LODHA, J. - (1.) THIS is a plaintiff's second appeal arising out of a suit for the redemption of mortgage and in the alternative for a decree for specific performance.
(2.) THE facts giving rise to this appeal may be stated within a narrow compass. THE property in question which consists of a house, two lime kilns and an open plot of land measuring 14,300 sq. yds. is situated in village Chandawal, Tehsil Sojat. This property originally belonged to respondent No. 3 Gulab Singh, who according to the plaintiff Ramniwas (appellant) mortgaged it by conditional sale by the mortgage deed dated 4-1-1960 for a sum of Rs. 4000/- with the defendant-respondent Nos. 1 and 2 Pokar Ram and Bhanwar Lal. One of the conditions incorporated in this alleged mortgage deed is that the mortgagor i. e. Gulabsingh will have a right to have the property in question resold to him on payment of Rs. 4000/- and interest thereon, within one year from the date of the execution of the deed. It was further stated that in case Gulabsingh failed to get the reconveyance in his favour as mentioned above the sale of the property in favour of the defendants Nos. 1 and 2 would be valid. Even after the execution of this document Gulabsingh continued to remain in possession of the property in question and executed a rent note for the same in favour of the defendants Nos. 1 and 2 for Rs. 40/- per month. It appears that subsequently defendants Nos. 1 and 2 filed a suit for arrears of rent and ejectment against Gulabsingh, and got possession of the property in question in execution of the decree, they had obtained in their favour on 19-7-1963. But before this happened Gulabsingh had sold away the property in question by a registered sale deed dated 3rd January, 1961 to the plaintiff-appellant Ramniwas for Rs. 12000/- mentioning therein that the property in question had been mortgaged with Pokarram and Bhanwarlal. On 10-9-1963 Ramniwas filed the suit against Pokarram, his son Bhanwarlal and Gulabsingh alleging that the document dated 4-1-1960 executed by Gulab Singh in favour of Pokarram and Bhanwarlal though ostensibly the sale was in fact a mortgage by a conditional sale and since he had purchased the property in question with full rights from Gulabsingh, he was entitled to redeem the mortgage on payment of Rs. 4000/- as principal and Rs. 240/-as interest @ 6% per annum, total Rs. 4240/- He, therefore, claimed a decree for redemption of mortgage and in the alternative prayed that, if for any reason, a decree for redemption was not granted in his favour the suit may be decreed for specific performance of the agreement to reconvey the property as provided in the deed itself. Pokarram and Bhanwarlal resisted the plaintiff's suit and pleaded that the deed in question was a sale out and out and not a mortgage by conditional sale. It was also pleaded that the suit for specific performance in the alternative, was not maintainable. Gulabsingh filed a separate written statement and supported Pokar Ram and Bhanwarlal in their contention that the deed executed by him in favour of Pokarram was a sale out and out and thus he also prayed for dismissal of the plaintiff's suit. THE learned Civil Judge, Sojat framed the following two issues - (1) Whether the deed dated 4-1-1960 executed by defendant No, 3 in favour of defendants Nos. 1 and 2 is a mortgage by conditional sale and therefore the plaintiff is entitled to redeem the property in question from defendants Nos. 1 and 2? (2) Whether the plaintiff is entitled to get the property in question sold to him by specific performance on the basis of the deed dated 4-1-1960 executed by defendant No. 3, in favour of defendants Nos. 1 and 2. (3) Relief. None of the parties produced any evidence, and, therefore, after hearing arguments, the learned Civil Judge held that the deed dated 4-1-1960 was a mortgage by conditional sale and consequently he passed a preliminary decree for redemption of the mortgage. In view of his decision on issue No. 1, the learned Judge did not decide issue No. 2. Aggrieved by the judgment and decree of the trial court the defendants Nos. 1 and 2 filed appeal before the District Judge, Pali, who reversed the finding of the trial court on issue No. l and held that the deed dated 4-1-1960 was a sale out and out and in this view of the matter he set aside the judgment and decree of the trial court and dismissed the plaintiff's suit for redemption and remanded the case to the trial court to decide issue No. 2 in accordance with law. Dissatisfied with the judgment of the learned District Judge, Pali dismissing his suit for redemption the plaintiff has come in second appeal to this Court. The short point that arises for decision in this appeal is whether the deed dated 4-1-1960 is a mortgage by conditional sale or a sale out and out. I have been referred to a very large number of decisions by the learned counsel for the appellant with a view to show that under the circumstances more or less a similar transaction was held to be a mortgage and not out and out sale with a condition for repurchase. Similarly the learned counsel for the respondent has also cited a number of cases in support of his contention that the language of the deed and the surrounding circumstances lead to the conclusion that the parties intended to bring into existence an out and out sale with a condition for repurchase. In this connection it would be relevant to refer to sec. 58 (c) of the Transfer of Property Act, which defines mortgage by conditional sale as follows - "58 (c) 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, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale, Provided 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. " Learned counsel for the appellant has argued that the deed in question satisfied the conditions laid down in sec. 58 (c), and, therefore, the learned District Judge had committed an error of law in holding that the transaction was an out and out sale. He has, urged that the deed has been misconstrued and therefore the matter is one of law and open to interference in second appeal. Learned counsel for the respondents has not challenged the jurisdiction of this Court to go into the question whether the transaction in question is a mortgage by conditional sale or a sale out and out and, I think rightly so, because the question involved in the present appeal is one of interpretation of the deed dated 4-1-1960 and if there is any mis-construction, then the matter would be one of law and open to interference in second appeal. In Bhaskar vs. Shrinarayan (1) their Lordships were pleased to observe, "the question whether by the incorporation of such condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. " In Chunchun Jha vs. Ebadat Ali (2) it was observed that - "the question whether a given transaction is a mortgage by conditional sale or a sale out right with a condition of repurchase is a vexed one and must be decided on its own facts. In such cases the intention of the parties is the determining factor. " It was further observed that, "the legislature has made a clear cut classification and excluded transactions embodied in more than one document from the category of mortgages, therefore, it is reasonable to suppose that persons who after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words, and if the conditions of sec. 58 (c) are fulfilled, then we are of opinion that the deed should be construed as!a mortgage. " In P. I. Rapuswami vs. N. Patty (3) the condition for re-purchase was embodied in the same document and the consideration for the transaction was half of what was found to be the real value of the property. The consideration for reconveyance was the same amount as the consideration for the original transaction. In these circumstances it was held by their Lordships that the transaction was one of mortgage by conditional sale and the plaintiff was entitled to get preliminary decree for redemption of the mortgage. In Bhoju Mandal vs. Debnath Bhagat (4) though all other conditions contained in the document were not decisive of the question raised, there was one factor which was held to be a clinching circumstance in favour of holding the document to be a sale and that was that the total area of the land mortgaged in the year 1923 was 13. 7 acres and the amount advanced thereunder was Rs. 1600 and only one year thereafter out of the said extent 12-6 acres was transferred by the document in question for a sum of Rs. 2800/-, it was held that the document in question was a sale and not a mortgage. Thus from the aforesaid cases of the Supreme Court one thing is clear and that is. that no hard and fast rules can be found to determine whether a particular transaction is a mortgage or a sale out and out, and the question, as to which category a document belonged can only be solved by ascertaining the intention of the parties on consideration of the contents of the document and other relevant circumstances, Learned counsel for the appellant relied on Daitari Dalal vs. Jagannath (5) wherein it was observed that the adequacy of consideration so as to represent the real value of the property is also a factor to be taken into consideration in determining if the transaction represents a sale or a mortgage. The factor that the consideration for reconveyance is the sale amount as consideration for original transaction negatives the case of sale.
(3.) IN Sita Ram vs. Basheshwar Dayal (6) relied upon by the learned counsel for the appellant it was held that in view of the fact that the price paid was wholly inadequate and that the possession remained with the transferor, it was clear that the transaction in question was not one of complete sale but what was intended was to create a mortgage by way of conditional sale. On the other hand learned counsel for the respondent relied upon Kotes-wara Rao vs. Sambiash (7), Jaggarnath Singh vs. Butto Kristo (8), Lalchand vs. Atma Ram (9), Sayyad Ahmed Ali vs. Bhageerathi Ammal (10) and Rajat Chandra vs. Dhani Ram (11 ). 16 In Koteswara Rao vs. Sambiah (7) it was held that the fixation of a short period for the exercise of the right or reconveyance was indicative of a sale rather than a mortgage. The fact making time essential for the exercise of the right was also a pointer in the same direction. It was observed than an agreement to pay interest by transferor was not indicative of the transaction being a mortgage by conditional sale It may be relevant here to point out that there were two instruments executed in this case though on the same day and in the agreement executed subsequently an option was given to the vendor to repurchase the property within a certain, period. In Jagarnath Singh vs. Butto Krishto (8) it was held that a stipulation for payment of interest is one circumstances favouring the inference that a transaction is a mortgage but this circumstance is not conclusive. It was further observed that inadequacy of price and absence of bargaining to settle the price are also circumstances which may be considered in coming to the conclusion that a certain transaction was a mortgage and not a sale. In Sayyad Ahmed Ali vs. Bhageerathi Ammal (10) there was a recital in the document that the vendee would have the right to alienate the property even before the expiry of the stipulated period and that on the expiry of the period fixed under the document neither the vendor nor his heirs would have any manner of right over these properties. It was held that these conditions were hardly consistent with the right of a mortgagor if the transaction was to be treated one by way of mortgage. In Rajat Chandra vs. Dhani Ram (11) where there was nothing in the document to show that the purchase price was inadequate, and the relationship of the debtor and creditor had been continued, the document was regarded as one of sale. In Lalchand vs. Atmaram (9) after discussing a number of principles with the help of Indian, English and American case law on the subject, the learned Judges held that the fact that the plaintiff had at no stage prior to the institution of the suit taken the plea that the transaction was a mortgage even though there had been ejectment proceedings against him was a clinching circumstance for holding the transaction to be a sale and not a mortgage. ;