1. Plaintiff is the appellant against an affirming judgment of the third Additional Subordinate Judge, Cut-tack, in a suit for declaration of title and for recovery of possession.
2. The plaintiff's case is that the defendant sold the disputed property to him on 15-10-54, by sale-deed (Ext. 2) for a consideration of Rs. 800 on condition that if the defendant pays back the consideration money before 14-6-56, the plaintiff would re-transfer the property to him. The defendant did not repay the money. On the other hand the plaintiff invested substantial amount in improving the land and remained in possession of the property, but the defendant forcibly dispossessed him on 21-6-59. Hence the suit by the plaintiff.
3. The case of the defendant is that the transaction was not a sale out and out, but was a mere mortgage with the condition that the plaintiff would enjoy the usufruct of the property towards the discharge of the debt and that the period of four years for which the plaintiff had enjoyed the property was sufficient to discharge the entire debt.
4. The learned trial court held that the transaction represented in Ext. 2 was a mortgage and not a sale. He accordingly dismissed the plaintiff's suit with a direction for ascertainment of the liability outstanding on the said mortgage. This decision of the trial court having been affirmed by the appellate court the plaintiff has filed this appeal.
5. The second appeal first came up for hearing before my Lord the Chief Justice who referred it to a Division Bench. The only question for consideration in the appeal is whether Ext. 2 is a deed of sale as claimed by the plaintiff or it was a mortgage as claimed by the defendant. The document, Ext. 2 describes itself as a sale-deed (Bikri Kabala) and the parties have been described as Baya (vendor) and Mustari (vendee). The relevant recitals in Ext. 2 may be enumerated as follows :
(i) The transferor has sold the property for Rs. 800 and received the value in cash from the Mustari (vendee).
(ii) The transferee will enjoy the property as Malik-Dakhalkar and Malguzar from today and will be free to deal with the property in whatever manner he likes.
(iii) In case the vendee is dispossessed at any time, the vendor shall restore him to possession and in case of his failure to restore him to such possession, the vendor binds himself to repay the consideration amount with Interest at the rates of Rs. 1-9-0 per cent per mensem from the date of such dispossession.
(iv) In case the consideration money is paid back before 14-6-56, the vendee will return this document to the vendor and execute a deed of retransfer in the name of the vendor.
6. It is not the case of either party that there is any other document in relation to this transaction. After the amendment to Section 58(c) of the Transfer of Property Act, if the sale and the agreement to repurchase the property are embodied in the separate document, the transaction cannot be a mortgage, but the converse is not true. It has, however, been held that if both the conditions are embodied in the same document it is an indicative of the fact that the transaction was a mortgage by conditional sale. See AIR 1966 SC 902, Bapuswami v. N. Pattay.
It is well settled that the question whether a particular transaction is a mortgage by conditional sale or a sale out and out, has to be decided with reference to the terms of the document. If the words are clear and unambiguous, then the true legal effect must be given to it. But if it is not so, then it is permissible to look into the surrounding circumstances to determine the real Intention of the parties, see AIR 1954 SC 345, Chunchun v. Ebadat Ali. The adequacy of consideration so as to represent the real value of the property is also a factor to be taken into consideration in determining if the transaction represents a sale or a mortgage. In the present case, the concurrent findings of both the courts are that the value of the suit property on the date of sale would be at least Rs. 3500, though the property is purported to have been sold only for a sum of Rs. 800.
In the aforesaid decision of the Supreme Court reported in AIR 1966 SC 902 and in a decision of this court reported in ILR (1961) Cut 487, B. Kamaraju v. Anem Siva Parvathamma Somayajulu Krishna Murthy, it was held that a gross Inadequacy of price is a circumstance indicative of the fact that the transaction is a mortgage by conditional sale and not a sale out and out,
7. Coming to the terms of the document, it is well settled by authorities that the mere use of the expressions such as 'vendee' and 'vendor' or 'sale-deed' and 'sale-price' or that the grantee is made the Malik Dakhalkar etc. from the date of the transaction will not necessarily make out a case of sale. (See ILR (1949) Cut. 776, Gouri Pradhan v. Bhagaban Pradhan). Therefore Clauases (i) and (ii) of the document Ext. 2, are not decisive on the point. In Clause (iv) the consideration for reconveyance was the same amount as the consideration for the original transaction. This also is a point to negative the case of sale as observed in the aforesaid decision of the Supreme Court in AIR 1966 SC 902.
Lastly in Clause (iii), it has been clearly mentioned that in case the vendee is dispossessed, the vendor is bound to restore him to possession and on his failure to do so, repay the consideration amount with interest at Rs. 1-9-0 per cent per mensem. The question is whether such a condition is indicative of sale or a mortgage. This question has been answered by a Full Bench decision of this Court reported in ILR (1951) Cut, 281 = (AIR 1951 Orissa 362) Nilomani Bewa v. Mrutunjaya Pradhan. It was held that where there is a covenant for refund of the consideration with interest on dispossession or disturbance of possession of the grantee not attributable to grantor's defective title, it is indicative of a mortgage rather than a sale while on the other hand such a covenant in case of dispossession due to grantor's defective title is inconclusive.
Obviously this clause in the agreement regarding repayment of the consideration money with interest has no reference to any defect in title of the vendor, but merely speaks of dispossession or disturbance in possession. No authority to the contrary has been cited by Mr. Mohapatra. Taking the recitals in the document, Ext. 2 and other surrounding circumstances into consideration, we are of the opinion that the transaction represented in Ext. 2 is not a sale, but a mortgage by conditional sale. The plaintiff's suit has rightly been dismissed.
8. The trial court has, however, given a direction for appointment of a commissioner to take evidence as to the yield of the suit land from the date of the transaction till the date of dispossession, that is, 21-6-59, to determine the extent of appropriation of the yield towards the loan in question. But under the circumstances of the case no such direction seems necessary. Admittedly the plaintiff has been dispossessed from 21-6-59. According to the clear terms of Ext. 2 the defendant has to repay to the plaintiff the consideration amount with an interest at Rs. 1-9-0 per cent per month from the date of dispossession. Once the transaction is held to be a mortgage the plaintiff is not entitled to more than 9% interest per annum notwithstanding any contract to the contrary. The defendant shall redeem the mortgage on payment of the consideration amount of Rs. 800 with interest at the rate of 9% from 21-6-59 that is, the date of dispossession till the date of payment. The defendant shall pay the sum within three months from today failing which it is open to the plaintiff to put the said property to sale for realisation of the mortgage dues.
The appeal is dismissed, but under the circumstances of the case parties to bear their own costs throughout.
9. I agree.