Case: Bhaskar Waman Joshi Vs. Shrinarayan Rambilas Agarwal

evidence in Suit No. 112 of 1932 deposed that the tax came to Rs. 48 on the date of purchase, but he did not state that this amount was payable monthly. There is again evidence of witness Balkrishna examined by the transferees that the water tax was paid by the tenants. In their written statement, the transferees had set out a statement of income and expenditure for the years 1931-1940 and in that statement for the year 1933 the expenses debited against income were Rs. 426-11-0, for 1934 Rs. 346-15-6 and for 1935 Rs. 542-2-6-, for 1936 Rs. 1,666-7-9, for 1937 Rs. 1,160-1-3, for 1938 Rs. 529-2-3, for 1939 Rs. 570-11-3 and for 1940 Rs. 46/2/0. If Rs. 48 were payable as municipal tax every month, the liability on account of taxes alone for exceeded the expenses debited against the rent received. This statement of account abundantly shows that the municipal taxes were borne by the tenants and not by the landlords. The High Court in para, 34 of its judgment proceeded to estimate the rental of the properties at Rs. 245 per month sand capitalised the same at 5 per cent. The High Court is not shown to be in error in accepting the net monthly rental at Rs. 245 per month. 11. The area of the land of the Amba Gate house in 9037 square feet, the area of the land at chawl is 23805 square feet, and the area of land of Dhanraj Lane house is 817 square feet. There is no clear evidence on the record about the precise area of the lands covered by the structures, but it is conceded that the structures stood on an area less than one-half of the total area of the land. From the evidence especially of the valuation reports, it appears that of the Amba Gate house 5800 square feet of land were open and of the Chawl 12000 square feet of land were open. Valuation of building land with structures by capitalising the rental may yield a reliable basis for ascertaining the value of the land together with the structures only if the land is developed to its full capacity by erection of structures. If the land is not fully developed by raising structures, valuation of houses together with lands by capitalising the rent received may not furnish reliable date for assessing the market value. By aggregating the value of the land and the value of the structure separately estimated a scientifically accurate value of the land with the structure may not be obtained. But where the land is relatively valuable and the structures are old and comparatively of small value this method may afford a rough basis in the absence of other reliable date for ascertaining the value of the land and the structure. Exs. D-52 and D-53 are the reports prepared by a valuer, of the market value of the Chawal and the Amba Gate house. According to the report Ex. D-52, the value of the superstructure of the Chawl was Rs. 31,708. Out of this amount the valuer sought to deduct 20 per cent as per Superintending Engineers letter dated the 21st August, 1931. On what basis that deduction has been made has not been explained. He again proceeded to deduct 20 per cent as depreciation on the cost of the building and estimated at Rs. 20,293 the value of the superstructure. It is evident that a deliberate attempt was made by the valuer to depreciate the value of the superstructure by making at least one deduction of 20 per cent for which there is no warrant. Even assuming that this valuation of Rs. 20,293 is accurate, the value of the Chawl together with the land considerably exceeds Rs. 26,000. The valuer has valued the site at 4 as, per square foot, but no reliable evidence has been led to support that estimate, Similarly for the Amba Gate house the valuer estimated the value at Rs. 18,.556 for the superstructure and he deducted 20 per cent with effect from the 22nd August, 1931 according to the Superintending Engineers letter dated the 21st August, 1931 and 25 per cent as depreciation charges on building and arrived at the figure of Rs. 11,134 and added there to the value of the land at the rate of 4 as. per square foot. The evidence on the record does not warrant the assumption that the land was wroth only annas four per square foot. As pointed out by the High Court in view of the sale deeds Exs. P-9 and P-21 the price of the land fluctuated between Re. 1 and Rs. 2-4 as per square foot. Even if the lower of the two rates be adopted, the value of the Chawl and the Amba Gate house will considerably exceed the price embodied in the sale deed. 12. The house in Dhanraj Lane was valued in the draft sale at Rs. 3,500 and in the sale deed at Rs. 2,000. No explanation has been given for this disparity between the prices mentioned in the draft and the sale deed and there is substance in the contention strongly pressed by counsel for the transferors that the value of Rs. 2,000 for a house with a ground floor and two stories is artificial. The evidence discloses that the house was let out on a monthly rent of Rs. 20 and capitalising that rent at 5 per cent on the assumption that by the construction the land was fully developed, the price thereof was more than double the price set out in the deed. It is clear that this house was included in the deed to make up the total value of Rs. 39,500, the amount required by the transferors to tide over their immediate difficulties. 13. Counsel for the transferees sought to rely upon the evidence of subsequent conduct of the transferors as indicative of the character of the transaction as a sale, but as already observed, that evidence is inadmissible.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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 circumstance that the condition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transactionIf the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their 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. Oral evidence of intention is not admissible in interpreting the covenants of the deed but evidence to explain or even to contradict the recitals as distinguished from the terms of the documents may of course be given .Evidence of the contemporaneous conduct is always admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible8. In the light of these principles the real character of the document Ex. D-1 may be ascertained. This agreement strongly indicates that the parties regarded the arrangement incorporated in the deed dated September 10, 1931, as a mortgageThere is in the deed no reference to any additional amount to be spent by the transferees for erecting buildings upon the land conveyed; and the books of the transferees are referred to in the agreement only to make the accounts maintained by them binding upon the transferorsThere is, however, no clear evidence as to what municipal taxes were payable in respect of the houses, and whether the taxes were payable by the tenants or by the landlordThis statement of account abundantly shows that the municipal taxes were borne by the tenants and not by the landlords. The High Court in para, 34 of its judgment proceeded to estimate the rental of the properties at Rs. 245 per month sand capitalised the same at 5 per cent. The High Court is not shown to be in error in accepting the net monthly rental at Rs. 245 per month. There is no clear evidence on the record about the precise area of the lands covered by the structures, but it is conceded that the structures stood on an area less than one-half of the total area of the land. From the evidence especially of the valuation reports, it appears that of the Amba Gate house 5800 square feet of land were open and of the Chawl 12000 square feet of land were open. Valuation of building land with structures by capitalising the rental may yield a reliable basis for ascertaining the value of the land together with the structures only if the land is developed to its full capacity by erection of structures. If the land is not fully developed by raising structures, valuation of houses together with lands by capitalising the rent received may not furnish reliable date for assessing the market value. By aggregating the value of the land and the value of the structure separately estimated a scientifically accurate value of the land with the structure may not be obtained. But where the land is relatively valuable and the structures are old and comparatively of small value this method may afford a rough basis in the absence of other reliable date for ascertaining the value of the land and the structure. Exs. D-52 and D-53 are the reports prepared by a valuer, of the market value of the Chawal and the Amba Gate house. According to the report Ex. D-52, the value of the superstructure of the Chawl was Rs. 31,708. Out of this amount the valuer sought to deduct 20 per cent as per Superintending Engineers letter dated the 21st August, 1931. On what basis that deduction has been made has not been explained. He again proceeded to deduct 20 per cent as depreciation on the cost of the building and estimated at Rs. 20,293 the value of the superstructure. It is evident that a deliberate attempt was made by the valuer to depreciate the value of the superstructure by making at least one deduction of 20 per cent for which there is no warrant. Even assuming that this valuation of Rs. 20,293 is accurate, the value of the Chawl together with the land considerably exceeds Rs. 26,000. The valuer has valued the site at 4 as, per square foot, but no reliable evidence has been led to support that estimate, Similarly for the Amba Gate house the valuer estimated the value at Rs. 18,.556 for the superstructure and he deducted 20 per cent with effect from the 22nd August, 1931 according to the Superintending Engineers letter dated the 21st August, 1931 and 25 per cent as depreciation charges on building and arrived at the figure of Rs. 11,134 and added there to the value of the land at the rate of 4 as. per square foot. The evidence on the record does not warrant the assumption that the land was wroth only annas four per square foot. As pointed out by the High Court in view of the sale deeds Exs. P-9 and P-21 the price of the land fluctuated between Re. 1 and Rs. 2-4 as per square foot. Even if the lower of the two rates be adopted, the value of the Chawl and the Amba Gate house will considerably exceed the price embodied in the sale deed12. The house in Dhanraj Lane was valued in the draft sale at Rs. 3,500 and in the sale deed at Rs. 2,000. No explanation has been given for this disparity between the prices mentioned in the draft and the sale deed and there is substance in the contention strongly pressed by counsel for the transferors that the value of Rs. 2,000 for a house with a ground floor and two stories is artificial. The evidence discloses that the house was let out on a monthly rent of Rs. 20 and capitalising that rent at 5 per cent on the assumption that by the construction the land was fully developed, the price thereof was more than double the price set out in the deed. It is clear that this house was included in the deed to make up the total value of Rs. 39,500, the amount required by the transferors to tide over their immediate difficulties13. Counsel for the transferees sought to rely upon the evidence of subsequent conduct of the transferors as indicative of the character of the transaction as a, but as already observed, that evidence is inadmissible.