Chunchun Jha vs Ebadat Ali - 1954 Supreme(SC) 68

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1954 Supreme(SC) 68

SUPREME COURT OF INDIA
14th April 1954.
B.K. MUKHERJEA, BOSE, GHULAM HASAN AND VENKATARAMA AYYAR, JJ.
Chunchun Jha, Appellant
Versus
Ebadat Ali and another, Respondents.
Civil Appeal No. 98 of 1953.
Advocates appeared
Mr. N. C. Chattarjee, Senior Advocate, (Messrs. A. N. Sinha and S. P. Verma, Advocates, with him), for Appellant; Messrs. Murtaza Fazi Ali and Rajinder Narain, Advocates, for Respondent No. 1.

Advocates:
A.N.SINHA, Murtaza Fazal Ali, N.C.CHATTERJI, RAJENDER NARAIN, S.P.Varma

Headnote:Transfer of Property Act (1882) Ss. 58(c), 8-Mortgage by conditional sale or sale with a condition of repurchase-Construction of a deed.
       Held: "The question whether a given transaction is a mortgage by conditional sale or a sale outright with a cognition of repurchase is a vexed one which invariably gives rise to trouble and litigation. Each case must be decided on its own facts. But certain broad principles remain. The first is that the intention of the parties is the determining factor ... and here as in every other case, where a document has to be construed, the intention must be gathered, in the first place, from the document itself. If the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used. If, however, there is ambiguiry in the language employed, then it is permissible to took to the surrounding circumstances to determine what was intended. As Lord Granworth said in Alderson v. White, (1858) 44 E.R. 924 at p. 928- "The rule of law on this subject is one dictated by commonsense: that prima facie an absolute conveyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase .... In every such case the question is, what, upon a fair construction, is the meaning of the instruments
       "The converse also holds good and if, on the face of it, an instrument clearly purports to be a mortgage it cannot be turned into a sale by reference to a host of extraneous and irrelevant considerations. Difficulty only arises in the border line cases where there is ambiguity....
       "Because of the welter of confusion caused by a multitude of confecting decisions the legislature stepped in and amended section 59(c) of the Transfer of Property Act. Unfortunately that brought in its train a further conflict of authority. But this much is now clear. If the sale and agreement to repurchase are embodied in separate documents then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. But the converse does not hold good, that is to say the mere fact that there is any one document does not necessasily mean that it must be a mortgage and cannot be a sale. If the condition of repurchase is embodied in the document that effects or purports to effect the sale, then it is a matter for construction which was meant.
       "The legislature has made a clear cut classification and excluded transactions embodied in more than one document from the category of mortgages, therefore it is reasonable to suppose that persons who after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words; and if the conditions of S. 58(c) are fulfilled, then we are of opinion that the deed should be construed as a mortgage (per Bose J.).
       (2) In the present case, taking all the facts into consideration and on construction of the document, the deed was a mortgage by conditional sale under S. 58(c) of the Act. - Deed-Construction-Transfer of Property Act (1882), S. 8.
       Held: In construing a document, the first determining factor is the intention of the parties. This 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 took to the surrounding circumstances to determine what was intended. -

Judgment

BOSE, J.: This is a plaintiffs appeal in suit for redemption of what the plaintiff calls a mortgage dated 15-4-1930. The only question for determination is whether this is a mortgage by conditional sale or a sale out and out with a condition of repurchase If the former the plaintiff succeeds. If the latter he is out of Court.

2. The property covered by the disputed deed belonged to one Bijal Tanti who died leaving a widow Mst. Phaguni and two sons Siban Tanti and Chandar Tanti. On 25-5-1922 Siban Tanti alone executed a simple mortgage in favour of the second defendant for Rs. 25. Then on 6-5-1927 Siban Tanti, Chander Tanti and Mst. Phaguni mortgagee the same property to the first defendant for Rs. 250. This was also a simple mortgage. After this came the transaction in suit dated 15-4-1930. The same three persons executed the disputed deed. This was in favour of the first defendant. The consideration mentioned in the deed is Rs. 634-10-0 due on the second mortgage and Rs. 65-6-0 taken in cash to enable the executants to meet the expenses of certain commutation proceedings under Section 41 of the Bihar Tenancy Act in respect of this very land.

3. The second defendant sued on his mortgage of 1922 but did not join the subsequent mortgagee the first defendant. He obtained a decree against the mortgagors alone and executed it in 1940. He himself purchased the property in dispute and took possession on 20-3-1943. Shortly after, on 19-8-1943, he sold this land to the plaintiff for Rs. 400.

4. The plaintiff s title is derived from the second defendant who stepped into the shoes of the mortgagors because of his suit against the mortgagors in 1940. The plaintiff s case is that the transaction of 15-4-1930 is a mortgage and, as the subsequent mortgagee was not joined as a party to the earlier suit, the plaintiff is entitled to redeem. The first defendant s case is that the transaction of 15-4-1930 was not a mortgage but an out and out sale with a covenant for repurchase which became infractuous because no attempt was made to act on the covenant within the time specified. The learned trail Judge and the lower appellate Court both held that the document was mortgage and so decreed the plaintiff s claim. The High Court on second appeal reversed these findings and held it was a sale. Consequently the learned Judges dismissed the plaintiffs suit. The plaintiff appeals here.

5. The question whether a given transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase is a vased one which invariably gives rise to trouble and litigation. There are numerous decisions on the point and much industry has been expended in some of the High Courts in collating and analyzing them. We think that is a fruitless task because two documents are seldom expressed in identical terms and when it is necessary to consider the attendant circumstances the imponderable variables which that brings in its train make it impossible to compare one case with another. Each must be decided on its own facts. But certain broad principles remain.

6. The first is that the intention of the parties is the determining factor: see "Balkishen Das. V. Y Lagge", 22 Ind. App. 58 (P.C.) (A). But there is nothing special about that in this class of cases and here, as in every other cases 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 thougt or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used. If however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended.

As Lord Cranworth said in - "Alderson v. White , (18587) 44 E. R. 924 at p. 928 (B)----

"The rule of law on this subject is one dictate

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1954 Supreme(SC) 68

Cases Referred (1)