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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 & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  ( @ SPECIAL LEAVE PETITION (CIVIL) NO. 26865 OF 2004)

P.K. BALASUBRAMANYAN, J.

1.              I respectfully agree with the reasoning and  conclusion of my learned Brother.  But I feel that I ought to  add a few words of my own in the light of the contentions  raised.  

2.              Going by Section 58 (c) of the Transfer of  Property Act, it is clear that for an ostensible sale deed to  be construed as a mortgage by conditional sale, the  condition that on repayment of the consideration by the  seller the buyer shall transfer the property to the seller is  embodied in the document which effects or purports to  effect the same.  It has so been clarified by this Court also  in Pandit Chunchun Jha Vs. Sheikh Ebadat Ali and Anr.  [1955 (1) SCR 174] by stating, "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."  Therefore, it is  clear that what was involved in this case was the sale  followed by a contemporaneous agreement for re- conveyance of the property.  Such an agreement to re- convey is an option contact and the right has to be  exercised within the period of limitation provided therefor.    It has also been held that in such an agreement for re- conveyance, time is of the essence of the contract. The  plaintiffs not having sued within time for re-conveyance, it  would not be open to them to seek a declaration that the  transaction of sale entered into by them construed in the  light of the separate agreement for re-conveyance executed  by the purchaser, should be declared to be a mortgage.   Such a suit would also be hit by Section 91 of the Evidence  Act, subject to the exceptions contained in Section 92 of  that Act.  

3.              Learned counsel for the respondents vehemently  contended that the permission granted to the plaintiffs to  make a deposit under Section 83 of the Transfer of Property  Act involved an adjudication that there was a subsisting  mortgage since the permission to deposit was granted by  overruling the objections of the defendant that the  transaction was not a mortgage.  That adjudication would  operate as res judicata and bar the appellant from  contending now that the transaction is not a mortgage but  is a sale.   The question is whether any adjudication is

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involved when a mortgagor in terms of the Section makes a  deposit of the amount remaining due on the mortgage even  though he is permitted to do so after overruling the  objections of the alleged mortgagee that there was no  mortgage involved or there was no subsisting right to  redeem.  The Section itself indicates that on deposit of the  money, it is open to the mortgagee either to receive the  money on complying with the obligations imposed on him  by the Section or refuse to receive the money.  In a case  where the mortgagee refuses to perform what he is to  perform under Section 83 of the Act, the only remedy  available to the mortgagor is to sue for redemption in terms  of Section 91 of the Transfer of Property Act.   

4.              Section 83 is a survival from Bengal Regulation I  of 1778 which enabled the mortgagor to redeem by  payment into court.  A corresponding right was given to the  mortgagee by Bengal Regulation XVII of 1806 to make an  application in the court if he intended to foreclose a  mortgage by conditional sale.  (See Mulla’s Transfer of  Property Act, 9th Edn. Page 83).  It was held by the Privy  Council in Forbes Vs. Ameeroonissa Begam [10 MIA 340  at page 350] that under the Bengal Regulation XVII of  1806, the functions of the Judge were purely ministerial.   The same position was adopted by the various High Courts.   In Ramakrishnaiah Vs. Krushi Vidyalaya Sangam [(1944)  2 MLJ 284], it was held that the question of correctness of  the amount could not be gone into as such an enquiry was  beyond the scope of Section 83 of the Transfer of Property  Act.  The Court was not called upon to give any findings.   This view was followed by the same Court in  Govindaswami Vs. Bakkim [(1983) 2 MLJ 207].    My  learned Brother has referred to Chandramani Pradhan Vs.  Hari Pasayat [1974 Orissa 47].  It is not necessary to  multiply authorities on the question.   5.              If the proceedings were only ministerial as held  by the Privy Council and the various High Courts,  obviously, it could not be argued that anything was "heard  and finally decided" in a proceeding under Section 83 of the  Act, which could operate as res judicata.  For, the essential  requirement of a bar by res judicata is that a matter should  have been directly and substantially in issue in a prior  litigation, and it should have been heard and finally  decided by a court of competent jurisdiction.  Of course,  Explanation-VIII to Section 11 of the Code of Civil  Procedure justifies a contention that even if the court that  heard and finally decided an issue between the parties was  one of limited jurisdiction, its adjudication would operate  as res judicata.  But, that would not enable learned  counsel for the respondents to contend either that the  court which entertained the application under Section 83 of  the Act is a court of limited jurisdiction within the meaning  of that Explanation, or that any issue was heard and finally  decided in the proceeding under Section 83 of the Act.  It  may be noticed that the deposit under Section 83 of the Act  has to be made in a court in which the mortgagor might  have instituted a suit for redemption.  Obviously, that is  not a court of limited jurisdiction in the sense of the term  as used in Explanation-VIII to Section 11 of the Code of  Civil Procedure.

6.              Thus the plea of bar of res judicata has only to  be rejected.