SOPAN (DEAD) THROUGH HIS L.R. versus SYED NABI on 16 July 2019

SOPAN (DEAD) THROUGH HIS L.R.

v.

SYED NABI

(Civil Appeal No.3506 of 2010)

JULY 16, 2019

[R. BANUMATHI AND A.S. BOPANNA, JJ.]

Transfer of Property Act, 1882 – s.58(c) – Mortgage byconditional sale – Respondent-plaintiff received a sum ofRs.5000/- from appellant-defendant, however, same was construedas the consideration for the suit property and a registered sale deeddated 10.12.1968 (Exh.23) was executed in favour of thedefendant – A separate agreement dated 10.12.1968 (Exh.24) wasalso entered into between the parties where the plaintiff agreed torepay the said amount and secure reconveyance of the property –Another agreement was entered into on 29.08.1969 (Exh.14/1)under which plaintiff agreed that he had received additional amountof Rs.2,224/-, hence total amount of Rs.7,224/- – Suit was filedseeking redemption of mortgage and recovery of the possession ofthe suit property – Plaintiff claimed that he was prepared to repaythe amount so as to secure back the property and, in that regard,construing the transaction as a mortgage – Trial court decreed thesuit – Lower appellate court on reappreciation of the evidence setaside the judgment and decree of the trial court – However, HighCourt decreed the suit in favour of plaintiff – On appeal, held: Onperusal of three documents namely, sale deed dated 10.12.1968(Exh.23) agreements dated 10.12.1968 (Exh.24) and 29.08.1969(Exh.14/1), it is clear that sale deed dated 10.12.1968 did notdisclose that the transaction is one of mortgage or that of aconditional sale – Agreement dated 10.12.1968 (Exh.24) can onlybe treated an agreement where the defendant had agreed toreconvey the property subject to the repayment being made asprovided thereunder – Further, agreement dated 29.08.1969(Exh.14/1) disclose that plaintiff did not repay Rs.5000/-andinstead received a further sum of Rs.2,224/-, thus in all taking thefinancial assistance treated as sale consideration to Rs.7,224/- – Ifthe reconveyance as agreed under agreement dated 10.12.1968

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A(Exh.24) was to be effected the said amount was to be repaid,failing which the right of reconveyance would be forfeited and saledeed would become absolute after which even the right ofreconveyance would not be available – Admittedly the said amountwas not repaid by plaintiff – In that background the documentcannot be considered as a mortgage by conditional sale – Since theBamount was not repaid the defendant had acquired absolute rightto the property – In the circumstance, the suit seeking redemptionwas not sustainable.

Allowing the appeal, the Court

CHELD: 1. In so far as the legal position relating to themanner in which the document is to be construed, this Court inthe case of Dharmaji Shankar Shinde & Ors. vs. Rajaram SripadJoshi (D) Lrs. and Ors. had considered the entire conspectus ofthe provision contained in Section 58(c) of the Transfer ofProperty Act, 1882 with reference even to the decisions reliedDupon by the counsel for the plaintiff and had arrived at theconclusion that a sale with a mere condition of retransfer is not amortgage. It is further held therein that keeping in view theproviso to Section 58(c) if the sale and agreement to repurchaseare embodied in separate documents then the transactionsEcannot be a mortgage by conditional sale irrespective of whetherthe documents are the contemporaneously executed. It isfurther held therein that even in the case of a single documentthe real character of the transaction is to be ascertained from theprovisions of the deed viewed in the light of the surroundingcircumstances and intention of the parties. [Para 7] [976-D-E]F

2. Keeping in view the enunciation of the legal position, inthe instant case admittedly the claim of the plaintiff is based onthe reliance placed on a contemporaneous document at Exh.24(agreement dated 10.12.1968). Hence at the outset, it is evidentthat the case of the plaintiff cannot overcome the rigour of law toGterm it as a mortgage by conditional sale. That apart even if thenature of the transaction is taken note of and in that context ifthe sale dated 10[th] December, 1968 (Exh.23) is carefully perused,it not only does not indicate any clause to demonstrate it as a mortgage but, on the other hand, refers to the sale consideration,the manner in which it was received and the plaintiff as the vendorby executing the document has assured the defendant that heshould enjoy possession of the said land ancestrally which, inother words, is an absolute conveyance. In that background,even if the agreement dated 10[th] December, 1968 (Exh.24) istaken note, the same cannot alter recitals in the sale deed totreat the same as a mortgage by conditional sale. At best thesaid agreement (Exh.24) can only be treated as an agreementwhereby the defendant had agreed to reconvey the propertysubject to the repayment being made as provided thereunder. Itis in that circumstance, the document dated 29[th] August, 1969(Exh.14/1) is to be viewed. From a combined reading of Exhibits24 and 14/1 it would disclose that not only the plaintiff has notrepaid the sum of Rs.5,000/- with interest but had received afurther sum of Rs.2,224/-, thus in all taking the financialassistance treated as sale consideration to Rs.7,224/-. Hence, ifthe reconveyance as agreed under Exh.24 was to be effected thesaid amount was to be repaid on “Velamavasya” failing which theright of reconveyance would be forfeited and the sale deed wouldbecome absolute after which even the right of reconveyance willnot be available. Admittedly amount of Rs.2,224/- was not repaidby the plaintiff. In that background, in any event, the documentcannot be considered as a mortgage by conditional sale.[Para 8] [976-F-H; 979-A-D]

3. In the above background, if the entire transaction istaken note, since the amount was not repaid the defendant hadacquired absolute right to the property. Hence, he had alsoinitiated mutation proceedings to secure the revenue entriesrelating to the land in his favour. Though the plaintiff had opposedthe proceedings the very contention urged herein had been takennote therein and the Tehsildar by the order dated 23[rd] July, 1974(Exh.21) has ordered the revenue entries to be changed to thename of the defendant. Change of mutation in the name of thedefendant is a formidable circumstance to show that the Exh.23is a sale deed conveying absolute right and title to the defendant.[Para 9] [977-D-F]

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A4. In the above circumstance the suit seeking redemptionof mortgage was not sustainable. If at all the agreement ofreconveyance (Exh.24) was to be pressed into service, theappropriate course ought to have been for the plaintiff to institutea suit seeking for the relief of specific performance. In such suitthe consideration would be on the touchstone of the principlesBrequired to be satisfied as governed under the provisions of theSpecific Relief Act. To that effect there should be appropriatepleading and evidence in support of the contentions which is notpresently satisfied as the suit is instituted on a misconception.[Para 11] [978-C-D]

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Dharmaji Shankar Shinde & Ors. v. Rajaram SripadJoshi (D) LRs.and Ors.(2019) 6 SCALE 682– relied on.

Bhimabai Mahadeo Kambekar v. Arthur Import andExport Co. (2019) 3 SCC 191 : [2019] 1 SCR 812 –Dinapplicable.

P.L. Bapuswami v. N. Pattay Gounder[1966] 2 SCR918 ;Pandit Chunchun Jha v. Sheikh Ebadat Ali[1955] 1 SCR 174 – referred to.

Case Law Reference

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3506of 2010

From the Judgment and Order dated 26.09.2007 of the High Courtof Judicature at Bombay, Bench at Aurangabad in Second AppealGNo. 479 of 1991

Subodh S. Patil, Ms. Sujata Kurdukar, Advs. for the Appellant.

Parameshwar, M.V. Mukunda, Shivaji M. Jadhav, Advs. for theRespondent.

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The Judgment of the Court was delivered by A.S. BOPANNA, J.

1. The appellant herein was the defendant in Regular Civil SuitNo.237 of 1980 filed before the Civil Judge, Junior Division at Ahmedpur.The suit in question was filed seeking a judgment and decree forredemption of mortgage and recovery of the possession of the suitscheduled land. The land in question is situated in Survey No.2/Ameasuring 6 acres 2 guntas. The Civil Court by its judgment dated 20[th]September, 1984 accepted the contention of the plaintiff and decreedthe suit whereby the redemption of the suit land was ordered treatingthe transaction to be a mortgage. The appellant herein, namely thedefendant in the said suit claiming to be aggrieved by the said judgmentwas before the lower appellate court i.e. the Additional District Judge atLatur in Regular Civil Appeal No.233 of 1984. The Lower AppellateCourt on reappreciation of the evidence on record and consideration ofthe legal position has through its judgment dated 29[th] June, 1990 allowedthe appeal and set aside the judgment and decree of the Civil Court.Accordingly, the suit filed by the respondent herein was dismissed. Theplaintiff/respondent herein therefore filed the Second Appeal before theHigh Court of Judicature at Bombay, bearing S.A.No.479 of 1991. TheHigh Court on answering the substantial question of law in favour of therespondent herein had allowed the appeal and consequently decreed thesuit. The appellant herein who was the defendant in the suit is, therefore,before this Court in the present appeal.

2. For the purpose of convenience and clarity the parties willbereferred to in the same rank as assigned to them in the Civil Suit namely,the appellant herein would be referred to as the defendant, while therespondent herein would be referred to as the plaintiff.

3. The brief facts are that the plaintiff and the defendant wereknown to each other and due to such acquaintance, the plaintiff hadtaken money from the defendant as and when such financial assistancewas required. At a stage when the plaintiff received a sum of Rs.5,000/-, the same was construed as the consideration for the land owned by theplaintiff bearing Survey No.2/A measuring 6 acres 2 guntas and thedefendant already being put in possession of the said property, a registeredsale deed dated 10[th] December, 1968 was executed in favour of thedefendant. A separate agreement dated 10[th] December, 1968 was also BCDEF

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Aentered into between the parties whereby the plaintiff had agreed torepay the said amount and secure reconveyance of the property. Anotheragreement was entered into on 29th August, 1969 between the partiesunder which the respondent-plaintiff agreed that he has taken Rs.5,000/- from the appellant-defendant and the possession of the land was given.In addition, respondent-plaintiff has received a sum of Rs.2,224/- withoutBany interest, in all Rs.7,224/-. The respondent-plaintiff agreed if theamount is not repaid on “Velamavasya” the deed will be considered assale deed. It is in that background the plaintiff claiming that he is preparedto repay the amount so as to secure back the property and, in that regard,construing the transaction as a mortgage, got issued a demand noticeCdated 10[th] September, 1980 through his Advocate. The defendant gotreplied the said notice on 23[rd] September, 1980 and disputed the claimput forth by the plaintiff. The plaintiff, therefore, filed the suit as statedabove. The defendant entered appearance and filed the written statementdisputing the claim. The trial court though had framed several issues,the entire consideration rested on the construction of the sale deed datedD10[th] December, 1968 and the contemporaneous documents, so as toconsider whether the same amounts to a mortgage by conditional sale inthe nature of contention put forth, or as to whether it isa sale transaction.

4. In the present appeal, it would not be necessary for us toreappreciate the evidence inasmuch as, only the nature of the transactionEwill have to be taken note from the three documents, namely, Exhibits23,24and 14/1 around which the entire controversy revolves. Beforeadverting to the said documents, it would be also necessary to take noteof the provision as contained in Section 58 (c) of the Transfer of PropertyAct which reads as hereunder:F58(c) Mortgage by conditional sale. Where the mortgagorostensibly sells the mortgaged property:

on condition that on default of payment of the mortgage moneyon a certain date the sale shall become absolute Gon condition not on such payment being made the sale shall becomevoid, or on condition that on such payment being made the buyershall transfer the property to the seller, the transaction is called a mortgage by conditional sale and themortgagee a mortgagee by conditional sale:

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[Provided that no such transaction shall be deemed to be amortgage, unless the condition is embodied in the document whicheffects or purports to effect the sale].

(emphasis supplied)

5. From a perusal of the proviso to Section 58(c) as emphasised,it indicates that no transaction shall be deemed to be a mortgage unlessthe condition is embodied in the document which effects or purports toeffect the sale. Therefore, any recital relating to mortgage or thetransaction being in the nature of a conditional sale should be an intrinsicpart of the very sale deed which will be the subject matter. In thatbackground, a perusal of the document at Exhibit 23, namely, the saledeed dated 10[th] December, 1968 would make it clear that the documentdoes not disclose that the transaction is one of mortgage or that of aconditional sale. However, the issue as to whether it should be construedas mortgage has presently arisen since the agreement dated 10[th]December, 1968 at Exhibit 24 being a contemporaneous document isrelied upon by the plaintiff to claim that the same indicates that thetransaction is a mortgage and the relationship of debtor and the creditoris established by the said document. In addition, the document which isalso to be noticed is at Exhibit 14/1 dated 29[th] August, 1969. It is nodoubt true that in the document at Exhibit 24 it depicts that the sale deedis reconveyable when the plaintiff would repay Rs.5,000/- to thedefendant and the land would be retransferred. It also indicates thatthe interest of Rs.720/- is agreed to be paid every year on the day of“Gudi Padwa”.

6. The contention on behalf of the defendant is that in addition tothe sum of Rs.5,000/- which was taken by the plaintiff earlier and wastreated as the sale consideration, a further sum of Rs.2,224/- was takenby the plaintiff and accordingly a total amount of Rs.7,224/- was agreedto be repaid without interest on the “Velamavasya” and the saidunderstanding was reached on 29[th] August, 1969. The case, therefore,set up by the defendant was that notwithstanding the agreement dated10[th] December, 1968 (Exh.24) and the document dated 29[th] August, 1969(Exh.14/1) whereunder reconveyance was agreed, since the amountwas not repaid within one year, though the defendant had agreed toreconvey the property, the sale deed had become absolute since theplaintiff had failed to repay the amount and secure the reconveyance.

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A7. However, the learned counsel for the plaintiff has contendedthat when the documents at Exhibits 24 and 14/1 is admitted by thedefendant and since it refers to the relationship of debtor and creditorthe sale deed dated 10[th] December, 1968 (Exh.23) is to be construed asa mortgage by conditional sale. The learned counsel has referred to thedecision of this Court in the case of P.L. Bapuswami vs. N. PattayBGounder (1966) 2 SCR 918 to contend that it should be construed asmortgage and in that context would also refer to the decision in the caseof Pandit Chunchun Jha vs. Sheikh Ebadat Ali (1955) 1 SCR 174 tocontend that the subsequent document would rebut the presumption. Inso far as the legal position relating to the manner in which the documentCis to be construed, we notice that this Court in the case of DharmajiShankar Shinde & Ors. vs. Rajaram Sripad Joshi (D) Lrs. andOrs. (2019) 6 SCALE 682 had considered the entire conspectus of theprovision contained in Section 58(c)with reference even to the decisionsrelied upon by the learned counsel for the plaintiff and had arrived at the conclusion that a sale with a mere condition of retransfer is not aDmortgage. It is further held therein that keeping in view the proviso toSection 58(c) if the sale and agreement to repurchase are embodied inseparate documents then the transactions cannot be a mortgage byconditional sale irrespective of whether the documents are thecontemporaneously executed. It is further held therein that even in theEcase of a single document the real character of the transaction is to beascertained from the provisions of the deed viewed in the light of thesurrounding circumstances and intention of the parties.

8. Keeping in view the enunciation of the legal position, we noticethat in the instant case admittedly the claim of the plaintiff is based onFthe reliance placed on a contemporaneous document at Exh.24. Henceat the outset, it is evident that the case of the plaintiff cannot overcomethe rigour of law to term it as a mortgage by conditional sale. That aparteven if the nature of the transaction is taken note of and in that contextif the sale dated 10[th] December, 1968 (Exh.23) is carefully perused, itnot only does not indicate any clause to demonstrate it as a mortgageGbut, on the other hand, refers to the sale consideration, the manner inwhich it was received and the plaintiff as the vendor by executing thedocument has assured the defendant that he should enjoy possession ofthe said land ancestrally which, in other words, is an absolute conveyance.In that background, even if the agreement dated 10[th] December, 1968H

(Exh.24) is taken note, the same cannot alter recitals in the sale deed totreat the same as a mortgage by conditional sale. At best the saidagreement (Exh.24) can only be treated as an agreement whereby thedefendant had agreed to reconvey the property subject to the repaymentbeing made as provided thereunder. It is in that circumstance, thedocument dated 29[th] August, 1969 (Exh.14/1) is to be viewed. From acombined reading of Exhibits 24 and 14/1 it would disclose that not onlythe plaintiff has not repaid the sum of Rs.5,000/- with interest but hadreceived a further sum of Rs.2,224/-, thus in all taking the financialassistance treated as sale consideration to Rs.7,224/-. Hence, if thereconveyance as agreed under Exh.24 was to be effected the said amountwas to be repaid on “Velamavasya” failing which the right ofreconveyance would be forfeited and the sale deed would becomeabsolute after which even the right of reconveyance will not be available.Admittedly amount of Rs.2,224/- was not repaid by the plaintiff. In thatbackground, in any event, the document cannot be considered as amortgage by conditional sale.

9. In the above background, if the entire transaction is taken note,since the amount was not repaid the defendant had acquired absoluteright to the property. Hence, he had also initiated mutation proceedingsto secure the revenue entries relating to the land in his favour. Thoughthe plaintiff had opposed the proceedings the very contention urged hereinhad been taken note therein and the Tehsildar by the order dated 23[rd]July, 1974 (Exh.21) has ordered the revenue entries to be changed to thename of the defendant. Change of mutation in the name of the defendantis a formidable circumstance to show that the Exh.23 is a sale deedconveying absolute right and title to the defendant.

10. Though the learned counsel for the plaintiff has relied uponthe decision in the case of Bhimabai Mahadeo Kambekar vs. ArthurImport and Export Co., (2019) 3 SCC 191 to contend that the mutationof land in the revenue records does not create or extinguish the title forsuch land, nor has it any presumptive value on the title, the said decisionwould not be of relevance in the present context as the mutationproceeding becomes relevant in the instant proceedings though not forthe purpose of title. We say so only to indicate that in the present facts,while construing the nature of the transaction and while considering asto whether the plaintiff had a right of redemption as a mortgagor, thefact that the defendant had acted upon the sale deed dated 10[th] December, A

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A1968 on the same becoming absolute in view of the reconveyance notbeing affected pursuant to the agreement dated 10[th] December, 1968and in that circumstance, the right was exercised to secure the mutationorder pertaining to the land is to be treated as a relevant circumstance.Further, though such mutation order was passed on 23[rd]July, 1974 in aproceeding in the presence of the plaintiff the said order was not assailedBbefore an appropriate forum and it is only in the year 1980 the suit inquestion came to be filed.

11. In the above circumstance the suit seeking redemption ofmortgage was not sustainable. If at all the agreement of reconveyance(Exh.24) was to be pressed into service, the appropriate course ought toChave been for the plaintiff to institute a suit seeking for the relief ofspecific performance. In such suit the consideration would be on thetouchstone of the principles required to be satisfied as governed underthe provisions of the Specific Relief Act. To that effect there should beappropriate pleading and evidence in support of the contentions which is Dnot presently satisfied as the suit is instituted on a misconception.

Dnot presently satisfied as the suit is instituted on a misconception.

12. In that background, if the consideration as made by the courtsbelow is taken note, we are of the opinion that the Civil Court and theHigh Court were not justified in their conclusion. On the other hand, thelower appellate court in Regular Civil Appeal No.233 of 1984 has takenEinto consideration the factual aspects in its correct perspective and keepingin view the legal position had allowed the appeal and dismissed the suit.Hence, we hereby set aside the judgment dated 26[th] September, 2007passed by the High Court in S.A.No.479 of 1991 and restore the judgmentdated 29[th] June, 1990 passed by the Additional District Judge in RegularCivil Appeal No.233 of 1984.F

13. Accordingly, the above appeal is allowed. Consequently, theRegular Civil Suit No.237 of 1980 filed by the plaintiff i.e. the respondentherein shall stand dismissed. However, we pass no order as to costs.

GAnkit Gyan

Appeal allowed.

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