SAHEBA DEOCHAND KUNBI Vs. JAGANNATH GUNDHARILAL KALAR

JUDGEMENT

(1.) THIS is a second appeal by the plaintiff who succeeded in the trial Court but against whom the decision was reversed in the lower Appellate Court. The claim was for possession of malik makbuza lands which the plaintiff claimed he had purchased from Rao Ranjitsingh. On 15th June 1930 Rao Ranjitsingh, defendant 1, had executed a document in favour of Gokuldas, defendant 2, and the point for determination is whether this document is to be interpreted as a mortgage or as an out and out sale with a condition of repurchase. The document is Ex. P. 2, and after declaring that the fields had been sold and the title transferred contained the further stipulation that if at any time within three years Rao Ranjitsingh was to pay back the Rs. 2500 paid to him in respect of these fields with compound interest at 1 per cent. per mensem after deducting the income which Gokuldas might derive from these fields, there should be a re-conveyance in his favour. It may be added that on 30th June 1932 Gokuldas executed an agreement to sell in favour of Jagannath, defendant 3. This agreement was not fulfilled, and on 11th July following defendant 2 executed another agreement to sell in favour of the plaintiff Saheba. In the agreement in favour of Jagannath there was no mention by Gokuldas of the agreement to re-convey to Rao Ranjitsingh on repayment within three years, although this was mentioned in the agreement in favour of Saheba. Neither of these agreements was implemented, and Jagannath brought a suit for specific performance during the pendency of the hearing of the suit which is now the subject of second appeal and obtained a decree, the Judge, who is the same Judge who decided the case now under appeal in Saheba's favour, holding that however imperfect Gokuldas's title to sell to Jagannath may have been, Jagannath had sued for specific performance with his eyes open as to the doubt of Gokuldas's title to sell and was entitled to his decree for specific performance for what it was worth. On 6th October 1932 Rao Ranjitsingh executed a sale deed of the property in favour of the plaintiff, and of the purchase money which amounted to Rs. 2000 Rs. 150 was paid to Rao Ranjitsingh and Rs. 1850 was paid to the defendant Gokuldas, on a calculation based on the assumption that the document between Rao Ranjitsingh and Gokuldas was a mortgage in full satisfaction of the mortgage claim. It will be noted that this sum of Rs. 1850 is the sum for which Gokuldas had contracted to sell to Jagannath. The document Ex. P-2 was then given back to Rao Ranjitsingh, and the plaintiff claimed that he had bought the fields clear of any incumbrance since the mortgage had been satisfied.

(2.) THE trial Court in a brief judgment came to the conclusion that the document between Rao Ranjitsingh and Gokuldas was in effect a mortgage, basing his opinion on the wording of the document, fortified by what he considered the surrounding evidence as shown by the oral evidence. The learned Judge did not consider that Section 92, Evidence Act, debarred him from admitting oral evidence on this point as it was not sought to contradict or vary the terms of the document. The learned Judge also came to the conclusion on the issue whether the plaintiff had any notice of the agreement to sell between Gokuldas and Jagannath that the plaintiff had no notice. The plaintiff's claim was accordingly decreed. In first appeal in the Court of the District Judge, Nimar, the Appellate Court rightly held that the trial Court was wrong in admitting evidence as to the intention of the parties and held that the document must be construed on its merits alone. The Court also held as a question of fact, and in my opinion quite correctly, that the plaintiff did have notice of the transaction between Gokuldas and Jagannath. The Court held that the correct interpretation to be placed on the document was that it was not a mortgage but an out-and-out sale and that the defendant Jagannath, who was the appellant before it, had acquired an absolute title to the fields when defendant 1 had failed to repurchase them from defendant 2, and that he was in possession of the fields and that the plaintiff was not entitled to oust him from that possession. The decision of the trial Court was reversed and the plaintiff's suit was dismissed. The plaintiff has preferred this second appeal in which the only contesting defendant is Jagannath.

(3.) THE learned Judge of the lower Appellate Court has taken notice of the various tests which have been applied from time to time in the Courts in India in distinguishing a mortgage from a sale with a condition of re-transfer and has referred to the summary of the most important tests which appear in Sir Dinshah Mulla's Transfer of Property-Act, Edn. 2, p. 330. The learned Judge has quoted the first five of the six tests given in that work namely, (1) the existence of a debt, (2) the period of re-payment, (3) the continuance of the grantor in possession, (4) the stipulation of interest on re-payment and (5) a price below the true value. He has, however, omitted the last test, namely, whether the stipulation for re-conveyance is in a contemporaneous deed or is one executed after a lapse of time. It is possible that he omitted this particular test inasmuch as by virtue of the proviso to Section 58(c), T.P. Act, which was added to it by the amending Act of 1929, no transaction purporting to be a mortgage by conditional sale shall be deemed to be a mortgage unless the condition of re-transfer is embodied in the document which effects or purports to effect the sale, and the question whether deed is contemporaneous or subsequent does not arise. The proposition, however, that a contemporaneous entry stipulating re-conveyance indicates a mortgage still holds good, and the obvious effect of the added proviso is that prima facie the document is a mortgage and that the burden lies on the opposite party to show that it appears rather to be an out-and-out sale, in which case the tests mentioned would have to be applied.