1. This is a defendant's appeal arising out of a suit for pre-emption. The transfer took place under a document which was described as a sale deed but it contained a condition that the property will be re-transferred on payment of the consideration within three years. The plaintiff's case was that the transaction was really one of sale and they were entitled to pre-empt the property transferred. Both the vendors and the vendees pleaded that the transaction was one of a mortgage by conditional sale and no right to pre-empt accrued on it.
2. The Courts below have treated this case as if it turned entirely on the construction of the document in question. Both Courts have come to the conclusion that in view of certain rulings the transaction was an out and out sale coupled with an agreement to re-transfer the property on payment of the mortgage within three years. The learned District Judge has conceded that the recent rulings of this Court favoured the view advocated on behalf of the defendants. But he has followed an earlier ruling of this High Court supported by the decision of a Full Bench of the Madras High Court. We may point out that in none of the cases relied upon by him except the case of Bishambhar Nath v. Muhammad Ubaidullah Khan A.I.R. 1923 All. 586 the transfer and the contract for re-sale were embodied in one and the same document. The Privy Council case referred to by him was a case prior to the Transfer of Property Act, which now defines a mortgages by conditional sale in Section 58, Sub-clause (c).
3. It cannot be stated broadly that in every case where there is an ostensible sale subject to the condition of re-purchase, the transaction cannot be a sale but must always be a mortgage by conditional sale. It seems to us that it is always open to a pre-emptor who is no party to the transaction to show by evidence, direct or circumstantial, that although the transaction was clothed in that particular garb it was in reality and substance a sale transaction. But where there are no such special circumstances, and we have only a transfer of the property subject to the condition of re-sale, it seems to us that the case would fall within the definition of a mortgage by conditional sale as laid down in Section 58(c). It is not necessary that the deed itself should contain the words, mortgage, mortgagor, mortgage money or security for the loan. If such words were expressly entered in the deed, the transaction would hardly be an ostensible sale. Even if the language of the document on the face of it suggests that it is a sale transaction, but the sale itself is subject to the condition of re-transfer as provided by sub-C1. (c) to the section the transaction would become one of mortgage by conditional sale and not an out and out sale.
4. In the present case there are no special circumstances which would necessarily show that the transaction was an out and out sale. The lower appellate Court has not found that full price was actually paid. Even the learned Munsif only thought that there was not any great disparity between the amount of the sale deed and actual value of the land sold. On the other hand, both the transferor and the transferee asserted that the value of the property was considerable. The mere fact that there was a previous usufructuary mortgage is not conclusive either way. It may also be stated that the circumstance that both the transferrer and the transferee united in pleading that this was a mortgage, does not necessarily go against the plaintiffs. But, in the case of a transaction falling within the definition of mortgage by conditional sale it is the duty of plaintiff to show that it is an out-and-out sale transaction. In the absence of any circumstance showing that, we must hold that the transfer is a mortgage by conditional sale and that no suit for pre-emption lies. The result therefore is that this appeal is allowed, the decrees of the Courts below are set aside and the plaintiffs suit is dismissed with costs including fees on the higher scale.