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1952 DIGILAW 117 (MP)

Chhuttu v. Kayam Khan

1952-10-28

SATHEY

body1952
JUDGMENT : 1. This defendant's appeal arises out of a suit for Rs.255 as arrears of rent of two houses. The Munsiff Bhopal decreed it only for Rs.185 but the learned District Judge on cross-appeals by the parties, awarded the full amount claimed. 2. The facts of the case are amply stated in the judgment of the lower appellate Court. The suit was based on present-note executed by the defendant on 2-7-47 in favour of the plaintiff. It was said that the defendant had paid the rent for five months and for the next seven months from 3-12-1947 to 2-7-1948 a sum of Rs.25 only was remitted. The claim, therefore, was for Rs.480 minus Rs.25=Rs.255. 3. The defendant's contest was two-fold viz : (1) that the transaction of sale dated 2-7-47 was in fact a mortgage by conditional sale and the rent-note was for interest which was thus liable to be cut down under S.49, Bhopal Civil P.C., and (2) that the plaintiff had taken the major portion of the house on rent at Rs.35 per month from the defendant benami in the name of his son Mohammad Sayeed under a rent-note and as such the claim for that amount was liable to be set off against the claim made in the plaint and a sum of Rs.25 only was due. It was further said that calculating the rate of interest allowed under the law, as stated above, a sum of Rs.75 was in fact due from the plaintiff to the defendant. The defendant, however, paid no court-fee on the amount for the set off. 4. The trial Court held that the transaction was a mortgage by conditional sale and the rent represented the interest on the loan which was liable to be cut down to Rs.30 per month and thus for the period of seven months only a sum of Rs.185 was due. On the other contention it was held that the rent-note by Mohammad Sayeed was inadmissible for want of proper stamp and non-payment of stamp-duty and penalty and thus no finding was given. The learned District Judge held that the defendant as a tenant under the rent-note was estopped from challenging the plaintiff's title and as such could not urge that the transaction was a mortgage. The learned District Judge held that the defendant as a tenant under the rent-note was estopped from challenging the plaintiff's title and as such could not urge that the transaction was a mortgage. On the other contention it was held that the rent due from the son could not be set off against the claim by the father. 5. Two contentions are now made in this Court, viz. : (1) that the learned District Judge wrongly applied S.116, Evidence Act, and as such the defendant was not estopped from pleading and proving that the plaintiff was a mortgagee and (2) that the learned Judge had also omitted to consider that as a fact the plaintiff was the tenant of the defendant and the amount due from him was liable to be set off against the plaintiff's claim. 6. It appears that both the lower Courts have overlooked the fact that no court-fee was paid on the amount of the set off against the claim in the plaint. It is now admitted before this Court, by the counsel for the appellant and is obvious from the record, that no court-fee was paid on the claim sought to be set off and as snob the second contention made in this Court cannot be considered. 7. The only question, therefore, is whether the transfer-deed dated 2-7-1947, by the defendant in favour of the plaintiff, was a sale out and out or a mortgage by conditional sale or whether the defendant is estopped from making the latter contention. The learned District Judge has referred to a decision by the Bhopal High Court in Badrunnisa v. Abdul Latif, in L.P.A. No.34 of 1949-50, d/-11-1-1950, which was a suit for ejectment. It appears that this decision was in its turn based on the decision in Mt. Bilas Kumar v. Desraj Ranjit Singh, (37 All 557 (PC).) The case of the Indian Court, however, involved altogether different and dissimilar facts and cannot be applied to the case on hand. 8. It must be noted that the defendant admittedly was not placed in possession of the houses by the plaintiff, but a mere rent-note was obtained from him. Bilas Kumar v. Desraj Ranjit Singh, (37 All 557 (PC).) The case of the Indian Court, however, involved altogether different and dissimilar facts and cannot be applied to the case on hand. 8. It must be noted that the defendant admittedly was not placed in possession of the houses by the plaintiff, but a mere rent-note was obtained from him. The defendant could not be, therefore, estopped under S.116, Evidence Act, from challenging or discounting the title of the plaintiff.' The rule of law is firmly established that a tenant, who has been let in possession cannot deny his landlord's title. The facts in the decision in Lal Chand v. Ramsingh, 1942 Nag LJ 136, appear to be exactly similar to the facts in the case on hand. It was held in that case that: "Section 116, Evidence Act, estops a tenant from disputing the title of the landlord at the date of lease but it pre-supposes that the person affected by the estoppel is a tenant. Where the defendant does not accept the position that he was a tenant and to neutralize the effect of the admission made by him in the lease, he relies on the recitals of another document of sale of the same date and he contends that the lease does not embody the whole of the agreement between the parties and the lease was only a part of an agreement, the nature of which can be discovered only by the construction of the sale-deed, the section will not come into play." It would thus appear that it is not correct to observe that S.116, Evidence Act, bars the contention as made by the defendant in the case on hand. 9. It must further be noted that proviso under S.58(c), T.P. Act, was not added to the section in the Bhopal T.P. Act and as such in order to raise a plea of the transfer being a mortgage, it was not necessary that the condition of re-conveyance should have been embodied in the document of sale itself. Even adhering to the terms of the document it would appear that extrinsic circumstances, showing the real intention of the parties, can be proved under S.92, proviso (6), Evidence Act. Even adhering to the terms of the document it would appear that extrinsic circumstances, showing the real intention of the parties, can be proved under S.92, proviso (6), Evidence Act. These circumstances may be found in the contemporaneous conduct of the parties and may include the fact that the transferee in the same sitting agreed to reconvey the property before the execution of the sale-deed and executed a separate document accordingly. The whole transaction may thus be found to be evidenced by the two documents read together and the intention of the parties can be gathered from both of them. Once this is done, the surrounding circumstances may help to arrive at the real intention of the parties and the nature of the whole transaction, and the Courts have illustrated these circumstances in different decisions amongst which the following may be said to be important : "(1) The period of repayment, a short period being indicative of a sale and a long period of a mortgage; (2) the continuance of the grantor in possession indicates a mortgage and (3) a contemporaneous deed stipulating re-conveyance indicates a mortgage." These are some of the tests which could be applied for arriving at the nature of a transaction. In applying these tests, the Courts put the onus on the party alleging that an ostensible sale-deed was a mortgage. The real test suggested is whether the agreement to reconvey was part of the consideration of the transfer. These principles seem to have been accepted by the Bhopal High Court in different decisions viz : (1) Mulla Ahsan Hussain v. Hayat Mohammad, F.C.A. No.151 of 1947, D/-27-3-1947 and (2) Narayandas v. Yakub Khan, L.P.A. No.31 of 1944-45, D/-17-7-1945. 10. Examining the case on hand, it appears that the following circumstances are apparently present in it viz., : (1) a contemporaneous agreement to reconvey; (2) agreement forming the terms of the consideration of the transaction of sale; (3) a fairly long period of five years for repayment and reconveyance and (4) possession continued with the defendant transferor. In my opinion, therefore, they clearly indicate the relationship between the parties to be of a debtor and creditor leading to the irresistible conclusion that the intention was to mortgage the property by conditional sale and the rent was intended to cover interest. 11. In my opinion, therefore, they clearly indicate the relationship between the parties to be of a debtor and creditor leading to the irresistible conclusion that the intention was to mortgage the property by conditional sale and the rent was intended to cover interest. 11. Such mortgage fell within the purview of S.49, Bhopal Civil P.C., applicable to the transaction in the suit and as such the interest could be limited to only the rate prescribed under it viz. : /12/per cent. per month. It would further appear that under that section the Courts have power to limit the rate only in passing a decree and therefore they could not look behind the claim as made and could not examine what the parties had done till then. It is only the claim, as laid before the Courts, to which the above prescribed rate is to be applied. In the circumstances, the plaintiff in the suit on hand was entitled to only a sum of Rs.30 per month and calculating the amount due for the period of seven months and deducting the amount paid it works out to a sum of Rs.185 only. 12. The result is that the appeal partly succeeds and is allowed with proportionate costs against the respondent who bears his own costs. The decree of the lower appellate Court is modified and it is ordered that the plaintiff's claim for only a sum of Rs.185 is decreed with proportionate costs against the defendant who shall bear his own costs in the suit. It is further ordered that similar costs be paid by the parties in the first appellate Court also. Counsel's fees will be upto the maximum, if certified in time. A decree be drawn accordingly. Decree modified.