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High Court Of Himachal Pradesh
V.RATNAM,A.L.VAIDYA
GURDIAL KAUR - Appellant
Versus
PREMINDER LAL DHINGRA - Respondent
R. F. A. No, 776 of 1978
Decided On : 07/29/1994
MORTGAGE - MORTGAGE BY CONDITIONAL SALE OR SALE WITH CONDITION FOR REPURCHASE - DISTINCTION - MORTGAGE BY CONDITIONAL SALE - ESSENTIAL FEATURES - MORTGAGE BY CONDITIONAL SALE OR SALE WITH CONDITION FOR REPURCHASE - DETERMINATION - PRINCIPLES - CLOG ON EQUITY OF REDEMPTION - MEANING AND EFFECT - TENANCY CREATED BY MORTGAGEE - BINDING ON MORTGAGOR AFTER REDEMPTION - CONDITIONS - INTEREST - RATE OF INTEREST - FIXATION - FACTORS TO BE CONSIDERED - ADDITIONAL EVIDENCE - RECEPTION - CONDITIONS - ORDER 41, RULE 27, C. P. C. - SCOPE AND APPLICABILITY.
Fact of the Case:
Suit for redemption of a mortgage deed dated 15-1-1953 and for recovery of possession of the mortgaged property and for an account of rents and other sums received by the mortgagee from 7-1-1953 till delivery of possession is effected and also for payment of the surplus amounts that may be found due, after deduction of such amounts as might have been spent lawfully under the terms of the mortgage deed together with—interest.
Finding of the Court:
The deed dated 15-1-1953 is only a mortgage by a conditional sale under section 58 (c) of the Transfer of Property Act and not a sale with a condition for re-purchase and a preliminary decree for redemption was rightly granted in the suit filed by late Sh. Malvinder Lal Dhingra.
Issues: None
Ratio Decidendi: 1. The intention of the parties must be gathered, in the first place, from the document itself and where the words are express and clear, effect must be given to them, avoiding any extraneous enquiry into what was thought or intended and the real question is what is the legal effect of the words used. 2. If the condition for repurchase is embodied in the document that effects or purports to effect the sale, then, it is a matter for construction as to what was meant and that as a clear cut classification had been made by the legislature, excluding the transactions embodied in more than one document—from the category of mortgages, it is reasonable to suppose that persons, who, after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words and if the conditions of section 58 (c) of T. P. Act, are fulfilled, then, the deed should be construed as a mortgage. 3. The question whether by the incorporation of a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties, to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. 4. The circumstance that the condition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. 5. The definition of a mortgage by conditional sale postulate the creation by the transfer of a relation of mortgagor and the mortgagee, the price being charged on the property conveyed. 6. In a sale coupled with an agreement to reconvey, there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to re-transfer the property within the period specified. 7. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. 8. The form in which the deed is clothed is not decisive. 9. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the document, viewed in the light of the surrounding circumstances and if the language is plain and unambiguous, true legal effect must be given to it, in the light of the evidence of surrounding circumstances, but if there is an ambiguity in the language employed, the intention may be gathered from the contents of the deed with such extrinsic evidence permitted by law to be adduced to show in what manner the language of the deed related to existing facts. 10. A provision to the effect that if Sh. Malvinder Lai Dhingra did not redeem the property, within a period of 15 years, would amount o a clog on the equity of redemption. 11. A condition in a mortgage deed that the mortgagor shall redeem the property within the stipulated period of three years, failing which the mortgagee would become the owner of the property, was held to be in the nature of a clog on the equity of redemption and the court has power to relieve the party from a bargain, which has the effect of forfeiting the mortgagors right to redeem 12. Any authorisation of the mortgagee, would not enable the creation of a tenancy binding on the mortgagor, after redemption of the mortgage and a tenant inducted by a mortgagee with possession, when the tenancy of that tenant is not binding on the mortgagor, after the redemption of the mortgage is not protected under the provisions of the Rent Control Act.
Final Decision: Appeal dismissed with costs of Prem Indar Dhingra and Mrs. Indra Dhingra, respondents (1-a) and (1-b) in the appeal.
V. Ratnam, C. J.—This appeal has been preferred by the legal representatives of deceased defendants 1, 2 and 4 and by defendant Nos. 3 and 5 against the judgment and decree in case No. 109/1 of 72 before the Sub-Judge (II), Shim la That suit was instituted by Sh. Malvinder Dhingra, praying for redemption of a mortgage deed dated 15-1-1953 and for recovery of possession of the mortgaged property and for an account of rents and other sums received by the mortgagee from 7-1-1953 till delivery of possession is effected and also for payment of the surplus amounts that may be found due, after deduction of such amounts as might have been spent lawfully under the terms of the mortgage deed together with—interest. Mulvinder Dhingra, who instituted the suit, died during the pendency of the appeal and his legal representatives Preminder Lal Dhingra and Mrs. Indra Dhingra have been brought on record and they are the main contesting respondents in this appeal. Briefly stated, the case of Shri Malvinder Dhingra, as set out in the plaint, is as under :
2. On 15-1-1953, the property known as Villa Nova main house, with furniture and fittings, pavilion rooms, rickshaw sheds, tennis courts and land measuring about 6624 sq. yards and 3 sq. fret was mortgaged by Shri Malvinder Dhingra to Shri S. Prem Singh, the predecessor-in-interest of the appellants, for a sum of Rs 26,000 and as the mortgage was with possession, no interest was stipulated. The further case of Malvinder Lal Dhingra, the mortgagor was that the mortgagee had realised by way of rents and income from the property, an amount far an in excess of what was advanced, together with interest at 7-1/2% and on the taking of the accounts, large amounts will be due to the mortgagor and no amount would be due on the mortgage. Referring to the conditions of redemption Shii Malvinder Dhingra stated that the period of mortgage was three years from 15-1-1953, i. e. 15-1-1956 and the mortgagor could pay the amount and redeem the property within a further period of two years i. e. by 15-1-1958 on payment of the full amount of the mortgage money. The further amount of Rs. 10,000 agreed to he paid by the mortgagee was not so paid and that rendered the condition of sale incorporated in the mortgage inoperative, besides being a clog on the equity of redemption, according to Shri Malvinder Dhingra. Stating that possession of the mortgaged property was delivered to S. Prem Singh on 7-1-1953 and that after his death, the appellants remained in possession of the mortgaged property and realised rents, the mortgagor put forward the plea that the annual income by way of rents from the mortgaged property was over Rs. 6,000 and the taxes payable per annum amounted to Rs. 445.75 and interest at 7 1/2% per annum on Rs. 26,000 worked oat to Rs. 1,950, and thus the mortgagor claimed that the mortgagee had received more than twice the amount originally advanced and a surplus of several thousands of rupees would be payable to the mortgagor, Malvinder Dhingra. Fn addition, the mortgagor also stated that he is ready and willing to pay any amount that the Court may find due and payable to the mortgagee. Referring to the induction of a tenant by the mortgagee, the mortgagor stated that the tenant had materially altered the structure and had also unauthorisedly and illegally put up some other constructions on the; tennis court and—had also closed the main passage to Villa Nova and the cottage and that had impaired the value and utility of the mortgaged property and that the mortgagor, Malvinder Dhingra is entitled to recover the possession not only from the mortgagee, but also from the tenant. Referring to the issue of notices dated 30-12-1957 and 11-7-1971, seeking redemption and the inaction of the mortgagee in that regard, the mortgagor prayed for the reliefs referred to earlier.
3. In the written statement filed on behalf of the successors-in-interest of the mortgagee, S. Prem Singh, they put forward the plea t
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