P L D 1954 Dacca 23 (PLP)

CHOWDHURY, J.

‑This appeal is against the judgment and decree of the Additional Subordinate Judge, Sylhet, affirming the decision of the Second Munsif, Sylhet, in Title Suit No. 164 of 1944. The suit is one for redemption. The only question involved in this appeal is whether the document, Exh. A, dated the 5th Kartick, 1345 B S is a mortgage by conditional sale or a deed of out and out sale with a condition of repurchase. ‑Both the Courts below held that it was a mortgage by condi tional sale and decreed the suit for redemption and directed to take account of the usufruct enjoyed by the defendants, on the basis that the defendant was not entitled to get more than the double of the principal amount. The plaintiff's case shortly stated is as follows: They took a loan of Rs. 150 from the defendant on this document. Exh. A. and the land covered by it, was given in possession of the defendant from the date of the bond and the mortgage dues had been satisfied by the usufruct of the land. The plaintiffs tendered the mortgage money to the defendant within the stipulated period but it was not accepted by him. The defendant contends, inter alia, that the transaction is not a mortgage but an out and out sale with a condition of repurchase and as such no suit for redemption lies and denies the tender alleged by the plaintiffs. His further contention is that the plaintiffs have forfeited the right of repurchase as they did not pay within the stipulated period. Whether the money was tendered by the plaintiffs in due time or not was not pursued by the plaintiffs as it was contrary to their pleading that the transaction was a mortgage and nothing was due on account of the mortgage and the liability of the plaintiffs on account of the mortgage had been wiped out by the usufruct enjoyed by the defendant. The trial Court held that the costs of the transaction were borne out by the plaintiffs which indicated that the transaction was a mortgage by conditional sale though it was found that the document in all appearance was a complete sale with a condition of repurchase. On appeal, the lower appellate Court has affirmed that decision of the trial Court though it has found that price of Rs. 150 is not below the normal price of the disputed land. The learned Additional Subordinate Judge has observed that there are two clauses in the last portion of the document the first clause being that if the consideration money with costs of the transaction are repaid within five years the purchaser will give up the land, and the second clause being that if they are not repaid within that time purchasers shall have an absolute title by out and out sale without any foreclosure which bring the transaction within the definition of mortgage by conditional sale under section 58 (c) of the Transfer of Property Act as the condition of repurchase is embodied in the document as provided in the proviso to that section and concluded that prima facie it would be a mortgage but the defendant could show that the deed was intended to be an out and out sale and for that purpose some of the tests in Butler's preface to Coke on Littleton were to be applied. One of the tests he relied on is the term of five years which according to him is a long term indicating that the document is a mortgage. He held that this test along with the two clauses mentioned above clearly, point to the mortgage character of the document. On this view of the matter he affirmed the decision of the trial Court. Against this decision the defendant appellant has come up before this Court. Mr. Debesh Chandra Bhattacharjee appearing for Mr. T. K. Pal, the learned Advocate for the appellant contends that the Courts below misconstrued the document and have erred in law in allowing the plaintiffs' claim for redemption holding that it is a mortgage by conditional sale. This contention of the learned Advocate for the appellants seems to be of substance. Before I deal with the construction of the document some of the recitals of the document relied on by the learned Subordi nate Judge are necessary to be stated here to appreciate the judgment of the lower appellate Court and the arguments advanced by the learned Advocates of the parties. After stating the necessity of selling the land and fixing the price at Rs. 150 received by the plaintiffs from the defendant it goes on to state that the land described in the schedule having been sold to you you shall have all the rights of true owner including the right of khas possession and you continue to enjoy the same in whatever way you like by possessing it and by exercising all rights of gifts, transfer, settlement, etc., from generation to generation and you have acquired an absolute tight in the same. Then it goes on to state that it is necessary to be mentioned here that if the principal amount of the price ........................ with the cost thereof can be repaid by us or by our heirs and successors to you or to your heirs and successors at any time within five years from the date, you will be bound to give up the land without any objection and if the consideration money with costs thereof cannot be repaid .by us within the period stipulated then your absolute title by purchase will be established without foreclosure. From these recitals the learned Advocate for the appellant contends that it is a deed of out and out sale with a condition of repurchase. Both the Courts below are of the opinion that in all appearance the transaction is an out and out sale. The lower appellate Court considered it to be a mortgage by conditional sale on account of the two clauses at the end of the document quoted above and that the condition of repurchase is embodied in the document as provided in the proviso to section 58 (c) of the Transfer of Property Act. There is nothing in the docu ment nor there is any evidence except that of the P. W. 1 that there was any relationship of debtor and creditor between the parties. It is no doubt true that the usual practice in the mufassil is that in a mortgage transaction costs of the transac tion are borne out by the mortgagor and in sale transaction by the purchaser. In this case it appears that the stamp on which the document is written was purchased by the plaintiffs. From this fact the trial Court held that the costs of the transaction were borne out by the plaintiffs indicating that the transaction was a mortgage transaction. The lower appellate Court has not based its decision on that. The trial Court in coming to that conclusion did not take into consideration the evidence of D. W. 1 who says that though he was not present he paid the cost of the transaction to the plaintiffs including the costs of purchasing the stamp. That evidence is corroborated by the recital in the document. It is stipulated in the document that, if the cost of transaction along with the principal amount of the price mentioned in the document is paid back to the defendant at any time within five years, the defendant will be bound to give up the land. It also appears that the defendant was not present at the time of the registration of the document which was presented for registration by the plaintiffs. If the cost of the transaction was borne by the plaintiffs there would not have been any recital in the document to pay the cost of the transaction to the defendant. Mr. Pal appearing on behalf of the respondents tried to support the findings of the trial Court contending that the costs mentioned in the document were the future costs of reconveyance. The word..............................(with costs relating thereto) just after ( .) (the principal amount of price of the land sold) cannot have reference to future cost of reconveyance. It must refer to the costs of the transaction by which the property was sold. That clearly shows that the cost of the transaction was borne out by the defendant. That indicates, if indication there is any, that the transaction is a sale transaction. The trial Court not right in holding that the cost of the transaction was borne by the plaintiffs indicating that the transaction is mortgage. On appeal, as I have already stated, the Additional Subordi nate Judge has not relied on that indication but relied on the definition of mortgage by conditional sale in section 58 (c) and the proviso to that section and has held that prima facie the document is a mortgage by conditional sale and the burden lies on the other side to prove that it is an out and out sale with a condition of‑repurchase. Mr. Pal appearing on behalf of the respondents tried to support this finding of the lower appellate Court. His contention is that while the condition of repur chases is embodied in the same document the presumption is that it is a mortgage transaction. In support of his contention he relies on the case of Ram Dhani Ram v. Ram Rikh Singh(I L R 53 All. 607). That was a case arising out of a suit for pre‑emption in which the plaintiff claimed pre‑emption on the basis of a transaction which was ostensibly a deed of sale with a condition for re transfer, claimed pre‑emption on payment of the amount. The condition was embodied in the document itself. Both the Courts below held that it was a mortgage deed and not a sale deed. Their Lordships relying on the findings of the Courts below and on the case of Man Singh v. Guman Singh (1929 A L J 887), held that the case was covered by the definition of a mortgage by con ditional sale as given in section 58, sub clause (c). The terms and conditions of the deed in question in that case are not clear nor the findings of the Courts below on which their Lordships relied as they are not elaborately dealt with. The learned Advocate Mr. Pal could not cite the case of Man Singh v. Guman Singh (supra) relied on in the case. In the circumstan ces it cannot be said that that decision supports the contention of Mr. Pal. Nowhere their Lordships said in that case that as the conditions of repurchase embodied in the same document raised a presumption that the transaction was a mortgage by conditional sale. Mr. Pal has also relied on the case of Saheba Deochand Kunbi v. Jagannath Gundharilal Kalar and others(A I R 1940 Nag. 84). It is no doubt true that it is held in that case that a contempo raneous entry stipulating reconveyance indicates a mortgage and the effect of the added proviso to section 58 (c) is that prima facie the document is a mortgage and the burden lies on the opposite party to show that it appears rather to be an out and out sale, but nowhere this decision lays down a principle that a document shall be presumed to be a mortgage by condi tional sale if the condition of repurchase is embodied in the document. Justice Crille in that case relying on the proviso to section 58, sub‑clause (c) held, at page 86 of the report, that the proposition, however, that a contemporaneous entry stipulat ing reconveyance indicates a mortgage still holds good, and the obvious effect of the added proviso is that prima facie the document is a mortgage and that the burden lies on the opposite party to show that it appears rather to be an out and out sale, in which case the tests mentioned would have to be applied. This view taken by the learned judge is not supported by any authority nor by the plain reading of the proviso which runs as follows:‑ "Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the docu ment effects or purports to effect the sale." The whole proviso simply provides that if the condition men tioned in section 58 (c) is not embodied in the transaction it shall not be deemed to be a mortgage. It does not say that if it is embodied in the document it shall be deemed to be martgage or there will be a presumption that it is a mortgage by conditional sale. In this connection I may quote passage from the case of Alderson v. White ((1858) 2 De G & J 105), quoted with approval by their Lordships of the Privy Council in the case of Bhagwan Sahai v. Bhagwan Din and others (17 I A 98), which is as follows :‑ The rule of law on this subject is one dictated by common sense that prima facie an absolute conveyance containing nothing to show that the relation of debtor and creditor is to exist between the parties does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase. It is no doubt true that there is a difference in the legal effect of a sale with a condition of repurchase and mortgage by con ditional sale and the difference is clear though it is extremely difficult to decide which of these two transactions a particular document or a set of documents disclose. The distinction is purely one of intention whether the parties really intended to create a relationship of debtor and creditor. For that purpose each case must be decided on a consideration of the contents of the document with such extrinsic evidence of surrounding circumstances as may be required to show how the language of the document is related to the existing fact. In the present case there is nothing in the document or in the surrounding circumstances to show that the relationship of debtor and creditor has been created by the transaction between the parties. Nor there is any evidence in the record to show that the transaction is a loan transaction. Mr. Pal also relied on a passage from Mr. Rash Behary Ghose's Law on Mortgage, Fifth Edition at page 89 which runs as follows :‑ I am, however, bound to say that a bona fide sale with a condition of repurchase is very rare in this country, while it is a very common practice with mortgagees to take a con veyance of the property from the mortgagor with a condition for repurchase as security for the loan, the mortgagee either taking the rents in lieu of interest, or allowing the mortgagor to remain in occupation paying interest on the mortgage money under the name of rent. This observation certainly supports Mr. Pal's contention but this sentence is followed by another sentence which in my opinion, is of significance for the purpose of the present case. It is in these terms :‑ Of course, if the transaction is not really a mortgage, but only a sale with an option to repurchase, the parties would not stand in the relation of mortgagor and mortgagee. At page 90 of that Book the author observes :‑ The test, therefore, whether the apparent vendee can exercise the rights of a creditor, cannot with propriety be applied in this country and the 'broad rule laid down in Alderson v. White (supra), `no doubt, no mortgage' may perplex but cannot guide our course. As Chief Justice Edge points out Indian documents ought not to be constructed as if they had been drafted by an English conveyancer familiar with equity cases, which are wholly unknown to the people of this country, and altogether inseparable to the form and object of the contract of mortgage as understood by the parties Alderson v. White (supra) has, however, received a sort of sacramental stamp from the Privy Council. From this it appears that simply because a condition of repur chase is embodied in the document it does not necessarily follow that the transaction is a mortgage and there is any presumption to that effect shifting the burden on the other side to prove that it is an out and out sale with a condition of repurchase. In support of my view I may refer to the Full Bench case of Muthuvelu Mudaliar v.. Vythilinga Mudaliar and two others (I L R 42 Mad. 407 (F B).), where it is held that where in one and the same transaction land is sold absolutely but with a right to repur chase to be exercised before a certain date, the transaction does not necessarily become by virtue of section 58 of the Transfer of Property Act, a mortgage by conditional sale, whatever the intention of the parties might have been. Wallis C. J. after referring to the Privy Council's decisions in the cases of Situl Purshad v. Luchmi Purshad (I L R 10 Cal. 30), Bhagwan Sahai v. Bhagwan Din (supra), Balakishan Das v. W. F. Legge (27 I A 58.), and clhanda Sing v. Wahid‑ud‑din (43 I A 284.) held that it is true that all these cases dealt with transaction before the passing of the Transfer of Property Act, but the Act made no difference in the law on this subject in this part of India and after referring to section 58 (a) and (c) observes as follows: Whether a particular transaction is really a sale, or ostensibly a sale and really a mortgage, must still be decided in accordance with the decisions of the Privy Council in the cases already cited. There is, in my opinion, nothing in the definition in section 58 (c) which favours the view that, wherever the sale‑deed and the agreement to reconvey from one transaction, it must necessarily be a mortgage and not a sale . This Full Bench decision of the Madras High Court is followed by the Bombay High Court in the case of Kuppa Krishna Hedge v. Mhasti Goli Nai (A I R 1931 Bom. 371.). On this point Mr. Pal also relies on the Privy Council case of Narasingherii Gyanaerji v. Panganti Parthasarodhi and others (51 I A 305.). and contends that when the transferor has been given option to repurchase at any time within five years the time factor is not treated by the parties as essence of the contract which is essential character istic of a mortgage. The case cited by Mr. Pal, in my opinion, does not support his contention. It was a case wherein the parties stipulated to reconvey and repurchase the properties within certain time, namely, on or after the 31st August 1912 and on or before 31st August 1914. After this there is a clause on the interpretation of which their Lordships of the Privy Council came to the conclusion that time was not the essence of the contract. Their Lordships of the Judicial Committee observed : "As soon as that is established all pretence for holding this ostensible sale and repurchase to be any thing else than a mortgage by a conditional sale disap peared". In the present case the parties stipulated that if the money, that is, the exact consideration money with costs of the transaction is not paid within five years the vendor will forfeit the right of repurchase. That definitely shows that the time was treated as essence of the contract though option was given to the vendor to pay it at any time within five years. It cannot be said there is no time‑limit fixed by the parties to indicate that time is not treated as an essence of the contract. The recitals in the document clearly shows that it is an out and out sale with a condition of repurchase. Mr. Pal,, refers to the word " ." (the principal amount) as well as to the word ". . ." (without foreclosure) and contends that these two words clearly indicate that the transaction is loan transaction otherwise there cannot have any reference to the principal amount and the foreclosure, the word " ." is qualified by the word " that is, consideration money and the words are " .." (the principal amount of the consideration money). It means nothing more than the actual amount paid as consideration of the kabala. The words "... ..." (without fore‑closure), in my opinion put the issue beyond dispute that it i5 not a mortgage by conditional sale. The exact Bengali words are which has been translated by Mr. Pal "In case of default of payment of the price with costs within the time stipulated above yours shall be the absolute right by purchase without foreclosure." It means "you will get an .absolute title free from the right to repurchase". The recitals in the earlier portion of the document clearly shows that the property was given in possesion of the defendant. It may be true that in a mortgage by conditional sale the document will assume all the characteristics of the sale because section 58 (c) provides that where the mortgagor ostensibly sells the mortgaged property, etc. But that clause must be read subject to clause (a) of section 58 of the Transfer of Property Act. In the case Naryan Ram Krishna Pandit and others v. Vigh neshwar Ganap Hedge and others (A I R 1929 All. 174.). It is held after referring to section 58 (a) and (c) : But the words of clause (c) are to be read not in an isolated manner, but in reference to the first paragraph of the section and when they are so read, it will be manifest that clause (c) comes in to play only when there is a mortgage as that term has been defined. The same view has been taken in the case of Mst. Mumtaz Begum v. Mst. Lachmi and others (A I R 1929 All. 174.). justice Sulaiman seems to have taken the same view in the case of Mathura Kurni v. Jogdeo Singh and others (A I R 1927 All. 321.). In the present case I have already mentioned that there is nothing either in the document or in the record to show that the relationship of debtor and creditor has been, contemplated by the parties. Mr. Pal refers to the evidence of P. W. 1 that he contracted to purchase another land for which he was in need of money and he also refers to the evidence of P. W. I that the plaintiff` contracted to purchase another land and he procured money by selling this land as well as other land to otter persons and from that he contends that the transaction in dispute cannot but be a loan transaction. It is no doubt true that sometimes people borrow money to purchase land but it is also true that one may purchase one property by selling some of his own properties. That depends upon the circumstances of each case. If a man thinks that one property which he intends to purchase is more valuable or more useful to him than his some other property, he may sell his property to purchase the other but that does not lead us to the conclusion that the transaction is a loan transaction. The most impor tant test laid by Butler in his preface to Coke on Littleton are : (1) the existence of debt which is absent in the present case ; (2) the period of payment, short period being indicative of sale and a long period of mortgage. Here option was given to vendor to purchase the property at any time within five years from the date of the sale. In the case of mortgage it is natural that the creditor will reserve the benefit arising out of the land for sometime in order to secure his profit on account of lending money. If it was a mortgage certainly the vendor would not have been allowed to redeem it on the next day of the transaction if he could procure the money ; (3) the continuance of the grantor in possession indicates a mortgage. In the present case the possession was given up in favour of the transfer ; (4) a stipulation for interest on repayment indicates a mortgage. In the present case there is no stipulation to pay interest nor the vendor was allowed to possess the land ; (5) a price below the true value indicates a mortgage. In the present case the lower appellate Court found that the value of the property is not below the normal price of the land. Mr. Pal contends that the tests laid down is Butler's preface are not exhaustive. I agree with Mr. Pal. There may be other tests which may be relied on by the party to show that the transaction is a loan transaction, But Mr. Pal fails to refer to any circumstances which indicate that the transaction is a loan transaction. In this view of the matter the Courts below are absolutely wrong in holding that the transaction is a mortgage by conditional sale. It is an out and out sale with a condition of repurchase. The plaintiff's suit for redemption is not maintainable. There is no alter native prayer in plaint to allow the plaintiffs to exercise the right to repurchase. Probably because it could not have been made on account of the allegation in the plaint that the mortgage money had been satisfied by the usufruct of the land and nothing was due from the plaintiffs on account of the mortgage. The result, therefore, is that this appeal is allowed, the judgment and decree of the Courts below are set aside and the plaintiff's suit is dismissed. In view of the facts and circumstances of the case I leave the parties to bear their own costs in this Court only. A. H. Appeal allowed.