KHURSHED ALI Vs. ABDUL MAJID

JUDGEMENT

(1.) This appeal arises out of a suit in which the plaintiffs seek to enforce their claim for pre-emption. The document which gave rise to the alleged cause of action is in the following terms: We agree that we shall pay annually the interest and in default of payment of interest for two years, the creditors shall have the right, without waiting for the expiry of the time fixed, to file suit and to recover their due from the property mortgaged (niakbuza) and if the creditors make delay in realizing the principal and interest then the aforesaid creditors shall not be entitled to recover their dues under the deed from any other property of myself excepting the property mortgaged (makbuza).

(2.) The plaintiffs came into court alleging that in reality the transaction was a sale and that they were entitled to get possession upon payment of the consideration. They further claimed, however, in the alternative that if the transaction was a mortgage they might be substituted for the mortgagees. The court of first instance held that the transaction was not a sale, but a mortgage, and granted the plaintiffs the alternative relief. The lower appellate court, agreeing with the court of first instance that the transaction was not a sale and that the document merely operated as a "charge" on the property, held that there was no right of substitution, and accordingly dismissed the suit.

(3.) Section 58 (clause b) of the Transfer of Property Act is as follows: "Where without delivering possession of the mortgaged property the mortgagor binds himself personally to pay the mortgage money and agrees expressly or impliedly that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee."