The Judgment of the Court was as follows:—
Chitty, J.:— In this case the Plaintiffs seek to recover from the Defendant possession of a plot of land measuring ten cottas under the following circumstances. In 1304, Jaru, the predecessor in interest of the Plaintiffs, borrowed Rs. 100 from the Defendant and by way of security mortgaged two plots of land measuring 6 cottas and 10 cottas respectively. The arrangement was that the Defendant should hold possession of both plots for eight years, i.e, until 1312, in full satisfaction of the debt and interest. The Defendant's case was that in 1306 the parties came to an arrangement whereby Jaru sold to the Defendant the 10 cotta plot for Rs. 98 and took back the 6 cotta plot, the mortgage being thus paid off. The conveyance of the 10 cotta plot to the Defendant was by an unregistered kobala. The Munsif declined to regard this document as evidence and decreed the Plaintiffs' suit which was filed on 8th January 1914 (1320) within 12 years from 1312, the original date fixed for the termination of the mortgage. This decision has been reversed by the Subordinate Judge, who finds the kobala to be a genuine document, and while holding it to be inadmissible to prove the sale, has accepted if as evidence of the satisfaction of the mortgage which came to an end in 1306 by the sale and dismissed the Plaintiffs' suit. The Plaintiffs have appealed. In my opinion the judgment of the lower Appellate Court cannot stand. The alleged sale in 1306 was of the equity of redemption in the 10 cotta plot, the consideration being the balance of the mortgage money then due plus Rs. 35-8 in cash. The thing sold was merely a right in immoveable property, the property being in the actual possession of the mortgagee. The sale thus being of an intangible thing could be made only by a registered instrument [See sec. 54 of the Transfer of Property Act and Ramasami Pattar…(Defendant No. 2) v. Chinnan Asari…(Plaintiff) .* (1)] and as the document was unregistered, no sale was effected. I agree with the learned Subordinate Judge when he held the document to be inadmissible to prove the sale. He was however, in my opinion, in error in holding that it was admissible to show when and how the mortgage was satisfied by Jaru. This would be to make it evidence of a transaction affecting the property, an use expressly forbidden by sec. 49 of the Registration Act.
If there was no sale or no such sale as could be proved, the mortgage must be deemed to have continued until 1312 when, by the agreement of the parties, it was satisfied automatically.
The Plaintiffs are therefore entitled to recover back so much of the mortgaged property as has not been returned to them, that is to say, the 10 cotta plot now in suit.
It was urged on behalf of the Defendant that it would be a hardship upon him as he would lose the Rs. 35-8 paid by him in cash in 1306. As he has retained possession of this plot for some 12 years after he should have given it up under the original agreement, there can be no question of hardship.
I would allow the appeal, set aside the decree of the lower Appellate Court, and restore that of the Munsif with costs to the Plaintiffs in both Courts.
Walmsley, J.:— The Plaintiffs who prefer this anneal sued to recover possession of a piece of land measuring ten cottas, on a declaration of their title. Their case was that their predecessor Jaru borrowed Rs. 100 from the Defendant in 1304 B.S, and put him in possession of two plots of land, namely, the plot in suit and another plot measuring six cottas, on the understanding that the two plots should be restored at the end of eight years with the debt, principal and interest, wiped out by the profits accruing from the occupation of the two plots. They say that the smaller plot was restored to them in 1312 B.S, but not the plot in suit. They filed their suit on 8th January 1914, i.e, in 1320 B.S
The Defendant's case is that two years after the loan, the smaller plot was restored to Jaru, while the larger plot, the one now in suit, was sold by him to the Defendant.
The first Court found that the evidence of the sale alleged by the Defendant was very unsatisfactory, and refused to accept an unregistered kobala. The suit was decreed, and the Defendant preferred an appeal.
The learned Subordinate Judge held that the kobala was inadmissible as evidence of sale, but that it could be admitted and used as evidence to show how and when Jaru satisfied the mortgage. Using the document to that extent he found that the mortgage came to an end in the manner described by Defendant. He also referred to a measurement made by the landlord somewhere about 1312, and the kabuliyats executed by the Defendant and the first Plaintiff in 1312, and pointed out that the Plaintiff's kabuliyat did not cover the land in suit, while the Defendant's did. The result was that he decreed the appeal.
For the Plaintiffs it is now urged that the kobala of 1306 is not admissible at all, and reliance is placed upon sec. 54 of the Transfer of Property Act. The argument is that what was sold was the equity of redemption, and that right is an “intangible thing” within the meaning of the second clause of sec. 54.
Now, if the document was a conveyance of the land, it did not need registration, for the purchase money is mentioned as Rs. 98 only. The first question therefore is whether the transaction is to be regarded as a sale of the land or as a sale of the equity of redemption. The document recites that Jaru was in need of money, that he agreed to sell the land for Rs. 98, that by reason of the Defendant's possession for nearly three years out of the eight years, the mortgage debt had been reduced to Rs. 62-8-0 and that Jaru therefore accepted Rs. 35-8-0 in cash as full payment for the sale. It is true that the document does not say that the mortgage was extinguished or mention anything about the other plot, but I think the meaning of the parties is plain from the way in which the amount to be paid in cash was calculated. The reckoning is unintelligible unless they intended that the mortgage should be extinguished for credit is given for the proportionate profits of both plots, and the whole of the balance is deducted from the purchase money, with the result that nothing is left due under the mortgage of 1304 B.S
This view, that the sale was not of the equity of redemption, hardly puts the Defendant in a better position however, because under sec. 54 of the Transfer of Property Act delivery of possession is essential where the document is not registered, and he was already in possession. It does not appear to be necessary to decide whether his possession was that of a mortgagee or of a lessee, for in either case it was a possession that was to come to an end in a definite period when the Plaintiffs' predecessor would have a right to resume possession. In the case of Sibendrapada Banerjee v. Secretary of State (2) it was said that the essence of a transfer by delivery is that possession is changed. In another case [Fatik Karikar v. Rajendra Nath (3)], Banerjee, J., held that in circumstances similar to those of this suit, it would not be necessary for the parties to go through the form of restoring the property to the mortgagor vendor and then again delivering to the mortgagee purchaser, but that it would be enough if the mortgagee took the property as purchaser and the mortgagor admitted that from that moment the purchaser held the property as purchaser and not as mortgagee.
At first sight it seems that there ought to be a remand for the lower Court to determine whether there was such a transfer as is suggested by Banerjee, J. But I do not think this is necessary. The fate of the second plot affords the best test on the question whether there was delivery of possession: if the Defendant had restored possession of that plot and retained possession of the other, then I think it might fairly be said that there was delivery of possession in regard to the larger plot, but the evidence to show that this was done is wanting: in fact such evidence as there is shows that Defendant continued to hold it. No useful purpose would be served by a remand.
It is suggested that, at any rate, the Defendant should have a decree for the repayment of the cash payment mentioned in the kobala, but as it appears that he did not give up possession of the smaller plot for several years, he is not entitled to such an order.
I think the appeal should be allowed, the decree of the lower Appellate Court set aside, and the decree of the first Court restored.
S.C.M
Appeal allowed.