A transaction that is an outright sale on its face cannot be declared to be a loan in substance, even if it was intended as security for a loan, due to the bar imposed by the proviso to Section 58(c) of the Transfer of Property Act, 1882.

( 1 ) THIS is an appeal from an appellate decree at the instance of the defendant in a suit under Sections 36, 37a and 38 of the Bengal Money Lenders Act, 1940 (hereinafter referred to as the said Act ). The appeal is directed against the decree dated August 4, 1972, passed by the learned Additional District Judge, 3rd Court. Howrah in Title Appeal No. 36 of 1972.

( 2 ) THE plaintiff/respondent instituted Title Suit No. 153 of 1970 renumbered as Title Suit No. 74 of 1971 in the 3rd Court, of the learned Munsiff, Howrah seeking relief under Sections 36, 37a and 38 of the said Act upon a declaration that a sale executed by her in favour of the defendant on July 29, 1968, in respect of premises No. 17/2, Khetra Mitra Lane. Howrah followed by an agreement for repurchase really constitutes a mortgage in respect of which the plaintiff is entitled to the reliefs under the said Act as prayed for. The plaintiff's case shortly was that she was the owner of the said premises by purchase. She was in need of money to help her Dharmaputra Netai Charan Patra to carry on his business in fish. She approached the defendant for a loan of Rs. 7,000/- through the defendant's husband who agreed to advance the loan provided the plaintiff executed a sale deed in respect of the suit property by way of security. In view of her extreme need the plaintiff had to agree and on June 29, 1968, three documents were executed between the parties. The first one was a conveyance in favour of the defendant. The second one was an agreement by the defendant for reconveyance and the third one was a lease of the suit property by the defendant in favour of Netai on a monthly rental of Rs. 175/- which really represents the interest on the money advanced by way of loan. According to the plaintiff, the whole transaction constitutes mortgage and she having paid a total sum of Rupees 1,400/- towards interest approached the defendant to allow her to repay the loan in easy instalments as she was not in a position to pay the entire sum at a time. The defendant having refused, the plaintiff filed the above suit for the aforesaid reliefs.

( 3 ) THE suit was contested by the defendant. The defendant admitted that the plaintiff was in need of money for the business of her Dharmaputra. But he denied that the agreement between the parties was really one for advancing a loan on a security furnished in the manner alleged by the plaintiff. The defendant claimed that it was an out and out sale. The defendant no doubt executed an agreement to reconvey the property to the plaintiff on certain terms which the plaintiff never fulfilled.

( 4 ) ON the pleadings as aforesaid and on the evidence adduced by the parties, the learned Munsif found that even upon the plaintiff's own case and evidence the loan incurred being one to meet the need of her Dharmaputra in carrying on his business in fish was a commercial loan not coming within the purview of the said Act. In holding as such, the learned Munsif overruled a contention put forward on behalf of the plaintiff to the effect that when the plaintiff had not incurred the loan for her own business it cannot be said that the loan was used by the plaintiff for the purpose of any business relating to trade, commerce, industry etc. , as proprietor or principal or agent or guarantor. He overruled the said contention by holding that in view of the relationship between the plaintiff and her Dharmaputra Netai either the plaintiff was the actual borrower and Netai was her surety or Netai was the actual borrower and the plaintiff was his surety and in either case according to the learned Munsiff it would come within the definition of commercial loan as in the Act The learned Munsif further found that, in view of the provision of the proviso to Section 58 (c) of the T. P. Act, the transaction cannot be held to be a mortgage. The learned Munsif accordingly concluded :"so the relief for declaration that the transaction was a mortgage or a mo