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Gulabchand Raychand Vs. Narayan Motiram Teli - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 283 of 1936
Judge
Reported inAIR1940Bom1; (1939)41BOMLR1217
AppellantGulabchand Raychand
RespondentNarayan Motiram Teli
DispositionAppeal allowed
Excerpt:
.....continue in his possession for a rent of rs. for, it may well be that the plaintiff was anxious to continue in occupation whereas the defendant would have preferred to have possession himself. if the amount due to the defendant, that is to say, the consideration for the sale-deeds, was treated as a continuing debt-and the best evidence of that would be the fact that interest was paid upon the amount of the debt-,then there would be strong grounds for holding that the transaction was a mortgage and not a sale......parties were, but there is no doubt about what they purported to do. the plaintiff executed two sale-deeds, exhibits 36 and 37, dated march 10 and 14, 1931, by which he purported to sell his properties in bijapur out and out for rs. 11,000 and rs. 800 respectively. the deeds were registered on march 14 and they admittedly formed part of one transaction. on march 11 the plaintiff executed a rent-note agreeing to pay rs. 73 a month as rent for the two properties excluding a portion of one which was leased to one chhotu. the latter attorned to the defendant. the plaintiff brought separate suits in respect of the two sale-deeds praying for a declaration that the transactions were really mortgages and for accounts on that footing. the two suits were consolidated by consent and disposed of.....
Judgment:

R.S. Broomfield, Ag. C.J.

1. This is an appeal from a judgment of the First Class Subordinate Judge, Bijapur, disposing of two companion suits brought by the plaintiff-respondent. The plaintiff is or was an oil merchant. For the purposes of his trade he used to borrow money from the defendant-appellant shop. He became heavily indebted to the defendant who brought a suit on a promissory note and got the plaintiff's immoveable property in Bijapur attached before judgment. Then the parties came together and there was a settlement. The dispute is as to the nature of this settlement and what the intentions of the parties were, but there is no doubt about what they purported to do. The plaintiff executed two sale-deeds, exhibits 36 and 37, dated March 10 and 14, 1931, by which he purported to sell his properties in Bijapur out and out for Rs. 11,000 and Rs. 800 respectively. The deeds were registered on March 14 and they admittedly formed part of one transaction. On March 11 the plaintiff executed a rent-note agreeing to pay Rs. 73 a month as rent for the two properties excluding a portion of one which was leased to one Chhotu. The latter attorned to the defendant. The plaintiff brought separate suits in respect of the two sale-deeds praying for a declaration that the transactions were really mortgages and for accounts on that footing. The two suits were consolidated by consent and disposed of by one decree.

2. The trial Judge held that the plaintiff was an agriculturist and that in any case the circumstances showed that the transaction was a mortgage. The question of the amount due from the plaintiff to the defendant at the date of the sale-deeds was referred to arbitration. The arbitrators found that the consideration for the two sale-deeds was Rs. 8,322-12-0 made up of Rs. 4,942-13-3 principal and Rs. 3,379-14-9 interest. The trial Court accepted this figure, and after taking accounts up to the date of the suit, made a decree that the sum of Rs. 7,419 was due as a mortgage debt on the two deeds in suit up to the date of the decree and that the plaintiff should pay this amount by annual instalments of Rs. 900.

3. The defendant has appealed, and the issues in the appeal are:

(1) Whether the plaintiff was an agriculturist at the date of the transaction and

(2) Whether the transaction evidenced by the two sale-deeds was one of mortgage or sale.

The plaintiff seeks to bring himself within that part of the definition of an agriculturist in Section 2 of the Dekkhan Agriculturists' Relief Act which says that an agriculturist means a person who ordinarily engages personally in agricultural labour. It seems probable that the intention of this part of the definition was to include agricultural labourers as distinct from owners or occupants of agricultural land. It has been held, however, that a trader may come within this part of the definition. In Sahoo v. Narayasnshastri (1930) 33 Bom. L.R. 476 Mr. Justice Madgavkar said that the word 'ordinarily' does not mean solely or mainly but regularly and habitually and not casually. In Ramchandra v. Tukaram (1932) 35 Bom. L.R. 715 Mr. Justice B.J. Wadia said that the word 'ordinarily' shows that it is only a bona fide agriculturist who comes within the definition, and though the word does not mean solely, the definition does not cover the case of a person who leaves his usual avocation and only temporarily engages personally in agricultural labour. In order that a trader may come within the definition, it must be an appreciable amount of work which he engages in, and not merely some casual or desultory work in the fields. Putting it another way, I think one may say that in order to come within the definition, a trader must engage in agricultural labour personally to such an extent that it may reasonably be said of him that he has two occupations, agriculture as well as trade.

4. The plaintiff has produced extracts from the Record of Rights which show that from the year 1930-31 onwards he has taken one or two fields in villages as a tenant. It is not suggested that he had any connection with agriculture prior to the year 1930-31, and these revenue papers in themselves do not show-that he engaged personally in agricultural labour in and after that year. He has, however, examined a witness, Bhimappa, who says that five years before he gave evidence, which would be about 1931, the plaintiff was cultivating a field of one Ramappa near the land belonging to the witness, that he owned two bullocks and that he was personally working in the land. Evidence of this kind could hardly be regarded as sufficient to show that the plaintiff was an agriculturist within the definition at the material time, even if there were nothing to rebut it; but we find that in certain proceedings taken by the defendant for recovery of rent in 1933, in order to avoid the attachment of this property the plaintiff made an affidavit in which he stated that he was trading in oil on a large scale, that he had a big shop for the purpose, that he had dealings with big merchants, that he paid Rs. 156 as income-tax, that there were outstandings due to the shop of a considerable amount, and that he had valuable immoveable property. In both the sale-deeds with which we are concerned, the plaintiff allowed himself to be described as a trader. In his evidence in the suit he admitted that he was trading in oil on a considerable scale, that he had rented a building for Rs. 100 a year and had engaged two gumastas on a pay of Rs. 150 a year and Rs. 60 a year. His case is that he took to agriculture because he was losing money over the oil trade, but he has not supported that case by producing anything in the nature of accounts or documentary evidence. Under the circumstances we are unable to hold that the plaintiff at the material time was ordinarily engaging personally in agricultural labour, and we must find that he has been wrongly held to have been an agriculturist.

5. However, in the circumstances of this case, it does not really make a great deal of difference whether he is held to be an agriculturist or not. If he had been an agriculturist, he might have taken advantage of Section 10-A of the Dekkhan Agriculturists' Relief Act and adduced oral evidence to show that there was an oral agreement between him and the defendant to treat the suit transaction as a mortgage. But, as a matter of fact, he has not adduced any evidence on this point beyond his own statement, and on that it is quite impossible to rely.

6. Now, as to the second issue, as Mr. Justice Patkar said in Kuppa v. Mhasti (1930) 33 Bom. L.R. 633 the question for decision in a case of this kind is whether the ostensible sale is a pretence or a reality, and that is to be determined by the construction of the document with the help of the surrounding circumstances. In the present case, the construction of the two documents cannot assist the plaintiff in the least. No plainer language could possibly have been used to show that the transaction was a sale and nothing else. In exhibit 36 we find the plaintiff subscribing to these statements:

I have sold to you the said property by way of absolute sale.... You are at liberty to make vahiwat of the same in your right as a permanent owner (nirantar malki hak), and should do the vahivat from generation to generation. Neither myself nor my heirs have any right whatever from today on the said property and the absolute (sampurna) ownership rests with you only. You are the malak to make vahiwat or arrangement in any way you like.

Similarly, in exhibit 37 we have these recitals:

I have absolutely sold to you of my own free will the above described house.... You should enjoy it from generation to generation by virtue of permanent malki hak. By reason of this sale myself and my heirs have ceased from this date to have any rights over the said house, and the full ownership thereof is yours. You are the malak to make vahiwat in whatever way you like.

7. Obviously, therefore, the plaintiff cannot derive any benefit from the construction of the deeds, and in order to show that the transaction was really a mortgage and not a sale, he must satisfy the Court from the surrounding circumstances that the parties did not mean what they said. It has been pointed out as a circumstance in favour of the plaintiff that when exhibit 37 was registered, the Registrar made this endorsement :-'Execution is admitted by Narayan Motiram Teli (i.e. the plaintiff). He says that it is a conditional sale-deed (mudati kraya).' Whether by describing exhibit 37 as a conditional sale-deed the plaintiff meant that he thought it was a mortgage is not clear. But, in any case, this endorsement is only evidence of a statement made by the plaintiff and does not in any way show that there was an agreement by the defendant that the sale was to be treated as a mortgage.

8. No similar endorsement by the Registrar was made in the case of exhibit 36. This sale-deed, which is the principal one, contains, however, a clause on which the plaintiff has laid some stress, and that is this:

If you want to sell the property in future, you should first ask me and then sell it. Because if it becomes possible for me by any fortunate circumstance to purchase it, I shall purchase it from you for the abovesaid amount (the abovesaid amount being Rs. 11,000). For this you should wait only for four years and thereafter you may do whatever you like.

But it is impossible to argue that this provision in the sale-deed converts the transaction into a mortgage. It is in fact inconsistent with the transaction being a mortgage, and it does not really give the plaintiff a right to repurchase. All that it appears to mean is that if within the period of four years the defendant desired to sell the property, the plaintiff had a right of purchasing back the property at the price of Rs. 11,000.

9. The strongest point and indeed the only really strong point in favour of the plaintiff is the fact that the greater part of the property was allowed to continue in his possession for a rent of Rs. 73 a month. There is some reason to suppose that this was a higher rent than the property would have fetched in the ordinary way. The defendant's munim, who was examined as a witness, has stated that the property covered by exhibit 36, excluding the portion occupied by Chhotu, was formerly capable of yielding a rent of Rs. 700 a year, although owing to the fact that rents had fallen by fifty per cent at the time he gave evidence it was only producing Rs. 325 a year. But the fact that the rent appears to have been high in itself proves nothing; for, it may well be that the plaintiff was anxious to continue in occupation whereas the defendant would have preferred to have possession himself. It would be a very different matter if there were reason to suppose that the rent was fixed at the rate of Rs. 73 a month to correspond with the rate of interest agreed on the amount due to the defendant. If the amount due to the defendant, that is to say, the consideration for the sale-deeds, was treated as a continuing debt-and the best evidence of that would be the fact that interest was paid upon the amount of the debt-, then there would be strong grounds for holding that the transaction was a mortgage and not a sale.

10. Unfortunately, the evidence on this point, when examined, is not at all satisfactory. The plaintiff's story is that the agreed rate of interest was six per cent. If that were so, the rent of Rs. 73 per month would have no connection with the rate of interest at all. The plaintiff has also said that although the agreed rate of interest was six per cent., when the calculation was made for the purpose of rent it was fixed at nine per cent. There seems to be no sense in that story. If rent was paid by way of interest at all, it must have been paid at the agreed rate. But even if we take it that the agreed rate was nine per cent., that would not come exactly to Rs. 73. According to the plaintiff's statement, when taking the rent-note interest was calculated at nine per cent on Rs. 11,000 and Rs. 800 less Rs. 200 of Chhotu's rent. According to that the amount of interest would be Rs. 862 per annum. That works out at a little less than Rs. 72 per mensem. Why the odd figure of Rs. 73 per mensem was selected, we do not know. But, at any rate, it is impossible to say that it was selected because it corresponded to nine per cent interest on the consideration for the sale-deeds. There seems to be no reason why, if the calculation was made on this basis at all, it should not have been made correctly. We cannot, therefore, see any real ground to say that the rent represented interest, and if not, then there is no evidence of a continuing debt at all. The plaintiff's khata in the defendant's books was admittedly closed, and as far as we can see, it would not have been possible for the defendant to recover his moneys.

11. There are two other matters which may be mentioned in connection with this part of the case, although no definite argument was founded upon them. As I have said, at one stage of the case the parties agreed to submit the question of the amount of consideration to the decision of panchas. But as appears from exhibit 57, this was done entirely without prejudice, and it cannot be inferred that the defendant had abandoned any part of his case. This document, which is the submission to arbitration, says that after examining the accounts and taking the evidence, the panch should inform the Court as to the amount that was due to the defendant from the plaintiff for principal and interest on the date on which the sale-deeds in suit were executed, and that to the amount thus determined the plaintiff and the defendant would give their assent. But it provides further as follows:

All the other matters in dispute between the parties are to be decided by the Court; and in the event of the Court thinking it necessary to determine the amount of the plaint transaction, the Court should accept the amount intimated by the panch.

12. Then it might perhaps be suggested that as the arbitrators found that the consideration was really only Rs. 8,322 instead of Rs. 11,800, the consideration for the sale was inadequate. It has been held that gross inadequacy in the consideration is one of the tests for determining whether a transaction is a sale or a mortgage. But the plaintiff has told us in his evidence that he purchased one of the properties for Rs. 7,500 in 1925 and the other for Rs. 775 in 1929. That is almost exactly the amount found due by the arbitrators. The plaintiff has alleged, no doubt, that he had spent thousands of rupees on improvements, but he has produced no evidence of this beyond his own word, and there is no evidence either of any increase in the value of the property since the date of his purchase. So that even if the figure found by the arbitrators be accepted as the real consideration for this transaction, it is impossible to say that the consideration was grossly inadequate, the plaintiff having received practically the same amount as he paid for the property.

13. On the whole, we think that the only possible conclusion is that the plaintiff sold his property out and out. He was in financial difficulties, and it may be that the defendant drove a hard bargain, although there is no ground for thinking that it was in any way an unconscionable bargain. It is quite impossible to hold on the evidence in this case that there was an agreement between the parties to treat the transaction as a mortgage.

14. In one paragraph of the plaint the plaintiff alleged that the defendant had taken advantage of the helpless condition of the plaintiff and had obtained the sale-deeds by undue influence. That case is hardly consistent with the case that there was a mutual agreement to treat the transaction as a mortgage and not a sale. Moreover, if the plaintiff desired to press this allegation, he should have asked for an issue to be framed on the point, but no issue was framed, and the plaintiff in his evidence has made no serious attempt to show, and certainly he has not succeeded in showing, that there was any such thing as undue influence in the matter.

15. The learned advocate for the plaintiff-respondent at the conclusion of his argument asked that even if the Court is unable to treat the transaction as a mortgage, the plaintiff might be allowed to convert the suit from a suit for redemption of a mortgage into one for enforcing the claim to repurchase the property under the clause in exhibit 36 to which reference has been made. He urges, moreover, that the plaintiff should be permitted to repurchase the property not for the amount of consideration shown in exhibit 36 but for the amount found due by the arbitrators. Reliance is placed on the fact that in his memorandum of appeal the defendant has stated that he does not claim possession, and his learned advocate has admitted that he is prepared to reconvey the property provided he is paid the amount stated in the sale-deeds. Mr. Jahagirdar's request really amounts to this, that accounts should be taken of the amount really due from the plaintiff at the date of the sale-deeds and at the date of the decree. But there is no legal basis on which accounts can be taken, as we have decided that the plaintiff was not an agriculturist and the transaction in suit was a sale and not a mortgage; and there is no object in allowing the suit to be converted into another kind of suit, because the plaintiff has nothing to rely upon except the clause in exhibit 36, and that merely gives the plaintiff an option to repurchase the property for the amount 'abovesaid', that is to say, Rs. 11,000. Whether the defendant is willing to reconvey and what consideration he is willing to accept are matters for arrangement between the parties themselves, and the plaintiff has no legal right to any order in that connection in this suit.

16. The appeal must be allowed and the plaintiff's suit dismissed with costs in both Courts.


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