Another v. The State of Madhya Pradesh

:Each case must be dCcided On its own facts. The numerous decisions of the High Courts on the point are of no help because two documents are seldom expressed in identical -terms. The intention of the parties is the determining. factor but the intention must be _gathered from the document itself which has to be construed to find out the legal effect of the word~ used by the If the . words are express and clear, effe~t must be given to parties. them and any extraneous enquiry into what was thought or te.nded is ruled <.>ut. employed- then it is Permissible to look to the surrouflding circum stances to determine what was inten·ded. there is ambiguity. in the language k If ho¥,rever ·""' . ' - - ( .. -"' - j ·. 'SUPREME COURT.• REPORTS f75 .s~C.R. . In view of the provisions of the• amended section 58( c) .of the Transfe{ of. Property .Ac_t, if' the sale _and agreemc::nq to repmchase are .. embodied in separate, doc.um, ents, then ·_the ,tr~nsa\tion cannot be a mortgage whether_· ilie . docijments are. cont~inpor~neously ·ohly one docu executed or not. But ·be ·a 'mortage and ment · does not necessarilv' mean that ·it' must cannot be a sale. If, the ·condition of repurchase in:mbodied in . the document that effects or purports · to effect the sale,.. then it . is a matter for construction which was ,meant. . Balkishen Das v. Legge .(27 I.A. 58), . Alderson y.: White. ( 44 E.R. <)42 at· 928), Bhagwan. Sahai v. Bflagwan Din (17, I.A. 98 at 102), and/handa Singh v. Wahid-ud-din (43 I.A. 284 a·t 293) re- ferred to. the niete fact that there is · · · · . · ' CIVIL No. 98 of 1953. APPELLATE ., JuRISDICTION : Civil Appeal 1954 Pandit Chunchun ]ha v. Sheikh Ebadat Ali · and Another · :S,, P. Verma, day of January, 1949, Appeal by Special Leave . from the .. Judgmen,~ and .Decree dated the 27th ,of the .High Court of Judicature at Patna in Appeal .. from Appellate Decree -No •. 690 of. 1947 against the Pecree dated . the 13th January, 1947, of the Court of. the District Judge, Bhagalpur, in Title Appeal No . .161 .of .and .Decree dated 1946 arising out of the the 25th July, 1946, of the Court of· the lSt .·Additional Subordinate in Title Suit' No. 80 of 1945; · Judge, · Bhagalpur, Judgment · · N. C. Chatterjee, (A. N. Sinha and with him) for the appellant. . Murtaza Faz/ Ali and Rajinder Narain, for respond ent No. 1.

#1954. April 14. The Judgment· of the Court was delivered by BosE J.-This is a plaintiff's appeal in a suit demption of what the plaintiff calls a mortgage . dated 15th April, 1930. The •only question for determination is whether this is a mortgage by conditional sale · or a If the sale out and out with. a condition' of repurchase; the plaintiff succeeds. · If the latter he is· out of former Court. The property • covered by· the disputed deed belonged to one Bijai Tanti who died leaving a widow Mst. Phaguni and two sons Siban Tanfr and Chander •Tanti. On 25th May, • · 1922, · Siban ; Tanti • :\:lone executed · a · 1 s.c.R. .::;UPREl\IE COURT REPORTS 177 v. , I954 Pandit Bose J. and Another. \Ve think that is a fruitless task Chunchun Jha decisions on tlie point and much industry has been expended in some of the High Courts in collating and analysing them. because two documents are seldom expressed in identi- cal terms and-when it is necessary to consider theSheiHEbaaatAli attendant circumstances the imponderable variables which that brings Jn -its train make it impossible to compare one case with another. Each must be decided on its own facts. But certain broad principles remain. The first is that the intention of the parties is the determining factor: see Balkishen Das v. Legge('). But there is nothing spedal about that in this class of cases and here, as in every other case where a document has to be construed, the intention must be gathered, in the first place, from the -document itself. If the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the _ legal effect of the words which they used. If, however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended. As Lord Cranworth said in Alderson v. White("): "The rule oflaw on this subject is one dictated by commonsense; that prima facie an absolute con-,, veyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase ............... In every , such case the question is, what, upon a fair construc tion, is the meaning of the instruments ? " Their Lordships of the Privy Council applied this rule to India in Bhagwan Sahai v. Bhagwan Din(') and in Jhanda Singh v. Wahid-ud-din ('). The converse also holds good and if, on, the face of it, an instrument elearly purports to be a mortgage , it cannot be turned into a sale by reference to a host of ... (t) 271.A. sS. (2) 44 E.R. 92.t- at 928. 23 (3) 17 I.A. 98 at 102. (4) 43 I.A. 284 at 293: 1'954 Pandit Chunchun ]ha v. Siuikh Ehodat Ali and Another. S.CR. SUPREME EOU~T REPORTS 177 is a is that that brings them. We terms and when circumstances in its is necessary train make it . impossible industry has ·been decisions on. the point and much in collating and expended in some of the·.High Courts analysing fruitless.· task because two documents are seldom expressed.. in identi to ·consider_ the imponderable . variables attendant compare one case with another. Each must be decided on its own facts.. But certain broad principles remain .. the intention of the parties · is the The first determining factor : see Balkishen Das v. Legge( 1 )., But there is nothing special about that in this · class of cases and here, as in every other case where a document has to be construed, in the If the words are first place, from the document itself. express and clear, effect must be given to them and any extraneous enquiry into what was ·thought or· intended is · not • is ruled out. The real question in such a· case what the parties intended or meant. but what .If, howeV'.er, legal effect of the words which they used. there is ambiguity in the language employed, · then it is permissible to look the surrounding circumstances to determine what was· intended. As . Lord Cranworth said in Alderson v. White ( 1 the intention· must . be gathered, : ) "The rule · of law on this subject to show is one dictated that prim a f acie an absolute con by commonsense; veyance, containing · nothing that the· relation of debtor and creditor is to exist between · the · parties, does not cease to be an absolute conveyance and become a mortgage: merely . because . the ·vendor stipulates he shall have a right to repurchase. , . . . . . . . . In every such c:;ise the question is, what, upon a fair , construc is the meaning of the instruments ?" tion, Their Lordships of the Privy Council applied this rule to. India in Bhagwan Sahai v. Bhagwan Din(8) and in . . /handtJ: Singh v. Wahid:ud-din('). , the face of The converse. also · holds good and if,. on it, an instrument .. clearly' A purports .to be ·a mortgage it reference. to a .. host' of cannot be. turned into• a 'sale by . . . ;• . (S.) 17 I. A. 98 at 102. ' (4) 43 'I. A. 284 at 293 .. . ' ~ -. . ,i, . - . ·-· ., . ~.' .. ~ ...... - .. 1954 Pandit Chunchun ]ha v. SllLikh Ebadat Ali · ·and .A.nothtr. Bose J. • 178 SUPREME COURT REPORTS [1955] ("' extraneous and• : .1 jrrelevant · .: considerations. Bifficulty only arises· in 'the .. ·bdrder~ line.,: cases where' there. is 'they form the· .bulk- of this ambiguity.' Unfortunately, kind of transaction. . . : . . . . ' to effect the sale, . then it is. a matter for • that i's to say, is-embodied in the document Because of the weltfr"of confusion· caused bv a multi tude of conflicting .decisions the Legisl~ti. Jre · stepped ' in and ·amended section 58(c) of ihe' Transfer of Property that ·brought in its train a further Act. Unfortunately conflict of authority. But this. much is · now dear.' If the sale · and agreement tl>' repurchase ' are embodied in separate documents, then the' transaction . cannot be· a mortgage whether ·the· : documents are- · contemporiine ously .. executed or not. But the converse· does· not hold the mere fact that there ·is only good, one document does not nei:essariiy·· mean· that it must If ·the condition be a mortgage and cannot be a sale. that ·effects of repurchase or purports construction which · was mea'nt. ·The 'Legislature has made a clear cut- classification · and· excluded tran5ac tions embodied in more . than :one · document from · · the category of mortgages, suppose that' persons who, · after the .. ·amendm~nt, ··choose not to use two documents,: do not ihtend"the transaction that presumption by to be a sale,. unless .they displace clear and ·express words.; and· 'if the.• .conditions of section 58( c ): are ·fulfilled, . then we· are of opinion that the. deed should. be· construed as· a· mortgage. The document· with which are "coricerried, Exhi bit A, is in the following is to construe it' is' ambi guous. the · document for con venience of construction· and have · · omitted unnecessary words).· th.e language . used. and see· whether therefore· it' is · reasonable terms and our first duty · (Wt · have ·paragraphed '.": ,, · ' · ( 1) "Rs. '(534 pri,;_cipal with' iriter~st under a' regis tered rehan bond" (sirripJe· mortgage) the·· 6th May; '1927, is justly due.:•;:; .. ""~ i'.by ·us· the ex'ecutahts. Now we,.further· require··R~~ 165-6-0 mote-to meet costs of the ·suit under• section 40." (Bihar Tenancy Act). ."dated ·· (2) '. ''.i!na· ~t ,present there is no .other way :in view rather it seems impossible and dif!icult to arrange . for - - ... • • i 1954 Pandit Chunchun J ha v. Shtikh Ebadat Ali and Another • Bose J. S.C.R. SUPREME COURT REPORTS 179 the property' lei:' out in the ·money without selling rehan" (simple mortgage) . "under . the above mentioned bond." · ' · · ·· · " (3) "Therefore, we. the executants .. : .... : .. declare . . . . . . . . . . . . that we ...... sold and vended the properties -detailed below on cohdition (given below)· for. a fair and just price of Rs. 700 .......... " · · ' · set off Rs. 634-10-0 against ( 4) "That we consideration· money" (torn) "payable under the afore the said vendee and received in favour · of said bond this' way Rs. 65-6-0 in cash from the said vendee. ·the entire consideration money was realised· from. said vendee." In · · (5) "and we put the said vendee in possession and ·occupation of the vended property detailed below and made him an absolute proprietor in our places." ( 6) "If we, the executants, shall sideration money to the said vendee within two years ............ the property vended under this deed of condi tional sale attached shall come in exclusive possession :and occupation of us, the executants." remain (7) "If we do not pay the same, the said vendee .thereof, _generation after generation. and · he shall appropriate the produce thereof." in possession and occupation (8) "We, the executants, neither have nor shall in respect of the vended have any. objection whatsoev.er property and the consideration money. Perchance ·we do so it shall be deemed null and void in Court." (9) "and we declare also that the vended · 'property is flawless ·in every way and that if in future any kind ·of defect whatsoever be found on account of which the. said vendee be dispossessed of a portion or the entire property vended under this deed of conditional sale and will have to pay the loss or damage, in that event we, the executants, (a) shall be liable -criminal procedure, and to be prosecuted und~r the · · · (b) we shall pay the 'entire consideration money ·together with loss and damage and interest at the r'ate ·of Rs. 2 per mensem per hundred rupees ·from :the 'date - - ~· -'95f ·Pandit ChU!"Chuh. Jhd· v. -Sheikh Eblul•t .A.If and Another ' · . · ·· , , .. · ,purports the produce · of the executants". That ( c) and we shall not claim p955J SUPREME ·couRT REPORTS ·180 pf '41! e}'.ecution., o~ thi~: deed, till t~' ,,d'lty ot . realisation , , .. from; .Ol\r, ,person. a11d other .properties .. , , , . vendee'~, : ,possession yend~d property for the period of agai'rist ·the· said veridee :or his' heirs and representatives." · .' (io)' "°f,herefor~, ·we,, . the'. e.xsc, utan, ts ... ,;.: ...... have that· it , may executed this deed of conditional ·sale so / be of use in future." · · " • ~ri qµ~ ''opini\i'.1~ thi~ ,fang~age is not .fi:ee ~qm giffi Cl!lW . ~nd . is ambiguous. The deed to be . ·" s~le a11d. has the .outward forin of.one b,ut at the same time j(plls itself a '.'conditional sale"., It, has, however, rio .clause· for retransfrr and instead says ( claus~ 6) if the executants pay the money within two years, i)1 excl~siy~ p~ssessJOn. and %CU p~~perfr . ".shail . CO,tlle pation of us, is dear about . the possession but is silent about the title. · In the context we cati' only pike these words to, mean that if there title· will paymen't' -Within the ·specified time, coritiinie to for what else cari' a' ' right of exclusive'. possession import ' ih 'these circumstances ? ' this silence afoul' title· ~ould be proper in a mortgage,· for in him all the while and' "so· a the 6wrier's title'remains reconveyance is unnecessary. But if there is an· out and 6ui sak the title could not revert' fo the' original ciwner without·~· proper reconveyance. Clause (7)' appears" to underline' this because' it couples to rernairt' 3 in possession ·and ·occupation and to · appro pciate "the' produce "generation after · generation'" with the .'non•payment of the .. rrioney• within the time· set out. It is' true the· words of conveyance ·in the. earlier part title if of. the deed (clause· 5) would pass an absolute 'read' as ·a they stood·' alone but the . document must be whole and: it .must ·also be. remembered that ''it· was rustics and scribed by. a' man executed by ignorant whose .knowledge·., 0£ conveyancing.: was; on the face of it, rudimentary and defective. The deed lacks . the pre cision, of,. ;i, p~actised . hand . and . that i probably .. accounts f~r, it~:iawbiguities : · that,.,.ther~ ·is ambiguity 1 is··· patent fro;m,vyhat.we hav~.:saicL.·i· . . · It' is relevant the· exectitarits'; iri passing · that tpnsfetee's then the to note rtside :' •• ·- ' - - 1 • t , \ SUPREME COURT REPORTS 1Si " . \ '- • . . -·~ '? - . S.0'.°R. . The next step is to see whether the document is · cover. ed by section 58( c) of the Transfer of Property Pandil v. Act, for, if it is not, then it cannot be a mortgage by Chunchun J•a conditional sale. The first point there is to see whether there is an " ostensible sale." That means a transaction Sheikh Ebadat AH which takes the outward form of a sale; for the essence of. a mortgage by conditional sale is that though in substance it is a mortgage it is couched in the form of a sale with certain conditions attached. The exec a tan ts clearly purported to sell the property in clause (5) because they say so, therefore, if the. transaction is not in substance a mortgage, it is unquestionably a sale : an actual sale and not merely an ostensible one. But if it is a mortgage, then the condition about an" osten- sible sale " is fulfilled. and Another. Bose J. We next turn to the conditions. The ones relevant to the present purpose are contained in clauses (6) and (7). Both are ambiguous, but we have already said that on a fair construction clause (6) means that if the money is paid within the two years then the possession will revert to the executants with the result that the title which is already in them will continue to reside there. The necessary consequence of that is that the ostensible sale becomes void. Similarly, clause (7), though clumsily worded, can only mean that if the money is not paid, then the sale shall become absolute. Those are not the actual words used but, in pur opinion, that is a fair construction of their meaning when the document is read as a whole. Ifthatis what they mean, as we hold they do, then the matter falls squarely . within the ambit of section 58(c). . • Now, as we have already said, once a transaction is embodied in one document and not two and once its terms are covered bysection58(c) then it must be taken to be a mortgage by conditional sale unless there are express words to indicate the contrary, or, in a case of ambiguity, the attendant circumstances necessarily lead to the opposite conclusion. · · There are no express words here which say that this is not 3. mortgage but there is ambiguity, so we must probe further. The respondents, who claim that this ' 1954 Pandit Chunthun ]ha v. Sheikh Ehadat Ali and Anolh~r. BoseJ. 1'82 SUPREME COURT REPORTS [1955] ·, . · 'Those, is ·used. from ·the .Jt: must follow .They · are ·all· ·culled is a.sale..·and not ·a .mortgage,. rely on· the .following ·deed circumstances. itself.·•.> · .. . , . · •. First, ·they point to cl~use (5} :which says •that' the transferee has been made the absolute proprietor · in plate of · the exec'utarits. say, are · the :operative· words and· point to at\ out ··and . our·· transfer of title. Next, they point to ·clause (2) where the· execu tants say that they have no other · ineans of raising · the inoney'·they want except by selling the ' property. The respondents argue that the word "sale" could · not have been used 'inadverten'tly because -it-· 'is·· contrasted ·with ·same · seritehce. The' word in 'the · very· a mortgage is alsc>' ·used in clause (l);_ therefor~· it. is "mortgage" intended' the word clear that when a mortgage ".mortgage" that ·.when-,. the word "sale''. is· used,· ·a sale must have ·been meant. The only weakness in this argument is· that· when ·a mortgage is by conditional sale this is the form it has that there must to take, ·because section 58( c) posmlates ·Ostensible be an "ostensible ,ale"· .and •ifa sale must necessarily contain all the outward -indioia· '-Of a real sale. The. question • we are considering can only arise when the word "sale' is used and, of course;· a sale imports a ·transfer of title. ·The use ·of · the words "absolute proprietor in our -places" carries the · matter no further- because 'the· essence of every. sale ·is to make the vendee the absolute proprietor of what is sold. The question here . is · not whether the words purport . to transferee an absolute · proprietor,• for. of course they must under. section: 58(c), but· whether that is done .of a certain kirid are attached.· · ' The lear~ed counsel for the resp; ndents nex't relied on the. fact that dause · (3). says that the ,price paid was a "fair_ and. just" one .and th~t the .. Courts below. have found that the .. consid~rarion was . not inadequate. , He that ,. no_.-interest also relies on the fact .Vl'.aS, ·charged, that the transferee was , placed in possession of the pro perty an'd 1was Iiot'' to· account 1fqr the'.. usilfruct ; 'also on tetm;' ·namdy ; two years, ,, was the" 'fact' that 'a sqi:ii't fixed f6f repiyrrtent " "ostensibly" . and whether conditions · ·' "'" ' "· " · " · · • 1 1954 Pandit Chunchun ]ha v. Sheikh Ebadat Ali and Another. Bose]. - ,. .~ • )_ - S.C.R .. SUPREME COURT REPORTS 183 to show borrowed related to this very But on the other side, that Rs. 65-6-0 was this very property : (clause 1). the very significant to enable executants to carry on commutation proceedings under section 40 of the Bihar Tenancy Act (that is, for sub stitution of a cash rent instead of one in kind) · in respect It was · admitted the com before us, and the lower Courts so find, that mutation proceedings land. The learned High Court Judges discount this by saying that the proceedings, that there is no evidence which were started in 1929, .continued after the deed. But that is a mistake apparently due to the fact the copy of the entry in the Rent Schedule, produced before the date. Mr. N. C. Chatterjee produced a certified copy the missing of the revenue record here and that gives date. From that it is clear that the proceedings con tinued till 18th February, 1931, some ten months after the deed. This, we selling their property would crucial. Persons who are to borrow money in order to hardly take continue revenue proceedings which could no longer benefit them and could only enure. for the good of their transferees. inadvertently omitted learned Judges; is to say, trouble think, the date of the parties existing at There is another point in favour of the appellant, the surrounding circumstances show is that and that and· creditor relationship of debtor that there was a the suit between transaction. The bulk of satisfaction of In those circumstances, seeing form of a mortgage by conditional sale under section legitimate 58 ( c) of the Transfer of Property Act, in the absence of clear to the to infer, the relationship of debtor and creditor contrary, was intended to continue. the consideration went the mortgage of 6th May,. 1927. it is indications the deed The point made on behalf of the respondents about the adequacy of the consideration and the absence of to take interest can be explained. The transferee was possession of produce and it is evident to be accountable for it. document that he was not thus get to us from the tenor of the property and would 1954 Pandii . Chunchun Jha v. . Shtikh Ebadat Ali "a"nd. Atiother' Bosej;

#184. SUPREMB CG>URT' REPORTS' [.f955J We··say ·this·· because ~he .-,Jndemhity•·.;Clause 1 (clause 9) says in isub-clause' (b) ., that in. the . event 'of the trans feree's possession. being 'disturbed the executants. ::would among ·.othen things, · pay· him; : in· ·addition to damages, the :··entire : cconsideration·" together·" with· interest "'at'.2 per cent. per month f~om the date of·the deed•an<l''Would not ·require the· transferee . to account : for the usufruct. It .is true this • can also be· read · the other . way but con sidering these·. very. drastic provisions ·as also ... the' threat of a criminal. prosecution ·'in sub-clause·· (a),.· we ·"think the transferee was out to' exact 'more than his·· p·ourid•of flesh from the unfortunate .rustics ·with. ·whom·,· h'e was dealing .. and that he would not ·have : agreed · to :a.ccount for the profits : · indeed that is· his own case,· for• he 'says In these' 'i:ircum stances; there would be no:need·to·keep a•· reasonable margin· .between the ·debt .and :the vah1e of the· .property as is ordinarily done in' the case of a· mor\gage.: Taking everythin'g into consideration, we ,.are of" 1 opinion th:at the· deed is.,a .mortgage.• by ·conditional sale· "'liridei·. ·sec- tion.58(c) of.the. Transfer-of. Property Act.' this· ·was a sale .. out and .mfo. .; .' ' . The appear'is allowetL The decrN~·of the'High'Coiirt is set- aside ·and ... that '·of thi: ' lower" appellate · · Cou'rt 'is restored except as to "osts. · ·:' ·" · · The original owners· of· the property have fost 'i[ .·'The v~lue of the property was p\it · at : over Rs. " 10;oqo "in the ·. special' leave . petition. 'The second defendant· oust~a tlie original owners by gehing ~ .'. mortgage decree for R'.i. · 130 ih':his ·favour on a mortgage ·of only"' 'Rs.' 25 and purchasing it ~t the auciio!1 himself. ' He · is ''no foi:iger in : the picture as he sold'· 'it to the' plilintiff 'fiir Rs. 400. · THe pbintiff · · has' accordi:itgly" obtained prO peity which. on his. own showing 'is worth 'more . ili~n Rs. )0,000 .'for· only Rs. 400.' The· first defend~nt .. , sptrit ci'nly · Rs. 250 plu~ 'Rs. 65'6.:0' ori'' it : Rs.''315-6-0' · ·~n'd the ~onsideration of the disputed deed 'is· bnlY' 'R.(706'. n . is. evident that both. sides. are : speculators:· Iri . the circumstances 'we': direct that" each party bear.!' its "owh co·sts. '"•""·" ~ ··i·, , ~: ;,,-, t. 1 , · .,- ·... ·. :· ! 1 ' , · • ' • • ,,; ,,., .. . Appeal, allow,~d., • • - 1 •