1958 (5) TMI 55 - SC - Indian Laws

Summary

Issues Involved:
1. Nature of the transaction (usufructuary mortgage vs. lease).
2. Applicability of Section 77 of the Transfer of Property Act.
3. Liability of the mortgagee to render accounts.

Detailed Analysis:

1. Nature of the Transaction:
The primary issue was whether the document executed on August 20, 1923, by Deokinand was a usufructuary mortgage or a lease. The plaintiff-respondents claimed it was a usufructuary mortgage, while the appellant contended it was a lease. The court emphasized the intention of the parties, stating, "once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called." After examining the document, the court concluded that the document was a mortgage and not a lease, noting that "the gist of the document was not a letting of the premises, with a rent reserved, but a mortgage of the premises with a small portion of the income of it made payable to the plaintiff."

2. Applicability of Section 77 of the Transfer of Property Act:
The next issue was whether the mortgage was a usufructuary mortgage or an anomalous mortgage. The court stated that whether the transaction was a usufructuary or anomalous mortgage, the outcome would be the same regarding the rendition of accounts. The court held that under the mortgage deed, there was a contract within the meaning of Section 77 of the Transfer of Property Act, which states, "Nothing in section 76, clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal." The court concluded that the mortgagee was authorized to take the entire income from the land in lieu of interest, and therefore, Section 77 applied, exempting the mortgagee from the liability to render accounts.

3. Liability of the Mortgagee to Render Accounts:
The appellant contended that even if the transaction was a usufructuary mortgage, he was not liable to render accounts under Section 77 of the Transfer of Property Act. The court agreed, stating, "Under Exhibit A(3), the mortgagee undertook an unconditional obligation to pay a sum of Rs. 435-4-0 in respect of the property mortgaged to him." The court found that the mortgagee had a right to take the entire receipts from the land in lieu of interest and was not required to render accounts to the mortgagor. The court also referenced the Judicial Committee's decision in Pandit Bachchu Lal v. Chaudhri Syed Mohammad Mah, which supported the view that a specified rate of interest in the mortgage deed does not negate the applicability of Section 77.

Conclusion:
The Supreme Court held that the document in question was a usufructuary mortgage and not a lease. The court also concluded that Section 77 of the Transfer of Property Act applied, exempting the mortgagee from the liability to render accounts. Consequently, the decree of the High Court was set aside, and the decree of the Subordinate Judge was restored. The appeal was allowed, and the appellant was awarded costs throughout.