TONDALA MUNISWAMAPPA Vs. NANJUNDACHARI

JUDGEMENT

(1.) This appeal arises from a suit for specific performance of an agreement of sale executed by the Appellant in favour of Respondent with respect to a house. On the same day the agreement was executed, the said property was purchased by the Appellant from the Respondent under a registered sale deed. The argument is unregistered and provides that on payment of Rs. 200/( which is also the consideration for the sale) with interest on Rs. 150/- within a period of three years by the Respondent the Appellant should re-convey the property to the former. The Respondent has after depositing the amount applied for re-conveyance and delivery at the property. The pleas put forward by the Appellant were that there was no valid tender of the amount prior to suit and that the agreement was nominal. The trial Court negatived both these and decreed the suit. At the hearing of the appeal preferred by the Appellant against this, objection to the maintainability of the suit was newly raised on the ground that the transaction between the parties was in substance a mortgage The learned Subordinate Judge rejected the contention and confirmed the decision of the Court. The argument in this Court was directed mainly against the finding of the learned Subordinate Judge that the transaction between the parties is a sale and not a mortgage by conditional sale.

(2.) The question whether and in what circumstances a document which purports to be a sale deed can be construed to be a deed of mortgage by conditional sale has been discussed in several cases. In 'Balkishendas v. W. F. Legge', 22 All 149 the Privy Council held that this has to be determined solely with reference to the terms of the document and the surrounding circumstances so far as it is necessary to ascertain the meaning of the terms. A test sometimes employed to find out whether it is the one or the other is the inclusion of a covenant to reconvey the property in the sale deed itself. In '42 Mys H C R 257' a document containing such an agreement and styled as a sale deed was treated as one of the mortgage by conditional sale. The document in that case was of a date prior to the addition of the proviso to Section 58 of the T. P. Act which states

(3.) No case in which a sale deed which did not contain an agreement of reconveyance was held to be a deed of mortgage in spite of the proviso was brought to our notice. In the present case there is no such covenant in the sale deed and the agreement is embodied in a separate deed which is not registered wherein the property is referred to as Having been sold to the Respondent. The appellant cannot, in view of the proviso, urge that the relation between the parties is that of mortgagor and mortgagee. It is rather curious that the person who wants the document to be treated as a deed of mortgage is not the ostensible vendor but the vendee who obtained possession of the property and got his title as owner completed by the vendor discharging the previous encumbrance. The plea put forward is belated as well as untenable.