The intention of the parties and the provisions of the Transfer of Property Act, particularly Section 58(a), are crucial in determining whether a transaction is a mortgage or a sale.

Bakewell, J.

1. The question in this case is whether a sale-deed and an agreement executed on the same day constitute a mortgage by conditional sale. The sale-deed is not only an absolute conveyance of the property but contains recitals which show an intention to extinguish a prior mortgage between the same parties and to discharge the vendors obligations to other parties and a statement that the sale price is the " proper current market value" of the land.

2. These provisions are inconsistent with an intention that the transfer was for the purpose of srcuring the payment of money advanced by way of loan (Transfer of Property Act, 1882, Section 58(a) ).

3. The agreement for reconveyance states that the appellants father had purchased the property for Rs. 1,500 and provides that " if you or your Oollittar or your heirs should pay the afore-said amount at the beginning of the cultivation season of any year within four years from this day, I shall re-convey the lands to you by means of a sale-deed in accordance with that executed in my favour."

4. The learned vakil for the appellants has relied upon the facts that patta was transferred into the name of the purchaser and he has been paying kist ; but these circumstances, as well as the period of the year fixed by the agreement for reconveyance, are consistent with a mortgage with possession equally with an absolute sale. The fact that no power is reserved to the appellants father for the recovery of the sale price or interest are also consistent with a usufructuary mortgage in which the rents and profits are received in lieu of interest and the debtor is not to be personally liable.

5. The learned vakil also relies upon the fact that the present suit was not brought until 21 years after the transaction, which certainly goes to show that the parties regarded it as having been concluded by the expiration of the period mentioned in the agreement for reconveyance.

6. I do not think that any of the circumstances of the case indicate an intention that there should be the relationship of debtor and creditor between the parties, or that the property should be security for a debt and on the other hand the terms of the documents themselves indicate that a subsisting debt was extinguished and that the transaction was an absolute sale.

7. The fact that there appears to have been no margin between the sale price and the actual market value of the property goes to show that the appellants father at all events did not regard the transaction merely as securing to him the repayment of an advance.

8. Whether the transaction constituted a sale or a mortgage is, I think, a question of law and I would allow the appeal and dismiss the plaintiffs suit with costs throughout.

Napier, J.

9. I agree and only wish to add a few words with regard to what I consider to be the proper method of approaching the consideration of this question on the construction of the Transfer of Property Act. The section dealing with mortgage by conditional sale is part of Section 58, the very first section of Chapter IV which actually defines what is a mortgage. Section 58 begins by stating that a mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced. It then proceeds to define trans-feror and transferee and mortgage money. Then we get Sub-clause (c) which is, " where the mortgagor ostensibly sells the mortgaged property (on three conditions mentioned therein), the transaction is called a mortgage by conditional sale." Mr. Seshaohariar wishes us to construe this sub-section as intending to lay down that sales with agreements to re-sell are presumably mortgages. If that had been the intention, I think it would have been perfectly easy for the Legislature to provide that, where there was a sale and, either contemporaneously or so shortly afterwards as to be part of the same transaction, an agreement to resell, that transaction should, in fact, be a mortgage.