A document which purports to be a sale deed with a condition to repurchase may be construed as a mortgage by conditional sale if the conditions specified in Section 58 (c) of the Transfer of Property Act are fulfilled.

A. V. KRISHNA RAO, J.

( 1 ) THIS is a plaintiffs appeal against the judgment and decree in O. S. No. 95 of 1968 on the file of the Court of the Subordinate Judge , Anantapur. The plaintiff filed the suit in forma pauperis for redemption alleging that Ex. B-1 dt. 25-6-1960 is a mortgage by conditional sale executed by the plaintiff in favour of the defendant. On a consideration of the evidence the Court below construed Ex. B-1 as an outright sale with a condition to repurchase. It was held that Ex. B-1 was not a mortgage by conditional sale. So the question in this appeal is whether Ex. B-1 is a mortgage by conditional sale or is a sale deed with a conditional reconveyance.

( 2 ) THE question whether a given document is a mortgage by conditional sale or not has ever been a vexed question. After the amendment of Transfer of Property Act in 1929, in order to constitute a mortgage by conditional sale , under Sec. 58 (c) of the Act unless the conditions provided by that section are embodied in the document, no transaction evidenced by a document shall be deemed to be a mortgage by conditional sale. Having regard to the definition of a mortgage in Section 58 (a) of the Transfer of Property Act, there must be a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan, an existing or future debt. It is , therefore , manifest that on the date of the transaction the existence of a relationship of a debtor and creditor is of the essence , as otherwise it cannot be called a mortgage at all. In constructing a document whether it is a mortgage by conditional sale or a sale with a condition to repurchase, there are pronouncements of the Supreme Court which indicate certain tests which are by no mens exhaustive. In Chunchun Jha v. Ebadat Ali, AIR 1954 SC 345 , Bose J. , considered the question whether the document in that case was a mortgage by conditional sale. The learned Judge observed that it would be a fruitless talk to try to collate and analyse the various decisions bearing on the subject because no two documents are expressed in identical terms. Each case must be decided on its own facts. But nevertheless certain broad principles are there. The first of them is that the intention of the parties at the time of the execution of the document is to be the determining factor. The intention can only be gathered in the first place only from the recitals of the document are clear, effect has to be given to those words and extraneous enquiry should be ruled out. Where the words in the document are clear the legal effect of the document has to be decided on the words used in the document. IF the language employed in the document is ambiguous, then it would be permissible to look into the surrounding circumstances to determine what was intended. It was also pointed out that if an instrument clearly purported to be a mortgage, it should not be turned into a sale by reference to a host of extraneous and irrelevant considerations. Section 58 (c) of the Transfer of Property Act as amended meant a clear cut Classification and excluded transactions embodied in more than one document from the category of mortgages by conditional sale. It was stated by the learned Judge that persons who after the amendment choose not to use two documents , it may be presumed that the parties did not intend the transaction to be a sale. There is thus a presumption that where there is only one document it is a mortgage by conditional sale and that the presumption had to be displaced by clear and express words. If the conditions of Section 58 (c) are fulfilled, then the deed should be construed as a mortgage. It was observed (at page 348 of the report) as follows : "now , as we have already said once a transaction is embodied in one document and not two and once its terms are covered by Section 58 (c) , then it must be taken to be a mortgage by conditional sale unless there are express words to indicate

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