P.D. JOSEPH v. NONE

V. RAMKUMAR , J.========================== A.S. Nos. 461 of 1995 & 497 of 1999==========================Dated this the 2nd day of June, 2009.JUDGMENTThe common defendant in O.S. Nos. 634 of 1991 and 106 of1993 on the file of the Subordinate Judge’s Court, Kozhikode isthe appellant herein. O.S. No. 631 of 1991 was one forredemption of Ext.A1 mortgage dated 02.03.1988 and forrecovery of the possession of the plaint schedule propertyconsisting of a single room which was formerly two roomssituated at Kariakunnu desom, Kasaba amsom in the heart ofCalicut Corporation. 2. The case of the plaintiffs can be summarized as follows:-The plaint schedule building originally belonged to P.G.Gopalakrishnan and P.G. Perumal. When they were in need ofRs.3,500/-, they borrowed the said amount from the defendantand mortgaged the plaint schedule building to the defendant.The time stipulated for the mortgage was three years. Thesurplus profit fixed under the document was Rs.900/- per month.There is a stipulation in Ext.A1 mortgage for redemption of the A.S. Nos. 461/1995 & 497/1999: 2 : mortgage. The defendant has been in possession of the propertyon the basis of Ext.A1 mortgage in which he is also an executant.Subsequent to Ext.A1 mortgage, the plaint schedule building hasbeen transferred by P.G. Gopalakrishnan and P.G. Perumal to theplaintiffs as per Exts. A3 and A4 sale deeds dated 25.01.1989and 24.02.1989. The right to redeem the mortgage and collectsurplus profits from the defendant was also given to the plaintiffs.The factum of purchase by the plaintiffs was intimated to thedefendant as per Ext.A6 lawyer notice dated 17.03.1989. Thedefendant has not been paying the surplus profits from February,1989 onwards. Even though the plaintiffs requested thedefendant to receive the mortgage money and redeem themortgage, the defendant has not complied with the said request.To Ext.A5 lawyer notice, the defendant has caused a reply noticeraising untenable contentions alleging that he is a lessee enjoyingthe plaint schedule building as a tenant and that neither theplaintiffs nor the prior landlords had mortgaged the plaintschedule building to the defendant at any point of time. Theperiod of Ext.A1 mortgage expired on 02.03.1991. The A.S. Nos. 461/1995 & 497/1999: 3 : defendant is liable to pay surplus profit of Rs.28,800/- for thepast 32 months. Hence the suit for redemption. 3. O.S. No. 106 of 1993 filed by the very same plaintiffsfor recovery of arrears of surplus profits at the rate of Rs.900/-from February, 1989 onwards for four months totaling toRs.3,872/- with interest thereon. 4. Both suits were resisted by the defendant contendinginter alia as follows:-The suits are not maintainable either in law or on facts. Itis not correct to say that the plaint schedule building wasmortgaged to this defendant by P.G. Gopalakrishnan and P.G.Perumal after borrowing Rs.3,500/- fixing a surplus profit ofRs.900/- per month. P.G. Gopalakrishnan and P.G. Perumalobtained the property from their father late Govindan Nair. Sincethis defendant was in need of starting a business of vendingvegetables in the Calicut market, he took the plaint schedulebuilding on lease from Govindan Nair in the year 1978 on amonthly rent of Rs.750/- and paying an advance amount ofRs.3,500/-. He is the licence holder in respect of the business A.S. Nos. 461/1995 & 497/1999: 4 : carried on in the plaint schedule property. In the year 1981, therent was enhanced to Rs.870/- and in the year 1984, it was againenhanced to Rs.900/-. When the room was entrusted to thisdefendant as a lessee, a document was got executed andregistered stating that it was prepared only for evading theCorporation tax and that it will not be acted upon. When the rentwas enhanced in the year 1981 and further enhanced in the year1984 also, similar documents were got executed. Later on, in theyear 1988, Ext.A1 registered document was executed in thename of Gopalakrishnan and Perumal who are the legalrepresentatives of Govindan Nair. Even though this defendanthad put his signature in Ext.A1, the said document has not beenacted upon. The transaction was really a lease transaction andthe defendant is a building tenant from the year 1978 onwardsand his status is not that of a mortgagee under Ext.A1 which isonly a sham document. This defendant has been paying themonthly rent regularly. The advance amount has not beenreturned so far. There was no mortgage by the prior title holdersof the plaintiffs as alleged in the plaint. There is no mortgagor – A.S. Nos. 461/1995 & 497/1999: 5 : mortgagee relationship between the plaintiffs and thisdefendant. A sum of Rs.2,700/- being the rent for three monthskept in arrears, was sent by this defendant to the plaintiffs. Butthe same was refused to be received. This defendant is liable tobe evicted from the plaint schedule building only in accordancewith the provisions of the Kerala Buildings (Lease and RentControl) Act, 1965. The plaintiffs are not entitled to realise anyamount by way excess profit. Both the suits are liable to bedismissed with costs.5. O.S. Nos. 634 of 1991 and 106 of 1993 were triedjointly. On the side of the plaintiffs, two witnesses was examinedas PWs 1 and 2 of whom PW1 is the 1st plaintiff and PW2 isPerumal who is one of the two sons of Govindan Nair, theprevious owner. Exts.A1 to A6 were marked. On the side of thedefendant, he examined himself as DW1 and got marked Exts. B1to B7.6. The learned Subordinate Judge, after joint trial, as percommon judgment dated 30.07.1994 decreed both the suits asprayed for after holding that Ext.A1 is a loan transaction as A.S. Nos. 461/1995 & 497/1999: 6 : contended by the plaintiffs and not a rental arrangement as wascanvassed by the defendant. Hence these appeals.7. I heard Senior Adv. Shri. M.C. Sen appearing for thecommon appellant and Shri. Jayesh Mohan Kumar appearing forthe common respondents/plaintiffs.8. The learned Senior Advocate appearing for the commonappellant made the following submissions before me in support ofthe appeals:-The specific case of the appellant/defendant is that he tookthe plaint schedule building on lease from Govindan Nair, theprevious owner in the year 1978 paying an advance of Rs.3,500/-and agreeing to pay a monthly rent of Rs.750/-. The rent wassubsequently enhanced to Rs.870/- in the year 1981 and toRs.900/- in the year 1984. It is also specifically pleaded that aregistered document styled as a mortgage deed was executed inthe year 1978 in order to avoid the Corporation tax. It is furtheralleged that the said document was executed only to convince theCorporation Authorities and the document so executed was asham and nominal document not intended to be acted upon. A.S. Nos. 461/1995 & 497/1999: 7 : Similar documents were executed in the year 1981 and in theyear 1984 as and when the rent was enhanced. PW2 Perumal,who is one of the sons of Govindan Nair, has admitted that thedefendant has been in the shop from the year 1978 onwards anddoing vegetable business therein. The testimony of PW2reinforces the defendant's contention. PW1, the 1st plaintiff doesnot have any direct knowledge about the transactions in questionsince he is only a subsequent assignee. The defendant whenexamined as DW1 has spoken in terms of his case. In Hathikav. Padmanabhan (1994 (1) KLT 345), it has been held that oralevidence is admissible to contradict or vary the terms of thedocument reduced to writing, if the contention of the party is thatthe document was a sham and nominal one not intended to beacted upon. In Narayana Rao v. Laxmi Amma (1994(2) KLJ88), a Division Bench of this Court has adumbrated the incidentsof an anomalous mortgage. If the transaction is intended by theparties for the enjoyment of the property by the transferee andnot intended solely to secure the amounts advanced by thetransferee, then it is a lease [See Kunhiparan v. Venkiteswara A.S. Nos. 461/1995 & 497/1999: 8 : Naicken (1967 KLT 646 FB)]. It is the intention of the partiescoupled with the surrounding circumstances which are to beconsidered by the court which interpreting the document. [SeeThommi vs. Devassia - AIR 1963 (SC) Kerala 75 andSubramania v. K.R. Anantanarayana - AIR 1963 Kerala 261].Calicut is the only place in Kerala where circumventing theprovisions of the Rent Control Act parties enter into mortgagetransactions. 9. I am afraid that I cannot agree with the abovesubmissions. As rightly submitted by the learned SeniorAdvocate, it is the intention of the parties which has to begathered to understand the real nature of the transaction enteredinto between them. Where the terms are express and clear, theintention of the parties has to be gathered from the documentitself. It is only when the terms of the document are ambiguousthat the court is entitled to look into the surroundingcircumstances. (See Hathika v. Padmanabhan (1994(1) KLT345)]. The plaint schedule building admittedly belonged toGovindan Nair, the father of Gopalakrishnan and Perumal. Both A.S. Nos. 461/1995 & 497/1999: 9 : Govindan Nair and Gopalakrishnan are no more. Perumal whowas the only surviving owner, was examined on the side of theplaintiffs as PW2. He has admitted that he knows the defendantfrom the year 1978 onwards. He has specifically admitted that inthe year 1978, the document created in the name of thedefendant was a possessory mortgage given by his fatherGovindan Nair. He further deposed that the defendantsurrendered the mortgage in the year 1981 after repaying themortgage money and that there is a registered documentevidencing the said surrender. 10. The appellant examined as DW1 had admitted duringhis cross examination that the document which was registeredafter three months of the entrustment in the year 1978 was amortgage deed. He would further concede that the surrenderdeed was also a registered document. According to him, theplaint schedule building was thereafter mortgaged to one Harisand after Haris surrendered the property it was mortgaged toJoseph Paul (who is none other than his own son) as per aregistered document. DW1 further admitted that Joseph Paul A.S. Nos. 461/1995 & 497/1999: 10 : also surrendered the property and that it was after the surrenderby Joseph Paul that Ext.A1 document was executed byGopalakrishnan and Perumal. Ext.A1 itself recites that theproperty which was mortgaged to Joseph Paul was redeemed on01.03.1988.11. The recitals in Ext.A1 unequivocally indicate that thetransaction which was entered into was a loan transactionwhereby a debtor-crditor relationship was created between thedefendant on the one side and Gopalakrishnan and Perumal onthe other side. The amount which was borrowed as per therecital in Ext.A1 is Rs.3,500/-. Rs.900/- was fixed as the surplusprofit payable by the mortgagee monthly. Thedefendant/mortgagee has been permitted to appropriate interestfor the mortgage amount. The mortgagee has to pay the currentcharges. Ext.A1 is a registered document and the defendant hasadmitted that he has also put his signature therein as one of theexecutants. His further case that it was after the registration ofExt.A1 that he singed the document, cannot be believed for amoment and was rightly rejected by the court below. From a A.S. Nos. 461/1995 & 497/1999: 11 : reading of the recitals in Ext.A1, the only conclusion which ispossible is that it is an out and out possessory mortgage clearlycovered by the decision in Gilbert v. Vivekanandan (1988(1)KLT 50). The trial Judge who had the unique advantage of seeingthe witnesses and assessing their credibility, has chosen tobelieve the version given by the plaintiffs' witnesses in preferenceto the interested testimony of the appellant examined as DW1. Isee no reason to differ from the conclusion reached by the courtbelow. Both the suits were rightly decreed as prayed for. Nointerference is called for in these appeals which are accordinglydismissed. However, in the circumstances of the case, theparties shall bear their respective costs in these appeals. Dated this the 2nd day of June, 2009. V. RAMKUMAR, JUDGE.rv A.S. Nos. 461/1995 & 497/1999: 12 : V. RAMKUMAR, J ------------------------------------ A.S.Nos. 461 of 1995 & 497 of 1999 ---------------------------------------- 2nd day of June, 2009.JUDGMENT A.S. Nos. 461/1995 & 497/1999: 13 :