1956 Present: Weerasooriya, J., and H. N. G. Fernando, J.

R. G. DE SILVA, Appellant, and M. V. ZOYSA et al, Respondents

S. C. 118-D. C. Balapitiya, 423

Sale of immovable property-Conveyance coupled with clause for reconveyance-Oral evidence of mortgage-Admissibility-Tender of money-Quantum of evidence.

In a transfer of immovable property, what purports to be a conveyance coupled with a clause for reconveyance on payment of a certain sum of money within a stipulated period cannot be proved by oral evidence to have been in reality a mortgage.
Quantum of evidence necessary to prove tender of money before the due date considered.

APPEAL from a judgment of the District Court, Balapitiya.

Sir Lalita Rajapakse, Q.C., with Bertram J. de Zylva, for the 2nd defendant-appellant.

S. C. E. Rodrigo, for the plaintiff-respondent.

Cur. adv. vult.

March 28, 1956. H. N. G. FERNANDO, J.-

The plaintiff in this action has been granted a decree declaring that two deeds executed by him are in the nature of mortgage bonds and that he is entitled to obtain a discharge of the bonds on payment of specified sums of money.

By a notarial document dated 11th October, 1949, described on its face as a Bill of Sale, the plaintiff sold and conveyed certain immovable property to the 1st defendant for a sum of Rs. 750, " reserving the right to have a reconveyance within two years on payment of the said principal and interest ". By a second notarial document of 1st July, 1950, described as a transfer, the plaintiff sold and conveyed to the 1st defendant for a sum of Rs. 470 " the right to re-purchase " the same property, which right had been reserved to the plaintiff by the earlier deed, while again reserving the right to re-purchase the right now sold on any date " within one year, three months and eleven days " of 1st July, 1950. It will be seen that, while the reservation in the first deed was a right to a reconveyance if a sum of Rs. 750 together with interest was paid before 11th October, 1951, the effect of the second deed was that the right to a reconveyance would be lost unless the plaintiff in addition re-paid within the same stipulated period a further sum of Rs. 470 with interest. In so far as the 1st defendant was concerned, the second payment which he made had the consequence of increasing the amount which the plaintiff would have had to pay for the reconveyance and thus of diminishing the chance of the exercise of the right to claim the reconveyance.

It was admitted that the plaintiff was entitled to remain in possession of the land in terms of the first deed and did in fact continue in possession. It is also in evidence that the plaintiff borrowed two sums of Rs. 250 and Rs. 120 from the 1st defendant in December, 1949. These loans represent the amount of consideration for the second deed of July, 1950, and it may be assumed that the necessity for the second deed arose because the plaintiff was unable to repay those loans. These circumstances do indicate that the plaintiff in all probability regarded his transactions with the 1st defendant as being loans upon the security of land and hoped for an improvement of financial circumstances to release him from his liabilities. But the difficulty in which the plaintiff finds himself is that the legal form of the transactions was that of a sale coupled with a clause for a reconveyance and not that of a mortgage.

In view of the recent judgments of the Privy Council and of this Court, it is now too late to take up the position which the plaintiff has attempted to take in this case. Their Lordships of the Privy Council in Saverimuttu v. Thengavelautham et al.[(1954) 55 N. L. R. 529.] approved the principle laid down in Perera v. Fernando [(1914) 17 N. L. R. 486.] that " where a person transferred a land to another by a notarial deed, purporting on the face of it to sell the land, it is not open to the transferor to prove by ora