Law: N.-W. F. P. Pre-emption Act (XI V of 1950)

Section: 4

  (a) N.-W. F. P. Pre-emption Act (XIV of 1950)-------   -----S. 4-- Pre-emptor entitled to have an ostensible mortgage declared a sale-: Transaction whether mortgage or sale-Test.   It is open to a plaintiff in a suit of pre-emption to have it declared that a transaction is a sale, although in appearance it is not a sale. He has this right under the language of section 4 of the North-West Frontier Province' Pre-emption Act, 1950, and the Court will have to declare it a sale if on the evidence adduced it is satisfied that the material brought on the record indicates most unequivocally that the intention of the parties to the transaction was to make a permanent transfer by way of sale. The material on the record will include the deed evidencing the transaction. But it requires a very strong and cogent evidence to assail a registered deed which purports to be deed of mortgage and have it declared as a sale, and unless he succeeds in establishing beyond doubt that the intention of the parties was to make a permanent transfer by way of sale he will not be entitled to that declaration. The tests to which a mortgage will be submitted for this purpose are:-   the amount of the mortgage money,   the period for which the mortgage is created,   the burdens which the mortgagee is permitted to impose upon the mortgaged property and which the mortgagor has to discharge at the time of redemption,   mortgagee's dealings with the mortgaged property i.e., whether the mortgagee ispermitted to deal with the property as if it has fallen into his hand as absolute property.   If the above tests point to the conclusion that the conditions of the mortgage are such that they exclude the possibility of redemption, or render redemption profitless for the mortgagor, the Court will pronounce it to be sale. The co-existence of two or more of these conditions will no doubt render redemption impossible or at least profitless for the mortgagor but the Court cannot declare a mortgage to be a sale on the only ground that the sum secured by the transaction is equal to the price of the property. Even if the price of the property is equal to the…