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Appeal from Appellate Decree No. 333 of 1948, decided on 25th March 1952, against the Decree of S. K. Neogi, Additional District Judge, 1st Court of Zilla Barisal, dated the 30th May 1947, in Title Appeal No. 152 of 1946, affirming the Decree of Subodh Chandra Mukherjee, Subordinate Judge, Additional Court of Barisal, dated the 18th April 1946.
, S. 58 (c) Mortgage by conditional sale‑Ascertained date for payment of mortgage money essential‑Substance behind the form of docu ment should be found out.
Under section 58 (c) of the Transfer of Property Act, which deals with the definition of a mortgage by conditional sale, there must be a condition that in default of payment of the mortgage money on a certain date the sale shall become absolute.
When the question is whether a transaction is a sale or a mortgage it is an inviolable rule that upon such a question the Court must find the substance behind the form.
, S. 92‑Evidence as to sub sequent conduct only barred if party to suit can be considered representatives‑in‑interest of parties to document.
Section 92, Evidence Act would stand in the way of sub sequent conduct being taken into consideration only if all the defendants to the suit can be considered to be representatives- in‑interest of the parties to the document.
B. C. Das for Appellants.
A. C: Bhattacharjee for Respondents.
---This second appeal arises out of a suit filed by the appellants for a declaration of their title to the suit property, for khas possession thereof and for a permanent injunction against the defendants restraining them from dis turbing their possession. The suit property originally belonged to two brothers, Bhagaban and Luxmi, in equal shares. Both the brothers executed in favour of Rasaraj Saha the 5th defend ant Exh. C, dated 19th November 1895, which, while purporting to be a sale deed contains a provision for the reconveyance of the land whenever the executants or their heirs are able to repay the consideration for the deed. On 9th Baisakh, 1304 B.S. (21st April 1897), Bhagaban, father of plaintiffs Nos. 1 to 3 and grandfather of plaintiff No. 4, obtained from defendant No. 5 a permanent lease in respect of the whole of the suit pro perty and subsequently sold the right in this permanent lease to Banamali, father of defendant No. 1. After this sale, Banamali redeemed two previous kot mortgages that had been created by Bbagaban on this permanent lease in 1314 B. S. Subsequently Bhagaban himself took a sub‑lease in korsha right from Banamali in 1317 B.S. by executing two kabuliyats in respect of the lands of the kobala which he had executed in favour of Banamali including the disputed land. Bhagaban then died and subsequently his brother Luxmi also died issueless with the result that plaintiffs Nos. 1 to 3 inherited the eight annas share from Luxmi. The plaintiffs then surrendered the korsha holdings for which Bhagaban had taken a sub‑lease from defendant No. 5. They, however, did not deliver possession. The 1st defendant thereupon instituted a suit and obtained possession of the twelve annas share of plaintiffs Nos. 1 to 3 ; and as his claim in that suit was dismissed as far as the 4th plaintiff, a minor, was concerned, he exercised his right as a landlord and obtained rent decrees against that plaintiff. The 5th defendant in his turn, after the main document in question, Exh. 3, was executed in his favour mortgaged his interest in the suit lands to defendant No. 6 and to the predecessor‑in- interest of defendants Nos. 7 and 8. These mortgagees obtained a decree, and in execution thereof purchased the property at Court sale. In the meantime, the present plaintiffs approached the Debt Settlement Board at Kasipur for settle ment of their debt on the allegation that Exh. 3 was a mortgage by conditional sale. The Board decided in favour of the plaintiffs settling the debt at Rs. 256 and the 5th defendant, who was made a party to these proceedings, appealed against that decision and the Appellate Officer increased the amount of debt to Rs. 500 and remanded the case to the Board for fixing the number of instalments. But the Board held that the debt due on the mortgage by con ditional sale, had been wiped out. Defendants Nos. 6 to 8 then instituted a suit for a declaration that this decision of the Board was ultra vires, but that suit was dismissed for default.
There is no controversy with regard to these facts. None of the documents, on which reliance has been placed by the Courts below and to which reference has been made in the shove summary of facts, are before us, as they were taken away by the parties concerned after the first appeal was disposed off. But all that has been stated above can be taken as common ground. There is no controversy about it. The Subordinate judge, who tried the suit, held that Exh. 3 was a deed of sale out and out. This conclusion was based not only on the terms of the document with reference to certain decisions which he cited but also on the subsequent conduct of the parties as well as the oral evidence. The decision of the Board was regarded as one without jurisdiction in view of the fact that the application made to the Board by the plaintiffs stated that there was nothing due from them. He therefore, dismissed the suit, and on appeal also the plaintiffs failed.
Mr. B. C. Das, appearing for the appellants, does not dispute that the decision of the Board, on which the plaintiffs relied, cannot be considered to be binding on defendants Nos. 1 to 4. Defendant No. 1, as has already been stated, is a person to whom the permanent lease was sold by Bhagaban, and defen dants No. 2 to 4 are his sub‑lessees. None of these defendants were parties before the Board. He however contends that, apart from the decision of the Board, the language of the deed by itself indicates that the intention of the parties was to create a mortgage by conditional sale. He contends that, in interpreting the document, the Courts below fell into an error by considering the subsequent conduct of the parties as well as the oral evidence. According to him, even defendants Nos. 1 to 4 have to be regarded as representatives in interest of the parties to the document. For the position that subsequent conduct of the parties should not be taken into consideration and that the terms in themselves disclose that the transaction was a mortgage by a conditional sale, the learned Advocate relies on Muhammad Usman v. Abdul Rahman and others (42 C L J 74.) Defendants Nos. 5 to 8 have not appeared before us., Mr. A. C. Bhattacherjee, appearing for the respondents contends on the other hand that the document taken by itself indicates that the transaction was a sale out and out. He refers to translation that has been given to us by the learned Advocate for the appellants and points out that all the recitals therein taken together, put at the highest amount to this that it is a sale out and out with a right of re‑purchase. According to the learned Advocate, for a transaction to be a mortgage by a conditional sale, there must be something in the document itself indicating the subsistence of the relationship of a debtor and a creditor, and this he argues is not to be found in the document in question. In support of the position he has taken, he refers us to Bhagwan Sahai v. Bhagwan Din and others (17 I A 98.), Bhagwan Sahai v. Bhagwan Din and others (I L R 12 All. 387), clhanda Singh v. Wahid‑ud‑Din and others (43 I A 284.) and also to Ramdhandas clhajharia v. Ram kisondas Dalmia and others (51 C W N 202.) another decision of the Privy Council.
We have given our anxious consideration to the recitals found in the translation that has been placed before us, and we have been through the decisions cited on both sides. In our opinion the Court below were right in construing this docu ment as evidencing a transaction of a sale out and out. In 51 C W N 202 (supra), their Lordships of the Judicial Committee have observed that when the question is whether a transaction is a sale or a mortgage it is an inviolable rule that upon such al question the Court must find the substance behind the form. We must therefore study the documents from this point of view. The original is not placed before us but we have been given a translation of material part of the deed. The learned Advocate for the respondents does not question the accuracy of this translation. The following extracts from this translation seem to us to clearly indicate that in substance the deed is one of sale out and out:
"After execution of the kabala you will have your name mutated in place of ours in the landlord's office ; pay the rent to the landlords and enjoy the property. Whatever rights of enjoyment we had in the property sold devolve on you from to‑day on our and our heirs surrendering the same. The sold property is not encumbered to anybody excepting to your father by the said mortgaged bond . . . . . . The lands sold are in our khas possession and under our cultivation. So we transfer the possession to you. You will have the right henceforth to let out the lands in Patni elsewhere and we shall have no objection to it. We shall clear up the rent of the sale, property up to 1301 B.S., if in default and damage is caused to the property or to yourself and due to the institution of any suit for arrear of rent by the landlords we shall be liable to pay damages".
The plaintiffs strongly rely on the following portion of the translation in support of their contention that this was a mortgage by conditional sale:
"It is declared that if we or our descendants be ever able to repay the whole amount of Rs. 500 you will return the property back to us and for that you will not get any interest nor you would return any surplus money as profit. If you refuse to give back the property we shall have the right to take steps to get back the kabala on our depositing the consideration money".
Then follows the direction to the vendee to pay the rent for the current year, and the translated portion thereafter ends thus:
"We hereby hand over all the documents whatever we had in our possession of the land sold. You will pay out bond‑debt to your father from this money. We execute this sale deed of the following properties for the repayment of the debt to your father, this day the 4th Agrahayan, 1302 B.S."
Reference is made in the deed at more than one place to the sold property. Even after the recital of the provision for repurchase, the deed goes on to say:
"this sale deed of the following properties for the repay ment of the debt to your father".
It is significant that the provision regarding re‑purchase states that the vendee will return the property without getting any interest or giving any profit to the vendors. In 43 I A 2114 (supra) there was deed of sale of immovable property followed by an agreement for resale to the vendor. It was held by the Privy Council that the two documents did not together constitute a mortgage unless it appeared from them in the light of the surrounding circumstances that the parties intended the transaction to be a mortgage, and that in a redemption suit instituted many years after the date fixed for the repurchase cogent reasons of the intention were necessary. In that particular case, the deed of sale was dated 29th August 1852, and the agreement containing the right of repurchase was executed on 5th September 1652, seven days after the deed of sale. That agreement was to the effect that the executants were willing to help and treat with kindness the vendors ; and on their own free will they (the executants) covenant in writing that if the vendors after a lapse of y to 10 years from the date of the execution of the deed pay to the executants the purchase money mentioned in the sale deed, i.e., a sum of Rs. 5,500, out of their own pocket without mortgaging or selling the property to other persons, the executant shall forthwith execute a fresh resale deed on receipt of this sum and get mutation of names in the revenue papers. The Additional Judge of Meerut had held that the document constituted an out and out sale of the property with a contract for repurchase, and in the High Court five out of the six judges were of the same opinion, while one judge held that the transfer was a mortgage. Their Lordships, in the course of the discussion of the law on the subject referred to the case of Balkishen Das and others v. Legge (27 1 A 58.), which was relied on in suppor of the contention that the two documents concerned in the case taken together constituted a mortgage by conditional sale. Their Lordships observe at p. 292 as follows:
"The case is entirely distinguishable from the present, and it does not appear to their Lordships to follow necessarily from the words of Lord Davey just quoted that the decision might not, despite the identity of the dates of the two deeds and the presence of the provision as to depositing the amount to be paid, have been the other way had the debt on the factories not been consolidated. The case of Bhagwan Sahai v. Bhagwan Din (supra) resembles the present case much more closely. There the two documents, the deed of sale and the contract for repurchase, bore the same date, 20th February 1835. By the first Alum Singh purported to sell his entire property to Ganga Din for Rs. 4,000 current coin. By the second, which recited the first, it was provided that, as a matter of favour, much kindness and indulgence. if the vendor should, within a period of ten years from the date of the deed, pay in a lump sum and without interest the Rs. 4.000, the vendee would accept the same and cancel the sale. It further provided that during the term of ten years the vendee should remain in possession, collect the rent, enjoy the profits, and be liable for loss, the vendors having no concern whatever ; they should not claim profits and the vendee should not claim interest ; and in case the whole of the principal should be not paid according to the terms of the document, the vendors not to be able to cancel the deed by repayment of principal and interest".
Their Lordships then refer to the case of Alderson v. White which was relied upon by Sir Barnes Peacock in delivering the judgment in 17 I A 98 (supra). A quotation from that decision taken from the observation of Lord Cranworth is as follows
"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 re purchase".
Their Lordships then go on to observe
That statement of the law by Lord Cranworth was approved of in Manchester, Sheffield, and Lincolnshire Ry. Co. v. North Central Waggon Co . . . . . . There is one other remark of Lord Cranworth's in Alderson v. White which is particularly applicable to the present case. He said I think a Court after a lapse of thirty years ought to require cogent evidence to induce it to hold that an instrument is not what it purports to be . In the present case the period of ten years fixed for repurchase terminated in 1863. Not till October 5, 1907, forty‑four years after the lapse of that period, was this instituted.
It appears to us that to the facts of the present case the principle of the decision in 43 I A 284 (supra) is applicable. As has been stated above, the document no where indicates that the relationship of a creditor and debtor should subsist. It is clearly an out and out sale with a condition of purchase. Some comment was made by Mr. Das on the fact that while in the decisions of the judicial Committee referred to by Mr. Bhattacharjee there were two documents, in the case before us there is one. We do not think that anything material turns on this. As a matter of fact, the observation in the English case, Alderson v. White which has been referred to both in 17 I A 98 (supra) and 43 1 A 284 (supra), applies equally to a case of one document of sale with a condition of repurchase, and two documents one of sale and another of contract for repurchase executed as part of the same transac tion. The observation in the English case mentioned above, with regard to the necessity for the evidence being cogent in support of the contention that a document is not what it purports to be when the action is brought years after the transaction, in our opinion applies to the facts of the present case with great force. In the case before us, no date has been fixed for payment which would entitle the vendors to get back the property from the vendee, and as pointed out by Mr. Bhattacharjee under section 58 (c) of the Transfer of Property Act, which deals with the definition of a mortgage by a conditional sale, there must be a condition that in default of payment of the mortgage money on a certain date the sale' shall become absolute. The next alternative clause, namely, on condition that on such payment being made the sale shall become void, also necessitates there being a certain date in the contract of purchase. 'Such payment' naturally means payment on a certain date ; similarly the third disjunctive clause in that subsection. Here the document was executed, as stated above, in the year 1895, and this suit was filed in 1943 nearly 50 years later. In view of the observations in 43 I A 284 (supra), the evidence that the document really was not meant to be what it says must be convincing, but we have not been shown any such evidence.
Mr. Das objected to evidence of subsequent conduct being taken into consideration. His contention is that section 92 of the Evidence Act is a bar, but he had to concede that that section would stand in the way of subsequent con duct being taken into consideration only if all the defendants to this suit can be considered to be representatives‑in‑interest of the parties to the document. He had to admit that defendants No. 1 to 4 cannot be regarded as such representa tives‑in‑interest. We, therefore, think that the subsequent conduct of the parties can be looked into, and when that is done what is clear to us from the document becomes clearer indeed. Bhagwan taking a permanent lease is more consistent with the transaction being a sale out and out than its being a mortgage by conditional sale. He then sells the right under the permanent lease to the father of the first defendant and then takes a sub‑lease from that lessee.
In 42 C L J 74 (supra), cited by the appellants the fact that no period for payment was mentioned in the document was no doubt regarded as indicating that the transaction was more a mortgage than a sale but as pointed out by Mr. Bhatta charjee in that decision the learned judges, in construing the document, were influenced by the fact that the parties were Muhammadans who would not take interest. The following observation in that judgment supports the contention of the learned Advocate
"In construing the document in the present case it should be remembered that the transaction was between parties who were Muhammadans and it is well known that docu ments are executed by Muhammadans in which they conceal or at least try to conceal the real nature of the transaction and attempt to make out that the transaction is an out and out sale, although as a matter of fact the intention of the parties was to create a mortgage".
We, therefore, think that this decision does not apply to the fact before us.
It is no doubt true that defendants Nos. 5 to 8 are in the position of representatives‑in‑interest of Bhagwan who was a party to the document, but Mr. Das conceded that, if once on the evidence adduced by defendants Nos. 1 to 4 this Court comes to the conclusion that the document was a sale out and out, no distinction on principle can be made between the two sets of the defendants. The effect to the decision given by the Debt Settlement Board, as we have already observed, does not affect defendants Nos. 1 to 4. As regards defendants Nos. 5 to 8 who may be said to be bound by it, there is no prayer in the plaint that there should be a declaration in respect of possession with reference to that decision. In view of our conclusion that Exh. 3, evidences a sale out and out, and the fact that it is conceded that when once that decision is arrived at, on principle no distinction can be made between the two sets of defendants, we do not consider it necessary to deal with the question whether the decision of the Board is ultra vices. Had it been necessary to decide the point we would have followed the, decision of a Bench of this Court to which one of us was a party, Haji Maharam Ali v. Munsar Ali (P L R 1 Dacca 121), and declared the decision of the Board as ultra vices.
We, therefore, see no reason to interfere. The appeal is dismissed with the costs of the contesting respondent.
---I agree.
A. H. Appeal dismissed.
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