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CASE NO.: Appeal (civil)  1958 of 2008

PETITIONER: Vishwanath Dadoba Karale

RESPONDENT: Prisa Shantappa Upadhye (D) Th. LRs

DATE OF JUDGMENT: 13/03/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 1958 OF 2008 (Arising out of SLP (C) No. 18127 of 2006)

S.B. Sinha, J.

       Leave granted.

1.      Parisa Shantappa Upadhye, the predecessor in interest of the  respondent, was the owner of the land.    He entered into a transaction with  the appellant herein on or about 7.10.1969. The deed was titled as  Conditional Sale Deed of immovable property.  The land, in question, was  situate in the town of Kolhapur in a market area.  A shed was constructed  thereupon.  The relevant terms of the said document evidencing the  transaction in question are as under:- "2.     The property described above is sold by me for a  period of five years and you are put into possession  thereof.   Consideration of Rs. 500/- for the said sale is  paid by you to me and I have received the same and  there is no grievance with respect to the said receipt.

3.      You are entitled to enjoy the possession of the said  property till the said period and get the property  transferred in your name and pay the municipal  assessment with respect thereto.

4.      In case the above said amount of Rs. 500/- is repaid  to you by the end of the above said period or prior  thereto, you will accept the same and restore the said  property in my possession and execute the sale deed in  my favour as per the agreement between us.

5.      At the end of the period mentioned hereinabove or  also before the expiry of the said period at any time if  we return the sale deed amount of Rs. 500/-, after  accepting the said amount you have to return the  possession in our favour and to execute sale deed in our  favour.   This is agreed between us."

2.      The plaintiff/respondent offered to return the said amount of Rs. 500/-  to the appellant/defendant.   It was not accepted on the premise that he had  acquired an absolute title thereto.  A suit for redemption of mortgage was  filed on or about 24.2.1981.  The issue which arose for consideration before  the courts below was as to whether the transaction in question contemplated

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conditional sale with an option to purchase or it was a conditional mortgage.          3.      The High Court by reason of the impugned judgment upon  construction of the said deed dated 7.10.1969 (Exhibit 40) opined that the  transaction constituted a mortgage and not an out and out sale.  Notice was  taken of the fact that only one document was executed.

4.      Mr. Shivaji M. Jadhav, learned counsel appearing on behalf of the  appellant would submit that the High Court committed a serious error in  passing the impugned judgment insofar as it failed to take into consideration  the concurrent finding of both the learned Trial Judge as also the first  appellate court that the transaction was that of a sale and not a mortgage.   The High Court, it was urged, committed a serious error in re-appreciating  the evidence in a second appeal.

5.      Mr. Vinay Navare, the learned counsel appearing on behalf of the  respondent, on the other hand, would support the judgment contending that  not only that a sale for a fixed period is not envisaged under the Transfer of  Property Act, the amount of loan could have been returned even before the  expiry of a period of five years.          6.      An answer to the question as to whether the transaction is a sale or a  mortgage not only would depend upon the language used in the deed, but  also the circumstances attending thereto.  The plaintiff in his deposition  categorically stated that his father had taken by way of a loan a sum of Rs.  500/- from the appellants.

7.      There are also evidences on record to show that the market price of  the land was higher than Rs. 500/- at the relevant point of time.

8.      When an absolute transfer of property is made, it cannot be limited to  a period.  The transaction shows that the appellant was to have title in the  property for a period of five years.    Appellant was to remain in possession  thereof only for the said period.  Plaintiff/respondent was entitled to tender  the said amount of Rs. 500/- not only at the expiry of the said period but  even prior thereto.  On tender of such document, the appellant was required  to execute a deed of reconveyance in favour of the plaintiff/respondent.   9.      Such a transaction, in our opinion cannot be construed to be a  transaction of sale.   It was a mortgage as has rightly been held by the High  Court.

       A suit for redemption of mortgage, therefore was maintainable.  A suit  for redemption is essentially a suit for recovery of possession.

Section 58(c) of the Transfer of Property Act, 1882 reads as under:- "58     "Mortgage", "mortgagor", "mortgagee",  "mortgage-money" and "mortgage-deed" defined. \026  (a) ****        ****    ****

(b)        ****       ****         ****         ****       ****  

(c)     Mortgage by conditional sale \026 Where, the mortgagor  ostensibly sells the mortgaged property \026          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

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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."          

10.     In this case, the terms of the sale and condition of repurchase were  recorded in one document.    

       The question came up for consideration in P.L. Bapuswami Vs. N.  Pattay Gounder [(1966) 2 SCR 918], where this Court laid down the law in  the following terms; "\005.. In the first place, there is the important  circumstance that the condition for repurchase is  embodied in the same document.   In the second place,  there is the significant fact that the consideration for Ex.  B-1 was Rs. 4,000/-, while the real value of the property  was, according to the Munsif and the Subordinate Judge,  Rs. 8,000/-.   The high Court has dealt with this question  and reached the finding that the value of the property was  Rs. 5,500/-, but it is submitted by Mr. Ganapathi Iyer on  behalf of the appellant that the question of valuation was  one of fact and the High Court was not entitled to go into  the question in the second appeal.   The criticism of  learned Counsel for the appellant is justified and we must  proceed on the basis that the valuation of the property  was Rs. 8,000/- and since the consideration for Ex. B-1  was only Rs. 4,000/- it was a strong circumstance  suggesting that the transaction was a mortgage and not an  out right sale.  In the third place, there is the  circumstance that the patta was not transferred to the 1st  defendant after the execution of Ex. B-1 by Palani  Moopan.   It appears that defendant no. 1 did not apply  for the transfer of patta and the patta admittedly  continued in the name of Palani Moopan even after the  execution of Ex. B-1.   Exhibits A-6 and A-7 are certified  copies of thandal extract of patta for the years 1945-54  and they prove this fact.   These exhibits also show that  the plaintiff had obtained patta for the land on the basis  of Ex. A-2.   The registered deed of transfer of patta was  executed by the sons of Palani Moopan in favour of the  plaintiff.   There is also the circumstance that the kist for  the land was continued to be paid by Palani Moopan and  after his death, by the sons of Palani Moopan.   Lastly,  there is the important circumstance that the consideration  for reconveyance was Rs. 4,000/-, the same amount as  the consideration for Ex. B-1.  Having regard to the  language of the document, Ex. B-1 and examining it in  the light of these circumstances we are of the opinion that  the transaction under Ex. B-1 was mortgage by  conditional sale and the view taken by the High Court  with regard to the legal effect of the transaction must be  reversed\005.."

11.     This Court in Bishwanath Prasad Singh Vs. Rajendra Prasad and  Another [(2006) 4 SCC 432] noticing Pandit Chunchun Jha Vs. Sk. Ebadat  Ali [(1955) 1 SCR 174] and several other decisions, opined that although the  deed was termed as "vaibulwafa", but therein the transfer was complete and  not partial.

       However, in Tulsi and Others Vs. Chandrika Prasad and Others  [(2006) 8 SCC 322] distinguishing Bishwanath Prasad Singh (supra), it was  held;

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"14. Before we consider the stipulations contained in  the deed dated 30-12-1968,  it may be noticed that in  terms of Section 58(c) of the Transfer of Property Act,  a transaction may be held to be a mortgage with  conditional sale if it is evidenced by one document.    The condition precedent for arriving at a finding that  the transaction involves mortgage by way of  conditional sale is that there must be an ostensible  sale.   It must contain a condition that on default of  payment of 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.  

15. A distinction exists between a mortgage by way of  conditional sale and a sale with condition of purchase.    In the former the debt subsists and a right to redeem  remains with the debtor but in case of the latter the  transaction does not evidence an arrangement of  lending and borrowing and, thus, right to redeem is  not reserved thereby.

16. The proviso appended to Section 58(c) of the  Transfer of Property Act was added by Act 20 of 1929  for resolution of the conflict in decisions on the  question whether the condition relating to  reconveyance contained in a separate document could  be taken into consideration in finding out whether a  mortgage was intended to be created by the principal  deed.

17. The transaction in this case has been evidenced by  one document.   Section 58(c) of the Transfer of  Property Act will, therefore, apply."  

       Recently in Manjabai Krishna Patil (D) by LRs. Vs. Raghunath Revaji  Patil & Anr. [2007 (3) SCALE 331], it was held; "12. Proviso appended to Section 58(c) is clear and  unambiguous.  A legal fiction is created thereby  that the transaction shall not be held to be a  mortgage by conditional sale, unless a condition is  embodied in the document which effects or  purports to effect the sale.  Were two documents  are executed, the transaction in question would not  amount to a mortgage by way of conditional sale.    In a case of this nature, ordinarily the same would  be considered to be a deed of sale coupled with an  agreement of reconveyance."  

In the facts of that case, however, it was held that no relationship of  debtor and creditor came in existence and no security was created and in fact  conveyance of the title of the property by the respondent to the appellant was  final and absolute.

12.     Strong reliance, however, has been placed by Mr. Jadhav on Tamboli  Ramanlal Motilal (Dead) by Lrs. Vs. Ghanchi Chimanlal Keshavlal (Dead)  by Lrs. and Another [1993 Supp. (1) SCC 295].    

The said decision cannot be said to have any application in the instant  case. Therein an absolute title was conveyed.  It was in the aforementioned  fact situation, this Court held;

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"21.    The last important clause is after the period of  five years the transferee will have a right to get the  municipal record mutated in his name and pay tax.  Thereafter, the transferee will have an absolute right  to mortgage, sell, or gift the suit property.  Neither   executant nor any one else could dispute the title.   All the above clauses are clearly consistent with the  express intention of making the transaction a  conditional sale with an option to repurchase.  Ex.  39 was pressed into service.   But we do no think  much assistance can be derived by the appellant.   That only shows there were dealings between the  parties.  Further, it also contains account relating to  betel leaves.   That has nothing to do with the suit  transaction."

       Therein also this Court observed;

"16.  ...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 observed, that it not conclusive of the  matter."  

       Having regard to the terms of the transaction, we are of the opinion  that the High Court was correct in its opinion that the transaction evidenced  a mortgage and not a sale.

13.     For the reasons aforementioned, there is no merit in this appeal which  is dismissed with costs.   Counsel’s fee assessed at Rs. 10,000/-.