Garachand De, J.
1. This second appeal is directed against the judgment and order dated 7th July, 1989 passed by the learned Additional District Judge, 2nd Court, Howrah in Title Appeal No. 93 of 1986 by which the judgment and order dated 31st March, 1986 passed in Title Suit No. 162 of 1980 of the 1st Additional Court of Munsif, Howrah was reversed.
2. The plaintiffs are the legal heirs of one Bindadin Tiwari. The plaintiffs' case in brief is that the said Bindadin Tiwari was a thika tenant in respect of the suit land measuring about 3 Kottas and 6 Chittaks on which he had fifteen rooms, including the shop room with brick walls and R. T. roofs and other fitting and fixtures fully detailed and described in the schedule to the plaint. Bindadin died on 11.5.75 leaving behind his widow (plaintiff No. 1) and three minor sons (plaintiff Nos. 2 to 4) who were in khas possession of two rooms and let out the other rooms after mutating their names. It is alleged that the defendant Md. Jalil Ansari was a tenant in respect of three such rooms and used to pay rent separately for each room at the rate of Rs. 20/-, Rs. 20/- and Rs. 10/- according to English calendar month and such rent was paid upto May, 1973. In the month of June, 1973, the said Bindadin Tiwari with plaintiff No. 1 approached the defendants for a loan of Rs. 2,000/- for payment of debts and the expenses incurred for marriage of their foster daughter. It was settled that such loan of Rs. 2,000/- will carry interest of Rs. 2,000/- for five years and the defendant shall remain in occupation of the said three tenanted rooms, without payment of any rent. It was also decided that it would be a loan transaction for which two documents in respect of the suit property, one in the form of ostensible sale deed for an amount of Rs. 4,000/- (principal Rs. 2,000/- plus interest Rs. 2,000/-) is to be executed and another deed in the form of simultaneous ostensible agreement for reconveyance of the suit property is to be executed. Accordingly two documents were executed on 26.6.73 and a sum of Rs. 2,000/- was handed over to Bindadin Tiwari towards loan, and the balance Rs. 2,000/- was kept by the defendant towards interest for five years.
3. It is specifically stated in the plaint that Bindadin Tiwari had no intention to sale the property at such a low price inasmuch as its market price were more than Rs. 30,000/- at the relevant time and it was yielding monthly income of Rs. 200/- from the tenants towards rent. Moreover, the plaintiffs have been paying taxes in respect of the suit property and has been realising rent from the tenants, as usual. The plaintiffs are ready to repay the lawfully due amount. But the defendant has been trying to grab the entire property ignoring the said loan transaction for which the instant suit was filed praying for declaration that the transaction was a loan in substance or mortgage by conditional sale, and also for ascertainment of the amount due and for accounts. Prayer is also made for easy instalment for payment of the amount to be found due under the Bengal Money-lenders Act.
4. The plaint was filed on 3.4.76 when it was numbered as T.S. No. 106/76. But subsequently it was renumbered as T.S. No. 162 of 1980 on transfer to the 1st Additional Court of Munsif at Howrah.
5. The defendant contested the suit after filing a written statement on 6.6.77 denying the transaction as loan in substance. The specific defence case is that the defendant is not a money-lender, that the defendant was a tenant under Bindadin Tiwari, that at the time of his daughter's marriage Bindadin Tiwari opted to sell the suit property at the then highest market price of Rs. 4,000/-, that the defendant accordingly purchased the suit property on payment of Rs. 4,000/- but at the request of Bindadin Tiwari he agreed to reconvey the suit property if the said amount of Rs. 4,000/- was repaid at a time within three years. Accordingly, two documents were executed. But due to manipulation through his Moharar, Bindadin managed to extend the period from three years to five years without the knowledge of the defendant. Since steps were not taken within three years for reconveyance, the defendant prayed for dismissal of the suit.
6. Subsequently, an application under Order 6 Rule 17 of C. P. Code was filed on 8.1.79 for amendment of the written statement. The plaintiffs filed a written objection on 12.4.79. The said application however was rejected being not pressed in terms of the Order No. 41 dated 6.8.79. But again on 19.11.85 an application for amendment of the written statement was filed and by Order No. 97 dated 2.12.85 the petition for amendment was allowed. By order No. 98 dated 5.12.85 there was a direction to amend the written statement in terms of the earlier order. Surprisingly enough no such amendment was done in the written statement. But the fact remains that paragraph 25 was allowed to be added. In the said paragraph the defendant specifically stated that Bindadin Tiwari at the time of handing over possession of the suit property on execution of the sale deed gave the defendant a right to repair the existing dilapidated structure on the suit property, that there was no whisper in the sale deed as regards mortgage or loan or interest towards loan, that after purchase the defendant raised new structure on the dilapidated portion by removing the old structure with full knowledge of the plaintiffs, that in the deed of agreement for reconveyance also there was no whisper of mortgage or loan taken, that the thika tenancy in respect of the suit land having vested in the State of West Bengal the defendant became a thika tenant under the Government of West Bengal for which without making the State Government a party the plaintiff is not entitled to get any relief.
7. On the basis of the respective pleadings six issues were framed on 27.3.78. But after amendment of the written statement no step was taken for framing of additional issue.
8. Parties adduced evidence in respect of their cases both oral and documentary and also advanced their respective arguments.
9. The Trial Court after a due consideration of the evidence adduced and the argument made decreed the suit by his judgment and order dated 31.3.86.
10. The said judgment and decree of the Trial Court was challenged in Title Appeal No. 93/86 and the learned Additional District Judge, 2nd Court, Howrah by its judgment and order dated 7.7.1989 allowed the appeal on contest and also set aside the judgment and decree dated 31.3.86 passed by the Trial Court, mainly on the ground that it was an out and out sale and not a loan transaction or a loan in substance.
11. In course of admission hearing of this appeal, a Division Bench of this Court by an order dated 19.6.90 indicated that there are substantial questions of law for which the appeal would be heard on the ground Nos. IV, V, VI, VII and X. At the time of final hearing of this appeal, the learned Counsel of both sides also centered their argument on those five grounds which are reproduced below:
Grounds
IV) For that the Appellate Court laid much emphasis to the repayment of interest as an essential ingredient to constitute the concept of loan transaction, whereas it ought to have taken into consideration the documents showing low valuation, nature of possession, conduct of parties and the pleading with evidences as a whole in the real perspective to adjudicate the despite in accordance with law.
V) For that the Appeal Court below erred in placing the entire onus upon the plaintiffs to prove that the apparent state of affairs is not real whereas it should have held that the initial onus lying upon the plaintiffs as well been discharged and the same is to be shifted to the defendant to explain the transaction in view of the amended provisions of the Bengal Money-lenders Act.
VI) For that there is no bar of Section 58(c) of Transfer of Property Act to lead evidence to prepare the theory of loan in substance and the Appeal Court below has not assessed the entire evidence adduced by the plaintiffs/appellants accordingly.
VII) For that the Appeal Court below has wrongly interpreted the provisions of Bengal Money-lenders Act and reported decisions cited from the Bar in support of the plaint case to deny the reliefs prayed by the plaintiffs.
X) For that the Appeal Court below should have found that all the ingredients and necessary steps are present in the instant case to hold the transaction not as 'out and out sale', but essentially 'a loan transaction, and/or loan in substance.'
12. At the very outset, it is to be pointed out that the following facts are admitted can be ascertained from the pleadings of the parties :
(i) Bindadin Tiwari was a thika tenant in respect of the suit property and he was the owner of the structures standing on the said land.
(ii) Bindadin and his family were residing in two such rooms and the remaining rooms were let out to the tenants including the defendant who was in occupation of three rooms on payment of a monthly rent of Rs. 50/-(Rs. 20/- + Rs. 20/- + Rs. 10/-).
(iii) The defendant paid such monthly rent upto May, 1973.
(iv) On the basis of an agreement between Bindadin Tiwari and the defendant a sale deed was executed and registered in favour of the defendant on 26.9.73 and Rs. 4,000/- was shown as consideration money in the said sale deed. On the same day, the defendant executed an agreement for reconveyance at the same price of Rs. 4,000/- in favour of Bindadin Tiwari within a period of five years.
(v) Bindadin Tiwari died on 11.5.1975 leaving behind the plaintiffs as his legal heirs.
13. It also appears from the finding of facts by both the Courts below that --
(i) the plaintiffs are in possession of the suit property as usual,
(ii) the defendant did not take any step till the filing of the suit for mutation of his name in respect of the suit property on the basis of the sale deed executed in his favour.
(iii) The plaintiffs have been realising rent from the other tenants of the suit premises.
(iv) The plaintiffs have been paying rates and taxes as usual in respect of the suit property.
(v) The defendant has not been paying any rent in respect of the three rooms under his possession since the date of execution of the sale deed in his favour.
14. It is pertinent to mention that in paragraph 24 of the written statement, the defendant specifically stated that there was no talk of interest at the time of transaction. 'Only it was settled that this defendant will live in the said three rooms free of rent till the said Bindadin Tiwari repurchased the suit property by a each down of Rs. 4,000/- at a time and that is the interest of the defendant. On that understanding, this defendant is living in the three rooms within the suit property from the time of Bindadin Tiwari which is also known to the plaintiff No. 1'. So it is admitted by the defendant that he was occupying the three rooms without paying the rent and the said amount was to be construed as interest till the property is reconveyed to the plaintiff on taking of Rs. 4,000/- at a time.
15. In course of hearing of this second appeal, it was argued on behalf of the respondent-defendant that the mutation proceeding at the instance of the defendant has been started in the meantime. But surprisingly enough nothing was argued with regard to the added paragraph 25 in the written statement. It is already stated hereinabove that by Order No. 97 dated 2.12.85, the petition for amendment of the written statement was allowed and by Order No. 98 dated 5.12.85, a direction was issued for giving effect to the amendment. It is also pointed out that on the basis of such amendment a new paragraph 25 was introduced in which the defendant took the plea of renovating the structures after the purchase thereby indicating that acts of possession were done. A legal plea was also taken that the thika tenancy right of the original plaintiffs having been vested in the State of West Bengal, the entire proceeding without impleading the State of West Bengal a party in the suit is bad in law.
16. But it appears that in course of hearing of the suit the facts stated in the added paragraph 25 were not agitated and no evidence was adduced. Of course it is simply claimed on behalf of the defendants in evidence that they renovated the structure after the purchase. But supporting materials were not produced in support of such claim. It is also to be noted from the judgment of the Trial Court that the issue No. 2 on the maintainability of the suit and issue No. 3 on the suit valuation were not pressed by the parties for which those two issues were decided in favour of the plaintiffs.
17. It is already stated that the Trial Court came to the conclusion that the transaction was nothing but a loan in substance and in coming to such a conclusion, she placed reliance on the following facts :
(i) The sale deed and the deed of agreement for reconveyance were executed on the same date (26.6.1973).
(ii) In the sale deed executed on 26.6.73, the price of the suit land was shown as Rs. 4,000/- and in the agreement for reconveyance, the price was also shown as Rs. 4,000/- though the time limit of reconveyance was upto five years from the date of execution of the deed on 26.6.1973.
(iii) The plaintiffs were in possession of the suit premises and exercised the act of possession as owner by realising rents from the tenants and by paying rates and taxes to the authorities.
(iv) The defendant did not take any step for mutation in their names till the filing of the suit.
(v) The price of the suit land was very low in comparison to the market price as there were 15 rooms on an area of 3 Cottahs and 6 Chittaks of land with other structures in very costly area of the town of Howrah.
(vi) Non-payment of rent by the defendant in respect of the three rooms amounting to Rs. 50/- (Rs. 20/- + Rs. 20/- + Rs. 10/-) per month, that is, Rs. 600/- per annum on account of interest as indicated in the written statement.
(vii) The defendant did not produce any evidence in support of his act of possession as an owner after the execution of the sale deed and no paper was produced in support of the contention that he raised a new construction after demolishing the old structure.
18. But the Appellate Court gave much stress on the question of giving delivery of possession to the defendant on the basis of the sale deed. The Appellate Court also took the view that the ingredients towards the constitution of loan were absent and it is not proved that the defendant was a money-lender having any money-lending business. The Appellate Court also took the view that giving of loan of Rs. 2,000/- and charging Rs. 2,000/- towards the interest having not been proved by the wife of the original loanee, the story of loan transaction was not proved, and finally he took the view that the principle adopted by this Court in Swarnalata Tat v. Chandi Charan Dey, reported in 1984 (1) CLJ 204, applies wholly to the facts and circumstances of the case. Accordingly, the First Appellate Court took the view that the provisions of Bengal Money-lenders Act were not attracted in the instant case. Accordingly he set aside the judgment of the Trial Court,
19. In course of hearing of this second appeal, the learned Counsel for the appellant contended that the finding of the First Appellate Court indicates complete non-application of mind either to the facts of the case or to the law on the point resulting into perversity and accordingly, sitting in second appeal the said judgment of the First Appellate Court is required to be set aside.
20. On the other hand, the learned Counsel for the present respondent placing reliance on the provisions of Section 58(c) of the Transfer of Property Act as amended contended that the transaction in question having been done on the basis of two separate documents, cannot be construed to be a mortgage. It is also argued that as no pre-existing date of Bindadin Tiwari has been proved, the taking of Rs. 4,000/- towards the sale proceeds in respect of the suit land cannot be construed to be a loan transaction. The learned Counsel accordingly placing reliance on the provisions of Section 37A of the Bengal Money-lenders Act contended that the suit is not at all maintainable. It is also argued placing reliance on the decision reported in 1980(2) CLJ 70: ILR (56)1 Cal 59, Manindra Nath Bose v. Narendra Krishna Mitra; 1984(1) CLJ 204, Swarnalata Tat v. Chandi Charan Dey and also the decisions reported in 2001(1) CLJ 129, Santosh Kr. Sardar v. Nilratan Sarkar; 2002(2) CLJ 534, Purnima Rani Das and Ors. v. Banamali Manna, contended that the evidence on record does not establish the transaction to be a 'loan in substance'. So it has been argued that the First Appellate Court rightly decided the factual aspect of the case and set aside the judgment of the Trial Court. Accordingly, this Court, sitting in second appeal, should not set aside the judgment of the First Appellate Court. On this score, the learned Counsel placed reliance on Navaneethammal v. Arjuna Chetty, reported in AIR 1996 SC 3521, Satya Gupta v. Brijesh Kumar, reported in : [1998]3SCR1183 , Tahera Khatoon v. Salambin Mahammad, reported in : [1999]1SCR901 , Labanya Neogi v. W. B. Engineering Co., reported in : AIR1999SC3331 and Jai Singh v. Shakuntala, reported in 2002(2) CHN (SC) Suppl. 124 and concluded that in exercise of the jurisdiction under Section 100 of the Code of Civil Procedure, the findings on facts by the final Court of fact cannot be set aside even if it is found that another view is possible. So, prayer was made for dismissal of the appeal.
21. The learned Counsel for the appellant also placing reliance on the Division Bench judgment of this Court dated February 1, 1954 in Manindra Nath Bose v. Narendra Krishna Mitra and Anr., (supra) argued at length as to what evidence was required to be led for establishing the transaction to be a 'loan in substance'. It is argued that the evidence adduced by the plaintiffs regarding possession and the value of the suit property indicated in both the documents are sufficient for determination of the nature of the transaction. It is also argued that the defendant in the written statement admitted that the rent in respect of the three rooms in occupation of the defendant was to be treated as interest for the loan of Rs. 4,000/-, indicates that the transaction was a loan transaction. Accordingly the defendant did not take any effective steps as regards acts of possession. It is also pointed out that the price as shown in the Sale Deed of 1973 was kept to be the price of the reconveyance to be executed after five years. This is another indication of the loan transaction. The First Appellate Court having not taken these factual aspects touching legal questions, erred in law in setting aside the judgment of the Trial Court.
22. As regards the scope of the second appeal, the learned Counsel for the appellant also placed reliance on several decisions of the Apex Court reported in : [1987]2SCR534 , Budhwani and Anr. v. Gulab Chand Prasad; : (2000)5SCC652 , State of Rajasthan v. Harphool Singh; : [2001]251ITR84(SC) , Santosh Hazari v. Purushottam Tiwari, : [2001]2SCR988 , Saraswathi and Anr. v. S. Ganapathy and Anr. and : [2001]3SCR925 , Deena Nath v. Pooran Lal.
23. It appears from the judgment of the Trial Court that all the relevant aspects for determination of the question as to whether the transaction was a 'loan in substance' were considered in accordance with law and came to a decision that the transaction was undoubtedly loan in substance. It is rightly pointed out by the learned Counsel for the appellant that the First Appellate Court neither considered the ingredients of the transaction as pointed out by the Trial Court nor any attempt was made to find out those ingredients from the materials on record. But simply relying on the evidence of the wife of Bindadin Tiwari, a decision was taken that the transaction was an out and out sale transaction with an agreement of reconveyance and not a loan in substance. The effect of execution of a sale deed along with another deed reserving to the vendor a right to repurchase the property sold on repaying the purchase money within a certain time was a subject-matter of dispute for a long period.
24. In Manindra Nath Bose (supra), a Division Bench of this Court as early as in 1954 analysed how a transaction is to be construed as a sale or a loan within the meaning of Section 2(12) of the Bengal Money-lenders Act. In the said judgment it was also discussed as to whether a transaction is a mortgage as per Transfer of Property Act or a loan in substance within the meaning of the Bengal Money-lenders Act depends on the evidence as regards possession and value of the suit property. Under Section 2(12) of the Bengal Money-lenders Act, a transaction, though not in form would be a loan within the meaning of the Act, if it is found in substance a loan.
25. In Chunchun Jha v. Ebadat Ali and Anr., reported in : [1955]1SCR174 , Their Lordships of the Supreme Court relying on the decision of Lord Chancellor in Alderson v. White, reported in 1858(44) ER 924, held that for removing the confusion caused by a multitude of conflicting decisions, the legislature stepped in and amended Section 58(c) of the Transfer of Property Act. So after the amendment of Section 58(c) of the Transfer of Property Act, it is settled that unless the sale and agreement to repurchase are embodied in the same document, the transaction cannot be construed to be a mortgage. So the law is settled on the point that if the sale and agreement to repurchase are in two separate deeds the transaction cannot be construed to be a mortgage as is rightly argued by the learned Counsel for the respondent.
26. But at the same time, it is to be noted that even though invalid as a mortgage the transaction may be construed to be a 'loan in substance' so as to be a 'loan' within the meaning of Section 2(12) of the Bengal Money-lenders Act, 1940. Such a situation was considered by Hon'ble P. N. Mukherjee, J in Banku Behari Chandra v. Kalyani Devi, reported in 70 CWN 139, His Lordship after analysing different case laws and also relying on His previous judgment in the Division Bench in Manindra Nath Bose (supra) reasserted that when two separate documents are executed the question of a mortgage under the law cannot arise. But so far as the Bengal Money-lenders Act is concerned, the decision in Manindra Nath Bose (supra) should be an authority for the proposition that even though invalid as a mortgage the transaction may still be a loan in substance, so as to be a loan within the meaning of Section 2(12) of the Bengal Money-lenders Act.
27. In Santosh Kumar Sardar (supra), the view taken in Manindra Nath Bose's case (supra) was taken into consideration, but keeping in view the evidence on record the Court was reluctant to set aside the concurrent finding of the Courts below. But it is to be noted that the First Appellate Court placed reliance in the Single Bench decision of this Court in Swarnalata Tat (supra) for coming to a conclusion that the transaction was neither a mortgage nor a loan in substance. In the said decision, the principles adopted in Chuchun Jha and Alderson v. White, were taken into consideration and it was also considered that notwithstanding the embargo imposed by Section 92 of the Indian Evidence Act, 1872, evidence could be adduced under Section 40(6) of the Bengal Moneylenders Act in respect of a transaction under that Act. It is also considered that a borrower in order to got the protection of Section 37A of the Bengal Moneylenders Act must first show that (a) there is a loan, (b) such loan has been secured by executing a mortgage and (c) the borrower ostensibly sells the property on any of the conditions enumerated under Section 58(c) of the Transfer of Property Act. It is specifically concluded that unless there is a debt in existence on the date of execution of the ostensible deed of sale, the deed is required to be construed as a deed of mortgage. It was also viewed that unless the relationship of creditor and debtor is established on the basis of a prior transaction, the mere inadequacy of consideration cannot be treated as a loan transaction in substance. So, factually the present case is distinguishable inasmuch as the transaction between the parties was based on two separate documents. In the above cited decision, the transaction was on the basis of a single deed followed by an oral agreement. Under the provisions of Section 40(6) of the Bengal Moneylenders Act, evidence could be given as regards the oral agreement as has been found by His Lordship in Purnima Rani Das's case (supra). So in spite of the amendment of Section 58(c) of the Transfer of Property Act, the legislature thought it fit to protect the interest of the borrowers and accordingly, Section 37A read with Section 40(6) of the Bengal Money-lenders Act were introduced.
So in case of any transaction coming within the definition of 'loan' under Section 2(12) of the Bengal Money-lenders Act requires special consideration in the eye of law. Even if a transaction is not construed to be a mortgage, it may be construed to be a loan in substance if the evidence in this regard is advanced. The circumstantial evidence are also very much important in this regard. It is already discussed hereinabove that the present transaction cannot be construed to be a mortgage, but the evidence on record as analysed by the Trial Court along with the circumstances are sufficient to indicate that no other conclusion is possible than to take the view that the transaction was a loan in substance. The First Appellate Court did not consider all these legal aspects. It simply relied on the evidence adduced by the plaintiff No. 1 without analysing that the transaction was actually done between the defendant and Bindadin Tiwari. After the death of Bindadin Tiwari, his widow came to prove the case thereby leaving certain confusions in the oral evidence. But the documentary evidence coupled with the circumstantial evidence analysed by the Trial Court are sufficient to show that the transaction was loan in substance and not an outright sale with option to repurchase. The finding of the First Appellate Court being not based on the evidence on record, deserves scrutiny under Section 100 of the Civil Procedure Code. Or in other words, placing reliance on the provision of Section 100 and the series of decisions of the Apex Court as regards the scope of the second appeal, I hold and conclude that it is a fit case in which the Second Appellate Court should interfere.
28. So after a careful scrutiny of the materials on record, I hold and conclude that the judgment of the First Appellate Court is liable to be set aside and the judgment and decree of the Trial Court are to be confirmed only with the modification that the plaintiffs have not been able to prove that full consideration of Rs. 4,000/- was not paid by the defendant. The evidence on record indicates that the plaintiffs duly received Rs. 4,000/- from the defendant and the defendant by not paying rent @ Rs. 50/- per month actually kept the said amount towards the interest per month. So for the purpose of accounting, the said amounts are to be taken into consideration. The points raised are accordingly decided.
29. The memo of appeal is sufficiently stamped. The appeal is allowed. The judgment and decree of the First Appellate Court are hereby set aside and the judgment and decree of the Trial Court are hereby affirmed with the modification that the amount of Rs. 4,000/- paid by the defendant to Bindadin Tiwari was not inclusive of Rs. 2,000/- as interest. The judgment and decree of the Trial Court stand modified to this extent. Considering the facts and circumstances of this case, the parties do bear their own cost of this appeal.
G.C. De, J.