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2004 Supreme(Cal) 61
High Court Of Calcutta
Gorachand De
SANTI DEVI - Appellant
Versus
MD.JALIL ANSWARI - Respondent
S. A. 252 Of 1991
Decided On : 01/30/2004
ASISH CHANDRA BAKSHI, BULU CHATTERJI, DEBJANI CHATTERJEE, INDRANI CHATTERJEE, Purnashis Gupta
A transaction, though not in form, would be a loan within the meaning of the Bengal Money-Lenders Act, 1940, if it is found in substance a loan.
Headnote:
LOAN IN SUBSTANCE - MORTGAGE BY CONDITIONAL SALE - BENGAL MONEY-LENDERS ACT - TRANSACTION OF SALE DEED AND AGREEMENT FOR RECONVEYANCE ON SAME DATE, LOW PRICE, POSSESSION OF PLAINTIFFS, NO MUTATION BY DEFENDANT, NON-PAYMENT OF RENT BY DEFENDANT, LACK OF EVIDENCE OF ACTS OF POSSESSION BY DEFENDANT - INDICATE LOAN IN SUBSTANCE.
Fact of the Case:
Bindadin Tiwari, the owner of the suit property, executed a sale deed in favor of the defendant for Rs. 4,000/- and an agreement for reconveyance for the same price within five years. After Bindadin's death, his legal heirs (plaintiffs) filed a suit alleging that the transaction was a loan in substance or mortgage by conditional sale and sought declaration, ascertainment of the amount due, accounts, and easy installment for payment of the amount found due under the Bengal Money-Lenders Act.
Finding of the Court:
The Trial Court held that the transaction was a loan in substance considering factors like the execution of sale deed and agreement for reconveyance on the same date, low price of the property, possession of the plaintiffs, non-payment of rent by the defendant, and lack of evidence of acts of possession by the defendant. However, the First Appellate Court reversed the Trial Court's decision, holding that the transaction was an out and out sale with an agreement of reconveyance and not a loan in substance.
Issues: 1. Whether the transaction was a loan in substance or an out and out sale with an agreement of reconveyance. 2. Whether the provisions of the Bengal Money-Lenders Act were applicable to the transaction.
Ratio Decidendi: 1. The Court held that the transaction was a loan in substance, relying on the following factors: - Execution of sale deed and agreement for reconveyance on the same date. - Low price of the property compared to the market value. - Possession of the plaintiffs, who continued to receive rent from other tenants and pay taxes. - Non-payment of rent by the defendant for the three rooms he occupied. - Lack of evidence of acts of possession by the defendant after the execution of the sale deed. 2. The Court held that the provisions of the Bengal Money-Lenders Act were applicable to the transaction, as the transaction was found to be a loan in substance, even though it was not in the form of a mortgage.
Final Decision: The Court allowed the appeal, set aside the judgment of the First Appellate Court, and restored the judgment of the Trial Court with the modification that the amount of Rs. 4,000/- paid by the defendant to Bindadin Tiwari was not inclusive of Rs. 2,000/- as interest.
( 1 ) THIS second appeal is directed against the judgment and order dated 7th july, 1989 passed by the learned Additional District Judge, 2nd Court, Howrah in Title Appeal No. 93 of 1986 by which the judgment and order dated 31st march, 1986 passed in Title Suit No. 162 of 1980 of the 1st Additional Court of Munsif, Howrah was reversed.
( 2 ) THE plaintiffs are the legal heirs of one Bindadin Tiwari. The plaintiffs' case in brief is that the said Bindadin Tiwari was a thika tenant in respect of the suit land measuring about 3 Kottas and 6 Chittaks on which he had fifteen rooms, including the shop room with brick walls and R. T. roofs and other fitting and fixtures fully detailed and described in the schedule to the plaint. Bindadin died on 11. 5. 75 leaving behind his widow (plaintiff No. 1) and three minor sons (plaintiff Nos. 2 to 4) who were in khas possession of two rooms and let out the other rooms after mutating their names. It is alleged that the defendant Md. Jalil Answari was a tenant in respect of three such rooms and used to pay rent separately for each room at the rate of Rs. 20/-, Rs. 20/- and Rs. 10/- according to English calendar month and such rent was paid upto May, 1973. In the month of June, 1973, the said Bindadin Tiwari with plaintiff No. 1 approached the defendants for a loan of Rs. 2,000/- for payment of debts and the expenses incurred for marriage of their foster daughter. It was settled that such loan of Rs. 2,000/- will carry interest of Rs. 2,000/- for five years and the defendant shall remain in occupation of the said three tenanted rooms, without payment of any rent. It was also decided that it would be a loan transaction for which two documents in respect of the suit property, one in the form of ostensible sale deed for an amount of Rs. 4,000/- (principal Rs. 2,000/- plus interest Rs. 2,000/-) is to be executed and another deed in the form of simultaneous ostensible agreement for reconveyance of the suit property is to be executed. Accordingly two documents were executed on 26. 6. 73 and a sum of Rs. 2,000/- was handed over to Bindadin Tiwari towards loan, and the balance Rs. 2,000/- was kept by the defendant towards interest for five years.
( 3 ) IT is specifically stated in the plaint that Bindadin Tiwari had no intention to sale the property at such a low price inasmuch as its market price were more than Rs. 30,000/- at the relevant time and it was yielding monthly income of rs. 200/- from the tenants towards rent. Moreover, the plaintiffs have, been paying taxes in respect of the suit property and has been realising rent from the tenants, as usual. The plaintiffs are ready to repay the lawfully due amount. But the defendant has been trying to grab the entire property ignoring the said loan transaction for which the instant suit was filed praying for declaration that the transaction was a loan in substance or mortgage by conditional sale, and also for ascertainment of the amount due and for accounts. Prayer is also made for easy instalment for payment of the amount to be found due under the bengal Money-lenders Act.
( 4 ) THE plaint was filed on 3. 4. 76 when it was numbered as T. S. No. 106/76. But subsequently it was renumbered as T. S. No. 162 of 1980 on transfer to the 1st Additional Court of Munsif at Howrah.
( 5 ) THE defendant contested the suit after filing a written statement on 6. 6. 77 denying the transaction as loan in substance. The specific defence case is that the defendant is not a money-lender, that the defendant was a tenant under bindadin Tiwari, that at the time of his daughter's marriage Bindadin Tiwari opted to sell the suit property at the then highest market price of Rs. 4,000/-, that the defendant accordingly purchased the suit property on payment of Rs. 4,000/- but at the request of Bindadin Tiwari he agreed to reconvey the suit property if the said amount of Rs. 4,000/- was repaid at a time within three years. Accordingly, two documents were execu
