Vol. 12 · pages 516–520

495THE TRANSFER OF PROPERTY ACT 2. A mortgage by conditional sale and a sale with a condition of repurchase have a very close resemblance. In both cases, there is a right of reconveyance :— (1) But they arc different in the nature of the terms on which the right to reconvey can be exercised vary. (2) If it is a sale with a condition of repurchase then :— (i) The right is personal and cannot be transferred. (ii) The right can be enforced on strict compliance with the terms laid down by the condition of repurchase. Cases. 10 Cal. 30 ; 6 All. 37 ; 21 Bom. 528. (3) If it is a mortgage by conditional sale, then— (i) The right to reconveyance is not personal but is a right in term and can be exercised by the transferee. (ii) Time will not be treated as of the essence. 3. What is it that distinguishes sale with a condition of repurchase and mortgage by conditional sale ? (1) In a mortgage by conditional sale, the transaction notwithstanding the form, remains a lending and borrowing transaction. The transfer of land, although it is in the form of a sale, in fact it is a transfer by way of security. (2) In a sale with a condition of repurchase, the transaction is not a lending and borrowing arrangement. It is not a transfer of an interest. It is a transfer of all rights. It is not a trnasfer by way of security. It is an absolute transfer reserving only a personal right of repurchase. What is the test for determining whether a transaction is a mortgage ? (1) No particular words or form of conveyance are necessary to constitute a mortgage. As a general rule, subject to very few exceptions, where a transfer of an estate is originally intended as a security for money, it is a mortgage and where it is not so originally intended, it is not a mortgage. (2) It is not the name given to a contract by the parties that determines the nature of the transaction. A document may be held to be a sale although it is called a mortgage by the parties. 2 Bom. 113.

496 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES (3) It is the jural relation constituted by it, that will determine whether the transaction is a mortgage or not. 2 Bom. 462. 4. How to find what the intention of the parties was ? By finding out how they have treated the money advanced ? If they have treated it as a debt, then it is mortgage. The criteria adopted by the Courts are— (i) The existence of a debt (ii) The period of repayment, a short period being indicative of a sale and a long period of a mortgage. (iii) The continuance of the mortgagor in possession indicates a mortgage. (iv) The price below a true value indicates a mortgage. In applying these tests, the Courts put the onus on the party alleging that an ostensible sale-deed was a mortgage, and in a case of ambiguity, lean to the construction of a mortgage. 5. Is oral evidence of intention admissible ? 1. Before the Indian Evidence Act was passed, oral evidence and other instruments were freely admitted to prove this intention. But this practice was condemned by the Privy Council. 2. After the passing of the Indian Evidence Act, the question was governed by Section 92. 3. Section 92 excludes oral evidence to contradict a written document. The Indian Courts, never the less, on the authority of Lincoln vs. Wright (1859) 4 DeG.& J. 16 admitted evidence of acts and conduct of parties to show, that a deed which purported to be an absolute conveyance was intended to operate as a mortgage. 4. In 1899, the Privy Council definitely ruled in Balkishen v/s. Legge= 22 All. 149 =27 I. A. 58. that the rule in Lincoln vs. Wright had no application in India. 5. The result is that, the Courts are definitely limited to the document itself in order to ascertain the intention of the parties.

497THE TRANSFER OF PROPERTY ACT The question is not what the parties meant, but what is the meaning of the words they used. Importance of the Proviso. 1. The condition must be embodied in the same document. Points to be noted. 1. Only means that in determining the question if the condition is contained in another document Court cannot take into consideration in determining intention. 2. But, even if, it was contained in the same document, it is necessarily a mortgage by conditional sale and not a sale with the condition of repurchase. 3. The question of construction still remains. (iii) Usufructuary Mortgage 1. CHARACTERISTICS. (i) Delivery of possession or undertaking to deliver possession. (ii) Authority to retain such possession until payment of mortgage-money. (iii) Authority to receive the rents and profits and to appropriate the same in liue of interest or in payment of the mortgage-money. NOTE.—There is no personal obligation to pay. (iv) English Mortgage I. CHARACTERISTICS (i) There is a personal obligation to repay by the mortgagor on a certain day. (ii) The transfer of the mortgagee is absolute. (iii) The transfer is subject to the proviso that the mortgagee shall reconvey the property on payment. II. This closely resembles the conditional mortgage. Difference. (i) In the English Mortgage the sale is absolute while in the mortgage by conditional sale the sale is ostensible.

498 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Query. How can it be a mortgage if the sale is absolute ? This seems to conflict with the definition of mortgage which is transfer of an interest. Difference in practice merely means this: that in English Mortgage, the mortgagee is entitled to immediate possession, While in the case of a mortgage by conditional sale, the right to possession depends upon the terms of the mortgage. (2) In English Mortgage, there is a personal obligation to pay. In a conditional mortgage, there is no such right. REQUISITES OF A MORTGAGE BY DEPOSIT OF TITLE DEEDS. I. Debt. 1. A debt has been defined as a sum of money due now even though payable in the future, and recoverable by action— (1922) 2 K. B. 599 (617). NOTE.—As to difference between a debt due by statute and debt due by contract—(1922) 2 K. B, 37. There is no necessity of a promise to pay in order to render the money recoverable when the debt is a statutory debt. 2. The debt may be an existing debt or a future debt. The deposit may be to cover a present as well as future advances—50 I. A. 283 ; 17 All. 252 ; 17 All. 252 ; 25 Cal. 611. 3. The debt may be a general balance that might be due on an account. 2 Mad. 239 P. C. II. DEPOSIT OF TITLE DEEDS. (i) Title deeds 1. It has been held in England that it is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title, and that, it is not necessary that all the deeds should be deposited. (1872) 8 Ch. App. 155. 2. These cases have been followed in India. 59 Cal. 781. 3. But Page c.f. in 11 Rang 239 F. B. held that the documents must not only relate to the property but must also be such as to show a prima facie or apparent title in the depositor.

499THE TRANSFER OF PROPERTY ACT 4. If the documents show no kind of title, no mortgage is created—Tax receipt—Plan—not documents of title. 5. If the deeds are lost, copies may be deposited. (ii) If the deeds are already deposited by way of mortgage, they can, by oral agreement, be made a security for further advance. It is not necessary that they should be handed back and redeposited. 17 All. 252. 25 Cal. 611. III. INTENTION. 1. The intention that the title-deeds shall be the security for the debt is the essence of the transaction. 2. Mere possession is not enough without evidence as to the manner in which the possession originated so that a contract may be inferred. 23 I.A. 106; 38 Bom. 372. 1 Rang. 545. 3. If it is in contemplation of the parties to have a legal mortgage prepared and if the title-deeds are deposited for that purpose only, the deposit does not create an equitable mortgage. 4. But although the deposit is for the purpose of the preparations of a legal mortgage, there may also be an intention to give an immediate security, in which case the deposit creates an equitable mortgage. 5. The question is whether mere possession coupled with debt does not raise an inference that it is a mortgage ? There is a difference of opinion but the better opinion seems to be as between creditor and debtor possession coupled with debt raises a presumption in favour of a mortgage. IV. TERRITORIAL RESTRICTIONS. 1. This kind of equitable mortgages can be created only in certain towns.