Acts/Rules/Orders:
Transfer of Property Act, 1882 - Section 58;Civil Procedure Code, 1908 - Section 100;India Evidence Act, 1872 - Section 92
Cases Referred:
Smt. Indirakaur v. Shri Sheo Lal Kapoor, AIR 1988 SC 1074;Chunchun Jha v. Ebadat Ali, AIR 1954 SC 345;Smt. Indira Kaur v. Shri Sheo Lal Kapoor, AIR 1988 SC 1074;Thankra Singh v. Sheo Nath Singh, AIR 1940 Allahabad 227;thakur Dass v. Tek Chand, AIR 1944 Lah 175
JUDGEMENT
1. This second appeal is directed against the judgment and decree, dated 13-7-1981 in R.A. No. 23 of 1979 passed by the learned District Judge, Mysore, whereby the learned District Judge reversed the judgment and decree dated 17-3-1979 made in O.S. No. 186 of 1973 by the learned Principal Civil Judge, Mysore.
2. Facts in brief are :--
The appellant is the plaintiff and the respondent is the defendant in the trial court.
The plaintiff filed a suit for redemption and directing delivery of possession of the suit schedule property on the plaintiff paying a sum of Rs. 16,000/- to the defendant within three months and further directed the defendant to pay the costs of the suit to the plaintiff. On 23-11-1961, the plaintiff and his father executed a mortgage deed by conditional sale for Rs. 16,000/- in favour of the defendant with a clause of repurchase upon repayment of the said amount within two years. The plaintiff has further alleged that on the same day the plaintiff executed a lease deed in favour of the defendant agreeing to pay rent at the rate of Rs. 110/- per month by way of interest on the mortgage debt. The defendant was not put in possession of the suit property. It is further stated in the plaint that the plaintiff's father died leaving behind him as the sole heir. The plaintiff issued a-notice offering to pay the mortgage money; but the defendant did not send any reply. As such, the plaintiff was constrained to file a suit for redemption.
3. The defendant in his written statement has contended inter alia that the suit transaction is not a mortgage by conditional sale, but it is an absolute sale with an option to repurchase within the period stipulated viz., two years from the date of execution of the document. Since the plaintiff's vendors did not exercise that option the suit filed by him for redemption is not mainlainable and it is barred by time. The defendant also denied that there had been any lease deed in her favour. Further, she has denied that she was not in possession of the suit house. Alternatively, the defendant has pleaded that she had effected improvement by spending Rupees 10,000/-. Further, she denied that the plaintiff is the sole heir, and contended that the two grand sons of Singchar who have signed the document are necessary parties and the suit is bad for non-joinder of necessary parties.
4. On the pleadings, the trial court framed the following issues for consideration:--
1. Whether the transaction under the deed dated 23-11-1961 between the plaintiff and his father on one hand, and the defendant on the other is a mortgage by conditional sale as pleaded by the plaintiff?
OR
Whether it is an out and out sale with a condition to repurchase as pleaded by defendant ?
2. Whether this suit is bad for non-joinder of necessary parties:
3. Whether this suit is in time?
4. Whether this suit for redemption without prayer for declaration is not maintainable?
5. To what relief, are the parties entitled ?
5. The learned Civil Judge after considering the oral and documentary evidence arid:after construing the documents Ex. P-I, recorded a finding on Issue No. 1 that the suit transaction is a mortgage by conditional sale and n^t an out and out sale. On Issue No. 2, he held that the suit is bad for non-joinder of necessary parties. On Issue No. 3 held that the suit is in time. On Issue No. 4 he held that the suit, is maintainable and having regard to his findings, on Issues Nos. 1 to 4, he decreed the suit of the plaintiff for redemption.
6. Being aggrieved by the judgment and decree passed by the trial court, the defendant preferred an appeal before the District Judge, Mysore, wherein inter alia contended that the suit document Ex. P-l is an absolute sale with an option to repurchase within the stipulated period such not a mortgage by conditional sale. He further contended that since the defendant had denied the title of the plaintiff, the plaintiff ought to have brought a suit for declaration of his title and, therefore, the mere suit for redemption is not maintainable. Lastly, it was contended that the learned Civil Judge had failed to formulate an issue regarding the improvement effected by the appellant and therefore, his finding that the appellant is not entitled to claim any sum towards improvement is erroneous. The learned counsel for the respondent-plaintiff contended that the document Ex. P-l is a mortgage by conditional sale and not an absolute sale with an option to repurchase. He has also contended that the defendant is not entitled to claim anything towards improvement is supported by evidence.
7. Having regard to the rival contentions of title parties, tlie lower appellate court has formulated the following points for determination :--
1. Whether the document Ex. P-l is a mortgage by conditional sale or an absolute sale with an option of re-purchase ?
2. Is the suit for redemption without a relief for declaration of title is not maintainable in law ?
3. Whether the appellant herein had effected any improvement if so what compensation is she entitled?
4. To what relief?
8. On point No. 1, which is a crucial one, the lower appellate court on consideration of documentary as well as oral evidence and on proper interpretation has come to the conclusion that Ex. P-l is an absolute sale with an agreement of option to re-purchase and nto a mortgage by conditional sale, and had fu'rther held that the judgment of the Civil Judge that the' document Ex. P-l is a mortgage1 any conditional sale and not ah absolute sale with art option to repurchase is not correct. On point No. 2 also he held that there is no need to mortgagor to incorporate a prayer for declaration in a suit for redemption. The very essence of mortgage is that title always, remains with the mortgagor and. it never passes to the mortgagee, and as such, there is no need to seek a declaration of title. Accordingly, point No. 2 was answered With regard to. Point No. 3 it has been held this point does not arise for consideration having regard to the finding on point No. I. However, the learned District Judge is of the opinion that if the document Ex. P-l is to be held as a mortgage by conditional sale, then only this question arises for consideration. Further, on consideration of the evidence, he has held that the evidence being different from the claim and in the absence of particulars of improvements and the repairs and in the absence of evidence regarding the nature of repairs and improvements and when the appellant-defendant did not even examine the persons who were engaged to carry out the repairs, it is not possible to hold that the defendant had effected improvement by spending Rupees 10,000/-. It is agreed with the finding of the learned Civil Judge that the defendant is not entitled to any act towards improvements. The point No. 3 was held in the negative. In view of his finding that Ex. P-l is an absolute sale with an agreement of option to repurchase and not a mortgage by conditional sale, he has allowed the appeal and set aside the judgment and decree passed by the learned Civil Judge and directed that the suit of the plaintiff shall be dismissed. Hence, this second appeal by the plaintiff.
9. At the time of admission, the following point of law was formulated for determination by this court :--
'Whether the view of the appellate court, taken in reversal of that of the court of the first instance that Ex. P-l, on a proper construction, was an out and out sale with the option to repurchase and not a mortgage by conditional sale is correct?'
10. Mr. G. Vishweshwara, learned counsel appearing for the appellant-plaintiff has made the submissions that the learned District Judge has failed to take into consideration the material evidence on record indicating the intention of the parties at the time of creating Ex. P-l mortgage by conditional sale. The learned District Judge has failed to take into consideration the fact that the condition of reconveyance is incorporated in the deed itself, which raises a presumption in favour of the appellant-plaintiff to the effect that it is a mortgage deed and that the burden shifts on the respondent to prove otherwise. The lower appellate court has failed to note that it was only ostensible sale with a condition to reconveyance receiving the amount of Rupees 16,000/- and this transaction in essence is a transaction falling within the purview of Section 58(c) of the Transfer of Property Act. The testimony of P.W. 1 to P.W. 4 indicate that the suit property was worth more than Rs.60,000/- in the year 1961. As such,' it ought to have been held that the transaction one for Rs. 16,000/- is in essence a mortgage by conditional sale. The principle laid down in the reported decision in has not been properly appreciated and applied to the facts of the case. The fact that recitals in Ex. P-l go to indicate that Ex. P-l is an out and out sale is no ground to say that it is not a mortgage in as much as in every such conditional sale, the recitals will be in the form in which they are found in Ex. P-l. In an ostensible sale, all the characteristics of a sale deed will be found particularly in their recitals. That cannot be the yardstick with which the transaction has to be teated. The learned District Judge has mainly relied upon certain recitals without taking into consideration all other attending circumstances in interpreting the decument.
11. Mr. H. B. Datar, learned senior counsel appearing for the respondent-defen-dent, contended that on proper interpretation of the document while taking into consideration the recitals contained do not establish that there was relationship of debtor and creditor between the parties and it is an out and out sale with a condition of re-purchase within a period of two years and not k mortgage with condition of sale. The learned District Judge, has rightly in consideration of the document Ex. P-l has come to the conclusion that Ex. P-l is not a mortgage deed, but is an out and out' sale with a condition to re-purchase.
12. In support of the submission, the learned counsel for appellant has strongly relied on the decision reported in , Smt. Indirakaur v. Shri Sheo Lal Kapoor.
13. Mr. H. B. Datar, Senior Counsel for respondent, in support of his submission, relied on the decision reported in (1) A1R 1952 Allahabad 716, (2) , (3) 1963 (2) SCC 676.
14. The facts in this case are few and simple. It appears that on 23-11-1961, the appellant and his father Contractor Singchar, executed a deed described as a deed of conditional sale in favour of Smt. Gowramma -- respon-', dent in respect of suit schedule property, with an option to the appellant to repurchase the same within two years. The appellant after lapse of four years filed the suit and claimed that the transaction evidenced by the conditional sale deed dated 23-11-1961 was in fact a mortgage by conditional sale. The respondent -- Smt, Gowramma objected by saying that it was an out and out sale subject to the condition of repurchase within a specified time. The trial Court on construing the document and the evidence adduced by the parties, has come to the conclusion, that the transaction embodied in the conditional sale deed -- Ex. P-l and the intention of the parties gathered from the surrounding circumstances, the transaction was a mortgage by conditional sale and not an out and out sale. The lower appellate Court held that Section 58(c) of the Transfer of Property Act when correctly construed does not indicate that every deed of sale containing a condition to repurchase operated only as a deed of mortgage and the test is still in the proper construction of the deed and the intention of the parties which may be gathered from the language of the deed and the surrounding circumstances at the time of execution. On facts and circumstances of the case he held that the transaction was an out and out sale not a mortgage by conditional -sale, by reversing the decision of the trial Court.
15. The question debated by the parties in this appeal are:
(i) Whether the transaction embodied in a deed -- Ex. P-l is a mortgage by conditional sale or an out and out sale with condition for repurchase.
(ii) Whether the view of the appellate court, taken in reversal of that of the Court of the first instance, that Ex. P-l was an out and out sale with the option to repurchase and not a mortgage by conditional sale is correct.
16. The appellant's counsel's main thrust of argument is that when there is a sale and there is a condition attached at the time of execution of the sale deed that the vendor could repurchase on payment of the sale price within the stipulated period, then the sale is, not real; the transaction ought to and must come under the definition of mortgage by conditional sale.
17. Before going into the legal question it is necessary to make reference to Sections 58(c) and 58(c) of the Transfer of Property Act.
'Section 58(a): A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transfer is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage money, and the instrument (if any) by which the transfer is effected is called a mortgage deed.'
Section 58(c) of the Transfer of Property Act reads thus:
'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 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'.
The words 'for the purpose of securing the payment of money' occuring in clause (a) clearly bring out the fact that the essence of a mortgage transaction consists in the purpose or intention of the transfer. It makes it clear 'that the purpose or intention permits the entire transaction which in law is termed a mortgage and constitute its existence. Clause (c) of S. 58 envisages another kind of mortgage namely mortgage by conditional sale. It is a special kind of mortgage called mortgage by conditional sale. To constitute a mortgage by conditional sale, certain conditions must exist (I) there must be a mortgagor (2) there must be mortgaged property and (3) there must be an ostensible sale of the mortgaged property on any of the conditions mentioned therein, which condition relates to the payment of mortgage money. In the decision of the Full Bench of Allahabad High Court reported in , interpreting the provision 'of S. 58(a) read with Clause (c) it is observed as follows (at page 729):
'71. So far as the first condition is concerned, it is significant that the Legislature has used the word 'mortgagor' and not the word 'transferor'. The effect of the use of this word is to import the definition of the word 'mortgagor' given in clause (a) into clause (c) and further to make the intention prescribed in clause (a) viz., 'the purpose of securing the payment of money' as the condition precedent of the said transaction. As to the second condition it is again significant that the Legislature has not used the words 'transferred property' but has used the words 'mortgaged property' which according to clause (a) would be the immovable property transferred for the purpose of or with the intention of securing the payment of money. As regards the third condition mentioned above, the use of the words 'ostensibly' and 'mortgage money' is again significant. The words 'ostensibly sells' in sub-clause (c) clearly indicate that there should be an apparent sate as opposed to a real sale. In other words, the form of transaction should be that of sale but the substance of transaction must be that of a mortgage. This would be only another way of saying that in the transaction of mortgage by conditional sale the real nature of the transaction as disclosed by the intention of the parties supersedes the form or the garb which the parties choose to give to the transaction. As to the consideration of the transaction, it is again noteworthy that the word used is not 'price' but 'mortgage money' which again takes us back to clause (a) according to which 'mortgage money' is the money the payment of which it is the purpose or intention of the parties to secure.'
Thus in determining whether transaction is a mortgage by conditional sale or sale with condition of repurchase, the vital question that should be required to be considered is the question of intention of the parties, and that intention of the parties must be considered on consideration of the contents of documents with such extrinsic evidence of surrounding circumstances. The Court should not be guided by the mere term of ostensible sale, but it should ascertain the reality by proper consideration of the term contained in the document and the manner in which the language of the document is related to the existing facts.
18. In various decisions of the Supreme Court, it has laid down the guidance as to the determination of the real nature of the transaction. The first principle is the intention of the parties and it is the real determining factor and the intention should be gathered from the language used in the document itself. If the words are not clear or unambiguous then it should resort to the surrounding circumstances to determine what was intended. In (Chunchun Jha v. Ebadal Ali) the Supreme Court has observed as follows (at page 346):
'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.'
From the above decision of the Supreme Court, it is clear that the real character of transaction has to be gathered from the language used in the deed. It is therefore necessary to refer to the vital document Ex.P. I itself so as to find out whether transaction was mortgage by conditional sale or out and out sale with condition to repurchase.
19. The learned District Judge of the Appellant Court has quoted the deed --- Ex.P. 1 at para 12 of the Judgment. It is translated to English from Kanada. I have perused the same and it is true and correct-transaction of the document which read as follows :
'Ex.P. 1 is the document concerned. Omitting the unnecessary words, 1 have paragraphed the document for convenience of construction.
We the executants (1) Singchar son of Narasimhacharya and (2) S. N.Swamy son of Singchar have this 23rd day of November, 1961 executed a conditional sale deed of the house in favour of Smt. Gowranima wife of Venkat Rao. The house described in the schedule belonging to us have been mortgaged in favour of Smt. Leelavathi under a registered mortgage deed dated 30-6-1960 after borrowing Rs. 6,000/-.
The mortgagees have been pressing for the repayment of the mortgage amount and that money is also required for business. We have sold the house described in the schedule for a sum of Rs. 16,000/ -. Out of the sale price, you shall pay of the mortgage amount of Rs. 8,000/- to Smt. Leelavathi and got a necessary endorsement on the mortgage document and remain in possession of the documents evidence of title and you are also conferred with the mortgagees right of subrogation. We will receive the remaining consideration of Rs. 8,000/- at the time of registration of the document. We have by this way received the entire sale price of Rs. 16,000/-from this date, you shall enjoy the property from generation of generation. Excepting the simple mortgage in favour of Smt. Leelavathi, the house is not subject to any other encumbrance or alienation. We assure that the property is not subject to any Court attachment or maintenance or any other encumbrance. If there is any such encumbrance, we shall at our cost discharge the encumbrance, failing which we agree that the loss that may be caused to you shall be recovered from our other moveable and immoveable properties and personally from us. To assure that the property is the self acquired property of the first executed Singchar, the 2nd executant and his two sons Chinnakrishna Vasudeva will put their consent signatures. From this day, within a period of two years, if the aforesaid amount of Rs. 16,000/- is paid to you before the Sub-Registrar, at our cost you shall resell the property described in the., schedule. Hence, this conditional sale deed. Singchar, S. N. Swamy, Chinnakrishna N. Vasudeva Seller, Accepting the conditions set out above and in token thereof, I have signed below : Gowramma (Purchaser).
There is no title to the deed to say whether it is mortgage by conditional sale or sale only, but it is styled as conditional sale deed. The transferee is to enjoy the property from generation to generation exercising the right of ownership and conferred with the right to mortgage, exchange or sell. It also contains a stipulation that transferors (vendors) have sold the house described in the schedule for Rs. 16,000/-. There is clear for retransfer and that has to be done by means of separate sale deed to be executed at the cost of (vendors) the transferors. The period for re-purchase fixed is only two years. There is no stipulation for the (purchaser) transferee to realise the sate price in the event of the vendors not exercising the option. The learned counsel for the appellant has argued that when the transaction is one of conditional sale that the transferor shall reconvey the property after two years for the same price, it shall be construed that the intention of the parties was that the transaction is mortgage by conditional sale, ostensible sale contained in 'the document does indicate that there was no sale in reality, but a mortgage as the language used implies a mortgage and the sale was merely cloak. In support of his submission he strongly relied on the decision of the Supreme Court in Smt. Indira Kaur v. Shri Sheo Lal Kapoor, . In that decision para 5 reads thus (at page 1077):
'5. There is no manner of doubt that the transaction in question was one of mortgage,' in essence and substance though it was clothed in the garb of a transaction of ostensible sale. The factors adumbrated here-under leave no room for doubt on this score :
(1)The sale deed was for a sum of Rs. 7000/-. So also the agreement which could be enforced at any time within ten years was also for an identical sum of Rs. 7000/-. If the defendant wanted to purchase an immovable property for the sake of investment would he have agreed to convey the very same property, for the same amount even after ten years In the first place he would have losilthe advantage of appreciation in value of the property 11 suiting in ten years let alone erosion of his investment on account of inflation. In the second place he would not have been able to sell, mortgage, gift or will away the property for ten years as the obligation to convey it to the plaintiff within ten years for the very same amount was annexed to the property and he could have dealt with his property in any of the aforesaid modes only subject to this obligation. Why should he have locked up his funds in such a manner?
(2) The stipulated period for conveying the property was a very long period of ten years. The very length of the period is suggestive of a transaction of mortgage and not a transaction of absolute sale with a stipulation to reconvey the property in such peculiar circumstances, bearing on the relationship between the parties or some other relevant consideration.
(3) If he wanted to purchase the property for his personal occupation, why should he have allowed the plaintiff to continue as a tenant on payment of Rs. 80/- per month which worked out to 13% interest on the sum of Rs.7000/-.
(4) Admittedly the property was never mutated to the name of the plaintiff (defendant). If he had become an absolute owner, why should he not have got the property mutated to his own name It is not even his case that he had ever applied for mutation. The fact that he allowed the property to remain standing in the name of the vendor -- plaintiff tells its own tale.
(5) The obvious reason for entering into such a transaction of ostensible sale coupled with a contemporaneous agreement to sell within ten years was that if it was not garbed with this paraphernalia and was given the nomenclature of a mortgage the period of redemption would have been 30 years. This period could not have been curtailed without attracting the doctrine of clog on equity of redemption. This was obvious reason for resorting to this device.'
20. In the present case, the factors are such which are not in any way similar or near similar to the factors enumerated in the above referred case in Supreme Court decision. Firstly there was no such long period stipulated for reconveyance in the instant case for suggesting that transaction is of mortgage and not absolute sale. The possession was not retained by the transferor. Though, the plaintiff has put forward the case that the suit property leased back to him, it was not proved. The suit property was mutated in the name of the transferee/the defendant whereas in the Supreme Court case, the property was never mutated. The decision relied on by the learned counsel for appellant in support of his submission that transaction as per Ex. P. 1 is mortgage by conditional sale and not out and out sale is of no assistance to him for the obvious reason that the factors in Ex.P. I and the language used therein clearly spell out the real intention of the parties that it was a transaction of out and out sale with condition to repurchase within the stipulated period of two years, and not mortgage by conditional sale.
21. As already noticed, on proper reading, of document - Ex.P. 1 what it clearly goes to show is that there is no word as to the mortgage by conditional sale. The purchaser is given the right of ownership stating that he would enjoy the property as owner conferring him the right to mortgage or sell. There is no. stipulation regarding payment of interest except the condition that the vendor could repurchase the property within two years for the same price to which it was sold. These facts, coupled with the surrounding circumstances such as the property-mutated, in the name of the purchaser/defendant and the constructive possession given to him as there was a tenant at the time of sale of the-suit property, whom he later got evicted by taking eviction proceedings, clearly spell out that the transaction was out and out sale and not; mortgage by conditional sale under Ex.P. I. It: is noteworthy to note that in the entire document Ex.P.l there is no whisper about the mortgagor or mortgaged property. Under clause (c) of Section 58, to constitute mortgage by conditional sale, the document should contain certain conditions such as mortgagor and mortgaged property. In the absence of these essential conditions in Ex.P.l it cannot be held that transaction was one of mortgage by conditional sale. Point No. 1 is answered accordingly.
Point No. 2.
Whether the view of the appellate court taken in reversal of that of the court of the first instance, that Ex.P.I was an out and out sale with the option to repurchase and not a mortgage by conditional sale is correct?
The learned counsel appearing for the appellant-plaintiff argued that the document conditional sale -- Ex.P.I with a .covenant of repurchase having been embodied in the documen, it must be regarded as mortgage by conditional sale within the meaning of Section 58(c). The learned senior counsel appearing for the respondent -- defendant has submitted that the argument of learned counsel for appellant is based on the proviso added to Section 58(c) by Act XX of 1929 which reads as follows:
'Provided that no such transaction shall be deemed to be mortgage unless the condition is embodied in the document which effects or purports to effect the sale.'
That proviso cannot be interpreted as laying down a rigid rule hat if the agreement to sell and the covenant of repurchase is embodied in the document, the inference of mortgage would not necessarily arise or that when the condition of repurchase is embodied in the document of sale, the transaction should necessarily be regarded as one of mortgage. The proviso to Section 58(c) is in the negative form. It doe snot follow that whenever there is a condition of reconveyance in a deed of sale, the transaction must be a mortgage. The learned counsel has relied on the Bench decision of Allahabad High Court in Thakra Singh v. Sheo Nath Singh . It is observed as follows:
'It cannot be broadly laid down that where the contract of sale and the contract of repurchase are evidenced by a single document or more or less contemporaneous documents the transaction is a mortgage by conditional sale and is not a sale out and out with the condition of repurchase. In every case it is a question of intention to be gathered from the document itself and the surrounding circumstances. If the ostensible vendee, out of courtesy and kindness, agreed to convey the property, this will be an important circumstance to indicate that the transaction was a sale and not a mortgage. In order to constitute a mortgage, there must be a debt and there must be a security.'
22. I am in full agreement with the, principles of law laid down in the above referred decision of Allahabad High Court, and I am also respectfully in agreement with the view opined in the said decision that 'if the ostensible vendiee, out of courtesy and kindness agreed to recover the property, that will be an important circumstance to indicate that transaction was a sale and not a mortgage.
23. The question raised in point No. 2 still remains to be answered.
Point No. 2: Whether the view of the appellate court, taken in reversal of that of the court of the first instance that Ex. P.I was an out and out sale with the option to repurchase and not a mortgage by conditional sale is correct?
24. The learned Civil Judge, the Court of the first instance, has held that the document -- Ex.P.I is a mortgage by conditional sale and his conclusion is based on the circumstance that the deed is termed as a conditional sale and the vendee shall reconvey the property to vendor within two years on the same price to which it was sold, there was relationship of debtor and creditor between the parties, the possession of the property was not delivered to the vendee and the value of the property was much more than the consideration for sale.
24-A. The learned District Judge, the appellate Court has held that the learned Civil Judge has not considered the document as a whole and has failed to consider the evidence on record in proper perspective, as such the conclusion of the learned Civil Judge that1 the document -- Ex.P. I is mortgage by conditional sale, is not sustainable both in law and facts.
25. Let me examine the respective contentions of the parties. The appellant's counsel contended that the trial Court is right in holding that document -- Ex.P. 1 is a mortgage by conditional sale and not out and out sale. The appellate Court, though final court of fact has improperly rejected the oral evidence adduced by the plaintiff and other witnesses as to the proof of existence of relationship of debtor and creditor between the parties, P.Ws. 1 and 2 gave evidence on the question of existence of relationship of debtor and creditor between the parties. P. W. 1 is the scribe of Ex. P.I. In his examination he has stated that the plaintiff wanted loan of Rs. 16,000/- as such he requested the loan for that amount for discharging the earlier debt. He has stated thus:
'I told the plaintiff that if he was ready to mortgage his house by conditional sale, I would get a loan for him. The plaintiff agreed. Then 1 contacted Venkatrao. I got a loan for plaintiff from Venkatrao, I again say that I got a loan from his wife Gowramma.'
26. P.W. 4 is the plaintiff. His evidence is that some days after the mortgage (earlier mortgage) Smt. Leelavathi, the mortgagee pressed repayment of mortgage money. Ven-kata Rao, the husband of defendant offered to help him. He agreed to pay money if the plaintiff mortgaged the property. In the entire evidence of P.W. 4, the plaintiff did not whisper that he approached P.W. 1 for any loan or that P.W. 1 arranged for loan. In his cross-examination, he has stated that at the time of his talk with Venkata Rao, husband of defendant, no one was present. The evidence of plaintiff totally belies the evidence of P.W. 1, for, the question of plaintiff approaching P.W. 1 or the plaintiff approaching Venkata Rao for a loan may not arise at all. In the cross-examination of P.W. 1, he has stated that one Mr. Ramachandraih -- P.W. 2 was present. When the plaintiff requested him to get the loan for him P.W. 4 the plaintiff did not whisper that P.W. 2 was present at any time. The evidence of P.W. 2 is 'the plaintiff took a loan from defendant, there was a document in this regard. I attested the said document. Under the document the plaintiff sold the suit house. It was agreed that if the plaintiff repaid the loan, the defendant should reconvey the property to the plaintiff.'
27. In the cross-examination, P.W. 2 has stated 'the amount paid to the plaintiff by Gowramma was towards sale consideration.' From the evidence of this witness, it is clear that the plaintiff had sold the suit property and the amount paid to the plaintiff/by Gowramma was towards sale consideration. This witness has not stated that he was present when P.W. 1 approached Venkata Rao for loan. Then the theory put forward that loan was taken is an afterthought and it is not proved. The learned District Judge, has rightly commented that the learned Civil Judge was not justified in relying on the evidence of P.W.I, P.W. 2 and P.W.4 in support of his conclusion that there has been relationship of debtor and creditor between the parties.
28. The learned Civil Judge has no doubt referring to the earlier mortgage in favour of Smt. Leelavathi has held that Ex. P. 1 was for the purpose of discharge of that mortgage. The learned Appellate Judge has repelled the said conclusion on the ground that the sale price under Ex. P1 is Rs. 16,000/- whereas the earlier mortgage was only for Rs. 8,000/-. Therefore, the Appellate Court, has no doubt, rightly held that the learned Civil Judge is not correct to say that the suit document was executed only to discharge the mortgage debt in favour of Smt. Leelavathi.
29. As per Ex. P.I, the plaintiff has conferred on defendant the right of subrogation of the original mortgage. If the intention of the parties was to create only mortgage by conditional sale there is no need to confer right of subrogation in favour of defendant. The appellate Court has further on reassessment of evidence of P.Ws 1, 2 and 4 held that if Venkata Rao had agreed to advance on condition that plaintiff executed mortgage by conditional sale, then P.W. 1 the scribe who is a retired Tahsildar would have certainly written that the document is mortgage by conditional sale, and there was no need for him to write the document as conditional sale deed.
30. The learned Senior Counsel appearing for the respondent-defendant has submitted that oral evidence of intention is not admissible for the purpose of construing the deed or ascertaining the intention of the parties as it is excluded by S. 92 of the Evidence Act. In support of his submission he relied on the decision of the Supreme Court in Thakur Dass v. Tek Chand, AIR 944 Lah 175 Mahajan J. (late Hon'ble Judge of the Supreme Court), has observed as follows at page 177:
'The question whether a transaction embodied in a deed is a mortgage by conditional sale or out and out sale depends upon the intention of the parties. Orai evidence of intention is not admissible for the purpose of construing the deed or ascertaining the intention of the parties, as it is excluded by S. 92, Evidence Act. The case has to be decided on a consideration of the contents of the document with such extrinsic evidence of surrounding circumstances as might be required to show in what manner the language of the document was related to the existing facts.'
31. The learned Appellate Court Judge has referred to the recital in Ex.P-1 which is to the effect that appellant-plaintiff has sold the property for Rs. 16,000/- and the entire consideration amount was paid. The subsequent conduct of the particulars strengthens the case of the respondent-defendant who has got the change of khata in her name and Municipal tax is paid by her. Ex.D-1 is the khata certificate for the period 1960-61 to 1977-78. The appellant-plaintiff did not contend that they paid the Municipal tax in any year. Taking these aspects into consideration, the Learned Appellate Judge has rightly held that the intention of the parties was that Ex.P-1 should be the document of absolute sale with a condition to repurchase and not a mortgage.
32. The appellant had made a feeble attempt to establish that on the day of execution of Ex.P.I, a lease deed has come into existence and according to the terms the appellant-plaintiff agreed to pay rent of Rs. 110/-. The learned Civil Judge, has accepted the theory of leasing back the property to the vendor-plaintiff. The appellate Court Judge has held that the theory of leasing back the property in favor of vendor by the vendee is again got up for the purpose of this case, and he has held that rent receipt Ex.P.2 is not genuine one, and no lease deed was produced to establish that on the date of execution of Ex.P.I, the lease deed was executed. Further on appreciation of evidence has held that if really there was lease deed executed by the vendee-defendant in favour of plaintiff-vendor, the plaintiff would have mentioned in the notice issued to the defendant in the year 1973, before filing the suit about the lease deed and the receipt of rent. Ex.P.3 is the notice, it is significantly silent regarding the so called lease or the receipt of rent. The solitary receipt, Ex.P.2 of the year 1961 was produced to show that the rent receipt was passed in favor of Chikkanna Krishna. This has been denied by the defendant, and the signature on the rent receipt was also denied. The learned appellate Judge considering the oral evidence as well as the document Ex.P2 and other material on record, has come to the conclusion, that since no lease deed was produced 'and the scribe of Ex.P.2 Mr. Chikkanna Krishna was not examined and no mention of lease deed or execution of Ex.P.2 in the notice issued by the. plaintiff and the execution of Ex.P.2 was not proved the plaintiff has failed to establish that there was relationship of debtor and creditor. The finding of lower appellate Court on this point on reversal of the finding of learned Civil Judge, the Court of first instance, in my opinion is correct.
33. On the point of possession, the learned Civil Judge has commented that no possession was given to the respondent-defendant. It is in evidence that the suit property was tenanted one, in which one Srinivasachar was residing as tenant on paying rent of Rs. 90/- and the plaintiff filed eviction proceeding against the tenant which came to be dismissed. The defendant has in fact took eviction proceedings against the tenant Srinivasachar and got him evicted and the same was later allotted to one Ramanaika through Rent Controller and later the respondent-defendant herself got physical possession of the suit property. The learned appellate Judge considering these factors, has held that when the property was tenanted, respondent-defendant got in law symbolical possession and later got actual physical possession by taking eviction proceedings against the tenant and as such merely non-mention of delivery of possession in Ex.P.I does not constitute that it is a mortgage by conditional sale as the learned Civil Judge seems to think. I do not think, that viewing it from any angle, the conclusion of the learned appellate Judge on this point is in any way contrary to material on record.
34. One other circumstance strongly relied upon by the learned Civil Judge is the value of the suit property which was much more than the consideration of sale for the purpose of holding that FA. P.I is mortgage by conditional sale and not out and out sale. The learned Counsel for the appellant-plaintiff has strenuously argued that the value of the suit property was much more than the consideration for the sale, which goes to indicate that the parties have intended to be a mortgage by conditional sale. To come to the said conclusion the learned Civil Judge has relied upon the evidence of plaintiff witness.
35. The learned Senior counsel for the respondent-defendant has submitted that the appellate Judge has not misread the evidence much less misguided himself in appreciation of evidence. The learned appellate Judge has taken into consideration all material evidence and relevant facts and has come to the conclusion that the value of the suit property was not more than the consideration of sale.
36. The contention is at the time of Ex.P. 1 the value of the suit property was more than the sale consideration indicating thereby the intention of the parties was mortgage by conditional sale. The suit property is situated at Irwin Road, a fairly busy locality. Ex.P.l was executed in the year 1961, for sale consideration of Rs. 16.000/-. The property measures 27' x 27' and it has a first floor. there is no evidence when it was constructed and the nature of the construction, and what amount spent for the construction in which year. The plaintiffs have not chosen to produce any document, either Bills or accounts book to show the amount expended for construction. There is only oral evidence of P.W. 1 who states that at the time of mortgage of the property the value of the property was about Rs. 45 to 50 thousands. In the cross-examination he stated that 'I had not gone to the property at any time' and he has stated that 'By my experience in the field I can state the value of the property'. However, the witness states in evidence that tenant was paying the rent of Rs. 90/- per month, but also stated that he had not seen any record to know as to what rent the tenant pays, further he stated that he cannot state the area of the property.
37. The learned appellate Judge has commented on this witness that how he can give the value of the property without even seeing property and without even knowing the dimensions and without having any particulars.
38. P.W. 2 in his examination in chief stated that the value of the house in the year 1960 was about to Rs. 20,000/- to Rs. 30,000/-. In the cross-examination he stated that 'I cannot say whether about 20 years ago, a building measuring 30' x 30' was worth about Rs. 15,000/-. The value I have stated above is my estimate and not based on record. I have not inspected the suit property to know its value.'
39. When the witness is not able to say whether the value of the building measuring 30' x 30' 20 years back was about Rs. 15.000/-and his estimation of the value of the suit property not based on record or by inspection of the building much reliance cannot be -placed on his estimate. The learned appellate Judge has rightly held so.
40. P.W. 3 gave evidence stating that the value of the suit property in the year 1960 was -about Rs. 40,000/- to Rs. 50,000/-. In cross-examination he has stated that 'In 1960, I did not know as to which house belonged to the plaintiff. I know that plaintiff owned a house on Irwin Road. I do not know about the suit. I have not seen any record concerning the suit house. I do not remember when the suit houe was built. It was in existence during my school days.' This witness also does not give the basis for his estimate. The learned appellate Judge has rightly commented that this witness is no better than the other two witnesses P.Ws. 1 and 2 for he does not give on the basis which he estimated the value of the suit property. Plaintiff no doubt has in his evidence stated that at the time of Ex.P.l the value of the suit property was Rs. 50.000/- to Rs. 60,000/-. The suit property has a ground floor and first floor. Plaintiff stating that the value of the suit property was more than Rs. 50,000/-, has not placed any document, neither bills for the purchase of materials nor the account book or the assessment order nor produced any document of sale transaction of similar property during relevant time. No reliance can be placed on the evidence of plaintiff firstly because he is an interested person, that apart, he has not produced any material document to show that the suit property at the relevant time was valued more than Rs. 50,000/-. The learned appellate Judge has rightly discarded the evidence of plaintiff and also aptly commented that the learned Civil Judge was not justified in placing reliance on the oral evidence of this witness to come to the conclusion that the value of the suit property was much more than the sale price of Rs. 16.000/- mentioned in Ex.P-1.
41. The learned appellate Judge taking into consideration the evidence of plaintiff that the rent realised by him from the property was of Rs. 90/ - capitalized it by adopting the multiple of twenty after deducting three months rents towards Municipal tax, collection charges, repairs, has come to the conclusion that the value roughly works out to Rs. 16.200/-. That being the position, as to the value fo the suit property at the time of Ex.P-1, the learned appellate Judge is right in holding that the finding of the learned Civil Judge that the value of the suit properly at the tie of Ex.P-1 was much more than Rs. 16,000/- i.e., Rs. 40,000/- to Rs. 50,000/-appears erroneous and not based on any reliable acceptable evidence.
42. It is well laid principles of law that the first appellate Court is the final court of fact and very important duty cast upon it. In a case of reversal, it is all the more important for the court of first Appeal to consider the evidence and the reasoning of the trial Court and only thereafter give the reasons for not agreeing with the findings of the trial Court.
43. In this case, the first appellate Court has considered the evidence by applying its mind independently and consider the reasoning of the trial Court and thereafter gave its reasons for not agreeing with the findings of the trial Court. Since the finding of the first appellate Court is sustainable from the reasoning given by it, that finding cannot be interfered with in Second Appeal.
44. For the reasons stated above, the point No. 2 is answered accordingly holding hat the view of the appellate Court, taken in reversal of that of the Court of the first instance that Ex.P. I on a proper construction was an out and out sale with option to repurchase and not a mortgage by conditional sale is correct.
45. For the foregoing reason, this second appeal fails and the same is dismissed.
In view of the peculiar circumstances of the case no order as to costs.
46. Appeal dismissed.