B.A. Khan alias Bahadur Ali Khan vs Nawaz Khan and Others

Ramaswami, J.—This is an appeal preferred against the decree and judgment of the learned Subordinate Judge of Cuddalore in A.S. No.

158 of 1951 reversing the well-considered order of the learned District Munsif of Kallakurichi in O.P. No. 12 of 1950. The facts are: Exhibit A-1

is the document in question. It is described to be a sale executed by the appellant in favour of the respondent''s father, for a consideration of Rs.

The consideration consists of three items, viz., (1) Rs. 300 due by the vendor on a usufructuary mortgage in favour of one Karuppan which

was directed to be discharged by the vendee; (2) Rs. 120 being the sale price of the house purchased by the vendor from the vendee and (3) Rs.

380 being the cash stated to have been received by the vendor for discharging a mortgage debt in favour of one Sembarampettu Sold Kanakam.

This document contains a clause which reads as follows:

If from to-day within six years I pay the aforesaid amount, I shall take a conveyance of this property from you. If I do not, you will retain the

property.

The contention of the appellant was that it is a mortgage by conditional sale liable to be scaled down and the contention of the respondents was

that it is an out and out sale with a condition to repurchase and therefore there is no debt to be scaled down.

The learned District Munsif held this document to be a mortgage by conditional sale and applied the provisions of Section 9-A of Madras Act

IV of 1938 and declared that the amount due under the mortgage would be Rs. 426-10-8 as on 5th March, 1951. The learned Subordinate Judge

on appeal held that it was an out and out sale with a condition to repurchase and therefore Act IV of 1938 would not apply to this case. Hence this

appeal by the defeated petitioner.

In appeal I find myself in agreement with the learned District Munsif for the following reasons. In Chunchun Jha v. Sheikh Ebadat Ali (1954) 1

M.L.J. 708 : 1954 S.C.J. 469, their Lordships of the Supreme Court recently pointed out that the question whether a given transaction was a

mortgage by conditional sale or a sale outright with a condition of repurchase is a vexed question which invariably gives rise to trouble and litigation

that there are numerous decisions on the point and much industry has been expended in some of the High Courts, to which I must also plead guilty

in collating and analysing them, that it is a fruitless task because two documents are seldom expressed in identical terms and when it is necessary to

consider the attendant circumstances, the imponderable variables which that brings in its train make it impossible to compare one case with another

and that each must be decided on its Own facts but that certain broad principles remained.

There are five circumstances in this case showing the document under consideration is a mortgage by conditional sale. First of all, the period

fixed for repayment, viz., six years cannot be considered to be a long period for a mortgage in the circumstances of this case, because the

document was executed in 1937 which was a period of economic depression. In fact Madras Act IV of 1938 and other ameliorative measures

came into existence for that reason. Though generally speaking a short period is indicative of sale end a long period of a mortgage, in the context in

which this document has been executed the period seems to be indicative of a mortgage. Secondly, the amount agreed upon as the price of

repurchase is the same as the consideration for the original sale and this is generally considered to be a circumstance indicative of a mortgage by

conditional sale. Thirdly, the fact that the document has been drafted in the form of a sale deed would not make any difference because a mortgage

by conditional sale is an ostensible sale; that is, it is executed in the form of a sale with a condition attached to it. Fourthly, the fact that there are no

two documents in this case but only one in which the condition regarding repurchase is embodied would be indicative of the transaction not being

an outright sale. Fifthly, there is another point in favour of the appellant and that is that the surrounding circumstances show that there was the

relationship of debtor and creditor between the parties existing at the date of the suit transaction.

In the result, the decree and judgment of the learned Subordinate Judge are set aside and the order of the learned District Munsif is restored and

this appeal is allowed. In the circumstances the parties will bear their own costs.

No leave.