Ch. Sultan Mahmood, J. Briefly, the petitioner filed a suit on 08.02.2016 and sought declaration to the effect that he be declared owner of the suit property on the basis of the mutation of bai bil wafa alleged by conditional sale or in the alternate specific performance of agreement dated 23.07.2014 be granted and the respondent be asked to return Rs.30,00,000/- with profit to the petitioner. In pursuance of agreement, mutation of mortgage No.954 was affected on 04.07.2014 for repayment of outstanding debt till 01.09.2015. The respondent issued two cheques each worth Rs.15,00,000/- but the said cheques were not cashed on the stipulated dates i.e. 07.04.2015 & 01.09.2015. Thus, the petitioner was entitled for foreclosure under declaration or its alternate. The respondent filed written statement and denied the existence of mutation and denied his liability of payment. Further averted that mutation and agreement inter se parties is result of fraud. Out of divergent pleadings of parties, issues were framed and parties led their respective evidence.
Learned trial Court decreed the suit after recording the evidence and passed judgment and decree dated 05.01.2021 to the effect that the petitioner is entitled to recover Rs.30,00,000/- along with profit 5% on yearly basis on the principal amount from the date i.e. 28.02.2015 till the payment is made. Subject to return of amount in favour of petitioner or deposit of the same as entrustment mutation of mortgage shall stand cancelled. Being aggrieved of the said judgment and decree by the learned trial Court, both petitioner and respondent preferred their separate appeals. Learned Appellate Court, being seized with the matter through consolidated judgment & decrees dated 29.09.2021 while accepting the appeal of petitioner held that as mortgage is with the respondent and he is not entitled for any interest, hence, modified the judgment and decree of the learned Trial Court to the extent of 5% interest and maintained decree to the extent of return of money and cancellation of mortgage in case of payment and return of disputed cheques to the respondent.
Whereas, appeal of the respondent was dismissed.
2. Being aggrieved by the judgment and decree dated 29.09.2021 passed by the learned Appellate Court, the petitioner preferred this petition on the ground that he was entitled for declaration on its alternate that as liability is admitted and mortgage inter se the parties was not cancelled.
3. Learned defense counsel has denied the arguments so raised and has contended that the petitioner has failed to make out his case and so, he is not entitled for decree as prayed for and learned Appellate Court has dealt the matter in accordance with law and the respondent is ready to fulfill his obligations.
4. Heard. Record perused.
5. The section 58 of the Transfer of Property Act, 1882 recognizes sale by conditional mortgage which runs as under: - "Mortgage by conditional sale. (c) Where the mortgagor ostensibly sells the mortgaged property-- On condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or On condition that on such payment being made the sale shall become void, or On condition that on such payment being made by 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."
The petitioner/plaintiff is claiming that instrument in question is a sale document after the cutoff date, whereas the Courts below have read the same as mortgage document. To prove a case of sale by mortgage, it is imperative that plaintiff should prove his case on the test popularly known as Butler's Test[1]. The definition of a mortgage by conditional sale itself contemplates an ostensible sale of the property. As pointed out by the Judicial Committee of the Privy Council in Narasingerji Gyanagerji v. P. Parthasaradhi[2], the circumstance that the transaction as phrased in the document is ostensibly a sale with a right of repurchase in the vendor, the appearance being laboriously maintained by the words of conveyance needlessly iterating the description of an absolute interest or the right of repurchase bearing the appearance of a right in relation to the exercise of which time was of the essence is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect.
If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts. Oral evidence of intention is not admissible in interpreting the covenants of the deed but evidence to explain or even to contradict the recitals as distinguished from the terms of the documents may of course be given. Evidence of contemporaneous conduct is always admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible. The test has been approved by the Supreme Court of Pakistan[3] and thus, it would be advantageous to reproduce the same and evaluate the document under question on its basis: -
(1) The existence of a debt;
(2) The period of repayment, a short period being indicative of a sale and a long period of mortgage;
(3) Continuance of the grantor in possession indicates a mortgage;
(4) A stipulation for payment of interest indicates a mortgage;
(5) A price below the true value is indicative of mortgage;
(6) A contemporaneous deed stipulating for re-conveyance in the case of a mortgage, but one executed after a lapse of time points to a sale;
(7) Purchase of stamps and payment of registration costs if done by the transferor, is indicative of a sale.
To me Butler's test a good criterion for ascertaining whether the parties intended the transaction to be a mortgage or a sale.
6. While analyzing the facts of the case, it comes to fore that the petitioner/plaintiff has mentioned existence of debt; the period of sale is about 14 months which is short; however the possession is not with the guarantor but with the mortgagee; there is a stipulation of repayment with interest; there is no pleading or evidence led by the plaintiff that he bought the property on the market price and he is not merchant of Venice; there is no contemporaneous deed for reconveyance; pleadings are silent with respect to the purchase of stamp papers but (PW-1) Syed Husnain Ali Shah states in his evidence that defendant got issued the stamps and after executing the same handed those over to him. Thus, transaction has not been proved to the test approved by the Supreme Court and plaintiff fulfills only two requirements. Thus, considering the remaining prongs of the test other than the two-favouring plaintiff, the balance tilts in favour of the defendant/respondent. The sale and mortgage by conditional sale are two different types of transactions; however, the requirement to prove the additional limbs in the case of later needs to be proved by pleading coupled with evidence by the party asserting such right.
7. Both the evidence and pleadings of the petitioner are deficient in this regard. He could not prove his case to the test laid down on the subject. Mere holding the mutation and an agreement does not entitle him for sale. It is the section 60 of the Transfer of property Act which embodies right of redemption of mortgager and no clog could be placed on such a statutory right. In this regard, reliance is placed upon case titled "Muhammad Akhtar v. Mst. Siani" (2011 CLC 1218) and its paragraph No.15 is reproduced as under: - "The provisions of section 60 of Transfer of Property Act is a statutory right through which the mortgagor has a right to redeem her property where the transaction is of mortgage irrespective therefore of a stipulated condition in the mortgage deed to the effect that if the mortgage is not redeemed within a specified period the land will become the absolute property of mortgagee.
Section 60 of Transfer of Property Act affirms the right of redemption in all mortgages and no clog can be put against the statutory rights. The right of redemption is available under section 60 of Transfer of Property Act cannot be controlled by an agreement between the mortgagee and mortgager. In Vernon V. Bethell (1762-1-Eden-113), Lord Henly opined as under: -- "A condition converting a mortgage into a sale is invalid as a clog on the equity of redemption.
This Court, as a Court of conscience, is very jealous of persons taking securities for a loan and converting such securities into purchase. And therefore I take it to be an established rule, that a mortgagee can never provide at the time of making the loan for any event or condition on which the equity of redemption shall be discharged and the conveyance made absolute. And there is great reason and justice in this rule, for necessitous men are not, truly speaking, free men, but to answer a present exigency, will submit to any terms that the crafty may impose upon them."
Even otherwise, suit for declaration was not maintainable. In this regard, reliance is placed on case "Muhammad Akhtar" (supra). Through the instant suit, the petitioner has sought declaration to vest right standing out of contract but this right runs contrary to section 60 of the Transfer of Property Act, 1882 and even otherwise, the petitioner has failed to fulfill all the requirements. The suit was not maintainable in its present form, however, both the Courts below while deciding the issue have rightly held that the petitioner is entitled for return of mortgage money Rs.30,00,000/- for which the petitioner is fully entitled and the respondent shall be fully entitled to redemption of property on payment of mortgage sum Rs.30,00,000/-[4].
8. The Mortgage Deed Exh. P2 clearly mentions subject matter property as agricultural land. The Section 10 of the Punjab Land Alienation Act, 1900 reads as under:
10. Future mortgage by way of conditional sale not permitted.- In any mortgage of land made after the commencement of this Act any condition which is intended to operate by way of conditional sale shall be null and void.
In Allah Din v. Fateh Din[5], Punjab Chief Court gave effect to section 10 of Punjab Alienation of Land Act, though the point was not taken in the lower Courts. Mr. Justice Shadi Lal of the Punjab Chief Court commenting on the applicability of section 10 of the above Act observed: - "The learned counsel on both sides wanted to argue the same points before me, but I drew their attention to section 10 of the Punjab Alienation of Land Act, which provides that in any mortgage of land made after the commencement of the Act any condition which is intended to operate by way of conditional sale shall be null and void. It is clear that the Act came into force on the 8th June, 1901 before the date of the mortgage in question, and that the circumstances that the mortgagor was not a member of an agricultural tribe does not make any difference so far as the operation of the section is concerned. The language of the enactment is wide enough to include every mortgage which contains a stipulation as to conditional sale, and it is absolutely immaterial whether the mortgagor is or is not a member of an agricultural tribe. It is true that this point was not raised either in the Courts below or by the learned counsel in this Court, but it is patent upon the record and I am bound to give effect to the law which I find, is clearly applicable to the case."
Somewhat similar views were expressed in Debi Sahai v. Ramji Lal No. 56 Punjab Record 1918 and Chhaju Ram v. Muzaffar Ahmad (AIR 1936 Lahore 845) by a Division Bench of this Court. However, it does not invalidate mortgage of the land altogether but deems mortgage to be void qua the condition of conditional sale[6]. It is trite law that prescription does not operate against law, the Punjab Land Alienation Act 1900 is part of the statute book and rights contained therein are enforceable.
9. Learned counsel appearing on behalf of petitioner argued that in alternate to relief of foreclosure, petitioner be granted interest as provided under Order 34 Rule 11 C.P.C. (v of 1908). The petitioner was enjoying usufruct of the property he cannot seek interest. The learned Appellate Court has rightly and judiciously appreciated both the facts and the applicable law.
10. Learned counsel for the petitioner has failed to satisfy this Court as to how the impugned judgment and decree of the learned Appellate Court suffers from misreading and non-reading of evidence as well as material illegalities and irregularities have been committed by the learned Court below rather it has gleaned out that the oral as well as documentary evidence adduced on record by the parties have rightly been appreciated and adjudicated upon.
11. For the foregoing reasons, there appears no illegality or irregularity in the impugned judgment and decree passed by the learned Appellate Court warranting interference by this Court in exercise of revisional jurisdiction under section 115 of Code of Civil Procedure, 1908 rather after evaluating evidence on record in a minute manner, the learned Appellate Court has exercised vested jurisdiction judiciously.
Apart from the above, in case of inconsistency between the findings of learned Trial Court and the learned Appellate Court, the findings of the latter must be given preference[7] in the absence of any cogent reason to the contrary.
12. In view of above, the relief sought by the petitioner was rightly refused by the learned Courts below. Hence, this revision is meritless and the same is hereby dismissed.
1. See Balkishen Das V, W. P. Legge 27 I A 58 ; Mating Kyin Ma Shwe La I L R 45 Cal. 320 ; Abdul Ilafiz Choudhnry and /another v, So mar Ali and Samir Ali 4 D L R 126 and Ganu Mia v, Abdul Jabbar and others 10 D L P. 636
2. 51 Ind. App. 305 [AIR 1924 PC 226]
3. 1968 SCMR 302 Ansar Ali and others Vs. Muhammad Ismail MiaJi represented by Mahabat Ali and others
4. 2006 YLR 965 Moula Buksh Vs Afzal Hussain and others.
5. 31 Punjab Record 1918
6. Tariq Hussain Shah Vs. The State (1993 MLD 1025)
7. 2015 SCMR 1 Amjad Ikram v. Mst. Asiya Kausar and 2 others, PLD 1969 SC 617 Madan Gopal and 4 others v. Maran Bepari and 3 others and 2013 SCMR 1300 Muhammad Nawaz through L.Rs. v. Haji Muhammad Baran Khan through L.Rs and others.