Mortgage deed terms prevail over nomenclature; receipts taken in lieu of interest exclude the duty to render accounts.

A transaction described as a lease was treated as a mortgage because the instrument disclosed a debtor-creditor relationship, a transfer of property as security for repayment, and repeated statements that the property was mortgaged; the substance and intention of the parties prevailed over nomenclature. On the accounting issue, a mortgagee in possession is ordinarily bound to render accounts, but that duty is excluded where the deed allows the mortgagee to appropriate the entire income in lieu of interest. As the deed expressly authorised appropriation of receipts and imposed a separate fixed payment obligation, the mortgagee was not liable to account, and the contractual terms controlled the arrangement.

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Issues: (i) Whether the impugned transaction was a lease or a mortgage. (ii) Whether the mortgagee was liable to render accounts, or whether the arrangement fell within the exception for receipts taken in lieu of interest.

Issue (i): Whether the impugned transaction was a lease or a mortgage.

Analysis: The document disclosed a debtor-creditor relationship, a transfer of property as security for repayment of money, and repeated declarations that the property was mortgaged and made liable for the advance. The nomenclature used in the document was not decisive; the substance and expressed intention of the parties controlled. On the terms of the instrument, the arrangement was not a mere letting for rent but a security transaction.

Conclusion: The transaction was a mortgage and not a lease, in favour of the appellant.

Issue (ii): Whether the mortgagee was liable to render accounts, or whether the arrangement fell within the exception for receipts taken in lieu of interest.

Analysis: Under the statutory scheme, a mortgagee in possession must ordinarily keep and render accounts, but that obligation does not apply where the contract provides that the receipts from the mortgaged property are to be taken in lieu of interest or interest and a defined portion of principal. The deed expressly authorised the mortgagee to appropriate the entire income from the property towards interest and imposed on him a separate obligation to pay a fixed amount to the mortgagor. The mention of a rate of interest did not alter the plain contractual allocation of rights. Even if the mortgage were treated as anomalous, the contract itself governed the parties and led to the same result.

Conclusion: The mortgagee was not liable to render accounts, in favour of the appellant.

Final Conclusion: The decree of the High Court was set aside and the decree restoring the trial court's view stood affirmed in substance, with the appellant succeeding on the central issue of liability to account.

Ratio Decidendi: Where a mortgage deed shows that the mortgagee is entitled to take the entire receipts from the property in lieu of interest, the statutory duty to render accounts is excluded and the contractual terms prevail over the mere form or nomenclature of the transaction.

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