1. This appeal arises out of a suit for redemption of an alleged mortgage. The Court' of first instance dismissed the suit. The plaintiff appealed, and the appeal coming before a Bench of this Court, consisting of the Hon'ble the Chief Justice and the Hon'ble Mr. Justice Banerji, the learned Judges differed, hence the present appeal under the Letters Patent.
2. The facts appear very fully from the judgments of our learned brothers, and it is only necessary very shortly to refer to them.
3. On the 29th of August 1852, the predecessors in title of the plaintiff executed a deed in favour of the predecessors in title of the defendants. This document, on the face of it, was an out and out transfer by way of sale of the properties now sought to be redeemed.
4. On the 5th of September 1852, another deed was entered into between the same parties. This document recites the sale-deed of the 29th August and proceeds as follows:
As we, the executants, are now willing to help and treat with kindness the vendors, we, the executants with our own free will do hereby covenant, and give it in writing that if the aforesaid vendors after the lapse of 9 or 10 years from the date of the aforesaid sale-deed, do pay to us the purchase money, etc., we shall forthwith execute a fresh sale-deed on receipt of the sale consideration entered in this document and get mutation of names effected in the revenue papers.
5. The deed goes on to provide that in default of payment at the end of 10 years the grantors shall have no further claim to the property.
6. The plaintiffs contend that these two documents must be read together and if they are read together they constitute a mortgage by conditional sale within the meaning of Section 58 of the Transfer of Property Act, Clause (e); that the plaintiffs; notwithstanding the time that has elapsed, have still a right to redeem, and that therefore, their suit ought not to have been dismissed.
7. The Transfer of Property Act was not, of course, in force when the document of the 29th August 1852 was executed but it is not contended that the Act introduced, any change in the law as to what constituted a mortgage by conditional sale. The defendants contend that the deed of the 29th of August was what, on the face of it, it purports to be, namely, an out and out sale, and that the subsequent document of the 5th of September was also what it purports to be, namely, an act of grace, and that, assuming it conferred on the plaintiffs or their predecessors in title any rights at all, such rights could only be exercised according to the actual terms of the deed and ceased and determined on the expiration of the period of ten years mentioned in the latter deed.
8. The plaintiffs argue that the form of mortgage by conditional sale is very common, particularly where the mortgagees are Mohammadans, that although a mortgage by conditional sale is more frequently carried out by a single deed, nevertheless, such a mortgage carried out by two deeds is not uncommon and was still less uncommon in the year 1852. They lay great stress on the improbability of the grantees in the deed of 29th August 1852, if in fact they were absolute vendees, foregoing their rights as such and becoming mortgagees in possession for a term of ten years.
9. The defendants rely on the unexplained, as they contend, interval of seven days between the execution of the two deeds, the express language of the later deed and certain other facts and circumstances to which I shall refer hereafter, as demonstrating that the two deeds were quite independent and ought to be given effect to accordingly.
10. It seems to me that if we hold that at the time of the execution of the first deed the parties intended that the second deed also should be executed, we ought to hold that the two deeds constituted a mortgage by conditional sale and that the plaintiffs have a right to redeem. On the other hand, if at the time of the execution of the sale-deed there was no intention of executing the second deed, the defendants are entitled to have the latter construed strictly and quite independent of the provisions of the Transfer of Property Act and the Law of Mortgages.
11. There can, in my opinion, be no doubt that if the two deeds were of even date an almost irresistible presumption would arise in favour of the transaction being a mortgage. I shall now very shortly refer to a few facts and circumstances relied upon by the parties.
12. The sale-deed was not registered until the 18th of May 1853 and it appears from the registration certificate to have been presented for registration by the ostensible vendors.
13. The deed of the 5th of September was registered on the 19th of May 1853 and was presented for registration by the ostensible vendees.
14. The plaintiffs contend that the presentation of the ostensible sale-deed for registration shows that the so-called sale-deed must in the interval have remained undelivered in the hands of the vendors. I do not think that this inference can be drawn. It is a very common practice for the deed to be presented by the party against whose interest it is, so as to make repudiation thereafter more difficult.
15. If we can believe the plaintiff's own witness, Narain, the sale-deed was given over to the ostensible vendees, on execution.
16. The parties entered into another transaction on the 29th August 1852. This was a simple mortgage. It recites the sale of mouza Murlipur Phul, as a sale, not as a mortgage nor as a mortgage by conditional sale. The interest is at a low rate but it shows that the grantees in the first mentioned deed of 29th of August 1852 though Muhammadans had no scruple in lending money on a mortgage which expressly provided for the payment of interest. On the 17th of July 1863 the parties entered into another transaction which was on the face of it a clear mortgage by way of conditional ale. This deed, no doubt, was executed some ten years after the first transaction but it cannot be left altogether out of consideration. It shows that in the year 1863 the parties, when they wanted to have a mortgage by conditional sale, adopted the more usual form of one single deed instead of two.
17. The deeds of the 29th of August 1852 (ostensible sale-deed) and 5th September 1852 each bear a stamp of Rs. 32. If the transaction had been a mortgage a stamp of Rs. 32 (or if carried out by two deeds Rs. 38) would have been sufficient. Lastly, it seems to me that no explanation has been given of the interval of 7 days between the execution of the two deeds. If the two deeds were all along dependent one on the other and constituted a mortgage by conditional sale why were both deeds not ready and executed the same day? As already mentioned, there was a simple mortgage executed on the 29th August. The plaintiff's Advocate referred us to the evidence of Narain where the witness states that there were differences between the grantors, and suggests that this explains why the two deeds were not executed on the same day. I cannot accept this explanation. It, perhaps, might explain the delay in registration but it does dot explain the interval of 7 days. Furthermore, I have already pointed out that another deed of simple mortgage was executed on the 29th of August. Differences between the grantors ought, it seems to me just as much, to have delayed the execution of this deed as the execution of the deed of the 5th of September. As to the argument based on the improbability of the vendees converting themselves into mortgagees, it may have been that the predecessors in title of the defendants considered that it was unlikely that the plaintiffs would ever be able to redeem, and that the grantees would in any event gain the advantage of getting possession with the good will of the grantors. However this may be, I do not think that this matter can outweigh the other circumstances of the case. After careful consideration, I have come to the conclusion that we ought to hold that at the time of the execution of the deed of the 29th of August 1852 the parties to it intended that there should be an put and out sale of mauza Murlipur Phula, and that the deed of the 5th of September following was the result of a subsequent arrangement between the parties and that, therefore, the suit was rightly dismissed by the Court of first instance. In my opinion the language of the deeds themselves and the surrounding circumstances so far from showing that it was the intention of the parties on the 29th August 1852 merely to make the property security for money lent, on the contrary show that the intention was that there should be an out and out sale. The case of Balkishen Das v. W.F. Legge 22 A. 49 : 27 I.A. 58 was decided on the language of the documents and surrounding circumstances peculiar to that case and for this reason cannot, I think, be relied on in the present case.
18. I would dismiss the appeal.
19. The intention of the parties has to be gathered from the documents themselves, the circumstances attending their execution and also from the conduct of the parties. The reason usually assigned for the execution of deeds of conditional sale instead of ordinary mortgages is, that Muhammadans who abide strictly by the tenets of their religion object to receiving interest on money lent. The vendees in the present case who are Muhammadans have no such scruples, for on the same date, i.e., 29th August 1852, the plaintiffs and their predecessors in title executed a deed of mortgage bearing interest in favour of the vendees in respect of another property. The sale was complete and absolute on 29th August 1852. The document in clear and unmistakeable terms indicates that it was a sale out and out. Mutation of names took place in respect of the property on 7th September 1853 and ever since that date the vendees have remained as owners of the village. If it had Been the intention of the plaintiffs or their predecessors in title to execute only a mortgage-deed on the 29th August 1852 it is difficult to imagine why they should have consented to execute an out and out sale-deed. That the agreement of the 5th September 1852 was the result of an after-thought is in my opinion, indicated first by the lapse of 7 days since the date of execution of the sale-deed, and further, by the fact that in order to execute the agreement the plaintiffs had to incur the further expense of purchasing a fresh stamp paper for Rs. 32.
20. If it had been the intention of the parties on the 5th September 1852 that the sale-deed of the 29th August of the same year should not operate as a sale-deed, but that the defendants were to renew a possession merely as mortgagees, the simplest and most direct method for the plaintiffs to adopt would have been on 5th September 1852 to tear up the sale-deed and execute another document setting out the intention plainly and distinctly.
21. I would, therefore, agree with the view taken by the learned Chief Justice.
22. I would dismiss the appeal.
23. I am fully in agreement with my learned colleagues in the view they have taken of the case.
24. It is clearly a question of intention. On the 29th August 1852 two documents were executed, one an out and out sale of the property in question and another a simple mortgage-deed (bearing interest) of other property. The Muhammadan vendees, therefore, clearly had no scruples in taking interest and in openly declaring this in writing.
25. If, therefore, the parties intended a mortgage in both cases there was no reason why they should in the one case have executed what on the face of it is an out and out sale-deed.
26. The agreement to re-sell on payment of the purchase-money was executed seven days after (5th September, 1852). There is no explanation of this delay.
27. The witness Narain is one of the original vendors. He admits that Ilahi Baksh wished to purchase the property but says that he was only willing to mortgage and that the two deeds were executed because Ilahi Baksh stated that as a Muhammadan he could not' openly take interest.. This statement is disproved by the simple mortgage-deed of 29th August 1852. It is suggested at the bar that the Muhammadans wished to evade the usury laws which were then in force and forbade the taking of more than 12 per cent. interest. There is no material on record to indicate the profits of this village in 1852, and the resultant interest on the amount paid by the vendees.
28. In regard to registration, it has first to be noted that under the law as it then stood registration was not compulsory and the sale was complete on August 29th, 1852. Moreover though the registration was delayed until May 1853, even then the two documents were not registered together but on separate dates.
29. On the evidence of Narain himself the sale-deed up to the time of registration remained with the vendees and not with the vendors. It does not follow from the bare fact that the vendors handed it to the Sub-Registrar in May 1853, that it had till that date remained in their (the vendors') hands.
30. It is contended that the language used in the deed of agreement, where it sets forth the action which the vendors might take to enforce the agreement in case the vendees failed to carry out their promise, is a reference to the procedure which was then in force under Regulation I of 1798 for the redemption of a mortgage, and clearly indicates the intention of the parties. In the first place, I think the document has not been properly translated. The word 'and' has no place in the original. In the next place, the language would apply in a certain degree to a suit for specific performance of contract. But in any case we have to look to the intention of the parties at the time when the sale-deed of 29th August, 1852, was executed and it is not possible to say from this language in the deed of 5th September 1852 that on 29th August 1852 the parties intended a mortgage and not a sale. I would further point out that though the vendors live in this very village and two settlements have taken place (one in 1858) since the year 1852, they have never put forward at such settlements a claim to be recorded as mortgagors. The vendees have all along been recorded as full owners The parties clearly understood what a mortgage was, including a mortgage by conditional sale, as is shown by the subsequent litigation (and its results) on the simple mortgage deed of 29th August 1852. In my opinion there are not sufficient grounds for holding that the transaction entered into by the parties on 29th August 1852 was other than what it purported to be on the face of the sale-deed of that date. The case is clearly distinguishable from the case of Balkishan v. W.F. Legge 22 A. 49 : 27 I.A. 58 and is similar to that of Bhagwan Sahai v. Bhagwan Din 9 A. 97, in fact, is a far stronger than the latter in that there was an interval of 7 days between the two documents.
31. I would, therefore, dismiss the appeal.
32. The appeal is dismissed with costs including fees on the higher scale.