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Abdul Rahman Vs. Mt. Bismillah Begam and ors. - Court Judgment

LegalCrystal Citation
Subject Property
CourtAllahabad
Decided On
Reported inAIR1939All539
AppellantAbdul Rahman
RespondentMt. Bismillah Begam and ors.
Excerpt:
- - the language of the sale deed and the contemporaneous deed of agreement is perfectly clear and shows that a transaction of sale was intended. it was in the interest of the vendor that the house was kept in good repairs......sale and accordingly decreed the suit for redemption. it appears that the plaintiffs executed a sale deed with respect to the house in dispute for a consideration of rs. 350. this deed was executed on 6th july 1928. on the same date the purchaser executed an agreement in favour of the vendors undertaking to retransfer the property within three years for a consideration of rs. 350. the present suit for redemption was instituted some years after the expiry of the period provided in the deed of agreement. the question for determination is whether the transaction was an out and out sale as it purports to be, or was a mortgage by conditional sale. the lower appellate court has given reasons for holding that the transaction was not what it purported to be but was a mortgage as alleged by.....
Judgment:

Mohammad Ismail, J.

1. This is a defendant's appeal arising out of a suit brought by the plaintiffs for redemption of a mortgage executed in favour of the defendant on 6th July 1928. The suit was contested by the defendant on the ground that the transaction was an out and out sale and that no suit for redemption was maintainable. The Courts below upon a consideration of evidence and circumstances came to the conclusion that the transaction was a mortgage by conditional sale and accordingly decreed the suit for redemption. It appears that the plaintiffs executed a sale deed with respect to the house in dispute for a consideration of Rs. 350. This deed was executed on 6th July 1928. On the same date the purchaser executed an agreement in favour of the vendors undertaking to retransfer the property within three years for a consideration of Rs. 350. The present suit for redemption was instituted some years after the expiry of the period provided in the deed of agreement. The question for determination is whether the transaction was an out and out sale as it purports to be, or was a mortgage by conditional sale. The lower Appellate Court has given reasons for holding that the transaction was not what it purported to be but was a mortgage as alleged by the plaintiffs.

2. A sale with a condition of retransfer is a common form of transfer in vogue in this country. It is often a matter of some difficulty whether a particular document or sot of documents disclose a transaction of mortgage by conditional sale or out and out sale. In order to bring a transaction within the category of mortgage the relationship of debtor and creditor must subsist between the parties and if there is no debt for which the transfer is a security it is impossible to hold that the transaction is a mortgage. When a document on the face of it appears to be a sale deed, in the absence of fraud, it must be held to embody a transaction of sale. The burden of proving it to be a deed of mortgage will rest heavily on the party alleging it to be so in Bhagwan Sahai v. Bhagwan Din (1890) 12 All. 387 their Lordships of the Judicial Committee quoted with approval the following passage from Alderson v. White (1858) 2 De G. & J. 97 at page 105:

The rule of law on this subject is one dictated by common tense; 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.

3. To discharge the burden the contemporaneous conduct of the parties may be proved if it is permissible to do so under Proviso (b) to Section 92, Evidence Act. This Section excludes evidence of an inconsistent, oral agreement and provides only for cases of fraud invalidating a document. In Balkishen v. Legge (1900) 22 All. 149 their Lordships of the Privy Council observed:

Their Lordships do not think that oral evidence of intention was admissible for the purpose of construing the deeds or ascertaining the intention of the parties. By Section 92, Evidence Act, no evidence of any oral agreement or a statement can be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contracting, varying, or adding to, or subtracting from, its terms subject to the exceptions contained in the several provisos.... The case must therefore be decided on a consideration, of the contents of the documents themselves with, such extrinsic evidence of surrounding circumstances as may be required to show in what manner the language of the document is related to existing facts.

4. In the present case the plaint is absolutely silent as to the reasons that led the parties to enter into a transaction of sale with a condition of re-transfer instead of a mortgage by conditional sale. There is no suggestion that the vendor was under the influence of the vendee nor is it suggested much less proved -- that the relation of debtor and creditor subsisted between the parties. The language of the sale deed and the contemporaneous deed of agreement is perfectly clear and shows that a transaction of sale was intended. The agreement was executed to give an option to the vendor to re-purchase the property within three years. The learned Civil Judge has summed up the grounds which induced him to hold that the transaction was a mortgage. I now proceed to examine those grounds in the light of proved facts, (1) That the deeds were executed simultaneously on the same date and at the same time and formed part of one and the same transaction. As the parties agreed to the terms-embodied in the agreement it was necessary to execute the agreement on the same date as the sale deed, otherwise the vendor might be tempted to resile from the terms agreed upon. (2) The respondents (vendors) were given the liability of carrying out the repairs even after the execution of the two-deeds and before the operation of the clause of repurchase showing that the respondents had some interest left in the property even after the sale. The right of repurchase was given within three years. It was in the interest of the vendor that the house was kept in good repairs. The vendee could not be expected to spend money on repairs knowing that he was likely to lose the property within three years. The vendee was bound to sell the property for the same consideration which he paid for it. It is obvious that the vendee would be reluctant to incur any expenditure on the maintenance of the house. That being so in my opinion this condition is not inconsistent with the document being a sale deed. (3) The word 'waguzaasht' in the agreement is only loosely used and in no way alters the plain meaning of the words of the rest of the deed. (4) The fact that the amount of consideration for this transfer was considerably below the actual value of the property transferred.

5. The value of the property according to one witness was between Rs. 500 and Rs. 600. The witness did not claim to be an expert and the value stated by him is only an approximate estimate and cannot be accepted too literally. Apart from this as the vendee was likely to lose the house only within three years it is manifest that he would not pay a very high price for it. The grounds enumerated by the learned Civil Judge do not appear to me conclusive, nor do they necessarily lead to the conclusion that the sale deed is in reality a mortgage deed. A number of authorities have been cited at the bar where this question was considered. Every case was decided on its own facts. Sir Dinshah Fardunji Mulla in his Commentary on the Transfer of Property Act has summed up the tests to be applied in such cases. They are as follows : (1) The existence of a debt. (2) The period of repayment; a short period being indicative of a sale and a long period of a mortgage. (3) The continuance of the Igrantor in possession indicates a mortgage. (4) A stipulation for interest on repayment [indicates a mortgage. (5) A price below the true value indicates a mortgage. (6) A contemporaneous deed stipulating for a reconveyance indicates a mortgage.

6. It may be noted that any one of the circumstances mentioned above will not necessarily prove that a sale deed with a condition of repurchase is in fact a mortgage by conditional sale. In the present ease the only circumstance that has been emphasized upon is the inadequacy of the price. I have already held that the evidence to prove the price is by no means very convincing and in view of the short time allowed by the agreement for repurchase of the property the sum paid as consideration in the sale deed is not particularly low.

7. As stated above the suit was brought some eight years after the execution of the deed. On the expiry of the lease the vendee relying upon the terms of the agreement has spent money on improvements and repairs. It would be highly unfair if the vendee is deprived of the money spent by him on the strength of the clear terms of the deed. A party must be held to be bound by his written agreement unless special circumstances exist to the contrary. In the result the appeal is allowed with costs, the decree of the Court below is set aside and the suit is dismissed.


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