Cherumanalil Lakshmi & Ors Vs.
Mulivil Kunninamkandy Narayani & Ors  INSC 159 (12 September 1966)
12/09/1966 BACHAWAT, R.S.
CITATION: 1967 AIR 876 1967 SCR (1) 314
R 1971 SC1575 (11)
Kerala Land Reforms Act (1 of 1964), s.
2(23)-Malabar Land Tenures-Difference between usufructuary mortgage and kanam-
The suits, lands, together with the
fruit-bearing trees standing thereon, were demised for a period of 24 years under
two documents which specified the kanartham (kanam amount). The documents did
not contain any recital that they created security for repayment of a debt nor
purported to be transactions for securing debts such as a mortgages, panama or
kyyasampanayam. The transferees were entitled to enjoy the lands with the
standing trees, plant other fruit-bearing trees thereon, appropriate the income
of the lands in lieu of interest on the kanam amounts, and to hold the lands
even after the expiry of 24 years until payment of the kanam amounts and the
value of trees planted.
The documents were styled kanan deeds and one
of them explicitly stated that the demises were in kanam-kuzhikanam right.
Subsequent documents also all recited that the transactions were kanam-kuzhikanam
HELD: The transactions were kanam-kuzhikanam
and were not usufructuary mortgages. [316 B-C] A kanan-kuzhikanam and a
usufructuary mortgage have many common features. Both of them involve transfer
of possession on payment of money by the transferee, set off profits against
interest, and retention of possession until repayment of the money. The
essential distinction between them is that the kanam-kuzhikanam is a lease, and
is, therefore -a transfer of a right to enjoy the property, whereas, a mortgage
is a transfer of an interest in the property for securing the repayment of a
debt. [316 B-C]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 567 of 1964.
Appeal by special leave from the judgment and
decree dated June 22, 1961 of the Kerala High Court in A. S. No. 243 of
H. R. Gokhale and A. G. Puddissery, for the
P. Ram Reddy, K. P. Madhava Menon and A. V.
V. Nair, for respondents Nos. 2 to 13.
The Judgment of the Court was delivered by
Bachawat, J. The question in this appeal is whether Ex. A-1 dated March 26,
1900 and Ex. B-1 dated March 27, 1900 were kanam-kuzhikanam transactions, or
whether they created usu- fructuary mortgages. The appellants sued for
redemption and recovery of the suit lands alleging that Exs. A-1 and B-1
created usufructuary mortgages. The respondents claimed that they were
kanam-kuzhikanamdars and entitled to fixing of tenure under s. 21 read with s.
3 (15) of the Malabar Tenancy Act, 1929 (Madras Act 14 of 1930). The trial
Court upheld the respondents' contention and dismissed the suit. On appeal, the
Kerala High Court affirmed this decree. The appellants now appeal to this Court
by special leave. During the pendency of this appeal, the Kerala Land Reforms
Act, 1963 (Act 1 of 1964) came into force. It is common case before us that the
appeal must be disposed of in accordance with the provisions of Act 1 of 1964.
In this appeal, the respondents claim that they are the holders of
kanam-kuzhikanam within the meaning of s. 2(23) of this Act.
Section 13 of Act 1 of 1964 gives to every
tenant fixity of tenure in respect of his holding and forbids resumption of the
holding except as provided in ss. 14 to 22. Section 2 is the definition
section. By s. 2(57), a tenant means any person who has paid or has agreed to
pay rent or other consideration for his being allowed by another to possess and
enjoy the land of the latter and includes inter alia a kanam-kuzhikanamdar.
Section 2(23) reads "kanam-kuzhikanam" means and includes a transfer
by a landlord to another person of garden lands or of other lands or of both,
with the fruit-bearing trees, if any standing thereon at the time of the
transfer, for the enjoyment of those trees and for the purpose of planting such
fruit-bearing trees thereon, the incidents of which transfer include- (a) a
right in the transferee to hold the said lands liable for the consideration
paid by him or due to him; which consideration is called 'kanartham'; and (b)
the liability of the transferor to pay to the transferee interest on the
kanartham unless otherwise agreed to by the parties;
Provided that a usufructuary mortgage as de-
fined in the Transfer of Property Act, 1882 (Central Act 4 of 1882), shall not
be deemed to be a kanamkuzhikanam;" Exhibits A-1 and B-1 demised the suit
lands together with the fruit-bearing coconut, arecanut and jack trees standing
thereon for a period of 24 years. The transfer was for the enjoyment of the
lands with the standing trees and for the purpose of planting fruit-bearing
trees thereon. The kanam amount or the kanartham under Ex. A-1 was. Rs. 5,000/-
and under Ex. B-1 was Rs. 600/-. The transferees were entitled to appropriate
the income of the lands in lieu of interest on the kanam amounts and to hold
the lands even. after the expiry of 24 years until payment of the kanam amounts
and the value of the trees planted by them. Thus, all the conditions of
kanam-kuzhikanam mentioned in the main part of s. 2(23) were satisfied.
Nevertheless, in view of the proviso M15Sup.CI/66-7 316 to s. 2(23), the
transactions would not be kanam-kuzhikanam if it is shown that they were by way
of usufructuary mortgages as defined in s. 58(d) of the Transfer of Property Act,
1882. A kanamkuzhikanam and a usufructuary mortgage have many common features.
Both the transactions involve or may involve transfer of possession on payment
of money by the transferee, set-off of profits against interest and retention
of possession until repayment of the money. In spite of their close
resemblance, the essential distinction between the two types of transactions
must not be overlooked. A kanam-kuzhikanam is a lease, and is, there- fore, a transfer
of a right to enjoy the property. A mortgage is a transfer of an interest in
the property for securing the repayment of a debt. The purpose of one is to
enable enjoyment of the property by the transferee, that of the other is to
secure the debt. On the question whether a transaction is a kanam-kuzhikanam or
a usufructuary mortgage, the name given to it by the parties is a relevant,
though not always a decisive, consideration. If the parties described the
transaction to be a kanam-kuzhikanam it is a valuable indication that they
intended it to be such and not a usufructuary mortgage. If the document
purports to be a mortgage, s. 12 of the Act allows the parties to prove that it
is, in substance, a kanam-kuzhikanam or other lease. But if the document purports
to be or is, on its true construction, a kanamkuzhikanam or other lease, s. 12
has no application and full effect must be given to the document according to
Both Exs. A-1 and B-1 were styled kanam
deeds. Exhibit A-1 stated that the demise was in Kettiyadakkam kanam right.
"Kottiadaki" means "took
possession". The expression "kettiyadakkam kanam" may mean a
usufructuary mortgage, but this, is not its necessary or invariable meaning.
Exhibit B-1 explained Ex. A-1. Exhibit B-1 explicitly stated that the demises
under Ex. A-1 and B-1 were in kanam-kuzhikanam right. Exhibits A-1 and B-1 read
together show that both the transactions were kanam-kuzhikanam. The subsequent
documents, Exs. B-2, B-5, B-8, B-9, and B-10 executed between 1921 and 1944 all
recited that Exs A-1 and B-1 were kanam-kuzhikanam transactions. Exhibits A-1
and B-1 did not contain any recital showing that they created security for
repayment of a debt. Significantly, the parties did not describe the
transactions to be a mortgage, otti, panayam or a kyvasam panayam. Instead,
they described the transactions as kanam-kuzhikanam and the amounts paid to the
transferees as kanartham. Exhibits A-1 and B-1 did not purport to be and were
not transactions for securing debts. We agree with the Courts below that the
transactions were kanamkuzhikanam and were not usufructuary mortgages.
In the result, the appeal is dismissed with