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Phattechand Anandram Vs. Uma Valoo - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 265 of 1928
Judge
Reported in(1933)35BOMLR1138
AppellantPhattechand Anandram
RespondentUma Valoo
DispositionAppeal dismissed
Excerpt:
.....plaintiff advanced a sum of money to the defendant who agreed to pass a document in the form of a sale deed, and the plaintiff agreed to pass an agreement to re-convey. the defendant executed his deed, but the plaintiff failed to execute his. in a suit by the plaintiff to enforce the sale deed the court held that the transaction amounted to a mortgage. the plaintiff then in another suit claimed to have the amount made a charge on the property :-;that whatever the intention of the parties might have been, the failure to carry it out was due to the plaintiff's own default, and no charge could, therefore, be created under section 100 of the transfer of property act, 1882.;p.r.p.r. somasundram chettiar v. y.p.n. nachiappa chettiar (1924) i.l.r. 2 ran. 429 and hukumchand kasliwal v. radha..........and this deed was registered through court on august 20, 1923. the plaintiff sued on this sale deed in suit no. 345 of 1923, but the defendants contended that the document was not intended as a sale deed, but that it was to be accompanied by an agreement to reconvey by the plaintiff and both these documents were to be registered together, but the plaintiff failed to execute the agreement to reconvey, and therefore the whole transaction was incomplete and void. the first class subordinate judge at nasik held that the suit lands were only given as security to the plaintiff for the amount of the sale deed, and that the sale deed was to take effect only on his passing to the defendants a writing embodying the agreement to reconvey, and the above condition not having been fulfilled,.....
Judgment:

Baker, J.

1. This is an appeal from a decree of the First Class Subordinate Judge's Court at Nasik. The facts are a little unusual. The defendants in 1919 passed a sale deed for Rs. 5,000 to the plaintiff, and this deed was registered through Court on August 20, 1923. The plaintiff sued on this sale deed in suit No. 345 of 1923, but the defendants contended that the document was not intended as a sale deed, but that it was to be accompanied by an agreement to reconvey by the plaintiff and both these documents were to be registered together, but the plaintiff failed to execute the agreement to reconvey, and therefore the whole transaction was incomplete and void. The First Class Subordinate Judge at Nasik held that the suit lands were only given as security to the plaintiff for the amount of the sale deed, and that the sale deed was to take effect only on his passing to the defendants a writing embodying the agreement to reconvey, and the above condition not having been fulfilled, the sale deed became void. He, therefore, dismissed the suit. The plaintiff appealed to the High Court, and in First Appeal No. 298 of 1929 the High Court confirmed the decree of the lower Court, holding that the plaintiff had broken the contract, as the sale deed which he had got from the defendants was merely one part of the transaction which had been agreed upon between them. The appeal was, therefore, dismissed, and the High Court remarked that it was too late for the plaintiff, when the Court had come to the conclusion that his conduct was improper, to fall back upon the case which he might have set up at the beginning that the land was mortgaged to him, and that he was entitled to possession. The plaintiff has brought the present suit, which is No. 835 of 1926, to recover the amount advanced under the sale deed, alleging that this operates as a mortgage, and that the same should be recovered by sale of the property. The First Class Subordinate Judge held that the sum could not be recovered by sale of the property as if the property was security for it, as a mortgage or the same was charged on the property, and gave the plaintiff a decree as if this was a simple suit for an unsecured loan or a suit for restoration of money which was intended to be secured by an immoveable property but was not so secured by reason of the plaintiff's own fault. He, therefore, passed a decree for Rs. 7,990, and costs and interest, in favour of the plaintiff, but did not make this a charge on the property.

2. The plaintiff appeals, and the only argument raised in appeal is that this amount should have been made a charge on the property, and it is contended by the learned counsel for the appellant that under Section 100 of the Transfer of Property Act, although the transaction does not amount to a mortgage, it will amount to a charge. Now it is quite clear from the authorities which have already been considered in the previous proceedings that this transaction did not amount to a sale, and was never intended to be a gale. It is also clear that it does not amount to a mortgage, because in order that it may amount to a mortgage it was necessary that the plaintiff should execute an agreement to re-convey, and that both documents should be registered together. This agreement to re-convey was never executed by the plaintiff. It has been held by the High Court on appeal, as well as by the First Class Court at Nasik, in the former litigation, that this is not a sale deed. It is also not a mortgage deed, and Section 100 would have no application to a case where the document falls short of being a mortgage not by reason of the intention of the parties but by the failure of one of the parties to carry out his part of the contract, that is, by the plaintiff's failure to execute the agreement of re-conveyance which had been agreed between the parties that he should execute. The result, therefore, is that no interest is created in the plaintiff by the sale deed. It has been held in P.R.P.B. Somasundram Chettiar v. Y.P.N. Nachiappa Chettiar I.L.R. (1924) Ran. 429 that a transaction intended to be a mortgage, but not reduced to writing or registered, could not be considered to create a charge, and in Sir Hukumchand Kasliwal v. Radha Kishen (1929) 32 Bom. L.R. 533 which is a Privy Council case, it was held that where it was intended by the parties that a regular deed of mortgage was to be executed by one of them, but no such deed of mortgage was ever executed in the plaintiff's favour, the plaintiff had neither a mortgage nor a charge on the immoveablo properties of the defendants or the proceeds of sale thereof, and were not, therefore, secured creditors of the company. In these circumstances, I think where one party by his own default has failed to create a transaction which would be binding in law on the other party, he cannot by reason of any supposed intention of the parties claim a charge on the property. Whatever the intention of the parties may have been, the failure to carry it out was due to the plain-tiff's own default, and, therefore, there can be no question of a charge being created under a 100 of the Transfer of Property Act.

3. Some reference has been made to the equities of the case, but the equity does not seem to be in favour of the plaintiff, inasmuch as it was his failure to execute the agreement to re-convey which resulted in the difficulties with which he is now met.

4. I am, therefore, of opinion that the view taken by the Judge of the lower Court that no charge was created on the property, and, therefore, the money which the defendants had borrowed from the plaintiff cannot be recovered from the property, is correct, and that the appeal should be dismissed with costs, one set for respondents Nos. 1 to 6, and another set for respondent No. 7, a subsequent mortgagee.

Divatia, J.

5. I agree. The only point that has been urged in this appeal is that the transaction between the parties, which has failed as an out and out sale as well as a mortgage, should be given effect to as creating a charge under Section 100 of the Transfer of Property Act, In the previous litigation the transaction has not been treated as a sale, on the ground that the intention of the parties was that simultaneously with the passing of the sale deed the other side had to pass an agreement to reconvey, and both the deeds were to be registered. The respondent in this case duly passed the sale deed, and got it registered. But the present appellant did not pass the agreement which he was bound to pass. In these circumstances, it was held by this Court that the transaction did not amount to a sale, because the intention of the parties was to have another document by which either a right of repurchase was given to the respondent or the right to redeem it would be given if the transaction amounted to a mortgage by conditional sale.

6. Subsequent to that, the present suit has been filed by the present appellant to recover the amount lent on the very property which was the subject-matter of the former sale-deed, and the argument is that although the transaction has failed to create an out and out sale, and also mortgage by conditional sale, it must be given effect to as a charge, inasmuch as the intention of the parties was to treat this property as security, and the appellant's counsel says it would be sufficient if that intention was proved in the case, and urges that that intention can be inferred from the passing of the sale-deed, even though the corresponding agreement was not passed. Now it is clear that the only document to evidence that intention is the sale-deed. So we have to look to this sale-deed alone. The sale-deed by itself is an out and out sale, and it cannot be said that this sale-deed is only a document creating a charge, or that it was intended that failing as a sale-deed it should create a charge. But, as I said, it has been held that it is not a sale-deed, and does not convey any property. Then as to mortgage, if the corresponding agreement had been passed by the present appellant, then a conditional mortgage might have been created, and provided both the documents were registered, the transaction might have been given effect to as a mortgage, with the result that the property could have been sold for the loan, But the very conduct of the present appellant in not passing the corresponding agreement itself was responsible for the failure of this transaction as a mortgage, and it is clear law that if parties wish to create a mortgage transaction and if that transaction fails, such as for want of attestation, or for want of registration, or as here, for not executing the corresponding agreement which along with the sale-deed would have created a mortgage transaction, then, it is not permissible to give relief to the parties on the basis that failing as a mortgage it is still good as a charge. The latest authority on this point is the Privy Council case in Sir Hukumchand Kasliwal v. Radha Kishen (1929) 32 Bom. L.R. 533 There is no question here of a primary intention and a secondary intention, and that the primary intention having fallen through, the secondary intention should be given effect to. The intention in this case was to create a mortgage, but that intention did not fructify, because the transaction was not made in a legal manner, by the passing of the agreement and getting it registered. Therefore, it is clear that the only intention that was in the mind of the parties having failed, there is no security created on this property at all either by way of mortgage or by way of charge. I, therefore, agree that the appeal should be dismissed with costs, one set for respondents Nos. 1 to 6, and another set for respondent No. 7.


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