Judgement

Appeal (No. 47 of 1922) from a decree of the High Court (February 24, 1921) modifying a decree of the Subordinate Judge of Nellore.

The suit was brought by the respondents and related to certain villages in the zamindari of Kalahasti which were dealt with by two deeds executed by the Raja of Kalahasti upon August 4, 1908. The first deed (exhibit X) recited that in order to prevent a sale of the property under a decree the Raja (who was described as " the vendor") had " agreed to convey by private sale the said villages for Rs. 6,00,000, and conveyed them to the appellant subject to conditions and reservations of which those material to the present judgment are therein set out. The second deed (exhibit U) was described as an agreement for a reconveyance of the villages to the Raja (referred to as "the purchaser") and provided " The vendor agrees to sell and the purchaser to purchase the villages in the conveyance for Rs. 6,00,000, the said sum to be paid by the purchaser to the vendor on August 31, 1913, or August 31, 1914, and not earlier." The deed contained other material provisions which are stated in the judgment of the Judicial Committee.

In 1914 the villages were brought to sale under a decree against the mortgagor, the Raja, and in February, 1915, they were knocked down to the respondents, to whom a sale certificate was issued. Meanwhile, namely, on August 31, 1914, the Raja (as was found by both Courts in India) tendered to the appellant the Rs. 6,00,000.

In August, 1915, the respondents brought the present suit against the appellant, joining the Raja as a defendant. By their plaint they contended that the transaction was a mortgage by conditional sale and that they were entitled to redeem ; alternatively, that if the transaction was a sale they as assignees had a right to a reconveyance upon payment.

The present appellant by his written statement denied that the transaction was a mortgage, and denied that any tender had been made; he also contended that the rights of the Raja were not capable of assignment and that the plaintiffs were not entitled to sue.

The Subordinate Judge found that the property was of the value of 15 or 16 lakhs. Having regard mainly to that fact, and to the circumstance that no bargaining as to the amount had taken place, he held that the transaction amounted to a mortgage. He accordingly made a decree for redemption; and subsequently, the money having been paid into Court by the plaintiffs, he made a final decree under Order xxiv., r. 8.

Upon appeal to the High Court the learned judges (Wallis C.J. and Oldfield J.) modified the decree by ordering a reconveyance with payment by the first defendant of mesne profits from July 1, 1914, until possession was given, and that the plaintiffs should pay to the first defendant interest upon Rs. 6,00,000 at (5 per cent, per annum from September 1, 1914, until March 5, 1919, the date of the deposit of the money in Court. The learned judges were of opinion that having regard to the provisions of the deed the transaction was a sale with a collateral agreement for repurchase, though they agreed with the findings of fact of the trial judge. They rejected a contention that the plaintiffs had purchased merely a right to sue which by s. 6 of the Transfer of Property Act was incapable of transfer.

The learned Chief Justice in the course of his judgment, after expressing his agreement with the findings of fact on which the trial judge held that the transaction was a mortgage, said If we were at liberty to apply the decisions of Courts of equity in England I think that these findings would support the inference that the conveyance exhibit X was originally intended as a security for money and must be treated as a mortgage.....But it has been held by the Privy Council, as regards transactions which no doubt arose before the Transfer of Property Act, that these equitable decisions are inapplicable in India Balkishen Das v. Legge (( 1899) L. R. 27 I. A 58.), w