published in http://judis.nic.in/supremecourt/filename=40466
Page 1
‘REPORTABLE’
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4833 OF 2013
(Arising out of Special Leave Petition (Civil) No.578 of 2005)
VANCHALABAI RAGHUNATH ITHAPE
(D) BY LR. Appellant(s)
VERSUS
SHANKARRAO BABURAO BHILARE
(D) BY LRS. AND OTHERS Respondent(s)
JUDGMENT
M.Y. EQBAL, J.
Delay condoned. Leave granted.
2. This appeal by special leave is directed against the
judgment and order dated 19.7.2004 passed by the High
Court of Judicature at Bombay in Second Appeal No.295 of
1988, whereby the second appeal filed by the plaintiffappellant was dismissed and the order of the first appellate
court was confirmed. The appellant is the legal heir of the
original plaintiff/widow who was admittedly the owner of thePage 2
suit property bearing Block No.126 of village Degaon
admeasuring 62 R.
3. The facts of the case can be summarized as under:
4. Plaintiff’s case is that a deed (Ex.31) was executed
by Vanchalabai Raghunath Ithape (the original plaintiff - now
deceased and represented through her legal representative)
in favour of defendant No.1 Shankarrao Baburao Bhilare (the
original defendant/respondent No. 1 herein and now
represented through his legal representatives) on 12.7.1967
for a consideration of Rs.3,000/-, by which the suit land
along with 4 annas share in the mango trees was transferred
to defendant No.1 and possession of the same was handed
over, with a specific stipulation to the effect that the land
was sold on the condition that after receiving Rs.3,000/- in
lump sum within 5 years before end of any Falgun month by
the defendant, the land was to be returned to the plaintiff.
The plaintiff’s case is that it was a mortgage transaction and
the land was to be returned by the original defendant after
receiving the said consideration of Rs.3,000/- within 5 years.
The plaintiff further alleged that the period of 5 years was
2Page 3
nominal as there was no condition that after 5 years the sale
would become final. According to the plaintiff, till 1978 the
defendant was agreeing to redeem the suit property, but
thereafter he started avoiding to do it. On 20.7.1979,
plaintiff issued a notice calling upon defendant to reconvey
the suit property after accepting the amount. Upon noncompliance, plaintiff filed a suit being RCS No.226 of 1979
for redemption of the suit property against defendant No.1
and his brothers/relatives as a suit for partition, which also
included the suit property, was stated to be pending
between them. However, only defendant No.1 contested the
suit by filing written statement contending that the
transaction in question (Exh.31) is not a mortgage
transaction, but was that of outright sale. He denied of
having any relationship of mortgagee and mortgagor
between him and the plaintiff. According to him, the plaintiff
had sold the suit property to him as per the said sale deed,
but only as a concession the period of 5 years was
mentioned in the deed to reconvey the said suit property
3Page 4
and since there was no repayment in 5 years no reconveyance could be claimed.
5. Considering the pleadings and evidence tendered
by the parties, the trial court opined that the suit land was
originally owned by the plaintiff and after execution of the
said deed, possession is with the defendant. On perusing
said Exhibit 31, the trial court found it in the nature of the
sale deed, but in the last paragraph of the said deed, there is
a mention that the said amount of Rs.3,000/- was to be
repaid by the plaintiff within the period of 5 years at the end
of Falgun, and that at that time the defendant was to accept
the said amount and to reconvey the suit land thereafter.
Considering the said recital coupled with the evidence of the
defendant and provisions of Section 58(c) of the Transfer of
Property Act, 1882, the trial court did not consider it to be a
sale transaction and held it to be a mortgage transaction by
conditional sale. The trial court also answered the issue
“whether defendant No.1 proved that time was the essence
of the said contract …” in negative. The suit of the plaintiff
for redemption was accordingly decreed by the trial court
4Page 5
declaring that the plaintiff is entitled to redeem the suit
property after paying the amount of Rs.3,000/- to the
defendant.
6. Aggrieved by aforesaid judgment and order, the
defendant preferred first appeal before the District Judge,
Satara, who, after hearing both the parties, allowed the
appeal holding that there was no relationship of debtor and
creditor between the parties nor it was it the case of the
plaintiff that the defendant was known to her before the
transaction and thus the transaction in question was an
absolute sale with a condition of repurchase, but the plaintiff
failed to get the land reconveyed within stipulated period.
7. The plaintiff took exception to the aforesaid
judgment by filing second appeal before the High Court
raising several contentions. The High Court dismissed the
second appeal mainly relying on the observations made by
the first appellate court that admittedly there was no
relationship of debtor and creditor between the parties nor
was it the case of the plaintiff that the defendant was known
to her before the transaction was settled and there was
5Page 6
nothing on record to show that the said observation was
incorrect and thus the document in question was of absolute
sale with condition of repurchase. The High Court held that
the findings recorded by the first appellate court were
neither perverse nor illegal and, therefore, no interference
was called for in the second appeal under Section 100 of the
Code of Civil Procedure.
8. We have heard Mr. Sushil Karanjkar, learned
counsel appearing on behalf of the appellant and Mr. Vinay
Navare, learned counsel appearing for legal representatives
of respondent No.1.
9. Admittedly, the plaintiff filed the suit claiming a decree
for redemption of the suit property. According to the
plaintiff, the suit land was mortgaged by her to the original
defendant for the mortgaged amount of Rs. 3,000/-; a period
of five years mentioned in the sale deed is nominal; and in
fact it was agreed between the plaintiff and the defendant
that whenever the plaintiff repay the said amount of Rs.
3,000/-, defendant No.1 was to take back the said amount
and redeem the suit property. The trial court decreed the
6Page 7
suit by passing a decree of redemption. The first appellate
court reversed the findings recorded by the trial court and
allowed the appeal and set aside the judgment and decree of
the trial court. As against that, the plaintiff preferred the
second appeal. The High Court did not interfere with the
findings of fact recorded by the first appellate court.
10. Since the first appellate court has gone into the
details of facts and evidence and recorded findings to the
effect that the transaction in question was not a mortgage
but contract sale, we would refer some of the findings
recorded by the first appellate court. Paragraphs 19, 20, 25,
26 and 29 of its judgment are worth quoting herein:
“19. Admittedly the plaintiff is a
widow but she has adopted her grand
son. Rajaram stays at Malgaon. Both
the plaintiff and Rajaram have admitted
that they were in need of money, not
only to purchase another land at
Malgaon but the amount was also
necessary for payment of the Society
debts of Rajaram. In case of mortgage
as well as sale transaction it is quite
possible that for the necessity alienation
takes place. So by itself these two
circumstances would not weigh in favour
of the plaintiff or the defendant. It is
admitted that with the consideration
7Page 8
amount of this sale deed Exh.31, a land
was purchased at Malgaon and that too
in the name of Rajaram. This clearly
indicates that in order to enable
Rajaram to cultivate the land it was
purchased at Malgaon Rajaram
obviously is managing the affairs of the
plaintiff.
20. Apart from the term incorporated in
Exh.31, it is the contention of the
plaintiff that a separate document was
executed by the defendant covering the
suit transaction. That document
according to the plaintiff was taken back
by the defendant at the time of Akshya
Tritiya of 1979, stating that it was
required for the partition suit between
the brothers. A bare perusal of different
stages of the suit indicate that from
time to time the plaintiff has tried to
make improvements in her story. The
defendant has flatly denied that there
was any other document executed on
the date of the sale. For about 11 years
after the transaction the plaintiff was
quite silent. In the plaint, it is
mentioned that after 1978, the
defendant was ready to abide by the
terms but later he avoided the
transaction. In this connection it may be
noted that in the notice Exh.32, issued
by the plaintiff, there is absolutely no
mention of the fact that any such
document had been executed much
less, that it was taken by the defendant
on the Akshya tritiya day. No doubt, it is
an admitted fact that defendant No.2
had filed the Civil suit for partition of the
8Page 9
suit land and that suit was still pending
at the date of the present suit. A pointed
question was asked to the plaintiff as to
why in the notice the fact that another
document had been executed and it was
taken at the time of Akshya Tritiya is not
mentioned. She has no explanation to
offer. According to her nobody else was
present when this document was taken.
xxx xxx xxx
25. Thus, ultimately what remains is the
fact that the sale deed Exh.31 contains
the provision of re-conveyance.
Whether by itself is it sufficient to
conclude that the transaction was a
mortgage transaction. Not only the sale
deed is drafted a pure and simple sale
deed but the plaintiff has tried to make
out inconsistent case. If it had been
agreed that the transaction was to be a
mortgage, normally the Bond writer
would have styled the document as
(conditional sale deed). Rajaram states
that the defendant No.1 was to enjoy
the land in lieu of interest. Neither any
such case is made out nor there any
clue from the recitals in the document.
Entire blot is tried to be put on the Bond
writer by stating that he prompted that
some period should be mentioned. In
fact the suggestion made to the
defendant is that, the bond writer
Sapkar is his friend and he gets
document written from Sapkal, thereby
suggesting that Sapkal had written
some terms not consistent with the
agreement between the parties. It is
9Page 10
strange, even such a suggestion made
when neither plaintiff nor Sapkal have
come out with a positive case that the
document does not incorporate the
terms agreed. At the most their stand is
that, there was contemporaneous
agreement of re-conveyance and that
document has been suppressed. The
existence of the separate document has
been discarded by me.
26. Admittedly, there was no
relationship of debtor and creditor
between the parties, nor is it the case of
the plaintiff that the defendant was
known to her or Rajaram before the
transaction was settled. The document
does not purport to create any
relationship of landlord and tenant. The
shorter period in which the land was to
be got re-conveyed is an indication of
absolute sale with a concession to the
vendor to get back the land in the
stipulated period. In the R of R also in
the other right column there is reference
to this term and the period is of 5 years
only. If there was any other document, it
is not the case of the plaintiff that it was
shown to the village officer. Naturally
we have to proceed on the basis that
the agreement of re-conveyance was an
integral part of the sale deed Exh.31.
No parole evidence to vary the terms of
the same can be allowed. It is quite
easy to make such a case to get over
the obstacle in the way of the plaintiff
but unless the circumstances justify it
cannot be believed.
1Page 11
xxx xxx xxx
29. As against this, the document
Exh.31, apparently shows that it was a
sale absolute. Not only title passed to
the defendant No.1 because there was
consistent recitals that plaintiff and her
heirs have no subsisting interest and
defendant has become full owner. Only
at the end a concession was given to get
the land re-conveyed in 5 years. Hence
in my opinion, the learned Civil Judge
was completely in error in concluding
that the transaction was a mortgage
transaction. I hold that the transaction
was an absolute sale. The plaintiff has
failed to get the land re-conveyed within
stipulated period. Hence, she has lost
her remedy. The appeal therefore, must
succeed.”
11. At the very outset, we are of the view that the
findings recorded by the lower appellate court are pure
findings of fact and hence the High Court has rightly refused
to interfere with those findings in second appeal under
Section 100 of the Code of Civil Procedure. However, we
would like to discuss some of the relevant points on the
basis of those findings recorded by the first appellate court.
The only question for consideration befpre us and which has
rightly been considered by the first appellate court, is as to
1Page 12
whether the transaction in question is mortgage transaction
or it is a sale transaction with a condition of repurchase.
12. The document in question has been described as
Sale Deed transferring the land along with the fixtures and
possession was handed over to the defendant. The relevant
portion of the Sale Deed is extracted hereinbelow:-
“Thus the sale land along with the
fixtures and all rights is being sold to
you with all rights along with its
possession. Thus you may cultivate the
same. Hence forth I or my heirs shall
not be having any right over the same
and you have become the owner of the
said land. Any obstruction would be
removed at my cost. I have received
the consideration for the same for which
there is no complaint. If Rs. 3000/- is
paid within 5 years at the end of any
Falgun month at that time you should
accept the said amount and return the
land to me and on this condition the
land is being sold to you.”
13. Section 58(a) and (c) of the Transfer of Property Act,
1882, needs to be reproduced here:-
“58. “Mortgage”, “mortgagor”,
“mortgagee”, “mortgage-money”
and “mortgage-deed” defined. -- (a)
A mortgage is the transfer of an interest
1Page 13
in specific immoveable property for the
purpose of securing the payment of
money advanced or to be advanced by
way of loan, an existing or future debt,
or the performance of an engagement
which may give rise to a pecuniary
liability.
The transferor is called a
mortgagor, the transferee a mortgagee;
the principal money and interest of
which payment is secured for the time
being are called the mortgage-money,
and the instrument (if any) by which the
transfer is effected is called a mortgagedeed.
(b) …..
(c) Mortgage by conditional sale--
Where, the mortgagor ostensibly sells
the mortgaged property—
on condition that on default of
payment of the mortgage-money 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 condition that on such payment
being made the buyer shall transfer the
property to the seller,
the transaction is called mortgage
by conditional sale and the mortgagee a
mortgagee by conditional sale:
1Page 14
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.”
14. From a perusal of the aforesaid provisions
especially, Section 58(c), it is evidently clear that for the
purpose of bringing a transaction within the meaning of
`mortgage by conditional sale’, the first condition is that the
mortgagor ostensibly sells the mortgaged property on the
condition that on such payment being made, the buyer shall
transfer the property to the seller. Although there is a
presumption that the transaction is a mortgage by
conditional sale in cases where the whole transaction is in
one document, but merely because of a term incorporated in
the same document it cannot always be accepted that the
transaction agreed between the parties was a mortgage
transaction.
15. In the case of Williams vs. Owen, 1840, 5
My.&Cr.303 = English Reports 41 (Chancery) 386, a similar
1Page 15
question arose for consideration as to whether a conveyance
by the plaintiff’s father to the defendant was to be
considered as having been a mortgage as contended by the
plaintiff, or as having been a sale, with a right of repurchase
at a given date. It was held that in a mortgage the debt
subsists and a right to redeem remains with the debtor, but
a sale with a condition of repurchase is not a lending and
borrowing arrangement; no debt subsists and no right to
redeem is reserved by the debtor, but only a personal right
to purchase. This personal right can only be enforced strictly
according to the terms of the deed and at the time agreed
upon.
16. In the instant case, the trial court committed grave
error in construing the document and erroneously held that
the transaction is mortgage and hence, the plaintiff is
entitled to decree of redemption.
17. In the case of Vasudeo Bhikaji Joshi v. Bhau
Lakshman Ravut & Others reported in ILR 1897 XXI 528 a
Bench (comprising Sir C. Farran, Kt., Chief Justice and Mr.
1Page 16
Justice Parsons) of the High Court at Bombay considered a
similar question in which the fact was that the plaintiffs sued
to redeem an alleged mortgage made in 1823 by their
ancestor to the ancestor of the defendant. The alleged
mortgage recited a previous mortgage under which the
mortgagee Gopal Gokhale was in possession, and it stated
that a sale had been contemplated, but the parties could not
agree as to price, but that they had now settled it at Rs.
125/- and the amount due on the mortgage at Rs. 200/-, and
that it was agreed that if within four years the mortgagor
paid Rs. 125/- with interest, he should get back the land; if
not, that the land should be the absolute property of
Gokhale. On these facts, the Court held that:-
“This was not a mortgage but a sale. It
was an agreement which put an end to
the previously existing mortgage. A
mere stipulation for repurchase does not
make a transaction a mortgage. To
make a mortgage there must be a debt,
and here there was no debt, nor was the
property here conveyed as security.”
1Page 17
18. In the case of Tamboli Ramanlal Motilal (Dead)
by LRs. v. Ghanchi Chimanlal Keshavlal (Dead) by
LRs. & Another, AIR 1992 SC 1236, the facts of the case
were similar to this case. In that case, a document of
transfer was executed and the property was handed over.
At the same time, the document proceeded to state that the
property is sold conditionally for a period of five years and
possession is handed over. The document stated:
“Therefore, you and your heirs and legal representatives are
hereafter entitled to use, enjoy and lease the said houses
under the ownership right.” The further clause in the
document was to the effect that the executant shall repay
the amount within a period of five years and in case he fails
to repay neither he nor his heirs or legal representatives
would have any right to take back the said properties. The
last important clause was that after the period of five years
the transferee would have a right to get the municipal
records mutated in his name and pay tax. On these facts,
this Court held that:-
1Page 18
“16. In order to appreciate the
respective contentions, it is necessary
for us to analyse Ex. 26 dated December
11, 1950.
Before that, it is necessary to
utter a word of caution.
Having regard
to the nice distinctions between
a
mortgage by conditional sale
and
a sale with an option to repurchase,
one
should be guided by the terms of the
document alone without much help from
the case law.
Of course, cases could be
referred for the purposes of interpreting
a particular clause to gather the
intention.
Then again, it is also settled
law that nomenclature of the document
is hardly conclusive and much
importance cannot be attached to the
nomenclature alone since it is the real
intention which requires to be gathered.
It is from this angle we propose to
analyse the document.
No doubt the
document is styled as a deed of
conditional sale, but as we have just
now observed, that is not conclusive of
the matter.
17. What does the executant do under
the document?
He takes a sum of Rs.
5,000/- in cash.
The particulars are (a)
Rs 2,499/- i.e. Rs 899/- by mortgage of
his house on 27-1-1944 and (b) Rs.
1,600 by a further mortgage on 31-5-
1947 totalling to Rs 2,499/-.
Thereafter,
an amount of Rs 2,501/- in cash was
taken from the transferee.
The purpose
was to repay miscellaneous debts and
domestic expenses and business.
It has
to be carefully noted that this amount of
Rs 5,000/- was not taken as a loan at all.
1Page 19
As rightly observed by the High Court,
by executing this document the
executant discharges all the prior debts
and outstandings.
Where, therefore, for
a consideration of a sum of Rs 5,000/-
with the conditional sale is executed,
we
are unable to see how the relationship
of debtor and creditor can be forged in.
In other words,
by reading the
documents as a whole, we are unable to
conclude that there is a debt and the
relationship between the parties is that
of a debtor and a creditor. This is a vital
point to determine the nature of the
transaction.”
This Court, therefore, held that
the document was not a
mortgage by conditional sale, rather the document was
transfer by way of sale with a condition to repurchase.
19. In the instant case, the alleged sale document was
executed in the year 1967 transferring the suit property by
way of sale subject to one stipulation/condition that on
receiving the sale amount of Rs. 3,000/- within five years the
land was to be returned to the plaintiff-vendor. It is also not
in dispute that after transfer of the land the defendant-
1Page 20
respondent No. 1 came in possession and used & enjoyed
the suit property as an absolute owner. It was only after 11
years that the plaintiff-appellant filed the suit alleging that
the suit property was mortgaged in favour of the
defendant/respondent No.1 herein with a condition to
reconvey the land.
20. In the aforesaid premises, we do not find any
reason to interfere with the findings recorded by the first
appellate court. As stated above, the High Court has rightly
not interfered with the findings of fact recorded by the first
appellate court.
21. For the aforesaid reasons, we do not find any
merit in this appeal which is, accordingly, dismissed, but
without any costs.
…………………………….J.
(P. Sathasivam)
…………………………….J.
(M.Y. Eqbal)
New Delhi,
2Page 21
July 1, 2013.
2
Page 1
‘REPORTABLE’
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4833 OF 2013
(Arising out of Special Leave Petition (Civil) No.578 of 2005)
VANCHALABAI RAGHUNATH ITHAPE
(D) BY LR. Appellant(s)
VERSUS
SHANKARRAO BABURAO BHILARE
(D) BY LRS. AND OTHERS Respondent(s)
JUDGMENT
M.Y. EQBAL, J.
Delay condoned. Leave granted.
2. This appeal by special leave is directed against the
judgment and order dated 19.7.2004 passed by the High
Court of Judicature at Bombay in Second Appeal No.295 of
1988, whereby the second appeal filed by the plaintiffappellant was dismissed and the order of the first appellate
court was confirmed. The appellant is the legal heir of the
original plaintiff/widow who was admittedly the owner of thePage 2
suit property bearing Block No.126 of village Degaon
admeasuring 62 R.
3. The facts of the case can be summarized as under:
4. Plaintiff’s case is that a deed (Ex.31) was executed
by Vanchalabai Raghunath Ithape (the original plaintiff - now
deceased and represented through her legal representative)
in favour of defendant No.1 Shankarrao Baburao Bhilare (the
original defendant/respondent No. 1 herein and now
represented through his legal representatives) on 12.7.1967
for a consideration of Rs.3,000/-, by which the suit land
along with 4 annas share in the mango trees was transferred
to defendant No.1 and possession of the same was handed
over, with a specific stipulation to the effect that the land
was sold on the condition that after receiving Rs.3,000/- in
lump sum within 5 years before end of any Falgun month by
the defendant, the land was to be returned to the plaintiff.
The plaintiff’s case is that it was a mortgage transaction and
the land was to be returned by the original defendant after
receiving the said consideration of Rs.3,000/- within 5 years.
The plaintiff further alleged that the period of 5 years was
2Page 3
nominal as there was no condition that after 5 years the sale
would become final. According to the plaintiff, till 1978 the
defendant was agreeing to redeem the suit property, but
thereafter he started avoiding to do it. On 20.7.1979,
plaintiff issued a notice calling upon defendant to reconvey
the suit property after accepting the amount. Upon noncompliance, plaintiff filed a suit being RCS No.226 of 1979
for redemption of the suit property against defendant No.1
and his brothers/relatives as a suit for partition, which also
included the suit property, was stated to be pending
between them. However, only defendant No.1 contested the
suit by filing written statement contending that the
transaction in question (Exh.31) is not a mortgage
transaction, but was that of outright sale. He denied of
having any relationship of mortgagee and mortgagor
between him and the plaintiff. According to him, the plaintiff
had sold the suit property to him as per the said sale deed,
but only as a concession the period of 5 years was
mentioned in the deed to reconvey the said suit property
3Page 4
and since there was no repayment in 5 years no reconveyance could be claimed.
5. Considering the pleadings and evidence tendered
by the parties, the trial court opined that the suit land was
originally owned by the plaintiff and after execution of the
said deed, possession is with the defendant. On perusing
said Exhibit 31, the trial court found it in the nature of the
sale deed, but in the last paragraph of the said deed, there is
a mention that the said amount of Rs.3,000/- was to be
repaid by the plaintiff within the period of 5 years at the end
of Falgun, and that at that time the defendant was to accept
the said amount and to reconvey the suit land thereafter.
Considering the said recital coupled with the evidence of the
defendant and provisions of Section 58(c) of the Transfer of
Property Act, 1882, the trial court did not consider it to be a
sale transaction and held it to be a mortgage transaction by
conditional sale. The trial court also answered the issue
“whether defendant No.1 proved that time was the essence
of the said contract …” in negative. The suit of the plaintiff
for redemption was accordingly decreed by the trial court
4Page 5
declaring that the plaintiff is entitled to redeem the suit
property after paying the amount of Rs.3,000/- to the
defendant.
6. Aggrieved by aforesaid judgment and order, the
defendant preferred first appeal before the District Judge,
Satara, who, after hearing both the parties, allowed the
appeal holding that there was no relationship of debtor and
creditor between the parties nor it was it the case of the
plaintiff that the defendant was known to her before the
transaction and thus the transaction in question was an
absolute sale with a condition of repurchase, but the plaintiff
failed to get the land reconveyed within stipulated period.
7. The plaintiff took exception to the aforesaid
judgment by filing second appeal before the High Court
raising several contentions. The High Court dismissed the
second appeal mainly relying on the observations made by
the first appellate court that admittedly there was no
relationship of debtor and creditor between the parties nor
was it the case of the plaintiff that the defendant was known
to her before the transaction was settled and there was
5Page 6
nothing on record to show that the said observation was
incorrect and thus the document in question was of absolute
sale with condition of repurchase. The High Court held that
the findings recorded by the first appellate court were
neither perverse nor illegal and, therefore, no interference
was called for in the second appeal under Section 100 of the
Code of Civil Procedure.
8. We have heard Mr. Sushil Karanjkar, learned
counsel appearing on behalf of the appellant and Mr. Vinay
Navare, learned counsel appearing for legal representatives
of respondent No.1.
9. Admittedly, the plaintiff filed the suit claiming a decree
for redemption of the suit property. According to the
plaintiff, the suit land was mortgaged by her to the original
defendant for the mortgaged amount of Rs. 3,000/-; a period
of five years mentioned in the sale deed is nominal; and in
fact it was agreed between the plaintiff and the defendant
that whenever the plaintiff repay the said amount of Rs.
3,000/-, defendant No.1 was to take back the said amount
and redeem the suit property. The trial court decreed the
6Page 7
suit by passing a decree of redemption. The first appellate
court reversed the findings recorded by the trial court and
allowed the appeal and set aside the judgment and decree of
the trial court. As against that, the plaintiff preferred the
second appeal. The High Court did not interfere with the
findings of fact recorded by the first appellate court.
10. Since the first appellate court has gone into the
details of facts and evidence and recorded findings to the
effect that the transaction in question was not a mortgage
but contract sale, we would refer some of the findings
recorded by the first appellate court. Paragraphs 19, 20, 25,
26 and 29 of its judgment are worth quoting herein:
“19. Admittedly the plaintiff is a
widow but she has adopted her grand
son. Rajaram stays at Malgaon. Both
the plaintiff and Rajaram have admitted
that they were in need of money, not
only to purchase another land at
Malgaon but the amount was also
necessary for payment of the Society
debts of Rajaram. In case of mortgage
as well as sale transaction it is quite
possible that for the necessity alienation
takes place. So by itself these two
circumstances would not weigh in favour
of the plaintiff or the defendant. It is
admitted that with the consideration
7Page 8
amount of this sale deed Exh.31, a land
was purchased at Malgaon and that too
in the name of Rajaram. This clearly
indicates that in order to enable
Rajaram to cultivate the land it was
purchased at Malgaon Rajaram
obviously is managing the affairs of the
plaintiff.
20. Apart from the term incorporated in
Exh.31, it is the contention of the
plaintiff that a separate document was
executed by the defendant covering the
suit transaction. That document
according to the plaintiff was taken back
by the defendant at the time of Akshya
Tritiya of 1979, stating that it was
required for the partition suit between
the brothers. A bare perusal of different
stages of the suit indicate that from
time to time the plaintiff has tried to
make improvements in her story. The
defendant has flatly denied that there
was any other document executed on
the date of the sale. For about 11 years
after the transaction the plaintiff was
quite silent. In the plaint, it is
mentioned that after 1978, the
defendant was ready to abide by the
terms but later he avoided the
transaction. In this connection it may be
noted that in the notice Exh.32, issued
by the plaintiff, there is absolutely no
mention of the fact that any such
document had been executed much
less, that it was taken by the defendant
on the Akshya tritiya day. No doubt, it is
an admitted fact that defendant No.2
had filed the Civil suit for partition of the
8Page 9
suit land and that suit was still pending
at the date of the present suit. A pointed
question was asked to the plaintiff as to
why in the notice the fact that another
document had been executed and it was
taken at the time of Akshya Tritiya is not
mentioned. She has no explanation to
offer. According to her nobody else was
present when this document was taken.
xxx xxx xxx
25. Thus, ultimately what remains is the
fact that the sale deed Exh.31 contains
the provision of re-conveyance.
Whether by itself is it sufficient to
conclude that the transaction was a
mortgage transaction. Not only the sale
deed is drafted a pure and simple sale
deed but the plaintiff has tried to make
out inconsistent case. If it had been
agreed that the transaction was to be a
mortgage, normally the Bond writer
would have styled the document as
(conditional sale deed). Rajaram states
that the defendant No.1 was to enjoy
the land in lieu of interest. Neither any
such case is made out nor there any
clue from the recitals in the document.
Entire blot is tried to be put on the Bond
writer by stating that he prompted that
some period should be mentioned. In
fact the suggestion made to the
defendant is that, the bond writer
Sapkar is his friend and he gets
document written from Sapkal, thereby
suggesting that Sapkal had written
some terms not consistent with the
agreement between the parties. It is
9Page 10
strange, even such a suggestion made
when neither plaintiff nor Sapkal have
come out with a positive case that the
document does not incorporate the
terms agreed. At the most their stand is
that, there was contemporaneous
agreement of re-conveyance and that
document has been suppressed. The
existence of the separate document has
been discarded by me.
26. Admittedly, there was no
relationship of debtor and creditor
between the parties, nor is it the case of
the plaintiff that the defendant was
known to her or Rajaram before the
transaction was settled. The document
does not purport to create any
relationship of landlord and tenant. The
shorter period in which the land was to
be got re-conveyed is an indication of
absolute sale with a concession to the
vendor to get back the land in the
stipulated period. In the R of R also in
the other right column there is reference
to this term and the period is of 5 years
only. If there was any other document, it
is not the case of the plaintiff that it was
shown to the village officer. Naturally
we have to proceed on the basis that
the agreement of re-conveyance was an
integral part of the sale deed Exh.31.
No parole evidence to vary the terms of
the same can be allowed. It is quite
easy to make such a case to get over
the obstacle in the way of the plaintiff
but unless the circumstances justify it
cannot be believed.
1Page 11
xxx xxx xxx
29. As against this, the document
Exh.31, apparently shows that it was a
sale absolute. Not only title passed to
the defendant No.1 because there was
consistent recitals that plaintiff and her
heirs have no subsisting interest and
defendant has become full owner. Only
at the end a concession was given to get
the land re-conveyed in 5 years. Hence
in my opinion, the learned Civil Judge
was completely in error in concluding
that the transaction was a mortgage
transaction. I hold that the transaction
was an absolute sale. The plaintiff has
failed to get the land re-conveyed within
stipulated period. Hence, she has lost
her remedy. The appeal therefore, must
succeed.”
11. At the very outset, we are of the view that the
findings recorded by the lower appellate court are pure
findings of fact and hence the High Court has rightly refused
to interfere with those findings in second appeal under
Section 100 of the Code of Civil Procedure. However, we
would like to discuss some of the relevant points on the
basis of those findings recorded by the first appellate court.
The only question for consideration befpre us and which has
rightly been considered by the first appellate court, is as to
1Page 12
whether the transaction in question is mortgage transaction
or it is a sale transaction with a condition of repurchase.
12. The document in question has been described as
Sale Deed transferring the land along with the fixtures and
possession was handed over to the defendant. The relevant
portion of the Sale Deed is extracted hereinbelow:-
“Thus the sale land along with the
fixtures and all rights is being sold to
you with all rights along with its
possession. Thus you may cultivate the
same. Hence forth I or my heirs shall
not be having any right over the same
and you have become the owner of the
said land. Any obstruction would be
removed at my cost. I have received
the consideration for the same for which
there is no complaint. If Rs. 3000/- is
paid within 5 years at the end of any
Falgun month at that time you should
accept the said amount and return the
land to me and on this condition the
land is being sold to you.”
13. Section 58(a) and (c) of the Transfer of Property Act,
1882, needs to be reproduced here:-
“58. “Mortgage”, “mortgagor”,
“mortgagee”, “mortgage-money”
and “mortgage-deed” defined. -- (a)
A mortgage is the transfer of an interest
1Page 13
in specific immoveable property for the
purpose of securing the payment of
money advanced or to be advanced by
way of loan, an existing or future debt,
or the performance of an engagement
which may give rise to a pecuniary
liability.
The transferor is called a
mortgagor, the transferee a mortgagee;
the principal money and interest of
which payment is secured for the time
being are called the mortgage-money,
and the instrument (if any) by which the
transfer is effected is called a mortgagedeed.
(b) …..
(c) Mortgage by conditional sale--
Where, the mortgagor ostensibly sells
the mortgaged property—
on condition that on default of
payment of the mortgage-money 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 condition that on such payment
being made the buyer shall transfer the
property to the seller,
the transaction is called mortgage
by conditional sale and the mortgagee a
mortgagee by conditional sale:
1Page 14
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.”
14. From a perusal of the aforesaid provisions
especially, Section 58(c), it is evidently clear that for the
purpose of bringing a transaction within the meaning of
`mortgage by conditional sale’, the first condition is that the
mortgagor ostensibly sells the mortgaged property on the
condition that on such payment being made, the buyer shall
transfer the property to the seller. Although there is a
presumption that the transaction is a mortgage by
conditional sale in cases where the whole transaction is in
one document, but merely because of a term incorporated in
the same document it cannot always be accepted that the
transaction agreed between the parties was a mortgage
transaction.
15. In the case of Williams vs. Owen, 1840, 5
My.&Cr.303 = English Reports 41 (Chancery) 386, a similar
1Page 15
question arose for consideration as to whether a conveyance
by the plaintiff’s father to the defendant was to be
considered as having been a mortgage as contended by the
plaintiff, or as having been a sale, with a right of repurchase
at a given date. It was held that in a mortgage the debt
subsists and a right to redeem remains with the debtor, but
a sale with a condition of repurchase is not a lending and
borrowing arrangement; no debt subsists and no right to
redeem is reserved by the debtor, but only a personal right
to purchase. This personal right can only be enforced strictly
according to the terms of the deed and at the time agreed
upon.
16. In the instant case, the trial court committed grave
error in construing the document and erroneously held that
the transaction is mortgage and hence, the plaintiff is
entitled to decree of redemption.
17. In the case of Vasudeo Bhikaji Joshi v. Bhau
Lakshman Ravut & Others reported in ILR 1897 XXI 528 a
Bench (comprising Sir C. Farran, Kt., Chief Justice and Mr.
1Page 16
Justice Parsons) of the High Court at Bombay considered a
similar question in which the fact was that the plaintiffs sued
to redeem an alleged mortgage made in 1823 by their
ancestor to the ancestor of the defendant. The alleged
mortgage recited a previous mortgage under which the
mortgagee Gopal Gokhale was in possession, and it stated
that a sale had been contemplated, but the parties could not
agree as to price, but that they had now settled it at Rs.
125/- and the amount due on the mortgage at Rs. 200/-, and
that it was agreed that if within four years the mortgagor
paid Rs. 125/- with interest, he should get back the land; if
not, that the land should be the absolute property of
Gokhale. On these facts, the Court held that:-
“This was not a mortgage but a sale. It
was an agreement which put an end to
the previously existing mortgage. A
mere stipulation for repurchase does not
make a transaction a mortgage. To
make a mortgage there must be a debt,
and here there was no debt, nor was the
property here conveyed as security.”
1Page 17
18. In the case of Tamboli Ramanlal Motilal (Dead)
by LRs. v. Ghanchi Chimanlal Keshavlal (Dead) by
LRs. & Another, AIR 1992 SC 1236, the facts of the case
were similar to this case. In that case, a document of
transfer was executed and the property was handed over.
At the same time, the document proceeded to state that the
property is sold conditionally for a period of five years and
possession is handed over. The document stated:
“Therefore, you and your heirs and legal representatives are
hereafter entitled to use, enjoy and lease the said houses
under the ownership right.” The further clause in the
document was to the effect that the executant shall repay
the amount within a period of five years and in case he fails
to repay neither he nor his heirs or legal representatives
would have any right to take back the said properties. The
last important clause was that after the period of five years
the transferee would have a right to get the municipal
records mutated in his name and pay tax. On these facts,
this Court held that:-
1Page 18
“16. In order to appreciate the
respective contentions, it is necessary
for us to analyse Ex. 26 dated December
11, 1950.
Before that, it is necessary to
utter a word of caution.
Having regard
to the nice distinctions between
a
mortgage by conditional sale
and
a sale with an option to repurchase,
one
should be guided by the terms of the
document alone without much help from
the case law.
Of course, cases could be
referred for the purposes of interpreting
a particular clause to gather the
intention.
Then again, it is also settled
law that nomenclature of the document
is hardly conclusive and much
importance cannot be attached to the
nomenclature alone since it is the real
intention which requires to be gathered.
It is from this angle we propose to
analyse the document.
No doubt the
document is styled as a deed of
conditional sale, but as we have just
now observed, that is not conclusive of
the matter.
17. What does the executant do under
the document?
He takes a sum of Rs.
5,000/- in cash.
The particulars are (a)
Rs 2,499/- i.e. Rs 899/- by mortgage of
his house on 27-1-1944 and (b) Rs.
1,600 by a further mortgage on 31-5-
1947 totalling to Rs 2,499/-.
Thereafter,
an amount of Rs 2,501/- in cash was
taken from the transferee.
The purpose
was to repay miscellaneous debts and
domestic expenses and business.
It has
to be carefully noted that this amount of
Rs 5,000/- was not taken as a loan at all.
1Page 19
As rightly observed by the High Court,
by executing this document the
executant discharges all the prior debts
and outstandings.
Where, therefore, for
a consideration of a sum of Rs 5,000/-
with the conditional sale is executed,
we
are unable to see how the relationship
of debtor and creditor can be forged in.
In other words,
by reading the
documents as a whole, we are unable to
conclude that there is a debt and the
relationship between the parties is that
of a debtor and a creditor. This is a vital
point to determine the nature of the
transaction.”
This Court, therefore, held that
the document was not a
mortgage by conditional sale, rather the document was
transfer by way of sale with a condition to repurchase.
19. In the instant case, the alleged sale document was
executed in the year 1967 transferring the suit property by
way of sale subject to one stipulation/condition that on
receiving the sale amount of Rs. 3,000/- within five years the
land was to be returned to the plaintiff-vendor. It is also not
in dispute that after transfer of the land the defendant-
1Page 20
respondent No. 1 came in possession and used & enjoyed
the suit property as an absolute owner. It was only after 11
years that the plaintiff-appellant filed the suit alleging that
the suit property was mortgaged in favour of the
defendant/respondent No.1 herein with a condition to
reconvey the land.
20. In the aforesaid premises, we do not find any
reason to interfere with the findings recorded by the first
appellate court. As stated above, the High Court has rightly
not interfered with the findings of fact recorded by the first
appellate court.
21. For the aforesaid reasons, we do not find any
merit in this appeal which is, accordingly, dismissed, but
without any costs.
…………………………….J.
(P. Sathasivam)
…………………………….J.
(M.Y. Eqbal)
New Delhi,
2Page 21
July 1, 2013.
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