Mangala Kunhimina Umma & Ors Vs.
Puthivaveottil Paru Amma & Ors  INSC 34 (28 January 1971)
CITATION: 1971 AIR 1575 1971 SCR 582
Kerala Land Reforms Act 1964, s.
2(22)-Kanam'-Definition of- Document purporting to be kanam whether lease or
mortgage- Tests Description in document not sufficient guide.
The document Ex. B-6 in so far as it related
to the suit lands purported to be a kanam executed in favour of the
predecessor-in-interest of the present appellants by the
predecessors-in-interest of the present respondents. The document had a
counter-part Ex. A-1. The suit was filed for the redemption of the kanam on
payment of the mortgage debt. The appellants contended in defence that Ex. B-6
was not a mortgage deed but a lease and, therefore, there was no right to
redeem. One of the incidents of the kanam as defined in s. 2(22) of the Kerala
Land Reforms Act, 1964 was the "payment of michavaram or customary dues on
renewal on the expiry of any specified period". Against the decision of
the Kerala High Court in favour of the plaintiffs- respondents, the present
appeal was filed by special leave.
The only question for consideration was
whether the appellants were protected against eviction by reason of their contention
that Ex. B-6 created a tenancy. The decision of this question depended upon the
further consideration whether the provision in Ex. B-6 for payment of land
revenue for properties by the appellants amounted in law to a stipulation as
rent or michavaran to the landowner.
HELD : (1) The mere description of the deed
as kanam will not be decisive of the essence of the transaction. The
description of the deed by itself, isolated from the terms and provisions may
be misleading or a misnomerq. The circumstances and the conduct of the parties
are always a very useful guide in ascertaining the true character of the
[587 B-C; E] (2) The first and foremost
element to be found for a lease is whether there is the intrinsic intention in
the written document for enjoyment of the property by the transferee in lieu of
rent or perquisites. Secondly the term of renewal of the enjoyment would
indicate the features of a lease.
Thirdly it has to be found out whether there
is any provision for payment .of customary dues. [587 R; 588 Al The dominant
feature of the mortgage transaction on the other hand will be ascertainment of
the ratio of the value of land to the amount advanced. It the ratio of the
amount advanced bears a substantial proportion to the value of the property
transferred it would be a strong piece of intention and circumstance to
indicate loan and a mortgage. The provision entitling the transferee to ask for
a return of money by sale of the property would be a very important feature to
indicate that the transaction is a loan and a mortgage and not a lease. The
absence of such a provision, however would not totally repel the transaction to
be a mortgage. The execution of counter-part is sometimes a common feature in
the case of possessory mortgage though the existence of a counter-part by
itself will not be conclusive of the question. [588 B-D] 583 (3) The High Court
correctly held that a mere direction to pay there venue of the property by the
grantee particularly when no payment is stipulated to be made to the grantor or
when the payment is not directed to be made out of anything which is due or
payable to the grantor, cannot be considered as a payment or rent or michavaran
to the grantor. [588 G] (4) In the present case the features which favoured the
construction of the transaction to be a mortgage and not a lease were; first
there was no provision for renewal;
secondly there was no provision for payment
of customary dues; thirdly the property was to be enjoyed by the defendants. by
way of interest on their advance after payment of land tax to the State;
fourthly the payment of land tax was not a deduction from rent or perquisites;
fifthly there was a provision for
surrendering the property with a registered release at the cost of the
transferee on the receipt of the consideration of kanam and the balance amount;
sixthly when the consideration was paid back the counter-pattam deeds and prior
deeds would he returned;, and finally there was liability to pay interest on
the advance and possession and enjoyment of the property was in lieu of
interest. The proportion of the amount advanced under Ex. B-6 to the value of
the property was also, substantial [589 E-G-, A-C] Parameswaran Embranthiri v.
Narasimha Nambudri,  K.L.T. 404, Sankunni Variar & Ors. v.
Neelakandhan Nambudripad & Ors., I.L.R.  Mad. Z54. Cherumanalil
Lakshmi & Ors. v. Mulivil Kunninamkandy Narayani & Ors.,  S.C.R.
314, Kunhiparan v. V. Naicken & Ors.,  K.L.T. 646 and Kunhirama
Nambiar v. Pairu Kutruo,  K.L.T. 62, referred to.
Hussain Thangal v. Ali,  K.L.T. 1033,
Patel Bhuder Mayji etc. v. Jat Mamdaji Kalaji
(deceased) through L.. Rs. Jat Singh Khan Mamdaji etc.  3 S.C.R. 690,
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 980 of 1967.
Appeal by special leave from the decree dated
the March 29, 1967 of the Kerala High Court in Second Appeal Suit No. 374.
T. Narayanan Nambyar and A. V. V. Nair, for
K. T. Harindranath and A. S. Nambyar, for
respondents Nos.1 to 4 and 6(1) and 6(2).
The Judgment of the Court was delivered by
Ray, J.-This is an appeal by special leave against the judg- ment dated 29
March, 1967 of the, High Court of Kerala confirming the decree of the lower
appellate Court declaring that the sum of Rs. 1000/- is due to defendants No.
10 to 17 as legal representatives of defendant No. 2 on the mortgage mentioned
in the plaint and that the plaintiffs having deposited the said sum of Rs.
1000/- on the file of the Court of the Munsif, Cannanore, the defendants No. 10
to 17 do surrender quiet and peaceable possession of the property described in
the plaint to the plaintiff No. 7 with all documents relating to the property
in their possession and further that the defendants No. 10 to 17 do pay to the
584 plaintiff No. 7 half of the mesne profits from 22 December, 1953 till the
date of surrender of possession.
The relevant documents are Ex. B-6 and Ex.
A-1. Ex. B-6 is a kanam-kuzhikanam. Ex. A-1 is its counter-part. They are both
dated 1 December, 1941. The transaction there under is a ,composite one, a
kanam in respect of taks I to 3 of item I which constitute properties in suit
and a kanam kuzhikanam in respect of tak 4 of item I and item 2 which are not
the subject matter of this suit. The kanamdars are defendants No. I and 2. In
partition under Ex. 3 the rights under Ex. B-6 have been divided equally
between the defendants No. I and 2 but the properties as such are not divided.
The appellants being the legal representatives of ,defendant No. 2 had thus an
undivided moiety in the properties in suit. The original plaintiff was an
assignee of the jennii (the land owner) who granted Ex. B-6. On the death of
the original plaintiff, her interest devolved on plaintiffs No. 2 to 6 who
assigned the same to plaintiff No.
7. The suit is for redemption of the kanam on
the properties in suit. Subsequent to the institution of the suit, defendants
No. 3 to 9 being the legal representatives of defendant No. 1 and being
respondents No. 7 to 13 in this appeal surrendered their moiety in the suit
kanam, to plaintiffs No. 2 to 6 and thereafter the suit proceeded in regard to
the moiety of the kannam that belonged to defendant No. 2 and his legal
representatives. namely, the appellants.
The only question in this appeal is whether
the appellants are protected against eviction by reason of their contention
that Ex. P-6 created a tenancy or whether the respondents were entitled to
possession of the properties, by reason of their rival contention that Ex. B-6
was a mortgage transaction and the respondents were entitled to redeem the
mortgage on the expiry of the stipulated period.
The Malabar Tenancy Act, 1929 was in force at
the time of the institution of the suit but it is common round that rights and
liabilities of the parties are to be judged under the Kerala Land Reforms Act',
1964 by reason of the provisions contained in section Kerala Act of 1964 which
defines kanam are as follows :- "(22) 'kanam' means the transfer for
consideration, in money or in kind or in both, by a landlord of an interest in
specific immovable property to another person or the latter's enjoyment,
whether described in the document evidencing the transaction as kanam or
kanapattam, the incidents of which transfer include-
585 (c) payment of michavaram or customary
dues, or renewal on the expiry of any specified period........" It is
indisputable that a kanam within the above 'definition involves payment of
michavaram or customary dues or renewal on the expiry of any specified period.
ln Ex.B-6 there is no provision for renewal or for payment of customary dues.
The pre-eminent question is whether there is a provision for payment of
michavaram. Broadly stated, Ex.B-6 executed by defendants No. 1 and 2
stipulated that they would pay the kanam of Rs. 1400 charged on taks I to 3 of
item No. I in the Schedule to Ex.B-6 to the 7 persons Narayani and others and
their representatives and redeem the same and hold the said taks I to 3 of item
No. I as kanam and tak 4 and item No. 2 as kanam-kuzhikanam, paying the land
revenue for the properties and enjoy them for interest on the kanam, and after
the term of 12 years when the kanam of Rs. 2000/- charged on taks I to 3 of
item No. 1 was offered the defendants shall receive and surrender the
properties with basic documents by a registered release at their costs. No rent
is stipulated for the property in consideration of advance of Rs. 2000/whereof
Rs. 1400/- was to be paid to the prior mortgagees on taks I to 3 of item No. 1.
The suit properties in Ex.B-6 were to be enjoyed by defendants no. I and 2 for
interest on their advance after payment of the land tax to the State.
It therefore falls for consideration as to
whether the provision in Ex.B-6 for payment of land revenue for the properties
by the appellants amounts in law to a stipulation as rent or michavaram to the
land owner. Counsel on behalf of the appellants relied on the decision of the
Kerala High Court in Parameswaan Emranthiri v. Narasimba Nambudiri(1) and the
earlier Bench division of the Madras High Court in Sankunni Varriar & Ors.
v. Neelakandhan Nambudripad Ors. (2) in support of the proposition that payment
of land revenue would amount to payment of rent, up.
In the Madras Bench dicision in Sankunni's
case (supra) the kanam deed was for 36 years and the deed provided that the
jenmi should receive inter alia an annual rental of 41 1 paras, 4 idangalis and
one nazhi of paddy and gingerly oil to the value of six rupees. The kandamdaras
were required by the deed in Sankunni's (supra) case to pay out of the gross
rent to the Government what became due by way of land revenue. The actual words
in the kanam deed were that the pattam (gross rent) of the property demised was
2507 paras of paddy and the kanamdars were to hold the properties in their
possession and enjoyment and pay to jenmi a pattam (rent) of 411 paras, 4
idangalis, I nazhi of paddy, of the money value of Rs. 138/- inclusive of paras
vasi (allowance (1) K.L.T.404 (2) I.L.R.  Mad. 254 586 for
difference of measurement) duly dried, winnowed, cleaned, .conveyed to the
jenmi's residence and measured out by their 40 nazhis para, after deduction of
the interest due on the mortgage amount and the assessment on the properties
due to the Government from the said rent together with sundry payment of one
para, two idanglis of gingelly oil of the value of Rs. 6, within the 30th of
Makaram (10th February) of each year commencing with the year 1069 M.E. (1893-94)
and duly take receipt there for.
In Sankunni's case the land revenue was
increased as a result of resettlement. The question was whether the burden of
the increased revenue fall upon the jenmi. It was contended in Sankunni's(1)
case that inasmuch as there was reference in the deed to gross yield of the
land and the jenmi was to receive his rent after deduction of the interest due
on the mortgage and the Government revenue, the intention was to fix the
kanamiars' liability on the basis of the revenue payable to the Government on
the date of the kanam. If the revenue payable was to be increased it was said
in that case that the jenmi was to be responsible for the payment of the
The entire ratio in Sankunni's(1) case was
first that the liability of the jenmi was for the revenue and secondly, the
kanamdar was to deduct from the rent the interest on the mortgage amount and
the assessment on the properties due to the Government. The decision of the
learned Single Judge of the Kerala High Court in Parameswaran's(2) case was
that recital in the deed that the defendant was to be in possession of the
properties and was to pay the revenue out of the income and appropriate the
balance towards interest on the amount of the advance amounted to a stipulation
for payment of revenue as michavaran or rent. In Sankunni's(1) case the
direction to pay revenue out of the rent of the property which was due to the
landlord was justifiably held to be a payment on behalf of the landlord because
it was a part of the michavaram. That reasoning could not apply to Parames
waran's(2) case because in that case there was neither any fixation of rent nor
any stipulation for payment of rent or michavaram to the landlord.
This Court in Cherumanalil Lakshmi & Ors
v. Mlilivil Kum- njnamkandy Narayani & Ors.(3) considered as to when a
transaction would be kanam-kuzhikanam and when a usufractuary mortgage. In each
case it manifestly depends entirely on the terms of the transaction. In
Lakshmi's case there was a demise of land with fruit bearing trees for 24
years. The transfer ",as for the enjoyment of land with trees. The kanam
amount was (1) I.L.R.  Mad. 254.
(2)  K.L.T. 404.
(3)  1 S.C.R. 314 587 Rs. 50001- in one
case and Rs. 600/- in the other. The transferees were entitled to appropriate
the income of the land in lieu of interest on the kanam amount and to hold the
land even after the expiry of 24 years until the payment of the kanam amount
and the value of the trees planted by them.
It was therefore found that all the
ingredients of kanam- kuzhikanam were satisfied. The test to be applied is
whether the purpose of the transaction is enjoyment of the property by the
transferee or whether it is intended to secure the repayment of debt by
transfer of interest in the property.
The mere description of the deed as
kanam-kuzhikanam will not be decisive of the essence of the transaction. The
description of deed by itself isolated from the terms and provisions may be
misleading or a misnomer.
Counsel for the respondents relied on the
Bench decision of tile Kerala High Court in Kunhiparan v. V. Naicken &
in support of the proposition that payment of
perquisite would indicate that the relationship was that of land-lord and
tenant and the name of the document would not be sufficient to displace the
real terms. In Kunhiparan's case the transaction was described as a kudiyiruppu
to have the flavour of a mortgage but the court found the transaction by the
terms, provisions and intention of the parties to be a lease and not a
The circumstances and the conduct of the
parties are always a very useful guide in ascertaining the true character and
content of the transaction. Counsel for the respondents relied on the Full
Bench decision of the Kerala High Court in Kunhirama Nambiar v.Pairu Kurup(2)
where the document was a kanayadharam and in spite of its nomenclature it was
held to be a mortgage and not a kanam. The elements which are usually
considered relevant to find out the intention of the parties, are first, the
proportion of the amount advanced to the value of the security; secondly, the
rate of interest payable on the sum advanced; thirdly, the absence of a
provision for making improvements and the proportion of the rent or 'purapad'
to the income reserved for appropriation towards interest; and fourthly, the
surrounding circumstances at the time of the transaction, namely, that the
tarward was at the time of the execution of the document in dire need of money
to discharge debts to indicate that the transaction was intended to be a
mortgage and not a lease. It will always be a significant feature in a document
as to whether the jenmom right of the tarwad in the properties has been secured
for the kanartham by way of mortgage.
The first and foremost element to be found
for a lease is whether there is the intrinsic intention in the written document
for en- (1)  K.L.T. 646. (2)  K.L.T. 62.
588 joyment of the property by the transferee
in lieu of rent or perquisites. Secondly, the term of renewal of the enjoyment
would indicate the feature of a lease. Thirdly, it has to be found out whether
there is any provision for payment of customary dues. Ile learned Single Judge
in the decision of the Kerala High Court in Hussain Thangal v. Ali(1) rightly
said that the use of words like 'pattam' meaning profits would be a strong
indication of the transaction to be a lease and not a mortgage.
The dominant features of a mortgage
transaction on the other hand would be the ascertainment of the ratio of the
value of land to the amount advanced. If the ratio of the amount advanced bears
a substantial proportion to the value of the property transferred it would be a
strong piece of intention and circumstance to indicate loan and a mortgage. A
provision entitling the transferee to ask for a return of money by sale of the
property would be a very important feature to indicate that transaction is a
loan and a mortgage and not a lease. The absence of such a provision, however,
would not totally repel the transaction to be a mortgage. The execution of counterpart
is sometime as common feature in the case of possessory mortgage though the
existence of a counterpart by itself will not be conclusive of the question.
The deed understood in the light of the
surrounding circum- stances will provide the answer in the facts and circumstances
of each case. In the present case, emphasis was placed by counsel for the
appellants on the payment of Government revenue by the transferee. This Court
in Patel Bhunder Mayji etc. v. Jat Mamdaji Kalaji (deceased) through L. Rs. Jai
Saheb Khan Mamdaji(2) etc. .,aid that payment of revenue and other dues to the
State, would not clothe the occupants with the right of the tenants.
Ordinarily, mortgagees under section 76(c) of the Transfer of Property Act in
the absence of a contract to the contrary pay out of the income of the property
the Government revenue and all other charges of a public nature during their
possession of such land. The High Court in the present case correctly said that
stipulation in the deed of payment of Government revenue by the transferee was
"that by virtue of the grant the liability to pay revenue is transferred
to the grantee and the grantee who had accepted the grant and the liability,
when he pays the revenue, pays it on his own behalf". The High Court also
correctly held that a mere direction to pay the revenue of the property by the
grantee, particularly when no ment is not directed to be made out of anything
which is due or payable to the grantor, cannot be construed as a payment or
rent or michavaram to the grantor.
The proportion between the amount advanced
and the value of the property is one of the important tests to be taken into
consideration - (1) K.L.T.1033.
(2)  3 S.C.R.690.
589 in deciding the nature of the
transaction. Where the amount advanced bears a substantial proportion to the
value of the property it is an important element indication that the intention
was the creation of a mortgage and not a tenancy. In the present case, the
amount for which the properties included in Ex.B-6 were sold to the first
plaintiff under Ex.A.2 was Rs. 5000/- out of which Rs. 2500/- was to go in
discharge of the amount under Ex.B-6.
The advance, therefore, bore a substantial
proportion to the value of the property. This feature when considered along
with the fact that the document did not provide payment of any annual purapped
to the jenmi and that the annual amount was directed to be paid as revenue of
the property which came to Rs. 10-4-0, a paltry recurring annual liability,
would be an additional reason to support the intention of the parties that the
transaction was a mortgage and not a tenancy.
It is significant that after the execution of
Ex.B-6 defendants ,No. I and 2 entered into a partition agreement evidenced by
Ex. A-3. The partition deed included transactions called kanam other than the
disputed one forming the subject matter of the suit. In almost all the
properties held under kanam there was division by metes and bounds, but with
regard to Ex.B-6 and the amount of Rs.
2000/- there was no division by metes and
bounds. This would also point to the conclusion that the defendants No. 1 and 2
never treated Ex.B-6 as creating a tenancy.
In the present case the features which favour
the construction of the transaction to be a mortgage and not a lease are :
first, that there is no provision for renewal;
secondly, there is no provision for payment
of customary dues; thirdly, the property was to be enjoyed by the defendants by
way of interest on their advance after payment of land tax to the State,
fourthly, the payment of land tax is not a deduction from rent or perquisites;
fifthly, there is a provision for surrendering the property with a registered
release at the cost of the transferees on the receipt of the consideration of
kanam and the balance amount; sixthly, when the consideration is paid back the
counter-pattam deeds and prior deeds would be returned; and finally, there is
liability to pay interest on the advance and possession and enjoyment of
profits of the property is in lieu of interest.
For these reasons we are of opinion that the
High Court was correct in its conclusion as to the nature of the transaction
being a mortgage and not a lease. The appeal fails and is dismissed with costs.