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Ram Niwas Vs. Pokarram and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Second Appeal No. 191 of 1967
Judge
Reported in1969WLN303
AppellantRam Niwas
RespondentPokarram and ors.
Cases ReferredChunchun Jha v. Ebadat Ali
Excerpt:
.....by vendor within 1 year--whether sale out & out.;it has been specifically mentioned in the deed in question that if the vendor is not able to repurchase the property in question within one year of execution of the deed, then the sala would be valid and complete. all these circumstances taken together lead to the conclusion that the parties to the document intended to bring into existence only a mortgage by conditional sale or not a sale out and out. - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have completed the age of 16 years and 13 days on the date of alleged occurrence -..........but before this happened gulab singh had sold away the property in question by a registered sale deed dated 3rd january, 1961 to the plaintiff-appellant ramniwas for rs. 12000/- mentioning therein that the property in question had been mortgaged with pokar ram and bhanwarlal on 10-9-1963 ramniwas filed the suit against pokarram, his son bhanwarlal and gulab singh alleging that the document dated 4 1-1960 executed by gulab singh in favour of pokar ram and bhanwarlal though ostensibly a sale was in fact a mortgage by a conditional sale and since he had purchased the property in question with full rights from gulab singh, he was entitled to redeem the mortgage on payment of rs. 4000/-as principal and rs. 240/-as interest at 6 o/o per annum, total rs. 4240/-. he, therefore, claimed a.....
Judgment:

C.M. Lodha, J.

1. This is a plaintiff's second appeal arising out of a suit for the redemption of mortgage and in the alternative for a decree for specific performance.

2 The facts giving rise to this appeal may be stated within a narrow compass. The property in question which consists of a house, two lime kilns and an open plot of land measuring 14,300 sq. yds, is situated in village Ghandawal. Teshil Sojat. This property originally belonged to respondent No. 3 Gulab Singh,, who, according to the plaintiff Ramniwas (appellant) mortgaged it by conditional sale by the mortgage deed dated 4-1-1900 for a sum of Rs. 4000/- with the defendant-respondents Nos. 1 and 2 Pokar Ram and Bhanwarlal. One of the conditions incorporated in this alleged mortgage deed is that the mortgagor i.e. Gulabsingh will have a right to have the property in question resold to him on payment of Rs. 4000/- and interest thereon, within one year from the date of the execution of the deed. It was further stated that in case Gulabsingh failed to get the reconveyance in his favour as mentioned above the sale of the property in favour of the defendants Nos. I. and 2 would be valid. Even after the execution of this document Gulab Singh continued to remain in possession of the property in question and executed a rent note for the same in favour of the defendants Nos. 1 and 2 for Rs. 40/- per month. It appears that subsequently defendants. Nos. 1 & 2 filed a suit for arrears of rent and ejectment against Gulab Singh, and got possession of the property in question in execution of the decree, they had obtained in their favour on 10-7-1963. But before this happened Gulab Singh had sold away the property in question by a registered sale deed dated 3rd January, 1961 to the plaintiff-appellant Ramniwas for Rs. 12000/- mentioning therein that the property in question had been mortgaged with Pokar Ram and Bhanwarlal On 10-9-1963 Ramniwas filed the suit against Pokarram, his son Bhanwarlal and Gulab Singh alleging that the document dated 4 1-1960 executed by Gulab Singh in favour of Pokar Ram and Bhanwarlal though ostensibly a sale was in fact a mortgage by a conditional sale and since he had purchased the property in question with full rights from Gulab Singh, he was entitled to redeem the mortgage on payment of Rs. 4000/-as principal and Rs. 240/-as interest at 6 o/o per annum, total Rs. 4240/-. He, therefore, claimed a decree for redemption of mortgage and in the alternative prayed that, if for any reason, a decree for redemption was not granted in his favour, the suit may he decreed for specific performance of the agreement to reconvey the property as provided in the deed itself. Pokarram and Bhanwarlal resisted the plaintiff's suit and pleaded that the deed in question was a sale out and out and not a mortgage by conditional sale. It was also pleaded that the suit for specific performance in the alternative, was not maintainable. Gulabsingh filed a separate written statement and supported Pokar Ram and Bhanwarlal in their contention that the deed executed by him in favour of Pokarram was a sale out & out & thus he also prayed for dismissal of the plaintiff's suit. The learned Civil Judge, Sojat framed the following two issues:

1. Whether he deed dated 4-1-1960 executed by defendant No. 3 in favour of defendants Nos. 1 and 2 is a mortgage by conditional sale and therefore the plaintiff is entitled to redeem the property in question from defendants Nos. 1 and 2?

2. Whether the plaintiff is entitled to get the property in question sold to him by specific performance on the basis of the deed dated 4-1-1960 executed by defendant No. 3, in favour of defendants Nos. 1 and 2?

3. Relief?

3. None of the parties produced any evidence, and, therefore, after hearing arguments, the learned Civil Judge held that the deed dated 4-1-1960 was a mortgage by conditional sale and consequently he passed a preliminary decree for redemption of the mortgage. In view of his decision on Issue No1, the learned Judge did not decide-issue No. 2.

4. Aggrieved by the judgment and decree of the trial court the defendants Nos. 1 und 2 filed appeal before the District Judge, Pali, who reversed the finding of the trial court on issue No land held that the deed dated 4-1-1960 was a sale, out and out and in this view of the matter he set aside the judgment and decree of the trial court and dismissed the plaintiff's suit for redemption and remanded the case to the trial court to decide Issue No. 2 in accordance with law. Dissatisfied with the judgment of the learned District Judge, Pali dismissing his suit for redemption, the plaintiff has come in second appeal to this Court.

5. The short point that arises for decision in this appeal is whether the deed dated 4-1-1960 is a mortgage by conditional sale or a sale out and out. I have been referred to a very large number of decisions by the learned Counsel for the appellant with a view to show that under the circumstances more or less a similar transaction was held to be a mortgage and not out and out sale with a condition for repurchase. Similarly the learned Counsel for the respondent has also, cited a number of cases in support of his contention that the language of the deed and the surrounding circumstances lead to the conclusion that the parties intended to bring into existence an out and out sale with a condition for repurchase.

6. In this connection it would be relevant to refer to Section 53(c) of the Transfer of Property Act, which defines mortgage by conditional sale as follows:

58(c) where the mortgagor ostensibly sales the mortgaged property:

on condition that on default of payment of the mortgage money 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 selle,

the transaction is called a mortgage by conditional sale and the mortgage, a mortgage by conditional sale,

Provided that no such transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to effect the sale.

7. Learned Counsel for the appellant has argued that the deed in question satisfies the conditions laid down in Section 58(c) and therefore, the learned District Judge had committed an error of law in holding that the transaction was an out and out and sale. He has urged that the deed has been misconstrued and therefore the matter is one of law and open to interference in second appeal. Learned Counsel for the respondents has not challenged the jurisdiction of this Court to go into the question whether the transaction in question is a mortgage by conditional sale or a Sale out and Out and, I think rightly so, because the question involved in the present appeal is one of interpretation of the deed dated 4-1-1960 and if there is any misconstruction, then the matter would be one of law and open to interference in second appeal.

8. In Bhaskar v. Shrinarayan AIR 1960 SC 30 their Lordships were pleased to observe:

The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances.

9. In Chunchun Jha v. Ebadat Ali : [1955]1SCR174 it was observed that:

The question whether a given transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase is a vex d one and must be decided on its own facts. In such cases the intention of the parties is the determining factor.

It was further observed that:

The legislature has made a clear cut classification and excluded transactions embodied in more than one document from the category of mortgages, therefore, it is reasonable to suppose that persons who, after the amendment choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words, and if the conditions of Section 58(c) are fulfilled, then we are of opinion that the deed should be constured as a mortgage.

10. In P.I. Rapuswami v. N. Pattay : [1966]2SCR918 the condition for re-purchase was embodied in the same document and the consideration for the transaction was half of what was found to be the real value of the property. The consideration for reconveyance was the same amount as the consideration for the original transaction. In these circumstances it was held by their Lordships that the transaction was one, of mortgage by conditional sale and the plaintiff was entitled to get preliminary decree for redemption of the mortgage.

11. In Bhoju Mandal v. Debanath Bhagat : AIR1963SC1906 though all other conditions conditions contained in the document were not decisive of the question raised, there was one facier which was held to be a clinching circumstance in favour of holding the document to be a sale and that was that the total area of the land mortgaged in the year 1923 was 13.7 acres and the amount advanced there-under was Rs. 1600/- and only one year thereafter out of the said extent 1-2-6 acres was transferred by the document in question for a sum of Rs. 2800/-. It was held that the document-question was a sale and not a mortgage.

12. Thus from the aforesaid cases of the Supreme Court, one thing is clear and that is, that no hard and fast rule can be found to determine whether a1' particular transaction is a mortgage or a sale out and out and the question, as to which category a document, belonged can only be solved by ascertaining the intention of the parties on consideration of the contents of the document and other relevant circumstances.

13. Learned Counsel for the appellant relied on Daitari Dalai v. Jagannath : AIR1968Ori65 wherein it was observed that 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 of a mortagage. The factor that the consideration for reconveyance is the same amount as consideration for original transaction negatives the case of sale.

14. In Sita Ram v. Basheshar Dayal AIR 1964 Punj. 81 relied upon by the learned Counsel for the appellant it was held that in view of the fact that the price paid was wholly inadequate and that the possession remained with the transferor, it was clear that the transaction in question was not one of complete sale but what was intended was to create a mortgage by way of conditional sale.

15. On the other hand learned Counsel for the respondent relied upon. Koteswara Rao v. Sambiah : AIR1966AP252 , Jagannath Singh v. Butto Krifhto AIR 1947 Pat. 345, Lal Chand v. Atma Ram , Sayyed Ahmed Ali v. Bhageerathi Anmal AIR 191 Mad. 301, and Rajat Chandra v. Dhani In Koteswara Rao v. Sambiah : AIR1966AP252 it was held that the fixation of a short period for the exercise of the right of reconveyance was indicative of a sale rather than a mortgage. The fact of making time essential for the exercise of the right was also a pointer in the same direction. It was observed that an agreement to pay interest by transferor was not indicative of the transferor was not indicative of the transaction being a mortgage by conditional sale. It may be relevant the to point out that there were two instruments executed in this case though on the same day and in the agreement executed subsequently an option was given to the vendor to repurchase the property within a certain period.

16. In Jaggannath Singe v. Butto Krishto AIR 1947 Pat. 345 it was held that a stipulation for payment of interest is one circumstance favouring the inference that a transaction is a mortgage but this circumstance is not conclusive. It was further observed that inadequacy of price and absence of bargaining to settle the price are also circumstances which may be considered in coming to the conclusion that a certain transaction was a mortgage and not a sale.

17. In Sayyed Ahmed Ali v. Bhageerathi Ammal : AIR1961Mad301 there was a recital in the document that the vendee would have the right to alienate the property even before the expiry of the stipulated period and that on the expiry of the period fixed under the document neither the vendor nor his heirs would have any manner of right over these properties. It was held that these conditions were hardly censitent with the right of a mortgagor if the transaction was to be treated one by way of mortgage.

18. In Rajat Chandra v. Dhani Ram AIR 1965 Assam 90 where there was nothing in the document to show that the purchase price was inadequate, and the relationship of the debtor and creditor had been continued the document was regarded as one of sale.

19. In Lalchand v. Atmaram after discussing a number of principles with the help of the Indian, English American case law on the subject, the learned Judges held that the fact that the plaintiff had at no stage prior to the institution of the suit taken the plea that the transaction was a mortgage even though there had been ejectment proceedings against him was a clinching circumstance for holding the transaction to be a sale and not a mortgage.

20. A brief review of the case law referred to above only leads to this conclusion that the decided cases have laid down many tests to ascertain the intention of the parties as to whether they wanted to bring into existence a sale out and out or a mortgage by conditional sale. But they are only illustrative and not exhaustive. For ascertaining the intention of the parties under one document a decision on a construction of the terms of another document cannot ordinarily afford any guidance unless the urais are exactly similar to each other. It is, therefore, to be determined in the present case on the language of the document itself coupled with the attendant circumstances whether the transaction in question was a sale out and, out or was a mortgage by conditional sale.

21. The document is no doubt described as sale deed and it is mentioned therein that Rs. 4000/- have been received from the vendees fur the purpose of depositing the lease money for lime quaries of Atpara, It is also mentioned therein that the Vendor Gulab Singh Will be entitled to repurchase the property on payment of Rs. 4000/ and interest. It is also stated that the possession of the property has been transferred to the vendee and the 'patta' of the property has also been handed over to the vendee. The period for n conveyance has been fixed as one year. No restrictions have been placed on the vendee as to the enjoyment, improvement and reconstruction of the property. The vendor Gulab Singh in his written statement has stated that it was a sale out and out and not a mortgage by a conditional sale. On account of these circumstances the learned District Judge came to the conclusion that there was no relationship of debtor and creditor between the vendor and the vendee and therefore the tram action must be held to be a sale.

22. On the other hand it is crystal clear from the document that the price for reconveyance was fixed the same as the consideration i.e. Rs. 4000/- along with interest. It also appears that the vendor had not parted with the physical possession of the property but had given only constructive possession by executing a rent note in favour of the vendee. There was a stipulation for repayment of the same amount with interest. It also appears that soon after the transaction in question the vendor Gulabsingh sold away this property to the plaintiff for a sum of Rs. 12000/-. There is no evidence on the record as to what was the market price of this property but at the same time there is nothing to show that the amount of Rs. 12000/- entered in the sale deed executed in favour of the plaintiff was a fictitious price. It is correct that Gulab Singh bad said in his written statement that the transaction in question was a sale out and cut and that he had rot received Rs. 12000/-- from the appellant Ramniuas But on my r pink n this admission of Gulab Singh contained in his written statement is not admissible against the plaintiff as the admission has been made by Gulab Singh after he had sold away the property to Ramniwas, and Gulabsmgh has not come in evidence to support his allegations. The learned District Judge in my opinion committed an error of law in using Gulabsing's admission, in the written statement, against the plaintiff. Thus it would be reasonable to suppose that Gulabsingh sold away the property in question after the transaction in dispute for a consideration of Rs. 12000/-. In these circumstances it would be reasonable to hold the amount of Rs. 4000/- for which the property in question was transferred by the deed dated 4-1-1960 did not represent its adequate price. Coupled with all these circumstances it is to be borne in mind that the condition of reconveyance is incorporated in the same document the condition to repay the same amount with interest is also negative of the document being treated as a sale. Here it maybe useful to recollect that it has been specifically mentioned in the deed in question that if the vendor is not able to repurchase the property in question within one year of the execution of the deed, then the sale would be valid and complete. All these circumstances take n together lead to the conclusion that the parties to the document intended, to bring into existence only a mortgage by conditional sale and not a sale out and out, and there is no such conclusive or clinching circumstance in favour of holding the document to be a sale out and out. As observed by their Lordships of the Supreme Court in Chunchun Jha v. Ebadat Ali : [1955]1SCR174 it is reasonable to suppose that since the parties have not chosen to use two documents, they did not intend the transaction to be a sale unless they displaced that presumption by clear and express words. The conditions of Section 58(c) are fulfilled in as much as the property has been ostensibly sold on condition that on such payment being made the buyer shall transfer the property to the seller. I am, therefore, firmly of the opinion that the learned District Judge committed an error of law in holding the transaction to be a sale out and out and that the deed must be construed as a mortgage by conditional sale.

23. I, therefore, allow this appeal, set aside the judgment and decree of the learned District Judge, Pali dated 25-11-1966, and restore the judgment and decree of the Civil Judge, Sojat granting the plaintiff a preliminary decree for redemption of the mortgage. A period of two months is granted for payment of the amount under the preliminary decree. In the circumstances of the case I leave the parties to bear their own costs.

24. Learned Counsel for the respondent prays for grant of leave to appeal to Division Bench. However, I do not consider the case a fit one for grant of leave. The prayer is disallowed.


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