Palaniappan v. Subbaraya Gounden

JUDGMENT

Sadasiva Ayyar, J. — The plaintiffs are the appellants. Their father executed the sale deed, Exhibit I, dated the 23rd June 1902, in favour of the 1st defendant, conveying the plaint lands to the 1st defendant for Rs. 300. Two days afterwards, i. e., the 25th June 1902, the 1st defendant executed a deed which he called the counter-part of the sale deed, Ex. I, in favour of the plaintiffs' father. This counter-part is Ex. A. By this counter-part the 1st defendant agrees to give back possession of the lands sold under Exhibit I, provided the plaintiffs' father repays the purchase money of Rs. 300, at the end of the sixth year, but imposed a condition that the plaintiffs' father should not borrow the said sum of Rs. 300 from others nor should he raise the Rs. 300 by selling or otherwise alienating the plaint land itself, and that the Rs. 300 should be repaid out of the plaintiffs' father's own earnings. This counter-part further says that, if the amount of Rs. 300 be not paid at the end of the sixth year, the plaintiffs' father will have no right whatever ever to the lands after that period “notwithstanding this counter-part deed.”

The two documents, i. e., the sale deed and the counter-part, executed at an interval of two days of each other, were both registered on the same date. As the properties were outstanding on usufructuary mortgage for Rs. 200 with the defendants Nos. 2 to 5, the 1st defendant did not get possession of the plaint lands on the date of Exhibit I, and the lands are still with the said usufructuary mortgagees. Patta for the lands has not been transferred to the 1st defendant's name, notwithstanding that the sale deed to the 1st defendant was executed about eight years before the suit. The plaintiffs and the plaintiffs' father have been paying the Government kist of the plaint lands up to date. These are the undisputed facts and circumstances of this case.

The Lower Courts have dismissed this suit brought about 18 months after the expiry of the six years' term mentioned in the counter-part deed, for redemption of the mortgage by conditional sale, which, according to the plaintiffs, was legally effected by the two documents, Ex. A and I, read together. The Lower Courts have based their decision on the ground that the two documents could not be so read together, that Exhibit I must be taken separately as an out-and-out sale and Exhibit A must be taken as a separate agreement of repurchase to be in force for only six years. Hence this appeal by the plaintiffs. The learned Subordinate Judge notices one other contention put forward by the 1st defendant before him, namely, that the right of repurchase given by Exhibit A to the plaintiffs' father could not be availed of by the plaintiffs after their father's death. But the learned Subordinate Judge does not give any decision on that contention.

The contentions of the plaintiffs (appellants) before us might be summarised thus:—The two documents, Ex. A and I, ought to be read together as forming one transaction and, when so read, they form a mortgage by conditional sale according to section 58 of the Transfer of Property Act, and that is the true construction of the said documents. I am of opinion that this contention must be upheld as valid. Section 58, clause (c), of the Transfer of Property Act, describes a mortgage by conditional sale as a transaction “where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgage money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on Such payment being made the buyer shall transfer the property, to the seller.” Though the section is worded as if the transaction of mortgage by conditinal sale is expected to be effected by a single instrument in which both the ostensible sale and the condition for which its becoming absolute or its becoming void or its being cancelled by reconveyance is also entered, it has been held in the Privy Council case in Balkishen Das v. W. F. Legge and in the cases of Wajid Ali Khan…(Plaintiff); v. Shafakat Husain…(Defendant).* that, provided that the transactions entered into in two separate documents can be reasonably inferred to be really intended by the parties to constitute together a single transaction, the mere fact that two separate documents were executed when the provisions contained in those documents could have been comprised in one and the same document will not prevent the two documents really and substantially forming a single transaction, namely, the transaction in the nature of a mortgage by conditional sale. As remarked in the decision in Mutha Venkatachelapati v. Pyanda Venkatachelapati decided by Sir S. Subrahmania Iyer, Offg. C. J. and Bhashyam Iyengar, J., “there is nothing in law to prevent the whole of a mortgage transaction being reduced in any form to writing on different papers, whether attached together or detached from each other, and the Court, in cases in which the terms, as appearing in the different parts, are contradictory or inconsistent has to ascertain the intention of the parties by reading all the papers together as forming one document, though each paper on the face of it purports to be a separate document.” The question whether Exhibits A and I should be considered as two separate transactions, that is, a transaction of sale and an independent transaction of repurchase, must be decided only on a perusal and construction of both the documents and by contemporaneous surrounding circumstances. No oral evidence as to what the parties intended and meant by the words in documents can be allowed. The Privy Council say in Balkishen Doss v. W. F. Legge:—”Their Lordships do not think that oral evidence of intention was admissible for the purpose of construing the deeds or ascertaining the intention of the parties. By section 92 of the Indian Evidence Act (Act I of 1872) no evidence of any oral agreement or statement can be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying or adding to, or subtracting from, its terms, subject to the exceptions contained in the several provisoes. …The oases in the English Court of Chancery, which were referred to by the learned Judges in the High Court, have not, in the opinion of their Lordships, any application to the Law of India as laid down in the Acts of the Indian Legislature. The case must therefore be decided on a consideration of the contents of the documents themselves, with such extrinsic evidence of surrounding circumstances as may be required to show in what manner the language of the document is related to existing facts”. “Mortgages by conditional sale under various names are a common form of mortgage in India and have come before this Board in several reported cases. If so, one would expect to find that the transactions would, as far as possible, be made to assume the appearance of a sale.” I have quoted this largely, because, loose expressions and sentences in several cases decided by Indian High Courts and Chief Courts in India and Burma have been quoted before us on both sides for the proposition that oral evidence and the evidence of subsequent conduct can be adduced for construing the document. I think that in view of the above distinct pronouncement of their Lordships of the Privy Council such evidence ought not to be allowed.

Again the Privy Council case of Bhagwan Sahai v. Bhagwan Din, the Full Bench case of Jhanda Singh v. Wahid-ud-din, the case Ma Hnin v. Osman Gani, the case of Kinuram Mandal v. Nitye Chander Sirdar and several similar cases were quoted by the Respondents' learned Vakil in support of his contention that, where two separate documents have been executed within a few days of each other or even contemporaneously, they ought to be treated as distinct transactions, one a sale and the other an independent agreement for repurchase and not as together constituting a mortgage by conditional sale. On the other side, the cases of Wajid Ali Khan v. Shafakat Husain and Ramayya v. Krishnamma, the Privy Council case of Balkishen Das v. W. F. Legge, the Full Bench case of Ram Saran Lal v. Amirta Kuar, the case of Maruti v. Balaji and several other cases were quoted to show that contemporaneous documents should be read together and, if they come within the terms of section 58 of the Transfer of Property Act, should be dealt with as one transaction of mortgage by way of conditional sale. I do not think it necessary to consider in detail all these cases. Some of them may be distinguished on the ground that the particular circumstances surrounding the execution of the documents and the special words used in the documents were the basis of the decisions of those cases. Others cannot be so distinguished; for instance the case of Kinuram Mandal v. Nitye Chander Sirdar, which I think, with the greatest respect to the learned Judges who decided it, is clearly inconsistent with the decision of the Privy Council in Balkishen Das v. W. F. Legge. I might further state that in Jhanda Singh v. Wahid-ud-din one of the learned Judges states as follows:—” There can, in my opinion, be no doubt that if the two deeds were of even date, an almost irresistible presumption would arise in favour of the transaction being a mortgage”. And then the learned Judge considers the several circumstances of the case including the circumstance that the two deeds were separated by an interval of seven days and were registered on different dates and comes to the conclusion that in that particular case, the two deeds did not constitute a mortgage by conditional sale.

In this case, the second deed clearly states that it is the counterpart of the first deed and it is an elementary principle of law that, where one deed calls itself the counter-part of another deed and the parties to the two deeds are the same individuals, the two deeds form one single transaction and must be read together, if possible, as parts of the same transaction. The interval of two days between the two deeds is therefore of little or no significance.

It must be admitted that some observations of the Privy Council in Bhagwan Sahai v. Bhagwan Din might be plausibly argued as inconsistent with the decision of the Privy Council in Balkishen Das v. W. F. Legge. In fact, the case in Bhagwan Sahai v. Bhagwan Din was quoted for the unsuccessful respondents in Balkishen Das v. W. F. Legge before the Privy Council. But their Lordships distinguished the case in Bhagwan Sahai v. Bhagwan Din, on the ground that the decision in that case depended on the peculiar language of the deeds, then in question. It seems to roe that the facts of the case in Balkishen Das v. W. F. Legge are more similar to the facts of the present case. The case of Ramayya v. Krishnamma which is also binding upon us, further supports the conclusion that the two deeds now in question form a mortgage by conditional sale. The learned Vakil for the Respondents strenuously argued that, unless there were in the first document some express words indicating that there was the relation of creditor and debtor between the vendor and the vendee, no mortgage by conditional sale can be inferred. This is a contention based on some observations made in English Courts of Equity and having regard to the opinion of their Lordships in Balkishen Das v. W.F Legge such considerations cannot be imported into India where we have got the plain words of section 58 of the Transfer of Property Act to show what the nature of a transaction is, which should be treated as a mortgage by conditional sale. As Doctor Ghose says at page 85, in his book on the Law of Mortgage in India, 4th edition, “the test, therefore, whether the apparent vendee can exercise the rights of a creditor, cannot with propriety be applied in this country and the broad rule laid down in Alderson v. White, ‘no debt, no mortgage’ may perplex, but cannot guide our courts”. See Tukaram v. Ramchand. As Chief Justice Edge points out, Indian documents ought not to be construed as if hey had been drafted by an English conveyancer familiar with the equity of cases, which are wholly unknown to the people of this country and altogether inapplicable to the form and object of the contract of mortgage as understood by the parties. Then the learned Doctor says at page 87, “it should be added that in doubtful cases the Court leans strongly to the construction most favourable to the person claiming the right to redeem. As regards the contention that the right of redemption is personal, which is based on the prohibition in Exhibit A to assign the right of redemption, such a prohibition is legally invalid and the right of redemption can be exercised by the heirs. [See Ram Saran Lal v. Amirta Kuar]. In the result I would reverse the decrees of the Lower Courts and give the plaintiffs the usual decree for redemption on their paying into the Court of first instance Rs. 300 for payment to the defendants within three months from this date. The parties will bear their respective costs throughout.

Spencer, J:—The only hesitation that I have felt in deciding this case is occasioned by the fact that there is a difference of two days in the dates of execution of Exhibit I and Exhibit A, and that in none of the numerous cases cited at the hearing of this appeal have two documents executed on different dates been held to constitute a mortgage by conditional sale. In Jhanda Singh v. Wahid-ud-din, where there occurred an interval of seven days between the execution of the first and the second documents, it was held that the document must be construed separately and that the parties intended a sale and not a mortgage.

The lapse of seven days was one of the circumstances relied on by the learned Judges who decided that case.

In the present case an explanation, more or less satisfactory has been offered for the agreement to transfer not having been written on the very same day as the sale deed was written, and the presumption that they were two independent transactions, suggested by difference in dates, has been more than counter-balanced by the description which occurs in Exhibit I of the second document being a counter-part of the first. If the two documents are read together, as they must be, when one is described as a counter-part of the other, the words in Exhibit I denoting that it is an instrument of absolute sale and that the vendor renounces all claims to the properties in future, lose the significance which they would bear if the sale deed had been executed singly.

I am therefore able to agree with my learned brother in holding that the appeal should be allowed on the terms stated in his judgment.

Appeal allowed.