TMI Blog1958 (5) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The plaintiff-respondents instituted Title Suit No. 4 of 1945 in the Court of the Additional Subordinate Judge IV, Gaya for redemption of the said document on the basis that it was a usufructuary mortgage, for rendition of accounts and for the recovery of surplus profits due to them. The appellant pleaded, inter alia, that the suit for redemption was not maintainable as the document was not a mortgage but a lease, that on the assumption that it was a mortgage it would only be an anomalous mortgage in respect whereof there was no statutory liability to render accounts to the plaintiff, that even if it was a usufructuary mortgage, it was governed by the provisions of section 77 of the Transfer of Property Act taking the mortgage out of the purview of section 76(d) and (g) of the said Act. 3. It is not necessary to particularize other defences as nothing turns upon them in the appeal. The learned Subordinate Judge held that the document created a usufructuary mortgage and not a lease and that section 77 of the Transfer of Property Act applied to the document exonerating the appellant from any liability to render accounts. In the result, the learned Subordinate Judge gave a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In respect of ₹ 29,496 the total sum of peshgi money, he should, for the satisfaction of interest thereon, get executed a usufructuary mortgage deed bearing a lower rate of interest in respect of 8 annas share i.e., half share in mauza Lodipur Mahima Bigha, principal with dependencies, together known and unknown tola and tolas................................... for term of 15 years on fixing ₹ 2,205 as the annual rental and by getting mortgaged thereunder 8 annas proprietary interest, thikadari interest together with peshgi money and the right to receive thikadari rent from the said thikadars. Accordingly, at the request and entreaty of me, the executant, the said Mahanthji took pity at my condition and agreed to my request and got ready to get usufructuary mortgage deed executed. Therefore, I, the executant,............... have voluntarily let out in ijara with possession the whole and entire 8 annas i.e., half of Mauza Lodipur Mahima Bigha.............. for a peshgi money of ₹ 31,701............... that ₹ 29,496, the peshgi money bearing interest at 1/2 per cent per month and ₹ 2,205, the peshgi money without interest, at an annual rental of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then allocates the liability in respect of improvements and sums spent in regard to boundary disputes to one or other of the parties to the document and then it continues to state : The peshgi money amounting to ₹ 31,701 with and without interest as mentioned in this ijara deed has been realized from the ijaradar in this manner that I allowed ₹ 28,246, the amount of loan principal with simple and compound interest as per account given below after remission of the interest due to the ijaradar under all the three mortgage bonds to be set off against the peshgi money by getting a note made to that effect on the back of the said mortgage bonds which I allowed to remain with the ijaradar as a proof of payment of the peshgi money covered by this deed............ The term of this ijara deed with possession shall terminate in the month of Jeth, 1345 Fasli, when I, the executant, or my heirs and representatives shall repay ₹ 31,701 being the peshgi money with and without interest mentioned in this deed in cash and in one lump sum to the said ijaradar or his heirs and representatives, I shall bring the ijara property into my sir possession. If I do not repay the pes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the other party would receive the annual rent of ₹ 2,205 from the thikadars, set off ₹ 1,769-12-0 on account of interest on the peshgi money bearing interest and pay the remaining sum of ₹ 435-4-0 as reserved rent to the executant. After the expiry of the thikadari interest in 1338 Fasli, the other party would take actual possession by setting off ₹ 2,205 the peshgi money due to the thikadars by the executant, against the annual thikadari rent. After getting possession of the ijara property, the other party would make arrangements for its cultivation and appropriate the produce towards interest, paying the executant only a sum of ₹ 435-4-0 as rent. The previous deeds were discharged and endorsements to that effect made on the back of the documents. If the debt was not discharged within 1345 Fasli, it was agreed that till the repayment of the entire peshgi money, the ijara deed with possession would precisely with all stipulations remain in force and intact. The executant, in express terms, undertook not to put forward any sort of claim or demand in respect of the increase in the produce except and save to get rent as fixed in the document. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises, with a rent reserved, but a mortgage of the premises with a small portion of the income of it made payable to the plaintiff. There is, therefore, no scope for the argument in this case that the document is a lease and not a mortgage. We hold, agreeing with the High Court, that the document is a mortgage and not a lease. 10. Even so, it was contended by the learned Counsel for the appellant that the document did not create an usufructuary mortgage but only an anomalous mortgage. This contention was raised as a foundation to the argument that if the document was an anomalous mortgage, the rights and liabilities of the parties would be governed by the terms of the contract between them and not by the provisions of section 76 of the Transfer of Property Act. The question does not really fall to be decided in this case. Whether the transaction is a usufructuary mortgage or an anomalous mortgage, in the circumstances of the case, there will not be any difference in the matter of rendition of accounts, for in the ultimate analysis, as we would presently show, the true construction of the relevant terms of the document would afford an answer to the question raised. We shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession is bound to keep clear, full and accurate accounts and to render the accounts to the mortgagor in the manner prescribed in clause 'h'. But section 77 enacts an exception to the mortgagee's liability under cls. (g) and (h) of section 76. Under that section (section 77), if there is a contract between the mortgagor and the mortgagee, whereunder it is agreed that the receipts of the mortgaged property should, so long as the mortgagee is in possession of the property, be taken in lieu of interest and a defined portion of the principal, the mortgagee is freed from the statutory liability to keep accounts or to render accounts to the mortgagor in the manner prescribed under cls. (g) and (h) of section 76 of the Act. This is so because, the receipts are set off against the interest, and there is nothing to account for. Therefore, to insist upon the mortgagee to keep accounts or render accounts to the mortgagor would be an empty formality. The essential condition for the application of this section is that the receipts of the property should be taken in lieu of interest or in lieu of interest and a defined portion of the principal. The contention of the learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re receipts from the land in lieu of interest. It is not a case, therefore, where receipts from the mortgaged property are divided between mortgagor and mortgagee, but one where the mortgagee pays a specified amount to the mortgagor and appropriates the entire receipts in lieu of interest. We, therefore, hold that, under the mortgage deed, Exhibit A(3), there is a contract between the mortgagee and the mortgagor within the meaning of section 77 of the Transfer of Property Act, to the effect that the receipts from the mortgaged property should be taken in lieu of interest. 13. Relying upon the judgment of the High Court, a further attempt was made by the learned Counsel for the respondents to contend that the mention of a specified rate of interest of the document is indicative of the fact that under the document the mortgagee, would have to take only such part of the net receipts sufficient to discharge the interest and credit the balance to the mortgagor. The mere mention of a rate of interest does not necessarily lead to the conclusion. The rate of interest may be stipulated for estimating the amount payable towards interest so that the parties may visualize whether the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 98 says : In the case of an anomalous mortgage, the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage-deed, and, so far as such contract does not extend, by local usage. 17. The question whether this section excludes the operation of other relevant provisions of the Act, including section 77, need not be considered in this case, for, whether section 77 applies, as the learned Counsel for the respondents contends, or the terms of the contract would govern the rights of the parties, as the learned counsel for the appellant argues, the result would be the same for the question to be decided is whether under the terms of the mortgage, the mortgagee has the right to appropriate the entire net receipts in lieu of interest. We have already held that in Exhibit A(3) not only there is such a recital but there is a specific term whereunder the mortgagor expressly agreed not to claim any produce received by the mortgagee. Whether section 77 applies or not, under the express terms of the contract, the appellant is not liable to render accounts for the excess receipts. 18. No other point is raised before us. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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