Appeal from Appellate Decree no.567 of 1993 ----- Against the judgment dated 3.8.93 passed by Shri Birendra Singh, 8th Additional District Judge, Munger in T.A. No.16/1989 reversing the judgment And decree dated 30.1.1989 passed by Sri Mithilesh Kumar Rai, Additional Munsif IV,Munger in T.Suit No.50/1983. ----- SK.MD.ILLIYAS ... ... Appellant Versus NARAYAN SAH ... ... Respondents ----- For the Appellant : M/S Raghib Ahsan,Sr.Adv. Md. Abu Haidar, Adv. Jahan Ara, Adv. For the Respondent : None. ----- P R E S E N T THE HON'BLE MR. JUSTICE GHANSHYAM PRASAD ---- Ghanshyam Prasad,J. This appeal has been preferred against the judgment of reversal dated 3.8.1993 passed by 8th Additional District Judge, Munger in Title Appeal No.16 of 1989 thereby he has set aside the judgment and decree dated 30.1.1989 passed by Additional Munsif-IV, Munger in Title Suit No.15 of 1983. 2. The plaintiff-appellant filed the abovementioned suit against the defendant-respondent for redemption along with other relief. His case in brief is that he executed two registered deeds of mortgage by conditional sale dated 26.6.1978 for - 2 - Rs.5,000/- (Rs.2500/- each) in respect of 10 katha of land each with a condition to re-convey if the plaintiff returns the amount within five years. Further case is that the plaintiff-appellant tendered mortgage money to the defendant-respondent within the time but he did not receive the same nor re-conveyed the land under mortgage. Hence, he filed the suit. 3. The defendant-appellant contested the suit mainly on the ground that the documents in question are out and out sale and not mortgage by conditional sale. Respondent had no right to redeem the sale. The tender of alleged mortgaged money has also been denied. 4. The learned trial court after consideration of recitals of deeds (Exts. 2 & 2/a) held that transactions were mortgage by conditional sale as defined in section 58© of the T.P. Act and, accordingly, decreed the suit for redemption. 5. Defendant-respondent being aggrieved by the aforesaid decision preferred appeal before the District Judge. The appeal was heard by 8th Additional District Judge. The learned court after consideration of materials and recitals of the deeds held that transactions were absolute sale with condition of re- conveyance and not mortgage by conditional sale. - 3 - Accordingly, he has allowed the appeal, set aside the judgment and decree of the trial court and dismissed the suit. 6. Plaintiff-appellant has preferred this second appeal. This appeal has been admitted to be heard on following substantial questions of law : i) Whether the lower appellate court was justified in holding on the basis of material on record that Exts.2 & 2/a are sale deeds and not mortgage deeds? 7. Heard the learned counsel for the appellant. This Court did not get opportunity to have assistance from the side of the respondent as inspite of sufficient time afforded to him, none turned up to argue on behalf of the respondent. 8. The learned counsel for the appellant in course of argument challenged the findings of the learned appellate court. It is contended that the learned appellate court has not properly considered recitals of the deeds nor the law of mortgage by conditional sale. It is further contended that recitals of the deeds would go to show that the intention of the plaintiff-appellant was to execute mortgage by conditional sale and not out and out sale with condition to re-purchase. For above submission, - 4 - the learned counsel for the appellant has relied upon several decisions including 1954 Supreme Court Page- 345 (Chunchun Jha Vrs. Ebadat Ali and another) and 1966 Supreme Court Page-902 (P.L. Bapuswami vrs. N.Pattay Gounder. 9. Mortgage by conditional sale has been defined in section 58 © of the T.P. Act, which runs as follows : “58©. Mortgage by conditional sale.- Where the mortgagor ostensibly sells the mortgaged property- on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale.” 10. The proviso to this clause has been added by section 19 of the T.P.(Amendment Act),1929. The effect of proviso is that where conditions are incorporated in the same document and those terms are covered by section 58© the transaction will be deemed - 5 - to be mortgage by conditional sale unless express words and attending circumstances show otherwise. The true effect of proviso has been discussed by the apex court in a decision reported in 1954 (Supra). In paragraph-8, it has been held as follows : “8. Because of the welter of confusion caused by a multitude of conflicting decisions the legislature stepped in and amended section 58© 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 & cannot be a sale. If the condition of repurchase is embodied in the document that effects or purports to effect the sale, then it is a matter for construction which was meant. The legislature has made a clear cut classification and excluded transactions embodied in more that one document from the category of mortgages, therefore it is reasonable to suppose that persons who, after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words; and if the conditions of section 58 are fulfilled, then we are of opinion that the deed should be construed as a mortgage.” - 6 - 11. The other important decision of the apex court on this point is reported in 1966 (Supra) which also lays down distinction between mortgage by conditional sale with right to re-conveyance and out and out sale with condition to re-purchase. In paragraph-5 of the judgment, it has been held as follows : “5. The proviso to this clause was added by Act 20 of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed. The Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The definition of mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a - 7 - sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. The distinction between the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the document viewed in the light of surrounding circumstances. If the language is plain and un-ambiguous it must in the light of the evidence of surrounding circumstances be given its true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may be law be permitted to be adduced to show in what manner the language of the deed was related to existing facts.” 12. In the light of above two decisions endeavour be made to know the true intention of the parties. The language of both the documents (Exts 2 & 2/a) are same. Upon consideration of recitals of the deeds coupled with several circumstances, it would appear that Exts.2 & 2/a are transaction of mortgage by conditional sale and not out and out sale with a condition to re-transfer. - 8 - 13. In the first place, the condition for re- purchase is embodied in the same document, which is the main condition for mortgage by conditional sale. In the second place, the Ext.1, the reply to the notice (Ext.1/A) is indicative of the character of the documents as mortgage. Ext.1/a is the copy of the lawyer’s notice dated 12.5.1983 sent on behalf of the plaintiff-appellant to defendant-respondent calling upon him to accept the mortgage money and re-convey the mortgage property. Ext.1 is reply sent by the defendant-respondent. In that very reply, he has simply expressed his willingness to accept the money and re-convey the land. He has not denied the character of the documents. It is clear admission by the defendant-respondent of the character of the deeds as mortgage by conditional sale. In third place, the value of the land under mortgage is much less than the actual price. The plaintiff-respondent in paragraph-14 of the written statement has himself valued the suit land at Rs.15,000/- whereas the total value of the deeds in question is only Rs.5,000/-. The low value of the transaction is strong circumstance to suggest that the transaction was mortgage and not out and out sale. In the fourth place, on perusal of deeds, it would appear that only possession was handed over by - 9 - the plaintiff-appellant. Not the right and title of the lands under the deeds. 14. Thus, having regard to the recitals of the documents coupled with the circumstances setforth above, this Court has no doubt in mind that the transaction under the deeds (Exts.1 & 1/a) are mortgage by conditional sale and not out and out sale with right to re-purchase. The view taken by the first appellate court is apparently erroneous and bad in law. He has not properly considered the law enshrined under section 58 © of the T.P. Act along with proviso as also the various pronouncement of the apex court on this point. 15. For the reasons mentioned above, this appeal is allowed with cost. The judgment and decree under appeal is hereby set aside and judgment and decree of the trial court is restored. Lawyer’s Fee Rs.250/- Lawyer’s Clerk’s Fee Rs.50/- ( Ghanshyam Prasad ) Patna High Court Dated the 16th July,2008 N.A.F.R./N.H. - 10 -