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Vaddparthi Narayanamurthy v. Kadimsetti Appalanarasimhulu
Factual and Procedural Background
The suit concerns the redemption of a mortgage dated 3rd February 1893 (Ex. I). The mortgage deed provided that the mortgagor borrowed Rs. 1000 and put the mortgagee in possession of 8 acres 25 cents of land towards yearly interest and taxes. The mortgage contained two key conditions: redemption was barred within the first five years, and if the principal was not paid within twenty years, the mortgagee would treat the lands as absolutely sold to him. The District Munsif initially decreed the suit for redemption, but the District Judge allowed the appeal and dismissed the suit. The plaintiff then filed this second appeal.
Legal Issues Presented
- Whether the inclusion of a condition barring redemption within five years deprives the mortgage of its character as a usufructuary mortgage.
- Whether the second condition barring redemption after twenty years affects the mortgage’s character and the application of Section 98 of the Transfer of Property Act.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kandulla Venkiah v. Donga Pallyya | Clog on equity of redemption caused by a condition barring redemption after twenty years is disregarded. | The court relied on this precedent to hold that the second condition does not destroy the usufructuary character of the mortgage. |
| Rose Ammal v. Rajarathnam Ammal | Condition postponing repayment suspends the mortgagor’s liability to be sued but not the right to redeem. | Used to distinguish the effect of the first condition barring redemption within five years, emphasizing it benefits the mortgagee and does not affect the usufructuary nature. |
| Srinivasa Ayyangar v. Radhakrishnam Pillai | Classification of mortgages and the effect of clogs on equity of redemption. | Supported the view that the mortgage is a usufructuary mortgage with a clog on the equity of redemption and not an anomalous mortgage. |
| Hakeem Patte Muhammad v. Shaik Davood | Distinction of mortgage types and the absence of essential elements of unmixed mortgages. | Distinguished from the present case to show that the mortgage here is not anomalous as in that precedent. |
| Perayya v. Venkata | Related principles on mortgage redemption and character. | Supported the conclusion that the mortgage is usufructuary and redeemable under the terms proposed. |
Court's Reasoning and Analysis
The court analyzed the terms of the mortgage, focusing on its usufructuary character despite the two conditions barring redemption within five years and after twenty years. It noted that if only the second condition existed, the mortgage would clearly remain usufructuary, following the precedent in Kandulla Venkiah v. Donga Pallyya. The main question was whether the addition of the first condition deprived the mortgage of this character.
The court reasoned that the first condition, barring redemption within five years, should be seen as benefiting the mortgagee by postponing the right to redeem, rather than affecting the mortgagor’s right to redeem or the mortgage’s usufructuary nature. Section 62 and Section 58(d) of the Transfer of Property Act were interpreted to support that postponement of repayment does not conflict with the usufructuary mortgage’s definition.
The court rejected the District Judge’s view that the mortgage was anomalous due to the five-year bar, finding no authority to support that the addition of such a term destroys the mortgage’s character. It distinguished this mortgage from other types such as simple or conditional sale mortgages, relying on precedents including Srinivasa Ayyangar v. Radhakrishnam Pillai and Hakeem Patte Muhammad v. Shaik Davood.
Ultimately, the court concluded that the mortgage remained usufructuary with a clog on the equity of redemption and granted the decree for redemption as proposed by the District Munsif.
Holding and Implications
The appeal is allowed with costs throughout.
The court held that the mortgage deed, despite containing conditions barring redemption within five years and after twenty years, retains its character as a usufructuary mortgage. The plaintiff is entitled to a decree for redemption, and the respondent is permitted to withdraw the money deposited in the lower court. No new precedent was established beyond affirming the applicability of existing principles on usufructuary mortgages and clogs on the equity of redemption.
JUDGMENT
Oldfield, J. — The terms of Ex. A, the mortgage we have to construe, are given in the judgment of my learned brother, which I have had the advantage of reading; they need not be repeated. Shortly the mortgage is usufructuary with the conditions barring redemption (1) within five years and (2) after twenty years from its date. If there were only a second of these conditions the case would be covered by the decision of the Full Bench in KandullaVenkiah v. Donga Pallyya(1) the clog constituted by that condition on the equity of redemption being disregarded. The question is then whether, as defendants contend, the inclusion of the first condition deprives the document of its character as a usufructuary mortgage, As we hold it does not do so it is not necessary to consider whether the second condition must receive effect as one of the terms of the mortgage with regard to Sect. 98 of the Transfer of Property Act.
If the condition postponing repayment of the mortgage money is regarded as intended for the benefit of the mortgagor, it will suspend only his liability to be sued, not his right to redeem before the date fixed, vide Rose Ammal v. Rajarathnam Ammal(2), and it clearly cannot affect the usufructuary character of the mortgage so as to attract the operation of Sect. 98. Here however it must rather be regarded with reference to the possessory character of the mortgage, as intended for the benefit of the mortgagee. No authority directly relevant to such a case has been cited. But the language of Sect. 62 entails that postponement pf the right to redeem to a date fixed in one way with reference to repayment of the mortgage money from the profits, is not inconsistent with the usufructuary character of the mortgage; and we have been shown no reason why such postponement to a date fixed otherwise, by actual specification should be so. In fact the simplest and the sufficient ground of decision is that the definition of a usufructuary mortgage in Sect. 58 (d) refers to payment of the mortgage money in connection only with the mortgagee's right to retain possession and includes nothing inconsistent with its application to mortgages, containing a condition for mere postponement of the right to repay.
The conclusion must therefore be in plaintiff's favour and he must have a decree for redemption as proposed by the District Munsif, the respondent being at liberty to draw the money which we understand is in deposit in Lower Court. The appeal is allowed with costs throughout.
Ramesam, J.—The plaintiff is the appellant. The suit is for redemption of a mortgage (Ex. I dated 3rd February 1893). The District Munsif decreed the suit but on appeal, the learned District Judge-allowed the appeal and dismissed the suit. Hence this Second Appeal.
The portion of Ex. I material for the purpose of this case runs as follows:—“We have borrowed from you Rs. 1000. We have put you in possession of the 8 acres 25 cents of land comprising………towards the yearly interest of Rs. 80 at 8 percent. and the taxes payable to Sircar. Whatever might be the profits received from the said lands in every year they shall be taken in payment of interest aforesaid and the taxes on the lands. You shall enjoy the profits from the said lands without having anything to do with the increase or decrease. You need not receive the said principal sum of Rs. 1000 even though we should pay you the same, within five years from the current year Nandana. It is settled that in case we should pay afterwards at one and the same time the said one thousand rupees on the 15th of Chitrai Sudham of any year, you should give up our land to us. If the principal sum be not paid within 20 years from this date, you shall treat and enjoy these lands as having been sold to you absolutely.”
The learned District Judge held that this mortgage is anamalous mortgage as “the circumstance that an arbitrary term of five years has been fixed within which the mortgagor may not redeem is sufficient to take this mortgage out of the category of usufructuary mortgages.” It is clear that but for the special terms he relies on, the mortgage would be, in his opinion, a usufructuary mortgage and I agree with him so far. The question therefore arises whether on account of the addition of a term providing for irredeemability within 5 years the mortgage ceases to be usufructuary. No authority has been cited in support of the learned Judge's view and it seems to me that the addition of other terms not inconsistent with the main feature of the transaction does not destroy its character. In my opinion the mortgage is merely a usufructuary mortgage with a clog on the equity of redemption, of., the first alternative of Spencer, J., in Srinivasa Ayyangar v. Radhakrishnam Pillai. I do not think there is a combination of two kinds of mortgages in this case. There is no covenant to pay as in Srinivasa Ayyangar v. Radhakrishnam Pillai according to the view of Sadasiva Aiyar, J., and hence no simple mortgage. Nor is there a mortgage by conditional sale. The last clause which provides for an outright sale on-nonpayment for twenty years cannot make the transaction a mortgage by conditional sale (vide the observations of Sadasiva Aiyar, J., in Srinivasa Ayyangar v. Radhakrishnam Pillai at p. 669 last seven lines and Kumaraswami Sastri, J., in Hakeem Patte Muhammad v. Shaik Davood (with which. I agree). For the same reasons there is no English mortgage.
The case in Hakeem Patte Muhammad v. Shaik Davood is clearly distinguishable. In that case, the essential elements of all the unmixed kinds of mortgage were wanting (See Spencer, J., at p. 1012 and Kumaraswami Sastri, J., at p. 1016.)
In my opinion the document is not an anamolous mortgage and the suit for redemption ought to have been decreed (See also Kandula Venkiah v. Donga Pallayi(3), Perayya v. Venkata(4).
In the view taken by me, the more difficult question what is the exact operation of Sect. 98 i.e, whether it should be taken subject to Sect. 60 does not arise.
The appeal will be allowed with costs throughout. I agree with the order proposed by my learned brother.
C.KAppeal allowed.
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