REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7448 OF 2008
DHARMAJI SHANKAR SHINDE
AND OTHERS …Appellants
VERSUS
RAJARAM SHRIPAD JOSHI (DEAD)
THROUGH LRs. AND OTHERS …Respondents
WITH
CIVIL APPEAL NO.7449 OF 2008
J U D G M E N T
R. BANUMATHI, J.
These appeals arise out of the judgment dated 15.11.2006
passed by the High Court of Bombay dismissing the Second
Appeal No.887 of 2003 thereby upholding the decision of the first
Appellate Court holding that Ex.P-73 is a “mortgage by conditional
sale” and that the respondents-plaintiffs are entitled to redeem the
suit property upon payment of the balance amount.
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2. Facts giving rise to these appeals are that the respondentsplaintiffs filed a suit for redemption of the suit property bearing
S.No.147 present G.No.750 admeasuring 2 Hectares 18 Are
situated in village Kudal, Jawli taluka and district Satara. Case of
the respondents-plaintiffs is that the suit property was mortgaged
by their father Shripad Joshi on 28.07.1967 in favour of Shankar
Shinde who is the predecessor-in-interest of the appellantsdefendants for Rs.2500/-. The said deed (Ex.P-73) is a deed of
“mortgage by conditional sale” with a condition that if the amount is
not repaid within a period of five years from the date of execution
of the deed, then the same would be treated and construed as an
absolute sale between the parties conferring absolute right of
ownership on Shankar Shinde and his legal representatives. As
per the recitals in the document, the possession of the suit property
was also handed over to Shankar Shinde on the date of execution
of the deed. The respondents-plaintiffs further averred that on
26.07.1972, their father had paid an amount of Rs.800/- to Shankar
Shinde and to that effect Ex.P-69-receipt was executed. Shripad
Joshi died in the year 1973 and the respondents-plaintiffs
succeeded to his estate. Further case of the respondents-plaintiffs
is that in spite of repeated request to the appellants-defendants for
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redemption of the suit property and delivery of possession of the
property, they failed to receive the money and had not handed over
the possession of the property. After issuance of legal notice dated
19.02.1980, the plaintiffs filed the suit for redemption of the
mortgage.
3. The appellants-defendants resisted the suit contending that
the transaction between their father-Shankar Shinde and the father
of the respondents-plaintiffs-Shripad Joshi was a sale with
condition to repurchase within a stipulated period of five years.
Case of defendants is that since Shripad Joshi, father of the
respondents-plaintiffs failed to repay the money within the
stipulated period of five years and failed to take any step to get the
property reconveyed to them, after the period of five years as per
the terms and conditions of Ex.P-73, father of the appellantsdefendants Shankar Shinde has become the absolute owner of the
suit property and the plaintiffs have no right, title or interest in the
suit property.
4. The trial court dismissed the respondents-plaintiffs suit by
holding that the relationship of debtor and creditor is not
established and the respondents have failed to prove that the
transaction (Ex.P-73) was a mortgage and therefore, they are not
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entitled to redemption and possession of the suit property. After
referring to the recitals in Ex.P-73, the trial court held that the
respondents-plaintiffs have agreed that if Shripad Joshi does not
pay the amount within stipulated period of five years, the said
document was to be treated as sale deed and in his life time
executant Shripad Joshi did not take any action to get the property
reconveyed. The trial court also held that Ex.P-69-receipt has not
been proved by the respondents-plaintiffs and the respondentsplaintiffs are not entitled to the decree prayed for by them.
5. In appeal, the first Appellate Court set aside the judgment of
the trial court by holding that Ex.P-73 is a “mortgage by conditional
sale” and not an absolute sale deed or a sale with a condition to
repurchase. The first Appellate Court held that payment of
Rs.800/- by Shripad Joshi has been proved and that the
respondents have proved the execution of Ex.P-69-receipt by
examining Prabhakar (PW-2) who is the son of the scribe of Ex.P69-receipt. The first Appellate Court held that Ex.P-73 was a
“mortgage with conditional sale” as per proviso to clause (c) of
Section 58 of the Transfer of Property Act and that the respondents
are entitled to redeem the mortgage subject to the payment of
balance amount of Rs.1700/-. Being aggrieved by the judgment of
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the first Appellate Court, the appellants preferred second appeal
before the High Court which came to be dismissed by the
impugned judgment.
6. Taking us through the evidence and materials on record, the
learned counsel for the appellants submitted that the amount of
Rs.2500/- was paid by Shankar Shinde as consideration for the
sale and the recitals in Ex.P-73-document clearly show that the
transaction was a sale with condition for reconveyance. It was
submitted that during the five years, original owner Shripad Joshi
did not repay the amount within the stipulated period of five years
and take steps to get reconveyance of the property and therefore,
the document dated 28.07.1967 has become an absolute sale. It
was submitted that merely because the clause regarding sale and
agreement to repurchase are embodied in the same document,
proviso to clause (c) of Section 58 of the Transfer of Property Act is
not attracted and it cannot be said that the transaction is a
mortgage. It was urged that the first Appellate Court and the High
Court failed to consider the intention of the parties and the
surrounding circumstances which clearly show that the parties
intended Ex.P-73 to be a transaction of sale with condition to
repurchase and not mortgage by conditional sale. It was further
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submitted that the execution of Ex.P-69-receipt has not been
proved by the plaintiffs and the first Appellate Court and the High
Court erred in reversing the well-considered judgment of the trial
court.
7. Per contra, the learned counsel for the respondents-plaintiffs
submitted that since the sale and agreement to repurchase are
embodied in the same document, in view of the mandatory
provision of the proviso to clause (c) of Section 58 of the Transfer
of Property Act, the transaction is to be treated as a “mortgage by
conditional sale” which the respondents-plaintiffs are entitled to
redeem. According to the respondents-plaintiffs, though the words
“….conditional sale….” have been used in the Ex.P-73, parties
intended it to be only a mortgage and not a conditional sale with
condition to repurchase. The learned counsel for the respondentsplaintiffs contended that the first Appellate Court rightly accepted
Ex.P-69-receipt under which the plaintiffs paid a sum of Rs.800/-
and the first Appellate Court rightly held that the document dated
28.07.1967 is a “mortgage by conditional sale” and not a sale with
condition for reconveyance.
8. We have heard Ms. Qurratulain, learned counsel for the
appellants and Mr. Arvind S. Avhad, learned counsel for the
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respondents-plaintiffs and perused the impugned judgment and the
judgment of the trial court and materials placed on record.
9. In these appeals, the question falling for consideration is the
interpretation of Ex.P-73-document dated 28.07.1967. Upon
consideration of the submissions, the following questions arise for
determination in these appeals:-
(i) Whether the respondents-plaintiffs are right in
contending that in view of the statutory provision viz.
proviso to clause (c) of Section 58 of the Transfer of
Property Act, Ex.P-73-document dated 28.07.1967 is
to be held as a mortgage by conditional sale?
(ii) Whether the clause in Ex.P-73-document that in case
of non-payment of the amount within the stipulated
period of five years, the sale will become permanent
and the transferee will have an absolute right are not
consistent with the intention of the parties of making
the transaction a conditional sale with an option to
repurchase?
10. Section 58(c) of the Transfer of Property Act contains the
definition of “mortgage by conditional sale”. In a “mortgage by
conditional sale”, the transfer is made as a security to a loan
taken by the mortgagor-owner; whereas in a “sale with a condition
to repurchase”, the sale is made by the vendor-owner reserving
with himself a right to repurchase it within a stipulated time. A
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sale with a condition of retransfer is not a mortgage since the
relationship of debtor and creditor does not exist and there is no
debt for which the transfer is made as a security. Whether the
document is a “mortgage by conditional sale” or “sale with a
condition to repurchase” is to be ascertained from the intention of
the parties. It is trite law that the intention of the parties should be
gathered from the recitals of the document itself.
11. Section 58(c) of the Transfer of Property Act deals with
“mortgage by conditional sale” which reads as under:-
“58. …….
(c) Mortgage by conditional sale.—Where the mortgagor ostensibly
sells the mortgaged property—
on a condition that on default of payment of the mortgagemoney on a certain date the sale shall become absolute, or
on condition that on such payment being made the sale shall
become void, or
on a condition that on such payment being made the buyer
shall transfer the property to the seller,
the transaction is called a mortgage by conditional sale and the
mortgagee, a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to be a
mortgage, unless the condition is embodied in the document
which effects or purports to effect the sale.”
(emphasis added)
12. Proviso to Section 58(c) was added by Act 20 of 1929. Prior
to the amendment, there was a conflict of decisions on the
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question whether the condition contained in a separate deed
could be taken into account in ascertaining whether a mortgage
was intended by the principal deed. The conflict was resolved by
adding proviso to Section 58(c). Considering the scope of
proviso to Section 58(c) which was added by Act 20 of 1929 and
elaborating upon the distinction between “mortgage by conditional
sale” and “sale with agreement to repurchase”, in Bhaskar
Waman Joshi (deceased) v. Shri Narayan Rambilas Agarwal
(deceased) (1960) 2 SCR 117 : AIR 1960 SC 301, it was
held as under:-
“6. The proviso to this clause was added by Act 20 of 1929. Prior to
the amendment there was a conflict of decisions on the question
whether the condition contained in a separate deed could be taken
into account in ascertaining whether a mortgage was intended by the
principal deed. The Legislature resolved this conflict by enacting that a
transaction shall not be deemed to be a mortgage unless the condition
referred to in the clause is embodied in the document which effects or
purports to effect the sale. But it does not follow that if the condition is
incorporated in the deed effecting or purporting to effect a sale a
mortgage transaction must of necessity have been intended. The
question whether by the incorporation of such a condition a transaction
ostensibly of sale may be regarded as a mortgage is one of intention
of the parties to be gathered from the language of the deed interpreted
in the light of the surrounding circumstances. The circumstance that
the condition is incorporated in the sale deed must undoubtedly be
taken into account, but the value to be attached thereto must vary with
the degree of formality attending upon the transaction. The definition
of a mortgage by conditional sale postulates the creation by the
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transfer of a relation of mortgagor and mortgagee, the price being
charged on the property conveyed. In a sale coupled with an
agreement to reconvey there is no relation of debtor and creditor nor is
the price charged upon the property conveyed, but the sale is subject
to an obligation to retransfer the property within the period specified.
What distinguishes the two transactions is the relationship of debtor
and creditor and the transfer being a security for the debt. The form in
which the deed is clothed is not decisive. The definition of a mortgage
by conditional sale itself contemplates an ostensible sale of the
property. ……”
13. As per proviso to Section 58(c), if the sale and agreement to
repurchase are embodied in the separate documents then the
transaction cannot be a “mortgage by conditional sale”
irrespective of whether the documents are contemporaneously
executed; but the converse does not hold good. Observing that
the mere fact that there is only one document, it does not
necessarily mean that it must be a mortgage and cannot be a
sale, in Chunchun Jha v. Ebadat Ali and another AIR 1954 SC
345, it was held as under:-
“6. The first is that the intention of the parties is the determining factor:
see Balkishen Das v. Legge 27 IA 58. But there is nothing special
about that in this class of cases and here, as in every other case
where a document has to be construed, the intention must be
gathered, in the first place, from the document itself. If the words are
express and clear, effect must be given to them and any extraneous
enquiry into what was thought or intended is ruled out. The real
question in such a case is not what the parties intended or meant but
what is the legal effect of the words which they used. If, however, there
is ambiguity in the language employed, then it is permissible to look to
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the surrounding circumstances to determine what was intended. As
Lord Cranworth said in Alderson v. White 44 ER 294 at 928:
“The rule of law on this subject is one dictated by
commonsense; that prima facie an absolute conveyance,
containing nothing to show that the relation of debtor and
creditor is to exist between the parties, does not cease to be an
absolute conveyance and become a mortgage merely because
the vendor stipulates that he shall have a right to repurchase….
In every such case the question is, what, upon a fair
construction, is the meaning of the instruments?”
7. Their Lordships of the Privy Council applied this rule to India in
Bhagwan Sahai v. Bhagwan Din 17 IA 98 at 102 and in Jhanda Singh
v. Wahid-ud-din 43 IA 284 at 293.
8. The converse also holds good and if, on the face of it, an instrument
clearly purports to be a mortgage it cannot be turned into a sale by
reference to a host of extraneous and irrelevant considerations.
Difficulty only arises in the border line cases where there is ambiguity.
Unfortunately, they form the bulk of this kind of transaction.
9. Because of the welter of confusion caused by a multitude of
conflicting decisions the legislature stepped in and amended Section
58(c) of the Transfer of Property Act. Unfortunately that brought in its
train a further conflict of authority. But this much is now clear. If the
sale and agreement to repurchase are embodied in separate
documents, then the transaction cannot be a mortgage whether the
documents are contemporaneously executed or not. But the converse
does not hold good, that is to say, the mere fact that there is only one
document does not necessarily mean that it must be a mortgage and
cannot be a sale. If the condition of repurchase is embodied in the
document that effects or purports to effect the sale, then it is a matter
for construction which was meant. The legislature has made a clear
cut classification and excluded transactions embodied in more than
one document from the category of mortgages, therefore it is
reasonable to suppose that persons who, after the amendment,
choose not to use two documents, do not intend the transaction to be
a sale, unless they displace that presumption by clear and express
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words; and if the conditions of Section 58(c) are fulfilled, then we are
of opinion that the deed should be construed as a mortgage.
(emphasis added)
In Chunchun Jha, after considering the recitals in the document
thereon and the surrounding circumstances thereon, the Supreme
Court held that there was a relationship of debtor and creditor
between the parties existing at the time of the suit transaction.
14. The question in each case is the determination of the real
character of the transaction to be ascertained from the provisions
of the deed viewed in the light of the surrounding circumstances.
If the words are plain and unambiguous then in the light of the
evidence of the surrounding circumstances, it must be given their
true legal effect. If there is any ambiguity in the language
employed, the intention is to be ascertained from the contents of
the deed and the language of the deed is to be taken into
consideration to ascertain the intention of the parties. Evidence of
contemporaneous conduct of the parties is to be taken into
consideration as the surrounding circumstances.
15. After referring to number of judgments and the essentials of
agreement to qualify as a “mortgage by conditional sale”, in
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Vithal Tukaram Kadam and another v. Vamanrao Sawalaram
Bhosale and others (2018) 11 SCC 172, it was held as under:-
“14. The essentials of an agreement to qualify as a mortgage by
conditional sale can succinctly be broadly summarised. An ostensible
sale with transfer of possession and ownership, but containing a
clause for reconveyance in accordance with Section 58(c) of the Act,
will clothe the agreement as a mortgage by conditional sale. The
execution of a separate agreement for reconveyance, either
contemporaneously or subsequently, shall militate against the
agreement being mortgage by conditional sale. There must exist a
debtor and creditor relationship. The valuation of the property and the
transaction value along with the duration of time for reconveyance are
important considerations to decide the nature of the agreement. There
will have to be a cumulative consideration of these factors along with
the recitals in the agreement, intention of the parties, coupled with
other attendant circumstances, considered in a holistic manner.”
In the light of the consistent view taken in various decisions, let us
consider whether Ex.P-73 is a “mortgage by conditional sale” or
a “sale with condition for reconveyance” and whether there exists
any debtor and creditor relationship.
16. Intention of the parties as seen from the recitals of
Ex.P-73:- By perusal of Ex.P-73, it is clear that eight days prior to
Ex.P-73, Shripad Joshi has borrowed orally a sum of Rs.700/- for
the purpose of marriage of his daughter. At the time of execution
of Ex.P-73 (28.07.1967), Shirpad Joshi required more money for
the same reason and he executed Ex.P-73-document titled as
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“mortgage by conditional sale” for a consideration of Rs.2500/-
and on the date of execution of the said document, Shripad Joshi
received only a sum of Rs.1800/-. The earlier borrowed amount
of Rs.700/- was thus adjusted from the sale consideration of
Rs.2500/-. The intention of the parties in putting an end to the
debtor-creditor relationship with respect to the sum of Rs.700/- is
clear from the recitals of the document i.e. adjustment of Rs.700/-
from the total consideration of Rs.2500/- and parties intending to
create a relationship of vendor and vendee by transfer of the suit
property for a consideration of Rs.2500/-. Period of five years
was fixed in Ex.P-73 within which Shirpad Joshi-father of the
respondents-plaintiffs was to repay the said amount. On the date
of execution of the document (Ex.P-73), the possession of the
property was handed over to the appellants-defendants for
cultivation. Further, recitals are to the effect that if the
consideration amount is paid within five years, Shripad Joshiexecutant will get the mortgage redeemed. In case, the amount
is not paid within the stipulated period of five years, the mortgage
shall be treated as an absolute sale and thereafter Shankar
Shinde to pay the land revenue to the government and all other
charges for which executant will have no complaint. The recitals
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of the document make clear the intention of the parties that if the
amount is not repaid within the stipulated period of five years, the
transferee will have absolute right and the mortgage will be
treated as an absolute sale and the transferee to pay the land
revenue and the other charges. These clauses in Ex.P-73, in our
view, are consistent with the intention of the parties making the
transaction a conditional sale with an option to repurchase.
17. Admittedly, executant of Ex.P-73, Shripad Joshi expired in
the year 1973 and till his life time, he never took any action or
step to get the property reconveyed. After death of Shripad Joshi
in the year 1973, no immediate action was taken by his
successor. Obviously, all the legal action were started in the year
1980 by the present plaintiffs based upon a receipt-Ex.P-69 dated
26.07.1972 under which an amount of Rs.800/- is said to have
been paid to Shankar Shinde. Much emphasis has been placed
by the respondents-plaintiffs on Ex.P-69-receipt which we would
refer a little later. When being confronted with the recitals in
Ex.P-73, in his cross-examination, PW-1-Rajaram Joshi admitted
that “the transaction was that of sale with the condition of
repurchase” and “neither parties are described therein as
mortgagor or mortgagee”. Admission of PW-1 is a formidable
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evidence indicating the intention of the parties. Having not paid
the amount within the stipulated period of five years, the plaintiffs
have lost their right to repurchase.
18. Mention of “borrowed a sum of Rs.700/-“ in the document is
incidental. Mere incorporation of the word “borrowed” and
“mortgage by conditional sale” cannot by itself establish that there
is a debtor-creditor relationship. In fact, as pointed out earlier, the
recitals of the document make it clear that the parties expressed
their intention to put an end to the debtor-creditor relationship with
respect to the sum of Rs.700/- that existed prior to the execution
of Ex.P-73 and creating a relationship of vendor and vendee by
transfer of the suit property for consideration of Rs.2500/-. As
rightly observed by the trial court, in Ex.P-73, there is no mention
of the rate of interest, right of foreclosure that are essential in a
deed of mortgage.
19. The contention of the respondents is that in view of the
mandatory provisions of the proviso to clause (c) of Section 58 of
the Act, since the sale and the agreement to repurchase are
embodied in the same document (Ex.P-73), the transaction is to
be taken as a mortgage and the conditions enumerated in proviso
to Section 58(c) of the Transfer of Property Act have been
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satisfied in the present case. On behalf of the respondents, it
was submitted that the existence of creditor-debtor relationship
can be derived from the recital in the document “I have
borrowed”. As pointed out earlier, there are no recitals in the
document to establish creditor-debtor relationship; nor does it
contain the right of foreclosure, payment of interest etc. which are
essential requirements in a deed of mortgage.
20. As per Section 58(a) of the Transfer of Property Act, the
mortgage is the transfer of an interest in specific immovable
property as security for the repayment of the debt; but such
interest itself is immovable property. In the case in hand, nonmention of the mortgage amount for which the interest in the
immovable property was created as security, indicate that the
parties have never intended to create a mortgage deed. If really
the parties have intended the transaction to be a mortgage, while
handing over possession of the property to Shankar Shinde for
cultivation, the parties would have stated that the cultivation and
enjoyment of usufructs are in lieu of the interest payable by
Shripad Joshi on the amount. But that was not to be so. The
transfer of possession and right to cultivate the suit land could be
conceived as the intention of the executant to transfer the right,
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title and interest in the property which are essentials in any
transaction of a sale.
21. Moreover, as per the clauses in Ex.P-73-document, the
possession of the suit property was also handed over to Shankar
Shinde-father of the appellants. Though, it is stated that the
transferee-Shankar Shinde was to pay the revenue to the
government after five years, according to the appellants, ever
since 1967, land revenue was paid by the father of the appellants.
In his evidence, PW-1 admitted that revenue cess of the suit
property has been paid by Shankar Shinde from 1967 and after
his demise, by his legal heirs. Likewise, a mutation was also
effected in the name of Shankar Shinde even in the year 1967.
During his life time, father of the respondents-Shripad Joshi has
not raised any objection to the mutation nor for the payment of the
revenue cess by Shankar Shinde. Considering the
contemporaneous conduct of the parties, it is clear that Shankar
Shinde and thereafter the appellants were dealing with the suit
property as if they were the owners of the land. The clause in
Ex.P-73 that if the amount is not paid within a period of five years,
the transaction will become a permanent sale deed and
thereafter, the transferee will have the absolute right over the
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property are consistent with the express intention of parties
making the transaction a conditional sale with option to
repurchase.
22. The respondents-plaintiffs contended that the market value
of the suit property was higher than the transaction value and
therefore, Ex.P-73 is to be construed as a mortgage. In support
of their contention, reliance was placed upon the judgment in
Vithal Tukaram. The facts in Vithal Tukaram are clearly
distinguishable with the facts and evidence on record in the
present case. In that case, the value of the land was Rs.3500/-
far in excess of the amount of Rs.700/- mentioned in the
document. Considering the evidence of the respondentdefendant thereon and the facts of the said case, the Supreme
Court held that the value of the land was far in excess of Rs.700/-
mentioned in the agreement. Further, in the said case, the
defendant thereon did not take any step for mutation of the land
for three long years and the plaintiff thereon specifically objected
to mutation in the name of respondent-defendant. The case in
hand is clearly distinguishable on facts.
23. In the present case, there are no averments in the plaint as
to the market value of the property and as to the inadequacy of
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the consideration. In his evidence, PW-1 has stated that the
transaction of absolute sale could have been worth Rs.60,000-
70,000/- in the year 1967; but the respondents-plaintiffs have not
produced the certificate of valuation of the land or the circle rate
of the property at the time when Ex.P-73 was executed. The
appellants contended that the suit property was sold for a proper
consideration and relied upon the transaction that took place in
the village in the year 1957 to establish that the sale
consideration is appropriate. The trial court while deciding issue
No.4 has held that the respondents-plaintiffs have failed to
adduce any evidence to show that the market value of the suit
property in the year 1967 was much more than what was paid by
the appellants-defendants.
24. The respondents-plaintiffs have placed much reliance upon
Ex.P-69-receipt to show that Shripad Joshi paid an amount of
Rs.800/- to Shankar Shinde who in turn executed the receipt
dated 26.07.1972 in favour of his father and at that time, PW-1
was also present. The appellants-defendants contend that Ex.P69-receipt is forged. Admittedly, neither parties to Ex.P-69-receipt
nor the scribe who wrote the receipt are alive. In the light of
defence plea questioning the correctness of Ex.P-69, the burden
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of proof is on the respondents-plaintiffs to adduce the best
possible evidence to prove Ex.P-69-receipt. The respondentsplaintiffs examined PW-2-Prabhakar, son of the scribe-Gopal
Tukaram Shivade to identify the handwriting and signature of the
scribe of Ex.P-69. In his evidence, PW-2 stated that he is
acquainted with the handwriting and signature of his father and
that Ex.P-69-receipt was written by his father.
25. Gopal Tukaram Shivade-scribe, father of PW-2, was a
Police Patil of Kudal for ten years and he expired in the year
1990. Ex.P-69-receipt was of the year 1972 and PW-2 was
examined in the year 1994. After perusal of Ex.P-69-receipt, the
trial court held that there are glaring defects in the said receipt i.e.
faded and incomplete thumb impression of Shankar Shinde on
the revenue stamp. The trial court has observed that except the
evidence of PW-2, no other evidence has been adduced by the
respondents-plaintiffs to prove Ex.P-69-receipt. Since the scribe
was a Police Patil of Kudal, it was very much possible for the
respondents-plaintiffs to prove the execution of the document by
producing the admitted handwriting of the scribe so as to
compare them with the questioned writing in the receipt. The trial
court also pointed out that though PW-1-Rajaram Joshi claims
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that he was present at the time of execution of Ex.P-69, PW-1
had not signed in it nor attested it, so PW-1’s evidence is of no
help to prove the execution of the receipt. Be it noted that though
Ex.P-69-receipt was of the year 1972, during his life time, based
on Ex.P-69-receipt, Shripad Joshi had not taken any step to
redeem the property. Even after death of Shripad Joshi in 1973,
Ex.P-69-receipt did not see the light of the day till 1980 when the
notice was said to have been issued by the respondents-plaintiffs.
In these factual circumstances, it cannot be said that the plaintiffs
have discharged the burden in proving Ex.P-69-receipt as
genuine to hold that the parties had intended that Ex.P-73-
document is only a “mortgage by conditional sale” and not a sale
with condition to repurchase. The receipt Ex.P-69 cannot be
relied upon as corroborative piece of evidence to hold that part
payment was made by Shripad Joshi and that the parties treated
Ex.P-73 as a “mortgage by conditional sale”.
26. When Ex.P-73 is clear and unambiguous, the first Appellate
Court erred in relying upon Ex.P-69-receipt to draw inference as
to the intention of the parties. The first Appellate Court did not
keep in view that the appellants-defendants have denied Ex.P-69-
receipt, hence, burden lies upon the plaintiffs to prove the
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contents of Ex.P-69 to bring in the intention of the parties that the
transaction between the parties was only a “mortgage by
conditional sale”. When the recitals in Ex.P-73-document is
sufficient to gather the intention of the parties, the first Appellate
Court erred in placing reliance on Ex.P-69-receipt to ascertain the
intention of the parties to upset the findings of fact recorded by
the trial court. The findings of the first Appellate Court and the
High Court in placing reliance upon Ex.P-69-receipt to conclude
that the transaction was a mortgage and not a sale are erroneous
and the same cannot be sustained.
27. Though the transaction and condition to repurchase are
embodied in one document, having regard to the intention of the
parties and the surrounding circumstances, in our considered
view, Ex.P-73 does not fall within the proviso to Section 58(c) of
the Transfer of Property Act. Ex.P-73 a registered document, in
our considered view, is not a mortgage but a transaction of sale
with condition to repurchase. The High Court and the first
Appellate Court did not properly appreciate the recitals in Ex.P-73
and that it does not create expressly or by implication the
relationship of debtor and creditor. The High Court failed to note
that since Shripad Joshi failed to pay the amount within the
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stipulated period of five years, the respondents-plaintiffs have lost
their right to repurchase the property. When the findings of the
first Appellate Court and the High Court though concurrent, whey
they are shown to be perverse, this Court would certainly interfere
with the findings of fact recorded by the courts below. The High
Court has not properly appreciated the evidence and Ex.P-73 in
the light of the surrounding circumstances and the impugned
judgment is liable to be set aside.
28. In the result, the impugned judgment of the High Court in
Second Appeal No.887 of 2003 dated 15.11.2006 is set aside and
these appeals are allowed. The Suit No.100/89 filed by the
respondents-plaintiffs is dismissed and the judgment of the trial
court shall stand restored. No order as to cost.
..………………………….J.
[R. BANUMATHI]
…………………………….J.
[R. SUBHASH REDDY]
New Delhi;
April 23, 2019.
24
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7448 OF 2008
DHARMAJI SHANKAR SHINDE
AND OTHERS …Appellants
VERSUS
RAJARAM SHRIPAD JOSHI (DEAD)
THROUGH LRs. AND OTHERS …Respondents
WITH
CIVIL APPEAL NO.7449 OF 2008
J U D G M E N T
R. BANUMATHI, J.
These appeals arise out of the judgment dated 15.11.2006
passed by the High Court of Bombay dismissing the Second
Appeal No.887 of 2003 thereby upholding the decision of the first
Appellate Court holding that Ex.P-73 is a “mortgage by conditional
sale” and that the respondents-plaintiffs are entitled to redeem the
suit property upon payment of the balance amount.
1
2. Facts giving rise to these appeals are that the respondentsplaintiffs filed a suit for redemption of the suit property bearing
S.No.147 present G.No.750 admeasuring 2 Hectares 18 Are
situated in village Kudal, Jawli taluka and district Satara. Case of
the respondents-plaintiffs is that the suit property was mortgaged
by their father Shripad Joshi on 28.07.1967 in favour of Shankar
Shinde who is the predecessor-in-interest of the appellantsdefendants for Rs.2500/-. The said deed (Ex.P-73) is a deed of
“mortgage by conditional sale” with a condition that if the amount is
not repaid within a period of five years from the date of execution
of the deed, then the same would be treated and construed as an
absolute sale between the parties conferring absolute right of
ownership on Shankar Shinde and his legal representatives. As
per the recitals in the document, the possession of the suit property
was also handed over to Shankar Shinde on the date of execution
of the deed. The respondents-plaintiffs further averred that on
26.07.1972, their father had paid an amount of Rs.800/- to Shankar
Shinde and to that effect Ex.P-69-receipt was executed. Shripad
Joshi died in the year 1973 and the respondents-plaintiffs
succeeded to his estate. Further case of the respondents-plaintiffs
is that in spite of repeated request to the appellants-defendants for
2
redemption of the suit property and delivery of possession of the
property, they failed to receive the money and had not handed over
the possession of the property. After issuance of legal notice dated
19.02.1980, the plaintiffs filed the suit for redemption of the
mortgage.
3. The appellants-defendants resisted the suit contending that
the transaction between their father-Shankar Shinde and the father
of the respondents-plaintiffs-Shripad Joshi was a sale with
condition to repurchase within a stipulated period of five years.
Case of defendants is that since Shripad Joshi, father of the
respondents-plaintiffs failed to repay the money within the
stipulated period of five years and failed to take any step to get the
property reconveyed to them, after the period of five years as per
the terms and conditions of Ex.P-73, father of the appellantsdefendants Shankar Shinde has become the absolute owner of the
suit property and the plaintiffs have no right, title or interest in the
suit property.
4. The trial court dismissed the respondents-plaintiffs suit by
holding that the relationship of debtor and creditor is not
established and the respondents have failed to prove that the
transaction (Ex.P-73) was a mortgage and therefore, they are not
3
entitled to redemption and possession of the suit property. After
referring to the recitals in Ex.P-73, the trial court held that the
respondents-plaintiffs have agreed that if Shripad Joshi does not
pay the amount within stipulated period of five years, the said
document was to be treated as sale deed and in his life time
executant Shripad Joshi did not take any action to get the property
reconveyed. The trial court also held that Ex.P-69-receipt has not
been proved by the respondents-plaintiffs and the respondentsplaintiffs are not entitled to the decree prayed for by them.
5. In appeal, the first Appellate Court set aside the judgment of
the trial court by holding that Ex.P-73 is a “mortgage by conditional
sale” and not an absolute sale deed or a sale with a condition to
repurchase. The first Appellate Court held that payment of
Rs.800/- by Shripad Joshi has been proved and that the
respondents have proved the execution of Ex.P-69-receipt by
examining Prabhakar (PW-2) who is the son of the scribe of Ex.P69-receipt. The first Appellate Court held that Ex.P-73 was a
“mortgage with conditional sale” as per proviso to clause (c) of
Section 58 of the Transfer of Property Act and that the respondents
are entitled to redeem the mortgage subject to the payment of
balance amount of Rs.1700/-. Being aggrieved by the judgment of
4
the first Appellate Court, the appellants preferred second appeal
before the High Court which came to be dismissed by the
impugned judgment.
6. Taking us through the evidence and materials on record, the
learned counsel for the appellants submitted that the amount of
Rs.2500/- was paid by Shankar Shinde as consideration for the
sale and the recitals in Ex.P-73-document clearly show that the
transaction was a sale with condition for reconveyance. It was
submitted that during the five years, original owner Shripad Joshi
did not repay the amount within the stipulated period of five years
and take steps to get reconveyance of the property and therefore,
the document dated 28.07.1967 has become an absolute sale. It
was submitted that merely because the clause regarding sale and
agreement to repurchase are embodied in the same document,
proviso to clause (c) of Section 58 of the Transfer of Property Act is
not attracted and it cannot be said that the transaction is a
mortgage. It was urged that the first Appellate Court and the High
Court failed to consider the intention of the parties and the
surrounding circumstances which clearly show that the parties
intended Ex.P-73 to be a transaction of sale with condition to
repurchase and not mortgage by conditional sale. It was further
5
submitted that the execution of Ex.P-69-receipt has not been
proved by the plaintiffs and the first Appellate Court and the High
Court erred in reversing the well-considered judgment of the trial
court.
7. Per contra, the learned counsel for the respondents-plaintiffs
submitted that since the sale and agreement to repurchase are
embodied in the same document, in view of the mandatory
provision of the proviso to clause (c) of Section 58 of the Transfer
of Property Act, the transaction is to be treated as a “mortgage by
conditional sale” which the respondents-plaintiffs are entitled to
redeem. According to the respondents-plaintiffs, though the words
“….conditional sale….” have been used in the Ex.P-73, parties
intended it to be only a mortgage and not a conditional sale with
condition to repurchase. The learned counsel for the respondentsplaintiffs contended that the first Appellate Court rightly accepted
Ex.P-69-receipt under which the plaintiffs paid a sum of Rs.800/-
and the first Appellate Court rightly held that the document dated
28.07.1967 is a “mortgage by conditional sale” and not a sale with
condition for reconveyance.
8. We have heard Ms. Qurratulain, learned counsel for the
appellants and Mr. Arvind S. Avhad, learned counsel for the
6
respondents-plaintiffs and perused the impugned judgment and the
judgment of the trial court and materials placed on record.
9. In these appeals, the question falling for consideration is the
interpretation of Ex.P-73-document dated 28.07.1967. Upon
consideration of the submissions, the following questions arise for
determination in these appeals:-
(i) Whether the respondents-plaintiffs are right in
contending that in view of the statutory provision viz.
proviso to clause (c) of Section 58 of the Transfer of
Property Act, Ex.P-73-document dated 28.07.1967 is
to be held as a mortgage by conditional sale?
(ii) Whether the clause in Ex.P-73-document that in case
of non-payment of the amount within the stipulated
period of five years, the sale will become permanent
and the transferee will have an absolute right are not
consistent with the intention of the parties of making
the transaction a conditional sale with an option to
repurchase?
10. Section 58(c) of the Transfer of Property Act contains the
definition of “mortgage by conditional sale”. In a “mortgage by
conditional sale”, the transfer is made as a security to a loan
taken by the mortgagor-owner; whereas in a “sale with a condition
to repurchase”, the sale is made by the vendor-owner reserving
with himself a right to repurchase it within a stipulated time. A
7
sale with a condition of retransfer is not a mortgage since the
relationship of debtor and creditor does not exist and there is no
debt for which the transfer is made as a security. Whether the
document is a “mortgage by conditional sale” or “sale with a
condition to repurchase” is to be ascertained from the intention of
the parties. It is trite law that the intention of the parties should be
gathered from the recitals of the document itself.
11. Section 58(c) of the Transfer of Property Act deals with
“mortgage by conditional sale” which reads as under:-
“58. …….
(c) Mortgage by conditional sale.—Where the mortgagor ostensibly
sells the mortgaged property—
on a condition that on default of payment of the mortgagemoney on a certain date the sale shall become absolute, or
on condition that on such payment being made the sale shall
become void, or
on a condition that on such payment being made the buyer
shall transfer the property to the seller,
the transaction is called a mortgage by conditional sale and the
mortgagee, a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to be a
mortgage, unless the condition is embodied in the document
which effects or purports to effect the sale.”
(emphasis added)
12. Proviso to Section 58(c) was added by Act 20 of 1929. Prior
to the amendment, there was a conflict of decisions on the
8
question whether the condition contained in a separate deed
could be taken into account in ascertaining whether a mortgage
was intended by the principal deed. The conflict was resolved by
adding proviso to Section 58(c). Considering the scope of
proviso to Section 58(c) which was added by Act 20 of 1929 and
elaborating upon the distinction between “mortgage by conditional
sale” and “sale with agreement to repurchase”, in Bhaskar
Waman Joshi (deceased) v. Shri Narayan Rambilas Agarwal
(deceased) (1960) 2 SCR 117 : AIR 1960 SC 301, it was
held as under:-
“6. The proviso to this clause was added by Act 20 of 1929. Prior to
the amendment there was a conflict of decisions on the question
whether the condition contained in a separate deed could be taken
into account in ascertaining whether a mortgage was intended by the
principal deed. The Legislature resolved this conflict by enacting that a
transaction shall not be deemed to be a mortgage unless the condition
referred to in the clause is embodied in the document which effects or
purports to effect the sale. But it does not follow that if the condition is
incorporated in the deed effecting or purporting to effect a sale a
mortgage transaction must of necessity have been intended. The
question whether by the incorporation of such a condition a transaction
ostensibly of sale may be regarded as a mortgage is one of intention
of the parties to be gathered from the language of the deed interpreted
in the light of the surrounding circumstances. The circumstance that
the condition is incorporated in the sale deed must undoubtedly be
taken into account, but the value to be attached thereto must vary with
the degree of formality attending upon the transaction. The definition
of a mortgage by conditional sale postulates the creation by the
9
transfer of a relation of mortgagor and mortgagee, the price being
charged on the property conveyed. In a sale coupled with an
agreement to reconvey there is no relation of debtor and creditor nor is
the price charged upon the property conveyed, but the sale is subject
to an obligation to retransfer the property within the period specified.
What distinguishes the two transactions is the relationship of debtor
and creditor and the transfer being a security for the debt. The form in
which the deed is clothed is not decisive. The definition of a mortgage
by conditional sale itself contemplates an ostensible sale of the
property. ……”
13. As per proviso to Section 58(c), if the sale and agreement to
repurchase are embodied in the separate documents then the
transaction cannot be a “mortgage by conditional sale”
irrespective of whether the documents are contemporaneously
executed; but the converse does not hold good. Observing that
the mere fact that there is only one document, it does not
necessarily mean that it must be a mortgage and cannot be a
sale, in Chunchun Jha v. Ebadat Ali and another AIR 1954 SC
345, it was held as under:-
“6. The first is that the intention of the parties is the determining factor:
see Balkishen Das v. Legge 27 IA 58. But there is nothing special
about that in this class of cases and here, as in every other case
where a document has to be construed, the intention must be
gathered, in the first place, from the document itself. If the words are
express and clear, effect must be given to them and any extraneous
enquiry into what was thought or intended is ruled out. The real
question in such a case is not what the parties intended or meant but
what is the legal effect of the words which they used. If, however, there
is ambiguity in the language employed, then it is permissible to look to
10
the surrounding circumstances to determine what was intended. As
Lord Cranworth said in Alderson v. White 44 ER 294 at 928:
“The rule of law on this subject is one dictated by
commonsense; that prima facie an absolute conveyance,
containing nothing to show that the relation of debtor and
creditor is to exist between the parties, does not cease to be an
absolute conveyance and become a mortgage merely because
the vendor stipulates that he shall have a right to repurchase….
In every such case the question is, what, upon a fair
construction, is the meaning of the instruments?”
7. Their Lordships of the Privy Council applied this rule to India in
Bhagwan Sahai v. Bhagwan Din 17 IA 98 at 102 and in Jhanda Singh
v. Wahid-ud-din 43 IA 284 at 293.
8. The converse also holds good and if, on the face of it, an instrument
clearly purports to be a mortgage it cannot be turned into a sale by
reference to a host of extraneous and irrelevant considerations.
Difficulty only arises in the border line cases where there is ambiguity.
Unfortunately, they form the bulk of this kind of transaction.
9. Because of the welter of confusion caused by a multitude of
conflicting decisions the legislature stepped in and amended Section
58(c) of the Transfer of Property Act. Unfortunately that brought in its
train a further conflict of authority. But this much is now clear. If the
sale and agreement to repurchase are embodied in separate
documents, then the transaction cannot be a mortgage whether the
documents are contemporaneously executed or not. But the converse
does not hold good, that is to say, the mere fact that there is only one
document does not necessarily mean that it must be a mortgage and
cannot be a sale. If the condition of repurchase is embodied in the
document that effects or purports to effect the sale, then it is a matter
for construction which was meant. The legislature has made a clear
cut classification and excluded transactions embodied in more than
one document from the category of mortgages, therefore it is
reasonable to suppose that persons who, after the amendment,
choose not to use two documents, do not intend the transaction to be
a sale, unless they displace that presumption by clear and express
11
words; and if the conditions of Section 58(c) are fulfilled, then we are
of opinion that the deed should be construed as a mortgage.
(emphasis added)
In Chunchun Jha, after considering the recitals in the document
thereon and the surrounding circumstances thereon, the Supreme
Court held that there was a relationship of debtor and creditor
between the parties existing at the time of the suit transaction.
14. The question in each case is the determination of the real
character of the transaction to be ascertained from the provisions
of the deed viewed in the light of the surrounding circumstances.
If the words are plain and unambiguous then in the light of the
evidence of the surrounding circumstances, it must be given their
true legal effect. If there is any ambiguity in the language
employed, the intention is to be ascertained from the contents of
the deed and the language of the deed is to be taken into
consideration to ascertain the intention of the parties. Evidence of
contemporaneous conduct of the parties is to be taken into
consideration as the surrounding circumstances.
15. After referring to number of judgments and the essentials of
agreement to qualify as a “mortgage by conditional sale”, in
12
Vithal Tukaram Kadam and another v. Vamanrao Sawalaram
Bhosale and others (2018) 11 SCC 172, it was held as under:-
“14. The essentials of an agreement to qualify as a mortgage by
conditional sale can succinctly be broadly summarised. An ostensible
sale with transfer of possession and ownership, but containing a
clause for reconveyance in accordance with Section 58(c) of the Act,
will clothe the agreement as a mortgage by conditional sale. The
execution of a separate agreement for reconveyance, either
contemporaneously or subsequently, shall militate against the
agreement being mortgage by conditional sale. There must exist a
debtor and creditor relationship. The valuation of the property and the
transaction value along with the duration of time for reconveyance are
important considerations to decide the nature of the agreement. There
will have to be a cumulative consideration of these factors along with
the recitals in the agreement, intention of the parties, coupled with
other attendant circumstances, considered in a holistic manner.”
In the light of the consistent view taken in various decisions, let us
consider whether Ex.P-73 is a “mortgage by conditional sale” or
a “sale with condition for reconveyance” and whether there exists
any debtor and creditor relationship.
16. Intention of the parties as seen from the recitals of
Ex.P-73:- By perusal of Ex.P-73, it is clear that eight days prior to
Ex.P-73, Shripad Joshi has borrowed orally a sum of Rs.700/- for
the purpose of marriage of his daughter. At the time of execution
of Ex.P-73 (28.07.1967), Shirpad Joshi required more money for
the same reason and he executed Ex.P-73-document titled as
13
“mortgage by conditional sale” for a consideration of Rs.2500/-
and on the date of execution of the said document, Shripad Joshi
received only a sum of Rs.1800/-. The earlier borrowed amount
of Rs.700/- was thus adjusted from the sale consideration of
Rs.2500/-. The intention of the parties in putting an end to the
debtor-creditor relationship with respect to the sum of Rs.700/- is
clear from the recitals of the document i.e. adjustment of Rs.700/-
from the total consideration of Rs.2500/- and parties intending to
create a relationship of vendor and vendee by transfer of the suit
property for a consideration of Rs.2500/-. Period of five years
was fixed in Ex.P-73 within which Shirpad Joshi-father of the
respondents-plaintiffs was to repay the said amount. On the date
of execution of the document (Ex.P-73), the possession of the
property was handed over to the appellants-defendants for
cultivation. Further, recitals are to the effect that if the
consideration amount is paid within five years, Shripad Joshiexecutant will get the mortgage redeemed. In case, the amount
is not paid within the stipulated period of five years, the mortgage
shall be treated as an absolute sale and thereafter Shankar
Shinde to pay the land revenue to the government and all other
charges for which executant will have no complaint. The recitals
14
of the document make clear the intention of the parties that if the
amount is not repaid within the stipulated period of five years, the
transferee will have absolute right and the mortgage will be
treated as an absolute sale and the transferee to pay the land
revenue and the other charges. These clauses in Ex.P-73, in our
view, are consistent with the intention of the parties making the
transaction a conditional sale with an option to repurchase.
17. Admittedly, executant of Ex.P-73, Shripad Joshi expired in
the year 1973 and till his life time, he never took any action or
step to get the property reconveyed. After death of Shripad Joshi
in the year 1973, no immediate action was taken by his
successor. Obviously, all the legal action were started in the year
1980 by the present plaintiffs based upon a receipt-Ex.P-69 dated
26.07.1972 under which an amount of Rs.800/- is said to have
been paid to Shankar Shinde. Much emphasis has been placed
by the respondents-plaintiffs on Ex.P-69-receipt which we would
refer a little later. When being confronted with the recitals in
Ex.P-73, in his cross-examination, PW-1-Rajaram Joshi admitted
that “the transaction was that of sale with the condition of
repurchase” and “neither parties are described therein as
mortgagor or mortgagee”. Admission of PW-1 is a formidable
15
evidence indicating the intention of the parties. Having not paid
the amount within the stipulated period of five years, the plaintiffs
have lost their right to repurchase.
18. Mention of “borrowed a sum of Rs.700/-“ in the document is
incidental. Mere incorporation of the word “borrowed” and
“mortgage by conditional sale” cannot by itself establish that there
is a debtor-creditor relationship. In fact, as pointed out earlier, the
recitals of the document make it clear that the parties expressed
their intention to put an end to the debtor-creditor relationship with
respect to the sum of Rs.700/- that existed prior to the execution
of Ex.P-73 and creating a relationship of vendor and vendee by
transfer of the suit property for consideration of Rs.2500/-. As
rightly observed by the trial court, in Ex.P-73, there is no mention
of the rate of interest, right of foreclosure that are essential in a
deed of mortgage.
19. The contention of the respondents is that in view of the
mandatory provisions of the proviso to clause (c) of Section 58 of
the Act, since the sale and the agreement to repurchase are
embodied in the same document (Ex.P-73), the transaction is to
be taken as a mortgage and the conditions enumerated in proviso
to Section 58(c) of the Transfer of Property Act have been
16
satisfied in the present case. On behalf of the respondents, it
was submitted that the existence of creditor-debtor relationship
can be derived from the recital in the document “I have
borrowed”. As pointed out earlier, there are no recitals in the
document to establish creditor-debtor relationship; nor does it
contain the right of foreclosure, payment of interest etc. which are
essential requirements in a deed of mortgage.
20. As per Section 58(a) of the Transfer of Property Act, the
mortgage is the transfer of an interest in specific immovable
property as security for the repayment of the debt; but such
interest itself is immovable property. In the case in hand, nonmention of the mortgage amount for which the interest in the
immovable property was created as security, indicate that the
parties have never intended to create a mortgage deed. If really
the parties have intended the transaction to be a mortgage, while
handing over possession of the property to Shankar Shinde for
cultivation, the parties would have stated that the cultivation and
enjoyment of usufructs are in lieu of the interest payable by
Shripad Joshi on the amount. But that was not to be so. The
transfer of possession and right to cultivate the suit land could be
conceived as the intention of the executant to transfer the right,
17
title and interest in the property which are essentials in any
transaction of a sale.
21. Moreover, as per the clauses in Ex.P-73-document, the
possession of the suit property was also handed over to Shankar
Shinde-father of the appellants. Though, it is stated that the
transferee-Shankar Shinde was to pay the revenue to the
government after five years, according to the appellants, ever
since 1967, land revenue was paid by the father of the appellants.
In his evidence, PW-1 admitted that revenue cess of the suit
property has been paid by Shankar Shinde from 1967 and after
his demise, by his legal heirs. Likewise, a mutation was also
effected in the name of Shankar Shinde even in the year 1967.
During his life time, father of the respondents-Shripad Joshi has
not raised any objection to the mutation nor for the payment of the
revenue cess by Shankar Shinde. Considering the
contemporaneous conduct of the parties, it is clear that Shankar
Shinde and thereafter the appellants were dealing with the suit
property as if they were the owners of the land. The clause in
Ex.P-73 that if the amount is not paid within a period of five years,
the transaction will become a permanent sale deed and
thereafter, the transferee will have the absolute right over the
18
property are consistent with the express intention of parties
making the transaction a conditional sale with option to
repurchase.
22. The respondents-plaintiffs contended that the market value
of the suit property was higher than the transaction value and
therefore, Ex.P-73 is to be construed as a mortgage. In support
of their contention, reliance was placed upon the judgment in
Vithal Tukaram. The facts in Vithal Tukaram are clearly
distinguishable with the facts and evidence on record in the
present case. In that case, the value of the land was Rs.3500/-
far in excess of the amount of Rs.700/- mentioned in the
document. Considering the evidence of the respondentdefendant thereon and the facts of the said case, the Supreme
Court held that the value of the land was far in excess of Rs.700/-
mentioned in the agreement. Further, in the said case, the
defendant thereon did not take any step for mutation of the land
for three long years and the plaintiff thereon specifically objected
to mutation in the name of respondent-defendant. The case in
hand is clearly distinguishable on facts.
23. In the present case, there are no averments in the plaint as
to the market value of the property and as to the inadequacy of
19
the consideration. In his evidence, PW-1 has stated that the
transaction of absolute sale could have been worth Rs.60,000-
70,000/- in the year 1967; but the respondents-plaintiffs have not
produced the certificate of valuation of the land or the circle rate
of the property at the time when Ex.P-73 was executed. The
appellants contended that the suit property was sold for a proper
consideration and relied upon the transaction that took place in
the village in the year 1957 to establish that the sale
consideration is appropriate. The trial court while deciding issue
No.4 has held that the respondents-plaintiffs have failed to
adduce any evidence to show that the market value of the suit
property in the year 1967 was much more than what was paid by
the appellants-defendants.
24. The respondents-plaintiffs have placed much reliance upon
Ex.P-69-receipt to show that Shripad Joshi paid an amount of
Rs.800/- to Shankar Shinde who in turn executed the receipt
dated 26.07.1972 in favour of his father and at that time, PW-1
was also present. The appellants-defendants contend that Ex.P69-receipt is forged. Admittedly, neither parties to Ex.P-69-receipt
nor the scribe who wrote the receipt are alive. In the light of
defence plea questioning the correctness of Ex.P-69, the burden
20
of proof is on the respondents-plaintiffs to adduce the best
possible evidence to prove Ex.P-69-receipt. The respondentsplaintiffs examined PW-2-Prabhakar, son of the scribe-Gopal
Tukaram Shivade to identify the handwriting and signature of the
scribe of Ex.P-69. In his evidence, PW-2 stated that he is
acquainted with the handwriting and signature of his father and
that Ex.P-69-receipt was written by his father.
25. Gopal Tukaram Shivade-scribe, father of PW-2, was a
Police Patil of Kudal for ten years and he expired in the year
1990. Ex.P-69-receipt was of the year 1972 and PW-2 was
examined in the year 1994. After perusal of Ex.P-69-receipt, the
trial court held that there are glaring defects in the said receipt i.e.
faded and incomplete thumb impression of Shankar Shinde on
the revenue stamp. The trial court has observed that except the
evidence of PW-2, no other evidence has been adduced by the
respondents-plaintiffs to prove Ex.P-69-receipt. Since the scribe
was a Police Patil of Kudal, it was very much possible for the
respondents-plaintiffs to prove the execution of the document by
producing the admitted handwriting of the scribe so as to
compare them with the questioned writing in the receipt. The trial
court also pointed out that though PW-1-Rajaram Joshi claims
21
that he was present at the time of execution of Ex.P-69, PW-1
had not signed in it nor attested it, so PW-1’s evidence is of no
help to prove the execution of the receipt. Be it noted that though
Ex.P-69-receipt was of the year 1972, during his life time, based
on Ex.P-69-receipt, Shripad Joshi had not taken any step to
redeem the property. Even after death of Shripad Joshi in 1973,
Ex.P-69-receipt did not see the light of the day till 1980 when the
notice was said to have been issued by the respondents-plaintiffs.
In these factual circumstances, it cannot be said that the plaintiffs
have discharged the burden in proving Ex.P-69-receipt as
genuine to hold that the parties had intended that Ex.P-73-
document is only a “mortgage by conditional sale” and not a sale
with condition to repurchase. The receipt Ex.P-69 cannot be
relied upon as corroborative piece of evidence to hold that part
payment was made by Shripad Joshi and that the parties treated
Ex.P-73 as a “mortgage by conditional sale”.
26. When Ex.P-73 is clear and unambiguous, the first Appellate
Court erred in relying upon Ex.P-69-receipt to draw inference as
to the intention of the parties. The first Appellate Court did not
keep in view that the appellants-defendants have denied Ex.P-69-
receipt, hence, burden lies upon the plaintiffs to prove the
22
contents of Ex.P-69 to bring in the intention of the parties that the
transaction between the parties was only a “mortgage by
conditional sale”. When the recitals in Ex.P-73-document is
sufficient to gather the intention of the parties, the first Appellate
Court erred in placing reliance on Ex.P-69-receipt to ascertain the
intention of the parties to upset the findings of fact recorded by
the trial court. The findings of the first Appellate Court and the
High Court in placing reliance upon Ex.P-69-receipt to conclude
that the transaction was a mortgage and not a sale are erroneous
and the same cannot be sustained.
27. Though the transaction and condition to repurchase are
embodied in one document, having regard to the intention of the
parties and the surrounding circumstances, in our considered
view, Ex.P-73 does not fall within the proviso to Section 58(c) of
the Transfer of Property Act. Ex.P-73 a registered document, in
our considered view, is not a mortgage but a transaction of sale
with condition to repurchase. The High Court and the first
Appellate Court did not properly appreciate the recitals in Ex.P-73
and that it does not create expressly or by implication the
relationship of debtor and creditor. The High Court failed to note
that since Shripad Joshi failed to pay the amount within the
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stipulated period of five years, the respondents-plaintiffs have lost
their right to repurchase the property. When the findings of the
first Appellate Court and the High Court though concurrent, whey
they are shown to be perverse, this Court would certainly interfere
with the findings of fact recorded by the courts below. The High
Court has not properly appreciated the evidence and Ex.P-73 in
the light of the surrounding circumstances and the impugned
judgment is liable to be set aside.
28. In the result, the impugned judgment of the High Court in
Second Appeal No.887 of 2003 dated 15.11.2006 is set aside and
these appeals are allowed. The Suit No.100/89 filed by the
respondents-plaintiffs is dismissed and the judgment of the trial
court shall stand restored. No order as to cost.
..………………………….J.
[R. BANUMATHI]
…………………………….J.
[R. SUBHASH REDDY]
New Delhi;
April 23, 2019.
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