The intention of the parties at the inception of the transaction determines its nature, and the courts will look more to the substance than to the form of the transaction to ascertain that intention.

S.C. Malte, J. -This appeal is filed by the original defendant against the judgment and decree passed in suit for redemption of mortgage. While admitting this appeal on 22.10.1979, it was admitted to consider the limited question, namely, Whether the transaction between the parties is a mortgage ?

2. The contentions raised by the respondent-plaintiff can be summarized as follows :-

The respondent (plaintiff) was in need of money. He, therefore, vide a deed dated 21.5.1995 executed a sale-deed of the suit-property in favour of appellant (original defendant). According to the plaintiff, the sale transaction was of simple mortgage for securing a loan of Rs. 2, 000/- which was the consideration shown in the said sale-deed. At the same time, by another agreement, the plaintiff-vendor agreed to pay rent to the vendee (present appellant) at the rate of Rs. 20 per month for use and occupation of the suit property. On the same day, another document was also executed whereby it was agreed between the appellant-vendee and the respondent-vendor that the vendee shall re-convey the property within four years. It may be mentioned here that the said document is not on record. Therefore, the exact terms of that document could not be ascertained. However, in the course of deposition, the appellant-vendee has admitted existence of such an agreement to re-convey the mortgage to the original vendor within four years. In this appeal, it was also one of the debatable questions as to whether the said evidence regarding the existence of such document and that terms of the said document can be considered in the absence of the said document. It was contended by the respondent-vendor that the transaction was not a sale, but was only a mortgage for securing the amount. According to him at the time of transaction, the property was worth Rs. 4,000/- through its value was shown to be Rs. 2,000/-.

3. It may further be mentioned that after the execution of the documents mentioned above, the respondents-vendor was in arrears of rent due in respect of the suit property. The appellant-vendor therefore filed a civil suit for recovery of arrears of rent amounting to Rs. 760/-. In that suit the respondent/vendor raised the question regarding the nature of documents referred above. In that suit, ultimately, a money decree in respect of rent dues came to be passed. In course of that litigation, the question regarding the nature of the document referred to above, however, was kept open and was to be determined in the suit if filed by the vendor for redemption of mortgage. That is how the vendor-respondent filed the present suit for redemption of the mortgage.

4. The appellant-vendee, on the other hand, contended that the transaction dated 21.5.1955 was out and there was no question of any redemption of mortgage. The trial Court came to the conclusion that the transaction was a mortgage. It took into consideration the circumstances surrounding the transaction. On facts, he held that in all three documents were admittedly executed on the same day. These were - (i) sale deed, (ii) rent note and (iii) an agreement entitling vendor to re-purchase the suit property after the lapse of four years from the date of sale deed. The trial court found as a fact that the vendor continued in possession of the suit property and that he had raised certain construction even after the transaction dated 21.5.1955. He also took into consideration the fact that the vendor had also inducted a number of tenant on the suit property from whom he used to recover rent for the period subsequent to 1955. On facts he further held that the value of the suit-property in the year 1955 would range between Rs. 5782/- to Rs. 10,000/- and in the background of that he concluded that the consideration of Rs. 2,000/- shown in the said sale-deed was consistent with the case of mortgage rather than sale. Along with these circumstances, he took into consideration, the fact that the vendee while deposing in s