1. This is a plaintiff's appeal arising out of a suit for redemption of what is alleged by the plaintiff to be a mortgage by conditional sale dated 14th February 1910, that is long after the Transfer of Property Act came into force. The defendant's contention is that the transaction was an out-and-out sale. Both Courts have agreed with the defendant and have dismissed the suit.
2. The transaction is all evidenced by only one document. I have not had the document itself placed before me. Nor has the Court been supplied with a translation or transliteration of the document as required by the rules of the Court. From the judgment of the trial Court it is manifest that in addition to the sale there was also a clause empowering the transfer to repurchase the house that had been sold at any time within three years from the date of the sale. The trial Court has held that there was nothing to show that the relation of debtor and creditor continued to exist, that the documents of title were all handed over to the purchaser; that immediate possession of the house was given, that there was nothing about interest; that the price was a very fair one; and that the period for the purchase was a fair indication that the document was intended to be a sale and not a mortgage-deed. The lower appellate Court referred to the fact that the present suit had been brought 15 years after the execution of the deed, i, e., about 12 years after the date fixed for the purchase; that all the incidents of an absolute sale had come into effect including immediate possession and the passing of the title; that the price was found more than a fair price; and that there was nothing to show that there was a relation of debtor and creditor continuing to exist between the parties. Both Courts held without hesitation that the document constituted an out-and-out sale with a covenant that the vendee would resell the property if he was asked to do so within three years. The only material section of the Transfer of property Act is Section 58.
3. The case stated by counsel for the appellant, if I have put it together correctly from his argument and the cases referred to by him, is as follows:
The only portion of Section 58 requiring consideration is 01. (c). It is not necessary before applying 01. (c) first to determine whether there is a mortgage at all. The: words 'the mortgagor,' 'mortgaged property' and 'mortgage-money' must be read as 'the transferrer,' 'the property' and 'the price or consideration' respectively. Whore there is a transfer which is on the face of it a sale coupled with one or other of the conditions set out in Clause (c) that transfer is a mortgage by conditional sale, and the question of intention is immaterial.
4. The whole argument then, of the appellant involves reading Section 58, Clause (c) as if it read
(c) where the transferrer purports to sell the property on condition that on default of payment of the price on a certain date the sale shall become absolute or on condition that on such payment being made the sale shall become void or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale.
5. How far this argument was prompted by anxiety lest the findings of the lower Courts might be held to be findings of fact on the question of intention and so to debar the appellant from any right of second appeal I am unable to say, but it has to be examined. Counsel was able to find some support in the language used in certain reported cases, but I am of opinion that the contention is unsound. To these authorities I shall return; at the moment I desire only to make clear the issue on which the decision turns.
6. Firstly, the argument gives no effect to the words 'the mortgagor,' 'mortgaged property' and mortgage-money' and assumes that in place of those phrases the words 'transferrer,' 'the property' and 'the price' may be read. There is no justification for this. Words must be given their appropriate meaning and most emphatically so, words of such tremendous import as the mortgagor' etc. It involves rewriting the whole clause.
7. Secondly, it fails to appreciate that the word 'ostensibly' has two meanings only one of which can possibly be attributed to it as used in Section 58(c) and the inevitable consequence of attributing to it its correct meaning. To this I shall return.
8. Thirdly, it omits to notice the significance of the change from the use of the word 'is' in para. 1, Section 58(a) which defines a mortgage to the words 'is called' in all the rest of Section 58 which gives the appropriate names to the parties and particular categories of mortgages.
9. Fourthly, Section 58(c) bears internal evidence that it cannot possibly be a self-sufficing definition of a mortgage by conditional sale, and that reference to Section 58(a) cannot possibly be avoided. It is only necessary to read the clause, 'where the mortgagor ostensibly sells 'the mortgaged property....' What property? If it is suggested that anybody can be a transferrer, that any form of consideration may be regarded as the price and that it was only bad drafting when drawing up a definition of mortgage by conditional sale, to anticipate by calling the transferrer 'the mortgagor' and the consideration 'the mortgage-money', it is at least beyond doubt that it is impossible to regard it as essentially immaterial whether the term ''the mortgaged property' is used or the term 'the property'. The use of the term 'the mortgaged property' is compelled, for otherwise the definition would cover a case of ostensible sale even of moveable property. Use of the term the mortgaged property' in its turn compels reference to Section 58(a). From another aspect, if, as has been precisely suggested, all that is necessary to a mortgage by conditional sale is a transfer which is in form a sale on certain conditions it could cover any property, which is obviously not the case.
10. I will proceed to state the view which I hold of the proper scope and interpretation of this Clause (c), Section 58. Section 58(c) does not by itself (nor do the Clauses (b), (d) or (e) by themselves) declare any transaction whatever to be a mortgage. It is Section 58(a) which declares what transactions are mortgages. Before Clauses (b), (c), (d) and (e) are looked at all it is necessary to determine whether there is a mortgage at all. It appears to me manifest that if reference is first made to Clause (c) before considering Clause (a) pause must instantly be made before being able to apply Clause (c) at all at the words 'the mortgagor.' Is there 'a mortgagor?' The question must first be determined and can only be determined by reference to Section 58(a).
11. When it has been determined whether the transaction satisfies the conditions of Section 58(a) and it has been found that it does, then there is a mortgage, and certain general consequences will follow. When and if this has been found, it may, and in most cases will, be necessary to determine what are the incidents of the mortgage which has been found to exist, i.e., what consequences will ensue. Certain incidents are declared by other sections of the Transfer of the Property Act and by other Acts (e.g. the Limitation Act) to attach to all mortgages and certain further incidents according to the particular category in which the particular mortgage falls. To determine into which category the mortgage, which has already been found to exist, falls we then have to look at Section 58(b), (c), (d) and (e) and Section 58 which tell us by what name the particular mortgage is to be 'called'. In determining whether it was a mortgage some of its characteristics will have been determined (e.g. whether, where there was apparently a sale, the sale was real or only ostensible and actually for the purpose of securing a loan, etc.). If the characteristics already so found proved or obviously apparent are not sufficient to determine into which category it falls, further inquiry will have to be directed to the existence or non-existence of the additional requisite characteristics. Having determined into which category it falls then it is possible to apply the other sections and Acts which declare the incidents attaching to the particular form of mortgage. To put this in other words, Section 58(c) does not say that any transaction where there is an apparent sale (whether real or only ostensible) on certain conditions is necessarily a mortgage by conditional sale, but merely that of those transactions which are mortgages those which take the form of an ostensible sale on certain conditions are to be called mortgages by conditional sale. The general provisions relating to mortgages will apply to such by virtue of the previous finding under Section 58(a) that they are mortgages and the special provisions relating to mortgages by conditional sale will apply to them by virtue of their being 'called' or classified as 'mortgages by conditional sale' in accordance with Section 58(c).
12. The above is in accordance with what might have been expected when the framers of the Act proceeded to their work. Before the Transfer of Property Act there were various kinds of transactions which were held to be mortgages with varying incidents attaching to them. The obvious thing to do was to lay down first what essential conditions must be satisfied before a transaction could be called a mortgage at all. This preliminary step was taken in para. 1, Section 58(a). Having determined what was essential to the transaction amounting to a mortgage (note the word 'a mortgage is') the draftsmen then proceeded to give names to the parties the consideration, and the document by declaring that they should be 'called' the 'mortgagor' 'the mortgagee' 'the mortgage-money' and 'the mortgage-deed' respectively. In other sections of the Act certain general provisions were laid down to be applicable to all transactions found to be mortgages. It was then necessary to determine to which class a particular form of mortgage belonged in order to determine what special incidents should attach to a particular mortgage in question. For this purpose in Section 58(b) to (e), further characteristics were detailed according to which if they were found to exist the particular mortgage would be classified or 'called' 'simple' by 'conditional sale,' 'usufructuary,' or 'English' respectively, and in other sections of the Act certain special provisions are laid down to apply particularly to each class. Where the further specified sets of characteristics were not found to exist in their simple form or a combination of certain simple forms provision was made by Section 98, such being described as 'anomalous mortgages.'
13. Parenthetically, in reference to the discussion that sometimes arises as to whether the legislature meant by the enactment of Section 58(c) to amend or merely to state the then existing law I may note that if the view expressed above by me is correct the only change made by Section 58(c) in the existing law, if it can be called a change, is that while before the passing of the Act it was open to argument that any particular transaction entered into before the Act which had been found to be a mortgage was of the class of mortgages by conditional sale and had the incidents attaching to that form of mortgage, three kinds of mortgage entered into after the Act are specifically declared to be of the class of mortgages by conditional sale, and it may well be that by implication the legislature intended that no other mortgages not coming within the terms of Section 58(c) were to be considered mortgages by conditional sale, and if they do not come within the descriptions in Section 58(b), (d) or (e) they would have to be considered as anomalous mortgages.
14. To turn now to the authorities which were quoted to me in support of the appellant's contention, and a consideration of these will involve consideration also of the true meaning of the word 'ostensible' as used in Section 58(c). These decisions are reported in Jagannath v. Gauri : AIR1926All670 and the judgment of Ashworth, J., in Lalta v. Jagdish : AIR1927All137 . There are also to be found some remarks, in the judgment of Sulaiman, J., who was a party also to the decision in Jagannath v. Gauri : AIR1926All670 , Mathura v. Jagdeo : AIR1927All321 which seem to support the appellant, but he clearly held at the bottom of p. 421 that the intention was the primary question.
15. On the other hand the contention of the appellant finds no support at all in the judgment of Kanhaiya Lal, J., who with Ashworth, J., decided the case Lalta v. Jagdish : AIR1927All137 nor in the judgment of Lindsay, J., who with Sulaiman, J., decided the case Mathura v. Jagdeo : AIR1927All321 . For the respondent I was also referred to Jhanda v. Wahiduddin A.I.R. 1916 P.C. 49. To all these cases, besides others, I have given the most careful consideration. I note that the remarks in Jagannath v. Gauri : AIR1926All670 were avowedly obiter while the views of Ashworth, J., avowedly differed from those of Kanhaiya Lal, J.
16. I will discuss here the meaning of the word 'ostensible' as used in Section 58(c). The word has two meanings and it is essential to be clear as to the sense in which the word is used. The word 'ostensible' may mean either (a) merely that the object bears a certain form or appearance without suggesting that it is or is not that of which it has the superficial appearance or (b) that the object bears a certain appearance but is not really that of which it bears the appearance. I may be pardoned for emphasizing this by reference to the second meaning as stated in the Oxford Dictionary 'often implicitly or explicitly opposed to 'actual' 'real' and so equals 'merely' 'professed' 'pretended'.'
17. It seems manifest that the second is the only meaning possible here. If it meant in Section 58(c) only 'having the appearance of a sale' without importing also that it was not really a sale, it would involve holding that the legislature, as of course it had power to do, had declared that, regardless of the intention of the parties, if the transaction bore the appearance of a sale on one of certain conditions, it was in law a mortgage even though the parties may have intended a sale.
18. Apart from the fact that there is no reason for crediting the legislature with so drastic an action (and I have shown that in my view the object intended and effected was quite different), the Privy Council has continued to apply the test of intention to make a sale or to make a mortgage to transactions entered into after the Act: Narasingerji v. Parthasaradhi Rayanim Garu A.I.R. 1924 P.C. 226 For the contrary view I can only find the remarks in Jagannath v. Gauri : AIR1926All670 which were avowedly only made obiter as suggesting an idea and the view of Ashworth, J., in Lalta v. Jagdish : AIR1927All137 who held (p. 1064 of 24 A.L.J.) that it was not necessary first to establish a mortgage; but even he, as I understand, agreed that the intention of the parties was the decisive factor, he would apparently limit the evidence of that intention by a test restricted to one point: see p. 1065 of 24 A.L.J.:
19. The question then of intention having to be decided, the thought suggested itself to me that, provided that the question of intention was determined, it was perhaps immaterial whether it was determined when deciding whether under Section 58(a) there was a mortgage or when deciding under Section 58(c) whether the transaction was really a sale or only ostensibly a sale. But it is not in fact an academic question whether the decision as to there being a mortgage at all is approached first by a consideration of Section 58(a) or by a direct and primary consideration of Section 58(c). Of course the circumstances may be such that a mere statement of them suggests that if the transaction is going to prove to be a mortgage at all it will prove to be one of the kind named in Section 58(b), (c), (d) or (e), as the case may be, and it may be this fact that tempts to a consideration of the terms of those clauses at the outset; but, as it appears to me, to consider the terms of those clauses before it has been determined whether the transaction is a mortgage at all is not only an error of procedure but an error which is also likely to confuse and mislead. The danger is manifold. If the first consideration of the question begins with Clause (c) the mere fact that there is an apparent sale with one of the conditions specified, the mere similarity of some of the characteristics, is likely to pre-dispose the inquirer to a finding in a particular direction. Again, the fact that one or other of the characteristics is not to be found in Section 58(c) may similarly prompt the idea that it is not a mortgage at all, whereas, though not a mortgage by conditional sale, it may yet satisfy the requirements of Section 58(a) and be an anomalous mortgage. The transaction may be quite unlike that in 13. 58(b)(d) or (e) and though very nearly like, yet not quite similar to that in Section 58(c), but it may nevertheless be a mortgage within the definition in Section 58(a), and of the class provided for in Section 98. On the other hand there is no room for these dangerous impulses if attention is first concentrated, as I have suggested it should be, on the terms of Section 58(a). If concentration of the first attention be on the words in Section 58(a) 'for the purpose of securing etc.' the appropriateness of the various tests which have been approved by their Lordships of the Privy Council of 'purpose' or 'intention' (e.g., is there anything to indicate that the relation of debtor and creditor subsisted as a result of the transaction) will be immediately apparent.
20. Whether or not the sale was only ostensible (i.e., ostensible in the sense in which I have held that the word is used) will be one of the facts which has to be determined when determining whether it was a mortgage at all. If it has been determined to be a mortgage that will involve a finding that the sale was only ostensible, and the first two requirements of Section 58(c) will have been found, that there is a mortgagor and a sale which was only ostensible.
21. Finally, the view that I have suggested appears to have this recommendation also that it allows to every word as we proceed throughout its natural meaning and it gives rise to no difficulty whatever as to the steps by which a decision is to be reached. Opinions may differ as to the exact weight to be attached to any particular item of the evidence, but that is inevitable in all cases.
22. The suit in this case was brought 12 years after the period of three years named in the deed had elapsed, but it was contended by counsel for the appellant that if he had succeeded in showing that this was a mortgage by conditional sale he would have the full period of 60 years within which to redeem and the limitation to three years in the deed must be regarded as a clog upon the equity of redemption. It may be noted that the contention involves drawing a pen through the words 'on a certain date' in Section 58(c), T.P. Act. The two ideas that 'a certain date' is one of the necessary characteristics before a mortgage can be classed as a mortgage by conditional sale. Section 58(c) and the idea that the period within which the payment or the repurchase is to be made cannot by the stated rule forbidding a so-called clog on the right of redemption be limited to a certain date seem difficult to reconcile, and might have required further examination but for the view at which I have arrived as to the nature of this deed and which I shall now state.
23. Turning to the facts of this particular case, the first question is, was there by the deed a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan? If there was, there was a mortgage and the next question to be determined according to the characteristics found existing, would be in which category of mortgages would the transfer fall? In answering the first question by a consideration of Section 58(a) the only doubt that could arise in the circumstances of this case is as to the 'purpose' or 'intention' of the transaction. On the face of it is a sale with an agreement for reconveyance. Was it really as well as in form a sale or only ostensibly a sale and really a mortgage?
24. Lest counsel for the appellant might have thought from any remarks that fell from me that I was in agreement with his contention that 'intention' was immaterial I gave him a further opportunity of dealing with the findings of the lower Courts as to the intention. Assuming that the finding of both Courts that the intention of the parties was that the document should constitute an out-and-out sale and not a mortgage is open to challenge in second appeal, I find that the Courts have both applied their minds to this question and have agreed that the proper conclusion to be drawn is that the parties did not intend it to be a mortgage; and it is for the appellant to satisfy me that was a wrong conclusion.
25. The Courts below in arriving at the conclusion that the transaction was not intended to be a mortgage have relied upon among others, the points that there was nothing to show that the relation of debtor and creditor continued to exist; that there was nothing about interest or its equivalent; that the price was a very fair one for a sale; and that a very long period, five times as great as the period contemplated in the deed, had been allowed to elapse before the plaintiff took action. For reliance on all these points there is ample authority. For the appellant it was mentioned that prior to the transaction the relation of debtor and creditor had existed between the parties. That fact manifestly as pointed out also by Lindsay, J., in Mathura v. Jagdeo : AIR1927All321 , is no indication either way. Again, it was urged that the transaction was all contained in one document, but that by itself certainly not conclusive for it has been held by their Lordships of the Privy Council: Jhanda v. Wahiduddin A.I.R. 1916 P.C. 49, that the mere fact that, where there were two deeds, they were executed on one day, while it is appropriate for consideration, is not necessarily indicative of a mortgage; and ordinarily there is no material difference between a transaction embodied in one document and the same transaction embodied in two documents executed on the same day. The appellant has failed to show any adequate ground for holding that the finding of the lower Courts as to the intention was wrong. I see no reason to interfere and the appeal is dismissed with costs.