Parma vs Halkuram

T.S. Doabia, J.

This is plaintiffs second appeal. A document exhibit P/l was executed. In this document there is a stipulation to the effect that in case the vendor wants to repurchase the property then they would he free to purchase the same by paying the sale price and also interest. Thus, there was a stipulation that the vendor can repurchase the property. The argument advanced by the counsel for the appellants is that this was a mortgage by conditional sale and therefore, the plaintiffs have a right to recover back the possession.

The land in dispute was in survey numbers 208 and 255; total area is 15 biswas. The present survey numbers are 93, 107 and 108. The plaintiffs are members of Scheduled Castes.

I have considered the entire matter. From the recitals in the document it is apparent that it falls under mortgage by conditional sale as defined in section 58 of the Transfer of Property Act. The question as to whether a particular transaction is to be treated as sale or mortgage by conditional sale was considered by the Allahabad High-Court in the case of Abdul Rahman Vs. Mt. Bismillah Begam and Others, The Court observed as under :-

In order to determine whether the transaction amounts to an out and out sale or was a mortgage by conditional sale, the following tests may be applied to determine the case :-

(1) The existence of a debt.

(2) The period of repayment a short period being indicative of a sale and a long period of a mortgage.

(3) The continuance of the grantor in possession indicates a mortgage.

(4) A stipulation for interest on repayment indicates a mortgage.

(5) A price below the true value indicates a mortgage.

(6) A contemporaneous deed stipulating for a recoveyance indicates a mortgage.

In this case, there is no period mentioned for repayment but there is a stipulation to the effect that interest would be payable by the seller. Under the circumstances, the document exhibit P/l can be taken as mortgage by conditional sale.

Reference may also be made to the decision given by the Supreme Court of India in the case of Pandit Chunchun Jha Vs. Sheikh Ebadat Ali and Another, In this case it was observed as under :-

The first is that the intention of the parties is the determining factor; See Balkishan Das v. Legge 22 Ind. APP. 58 (P.C.). But there is nothing special about that in this class of cases and here, as in every other case, where a document has to be construed, the intention must be gathered, in the first place, from the document itself. It the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or-meant but what is the legal effect of the words which they used. If, however, there is ambiguity in the language employed, then stances to determine what was intended. As Lord Cranworth said in ''Alderson v. White (1858) 44 E.R. 924 at p. 928'' The rule of law on this subject is one dictated by common sense; that ''prima facie'' an absolute conveyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase.... In every such case the question is, what, upon a fair construction, is the meaning of the instruments.

Their Lordships of the Privy Council applied this rule to India in -''Bhagwan Sahai v. Bhagwan Din 17 Ind. App. 90 at p. 102 (P.C.) and in Jhanda Singh v. Wahid-ud-din; AIR 1910 P.C. 49 at p. 54. The converse also holds good and if, on the face of it, an instrument clearly purports to be a mortgage it cannot be turned into a sale by reference to a host of extraneous and irrelevant considerations. Difficulty only arises in the border line cases where there is ambiguity. Unfortunately, they form the bulk of this kind of transaction. Because of the welter of confusion caused by a multitude of conflicting decisions the legislature stepped in and amended section 58(c) of the Transfer of Property Act. Unfortunately that brought in its train a further conflict of authority. But this much is now clear. If the sale and agreement to repurchase are embodied in separate documents then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. But the converse does not hold good, that is to say the mere fact that there is only one document does not necessarily mean that it must be a mortgage and cannot be a sale. If the condition of purchase is embodied in the document that effects or purports to effect the sale, then it is a matter for construction which was meant.

Having noticed the position of law as enunciated by the Privy Council and the Supreme Court of India and taking guidance from the same, I am of the view that the document Ex. P/l was a mortgage by conditional sale. This is because :-

(i) There is a clear stipulation to repurchase and the case squarely falls within the ambit of Section 58(c) of the Transfer of Property Act, 1882.

(ii) The price is very low. Fifteen biswas have been sold for Rupees two hundred only,

(iii) There is a stipulation to pay interest.

(iv) Absence of period for repurchase.

Accordingly the appeal is allowed. The judgment and decree passed by Courts below is set aside. There is no order as to costs.