and to the two combinations mentioned in Section 98, so as to override any terms in the mortgage-deed inconsistent with the Act, but that it would be safer to leave other forms of mortgage, which may be regarded as anomalous and are so referred to in the beading to Section 98, to be governed by the provisions of the mortgage deed or local usage, and in effect to exempt them from the operation of the Act to this extent at any rate that the terms of the contract or the local usage applicable thereto should override the general provisions of the Act. The general rule being that, except in this particular case, the provisions of the Act should override the terms of the mortgage contract, the Court should, I think, satisfy itself that the particular mortgage cannot fairly be brought within any of the six specified classes of mortgages before holding it to come within the rule of exception created in favour of anomalous mortgages. Doming now to Exhibit A, I am dearly of opinion that it is not a mortgage by conditional sale within the meaning of the definition in Section 58(c) of the Transfer of Property Act, The provision that, in default of payment on or before the stipulated date, the mortgagor shall execute a deed of sale in favour of the mortgagee, no doubt brings it within the description given by Sir Charles Turner in Ramasami Sastrigal v. Samiyappanayakan 4 M. 179 : 6 Ind. Jur. 81 : 1 Ind. Dec. (N.S.) 960 of a conditional mortgage as understood in Southern India before the passing of the Act, but we are governed by the terms of Section 58 and as pointed out by Sadasiva Aiyar, J. in Srinivasa Aiyangar v. Radhakrishna Pillai 22 Ind. Cas. 54 : 38 M. 667 : M.L.T. 547 : (1914) M.W.N. 81 : 26 M.L.J. 47, Clause (c) seems to have been expressly framed so as to exclude the Hindu form of mortgage by conditional sale from the definition of mortgage by conditional sale in the Transfer of Property Act, with the result that the provision as to a future sale must be regarded overridden by the statutory right of redemption conferred by Section 60. Pattee Mahamad v. Sheikh Davood 30 Ind. Cas. 569 : 39 M. 1010 : 18 M.L.T. 208 : 29 M.L.J. 525 : (1915) M.W.N. 852 is to the same effect, and, both on the construction of the Act and on these authorities, I am of opinion that Exhibit A is not a mortgage by conditional sale within the. meaning of Sections 50 and 98. This, however, does not conclude the question, as we have still to see if Exhibit A comes within any of the five remaining classes, one of which is a combination of a simple mortgage and a usufructuary mortgage. How, if we take the first part of Exhibit A with its covenant to repay with interest at one per cent, an the date fixed and the stipulation that on failure to pay on that date, the mortgagor is "to give up the land as sold to yon fur the amount then outstanding due to you and execute a proper sale-deed," it contains all the essentials of a simple mortgage with an illegal colg on the equity of redemption superadded. If now we take the second part of the instrument and read with the recital of the mortgage debt at the beginning, it provides Possession of the property having been delivered to you on this very date, you shall henceforth enjoy the property as you please and shall yourself pay Rs. 6-3-0 due to Government every year without giving any consideration whatever for every year." Here we have all the essentials of a usufructuary mortgage as defined in station 58(d), as the property is delivered to the mortgagee and he is authorised to receive the rents and profits accruing from the property and to enjoy them subject to the payment of land revenue without accounting for them. The deed does not say expressly he is to appropriate them in lieu of interest," but an express statement to that effect in the mortgage deed is not necessary to make a usufructuary mortgage as defined in Section 58(d), because, as by the terms of the instrument, they are not to be appropriated in satisfaction of the principal, the only inference must be that they are to be appropriated by the mortgagee himself in consideration of his advance, which is another way of saying that they are to be appropriated in lieu of interest. Reading the two parts of the document together, the mortgagee gets, in addition to the rate of interest provided in the first and simple mortgage part of the document, the enjoyment of the rents and profits provided in the second and usufructuary part which must in my opinion be regarded as by way of further interest. In any case Exhibit A, as I have pointed cut, contains expressly or impliedly all the essentials of a simple mortgage and also of a usufructuary mortgage with a clog on tie equity of redemption superadded, and amounts, in my opinion, to a combination of a simple mortgage and a usufructuary mortgage within the meaning of Section 98. My answer, therefore, is, that the stipulation in Exhibit A which fetters the equity of redemption is invalid as opposed to Section 60 of the Transfer of Property Act, which admittedly governs all mortgages bet the residuary class of mortgages defined in Section 98. Oilfield, J.

(2.) It is, I agree, possible to deal with this reference en the ground that Exhibit A is not an anomalous mortgage and without expressing any opinion as to whether Section 9d of the Transfer of Property Act is controlled by Section 60.

(3.) The terms of the document are given in the order of reference. It is clear that the sale provided for in it is future and not ostensible ; and there is, therefore, no question of a mortgage by conditional sale. It is next material that the provision for a sale must for the present purpose be dismissed from consideration. For such provision, standing in a mortgage of one of the normal forms defined in Section 58 or in one of the combinations of them specified in Section 58, would operate as a restraint on the right of redemption and, whether the prohibition of restraints on redemption implied in Section 60 is or is not applicable to anomalous mortgages, the settled principle that sash a provision is inoperative in a normal mortgage cannot be evaded by the classification of all mortgages containing a restraint as on that ground anomalous. Our conclusion as to the character of the transaction must accordingly be reached with reference only to the remainder of the document, the provision by the mortgagor to pay on a specified date and the transfer of possession to the mortgagee.