C. Ganesha Mudaliar and Another vs V. Gnanasikhamani Mudaliar and Another

Wallace, J.—The question in this case is whether Exhibits I and C, both dated 14th July, 1902, Exhibit I being ostensibly a deed of absolute

sale and Exhibit C an agreement by the vendee to reconvey the property at any time within eight years on payment of the consideration recited in

Exhibit I, constitute an out-and out sale and an agreement for re-conveyance or a mortgage by conditional sale. Both the lower Courts have held to

the former view and it is urged that they are wrong.

That such a question is not a pure question of fact is clear from the numerous cases in which it has been allowed to be fully argued in second

appeals before this Court.

The first defendant, vendee, under Exhibit I, was already holding an equitable mortgage on the property. The mortgagor, one C. Velayudha

Mudali, was the owner of the property. He sold it to his mother in law under Exhibit B, evidently with a view to avoiding creditors. The first

defendant was pressing for payment and the mother-in-law, 8 or 9 months after Exhibit B, executed this ostensible sale deed, Exhibit I, and the

first defendant executed the counterpart agreement, Exhibit C, both being executed on the same day. The crucial question is What was the

intention of the parties?

The plaintiffs argued that the fact that Velayudha Mudali sold the property first to his mother-in-law indicated his and her strong desire to keep

the property in the family and that therefore it is likely that the lady did not intend to carry through an absolute sale, which would involve a total loss

of the property to the family. But the sale was eight months after she had purchased from Velayudha Mudali and her and his desires are really no

indication of what was the intention of the vendee, the first defendant, on the date of Exhibits I and C. It is also pointed out that the first defendant

says that he executed Exhibit C because the lady insisted on it, but I cannot hold that that necessarily indicates that she did not intend to sell. The

1st defendant may, as he implies, have given way to her importunity so far as to give her a chance of repurchase within a reasonable time. It is

further pointed out that the consideration set out in Exhibit I is not described as the market value of the land, but as the amount of the debt owing,

to discharge which the sale was carried through, a point which I shall deal with later. On the other hand, both the lower Courts find that the amount

of consideration was an adequate market value for the land. In Exhibit C there is no hint that the consideration for re-conveyance was to be any

amount calculated on the footing of the mortgage, and it contains no provision for interest on the mortgage amount. The expenses of the re

conveyance were to be paid by the vendor and not by the vendee. It is also pointed out that the first defendant already held an equitable mortgage

over the land and that there was little point in his changing one form of mortgage for another. It is also significant that the heirs of the ostensible

vendor did not choose to challenge the nature of this sale until sixteen years later, eight years after the period fixed in Exhibit C for reconveyance.

Numerous cases have been cited to me laying down the principles by which the Court should be guided in a case like the present. That there is

no presumption in favour of a mortgage by conditional sale is clearly laid down in the Full Bench case in Muthuvelu Mudaliar v. Vaithilinga

Mudaliar (1919) 42 Mad. 407 It is not the form of the document but the intention of the parties which is the deciding factor, and it rather lies on

the party who contends that a document prima facie connoting absolute sale is really a mortgage to prove his contention. I shall not go through the

cases in detail but one or two remark maybe made. An uncommon state of circumstances, for which there is no counterpart in this case, influenced

the decision in Muthukaruppa Pillai v. Marudachalam Chetti (1914) 27 I.C. 436 and Singaram Chettiar v. Kalyanasundaram Pillai (1914) 1 L.W.

687 and the judgment of Coutts Trotter, J., in Kalappa Kamathi v. Kachur Sakha Rama Rao (1915) 29 I.C. 898. In Ramayya v. Krishnamma

(1899) 23 Mad. 114 the counterpart clearly showed that the relationship of debtor and creditor was to continue and the same is true of the case in

Kasturchand Lakhinaji v. Jakhis Padia (1915) 40 Bom. 74 where also the consideration was nothing like the actual market value of the land. In the

Privy Council case in Balkishen Das v. W.F. Legge (1899) 22 All. 149 their Lordships clearly held that the tenor of the agreement indicated that

the parties intended in the event of purchase that the provisions of Regulation I of 1798, which was applicable to the redemption of mortgages by

conditional sale, should alone be followed a very clear indication of what the intention of the parties was. The other cases quoted to me were all

cases in which the final decision of the Court was that the transaction was an out and out sale and not a mortgage by conditional sale. The

documents in the present case seem to me to bear most resemblance to those in Ayyavayyar v. Rahimansa (1890) 14 Mad. 170 Maruthai

Goundan and Another Vs. Dasappa Goundan and Others, and Muthuvelu Mudaliar v. Vaithalinga Mudaliar (1919) 42 Mad. 407.

The mere fact that the deed of sale does not say that the amount of consideration is the market value of the land is unimportant. The same

omission appears in the sale deed in Muthuvelu Mudaliar v. Vaithalinga Mudaliar''s case (1919) 42 Mad. 407.

I can find no clear indication that the parties here intended to perpetuate the relationship of debtor and creditor, and that is the crucial test in the

case. I am unable to bold that the lower appellate Court misdirected itself or committed any error of law in concluding that the transaction was an

out and out gale and not a mortgage. I see no reason to interfere and dismiss this appeal with costs.