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Jhanda Singh and ors. Vs. Sheikh Wahid-ud-dIn and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Judge
Reported in6Ind.Cas.183
AppellantJhanda Singh and ors.
RespondentSheikh Wahid-ud-dIn and ors.
Excerpt:
mortgage - mortgage by conditional sale--sale with a right to re-purchase--deed--construction--test of mortgage by conditional sale--origin of bai-bil-wafa. - - 58. if his contention be well-founded, then the plaintiffs-appellants are entitled to redeem and to have an account from the defendants of the rents and profits of the property from the year 1852 up to the present time. 98. 7. in my opinion this last contention is well-founded. during the aforesaid term i shall remain in possession, collect the rents, enjoy the profits and be liable for loss; ' his contention is that this provision is a strong indication that the transaction was one coming within the purview of bengal regulation i of 1798, a regulation to prevent fraud and injustice in conditional sales of land under deeds of..........below dismissed the plaintiffs' suit finding that the document in question was an. out and out sale-deed and not a mortgage. against this decision, the present appeal has been preferred on the grounds that upon a true construction of the document in question and another document of the 8th of september, 1852, the transaction evidenced by them was a mortgage by way of conditional sale.3. in the document of the 29th of august 1852, the entire of a tillage called murlipur phul, which is stated therein to belong to the executants by right of inheritance, was conveyed to ilahi bakhsh and others in consideration of a sum of rs. 5,500. the operative part of the document runs as follows: 'we have now sold the entire 20 biswa zamindari property aforesaid together with all the rights and.....
Judgment:

John Stanley, C.J.

1. This appeal arises out of a suit for redemption, of what is alleged to be a mortgage, dated the 29th of August 1852, executed by the predecessors-in-title of the plaintiffs against the representatives of the alleged mortgagees.

2. The Court below dismissed the plaintiffs' suit finding that the document in question was an. out and out sale-deed and not a mortgage. Against this decision, the present appeal has been preferred on the grounds that upon a true construction of the document in question and another document of the 8th of September, 1852, the transaction evidenced by them was a mortgage by way of conditional sale.

3. In the document of the 29th of August 1852, the entire of a Tillage called Murlipur Phul, which is stated therein to belong to the executants by right of inheritance, was conveyed to Ilahi Bakhsh and others in consideration of a sum of Rs. 5,500. The operative part of the document runs as follows: 'We have now sold the entire 20 biswa zamindari property aforesaid together with all the rights and interests appertaining thereto for a sum of Rs. 5,500 to llahi Bakhsh, Abdul Rahim, Abdul Karim and Abdul Hakim and the aforesaid vendees purchased the aforesaid property from us in consideration of the aforesaid amount. The sale is valid, legal, lawful and enforceable. Accordingly the proposal and acceptance have taken place between the parties. We have received the whole of the consideration in respect of the property sold from the aforesaid vendees and have brought the same to our use. We have put the vendees into possession and enjoyment of the aforesaid property together with all that cesses and revenues.' This document was presented for registration on the 18th of May 1853 by the executants, or persons representing them, and the receipt of the consideration admitted before the registering Officer.

4. On the 5th of September following, an agreement was entered into between Ilahi Bakhsh, Abdul Rahim, Abdul Karim and Abdul Hakim with the executants of the document of the 29th of August 1852, in which that document is recited as being a purchase of the village in question, and then an agreement for re-sale is stated in the following terms: 'As we the executants are now willing to help and treat with kindness the vendors, we the executants of our own free will do hereby covenant and give in writing that if the aforesaid vendors after the lapse of 9 to 10 years from the date of the execution of the aforesaid sale-deed, do pay to us the purchase-money as entered in the sale-deed, i.e., the sum of Rs. 5,500, out of their own pocket without mortgaging or selling their property to other persons, we shall forthwith execute a fresh sale-deed on receipt of the sale consideral ion entered in this document and get mutation of names effected in the revenue papers. We shall never deviate from what we have agreed upon. In the event of oar refusal, they have power to deposit into the treasury attached to the Court the amount of consideration entered in the sale-deed; and after the institution of a suit in Court to purchase their property anew. Further if the aforesaid persons be not ready, to purchase the property and to pay the purchase-money within the aforesaid time, they shall have no claim to the aforesaid property after the expiry of the period of ten years.'

5. This agreement was presented for registration by the executants on the 19th of May 1853, that is, the day after the date of registration of the earlier document. I may observe that documents of the kind were not at this time compulsorily registrable.

6. The learned Judge, after a review of the authorities, held that the document of the 29th of August 1852, was not a mortgage but an out and out sale and that any claim on foot of the subsequent document of the 5th of September 1852, was barred by limitation.

7. This appeal has been preferred and the contention of the learned Advocate for the appellants is that the two documents must be read together and that being so read, they are evidence of a mortgage by way of conditional sale, and that the case is governed by the ruling of their Lordships of the Privy Council in Balkishen Das v. Legge 22 A. 149 : 27 I.A. 58. If his contention be well-founded, then the plaintiffs-appellants are entitled to redeem and to have an account from the defendants of the rents and profits of the property from the year 1852 up to the present time.

6. On the other hand, it is contended that the two documents are evidence of two different transactions, one being an out and out sale, the other an agreement to re-sell within a limited time and that the case is governed by the ruling of their Lordships of the Privy Council in Bhagwan Sahai v. Bhagwan Din 12 A. 387 : 17 I.A. 98.

7. In my opinion this last contention is well-founded. I am unable to distinguish the case from that of Bhagwan Sahai v. Bhagwan Din 12 A. 387 : 17 I.A. 98. In that case the two documents, were contemporaneous, being dated the 20th of February 1838. By the first document. Alam Singh and others, who professed to be the proprietors of certain property, declared that they had ,pf their own accord absolutely sold the entire property to Ganga Din in consideration of a sum of Rs. 4,000. Then on the same day another document was executed by which Ganga Din after the recital of the deed of purchase added 'I have, as a matter of favour, mercy, kindness and indulgence, executed this deed, and do hereby stipulate that if all these vendors will, within a period of ten years from the date of this deed, pay in a lump sum and without interest the whole amount specified above I shall accept the same and cancel this valid sale. During the aforesaid term I shall remain in possession, collect the rents, enjoy the profits and be liable for loss; the vendors shall have no concern whatever. I shall, not claim interest from the vendors, nor will they demand profits from me after the expiry of the term. In case the whole of the principal is not paid the vendors shall not be able to cancel the sale by payment of the principal.' Sir Barnes Peacock, who delivered the judgment of their Lordships of the Privy Council, held reversing the decisions of the Courts below that it was clear that 'this case was not one of mortgagor and mortgagee but one of an absolute sale with a right to re-purchase within a period of ten years.' In that case it will be observed both the documents were executed on the same day which lent colour to the contention that the two transactions were really one transaction. In the case before us there was an interval of 7 days between the execution of the two documents, and the registration of first document was effected on the 18th of May 1853, whilst the registration of the agreement was on the following day. From this it may reasonably be inferred that the parties intended that the transactions should be kept separate and distinct. The documents taken together do not, on the face of them, constitute a mortgage; and assuming that they are to be read together there is nothing in them to indicate that they represented a mortgage transaction. Prima facie an absolute conveyance, containing nothing to show that the relationship of debtor and creditor is to exist between the parties, does not cease to be no absolute conveyance merely because the vendor stipulates that he shall have a right to re-purchase. But there was in this case no stipulation on the part of the vendor that he should have a right to purchase. It was the executants who undertook to re-convey out of kindness to the vendors, just as in Bhagwan Sahai v. Bhagwan Din 12 A. 387 : 17 I.A. 98, the vendees 'as matter of favour, mercy, kindness and indulgence' stipulated that their vendors should have that right.

8. The learned Advocate for the appellants strongly relied upon a passage contained in the agreement of the 5th of September 1852 which runs as follows: 'In the event of our refusal (i.e., the refusal of the vendees to re-convey), they (the vendors) shall have power to deposit into the treasury attached to the Court the amount of consideration entered in the sale-deed, and after institution of a suit in Court to purchase their property again.' His contention is that this provision is a strong indication that the transaction was one coming within the purview of Bengal Regulation I of 1798, a regulation to prevent fraud and injustice in conditional sales of land under deeds of bai-bil-wafa or other deeds of the same nature. By that Regulation, the mortgagor under deeds of this description was empowered to deposit the amount due on or before the stipulated date in the Dewani Adaulat of the city or zillah in which the land might be situate and redeem the property.

9. Reliance was placed on the language in question in view of the decision of their Lordships of the Privy Council in the case of Balkrishon Dan v. Legge 22 A. 149 : I.A. 58. In that case Legge executed in favour of Balkrishen Das and another, a firm of Bankers in Benares, a deed of sale of his estate, the price stated being Rs. 1,50,000. The consideration was not paid in cash, but consisted in part of money unpaid upon a previous mortgage to the banking firm, effected on the 8th of April 1872, and the rest of the consideration was a balance, retained by the banking firm, of the amount then due on an estimate of expenses for conducting certain factories which, they financed for the plaintiff. A second document was executed by the banking firm to the plaintiff on the same day whereby the firm agreed to re-sell the property to Legge if he paid on the 1st of March 1876 the sum of Rs. 1,65,000 and it was agreed that if the buyers or their heirs should raise any objection to receive the money and relinquish the property, the vendor should be competent to deposit the amount in cash in the treasury by virtue of the agreement and obtain possession of the property. It was further stipulated that if the estimate of the expenditure on the indigo factories should be varied by consent from year to year, then the vendor should be liable to pay along with the sum specified above whatever sum may be found to be due by him at this time. Their Lordships held that there were contained in the two documents indications that the parties intended to effect a mortgage by conditional sale, and that redemption had been rightly decreed in the Courts below. Lord Davey, who delivered the judgment of their Lordships, in the course of his judgment pointed out that mortgages by conditional sale under various names were a common form of mortgage in India and that this form was introduced to enable Muhammadans, contrary to the precepts of their religion, to lend money at interest and obtain security for principal and interest, and that, therefore, one would expect to find that the transaction would be made to assume the appearance of a sale. Referring to the case of Bhagwan Sahai v. Bhagwan Din 12 A. 387 : 17 I.A. 98, he observed: Their Lordships decided that case on the language of the deeds in question which they evidently considered showed that the transaction was not such a transaction as is described in the Regulation of 1806 and there was, therefore, no right of redemption after the expiry of 'the date fixed.' He then later on observes that 'the documents in question contained important indications of the intention of the parties. The second deed or ikrarnama provides that if the bankers object to receive the money and relinquish, the property, the vendor may deposit the amount in the treasury 'by virtue of this agreement' and obtain possession over the ilaqa.' This provision he said 'at once suggests a reference to Regulation I of 1798 as being in the opinion of the parties applicable to the case. It was not suggested that there was any other statutory provision or practice by which such deposit could be made by virtue of the agreement alone without the intervention of the Court in a suit for the purpose, while on the other hand the words exactly describe the procedure under the Regulation.' Again he observed: 'the estate was made redeemable only on payment as well of the amount which should be found due at the time of redemption on account of the Basharatpur concern as of the stipulated sum of Rs 1,65,000. The practical effect of this was, he held, to consolidate the debt on the factories account with the principal sum mentioned in the deed and to give the bankers a security on the taluka for the debt of the factories. This gives the transaction the character of a mortgage so far as the factory accounts are concerned and if it is to some extent a mortgage it may well be held to be so entirely.'

10. The facts of that case are unlike those of the present. Here the agreement for re-purchase was at the price originally paid for the property, and there was no consolidation of the sum representing the price with a debt on any account such as would give the transaction the character of a mortgage to any extent. The words in the agreement whereby the vendors were empowered to deposit into the treasury the amount of the consideration mentioned in the sale-deed are vague and little weight can be attached to them. Unintelligent draughtsmanship would account for them. The subsequent words 'after the institution of a suit in Court' seem to indicate the course which the vendors were to adopt in the event of the vendee's refusal to fulfil his agreement to re-sell, namely, a suit for specific performance of the agreement. If this be so, the reference to a deposit in Court pointed to a deposit of the purchase-money in the Court having seisin of the suit for specific performance. Whatever be the meaning of this passage, it is too obscure and vague, in my opinion to justify us in holding that the two documents are to be read together and that being so read they constitute a mortgage by way of conditional sale. This is the main plank upon which the learned Advocate for the appellants based his argument in support of his contention that this case comes within the ruling in. Balkishen Das v. Legge 22 A. 149 : 27 I.A. 58. The best general test of the intention of the parties in cases such as the one before us is the existence or non-existence of a power in the original purchaser to recover the sum named as the price of the re-purchase. If there is no such power there is no mortgage. See Williams v. Owen 5 My & Cr. 305 : R.R. 322 : 12 L.J. Ch. 207 : 5 Jur. 114. Lord Manners in Goodman v. Grierson 12 R.R. 82 : 2 Ball. & B. 278, adopted a somewhat, similar test. He observed: 'The fair criterion by which the Courtis to decide whether this deed be a mortgage or not, I apprehend to be this--are the remedies mutual and reciprocal, has the defendant all the remedies a mortgagee is entitled to?'' Tried by this test, there can be no doubt that the transactions before us did not constitute a mortgage, A sale with a provision for re-purchase is not common either in this country or in England but there is nothing illegal or objectionable in such a transaction. The document of the 29th of August 1852, purports in clear and unambiguous language to be a sale-deed. The document of the 8th of September 1852 likewise in explicit terms purports to be an agreement for re-sale within a limited period. There is nothing in them to indicate that the parties did not intend that these documents should operate according to their tenor. There is nothing illegal in a transaction of sale with an agreement for re-sale within a limited time and I fail to see why these documents should be interpreted differently from any other document. I would point out that no qualms of conscience in regard to the lending of money at interest and obtaining security for principal and interest could have had any influence on the parties to these transactions inasmuch as we find that a simple mortgage securing principal and interest was given and taken by the same parties on the day of the sale of Murlipur, Phul, that is the 29th of August 1852. This mortgage is No. 1230 of the record. In it we find an admission by the mortgagors of the receipt of Rs. 2,500, the consideration for the bond as also of the receipt of Rs. 5,500, the consideration for the purchase of Murlipur Phul. By this mortgage another property of the mortgagors was hypothecated in the ordinary form, the mortgag-ors agreeing to pay principal and interest. It cannot, therefore, be said that it was to avoid the interest question that the other transaction was carried out in the form of a sale and agreement for resale. I am at a loss to understand on what principle of equity or good conscience the plaintiffs-appellants can justly claim a right now to redeem or repurchase the property. They or their predecessors-in-title allowed the period for repurchase to elapse and now after a lapse of more than half a century seek to convert a sale with an option of re-purchase within a limited period into a mortgage by, way of conditional sale. The Court below, in my opinion, rightly dismissed their suit. I would, therefore, dismiss the appeal.

Banerji, J.

11. The question in this appeal is whether the two documents of 1852 together constituted a mortgage known as a bai-bil-wafa mortgage, that is, a mortgage, by way of conditional sale, or an out and out sale with a contract for re-purchase. The test in these cases is what was the intention of the parties. This is to be gathered from the documents themselves and from surrounding circumstances. The first circumstance to which I would refer is, as pointed out by Dr. Rashbehari Ghose in his well known work on Mortgages, 3rd Edition, p. 114, that 'a bonafide sale with a condition for re-purchase is very rare in this country, while it is a very common parctice with mortgagees to take a conveyance of the property from the mortgagor with a condition for repurchase as security for the loan; the mortgagee either taking the rents in lieu of interest or allowing the mortgagor to remain in occupation paying interest on the mortgage-money under the name 'f rent.' The next circumstance I would refer to is the fact that in these Provinces the Muhammadan forms of conveyancing were followed for a long time, specially in case in which one of the parties to the transaction was a Muhammadan. See the observation of Edge C.J. in Ali Ahamd v. Rahamatullah 14 A. 195 at. P. 199. Another circumstance which I may mention is that as Muhammadans are prohibited from taking interest they resort to the device of obtaining an absolute sale with a stipulation for re-purchase in order to evade the prohibition as to interest. This is the origin of bai-bil-wufa transaction under which in the garb of a sale the creditor enjoys the usufruct of the property in lieu of interest, the transaction being in reality a mortgage. Such mortgages were very common in earlier times and were effected sometimes by the execution of a deed of absolute sale containing a contract for re-purchase and often by the execution of two documents, one of which purported to be a deed of sale out and out and the other an agreement by the ostensible purchaser to re-convey the property to the apparent vendor. Such transactions have always been regarded as mortgages by way of conditional sale. Among Muhammadan lawyers a long term for re-purchase denotes a mortgage or security for a loan.' (See Ghose on Mortgages, p. 77, 3rd Edition).

12. Bearing these circumstances in mind, if we look at the transaction in question it seems to me to be clear that it was a bxi-bil-wafa mortgage, that is, a conditional sale, and not an absolute sale with a right of re-purchase. The persons who, purported to be purchasers were Mohammadans and they were to take possession and enjoy the usufruct. They executed a document by which they agreed to reconvey the property 'after the expiry of the term of 9 to 10 years' enjoying in the meantime the usufruct in lieu of the use of their money. It is true, the two documents bear different dates but they were presented for registration about the same time, the one on the 18th and the other on the 19th of May 1853 and neither of them was delivered before registrantion as the endorsement of the registering officers shows. They were, therefore, in fact contemporaneous documents, as in ordinary cases of bai-bil-wafa mortgage. The long term of ten years is another indication that the transaction was a mortgage. Further, the agreement provides that 'in the event of the executants of it refusing to execute a sale-deed on receipt of the amount mentioned in the document, the nominal vendors would have power to deposit in the Treasury attached to the Court the amount of consideration entered in the sale-deed.' This clause, in my opinion, refers to a deposit under Regulation I of 1798, as in the case of Balkishen Das v. Legge 22 A. 149 : 27 I.A. 58 and shows that the parties regarded the transaction as one of mortgage to which the Regulation applied. The absence of the words by virtue of this agreement seems to me to be immaterial and I do not agree with the Court below that a suit for specific performance was contemplated. This case is in many respects similar to that of Balkishen Das v. Legge 22 A. 149 : 27 I.A. 58 referred to above and is distinguishable from that of Bhagwan Sahai v. Bhagwan Dts 12 A. 387 : 17 I.A. 98 relied on by the Court below. The transaction in question was, in my judgment, one of a mortgage by way of conditional sale. I would, therefore, allow the appeal, set aside the decree of the Court below and remand the case to that Court for trial on the merits.

13. The members of the Bench being divided the decree of>the Court below will stand. We accordingly affirm the decree of the Court below and dismiss the appeal but under the circumstances without costs.


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