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PETITIONER: BHOJU MANDAL

       Vs.

RESPONDENT: DEBNATH BHAGAT

DATE OF JUDGMENT: 14/11/1962

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. IMAM, SYED JAFFER MUDHOLKAR, J.R.

CITATION:  1963 AIR 1906            1963 SCR  Supl. (2)  82

ACT: Construction of Document-Mortgage by conditional sale-  Sale with  a  condition  of  repurchase-Distinction-Intention  of parties-Relevant circumstances.

HEADNOTE: The High Court in dismissing the suit for redemption brought by the appellant in reversal of the decisions of the  courts below held that the document on which the suit was based was one of sale and not a mortgage by conditional sale.  It  was executed  to  meet  pressing demands and  not  merely  ,  to discharge  a previous mortgage in favour of the  respondent. it  provided that in case of defect of title and  consequent dispossession  of the vendees, the executants  would  remain bound to refund, the consideration with interest which would be a charge on the property and that the executant would pay the  rent  for  a short period  after  the  execution.   The document  described itself as "tamashuk sarti kebala".   The total  area of the land mortgaged. to the respondent in  the previous  year was 13.17 acres and the amount  advanced  was Rs.  1,600/-.  Only a year thereafter 12.6 acres out of  the aforesaid  area  were  transferred for Rs.  2,800/-  to  the respondents  who  were  put in  possession.   There  was  no dispute  that the lattter amount represented the real  value of the land. Held, that there is a clear distinction between A  mortgagee by  conditional  sale  and  a  sale  with  a  condition   of repurchase.   The  former is a niortgagee and the  right  to redeem  remains with. the debtor.  The latter is an out  and out sale by which by the owner divest and his rights to  the property, reserving a right of repurchase.  The question  to which  category  a document belongs can be decided  only  by ascertaining the intention of the parties on a consideration of  the document and other relevant circumstances.   Decided cases are only illustrative and not exhaustive. In  the instant case, the cumulative effect of the terms  of the  document  and  the surrounding  circumstances  left  no manner  of  doubt that the document in question  was  not  a mortgage but  83 a  sale  with  .  the  condition  of  repurchase.   Whatever

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ambiguity  there,  might,, be in the  document  the  crucial circumstance  that smaller area of the land was sold  for  a higher-amount in discharge of an earlier mortgage of a large area  for  a smaller amount, ’left no doubt as to  the  real character of the document. Pandit  Chunchun  Jha v. Sheikh Ebadat Ali [1955]  1  S.C.R. ’174, distinguished. A  decision  on the construction of a  document  can  hardly afford  any guidance for ascertaining the intention  of  the parties  in  another  unless  the  terms  used  arc  exactly similar.

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeal No.204 of 1960. Appeal  by special leave from the judgment and decree  dated -March  31.,  1958 of the Patna High Court  in  Appeal  from Appellate Decree No. 582 of 1954. Jagadish Ohandra Sinha and R. R. Biswas, for the Appellants. Bhawani  Lal and P. C. Agarwala, for Respondents.Nos.  I  to 16. 1962.  November 14.  The judgment of the Court was delivered by SUBBA RAO, J -The only question in this appeal- is  whether the  suit document is a mortgage by, conditional sale  or  a sale with a condition of re purchase. The  facts  that gave rise; to this appeal  may  be  briefly stated  : On February 2, 1924, the appellants 1 &  2,  their father  late  Matooki  Mandal and  their  uncle  late  ’Lila Maridal  executed a deed purporting to-convey a property  of the extent of 12.6 acres in favour of respondents 1 & 2  for a  consideration of Rs, 2,800/- and;put them  in  possession of the same. In  1950 the appellants instituted ’title  suit No. 73 of 84 1950 in the Court of the Munsif, 1st Court, Bhagalpur, Bihar for  redemption on the ground that the said document  was  a mortgage by conditional sale.  The contesting defendants  i. e., respondents 1 & 2 pleaded that the said document was not a  mortgage but an out and out sale and therefore  the  suit for  redeemption  was not maintainable.  The Munsif  and  on appeal  the  Subordinate  judge,  Bhagalpur,  accepted   the contention  of  the appellant and decreed the  suit  but  on second  appeal the High Court held that the document  was  a sale and on that finding the appeal was allowed and the suit was  dismissed  with costs throughout.   The  appellants  by Special cave preferred the present appeal against the decree and judgment of the High Court. The  only  question  in  this appeal  is  whether  the  said document is a mortgage or sale.  As the question turns  upon the  construction  of the provisions of the  sale  deed,  it would  be convenient to read the document as the High  Court did omitting the unnecessary words :-               "1. We, the executants, executed a  registered               Sudbharna  bond, dated 1-3-1923, in favour  of               Deonath   Bhagat  and  Raghunath  Bhagat   and               received the entire consideration money.               2.    We, the executants, are badly in need of               some  money in cash for repayment of  debt  of               Sumeri  Kapri  and are in great need  of  some               more money in cash for meeting the expenses of               cultivation, purchasing bullocks and also  for               meeting  the household expenses and  repayment               of petty debts to creditors.

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             3.    We,  the executants, cannot arrange  the               aforesaid  money in cash without selling  some               property.               4.    Deonath  Bhagat  and  Raghunath   Bhagat               aforesaid have, not up till now entered into               85               possession of the Sudbharna property and  they               are,  making a demand for the money and it  is               absolutely necessary to repay the money to the               said creditors.               5.    Hence  on  negotiation for sale  of  the               some property with the said Bhagats by way  of               conditional  sale the said Bhagats  agreed  to               purchase our property and to pay money in cash               for repayment of the debts of Sumeri Kapri and                             for meeting other expenses.               6.    Hence we, the executants, have sold  and               vended  12.6 acres of Nakdi jot land  for  Rs.               2,800/-   to  Deonath  Bhagat  and   Raghunath               Bhagat.               7     .  We  declare  that  in  the  month  of               Baisakh  1334 Fasli we shall on  repayment  of               the said amount in full and in one lump sum to               the   said  Bhagats,  take  back  the   vended               property  from the said Bhagats and,  that  in               case   of   failure  of   repayment   of   the               consideration  money of this deed of  sale  in               full within the stipulated time, this deed  of               sale   will  remain  in  force  and   we   the               executants, or our heirs, shall not be  compe-               tent  to  demand  the  return  of  the  vended               property.               8.    Out  of the consideration money of  this               sale deed Rs. 1,600/- due to the said  Bhagats               under  the bond dated 1-3-1923 was paid up  in               full   and   on  receipt  of   the   remaining               consideration  money the dues of Sumeri  Kapri               amounting  to Rs. 500/- was paid up  and  with               the  balance  of Rs. 700/- we  met  the  above               expenses.               9.    We, the executants, put the said vendees               in  possession  of  the  vended  property  and               authorise               86               them,  to  remain in  possession  thereof  and               appropriate the produce thereof in such manner               as, they like and, the payment- of the rent of               the  vended land from 1332 fasli remained  the               concern of the said vendees.               10.   If  due  to a defect in, the  title  the               said  vendees are dispossessed of  the  vended               property or any portion thereof, we shall,  be               liable  to refund the consideration  money  of               the  sale,deed with interest at the  rate  of,               Rs,, 3/2/- per hundred rupees per month.               11.   Whatever- rights and interests the  said               vendees  had  under the bond’  dated  1-3-1923               remained, intact under the sale deed.               12.   Hence we have put into writing these few               words  by way of a deed of absolute sale  con-               ditional sale, so, that it may be of use  when                             required," There  is  a  clear  legal  distinction,  between  the   two concepts-a  mortgage by conditional sale and, a sale with  a condition  of  repurchase.  The former is  a  mortgage,  the

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relationship of debtor and creditor subsists and  the  right to redeem remains with the debtor.      The latter is an out and. out sale whereby the owner    transfers all his  rights in  the,  property to the, purchaser  reserving  a  personal right  of  re-purchase.  The question, to which  category  a document  belongs presents a real difficulty which can  only be  solved  by ascertaining the intend of the parties  on  a consideration  of  the  contents of a  document  and  other, relevant circumstances... Decided cases have laid down  many tests  to ascertain the intentions of the parties  but  they are only illustrative and not exhaustive.  Let us  therefore look at the terms of the document extracted above. The learned, counsel for the appellant relied 87               upon the following circumstance&:-               1.    The  consideration of the document  went               mainly  in the dscharge of a  registered  sud-               bharna  bond  dated March 1,  1923,  given  in               favour of the respondents 1 & 2. It  indicates               that relationship ’of: creditor and debtor was               continued under-the document.               2.    -  There are no words of  conveyance  in               the document.               3. There   are no words of re-conveyance after               the stipulated date.               4.    There  is  a term that if  there  was  a               defect  in  the title and  the  vendees  we’re               dispossessed the executants would be liable to               the refund of the consideration with  interest               with  a charge on the property covered by  the               document.               The  term  creating a charge on  the  property               transferred  it  is said  indicates  that  the               executants  contained to be the owners of  the               land despite the document.               5.    The executants took upon themselves  the               liability  of the entire rent for 13311  falsi               though  the document was executed in the  Magh                             of  1331 fasli.  The fact that  the  executant s               continued  to  be liable to pay for  a  period               after  the  execution of the sale  deed,it  is               suggested indicates that the document was  not               an  out  and  out sale but one  in  which  the               appellants  continued to have an  interest  in               the land.               6.    In the execution portion of the document               it is describecd as ’tamashuk sarti kebala’and               the appellants’ counsel says that the said ex-               pression means mortgage  conditional sale.               88               If there was any ambiguity in the rest of  the               document   the  argument  proceeds  that   the               parties  clearly expressed their intention  by               so describing the nature of the document. It  is  not  accurate  to say that  the  suit  document  was executed ’only to discharge the mortgage bond dated March 1, 1923.  The document itself narrates that the executants were badly in need of money not only for repaying the debt  under the said bond but also for repaying the debts of one  Sumeri Kapri  and for meeting the expenses in connection with  cul- tivation,  purchase  of  bullocks  and  household.   It  is, therefore, not a document executed in renewal of an  earlier mortgage  bond  but was brought into existence to  meet  the pressing demands on the appellants.  It is also not  correct

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that  the document does not contain words of  conveyance  or re-conveyance.  The document says in express terms that  the property "was sold and vended’, which are certainly words of conveyance,  and that after the prescribed period and  after the  amount  was paid the appellants would  "take  back  the vended property’ from the respondents’ which are again words of  reconveying.   Though  the  words  of  "conveyance’  and ’reconveyance’  are  not expressed in phraseology  found  in documents prepared by trained draftsmen, they are  expressed in  words usually adopted by village document writers.   The taking  over  of  the  liability to  pay  the  rent  by  the executable  for a short period subsequence to the  execution of  the  document may be due to the fact that the  rent  had become due before the execution of the document or for  some other  circumstance  which is not clear from  the  document. This  is at best a neutral circumstance.  The fact  that  in case  of any defect in title the vendees were  dispossessed, the  consideration amount with interest was charged  on  the property is nothing more than an indication of the intention to keep alive The mortgagee’s rights under 89 the  earlier document.  The said clause only makes  explicit what  the  respondents  would be entitled to  in  law.   The translation of the words ’tamashuk sarti kebala’ as mortgage by  conditional  sale does not appear to  be  correct.   The learned Subordinate juage observes that if those words. were literally translated, they would mean ’a bond by way of con- ditional sale’.  If that was the meaning the said expression would be consistent both with a mortgage by conditional sale as  well  as  a sale with a right  of  repurchase.   In  law Lexicon,  P. Ramanatha Iyer gives the following meanings  to the  word "kebala’; ’Any deed of conveyance or  transfer  of right or property, any contract of bargain or sale, a  bond, a bill sale, title-deeds, and the like’.  Even accepting the widest  meaning given to that word, the expression can  only mean a bond or a contract by way. of. conditional sale.   So translated the expression is consistent with a mortgage,  as well as with a sale and therefore that is a neutral  circum- stance.   On  the  other hand the  executant  describes  the transaction  as  a  sale and respondents  as  vendees.   The amount  paid  is described as consideration  for  the  sale. Usual covenant of title is given and there is a provision of re-conveyance  in case of payment of the  prescribed  amount within the time agreed upon.  No doubt these recitals  would be  found in a document  which purports to be an  ostensible sale  and  they  do not in themselves are  decisive  of  the question  raised but there is one factor which  dispels  any doubt  in regard to the construction of the  document.   The total area of the land mortgage in the year  1923 was  13.17 acres  and the amount advanced thereunder was  Rs.  1,600/-. Only  one year thereafter out of the said extent 12.6  acres was transferred by the document in question for a sum of Rs. 2,800/-,  that  is if the contention of  the  appellant  was correct,  a smaller extent of land was mortgaged for  higher amount.  It is improbable 90 that a mortgagee would advance an additional amount and take a  mortgage. of a smaller extent in discharge of an  earlier mortgage  wherounder  a larger extent of land was  given  as security.   Unless there are extraordinary reasons for  this conduct, this would be a clinchina circumstance in favour of holding that a document was a sale.  The learned counsel for the appellant realizing the importance of this: circumstance at tempted to explain it away by a suggestion that under the earlier document the respondents were not put in  possession

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of  the  land and that the reduction ’of the extent  of  the mortgaged property under the subsequent document was-due  to the fact that they secured possession of the lands mortgaged thereunder.   This  was not put either to the  witnesses  or suggested  in  any  of the three courts  below.   We  cannot therefore  accept this argument advanced for the first  time before  us, for there may have been many e explanations  for the  respondents  in respect of this  suggestion.   What  is more,  it  is  not  disputed that the  sum  of  Rs.  2,800/- represents  the  real  value  of  the  1  and  sold  to  the respondents’ and it is high improbable to say the least that a  person would aydvance the amount equivalent to the  value of  the. land mortgaged without keeping a reasonable  margin for realizing his amount.  This is sought to be explained by throwing  a suggestion that as the respondents were  put  in possession, they would be getting the interest and therefore there  was no chance of the debt exceeding the value of  the property.   Even  so a  mortgagee in lending  mounies  would insist upon a reasonable margin in the value of the property to  provide  against the possible contingency  of  the  pro- perties  going  down  in value and the  amount  due  to  him swelling by the addition of cost, damage, etc., in the event of  his  filing  a suit to recover the  name.  in  our  view whatever  ambiguity there may be in the document,  the  fact that  only a portion of the land already mortgaged was  sold for a proper and adequate 91 consideration is a circumstance which stamps the document as an out, and out sale. Reliance:is placed by the learned counsel for the appellants on  a  judgment  of this court in "Pandit  Chunohun  Jha  v. Sheikh  Ebadat  Ali’ (1).  It may be stated at,  the  outset that  for ascertaining the intention of the-, parties  under one  document- a decision on a construction of the terms  of another  document  cannot  ordinarily  afford  any  guidance unless  the terms are exactly similar to each other.  It  is true  that, some of the terms of the document in  that  case may  be  approximated to some of the terms  in  the  present document but the judgment of this Court really turned upon a crucial circumstance.  There is one important recital  found in  the document in that case which does not appear  in  the document in- question and there is another important recital found  here which is not present there.  There the  document under  scrutiny was executed on April 15, 1930.  Before  the execution   of  the  document  the-   executants   initiated commutation  proceedings  under s. 40 of the  Bihar  Tenancy Act.   Those  proceedings continued till February  18,  1931 i.e.’  for some ten months after the deed.   The  executants borrowed  Rs.  65/6/-  to  enable  them  to  carry  on   the commutation   proceedings  even  after  they  executed   the document.  Bose.1., speaking for the court adverting to  the said  circumstance observed at page 183: "This we think,  is crucial.   Persons  who  are selling  their  property  would hardly  take  the  trouble  to, borrow  money  in  order  to continue revenue proceedings. which could no longer  benefit them   an   could  only  ensure  for  the  good   of   their transferees."   It   is,  therefore,   obvious   that   this circumstance clinched the case in favour of the  executants. The crucial circumstance in the present case, namely that  a smaller extent was- sold for a higher amount in discharge of an earlier mortgage of a larger extent for a smaller  amount was not present in that case.  The said 1(1955) 1.S.R. 174. 92 crucial circumstances make the two cases entirely dissimilar

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and therefore the said judgment of this court is not of  any help   in  construing  the  document  in  question.   On   a consideration  of the cumulative effect of the terms of  the document in the context of the surrounding circumstances  we hold  that the document in question is not a mortgage but  a sale  with  the  condition of  repurchase.   The  conclusion arrived at by the High Court is correct. The  appeal fails and as the advocate for the respondent  is not present in Court it is dismissed without costs. Appeal dismissed.