1. This second appeal raises the question whether the document dated 6-12-1113, Ex. A, in the case is a mortgage by conditional sale or an outright sale with an option to repurchase.
2. The circumstances under which this document came to be executed are not in dispute. The defendant in the suit O. S. No. 577 of 1950 on the file of the Principal District Munsif's Court, Nager-coil, obtained a decree against the plaintiff in O. S. No. 820 of 1112 on the file of the Additional District Munsif, Nagercoil, for recovery of a sum of money. The plaintiff in this suit made an application before the Debt Conciliation Board in C. A. 138 of 1113 for an amicable settlement of all his debts under the provisions of an enactment prevailing in Travancore.
It appears, though there is no specific evidence on the point, that the Debt Conciliation (Board brought about a settlement of the debt and in pursuance of an arrangement between the plaintiff and the defendant in consonance with the decision of the Board the plaintiff executed in favour of the defendant, Ex. A, for a consideration of Rs. 1025. The terms of this document will be referred to later,
The plaintiff sought to recover possession of the properties comprised in Ex. A on the ground that the transaction embodied in Ex. A was really a mortgage, though ostensibly it look the form of a sale-deed and that he is entitled to redeem that mortgage on payment of the sum of Rs. 1025. The defendant resisted the suit and contended that the apparent tenor of the document reflected the true intention of the parties to the transaction, that the transaction was one of outright sale, that the time fixed for reconveyance had expired, that the time was of the essence of the contract and that the suit was not maintainable.
3. At the trial of tho suit before the learned District Munsif on Nagarcoil two main issues were raised, the first relating to the nature of the transaction under Ex. A, and the other raising the question whether the suit is barred by res judicata in view of an earlier proceeding in O. P. No. 19 of 1118 on the file of the District Court, Nagarcoil. The trial Court upheld the defendant's contention and non-suited the plaintiff. The plaintiff thereupon preferred an appeal, A. S. No. 525 of 1952, on the file of the District Court, Nagercoil. The learned District Judge confirmed the judgment and decree of the trial Court. This second appeal has therefore been preferred by the aggrieved plaintiff.
4. The learned District Judge held that the present suit was not barred by res judicata by reason of the prior proceeding in O. P. No. 19 of 1118. On the question whether the suit transaction was a mortgage or an outright sale, the learned District Judge held that it was a sale. The finding of the learned District Judge that the suit was not barred by res judicata has not been challenged before me by learned counsel for the respondent. The only point that arises for consideration therefore is whether Ex. A can be construed to be a mortgage by conditional sale or not.
5. I shall now set out the relevant terms of Ex. A. The form of the transaction is that of a ;alc. But that is in no way inconsistent with its being construed as a mortgage by conditional sale. Though the provisions of the Transfer of Property Act do not in terms apply to the Travancore territory, the principles of that Act appear to have been uniformly adopted and followed. The definition of a mortgage by conditional sale as contained in the Transfer of Property Act shows that the form of the transaction is that of a sale.
I therefore attach no importance to the nomenclature of the document Ex. A. That there was a relationship of a debtor and a Creditor between the parties to Ex. A cannot be disputed. In fact the bulk of the consideration for the transaction was the discharge of the decree debt which formed the subject-matter of conciliation bffore the Debt Conciliation Board. This is a circumstance more in support of the transaction being a mortgage than its being an outright sale. The following clauses in Ex. A are relevant:
'But in case either myself or the person who may obtain right subsequently either under law or by way of transfer, pays the Consideration amount of fourteen thousand three hundred and ninety two and eleven sixteenth fanams on or before the end of Karkitagam 1115 M. E. (June-July 1940), you shall receive the said amount and surrender possession of the properties by executing and registering a sale-deed at my cost without raising any dispute whatever. On the expiry of this period, neither myself nor my successors will have any manner of right over these properties as per the above stipulation. You shall have the right to alienate the properties before the expiry of the above stipulated period subject to the said stipulation. Similarly I shall also have the authority to transfer my right to purchase the property for 14,392-11/16 fanams as stipulated above. But this stipulation shall not stand in the way of your getting patta in your name by registering the thandapper.'
6. The true nature of the transaction has got to be detemined by the intention of the parties thereto us evidenced by the terms of the document. Where the terms of the document are clear no extrinsic evidence de hors the document is admissible. But in cases of ambiguity it may be permissible to ascertain the true intention by having regard to the surrounding circumstances under which the document came into existence and other declaration of intention made by the parties. In the recent decision of the Supreme Court in Bhaskar v. Shri Nara-van, : 2SCR117 , this position has been clearly laid down.
7. In my judgment there are certain clinching circumstances in the terms of Ex. A which would establish beyond all doubt that the true nature of the transaction was that of an outright sale. There is a recital in the document which states that the vendee shall have the right to alienate the properties even before the expiry of the stipulated period. This shows that title to the properties passed from the vendor to the vendee eo instanti on the execution of the document.
If it were to be a transaction by way of a mortgage, there cannot be passing of title from the mortgagor to the mortgagee except the transfer of the bundle of rights consisting in a mortgage as defined under the law. Secondly there is a significant clause stating that on the expiry of the period fixed under the document neither the vendor nor his heirs shall have any manner of right over these properties.
This clause emphasises the fact not merely that the option for reconveyance has got to be exercised within the stipulated period, time being of the essence of the contract, but after the expiry of the said period the option holder shall have no manner of right at all to the properties. This is hardly consistent with the right of a mortgagor if the transaction were to be treated as one by way of mortgage.
There is also the clause that the vendee shall be entitled to have his name registered in the-than-dapper. I am not inclined to attach much importance to this aspect of the matter, as it may be that even in a mortgage by conditional sale with a view to facilitate the payment of kist such a transfer might be brought about. I am of opinion that on the clear language of the instrument, Ex. A, should be construed as being one of an outright sale.
8. Mr. Chellaswami, the learned counsel for the appellant, contended that an essential criterion to determine the true nature of the transaction would be the market value of the properties as on the date of the transaction. The learned District Judge has discussed this aspect of the matter and. in his view the consideration mentioned in Ex. A cannot be said to be such as to enable the Court to consider the transaction as being one of a mortgage. It is true that if regard can be had to Ex. D, the extract from the settlement register, the value of the properties would be much more than the sum of Rs. 1025 stated to be the consideration under Ex. A-1.
But unfortunately it is not known on what datethe settlement came into existence. It may be thatSri Chellaswami the learned counsel is right whenbe submitted that it was long before the suit transaction. But I cannot say that the finding of factarrived at by the lower appellate Court on this question of valuation is such as to call for interferencein second appeal by this Court. I uphold tho finding of the Court below that Ex. A is an outrightsale. In the result the appeal fails and is dismis-sed with costs. No leave.