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1951 DIGILAW 96 (MP)

Sunder Lal v. Mohan Lal

1951-12-03

DIXIT, MEHTA

body1951
JUDGMENT : DIXIT, J. 1. This is an appeal by the plaintiff in the suit, from the decision of the Additional District Judge, Ujjain, whereby he substantially affirmed the judgment and decree of the City Sub-Judge, Ujjain dismissing the appellant's suit for pre-emption. 2. It was alleged by the plaintiff that the respondent Javar Chand who was the owner of a house No.2689 situated in Mohalla Budhwaria, Ujjain, mortgaged the house on 27-10-32 with one Vithal. Das for Rs.800/-; that on 17-7-43 an account of the amount due on this mortgage was taken and Rs.1394/- were found due from Javar Chand; that as both Vithal Das and Javar Chand were in need of money, Vithal Das sold on 17-7-43 his rights in the mortgage to Mohan Lal for Rs.900/- and on the same date Javar Chand executed a registered deed in favour of Mohan Lal purporting to borrow Rs.400/- from Mohan Lal and to mortgage the house in suit with Mohan Lal for this sum of Rs.40.0/- and Rs.1394/- said to be amount due on the mortgage purchased by Mohan Lal from Vithal Das. The plaintiff claimed that the transaction evidenced by the deed of 17-7-1943 executed by Javar Chand in favour of Mohan Lal was one of sale of the-property to Mohan Lal for Rs.1300/- and that he was entitled to pre-empt the property for that amount. In his written statement, Javar Chand admitted the plaintiff's claim. Mohan-Lai contested the suit mainly on the ground, that the deed of 17-7-43 was on the face of it and in reality a deed of mortgage and that with, regard to this mortgage transaction, no preemption suit could lie. The Court of first instance held that the transaction entered into by Javar Chand with Mohan Lal on 17-7-43 was a mortgage for Rs.1300/- and dismissed the plaintiff's claim. On appeal the learned Additional District Judge of Ujjain agreed with the conclusion of the Sub-Judge that the transaction was a mortgage but found that the consideration for the mortgage was Rs.1794/- and not Rs.1300/-. The learned District Judge, therefore, dismissed the plaintiff's appeal and allowed the defendant Mohan Lal's cross-objections in regard to the amount of consideration for the mortgage. It is from this decision of the Additional District Judge Ujjain that the plaintiff has preferred this appeal. 3. On behalf of the appellant, Mr. The learned District Judge, therefore, dismissed the plaintiff's appeal and allowed the defendant Mohan Lal's cross-objections in regard to the amount of consideration for the mortgage. It is from this decision of the Additional District Judge Ujjain that the plaintiff has preferred this appeal. 3. On behalf of the appellant, Mr. Sanghi argues that the Courts below have not given due weight to the fact that in this case it was open to the plaintiff to show from circumstantial or oral evidence that the transaction of 17-7-43 was one of a sale and not a mortgage and accordingly considered the evidence on the record. Learned Counsel for the appellant pointed out that the evidence shows that prior to 17-7-43 the defendant Javar Chand had actually approached the plaintiff and other persons for the sale of the house; that the value of the property did not exceed Rs.1500/- and that it appears incredible that Mohan Lal agreed to take a mortgage for Rs.1794/- on a house the value of which did not exceed Rs.1500/- and in which the mortgage Vithal Das's rights were purchased by Mohan Lal for Rs.900/- only. Counsel for the appellant stressed the point that the sale by Vithal Das of his rights to Mohan Lal and the alleged mortgage by Javar Chand to Mohan Lal were effected on the same date and that Vithal Das sold his-rights to Mohan Lal with the consent of Javar Chand. It was argued that having regard to all these circumstances the Courts below should-have held that the transaction of 17-7-43 between Javar Chand and Mohan Lal was one of a sale of the house for Rs.1300/- being the amount which Mohan Lal himself had paid to Vithal Das for the purchase of his rights as a mortgagee and the sum of Rs.400/- borrowed by Javar Chand from Mohan Lal. 4. Mr. Hirway for the respondent Mohan Lal did not dispute that it was open 1o the pre-emptor to show from circumstantial and oral evidence that the transaction was one of a sale and not a mortgage. He, however, contended that the Courts below did consider the evidence-led by the plaintiff as to the nature of the transaction and then came to the conclusion which was justified on that evidence, that the appellant had failed to prove that the transaction was in reality a sale. He, however, contended that the Courts below did consider the evidence-led by the plaintiff as to the nature of the transaction and then came to the conclusion which was justified on that evidence, that the appellant had failed to prove that the transaction was in reality a sale. Having considered the arguments of the learned Counsel for the parties, I have come to the conclusion that this appeal must be dismissed. That a pre-emptor is not precluded from showing that the deed on which he bases his right to pre-empt and which on the face of it purports to be a mortgage is in reality a sale, is clear enough from the provisions of S.99, Evidence Act, and of S.3 of the Gwalior State Pre-emption Act of Samvat 1992. But, in my opinion, this rule of law only permits a pre-emptor to give evidence of any fact to prove a contemporaneous agreement between the parties to the document to the effect that the parties agreed that though the document showed one thing actually, the real transaction between them was to be quite different. I do not think, it enables a pre-emptor to suggest without proving a contemporaneous oral agreement that though a deed is 'ex facie' a mortgage and though according to its plain terms, it must be construed as such between the parties, nevertheless it should be treated as the sale because the intention of the parties was to defeat the right of pre-emption. Learned Counsel for the appellant relied on - 'Lalji Misir v. Jaggu Tewari', 33 All 104 (A); - 'Baijnath Singh v. Hajee Vally Mahomed', AIR 1925 PC 75 (B); and - 'Usan v. Mohammad Shafi Khan', AIR 1927 All 204 (C) and said that a pre-emptor is entitled to ask the Court to treat a deed of mortgage as a deed of sale,if it was executed for the purpose I of avoiding the exercise of a right of preemption and had the same result as a sale. It seems to me that the none of the cases relied upon by the learned Counsel for the appellant lays down any such proposition. In 33 All 104 (A), the question that was decided was whether the word "Intiqual" used in the pre-emptive clause of a "Wajibularj" was wide enough to include a perpetual lease. It seems to me that the none of the cases relied upon by the learned Counsel for the appellant lays down any such proposition. In 33 All 104 (A), the question that was decided was whether the word "Intiqual" used in the pre-emptive clause of a "Wajibularj" was wide enough to include a perpetual lease. In the Privy Council decision reported in AIR 1925 PC 75 (B), their Lordships of the Privy Council considered the question whether a term in a deed of a transfer of certain shares in a company should be construed in the light of all the circumstances attending the execution of the deed, as a transfer of the shares by way of a security or as a sale with a clause for re-purchase. The decision in AIR 1927 All 204 (C) held a deed purporting to be a mortgage-deed to be a sale deed on the construction of its terms with the help of extrinsic evidence of surrounding circumstances. In all these cases, the question was one of construction of the terms of a deed and not of altering the legal effect of the plain words of an instrument according to the surmised or alleged intention of the parties. To my mind, the correct rule is as stated in - 'Sarfaraz Singh v. Baleshwar Prasad', AIR 1928 Oudh 103 (D), that cases of this kind should be decided by the construction of the document, and if it is, on the face of it, a mortgage, it cannot be regarded as a sale merely because, its terms are onerous so as to render the chance of redemption of the mortgage remote or because the mortgage was executed for defeating the right of pre-emption. 5. The question for determination in this case is therefore, purely one of fact, namely, whether the deed executed on 17-7-43 by Javar Chand in favour of Mohan Lal was one of mortgage or of sale. In the determination of this question, on the construction of the deed, very little assistance can be derived from the construction put on different documents by the Courts in decided cases. By the deed executed on 17-7-1943, Javar Chand mortgaged with possession the house in suit with Mohan Lal for Rs.1794/- and undertook to redeem the mortgage within 5 years. In the determination of this question, on the construction of the deed, very little assistance can be derived from the construction put on different documents by the Courts in decided cases. By the deed executed on 17-7-1943, Javar Chand mortgaged with possession the house in suit with Mohan Lal for Rs.1794/- and undertook to redeem the mortgage within 5 years. The mortgage debt carried no interest and in lieu of it Mohan Lal was given the right to appropriate the profits of the property. There is no term in the deed in regard to which it could be said that it is so onerous and unconscionable in its nature that it makes the exercise of the right of redemption impracticable or impossible. 'Ex facie' the deed of 17-7-43 on which the plaintiff has sued, is a mortgage. The onus, therefore, lies heavily on the appellant to show that the transaction is in reality a sale. He attempted to discharge this burden by showing certain circumstances, in which, according to him, the document was executed. These circumstances on which the learned counsel for the appellant relied have already been stated above. I do not regard any of these circumstances taken individually or together as conclusive to show that the parties agreed that the transaction should be treated as a sale. It is quite true that it was not necessary for Vithal Das to obtain the consent of Javar Chand for the sale of his rights as mortgagee to Mohan Lal. But if Mohan Lal did obtain the consent of Javar Chand for reasons best known to him, it cannot be said that having given that consent, Javar Chand is debarred from redeeming the mortgage, which he made in favour of Mohan Lal. Again, from the fact that Javar Chand was at one time thinking of selling the property, it does not follow that thereby he precluded himself from mortgaging the property, to any one. The contention that the transaction should be treated as a sale because as a mortgage for Rs.1794/-of a property of the value of about Rs.1500/-, it was an unprofitable bargain to Mohan Lal, is equally without any substance. The contention that the transaction should be treated as a sale because as a mortgage for Rs.1794/-of a property of the value of about Rs.1500/-, it was an unprofitable bargain to Mohan Lal, is equally without any substance. From the evidence of the plaintiff's own witnesses, it appears to me that the value of the house in suit was much above Rs.1500/- and that in purchasing the mortgagee's rights for Rs.900/-from Vithal Das and then in taking a morlgags of the house for Rs.1794/- after advancing Rs.400/- to Javar Chand, Mohan Lal made for himself a profit of Rs.494/-. There is, therefore, no ground for suggesting that Mohan Lal could not have entered into such a transaction except as a sale. Learned Counsel for the appellant laid some stress on the fact that in his written statement Javar Chand admitted the claim of the plaintiff saying that he had in fact sold the house to Mohan Lal. Quite apart from the fact that in the deposition given as a witness of the plaintiff, Javar Chand has not adhered to the position he took in his written statement, I think very little value can be attached to this admission of Javar Chand for the simple reason that Javar Chand being a party to the deed, he cannot be heard to say vis-a-vis Mohan Lal that the deed is a sale and not a mortgage. 6. For the above reasons, I think the Courts below were right in arriving at the finding that the transaction was one of a mortgage and not of a sale and as such not subject to pre-emption. I would, therefore, dismiss this appeal with costs. 7. MEHTA, J. :- I agree.