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CASE NO.: Appeal (civil)  1276 of 2006

PETITIONER: Bishwanath Prasad Singh

RESPONDENT: Rajendra Prasad & Anr

DATE OF JUDGMENT: 24/02/2006

BENCH: S.B. Sinha

JUDGMENT: J U D G M E N T (Arising out of SLP(C)No.26865/2004)

S.B. SINHA, J :

Leave granted.   

This appeal is directed against the Judgment and Order dated 11th  September, 1988 passed by a learned Single Judge of the Jharkhand High  Court, Ranchi in Appeal from Appellate Decree No.176 of 1988 whereby  and whereunder a second appeal preferred by the respondents herein from a  Judgment and Decree dated 18.7.1988 passed by the 6th Additional District  Judge, Palamau at Daltonganj in Title Appeal No.26 of 1987 setting aside  the Judgment and  Decree dated 27.6.1987 passed by Munsif, Daltonganj in  Title Suit No.11 of 1986, was allowed.   The respondents herein filed a suit against the  appellant, inter alia,  for a declaration that the transaction  dated 24.6.1977, although ostensibly  expressed in the shape of  a deed of sale, was in fact a transaction of  usufructuary mortgage and for a further declaration that the said transaction  stands redeemed under Section 12 of the Bihar Money Lenders Act, 1974.   The respondents herein further sought for a decree directing the appellant to  deliver vacant possession of the suit land to them, failing which they might  be put back in possession thereof through the process of Court.  The  respondents averred that they were occupancy raiyats of the suit land.  The  appellant herein allegedly gave an advance of Rs.3,000/- on their executing  a deed of usufructuary mortgage in respect of the suit land.  However,  allegedly the appellant asked them to execute a deed of sale on the ground  that he did not possess any money lending licence, whereupon indisputably  such a deed was executed on 24.6.1977.  The appellant in turn executed a  registered deed of agreement in his favour whereby and whereunder the  respondent agreed to execute a deed of reconveyance on his receipt of the  said sum of Rs.3,000/-.   

The appellant herein in his written statement, on the other hand,  contended that in fact a deed of sale was executed on 24.6.1977 by the  respondents in his favour.  It is, however, accepted that the appellant  executed a deed of an agreement for sale on the same day.  It is furthermore  not in dispute that the respondents herein filed an application in the Court of  Munsif, Daltonganj being Miscellaneous Case No.14 of 1978 purporting to  be under Section 83 of the Transfer of Property Act seeking its permission  to deposit an amount of Rs.3,000/-  By an Order dated 22.3.1979, despite an  objection taken in this behalf by the appellant herein that the transaction in  question was not a mortgage, the respondents were permitted to deposit the  said amount.  

It is also not in dispute that the property in question was mutated in  the name of the appellant in the Revenue Records of  Rights.  

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The Trial Court, in view of the pleadings of the parties, framed the  following  issues :

"(i)    Is the suit, as framed maintainable?

(ii)    Have the plaintiffs got cause of action for the suit?

(iii)   Is the sale deed dated 24.6.1977 real transaction of  usufructuary mortgage deed in view of the  agreement of the same day executed by the  defendant and, if so, are the plaintiffs entitled to a  decree as prayed for?

(iv)    To what relief or reliefs, if any, the plaintiffs are  entitled?"

The said suit was dismissed holding that the deed of sale dated  24.6.1977 coupled with the said agreement of reconveyance of the same  date did not constitute a mortgage.  It was further held that the remedy  available to the respondents  was only to file a suit for specific performance  of the contract and as such a relief had not been availed of by them within a  period of  three years, no relief could be granted in their favour. The appeal  preferred by the respondents herein thereagainst was also dismissed.             

The respondents thereafter filed a second appeal before the High  Court which was allowed by the impugned judgment.   

The purported substantial question of law framed by the High Court   is as under :

"Whether in view of the admission made by respondent  no.2 in Ext.2 to the effect that the parties understood the  document to be a deed of Baibulbafa, learned court  committed error of law in construing Ext.A without  taking into consideration the admissions made by the  parties to the aforementioned effect, in view of the  decision reported in AIR 1988 SC 1074."

The High Court in its judgment came to the conclusion that the recital  of both the documents spelt out that the real intention of the parties was that  the transaction was to be one of mortgage holding that the said deed of  mortgage was executed by the respondents in favour of the appellant for the  purpose of securing a loan of Rs.3,000/-.  It was also held that the agreement  for sale dated 24.6.1977 did not have the efficacy to control the import of  the recitals made in the said conveyance dated 24.6.1977.

Mr. P.S. Mishra, learned Senior Counsel appearing on behalf of the  appellant raised a short question in support of this appeal.  It was contended  that having regard to the provisions of Section 58(C) of the Transfer of  Property Act, the High Court  committed a manifest error in holding the  transaction to be one of mortgage as the said plea could not have been raised  having regard to the provisions of Sections 91 and 92 of the Indian Evidence  Act.  It was further contended that the order dated 22.3.1979 passed by the  Civil Court in Miscellaneous Case No.14 of 1978 filed under Section 83 of  the Transfer of Property Act, did not operate as res judicata as thereby no  issue between the parties was heard and finally decided.  It was further  submitted that in view of the recitals in the said deed dated 24.6.1977, the  High Court committed an error in holding that by reason thereof the right  title and interest of the respondents did not pass on to the appellant herein.   It was argued that the High Court also committed a manifest error in  interfering with the concurrent findings of the Trial Court as also the First  Appellate Court.   

Mr. Vijay Hansaria, learned Senior Counsel  appearing on behalf of

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the respondents, on the other hand, supported the judgment of the High  Court.  It was submitted that the order dated 22.3.1979 would operate as res  judicata in view of the fact that the issue as to whether the said transaction  evidenced by the deed dated 24.6.1977 constituted a mortgage or a sale, had  been determined thereby.   

It is not in dispute that the deed in question was titled as a ’deed of  sale’.  The respondents were described as ’vendor’ and the appellant as a  ’vendee’. The nature of the deed was mentioned as ’Sale Deed (Kewala)’.   The amount paid by the appellant to the respondents was treated to be the  consideration money.  In the recitals made therein the purpose of executing  the deed of sale was stated to be as for repaying the debts taken by the  respondents  from several money lenders and it was recited that they did not  have any source of income to repay the debts and no means of liquidating  the debts except to sell out the said land. It was categorically stated:  

"Therefore, vendors on their own wishes and in good  mental capacity sold the property/land mentioned in  column 5 aforesaid for a consideration of Rs.3000/- to  the aforesaid vendee Sh. Vishwanath Prasad Singh and  accordingly transferred all rights pertaining to this land  to Sh. Vishwanath Singh.  From today neither Vendors  nor their successors or legal heirs have no right or title  over this land."

On the  same date, as noticed hereinbefore, an agreement for sale  (Ekrarnama) was executed where again the parties were described as  ’Vendor’ and ’Vendee’.  In the said agreement for sale, the parties referred  to the deed of sale executed on the said date by the respondents.  However,  it was stated therein that the said deed of sale was executed on the  Baibulbafa condition.  It was  also stated that the ’vendees’ agreed that the  ’vendor’ or his successors or heirs whenever would pay the consideration  amount of Rs.3,000/- within 23 months from that date, i.e., upto the month  of June, 1978, then he would execute the deed of sale pertaining to the said  property.

The learned Trial Court as also the learned First Appellate Court  arrived at a concurrent finding that the said transaction did not constitute a  mortgage but thereby the respondents executed a deed of sale in favour of  the appellant and the appellant in turn executed an agreement for  reconveyance in their favour.  ’Baibulwafa’ was held to be a deed of  conditional sale  with a contract of repurchase and not a mortgage with  conditional sale.  On the aforesaid findings it was categorically held that a  suit for declaration that the said transactions in effect and substance  constitute a mortgage, was not maintainable.                   A deed  as is well known must be construed,  having regard to the  language used therein.  We have  noticed  hereinbefore  that   by reason of  the said deed of sale, the right, title and interest of the respondents herein  was conveyed  absolutely in favour of the appellant.  The sale deed does not  recite any other transaction of advance of any sum by the appellant  to the  respondents was entered into by and between the parties.   In fact, the  recitals made in the sale deed categorically show that the respondents  expressed their intention to convey the property to the appellant herein as  they had incurred debts by taking loans from various other creditors.

       We are not oblivious of the fact that the term ’Bai-bil-wafa’ or ’Bye- bil-wuffa/wafa’ is an Arabic term which may mean a mortgage or a   condition sale but the said term is not synonymous to ’Bai-ul-wafa’.  In P.  Ramanatha Aiyar’s Advanced Law Lexicon, 3rd edition at page 442, it is  stated:

"Bai-ul-wafa.  There is no unanimity of opinion  among the jurisconsults of Islam on the point  whether a transaction of Bail-ul-wafa is a valid

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sale, a fasid sale  or a mortgage.  Hence, it was  held that "the Court is consequently, free to  choose any of the opinions (of jurists) which  might be conformable to the equities of the case  and may carry out the real intention of the  parties."  It was further held that "in this type of  transaction, the contract between the parties is to  the effect that the transferee sells to the transferee  the property in question for either within a fixed  period or at any undefined time, the sale would to  the transferor".  

       We have noticed hereinbefore that the nature of deed was stated to be  agreement (Ekrarnama), the nature of the document was not stated to be  ’Bai-ul-wafa’, the relevant clause whereof reads as under:

"Because the vendor today of this date has sold  the property of this deed to the vendee through  registered agreement  on the Vaibulwafa  condition and during this period the vendor and  vendee has already agreed that this case will  remain as Vaibulwafa and as per the said Sarait,  vendor of this deed agrees that the vendee of this  deed or his successors or heirs whenever will pay  the consideration amount of this deed amount to  Rs. 3000/- (three thousand) within 23 months  from today i.e. upto the month of June, 1978 after  harvesting of the crops i.e. Paddy or Ravi, then I  the vendor or my legal heirs or my successors  after receiving the said consideration amount of  Rs. 3000/- will execute the sale deed pertaining to  the property mentioned in column 5 of this deed  in favour of the vendee or his legal heirs or  successor."

       It is of some significance to note that therein the expressions  "vendor", "vendee", "sold" and "consideration" have been used.  These  expressions together with the fact that the sale deed was executed to be  within a period of 23 months, i.e., upto June, 1978, evidently the expression  ’Vaibulwafa’ as a condition was loosely used.

       Furthermore, the agreement was also executed for a fixed period.  The  other terms and conditions of the said agreement (Ekrarnama) also clearly  go to show that the parties understood the same to be a deed of  reconveyance and not mortgage or a conditional sale.

       The terminology ’Vaibulwafa’ used in the agreement does not carry  any meaning.  It could be either ’Bai-ul-wafa’ or ’Bai-bil-wafa’.

       It will bear repetition to state that with a view to ascertain the nature  of a transaction the document has to be read as a whole.  A sentence used or  a term used may not be determinative of the real nature of transaction.

       Baibulwafa, it was held by the trial court connotes only  an agreement  for sale. In terms of Section 91 of the Evidence Act, if the terms of any  disposition of property is reduced to writing, no evidence is admissible in  proof of the terms of such disposition of property except the document  itself.    

In Ishwar Dass Jain (D) through Lrs. v.  Sohan Lal (D) by Lrs.  [(2000) 1 SCC 434] this Court  in a case where a transaction  in question  was said to be a sham transaction opined that oral evidence was not  admissible  when a party relied upon the said document.          

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In Roop Kumar v. Mohan Thedani [(2003) 6 SCC 595] the Court laid  down the parameters of best evidence rule in the following terms:  

"Section 91 relates to evidence of terms of contract,  grants and other disposition of properties reduced to  form of document. This section merely forbids proving  the contents of a writing otherwise than by writing  itself; it is covered by the ordinary rule of law of  evidence, applicable not merely to solemn writings of  the sort named but to others known sometimes as the  "best-evidence rule". It is in reality declaring a doctrine  of the substantive law, namely, in the case of a written  contract, that all proceedings and contemporaneous oral  expressions of the thing are merged in the writing or  displaced by it. (See Thayer’s Preliminary Law on  Evidence, p. 397 and p. 398; Phipson’s Evidence, 7th  Edn., p. 546; Wigmore’s Evidence, p. 2406.) It has been  best described by Wigmore stating that the rule is in no  sense a rule of evidence but a rule of substantive law. It  does not exclude certain data because they are for one or  another reason untrustworthy or undesirable means of  evidencing some fact to be proved. It does not concern a  probative mental process \027 the process of believing  one fact on the faith of another. What the rule does is to  declare that certain kinds of facts are legally ineffective  in the substantive law; and this of course (like any other  ruling of substantive law) results in forbidding the fact  to be proved at all. But this prohibition of proving it is  merely that dramatic aspect of the process of applying  the rule of substantive law. When a thing is not to be  proved at all the rule of prohibition does not become a  rule of evidence merely because it comes into play when  the counsel offers to "prove" it or "give evidence" of it;  otherwise, any rule of law whatever might be reduced to  a rule of evidence. It would become the legitimate  progeny of the law of evidence. For the purpose of  specific varieties of jural effects \027 sale, contract etc.  there are specific requirements varying according to the  subject. On the contrary there are also certain  fundamental elements common to all and capable of  being generalised. Every jural act may have the  following four elements:

(a) the enaction or creation of the act;

(b) its integration or embodiment in a single memorial  when desired;

(c) its solemnization or fulfilment of the prescribed  forms, if any; and

(d) the interpretation or application of the act to the  external objects affected by it."

       Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage  by conditional sale in the following terms:  

"(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

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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 :

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."

       A bare perusal of the said provision clearly shows that a mortgage by  conditional sale must be evidenced by  one document whereas a sale with a  condition of re-transfer may be evidenced by more than one document.  A  sale with a condition of retransfer, is not mortgage.  It is not a partial  transfer. By reason of such a transfer all rights have been transferred  reserving only a personal right to the purchaser, and such a personal right  would be lost,  unless the same is exercised within the stipulated time.    

In  Pandit Chunchun Jha  v. Sheikh Ebadat Ali & Anr [(1955) 1 SCR  174]  this Court  clearly held:  

"\005We think that is a fruitless task because two  documents are seldom expressed in identical terms and  when it is necessary to consider the attendant  circumstances the imponderable variables which that  brings in its train make it impossible to compare one case  with another.  Each must be decided on its own facts\005"

       Yet again in Mushir Mohammed Khan (D) Lrs. v. Sajeda Bano (Smt.)  & Ors. [(2000) 3 SCC 536] this Court upon construing Section 58 (c) of the  Act  and opined:  

"9-The proviso to this clause was added by Act 20 of  1929 so as to set at rest the conflict of decisions on the  question whether the conditions, specially 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. The legislature enacted that a  transaction shall not be deemed to be a mortgage unless  the condition for reconveyance is contained in the  document which purports to effect the sale."

       Referring  to Chunchun Jha  (supra) it was held:  

"14-Applying the principles laid down above, the two  documents read together would not constitute a  "mortgage" as the condition of repurchase is not  contained in the same documents by which the property  was sold.  The proviso to clause (c) of Section 58 would  operate in the instant case also and the transaction  between the parties cannot be held to be a "mortgage"  by conditional sale"

       In Umabai and Another v. Nilkanth Dhondiba Chavan (Dead) by Lrs.  And Another  [(2005) 6 SCC 243], wherein of us was a party, this Court   held : "21. There exists a distinction between mortgage by  conditional sale and a sale with a condition of repurchase.  In a mortgage, the debt subsists and a right to redeem  remains with the debtor; but a sale with a condition of

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repurchase is not a lending and borrowing arrangement.  There does not exist any debt and no right to redeem is  reserved thereby. An agreement to sell confers merely a  personal right which can be enforced strictly according to  the terms of the deed and at the time agreed upon. Proviso  appended to Section 58(c), however, states that if the  condition for retransfer is not embodied in the document  which effects or purports to effect a sale, the transaction  will not be regarded as a mortgage. (See Pandit  Chunchun Jha v. Sk. Ebadat Ali, Bhaskar Waman Joshi v.  Narayan Rambilas Agarwal, K. Simrathmull v. S.  Nanjalingiah Gowder, Mushir Mohammed Khan and  Tamboli Ramanlal Motilal.)"

       The High Court relied upon Smt. Indira Kaur & Ors. v. Sheo Lal  Kapoor [(1988) 2 SCC 488] therein the court took into consideration the  factors adumbrated therein, particularly, a long stipulated period of 10 years   for conveying the property and the  vendee was prohibited from selling and  parting with his right, title and interest for 10 years.   The vendor was  allowed to occupy the property as a tenant on payment of Rs. 80/- per  month.  No order of mutation was passed in his favour.  It was held:  

"6. In the present case having regard to the facts and  circumstances highlighted in the course of the  discussion pertaining to the question as to whether or  not the transaction was a transaction of mortgage having  regard to the real intention of the parties it would be  difficult to hold that the agreement to sell executed by  the defendant in favour of the plaintiff was by way of a  "concession". It was a transaction entered into by the  defendant who was a hard-headed businessman and the  documents in question have been carefully framed in  legal terminology taking into account the relevant  provisions of law. The transaction also discloses the  awareness of the defendant about Section 58(c)4 of the  Transfer of Property Act as is evident from the fact that  the reconveyance clause is not embodied in the sale  deed itself. In the agreement to sell, no reference has  been made to the transaction of sale though it has been  executed contemporaneously. The defendant who has  permitted the plaintiff to continue in possession on  payment of rent equivalent to about 13= per cent  interest and was evidently aware of all the dimensions  of the matter would not have granted any concession or  executed the agreement by way of a concession. The  agreement was executed evidently because the plaintiff  would not have executed the sale deed unless an  agreement to sell by a contemporaneous document was  also executed to enable the plaintiff to enforce specific  performance within ten years. It was therefore a  transaction entered into with open eyes by the defendant  and there was no question of granting any  concession\005."

       In the instant case, as noticed hereinbefore, the transfer is complete  and not partial, no stipulation has been made that the appellant cannot  transfer the property.  Not only that the appellant was put in possession of  the land, his name was also mutated.  

       In Ramlal and Another v. Phagua and Others [(2006) 1 SCC 168],  this Court having regard to the peculiar fact situation obtaining therein  opined:

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"In our opinion, agreement to reconvey the property  will not ipso facto lead to the conclusion that the  sale is nominal and in view of the stand of  Defendant 8, as also of the fact that the property  worth Rs. 700 has been purportedly sold for Rs.  400, we are of the considered opinion that the sale  deed dated 1-12-1965 did not convey any title to  Defendant 8.  It is well settled by a catena of  decisions that the vendor cannot convey to the  vendee better title than she herself has."

       As of fact, it was held therein that the sale deed in question was not a  real sale deed but was by way of a surety.  In that case, furthermore, the  defendant categorically admitted that the plaintiff had taken loan.  It is in  that situation, the transaction was held to be a mortgage.  Apart from it,  there were other circumstances which led the court to arrive at the said  conclusion.  The said decision, therefore, cannot have any application in the  instant case.

       The question which now arises for consideration is as to whether the  aforementioned order dated 22.3.1979 passed in Misc. Case No. 14/78  would operate as res judicata.  Section 83 of the Transfer of Property Act  reads as under:  

"Power to deposit in Court money due on mortgage.-  At any time after the principal money payable in respect  of any mortgage has become due and before a suit for  redemption of the mortgaged property is barred, the  mortgagor, or any other person entitled to institute such  suit, may deposit, in any court in  which he might have  instituted such suit, to the account of the mortgagee, the  amount remaining due on the mortgage.  

Right to money deposited by mortgagor.- The court  shall thereupon cause written notice of the deposit to be  served on the mortgagee, and the mortgagee may, on  presenting a petition (verified in manner prescribed by  law for the verification of plaints) stating the amount  then due on the mortgage, and his willingness to accept  the money so deposited in full discharge of such  amount, and on depositing in the same court the  mortgage-deed  and all documents in his possession or  power relating to the mortgaged property, apply for a  and receive the money, and the mortgage-deed, and all  such other documents so deposited shall be delivered to  the mortgagor or such other person as aforesaid.  

Where the mortgagee is in possession of the mortgaged  property, the court shall, before paying to him the  amount so deposited, direct him to deliver possession  thereof to the mortgagor and at the cost of the  mortgagor either to re-transfer the mortgaged property  to the mortgagor or to such third person as the  mortgagor may direct or to execute and (where the  mortgage has been effected by a registered instrument)  have registered an acknowledgement in writing that any  right in derogation of the mortgagor’s interest  transferred to the mortgagee has been extinguished."                                   The provision merely permits the mortgagor to deposit the mortgage

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amount.  Even in a case where such deposit is made, in the event the  mortgagee refused to accept the deposit, the mortgagor would have no  option but to institute a suit for redemption relying on the mortgage money  deposited. The respondent did not file a suit for redemption.  It may be that  the appellant objected to the said deposit but despite the fact that the  purported mortgage amount was allowed to be deposited,  the same being  not binding upon the mortgagee as he could not be compelled to accept the  same, the question of applying the principles of res judicata would not arise.   [See Chandramani Pradhan  v. Hari Pasayat, AIR 1974 Orissa 47].  By  reason of such deposit the status of the parties is not altered.  For filing a  suit for redemption by the mortgager, deposit under Section 83 is not a  precondition.  

       It is well-known that the function of a court in terms of Section 83  Transfer of Property Act is procedural in nature.   

       For attracting the principles of res judicata, the submissions of Mr.  Hansaria is that the court of the Munsif was a court exercising limited  jurisdiction while entertaining an application under Section 83 of the  Transfer Property Act and the decision of such a court of limited jurisdiction  would also operate as res judicata.  Strong reliance has been placed by Mr.  Hansaria on Sulochana Amma  v. Narayanan Nair[ (1994) 2 SCC 14]. He  submitted that in that case a suit was filed before a court of limited  pecuniary jurisdiction and in view of the decision thereon,  explanation VIII  to Section 11 of the Code of Civil Procedure was held to be attracted.   

In  Rajendra Kumar v. Kalyan (Dead) by Lrs. [(2000) 8 SCC 99] this  Court merely held that the expression ’court of limited jurisdiction’ is of  wide amplitude.  The Court made a distinction between a procedural statute  and a substantive statute for applicability of the principles of res judicata.   In that case the earlier suit was filed before a court of competent  jurisdiction.   

In  Mahila Bajrangi (Dead) through Lrs. & Ors. v. Badribai w/o  Jagannath & Anr. [(2003) 2 SCC 464] this Court clearly held that the  principles of res judicata would be applicable only when an issue arose  directly and substantially in an earlier suit, a finding regarding an incident or  collateral question reached for the purpose of arriving at the final decision  would not constitute res judicata.   

In  Union of India v. Pramod Gupta (D) by Lrs. & Ors.  [JT (2005) 8  SC 203] this Court opined:  

"28- The principle of res judicata would apply only  when the lis was inter parties and had attained finality in  respect of the issues involved.  The said principle will,  however, have no application inter alia in a case  where  the judgment and/or order had been passed by a court  having no jurisdiction therefore, and/or in a case  involving pure question of law.  It will also have no  application in a case where the judgment is not a  speaking one."

       The question of determination of being a pure question of law, the  principles of res judicata shall have no application.  Therefore, the High  Court, in our opinion committed a manifest error in interfering with the  judgment and decree passed by the trial court as also the appellate court in  exercise of its jurisdiction under Section 100 of the Civil Procedure Code.  

       For the reasons aforementioned, the impugned judgment of the High  Court cannot be sustained.  It is set aside accordingly.  The appeal is  allowed with cost.  Counsel’s fee quantified at Rs. 5,000/-.