AOHA At.t HYDER, J.--This appeal from the Judgment and preliminary decree, dated 11-5-1964, passed by the learned Additional District Judge, Dadu, arises in the following vircumstances :~--
2. The plaintiff respondent, who is an agriculturist, on the 25th of September 1952, entered into an agreement with the defendant-appellant for the sale of S. No. 284, measuring 5.3 3 acres, situated in deh Sial, Taluka Dadu, for a consideration of its. 1,503.00. The agreement was registered by the sub. Registrar, Dadu, in whose presence Rs. 875.00 were paid by the appellant to the respondent, It is not denied that Rs: 625.03 had been paid earlier, though the rival versions differ in respect of the mode of payment. In part performance of the contract, the possession of the land ryes delivereJ, to the appellant. Ix was stipulated in the agreement, that if the respondent paid back the entire amount of Rs. 1,500.00 on the expiry of 6 months from the date of its execution, the possession of the land would revert and the land would be reeonveyed to him. In case the option was not exercised, the transaction was to be treated as an out and out sale. The payment was not made by the respondent and the possession of the land has ever since remained with the appellant. In May 1962, the respondent filed a suit Inter alla on the allegation that he was indebted to the appellant In a sum of Rs. 625.00 and being unable to clear 1t, was coerced by the appellant to mortgage the land in question and deliver its possession on the understanding that the possession of the land would be restored to him on the payment of the mortgage amount or when the debt was satisfied from the yields of the crop. The agreement described the transaction, as a conditional sale. The defence set up by the appellant was that the transaction Intended by the parties was an absolute sale, but because of the restrictions imposed under the sind Rural Credit and Land Transfer Act, the device of a conditional sale was resorted to.
3. On the basis of the pleadings, by the parties, the learned Additional District Judge, settled the following issues :
(1) Whether the plaint is insufficiently stamped 7
(2) Whether D: A. R: Act is applicable to the facts of the present case?
(3) Whether the transaction in question !s a mortgage?
(4) Whether the defendant Is liable to render accounts to the plaintiff in respect of suit land?
(5) What should the decree be?
4. The respondent and the appellant apart from themselves, examined a number of witnesses.
5. The issues Nos. I and 2 were not pressed and the remaining issues were answered in the affirmative.
6. The question for consideration before us is whether the transaction was a mortgage by conditional sale, as found by the trial Court, or an agreement of sale, with the condition of re--purchase. Mortgage by conditional sale has been defined in section 58(c) of the Transfer of Property Act, 1882. It is a transaction where the mortgagor ostensibly sells the mortgaged property
(1) on condition that on default of payment of the mortgage money, the sale shall become absolute;
(2) on condition that on such payment being made, the sale shall become void; or
(3) on condition that on such payment being made, the buyer shall transfer the property to the seller.
7. By the Amending Act XX of 1929, a proviso was inserted 'in section 58(c) to the effect that no "such transaction shall be deemed to be a mortgage, unless the condition Is embodied in the document which affects or purports to affect the sale". Section 10-A of the Dekkhan Agriculturists'
Relief Act, 1879 empowers Courts to determine the nature of transactions entered into by an agriculturist, notwithstanding anything contained In section 92 of the Evidence Act or any other law for the time being in force.
Illustration (d) to the aforesaid section reads as under :-a- "An agriculturist sues to redeem property alleged to have been mortgaged by a deed in the form of a sale. The Court may admit evidence of the intention of the parties outside the deed, in order to determine whether the transaction was a mortgage or a sale, and if satisfied that the transaction was a mortgage, may enforce the deed as a mortgage-deed."
8. In the present state of law the condition of repurchases embodied in the agreement of sale, does not necessarily lead to the inference that it was a mortgage-deed. Prima facie it would be a mortgage by conditional sale, but it is open to the other side to show that it was intended to be an outright sale with the condition of re-purchase. This can be done by interpreting the terms of the deed itself, the surrounding circumstances and with the help of the tests which have been evolved to find out the real Intention of the parties.
9. It was argued by Mr. (3hulam Hussain Abbasi, learned counsel for the appellant, that the transaction was an agreement of outright sale with a condition of repurchase; the respondent could exercise the option within 6 months and having failed to do so, his rights were totally extinguished. In support of his contention, he cited the cases of Bhagwan Sahat v. Bhagwan Din (1), Sheoranr Singh and others v. Babu Singh and others (2), Munsht Bishan Lai v. Laid Ban wari Lai and others (3) and Haji Allahanda and another v. Sadarangmal and another (4).
10. In Bhagwan Sahat v. Bhagwan Din and others, two documents were executed on the same day one being an absolute conveyance and the other, in which the vendee stipulated as a matter of "favour, mercy, kindness and indulgence" to cancel the sale deed and reconvey the property to the vendor if the principal amount was paid back within 10 years. The representatives of the vendor filed a suit after about 49 years to redeem the mortgage. It was found by their Lordships of the Judicial Committee that it was a case of absolute conveyance and not of mortgage because there was nothing to show that the relation of debtor and creditor existed between the parties, and that the stipulation to repurchase was not made by 'the vendor, but at the instance of the vendee, and as a matter of grace. The decision was based on the meaning of the instrument upon a fair construction.
11. In the case of Sheoram Singh and others v. Babu Singh and others, there was no dispute about the nature. Of the transaction, as a mortgage. Ttie question under consideration was whether it was a mortgage by conditional sale or a mortgage in respect of which the mortgagee might sue for foreclosure or
(1) 12 All. 387 (2) AIR 1926 All. 493
(3) AIR 1939 All. 713(4) PLD 1967 Kar. 859 for sale, and whether Article 132 or Article 147 of the Limitation Act will be applicable in the circumstances of the case. This case, therefore, will be of no assistance.
12. In Munahi Bishan Lai v. Banwari Lai and others, the observation was that the insertion of the proviso, to section 58cc) by the Amending Act XX of 1929, would not be conclusive of the fact that if a transaction of sale with a condition of repurchase was embodied in one document it must necessarily be regarded as a mortgage by conditional sale and the case was decided on the construction of the deed itself and the surrounding circumstances. In Haji Allahande and another v.
Sadarangmal and another, the law on the subject came for a review. The sale deed and the agreement to repurchase, executed 10 days later in that case were found not to constitute a mortgage but a sale with a condition of repurchase by the application of the following tests which are only illustrative :-
(i) Whether the relationship of debtor and creditor existed between the parties before or at the time of the alleged sale;
(ii) Did the intention to create a mortgage precede the alleged sale;
(iii) Was the price paid by the purchaser fair market price;
(iv) Was the possession of the property transferred to the purchaser;
(v) Is there a covenant for the payment of interest by the purchaser;
(vi) Is the purchaser accountable to the seller for the income of the property;
(vii) Whether agreement of repurchase was made at the time of sale or some time thereafter; (the former evidencing the intention to create mortgage and the latter the intention of repurchase only);
(viii) Whether a short or long period of payment is stipulated (a short period evidencing the intention to sell and a long period indicating a mortgage).
13. We would, therefore, proceed to examine the nature of the transaction in the light of these tests.
14. The sale consideration for the land was Rs. 1,500.00 gut of which Rs. 875.00 was paid in the presence of the Sub--Registrar. As for Rs. 625.00 all that is to be found in the document is that it had been paid to the respondent earlier. The appellant has however stated at the trial that it had been paid a day before the execution of the agreement. That was not expressly mentioned in the agreement itself. It is rather surprising that it should not have been so explicitly mentioned. It is also not the appellant's case, that he had obtained even a receipt for the same. He also does not say, that it was paid in the presence of anybody else. The two witnesses, produced by him, one of whom is a nephew and the other a son-in-law, are completely reticent about it. A suggestion was made to the appellant in the cross-examination that the said money was never paid, but had been adjusted in the debts outstanding against the respondent, but the suggestion was denied. It is true that he bad received the possession of the land, but his title was far tom complete. The version of the respondent, that the money had been adjusted in settling the earlier claims seems to approximate with the truth.
15. Moreover from September 1952 till the institution of the suit by the respondent, the appellant took no steps to have the sale-deed registered. The appellant has stated that he and the respondent bad gone to Dadu in September 1952, for the registration of the sale-deed and learnt that it could not be done because of certain restrictions. That appears to be rather naive--Any way he never sent any letter or notice, calling upon the respondent to apply for the necessary sanction.
There is nothing to show that any application was made in that connection to the w--thorities. It was not a difficult thing to obtain the sanction Two documents about such sanctions relating to land situated to ?Lie vicinity of the land in question produced by P. Ws. Khair i~lohammad and Abdul Hai, dated 9-5-1950 and 23=6-1955 respec--tively, clearly show that sanction vas accorded by the Deputy t_ommissloner. There is no explanation of the complacency of the appellant in this behalf.
16. The land in question measuring 5.33 acres was allegedly sold for Rs. 1,500.00. The price will work out to a little more than Rs. 25(3.00 per acre. The respondent has stated that ft was just a mile and a half from Dadu. He has also stated that the reigning price In the area was Re. 1,200.00 per acre F W. Khair Mohammad had purchased 9.1 acres --f land :r about, bearing S. No. 324 for Rs. 4,000.00 on the 5th eptember 1950. That would make about Re. 440.00 per acre. p. W. Abdul Hai had purchased 2J acres, bearing S. No. 319 in the same Deh for Rs. 1,200.00 on 23-6-1955. The price comes about Rs. 550.00 per acre. The appellant has stated that it was undeveloped land and he had to incur considerable expenses in bringing it under the plough. In the same breath he, stated that the market price of the land in the area in those days was only Re. 40.00 per acre. In that case, it is rather strange that he should have gone for these lands for about 6 tines the price, and without a perfect title. Evidently the alleged sale consideration cannot be said to be adequate to indicate that a sale was made.
17. The document speaks for itself. It clearly describes the transaction as a conditional sale, which in view of the proviso to section 58(c) of the Transfer of Property Act and in the circumstances disclosed, expresses the true intention of the parties and makes it a mortgage.
18. It was an anomalous mortgage because the possession ~.j: the land was transferred to the appellant and there was no venant for the payment of interest, or for accountability of income. This shows that the usufruct was to be appropriated "bards the interest. There is no suggestion that the usufruct =~,ss unreasonable or exorbitant; therefore, section 71-A of the Dcccan Agriculturists Relief Act does not apply to the core.
We, therefore, think that the appellant is not liable to render accounts up to the date of this suit.
This is fair to the respondent--plaintiff also because he will get back the land at a nominal price as compared to the prices which prevail now and no law has been brought to our notice in terms of which the amount of usufruct can be reduced by us in the circum--stances of this case in order to limit it to 6J% interest for the period before the institution of the suit. From the date of the institution of the suit we reduce the amount of usufruct to bring it down to a rate that may not be more than 6J% in terms of sec--tion 34, C. P. C. The defendant-appellant must, therefore, render account of the usufruct fromthe data of this suit and order redemp--tion of the mortgage on payment of Ks.
1,500.00 by the respondent--plaintiff after deducting the cost of the suit and such excess amount of usufruct as may be found, on rendition of accounts, to have been received by the defendant- appellant from the date of the institution of this suit onwards. The defendant-appellant shall further be liable to pay to the plaintiff-respondent such amount as may b9 found due to him after the above-mentioned adjustment.
19. We accordingly modify the judgment and decree of the trial Court in the above terms grant a preliminary decree for redemption and rendition of accounts. The appeal is tbus partly accepted with no orders as to costs.