1. The sole question for determination in this appeal is whether the Courts below were right in interpreting a certain document as a mortgage-deed.
2. The facts briefly are these: On 9th August 1865 the ancestor of the plaintiff-respondent, Sadaphal Singh, executed a sale-deed in favour of Bachchu Singh and Achraj Singh, ancestors of the defendants. The transferees did not obtain possession, and they had to bring a suit for recovery of it. In the suit a compromise was entered into though in the deed of compromise it was called only a deed of confession of judgment. This was on the 15th March 1867. The parties agreed to vary the original document which was one of out and out sale. They entered into certain terms, and the decree that was passed adopted those terms. The plaintiff's case is that the compromise coupled with the decree created a mortgage in favour of Bachchu Singh and Achraj Singh and that, therefore, the plaintiff was entitled to recover the property by way of redemption. He accordingly instituted the suit out of which this appeal has arisen. The Courts below decided in favour of the respondent 1; hence an appeal by some of the defendants. The appellants' contention is that the compromise did not alter the character of the sale of 1865, but only gave the vendors a right to repurchase the property.
3. The question for determination in this appeal is whether the sale stands and the compromise gave only a right of repurchase, or whether the sale-deed was given up and in its place a mortgage by conditional sale was accepted by the parties.
4. The salient points as regards the language of the document are mentioned in the judgment of the first Court, and some of these points have been noticed by the lower appellate Court. Briefly speaking the deed of compromise said that if the vendors paid to the vendees the sale price of Rs. 525 on 30th day of Jeth of 1285, fasli, the vendees would give up' (chhor den) the property. The parties further agreed that in case the plaintiffs (transferees) refused to give up the property, the transferrers would be entitled to deposit the money in the treasury and to recover the property by a suit by the cancellation of the decree and the sale-deed. The document further said that if the transferrers failed to pay the sum of Rs. 525 at the aforesaid date, then the condition of payment of the sum of Rs. 525 would be treated as void, and the plaintiffs (the transferees) would become the 'absolute owners' of the property sold, and the defendants (the transferrers) would have nothing to do with the same. Five years after this compromise the very persons who entered into the compromise, namely, the ostensible vendees, Bachchu Singh and Achraj Singh, executed a sub-mortgage, on the 4th August 1872 for a term expiring with the 30th of Jeth 1285-the same date on which the original transferrers were to pay the sum of Rs. 525. In this document. Bachchu Singh and Achraj Singh described themselves as being mortgagees by conditional sale and as deriving their right by the 'compromise' aforesaid. They described the document of the 15th March 1867 as a 'compromise' and not merely as a confession of judgment. The khewat of 1873 shows that Bachchu Singh and Achraj Singh got their names mutated in the revenue records as mortgagees by conditional sale and not as pure proprietors.
5. We have to determine in the circumstances, whether the subsequent transaction of compromise was meant to be one of mortgage or one of sale:
6. To my mind there is not the slightest difficulty in accepting the respondents' contention. The fact that there was a dispute between the parties as to an out and out sale, the fact that the transferees undertook to 'give up' the property on payment at a certain date, the fact that provision was made for deposit of money, which could be valid only in the case of a mortgage money, and the further fact that a provision was made that in the case of default of payment the transferees would become 'absolute 'owners', all point to the conclusion that the transaction was one of a mortgage by conditional sale, although the transaction took place before the passing of the Transfer of Property Act. The character of the transfer was well known and in no way differed from what has been described in the Transfer of Property Act. If we read the definition of a mortgage by conditional sale as given in the Transfer of Property Act and compare it with the terms given in the deed of compromise, we shall see that every item of the several terms falls within the said definition. If, however, we should experience any difficulty in understanding what the parties meant to be the nature of the transaction, that difficulty is very easily solved by the subsequent conduct of Bachchu Singh and Achraj Singh themselves. They were the parties to the sale-deed, and they were the parties to the compromise. They regarded themselves as nothing more than mortgagees by conditional sale, and they obtained notation of their names as such. If they had for a moment regarded themselves as absolute owners, they would not have hesitated in asking for mutation in that capacity. Then they were the persons who made the mortgage of 1872 and they called themselves mortgagees by conditional sale. After all these three transactions, to contend in the year 1927,-60 years after the transaction-that the parties meant something different from what they themselves believed to have, been the case, would be, in my opinion, undesirable. Certainly those who entered into the transactions themselves know what they wanted to do. There can be no doubt that the meaning is not clear, otherwise there would not have been a second appeal in spite of two concurrent findings against the appellants. In the circumstances the conduct of the parties is admissible in evidence to show in what light they themselves regarded the transactions.
7. The Privy Council, in the unreported case of Ma Thaung v. Ma Than A.I.R. 1924 P.C. 88, had before their Lordships a certain document up for interpretation. It could be interpreted both as a deed of partnership and as a deed of partition. Finding that the document was not quite clear, they looked into the conduct of the parties to the contract and said:
The conduct of the parties to a contract reduced into writing will not vary or alter it, but their conduct may help to explain or elucidate a contract open to different meanings. The mode, therefore, in which the sons and daughters of U. Nyein dealt with their shares is material; it helps to strengthen the conclusion that Ex. L was more a record of a division of rights and interests rather than a deed, of partnership.
8. This, therefore, is a distinct authority for admitting into evidence the khewat and the subsequent deed of mortgage of 1872. They afforded not merely admissions of Bachchu Singh and Achraj Singh but admissions supported by their conduct affecting the property itself.
9. Again in the case of the Secy. of State v. Raja Jyoti Prasad Singh P.C.A. No. 15 of 1923, which has been but imperfectly reported in Secy. of State v. Raja Jyoti Prasad Singh A.I.R. 1926 P.C. 41, the question arose whether the lease granted to the Raja of Pachete included or not three particular villages. Their Lordships of the Privy Council found that it was useful to look into the conduct of the Raja. It was found that the Raja had made certain returns as to villages from time to time, and that he had omitted to mention those villages. This conduct on the part of the Raja was found to be an indication that the three villages were not included in his lease.
10. I am, for the foregoing reasons, clearly of opinion that the interpretation put on the document by the parties to the document themselves, namely, by Bachchu Singh and Achraj Singh, was the right interpretation, and there is no reason to suppose that they were under any mistake as to their position as created by the transaction in which they themselves entered. I would, therefore, dismiss the appeal with costs.
11. I concur in dismissing this appeal but for different reasons from those invoked by the lower Courts and by my learned brother.
12. It is a fact that the ancestors of the plaintiff-respondents executed on the 9th August 1865 a sale-deed in favour of the ancestors of the defendants. The transferees had to bring a suit to obtain possession. This suit was resisted on the ground that the whole of the purchase-money had not been paid. The suit was settled by a composition deed dated the 15th March 1867. This deed dealt with some other matters as well as with the matter in suit. It recited that the defendants gave up their objection based on nonpayment of purchase money and agreed to possession being given to the plaintiffs. At the same time it provided that if the purchase money were repaid by a certain date,
the plaintiffs shall give up the property, and if the plaintiffs refuse to give up the property and accept the money, the defendants shall pay the money into Court and shall after filing a suit in Court and getting the decree set aside and the sale-deed cancelled, obtain possession.
13. Both the lower Courts and my learned brother have assumed that a decree was passed in terms of the compromise. No decree, however, has been referred to by the lower Courts or has been placed in evidence before us on appeal. It might, however, if there were nothing to indicate the contrary, be presumed that the decree was passed in terms of the compromise. If the decree had merely referred to the compromise, then the question would have been what was the effect of the sale-deed as overlaid by the composition deed. There is, however clear evidence on the record that the decree did not merely refer to the terms of the compromise. There is a document called Ex. 4. wherein the vendees under the sale-deed mentioned mortgaged on the 4th August 1872 their rights to a third party. In this deed they referred to the previous suit as follows:
As no mutation of names had been effected the said document (i.e., the sale-deed of 1865) was filed in the Court of the Munsif at Muhammadabad and by reason of the mutual compromise the Court held that the said sale deed was a mortgage by conditional sale till 1285 F. and a decree was passed in favour of us, the executants.
14. From this it is clear that in the suit referred to after the composition deed had been filed, the Court gave a decree declaring that the plaintiffs were to obtain possession of the land as mortgagees under a mortgage by conditional sale. This being so the question in this case was not what was the proper interpretation to be placed on the sale-deed read with the composition deed, but what was the effect of the decree passed in the suit. It is clear that the ancestors of the defendants, by virtue of the decree, became mortgagees whatever they had been before.
15. If I had to construe the sale-deed read in conjunction with the composition deed and with surrounding circumstances, I should have held that the defendants were out and out vendees, and that the plaintiffs had only a right to repurchase, which right was barred by limitation. Nor would I have admitted any subsequent conduct of the plaintiffs as evidence for the purpose of construing the composition deed. Subsequent conduct is only admissible for the purpose of construing a deed when it is impossible to arrive at a clear finding as to the meaning of the deed from its own terms and from surrounding circumstances. There were no expressions in the composition deed inconsistent with its being regarded as continuing the position of the transferees as that of vendees, and there were terms, especially those declaring what the transferrers would be entitled to do if the transferees did not accept the purchase-money offered to them, which were inconsistent with regarding the composition deed as changing the sale into a mortgage. But, as I have remarked above, the defendants can only set up their position under the decree and cannot fall back on their position as it would have been on a proper interpretation of the composition deed in the absence of a decree.
16. The appeal is dismissed with costs.