Section 92 of the Indian Evidence Act is a rule of evidence that does not prevent a court from determining the true nature of a transaction by considering surrounding circumstances, especially when written instruments are used to disguise the actual agreement.

Sir Lawrence Jenkins:-

These are consolidated appeals from two decrees of the Chief Court of Lower Burma, dated the 23rd of May, 1919, varying two decrees of that Court in its original jurisdiction, one dated the 28th of February, 1917, in suit No. 62 of 1916, and the other dated the 15th of March, 1917, in Suit No. 60 of 1916.

Both suits were brought by Baijnath Singh for the redemption of shares alleged to have been mortgaged by him.

Suit No. 60 of 1916 is against Hajee Vally Mahomed Hajee Abba. Suit No. 62 of 1916 was originally against Hajee Mahomed Jamal, but the plaint was amended by adding the defendant Abdul Kareem Abdul Shakoor Jamal. Later, during the pendency of the suit Hajee Vally Mahomed Hajee Abba was substi tuted as defendant in their place, and he is now the sole defendant in both suits.

The plaintiff's right to redeem is denied on the ground that the several transactions on which the plaintiff relies were not mortgages, but sales with a right of re purchase that has expired.

The Trial Judge upheld the plaintiff's contention in both suits. On appeal, the Chief Judge decided that the transactions were mortgages. Ormond, J., held that they were sales with contracts for re-pur chase, but that time was not of the essence of the contracts. In the result a decree was passed by the Appeal Court in each suit that on payment by the plaintiff of the sum found due the shares claimed should be transferred to the plaintiff.

Of the disputed transactions one (which will be called the Abba transaction) is too subject-matter of Suit No. 60 of 1916, the others (which will be called the Jamal transactions) are the subject-matter of suit No. 62 of 1916.

They have been conveniently tabulated in the judgment of the Chief Judge in the following form :-

No. of shares transferred To On Amount paid by transferee Series

Rs.

30,000 Abba 16th January, 1912 ..... 60,000 J series of exhibits

70,000 Jamal 15th November, 1912 ... 1,30,000 A do.

10,000 do. 10th December, 1912 .... 20,000 B do.

17,000 do. 31st January, 1913 .... 42,500 C do.

30,000 do. 18th March, 1913 ..... 75,000 D do.

8,520 do. 6th January, 1914 ...... 21,000 E do.

The first transaction, it will be seen, was in January, 1912.

At that time, Baijnath owned 1,81,020 fully paid shares of Rs. 10 each in the Nath Singh Oil Company, Ltd. The cer tificates of these shares had been lodged with the Bank of Bengal as security for a cash credit account, and in November, 1911 the shares had been transferred, still by way of security, into the names of two nominees of the Bank. In January, 1912, the sum due from Baijnath to the Bank was two lacs and ten thousand rupees, and the Bank was pressing for reduction of this debt.

The case alleged in the plaint is that Baijnath approached Abba for a loan and Abba offered to lend and advance to Baij nath for payment to the Bank a sum of Rs. 60,000 on the security of 30,000 of the Oil Company's shares, with interest at the rate of 75 per cent. per annum up to 17th May, 1912. It is further alleged that Baijnath agreed to these terms; that Abba at Baijnath's request paid a sum of Rs. 60,000 to the Bank of Bengal in part payment of Baijnath's indebtedness to the Bank; and that as security for the loan the Bank on the 17th January, 1912, handed over the certificates for the shares to Abba and executed a transfer of them in his favour. In the 5th paragraph of the plaint it is said that prior to the transfer Abba represented to Baijnath that being a Mohammedan it was contrary to the pre cepts of his religion to lend money at in terest, and that as he was anxious it should not be known that he was charg ing interest at the rate of 75 per cent. per annum, Baijnath and Abba should execute, bought and sold notes by which it would be made to appear that Abba had sold and Baijnath had bought 30,000 fully paid-up shares for Rs. 75,000, delivery on or be fore the 17th of May, 1912. Though Abba does not admit the correctness of this ver sion, it is not disputed that there was an a