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Veeravunni Haji Vs. Koyammu - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKerala High Court
Decided On
Case NumberSecond Appeal No. 1151 of 1954 (M)
Judge
Reported inAIR1957Ker169
ActsTransfer of Property Act, 1882 - Sections 58
AppellantVeeravunni Haji
RespondentKoyammu
Appellant Advocate V.P. Gopalan Nambiar, Adv.
Respondent Advocate N. Sundara Iyer, Adv.
DispositionAppeal dismissed
Cases ReferredPadmanabha v. Sitarama
Excerpt:
- - on the date of the deed pokker surrendered possession of the property to the transferee 1st defendant with liberty to enjoy and deal with the property as if he was the owner but subject to the reservation that if repayment of the consideration of rs. ebadat ali, air 1954 sc 345 (c). if, on the face of it an instrument clearly purports to be a mortgage it cannot be turned into a sale by reference to a host of extraneous and irrelevant......for consideration of the rest of the issues. 3. the question whether a given transaction is an out-right sale with a condition of repurchase or a mortgage by conditional sale is a vexed one and must be decided on its own facts. broadly speaking it depends on the intention of the parties to be gathered from the contents of the document and the surrounding circumstances, as to whether an absolute right in the property is to vest forthwith in the transferee subject only to the condition regarding retransfer or on the other hand a sale is to come into effect on a future date. if the transferee became entitled to all the rights of the transferor on the date of the execution of the document the document will be regarded as a sale. but it the absolute transfer of right is intended to be.....
Judgment:

Varadaraja Iyengar, J.

1. The defendants 1 and 2 are the special appellants.

2. The suit was for redemption of what according to the plaintiff-respondent was a mortgage executed by his assignor Pokker in favour of the 1stdefendant and assigned by the 1st defendant to the 2nd defendant. Ext. B1 which evidences the transaction was executed on 15-7-1949 and styled itselfas an 'avadhi teer' or sale with a limit of time. The consideration of Rs. 100 raised under it was recited to be for the purpose of depositing the rent due from the executant to the jenmi of the property in respect of certain other items.

On the date of the deed Pokker surrendered possession of the property to the transferee 1st defendant with liberty to enjoy and deal with the property as if he was the owner but subject to the reservation that if repayment of the consideration of Rs. 100 was made Within two years the property would be reconveyed by the 1st defendant. If however repayment was not made within that period, Pokker was to lose all his rights in the property for ever more.

The question was whether the deed amounted only to a mortgage by conditional sale as the plaintiff would have it or as contended by the defendants was an out and out sale with a clause for repurchase which had become incapable of enforcement on account of the lapse of the period of two years limited therefor. The Munsiff held in favour o the defendants and dismissed the suit without more while the District Judge has upheld the plaintiff's claim and remanded the suit for consideration of the rest of the issues.

3. The question whether a given transaction is an out-right sale with a condition of repurchase or a mortgage by conditional sale is a vexed one and must be decided on its own facts. Broadly speaking it depends on the intention of the parties to be gathered from the contents of the document and the surrounding circumstances, as to whether an absolute right in the property is to vest forthwith in the transferee subject only to the condition regarding retransfer or on the other hand a sale is to come into effect on a future date. If the transferee became entitled to all the rights of the transferor on the date of the execution of the document the document will be regarded as a sale.

But it the absolute transfer of right is intended to be postponed so as to take effect only on a future date the transaction will be held to be one by way of mortgage. In the former case the ownership vests in the transferee from the date of the document and there is no question of any debt coming into existence after the date of the transaction, while in the latter case the debt subsists and the right to redeem remains with the debtor. The leading case on the point in India is Bhagwan Sahai v. Bhagwan Din, ILR 12 All 387 (A), where their Lordships of the Privy Council quoted with approval the following observations of Lord Cranworth in Alderson v. White, (1858) 44 ER 924, at p. 928 (B):

'The rule of law on this subject is one dictated by common sense; that prima facie an absolute conveyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right of repurchase .....Inevery such case the question is, what upon a fair construction is the meaning of the instruments.'

And conversely as Bose, J., observed in Chun-chun Jha v. Ebadat Ali, AIR 1954 SC 345 (C). 'If, on the face of it an instrument clearly purports to be a mortgage it cannot be turned into a sale by reference to a host of extraneous and irrelevant. considerations'

4. Again as a matter of construction, the fact that a transaction is embodied in one document and not two and its terms are covered by Section 58(c) of the Transfer of Property Act may give rise to the inference that it is a mortgage by conditional sale unless there are express words to indicate the contrary or in a case of ambiguity the attendant circumstances necessarily lead to the opposite conclusion. For,

'The legislature had made a clear cut classification and excluded transactions embodied in more than one document from its category of mortgages, therefore it is reasonable to suppose that persons, who after the amendment (by addition of the Proviso to Section 58(c) in 1929) choose not to use two documents, do not intend the transaction to be a sale unless they displace the presumption by clear and express words'. See AIR 1954 SC 345 at 347 (C).

5. The document with which we are concerned, Ext. B1 embodies both the aspects of sale and agreement to reconvey within the meaning of the above rule of construction and there are also no express words to say that it is not a mortgage. On the other hand the document is as styled not 'sale' merely but qualified by the addition of the words 'with limit of time' and further the clause relating to the agreement for resale comes after the clauses effecting the conveyance and that clause begins with the Malayalam word 'ennal'.

The corresponding Tamil expression 'anal' in this juxtaposition was considered to be a great significance by Srinivasa Iyengar J., in the bench decision in Padmanabha v. Sitarama, AIR 1928 Mad 28 (D), as the detraction or subtraction from the absoluteness of the sale previously in the document stated to have been made and comparison was made in this connection of the form adopted in English precedents of conveyancing in regard to mortgage by conditional sale under which the clause relating to the equity of redemption always began with some such expression as 'provided however that' or 'provided always'.

6. We have again in the fact that the price for the repurchase within two years is expressly stated as Rs. 100, viz., the same as the consideration for the transfer and that too in 1949, when, as the learned Judge below states, the price of the property was high and going further up. This is certainly a pointer to the construction that Ext. B1 is a mortgage. And above all there is the significant circumstances noticed by the learned Judge that the parties indicated by the insertion first and the crossing next of the words (words in Malayalam omitted) 'from today onwards' and again by an express provision postponing the attornment by the 1st defendant to the landlord for the two years, that the rights over the property should fully vest in the assignee, 1st defendant, only on a subsequent date and not immediately.

7. Learned counsel for the appellant stressed before me those clauses by which the transferee hasbeen made the absolute proprietor in place of the executant and to the fact that no interest was charged and that the transferee was placed in possession of the property without liability to account for the usufruct. But these circumstances cannot matter for, when a mortgage is by conditional sale, it is the form of 'ostensible sale' it has to take and if the sale is ostensible, it must necessarily contain all the outward indicia of a real sale.

The learned Munsiff would appear to have been highly impressed by the surrounding circumstances, as he found them firstly that the stamp papers for Ext. B1 was purchased by the 1st defendant and secondly that the consideration of Rs. 100 under Ext. B1 was a fair price for the property at that time. But the learned Judge found himself unable to agree with the Munsiff on these points, in our opinion, rightly.

8. It follows, therefore, that the conclusion ofthe learned Judge is right and the second appealfails. It is therefore dismissed with costs.


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