Kirpal Singh v. Sheoambar Singh

1. This is a plaintiff's appeal arising out of a suit for redemption of an alleged mortgage by conditional sale. On 3rd November 1909 a document, ostensibly a sale-deed, was executed by the plaintiff in favour of the defendants for Rs. 1,300 and on the same date there was an agreement by the defendants in favour of the plaintiff agreeing to retransfer the property on certain conditions. The plaintiff alleged that the two documents were evidence of one and the same transaction which constituted a mortgage by conditional sale and that he was entitled to redeem the property. He also alleged that in the Jeth preceding the institution of the suit he had actually tendered the amount but the defendants had refused to take it. His suit was instituted within 15 years of the deeds.

2. The defendants denied the execution of any such agreement, although it had been registered and a certified copy of it was produced. In the written statement the defence taken up was that the transaction was not one of mortgage, and that the plaintiff had not complied with the conditions entered in the deed of agreement, even if that be proved. There was no specific plea that this agreement was in fact a separate or subsequent agreement executed quite independently from the sale-deed and represented a distinct and separate contract.

3. Both the Courts below have dismissed the plaintiff's suit on the finding that the transaction amounted to a sale out and out. So far as the finding that no tender was actually made by the plaintiff on the Jeth of 1924 is concerned, it is a finding of fact and must be accepted.

4. The sale-deed as its phraseology stood did not in any way contain anything which would itself indicate that it was a mortgage by conditional sale. The property was sold out and out, though there was a provision that if any prior incumbrance is discovered on the property and any part of it passes out of the possession of the transferee or is advertised for sale or if the latter fails to deliver possession of the property or relinquish the sir and khudkasht lands or any part of the property goes out of his possession on account of any defect in the title, the transferee would be entitled to recover "the amount due to him" together with interest at 1 per cent per mensem from this as well as other property and the person of the transferrer. The deed of agreement stated that the property had been sold to the executants and they "therefore" agreed to retransfer the property on payment of the total amount in any Jeth within 15 years of the deed, provided the seller procured the money out of his own pocket and not by sale or mortgage of the property transferred.

5. The lower appellate Court has found that the stamps for both these documents were purchased on the same day, that both the documents wore executed on the same day and written by the same scribe, that the same set of 'witnesses attested both the documents, that the same witnesses identified the executants before the registering officer, and that both the documents were presented at the registration office at one and the same time. He has then remarked:

All these facts are no doubt quite true but they at most show that the transaction of sale and the contract to reconvey the property were settled between the parties to the sale simultaneously before the execution of the sale-deed by Kirpal Singh, plaintiffs.

6. As against these circumstances the learned Judge has pointed out that the full price was paid for this transfer, and has also laid emphasis on the restriction placed on the transferror that the latter should not procure money by sale or mortgage of the property transferred.

7. No doubt the first set of circumstances was in favour of the plaintiff's contention, and the last two circumstances were points in favour of the defendants. The facts that the stamp papers for the two deeds were obtained at the same time, that they both were faired out obviously at the same time and by the same scribe and attested by the same witnesses and that they were presented for registration at the same time and that the executants were identified by the same set of witnesses no doubt indicated that the whole thing had been arranged previously between the parties and that it had been intended from the very beginning that there would be one document in the form of a sale-deed by the plaintiff in favour of the defendants and another document in the form of an agreement for retransfer by the defendants in favour of the plaintiff.

8. Although a clause restricting the source from which the money for re-acquisition of the property may be obtained is not unusual in mortgage-deeds and any such restriction has been held to amount to a clog on the equity of redemption, its existence in the agreement is no doubt a point in favour of the defendants because it is more consistent with the transaction being a sale than a mortgage. Similarly, although it is not impossible that in a possessory mortgage the amount paid may be equal to the full value of the property, inasmuch as no interest is accruing and there may be a prospect of an enhancement in its value by lapse of time, the fact that full value was paid is a circumstance which must weigh in favour of the defendants. The oral evidence on the point was as usual conflicting. If on all this evidence the learned Additional District Judge had recorded a clear finding that the agreement was wholly independent of and not subsequent to the sale, and the sale had not taken place subject to a condition of a repurchase, we would have accepted his finding, but he has omitted to recerd any such categorical finding. On the other hand the words quoted by us indicate that he conceded that the transaction of sale and the contract to re-convey the property were settled between the parties to the sale simultaneously and before the execution of the sale-deed in question. He has nowhere said that the agreement for retransfer was an independent, separate and subsequent agreement. His finding therefore cannot be regarded as a finding of fact binding on us in second appeal.

9. If the agreement was to be an entirely independent and subsequent transaction it is difficult to see what the consideration for it was. If it was a part and tparcel of the whole transaction, then the sale and the agreement would be consideration for each other, but if the agreement was entirely independent, separate and subsequent, then there would be no consideration for the same and we would have to hold that the party intended that this agreement would be merely gratuitous and voluntary. This would drive us to the conclusion that they had entered into an agreement which was not enforceable in the eye of the law. In our opinion such a presumption should not be made, and the parties must be deemed to have entered into an agreement which was binding upon them. In the recent cases decided by this Court greater stress has been laid on the definition of a mortgage by conditional sale in Section 58(c), T.P. Act, and it has been pointed out that if the case falls within the scope of that definition we must hold that it is a mortgage even though ostensibly it purports to be a sale. Unfortunately this case was decided by the District Judge before these recent pronouncements were made, namely Jagannath v. Gauri Shankar A.I.R. 1926 All. 670. Lalta Prasad v. Jagdish Narain A.I.R. 1927 All. 137, and Mathura Kurmi v. Jagdeo Singh A.I.R. 1927 All. 321.

10. No explanation has been offered on behalf of the executants why a wholly gratuitous agreement without any consideration was executed by them subsequent to a completed contract of sale. Having regard to the identity of the dates and the other circumstances mentioned above, we think that this agreement must have been a part and parcel of the same transaction, and that the whole contract between the parties was to have a sale-deed by one party and an agreement by the other, the sale being subject to the condition of the repurchase. The mere fact that the single contract was evidenced by two separate but contemporaneous documents cannot make any difference. In this view we must hold that the transaction was a mortgage by conditional sale within the meaning of Section 58(a), T.P. Act.

11. The next question is what relief the plaintiff is entitled to. We have already remarked that the restriction that the money should be procured otherwise than by sale or mortgage of this property would be a clog on the equity of redemption, Sarbdawan Singh v. Bijai Singh [1913] 36 All. 551, and is not enforceable. As a matter of fact in this case there is no suggestion that the plaintiff has raised money by a mortgage or sale of his equity of redemption.

12. The other provision that the amount should be tendered in the month of Jeth cannot have the effect of making the present suit premature. All that the mortgagee is entitled to insist upon is that there should be no redemption except in that month. Such a provision is not a clog on the, equity of redemption, inasmuch as the intention of the party obviously is to permit redemption at a time when the crops are not standing. The procedure adopted by this Court in such cases has been to pass a decree for redemption to take effect on the next Jeth, Raghunandan Rai v. Raghunandan Pande A.I.R. 1921 All. 353 Het Singh v. Bihari Lal A.I.R. 1921 All. 358.

13. The result therefore is that we allow the appeal, setting aside the decrees of the Courts below, decree the plaintiff's claim for redemption on payment of Rs. 1,300 on or before 30th June 1930. In the event of payment the mortgagor will get possession of the mortgaged property in Jeth 1930. An ordinary preliminary decree for redemption of a mortgage by conditional sale under Order 34, Rule 7(d) should be prepared fixing 30th June 1930, as the date for payment. As the plaintiff has succeeded in his claim we direct that he should recover his costs from the defendants who shall bear their own costs.