Sajeda Bano v. Mushir Mohammad Khan — 1987 DIGILAW 271 (MP)

JUDGMENT : ( 1. ) THIS is plaintiffs appeal under Section 100 of the Code of Civil Procedure and is directed against the judgment and decree dated 21-12-1982, passed by V Addl. Judge to the Court of District Judge, Bhopal in Civil Appeal No. 17-A of 82, arising out of the judgment and decree dated 5-7-1979, passed by II Civil Judge, Class II, Bhopal in Civil Suit No. 57-A of 77. ( 2. ) THE dispute between the parties is about a house situated in Gali Masjid Peerji in Ibrahimpura, Bhopal. It is not in dispute that this house was owned by the appellant, Aziz Rehman who purchased the same for a valuable consideration of Rs. 3,000/- on 24-2-1949 by a registered sale-deed, Ex. P-1, on 28-12-1955 a sale-deed in respect of this very house was executed by the appellant in favour of respondent, Mushir Mohammad Khan for a valuable consideration of Rs. 1,000/- only. This sale-deed was, however, not registered on that date (Ex. P-2 ). On 3-1-1956, the appellant executed a rent note in relation to this very house in favour of the respondent and agreed to pay Rs. 20/ - per month as rent (Ex. P-4 ). On this very date i. e. 3-1-1956, the respondent executed a deed of reconveyance agreeing to reconvey the sold property to the appellant if he paid the principal sum of Rs. 1,000/- within a period of 2 years (Ex. P-3 ). Later on, the sale-deed dated 28-12-1955, (Ex. P-2) and the deed of re-conveyance, (Ex. P-3) were got registered before the Sub-Registrar, Bhopal on 5-1-1956. Case of the appellant-plaintiff was that the suit house was mortgaged on 3-1-1956 when the rent note was executed and also on 5-1-1956 when the sale-deed and the deed of reconveyance were registered. According to him, he had been regularly paying rent and the said amount would be liable to be adjusted towards the principal amount. His further case was that on 11-7-1982, he requested the respondent to settle the accounts and release the house but the respondent refused to do so, as the period of re-conveyance had expired. The further case of the appellant was that he had been residing as owner thereof and had invested a sum of Rs. 4,000/- on the construction of the room in the same, besides expenses in improvement etc. The further case of the appellant was that he had been residing as owner thereof and had invested a sum of Rs. 4,000/- on the construction of the room in the same, besides expenses in improvement etc. He, therefore, prayed for a preliminary decree, requiring the respondent-defendant to settle the account and re-convey the house. He also prayed that in case the respondent did not do so, the Court may give such necessary relief as may be justified. The respondent defended the suit and denied that the suit house was mortgaged. According to him, the house was unconditionally sold on 5-1-1956 when the deed was registered. The respondent, however, admitted the execution of the deed of re-conveyance and rent note but submitted that they were not of any benefit, as the terms contained therein were not incorporated in the sale deed. He relied on Section 58 (c) of the Transfer of Property Act and submitted that the sale was absolute and unconditional. The learned trial Judge, on consideration of evidence on record held that it was not proved that the suit house was mortgaged. According to him, the house was unconditionally sold and deed of reconveyance or rent note could have no legal effect because of the proviso to Section 58 (c) of the Transfer of Property Act. The suit was accordingly dismissed. Learned lower appellate Court affirmed the aforesaid view and dismissed the appeal. That is how the matter is placed for consideration of this Court in this appeal. ( 3. ) THIS Court while admitting the appeal for final hearing on 28-6-1983, framed the following substantial questions of law for consideration:- (1) Whether the suit transaction was a mortgage? (2) If so, whether the appellant was entitled to a decree as prayed for? Under the circumstances, the only question requiring consideration of this Court is whether the transaction between the parties was a mortgage and not sale. ( 4. ) THE submission of the learned counsel for the appellant is that sale-deed Ex. P-2 and deed of reconveyance Ex. P-3 are parts of the same transaction and have, therefore be read together. So read, they would only indicate that the transaction between the parties was not a sale transaction but a mortgage transaction. ( 4. ) THE submission of the learned counsel for the appellant is that sale-deed Ex. P-2 and deed of reconveyance Ex. P-3 are parts of the same transaction and have, therefore be read together. So read, they would only indicate that the transaction between the parties was not a sale transaction but a mortgage transaction. According to him, the rent note would indicate that the possession of the property was delivered to the mortgagee and therefore, the transaction between the parties would be usufructuary mortgage. It is, therefore submitted that provision to Section 58 (c) of the Transfer of Property Act would not be attracted in the instant case. Learned counsel, further submitted that the condition of two years stipulated in the deed of re-conveyance, cannot be accepted as a clog on equity of redemption and therefore, the right to redeem will continue. Even otherwise, it is submitted that before proviso to Section 58 (c) of the Transfer of Property Act can be applied, it will have to be determined whether the parties intended to execute a sale-deed. In case this document is not held to be an outright sale but only as a security for loan, it will have no effect on right and title of the appellant. Reliance is placed on Bhaskar v. Shrinarayan, AIR 1960 SC30. 1 International Contractors Ltd. v. Prasanta Kumar, AIR 1962 SC 77 , Dhulchand Chaturbhuj v. Dharanidhar, 1961 MPLJ 404 and Sheikh Gaffar v. Kastunibai, 1961 MPLJ 1298=1962 JLJ 171. Learned counsel for the respondent, however, submitted that the sale-deed is otherwise clear and leaves no doubt, in the mind of any one that it was intended to be an outright sale. He also relied on the cases quoted in the impugned Judgment and prayed for dismissal of the appeal. ( 5. ) IN view of the submission of the parties the most important question involved in this appeal is whether the transaction between the parties was an outright sale or it was a mortgage? The law appears to be well-settled and is that the form of transaction is not decisive of whether it is sale or a mortgage. ( 5. ) IN view of the submission of the parties the most important question involved in this appeal is whether the transaction between the parties was an outright sale or it was a mortgage? The law appears to be well-settled and is that the form of transaction is not decisive of whether it is sale or a mortgage. In Bhaskar v. Shrinarayan (supra), Ramdhan Puri v. Bankey Bihari, AIR 1968 SC 941 and Chunchun Jha v. Ebadat Ali, AIR 1954 SC 345 , it is laid down that if the parties intended that the transfer is by way of security, the transaction would be a mortgage. Under the circumstances, the question whether the document which is ostensibly a sale-deed, it intended to be the only pretence for mortgage deed is a crucial question to be decided by this Court, not only on the basis of contents of documents but also the surrounding circumstances. Surrounding circumstances which have been accepted as sufficient to show that the transaction is a mortgage and not a sale are (i) the price fixed being far below the real price. Janki v. Ganeshram, AIR 1984 All 219 , and Shri Narayan v. Bhaskar, 1954 NLJ 64 = AIR 1954 Nag. 193; (ii) the sale-deed being accompanied by an agreement to re-convey, Dhanraja Jagirji v. Parthasaradhi, AIR 1924 PC 226 and Panji v. Govind Raghoba, AIR 1934 Nag. 191; (iii) the possession having not been given to the purchaser at the time of ostensible sale (see Krishnamurthy v. Venkatesivaran, AIR 1952 Mad. 11 , Hans Raj v. Mat Ram, AIR 1952 Punj. 181. In Narayan v. Bhaskar (supra), where possession was handed over to the purchasers in furtherance of an agreement to guarantee interest, it was held that handing over of the possession indicated a mortgage rather than a sale. If the facts of the case are considered on the touch stone of this law, it will have to be held that the transaction between the parties was not an outright sale but was a mortgage and sale-deed (Ex. P-2) was a document not intended to transfer any right or title on the respondent. The suit property was purchased by the appellant for a sum of Rs. 3,000/- on 24-2-1949, vide Ex. P-1 and could not be sold for Rs. 1,000/- after 7 years. P-2) was a document not intended to transfer any right or title on the respondent. The suit property was purchased by the appellant for a sum of Rs. 3,000/- on 24-2-1949, vide Ex. P-1 and could not be sold for Rs. 1,000/- after 7 years. It is common knowledge that the prices of landed property are increasing higher and higher. It is proper to hold that the property which was sold for Rs. 3,000/- in 1949, would have appreciated in value of at least Rs. 6,000/ -. Such property could not be sold for a paltry sum of Rs. 1,000/ -. Then, it is not understood as to why the respondent executed the deed of reconveyance on 5-1-1956. The sale-deed and the deed of re-conveyance were registered on the same date i. e. on 5-1-1956 which sufficiently proves that they form part of the same transaction. If the sale-deed was intended to be real sale, the registration of document written on 28-12-1955 would have been effected on the same date. Since it was not done, it only indicates that the parties had originally not intended to get the same registered. The subsequent conduct indicates that when the respondent wanted the sale-deed to be registered, the appellant insisted on registration of deed of re-conveyance as well. That is why both, the sale-deed and the deed of reconveyance were registered together. Execution of the rent note also provides strength to this conclusion, as it only secures interest of Rs. 20/- per month. These circumstances, therefore, sufficiently indicate that the transaction between the parties was a mortgage transaction and not the transaction of sale. ( 6. ) THE next and the important question is whether the mortgage was a simple mortgage or usufructuary mortgage? Usufructuary mortgage is defined in Clause (d) of Section 58 of the Transfer of Property Act. Where the mortgagor delivers possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of mortgage money and receive the rent and profits accruing from the property and to appropriate the same in lieu of interest or in payment of mortgage money, the transaction is called usufructuary mortgage. Similarly, if there is no delivery of possession of mortgaged property, the transaction is called be simple mortgage. Similarly, if there is no delivery of possession of mortgaged property, the transaction is called be simple mortgage. But where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of mortgage money on a certain date, the sale shall become absolute, the transaction is called a mortgage by conditional sale. Proviso to Section 58 (c) of the Transfer of Property Act, however, provides 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. It is this proviso which has been relied upon by both the Courts below to hold that the sale deed Ex. P-2 could not be treated to be a mortgage deed. The question for consideration is whether the proviso has such a far reaching effect? ( 7. ) SIMPLY stated the proviso only provides that where the agreement to re-convey is not embodied in the same document which effects or purports to effect the sale, the transaction shall not be deemed to be a mortgage. It may, therefore, appear that even though a transaction may in fact, be a mortgage yet when the condition of resale is not emobodied in the document, the transaction cannot be treated as a mortgage. It must, however, be kept in mind that this proviso is a proviso to Sub-section (c) of Section 58 and therefore, curtails the meaning of the main section. Its effect cannot be carried over to other sub-section to which it is not related. Under the circumstances, though this proviso will apply to all mortgages by conditions covered by Section 58 (c), it will not apply to usufructuary mortgage covered by Section 58 (d) of the Act. It may, therefore, be examined if the transaction can be treated to be a mortgage by conditional sale? In M. A. Bashir v. Mrs. Ethel, 1957 MPLJ 201 = AIR 1957 M. P. 207, this Court had the occasion to consider the ambit and scope of these provisions and held as under :-" if the purchasers do not desire that their transaction should be interpreted as a mortgage by conditional sale, they must insist on two separate documents which can never be construed as a mortgage under the law. If, however, they choose to incorporate the condition of repurchase in the same document, they must insist that clear and express words excluding the mortgage are incorporated in the same document. If they do not insist on these two things, and the condition of repurchase is in the same document, then, however ostensible the first part conveying absolute title to the purchaser may be, Courts will hold that a mortgage was intended and they will go to the surrounding circumstances only if there be ambiguity, but not otherwise. " In this case the Court considered the Supreme Court decision in Chunchun Jha v. Ebadat Ali (supra) and noted that after the incorporation of the proviso in Section 58 (c), two separate documents incorporating respectively the sale and agreement to reconvey cannot be construed as the transaction of mortgage by conditional sale. If the facts of the case are judged by applying these tests, it will be clear that the transaction was not intended to be a mortgage by conditional sale. ( 8. ) CAN the transaction between the parties be treated to be usufructuary mortgage? As observed earlier, delivery of possession and payment of rent in lieu of interest are the characteristics of an usufructuary mortgage. In the instant case, the sale-deed (Ex. P-2) itself indicates that the possession was delivered to the respondent. This was, however, symbolic. Subsequent to execution of the rent note also proves this delivery of possession. There should, therefore, be no difficulty in holding that the transaction between the parties was usufructuary mortgage and not mortgage with conditional sale. Under the circumstances, proviso to Section 58 (c) of the Transfer of Property Act would not be attracted in the instant case. Submission of the learned counsel for the appellant is that the proviso gives effect to the document of sale and prohibits evidence to show that it was a mortgage. This according to him is the effect of broad language used in the proviso. Under the circumstances, the submission of the learned counsel is that the proviso would apply not only to Sub-section (c) but to every other type of mortgage. It is not possible to accept the submission. The normal function of a proviso is to expect some thing out of enactment or to clarify some thing enacted therein which but for the proviso would be within the purview of the enactment. It is not possible to accept the submission. The normal function of a proviso is to expect some thing out of enactment or to clarify some thing enacted therein which but for the proviso would be within the purview of the enactment. In Dwarka Prasad v. Dwarka Das, AIR 1975 SC 1758 , it was held that the language of the proviso even if general, is normally to be construed in relation to the subject matter covered by the section to which the proviso is appended. In R. N. Sons Ltd. v. Asstt. Sales Tax Commr. , AIR 1955 SC 765 , the proviso appended to Article 286 (2) of the Constitution and authorising the President to lift the ban imposed by the said provision was sought to be applied to Article 286 ( 1 ). The Court held that it was hot permissible. Indeed, this appears to be the well-settled rule (see G. P. Singhs Principles of Statutory Interpretation, III Ed. 155 ). Under the circumstances, the proviso cannot be construed with reference to usufructuary mortgage covered by Section 58 (d) of the Act. In the instant case, the appellant was trying to show that the document (Ex. P-2) was not a sale in reality though written as such. It was sham or nominal and not intended to be acted upon. In such a situation, it is not the document of sale which is required to be interpreted. The document remains a document of sale without doubt. What is sought to be proved in such cases is that this document was not real but was sham and not intended to be acted upon. The real transaction between the parties was some thing different, such as the usufructuary mortgage in this case. Such a course is, of course permissible and does not go contrary to any law. The Supreme Court decisions in Bhaskars case (supra) and Sheikh Gaffar v. Kasturi Bai, 1961 MPLJ 1298 = 1962 JLJ 171, sufficiently support this conclusion. In view of the discussion aforesaid, this Court is unable to sustain the impugned judgment and decree. In the opinion of this Court the transaction between the parties was that of usufructuary mortgage and therefore, the suit was properly filed. Under the circumstances, it is decreed that on payment of principal sum together with interest at the rate of Rs. In view of the discussion aforesaid, this Court is unable to sustain the impugned judgment and decree. In the opinion of this Court the transaction between the parties was that of usufructuary mortgage and therefore, the suit was properly filed. Under the circumstances, it is decreed that on payment of principal sum together with interest at the rate of Rs. 20/- per month uptodate, the appellant would be entitled to redeem the mortgage. It is, therefore, decreed that in case the amount as calculated above is paid or deposited in the trial Court within 4 months from today, the respondent shall re-convey the property by executing a deed in accordance with law. If the respondent fails to do so, the appellant would be entitled to get the same re-conveyed through the Court. The parties shall bear their own costs throughout.