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Maruthai Goundan and anr. Vs. Dasappa Goundan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in36Ind.Cas.393; (1916)31MLJ375
AppellantMaruthai Goundan and anr.
RespondentDasappa Goundan and ors.
Cases ReferredBhagwan Sahai v. Bhagwan Din I.L.R.
Excerpt:
- - ' 4. the learned vakil for the appellants has relied upon the facts that patta was transferred into the name of the purchaser and he has been paying kist ;but these circumstances, as well as the period of the year fixed by the agreement for reconveyance, are consistent with a mortgage with possession equally with an absolute sale. if that had been the intention, i think it would have been perfectly easy for the legislature to provide that, where there was a sale and, either contemporaneously or so shortly afterwards as to be part of the same transaction, an agreement to resell, that transaction should, in fact, be a mortgage......with the result that the section assumes that these conditions will only apply where there is, in fact, a mortgagor and where there is, in fact, a mortgaged property and we cannot transliterate them into 'transferor' and 'transferred property'. it necessarily follows, therefore, that what the sub-section is doing is not so much defining the circumstances that create a mortgage as providing that, where there is something which is in essence a mortgage, it shall not become or be treated as a sale merely by reason of the fact that it is ostensibly a sale and that to my mind is the real meaning of this section. it begins by assuming a mortgage, in which it is essential that there should be payment of money advanced and transfer of an interest by way of security and where those two.....
Judgment:

Bakewell, J.

1. The question in this case is whether a sale-deed and an agreement executed on the same day constitute a mortgage by conditional sale. The sale-deed is not only an absolute conveyance of the proparty but contains recitals which show an intention to extinguish a prior mortgage between the same parties and to discharge the vendors' obligations to other parties and a statement that the sale price is the ' proper current market value' of the land.

2. These provisions are inconsistent with an intention that the transfer was for the purpose of srcuring the payment of money advanced by way of loan (Transfer of Property Act, 1882, Section 58(a) ).

3. The agreement for reconveyance states that the appellants' father had purchased the property for Rs. 1,500 and provides that ' if you or your Oollittar or your heirs should pay the afore-said amount at the beginning of the cultivation season of any year within four years from this day, I shall re-convey the lands to you by means of a sale-deed in accordance with that executed in my favour.'

4. The learned vakil for the appellants has relied upon the facts that patta was transferred into the name of the purchaser and he has been paying kist ; but these circumstances, as well as the period of the year fixed by the agreement for reconveyance, are consistent with a mortgage with possession equally with an absolute sale. The fact that no power is reserved to the appellants' father for the recovery of the sale price or interest are also consistent with a usufructuary mortgage in which the rents and profits are received in lieu of interest and the debtor is not to be personally liable.

5. The learned vakil also relies upon the fact that the present suit was not brought until 21 years after the transaction, which certainly goes to show that the parties regarded it as having been concluded by the expiration of the period mentioned in the agreement for reconveyance.

6. I do not think that any of the circumstances of the case indicate an intention that there should be the relationship of debtor and creditor between the parties, or that the property should be security for a debt and on the other hand the terms of the documents themselves indicate that a subsisting debt was extinguished and that the transaction was an absolute sale.

7. The fact that there appears to have been no margin between the sale price and the actual market value of the property goes to show that the appellants' father at all events did not regard the transaction merely as securing to him the repayment of an advance.

8. Whether the transaction constituted a sale or a mortgage is, I think, a question of law and I would allow the appeal and dismiss the plaintiffs' suit with costs throughout.

Napier, J.

9. I agree and only wish to add a few words with regard to what I consider to be the proper method of approaching the consideration of this question on the construction of the Transfer of Property Act. The section dealing with mortgage by conditional sale is part of Section 58, the very first section of Chapter IV which actually defines what is a mortgage. Section 58 begins by stating that a mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced. It then proceeds to define 'trans-feror' and 'transferee' and 'mortgage money'. Then we get Sub-clause (c) which is, ' where the mortgagor ostensibly sells the mortgaged property (on three conditions mentioned therein), the transaction is called a mortgage by conditional sale.' Mr. Seshaohariar wishes us to construe this sub-section as intending to lay down that sales with agreements to re-sell are presumably mortgages. If that had been the intention, I think it would have been perfectly easy for the Legislature to provide that, where there was a sale and, either contemporaneously or so shortly afterwards as to be part of the same transaction, an agreement to resell, that transaction should, in fact, be a mortgage. But the Legislature has not used any words which are at all apt to any such construction. On the contrary, the words 'mortgagor' and 'mortgaged property' are used in the sub-section. Now, it is obvious that, in construing Sub-clause (c) containing these words, we must look back to the earlier part of the section and ascertain what is meant by 'mortgagor' and what is meant by 'mortgaged property' and it is not permissible to do what I think Mr. Seshachariar's argument really tends to, namely, to scratch out the word 'mortgagor' and insert 'transferor' and scratch out the word 'mortgaged' and insert 'transferred'. If that could be done, we should get the language, ' Where the transferor ostensibly sells the transferred property' and some argument might then be based on the fact that the nature of the transaction was already stated ; but we must give weight to these two words with the result that the section assumes that these conditions will only apply where there is, in fact, a mortgagor and where there is, in fact, a mortgaged property and we cannot transliterate them into 'transferor' and 'transferred property'. It necessarily follows, therefore, that what the sub-section is doing is not so much defining the circumstances that create a mortgage as providing that, where there is something which is in essence a mortgage, it shall not become or be treated as a sale merely by reason of the fact that it is ostensibly a sale and that to my mind is the real meaning of this section. It begins by assuming a mortgage, in which it is essential that there should be payment of money advanced and transfer of an interest by way of security and where those two conditions do exist and they must necessarily exist if we wish to give a proper meaning to the words ' mortgagor ' and ' mortgaged '--then the transaction does not become a sale by reason of the form. If that be so, then the language of the Act goes a great deal further than the original principles which are laid down in Bhagwan Sahai v. Bhagwan Din I.L.R. (1890) A. 337. The person who seeks to make the transaction a mortgage must begin by showing that there is a mortgagor and mortgaged property within the meaning of Section 58(a). For that purpose we must construe the document and look to what was the intention of the parties and once it is shown that there is no real purchase money but only money advanced etc. and the transfer is intended to be for the purpose of securing payment etc., the form becomes immaterial and the transaction becomes a mortgage. I agree with my learned brother on the facts of this case that there is nothing to show any intention to create a mortgage and that the transaction is an out-right sale. There is nothing to show that, at the time when that document which is on the face of it a sale was brought into existence, there was a person who could be called by virtue of that document a mortgagor or that document together with the counterpart, intended to create a mortgage of the property.

Bakewell, J.

10. I entirely agree with my learned brother in his construction of Section 58 of the Transfer of Property Act.


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