1. This is an appeal by Thakra Singh who was the plaintiff in the suit. Mr. S.N. Katju on his behalf has argued the case with great ability and thoroughness and has said all that could be said in the matter, but we have come to the conclusion that the view taken by the Courts below in this case is correct. The plaintiff brought the present suit for a declaration that the property detailed in the plaint was attachable and saleable in execution of the decree in Suit No. 319 of 1927, Thakra Singh, decree-holder v. Attar Singh, judgment-debtor, of the Court of the Munsif of Bijnor. It was stated in the plaint that after obtaining his decree against Attar Singh the plaintiff took out execution of the said decree and wanted to get the property mentioned in the plaint attached and sold by auction, but a fictitious and fraudulent Sale deed was executed on 19th November 1928 by Attar Singh in favour of Sheo Nath Singh and objections were taken to the execution on the ground that the property did not belong to the judgment-debtor of the plaintiff but was owned and possessed by Sheo Nath Singh. These objections were allowed by the Court on 11th January 1932, and therefore the plaintiff had to bring the present suit under the provisions of Order 21, Rule 63, Civil P.C.
2. It would thus appear that the plaintiff's case originally was that the sale in favour of Sheo Nath Singh was fictitious and collusive and without consideration. Sheo Nath Singh filed his written statement and therein stated that the sale deed was executed for Rs. 16,000 instead of Rs. 20,000 for the reason that Attar Singh and Sheo Nath Singh had entered into an agreement whereunder Attar Singh had stipulated that he would get the property sold reconveyed if he paid to Sheo Nath Singh the sale consideration together with interest at the rate of Rs. 2 per cent. per mensem within six months, and as Attar Singh had not paid the money to the defendant the defendant was the owner of the property unfettered, by any condition of re-purchase. Sheo Nath Singh was subsequently examined on 9th January 1933 and he stuck to the position which he had taken in the written statement with this addition, that he alleged that he was to get interest as well as profits.
3. In this state of the pleadings the plaintiff declined to produce any evidence and so did the defendant, and learned Counsel for the parties proceeded to argue the case. It was contended on behalf of the plaintiff that on the case put forward by the defendant the document of 19th November 1928 was a mortgage by conditional sale. Mr. Daya Nand Joshi who heard the case in the first instance held the view that the document was a mortgage by conditional sale and decreed the plaintiff's suit. It might be mentioned at this stage that the villages mentioned at the foot of the plaint included a village by the name of Bakarpur Jairam, but during the pendency of the suit it became quite clear that Bakarpur Jairam was not sold to Sheo Nath Singh and hence the decree granted by Mr. Joshi was confined to the other villages mentioned in the plaint. There was an appeal by the defendant and Mr. Lakshman Prasad passed a curious order in the case which has given rise to certain arguments. He felt dissatisfied with the attitude taken by learned Counsel for the parties in the trial Court and was of the opinion that the defendant was prejudiced by the attitude taken by his counsel. He thought that an opportunity should be given to the parties to show if time was of the essence of the contract of re-purchase. One would have thought that under these circumstances he would have remitted an issue and asked for a finding from the trial Court on the particular issue, but instead he set aside the decree of the trial Court and remanded the suit to that Court for re-trial on the merits after giving the parties opportunity to produce evidence on the question referred to above. A decree under Order 41, Rule 35, Civil P.C., was prepared.
4. When the case went back the learned Munsif was Mr. N.P. Sanyal and he felt some difficulty in interpreting the order of the learned Additional Civil Judge. In the end he thought that the better view to take was that the suit had been remanded under Order 41, Rule 23, Civil P.C., and the parties should have a right to give evidence on all the issues in the case and he gave such permission both to the plaintiff and to the defendant. The plaintiff declined to take advantage of the permission and agreed to give rebutting evidence on the issue of time being of the essence of the contract. Evidence was then tendered by the parties, and in an elaborate judgment Mr. Sanyal came to the conclusion that the transaction of 19th November 1928 was an out and out sale and there was an agreement to reconvey the property if the vendor paid Rupees 16,000 with interest at Rs. 2 per cent. per mensem within six months. The learned Munsif observed:
The period of six months was the essence of that oral contract entered into between the vendors and vendee on Sunday, 18th November 1928, a day before the sale deed in suit was executed.
5. He accordingly ordered that the suit for declaration that the property of Bakarpur Jairam was liable to attachment and sale in execution of the plaintiff's decree was decreed, but the suit for declaration that the properties in the other villages which were the subject of sale in the defendant's favour was dismissed. There was an appeal by the plaintiff and the appeal was dismissed by Mr. Nawab Hasan who was the then Additional Civil Judge of Bijnor. The plaintiff has therefore come in second appeal to this Court and has argued two points before us.
6. The first is that the plaintiff had been prejudiced by the attitude adopted by Mr. Sanyal in not confining his judgment to the one issue in the case, namely whether time was of the essence of the contract, and in trying the case de novo. This point has not been taken in the memorandum of appeal filed in this Court, but we allowed Mr. Katju to address us on this point. We have not been able to appreciate clearly the prejudice which learned Counsel says was caused to his client. The learned Munsif gave opportunity to both the plaintiff and the defendant to adduce evidence on the whole case and we think that he interpreted the order of Mr. Lakshman Prasad correctly. It is true that Mr. Joshi in the first instance had decided the whole case on the merits and not on a preliminary point, but the way in which the order of Mr. Lakshman Prasad was worded left no room for any other interpretation excepting the one put upon it by Mr. Sanyal. No prejudice seems to have been caused to the plaintiff inasmuch as if the order of Mr. Lakshman Prasad be considered to be one under Order 41, Rule 25, Civil P.C., the decision of Mr. Joshi that the transaction in dispute was a mortgage by conditional sale would not be binding on the appellate Judge when the matter came to him and in the present case we do find that Mr. Nawab Hasan, the successor-in-office of Mr. Lakshman Prasad, did come to the finding that the transaction in dispute was a sale out and out with the condition of re-purchase.
7. The next contention that was advanced by the appellant was that the document dated 19th November 1928 was a mortgage by conditional sale and the plaintiff's suit ought to have been decreed and the equity of redemption should have been permitted to be attached and sold in execution of the plaintiff's decree. Several cases have been cited by learned Counsel for the appellant in which the view has been taken that where the contract of sale and the contract of repurchase are evidenced by a single document or more or less contemporaneous documents the transaction is a mortgage by conditional sale and is not a sale out and out with the condition of re-purchase. We are not prepared to accept this proposition in the broad and bald manner in which it has been stated by learned Counsel for the appellant or in which it might have been stated in some of the cases cited by him. We think in every case it is a question of intention to be gathered by the document itself and by the surrounding circumstances.
8. An exhaustive discussion of the law on the subject is to be found in two cases, namely (1) the case in Bishambhar Nath v. Mohammad Ubaidullah Khan (1923) 10 AIR All 586, where it was pointed out that the neglect of the obvious fact that a document, before it can be a mortgage by conditional sale, as defined in Section 58(c), T.P. Act, has to be a mortgage as defined by Section 58(a), has led to serious confusion, and (2) the case in Ram Das Rai v. Brinda Ban Ram : AIR1931All113 , where several conclusions as settled propositions of law have been enumerated at p. 586 with most of which propositions we find ourselves in complete agreement We might particularly quote a small passage from p. 586 and it is as follows:
If the ostensible vendee, out of courtesy and kindness, agrees to convey the property, this will be an important circumstance to indicate that the transaction was a sale and not a mortgage. In order to constitute a mortgage, there must be a debt and there must be a security. A stipulation to pay interest on the amount of the purchase money may be an indication of the fact that the transaction is a mortgage. If the entire transaction shows an accountability on the part of the ostensible vendee, this would warrant an inference in favour of a mortgage. It may also be an important factor as to whether the sale consideration represents the actual value of the property. These and other cognate tests may be reasonably applied for determining the question In issue between the parties.
9. Applying these tests to the facts of the present case it appears from the evidence of the defendant, which evidence has been believed by the Courts below, that at first the intention was to execute a sale out and out and a stamp paper for Rs. 200 was purchased, the sale consideration having been settled at Rs. 20,000. Before the document could actually be drawn up-it was drawn up on a Monday-there was an agreement on the preceding Sunday that the sale consideration should be reduced to Rs. 16,000 and Attar Singh should be given an option of getting back the property on payment of Rs. 16,000 with interest at Rs. 2 per cent. per mensem if this amount with interest was paid within six months, and out of courtesy and kindness Sheo Nath Singh agreed to reconvey the property. There was really no debt and there was no security, but it is said that a stipulation to pay interest is a clear indication of a debt. We might have felt inclined to agree with this contention if there had been a condition of accountability so far as the profits of the property were concerned. There was no such condition. On the other hand, the defendant vendee was to get the profits as well as interest. It is clear and it is common ground that Attar Singh was heavily indebted and decree-holders were putting their decrees in execution. If the idea was to have a mortgage the time would not have been six months and if any redemption was contemplated after a long period of time it was clear according to the stipulation between the parties that redemption would become impossible because about Rs. 4000 a year was the stipulated interest. The value of the property in no event is more than Rupees 25,000 and after about three years it would not have been worth anybody's while to try to redeem the property. After having given the case our anxious consideration and after having paid due regard to the arguments of learned Counsel for the appellant we hold the view that the decisions of the Courts below are correct and we dismiss this appeal with costs.