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Kuppa Krishna Hegde Vs. Mhasti Goli Naik - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 617 of 1928
Judge
Reported in(1931)33BOMLR633
AppellantKuppa Krishna Hegde
RespondentMhasti Goli Naik
DispositionAppeal dismissed
Excerpt:
sale or mortgage--sale with condition of repurchase--transfer of property act (iv of 1888), section 58(a)(c)--indian evidence act (i of 1812), section 92--dekhhan agriculturists' relief act (xviii of 1879), section 10a.;on april 13, 1910, the plaintiff conveyed his land for an adequate price to the vendee under a deed which was in the form of a sale deed, but which entitled the vendor, his wife or his male issue to have the land reconveyed within twenty years on payment of the consideration money. on the same day, the plaintiff took the land from the vendee on a permanent lease agreeing to pay the assessment and also the rent. in 1913, the vendee sold his interest to the defendant. in 1925, the plaintiff sued for a declaration that the transaction in 1910 was a mortgage and for taking.....patkar, j.1. the question involved in this second appeal is whether the transaction embodied in ex. 14 is a mortgage or a sale with a condition of re-purchase.2. on april 13, 1910, the original owner of the land narsing hegde sold it for rs. 500 to one vasudev ram bhat by ex. 14. in the sale deed there was a clause which enabled the vendor and his heirs to have the land reconvened within twenty years on payment of rs, 500. on the same day the vendee leased the lands to the vendor by mulgeni or permanent lease, ex, 37, the rent fixed being ten mangis of rice and the assessment rs. 14 being payable by the vendor. on august 14, 1913, vasudev sold the property to one manjaya naik under whom the defendants claim, in may 1914, the vendor narsing died, and the present suit is brought by his.....
Judgment:

Patkar, J.

1. The question involved in this second appeal is whether the transaction embodied in Ex. 14 is a mortgage or a sale with a condition of re-purchase.

2. On April 13, 1910, the original owner of the land Narsing Hegde sold it for Rs. 500 to one Vasudev Ram Bhat by Ex. 14. In the sale deed there was a clause which enabled the vendor and his heirs to have the land reconvened within twenty years on payment of Rs, 500. On the same day the vendee leased the lands to the vendor by mulgeni or permanent lease, Ex, 37, the rent fixed being ten mangis of rice and the assessment Rs. 14 being payable by the vendor. On August 14, 1913, Vasudev sold the property to one Manjaya Naik under whom the defendants claim, In May 1914, the vendor Narsing died, and the present suit is brought by his heirs under Section 15D of the Dekkhan Agriculturists' Relief Act to take accounts of the mortgage on the allegation that the transaction evidenced by Exb. 14 was a mortgage by conditional sale.

3. The learned Subordinate Judge on consideration of the terms of the document and the surrounding circumstances came to the conclusion that the transaction evidenced by Exh. 14 was a sale deed with a condition of repurchase and not a mortgage by conditional sale, and dismissed the plaintiffs' suit. In arriving at that conclusion the learned Subordinate Judge principally relied on the facts that there was no relation of creditor and debtor between the parties, no stipulation or provision in the deed for payment of interest, the price paid being adequate according to evidence, the rent reserved by the permanent lease being fair, the existence of mulgeni lease rather than a twenty years' lease and the condition of repurchase being restricted to the vendor, his wife and male issue. He also took into consideration the language of the deed along with the surrounding circumstances, and held that the transaction was a sale with an agreement of repurchase and not a mortgage which could be redeemed by the plaintiffs.

4. The learned District Judge considered that the Subordinate Judge applied the law applicable to the facts of the case correctly and held that the transaction in suit was a sale and not a mortgage.

5. The present suit is brought under the Dekkhan Agriculturists' Relief Act, and it was permissible to the parties under Section 10A of the Act to give oral evidence as regards the intention of the parties notwithstanding Section 92 of the Indian Evidence Act, and if the judgment of the lower appellate Court had been based not only upon the construction of the document and the surrounding circumstances but also on appreciation of the oral evidence in the case, the conclusion arrived at might have been a finding of fact which would have been binding in second appeal. The learned District Judge has arrived at a finding that the transaction evidenced by Exh. 14 is a sale with a right of repurchase merely on the construction of the document and the surrounding circumstances. It is, therefore, a legal inference from surrounding circumstances and based on the construction of the document which is the foundation of the claim, and its correctness can be considered in second appeal.

6. It is urged on behalf of the appellants that the transaction Ex. 14 evidences a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, and relying on the cases in Madhavrao Keshavrao v. Sahebrao Ganpatrao ILR (1914) 39 Bom. 119, 16 Bom. L.R. 769, Ram Charan Lal v. Dharam Singh ILR (1923) All. 173, Lalta Prasad v. Jagdish Narain ILR (1926) A11. 787, and Mathura Kurmi v. Jagdeo Singh ILR (1926) All. 405, and the proviso to Section 58(c) of the Transfer of Property Act which has been recently added by Act XX of 1929, it is urged that the agreement of sale with a covenant to repurchase is embodied in one document and would be a mortgage by conditional sale within the meaning of Section 58(c) of the Transfer of Property Act. The decision in Ram Charan Lal v. Dharam Singh and the opinion of Ashworth J. in Lalta Prasad v. Jagdish Narain would appear to a certain extent to support the contention on behalf of the appellants. The proviso added by Act XX of 1929 runs as follows:--

Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.

7. That proviso has been added to restrict the inference to be drawn in favour of a mortgage only when the condition of repurchase is embodied in one document which effects or purports to effect the sale. It is a matter of common knowledge that when documents are passed in favour of creditor the mortgagee in order to avoid the accounting of the profits of the property generally prefers to have the document passed in the form of a sale-deed. In case a mortgagor passes in favour of a mortgagee an ostensible sale-deed and the intention of the parties is to be arrived at by the construction of the document, the proviso says that the right of repurchase must be embodied in the same document, and that if it is embodied in more than one document the inference of a mortgage would not necessarily arise, and that no transaction should be deemed to be a mortgage by conditional sale unless the condition is embodied in the document of the ostensible sale; but the Sub-section and the proviso do not dispense with the condition that it must be a transaction between the creditor and the debtor. In my opinion Section 58(a) would govern Section 58(c). Section 58(a) says:--

A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

8. It is, therefore, necessary that there must be a debt and the relation of a creditor and debtor between the parties. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured is mortgage money. Section 58(c) says:--

Where the mortgagor ostensibly soils the mortgaged property--on condition that, on default of payment of the mortgage-money, on a certain date the sale shall become absolute, or on condition that, on such payment being made, the sale shall became void, or on condition that, on such payment being made, the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale, and the mortgagee a mortgagee by conditional sale.

9. Though the document may be ostensibly a sale-deed, the question for consideration is whether the sale-deed, is a pretence or a reality, and that question is to be determined by the construction of the document and the surrounding circumstances. In the case of Lalta Prasad v. Jagdish Narain Kanhaiya Lal J., in order to decide whether the document was a sale or a mortgage, considered the payment of interest on the purchase money at page 792; and the intrinsic value of the property at page 796, and on consideration of the two circumstances among others came to the conclusion that it was a mortgage. Ashworth J., on the other hand, held that where there is an ostensible sale with an agreement of repurchase the necessary inference is that it is a mortgage by conditional sale. Though the fact that the agreement of sale coupled with the agreement of repurchase is embodied in one document is a circumstance to be considered in arriving at the conclusion as to the true nature of the document, it is not a conclusive test. Though there may be an agreement of sale with a right of repurchase that circumstance in itself is not a sufficient basis for an inference that it is a mortgage. This view was taken by the Full Bench of the Madras High Court in Muthuvelu Mudaliar v. Vythilinga Mudaliar ILR (1919) Mad. 407, where it was held that where in one and the same transaction land is sold absolutely but with a right of re-purchase 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 decisions in Situl Purshad v. Luchmi Purshad ILR (1883) Cal. 30, Bhagwan Sahai v. Bhagwan Din ILR (1880) All. 387, Balkishen Das v. W.F. Legge ILR (1899) All. 149, 2 Bom. L.R. 523, and Jhanda Singh v. Wahid-ud-din ILR (1916) All. 570, 19 Bom. L.R. 1., Held that though the cases dealt with transactions before the passing of the Transfer of Property Act, the Act made no difference in the law on the subject, and after referring to Section 58(a) and (c) observed as follows (page 419):--

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 form one transaction, it must necessarily be a mortgage and not a sale.

10. The recent decision of the Privy Council after the Transfer of Property Act came into force and reported in Narasingtrji Gyanagerji v. Panuganti Parthasaradhi does not effect any change in the law. At page 316 after referring to the inadequacy of price and other circumstances the conclusion was reached that the transaction in which the parties were engaging was not a sale but a loan.

11. In Kasturchand Lakhmaji v. Jakhia Padia ILR (1915) 40 Bom. 74, 17 Bom. L.R. 928 Batchelor J. observed (page 82):--.the mere agreement to reconvey does not necessarily signify that the transaction is a mortgage. It seems to us, however, that two things must be remembered in this context. One of them is the notorious reluctance of Indian is peasants to sell their land, a reluctance which is judicially noticed and historically explained by Sir Michael Westropp in Bapuji Apaji v. Senavaraji Marvadi ILR (1877) 2 Bom. 231. And the second thing to be remembered is that, in the case now before us, on the assumption that the parties intended an out and out sale, there is no assignable reason why the defendants should have promised the plaintiffs to reconvey the property to them if they repaid the purchase money.

12. The same learned Judge in Narayan Ramkrishna v. Vighneshwar ILR (1916) 40 Bom. 378, 18 Bom. L.R. 250 observed, after referring to Section 58(a) and (c) (page 382):--

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 into play only when there is a mortgage as that term has been defined.

13. The same view has been taken by a recent decision of the Allahabad High Court in Mt. Mumtaz Begam v. Mt. Lachhmi : AIR1929All174 , Sulaiman J. seems to have taken the same view in Mathura Kurmi v. Jagdeo Singh ILR (1926) All. 405. I think, therefore, that from the mere fact that there is an agreement of sale with a condition of repurchase embodied in the same document the inference of mortgage does not necessarily arise. But the question has to be determined by well recognised principles which have been laid down by several decisions of this Court. Some of the tests to determine whether a transaction is a sale or a mortgage are, first, whether there is a debt and the relation of a creditor and debtor subsists between the parties or, in other words, whether the money which was obtained as purchase money was a loan and was intended to be repaid with or without interest. The second test is whether the ostensible price is adequate. The adequacy of consideration is considered as an important element in helping to decide the question. -Another important question is as to the possession of the property involved. The transfer of possession is more consistent with a sale whereas retention of possession by the transferor is an indication of a mortgage.

14. In Maruti v. Balaji (1900) 2 Bom. L.R. 1058, following the case in Bapuji v. Senavaraji, it was observed (page 1068):--

The test there laid down is whether any debt remained after the alleged document of sale was executed which the purchaser could enforce, in other words, whether the remedies were mutual and reciprocal. Where the remedy was not reciprocal, it was a sale, otherwise it was a mortgage. Insufficiency or sufficiency of consideration is another best laid down and many other tests were suggested in the judgment which it is not necessary to refer, but the right to, recover the debt in whole or part may be mentioned here in connection with the present case as a material condition.

15. In Madhavrao Keshavrao v. Bahebrao Ganpatrao ILR (1914) 39 Bom. 119. 16 Bom. L.R. 769 the circumstances relied on in support of the inference of mortgage were that the amount of rent corresponded to six per cent. on the amount of the purchase-money and that the amount Rs. 300 paid as the purchase-money was an inadequate price of the land. In the case of Maruti v. Balaji the circumstances relied on were inadequacy of consideration and the fact that the land could not have yielded rent of more than Rs. 50 whereas the rent reserved was Rs. 180. In Kasturchand Lakhmaji v. Jakhia Padia ILR (1915) 40 Bom. 74, 17 Bom. L.R. 928 the rent reserved was Rs. 225 which corresponded to nine per cent interest on the purchase-money and the amount of Rs. 2,600 was considered not to be the real price of the land.

16. The case in Narayan Ramkrishna v. Vighneshwar, in which the document was held to be a sale, has some resemblance to the facts of the present case. In that case, however, there was a clear agreement that out of ninety-two lands which were previously mortgaged with the defendants twenty lands were made the subject-matter of the sale. That no doubt was an additional circumstance considered by the Court in arriving at the conclusion that the transaction was a sale. The sale deed in that case contained the provision that if within the period of twenty years the plaintiffs repaid Rs. 13,000 in one lump sum or in installments the defendants should reconvey the lands to the plaintiffs. On the same day the, plaintiffs executed to the defendants a permanent lease of the lands at fixed annual rental of Rs. 412-8-0.

17. It appears, therefore, that according to the decisions of the Privy Council and the full bench decision of the Madras High Court and the decisions of this Court, the question for decision in a case of this kind is whether the ostensible sale is a pretence or a reality, and that has to be determined on the construction of the document with the help of the surrounding circumstances.

18. The question, therefore, is whether the view taken by the lower Courts in this case is correct having regard to the construction of the document and the surrounding circumstances. It is urged on behalf of the appellants that the document is described as Muddatakraya and therefore, according to the decision in Ramasami Sastrigal v. Samiyappanayakan ILR (1881) Mad. 179., it must be considered to be a mortgage and not a sale. There is no evidence in the present case to show that in the District from which this case has come the word Muddatakraya has a specific meaning and is used only in relation to a mortgage and not a sale. On the other hand, reliance has been placed on the words in the document Exh. 14 'Hence neither I nor my Varasdars nor Uttaradhikaris etc., have any right or interest in these plots of land any longer.' This recital is more consistent with the divesting of the owner of any interest in the land and is more consistent with the document being a sale rather than a mortgage. But as in all such cases the document takes the form of a sale deed the recitals in the document made in order to keep up the appearance of a sale deed cannot be given undue weight.

19. The other recital in the document is--

If within twenty years from this date, Rs. 500 the consideration for this sale is paid to you in one lump sum either by me or by my proper Uttaradhikaris i.e., my wife, or if any male issue is born to mo in future, by them only you should reconvey the property now sold and deliver possession of the lands.

20. This recital is relied on behalf of the respondents as a strong circumstance in their favour on the ground that a right to repurchase is restricted to the vendor and the persons specified in the document. In Vithoba Madhav v. Madhav Damodar ILR (1918) 42 Bom. 344, 20 Bom. L.R. 654, where the right of repurchase was restricted to the vendor and his descendants, it was held that the right reserved was personal right which could not be assigned to any other person, and that an assignee outside the family could not enforce the contract specifically. A clause restricting the right of repurchase can be validly introduced in a sale deed. On the other hand, if this is considered to be a mortgage by conditional sale there is no explanation why the right of redemption should be strictly confined to the mortgagor and his family. In Sayad Abdul Hak v. Gulam Jilani ILR (1895) 20 Bom. 677 it was held that where the right of redemption is restricted to the mortgagor and his family, the condition is invalid and that a mortgagor cannot, by any contract entered into with the mortgagee at the time of the mortgage, give up his right of redemption or fetter it in any manner by confining it to a particular time or a particular description of persons. It would, therefore, follow that if this condition in the document was intended to have any legal effect the transaction must have been intended to be a sale rather than a mortgage.

21. It was urged on behalf of the respondents that there was no, mutuality of remedies provided by this document and though the vendor had a right to pay the purchase money and to get back the land, there was no remedy left with the vendee if the document is considered to be a mortgage to recover the mortgage amount. The want of mutuality of remedies, though considered a good test in Maruti v. Balaji (1900) 2 Bom. L.R. 1058, has not been accepted as such in Kasturchand Lakhmaji v. Jakhia Padia ILR (1915) 40 Bom. 74, 17 Bom. L.R. 928 by Batchelor J., who held that a transaction being ex facie a sale, a deed of sale would clearly be an inappropriate place in which to embody the reciprocal remedies of a mortgagee as mortgagee.

22. The next recital in the document on which reliance is placed on behalf of the respondents is as follows:--

We have no right to alienate the same by sale to any body else, subject to this sale; and oven if we do so, it shall not be operative.

23. The fact that it is a sale deed is said to be emphasised by this recital. The restraint on alienation may be valid in restricting the right of repurchase to the vendor and his family, but would be unnecessary in a mortgagee deed as it would ordinarily be a matter of indifference to the mortgagee as to who pays his debt.

24. The last point urged on behalf of the respondents is that the fact that a permanent lease is passed in favour of the transferor is a circumstance more in favour of the inference that a transaction is a sale and not a mortgage. The transferor was originally the owner of the land and if this document is considered to be a sale with a right of repurchase, the transferor having divested himself of all his interest in the land would prefer to take a permanent lease from the person in whom the property vested as a precautionary measure against default in payment of the purchase money at the appointed time. If, however, the document is considered to be a mortgage, the transferor not having divested himself of his ownership in the property and having retained the right of redemption it is difficult to find a satisfactory explanation as to why he should take a permanent lease from a mortgagee whom he could redeem at any time within sixty years from the date of the transaction, From the point of view of a conditional mortgage, the mortgagee under Section 67, proviso (a), of the Transfer of Property Act would have only a right of foreclosure, but the permanent lease would be an obstacle to his getting possession. He would not be entitled to recover his money by sale of the property and would have to be content with the rent reserved in the mulgeni lease.

25. The learned District Judge has recorded clear findings that the price paid was adequate and that the rent reserved did not bear any proportion to the interest on the purchase money. These circumstances would strengthen an inference in favour of a sale rather than in favour of a mortgage.

26. I think, therefore, that the view taken by both the lower Courts on the construction of the document considered along with the surrounding circumstances is correct and this appeal must be dismissed with costs.

Broomfield, J.

27. The question whether the transaction evidenced by Exh. 14 was a sale with an option of repurchase as contended by the respondents or a mortgage by conditional sale as contended by the appellants admittedly depends on the intention of the parties, The lower Courts have agreed in holding that the intention was to effect an out and out sale with a (limited) right of repurchase. A preliminary question therefore arises whether this is not a finding of fact binding on this Court in second appeal. In support of the view that an appeal lies Mr. Coyajee has cited Maruti v Balaji (1900) 2 Bom. L.R. 1058 and Kasturchand Lakhmaji v. Jakhia Padia ILR (1915) 40 Bom. 74, 17 Bom. L.R. 928. The first of these is clearly not a strong case because there were two inconsistent findings of fact by the Court of first appeal, one of which was accepted by the High Court. The remarks on the point in Kasturchand Lahhmaji v. Jakhia Padia ILR (1915) 40 Bom. 74, 17 Bom. L.R. 928 are very brief, Batchelor J. merely remarking (page 84):--

We have given our reasons for adopting the same conclusion (that of the lower Court), because it seems to us that the question, depending as it does on the construction of documents, is open in second appeal.

28. Mr. Thakor who appears for the respondents has pointed out that the present is a case to which Section 10-A of the Dekkhan Agriculturists' Relief Act applies and that some oral evidence has been recorded. It appears that one witness was examined on behalf of the plaintiff, but for all practical purposes the case depends on the construction of Exs. 14 and 37. The oral evidence has not been referred to by the District Judge nor in the lengthy arguments before this Court, and it is clearly of no importance. Madhavrao Keshavrao v. Sahebrao Ganpatrao ILR (1914) 39 Bom. 119, s.c. Bom. L.R. 769, Wajid Ali Khan v. Shafakat Husain ILR (1910) All. 122, and Ram Charan Lal v. Dharam Singh ILR (1923) All. 173, are all cases where precisely similar questions have been considered in second appeal. I may also refer in this connection to Vithoba Madhav v. Madhav Damodar ILR (1918) 42 Bom. 344, 20 Bom. L.R. 654 where Beaman J. said (page 350):--

It has been urged that the intention of the parties was found upon by the lower appellate Court, and what was or was not the intention of the parties to a document of this kind is a question of fact, the answer to which is binding upon us, I do not, however, think that this is be in a case of this very peculiar kind. In the first place there is the distinct question of construction, upon which the Courts have to pronounce--and this is a case of real construction--before the plaintiffs could have any show or colour of right at all. I am not prepared myself to say that the lower Court's construction was correct, but even if it were, in the result we have to deal with a question which is quite as much dependant upon the construction of the deed as upon any other materials; and where that is so, it seems to me that we in second appeal have as good a right as the lower appellate Court to put our own construction upon the document as a whole in order to arrive at the intention of the parties thereto.

29. There is a recent decision of the Privy Council in Wali Mohammad v. Mohammad Baksh (1920) 32 Bom. L.R. 380. in which their Lordships have tabulated in a general way the matters which it is open to the Court to consider under Section 100 of the Civil Procedure Code. Counsel on both sides have relied on this decision: Mr. Coyajee on proposition No. 2 which is this, 'The legal inference to be drawn from proved or admitted facts is a matter of law, or, in other words, the proper legal effect of a proved fact is essentially a question of law.' On the other hand, Mr. Thakor has relied on proposition No. 3 which is, 'Where the question to be decided is one of fact it does not involve an issue of law merely because documents which were not instruments of title or otherwise the direct foundations of rights, but were really historical materials, have to be construed for the purpose of deciding the question.' In the present case these documents Exs. 14 and 37 are clearly the direct foundations of the rights of the parties. I think we are concerned in this ease with the proper legal effect of proved facts and that there is nothing in the Privy Council judgment which is at variance with what has clearly been the practice of this and other High Courts. I may also mention another Privy Council ruling in Amiruddi Gazi v. Makhan Lal Chatterjee (1929) 32 Bom. L.R. 520., where it was held that as the whole of the relevant evidence in the matter was documentary and the documents themselves constituted the foundation of the right claimed by the plaintiffs, the right construction of these documents was a question of law which the High Court was not precluded from considering in second appeal.

30. On the merits, certain criteria by which the real nature of a transaction of this kind can be determined were laid down in Bapuji Apaji v. Senavaraji Marvadi ILR (1877) 2 Bom. 231 and were approved by Ranade J. in Maruti v. Balaji (1900) 2 Bom. L.R. 1058, Ranade J. after mentioning various tests, whether there was a continuing debt, whether the remedies were mutual and reciprocal, and the insufficiency or sufficiency of consideration, said that the test of the reservation of liability for debt is the principal consideration to be borne in mind. Both the above cases were referred to in Kasturchand Lalchmaji v. Jakhia Padia, which was relied on by the learned counsel for the appellants as the transaction was there held to be a mortgage. Batchelor J., at page 82, after referring to Maruti v. Balaji, said:

The principle which governs the cases seems to be clear enough. The Court has to decide between an out and out sale for an agreed price and a mere transfer of the property, the subject of the sale deed, as security for a loan. Thus the principal point to be cleared up is, whether the apparent price, in this case Rs. 2,500, was the real price of a sale or was treated and regarded as a continuing debt between the parties the property being made security for the repayment of that debt.

31. At page 85 he mentioned two other circumstances as strengthening the conclusion that the transaction in that case was a mortgage, one being that, in spite of the terms of the deed of sale, possession remained with the vendors, and the other that the: value of the properties was double the sum fixed as the consideration of the apparent sale. In the case with which we have to deal has been found that there was no pre-existing debt and there is nothing to show that the relationship of debtor and creditor existed between the parties after the execution of Exh. 14. It does not appear that the vendee could have recovered his money. Assuming that the transaction was a mortgage by conditional sale, then under Section 67 of the Transfer of Property Act read with proviso (a) to the section, the mortgagee's only remedy would be foreclosure, and he would only have that remedy in the absence of a contract to the contrary. In the present case the mulgeni lease, Exhibit 37, would clearly be a contract to the contrary, inasmuch as it would prevent the mortgagee from getting possession of the property. So that it comes to this, that if the transaction was a mortgage the mortgagee had apparently no rights at all except on the basis of the permanent lease, Exh. 37. It is true that the possession of the property remained with the vendor, but that was under a lease reserving what has been found to be a fair rent, and not a nominal rent as in Madhavrao Keshavrao v. Sahebrao Ganpatrao, relied on by the learned counsel for the appellants. Mr. Coyajee has argued that the sum of Rs. 30, which is recited in Ex, 37 to be the customary value of the rent of ten managis of rice, is equivalent to six per cent, on the purchase money of Rs. 500. But there is nothing in the evidence, documentary or oral, about six per cent. That no doubt is the usual Court rate, but it is not the usual rate in private transactions in the mofussil. The fact to which Mr. Coyajee refers may well be merely a coincidence. Then, lastly, it has been found that the consideration in this case was not inadequate for an absolute sale.

32. The points on which Mr. Coyajee has laid most stress are that the provisions of the document Ex, 14 show firstly, an unwillingness on the part of the vendor to sell, as shown by the provision for repurchase, and, secondly, an unwillingness to part with possession of the land, as shown by the mulgeni or permanent lease, which made it impossible for the vendee to deprive him of possession or enhance the rent. No doubt the provision for repurchase does show reluctance to sell or at any rate to part with the land irrevocably. But, apart from some recent Allahabad decisions which have been referred to by my learned brother, it has never been suggested that the existence of a provision for reconveyance in a deed of this kind is enough to show that the transaction was a mortgage. Indeed there is the authority of the Privy Council to the contrary in Bhagwan Sahai v. Bhagwan Din ILR (1890) All. 387., Balkishen Das v. W.F. Legge ILR (1899) All. 149, 2 Bom. L.R. 588., and Jhanda Singh v. Wahid-ud-din ILR (1916) All. 570, 19 Bom. L.R. 1.

33. As regards the (sic) baaed on the mulgeni lease, the learned Judge has regarded this lease rather as an indication that the transaction could not have been a mortgage, because, as he says, 'the mulgeni tenure professes to create permanent rights, and if the relationship between Vasudev and Narsing was to subsist only for a definite period the creation of apparently permanent rights would serve merely to complicate the situation.' Mr. Coyajee questions this and urges that the permanent lease might be set aside if necessary as a clog on the equity of redemption, That may be true and there might not be any difficulty so far as the lessee is concerned. But the real difficulty arises from the position of the lessor who, as pointed out, would be left without any remedy qua mortgagee. Mr. Thakor's explanation of the mulgeni lease is that the vendor contemplated the possibility of his not being able to repurchase and so he retained, at any rate, the position of a tenant in perpetuity. By way of contrast he pointed out that in those cases where the transaction has been held to be a mortgage, if there has been a lease, the lease has been for the period fixed for repurchase, e.g., in Maruti v. Balaji (1900) 2 Bom. L.R. 1058 and Kasturchand Lakhmaji v. Jakhia Padia.

34. Exhibit 14 restricts the right of repurchase to the vendor himself or his wife or male issue. It also contains the clause 'we have no right to alienate the property by sale etc., to any body else, subject to this sale.' As regards these restrictions Mr. Coyajee says that no stress should be laid on the apparent limitation of the right to repurchase because the document does 'not appear to have been drafted by a lawyer. As regards the restraint on alienation he suggests that the mortgagee was anxious to see that the equity of redemption remained with the mortgagor. On the other hand Mr. Thakor argues that the restriction of the right to repurchase to particular persons would be a familiar and natural provision in a sale deed but would be invalid in a mortgage as a clog on the equity. Similarly, as regards the restraint on alienation he argues that, if the transaction was a sale, the vendor and his family might be given a personal right to repurchase which they could not transfer, but the equity of redemption of a mortgage could not be thus limited. He also points out that it could not make any difference to a mortgagee from whom he received his money. In my opinion the arguments of Mr. Thakor in this connection are the more convincing and the trial Judge appears to be right in his finding that the terms of the documents are on the whole much more consistent with the view that the transaction was an absolute sale.

35. Mr. Coyajee referred, without it seemed to me any great confidence, to certain recent decisions of the Allahabad High Court in Ram Charan Lal v. Dharain Singh ILR (1923) All. 173, Lalta Prasad v. Jagdish Narain ILR (1926) All. 787, and Mathura Kurmi v. Jagdeo Singh ILR (1926) All. 405, where the view has been expressed that where a promise to reconvey is part of the consideration for an ostensible sale, the transaction amounts to a mortgage by conditional sale within the definition in Section 58(c) of the Transfer of Property Act. A full bench of the Madras High Court has taken a different view in Muthuvelu Mudaliar v. Vythilinga Mudaliar ILR (1919) Mad. 407., and with respect I prefer the reasoning which appealed to the Madras High Court. It is not really necessary to choose between these two authorities because there is a decision of the Bombay High Court which deals with this point and is binding on us. I refer to Narayan Ramkrishna v. Vighneshwar ILR (1916) 40 Bom. 378, 18 Bom. L.R. 250, and in particular to the passage at page 882 which my learned brother has read. It appears to me that the proviso which has recently been added to this section makes no difference, except in the manner which my learned brother has explained.

36. For these reasons I hold that there is no ground for differing from the view of the lower Courts that this transaction was what it purported to be, viz., an absolute sale with a right to repurchase within twenty years. I agree that the appeal should be dismissed with costs.


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