NON­REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 3960 OF 2011

GANPATI BABJI ALAMWAR (D) BY LRs. RAMLU AND OTHERS ...APPELLANT(S)

VERSUS

DIGAMBARRAO VENKATRAO BHADKE  AND OTHERS            ...RESPONDENT(S)

JUDGMENT

NAVIN SINHA, J.

The appellants, who were the original defendants are

aggrieved by the dismissal of their second appeal, affirming the

judgment of the First Appellate Court, which reversed the

dismissal of the suit for redemption of  mortgage filed by the

plaintiffs.  

2. The parties shall be referred to by their original position in

the suit for convenience.   The plaintiffs purchased daily

necessities from the shop of defendant no.1 on credit.  A sum of

Rs.10,500/­ became outstanding after  verification of  accounts.

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On 26.04.1970, the plaintiffs executed an instalment bond,

Exhibit 53, to pay the dues in three yearly instalments on the

occasion of  Gudi Padwa  in 1971, 1972 and 1973. The plaintiffs

defaulted in payment of the first instalment itself. On

29.04.1971, Exhibit 52, the plaintiffs executed a conditional sale

deed for sale of their agricultural lands measuring 2½ acres in

favour of defendant no.1 for a sum of Rs.11,000/­. The earlier

dues of Rs.10,500/­ formed part of the consideration. The

plaintiffs admitted having received a sum of Rs.500/­ earlier. The

agreement  provided that the  plaintiffs  upon repayment of the

dues by Gudi Padwa of 1973 shall be entitled to reconveyance of

the lands. In the event of their failure to do so, the sale would

become absolute.  The plaintiffs having failed to repay the dues,

defendant no.1 obtained mutation of the lands in his name on

13.05.1976 and sold the lands to defendant no.2 by a registered

sale deed dated 13.02.1978. The plaintiffs thereafter filed the suit

for redemption in the year 1980.

3. The Civil Judge held that the nature of the document

coupled with the recitals therein and conduct of the plaintiff, left

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him in no doubt that the document was a sale deed.   The First

Appellate Court and the High Court on an interpretation of the

document held it to be a mortgage by conditional sale, opining

that their existed the relationship of a debtor and a creditor, and

not that of a transferor or transferee. Thus, the present appeal.

4. Learned counsel for the appellants submitted that even if

Exhibit 52 is interpreted as a mortgage by conditional sale,

nonetheless the intention of the parties, the attendant

circumstances, including the conduct of the plaintiffs in failing to

repay and redeem the property in accordance with the instalment

bond within the stipulated time, the failure to object to the

mutation proceedings despite notice or to challenge the final

order of mutation dated 13.05.1976 in favour of defendant no.1,

are all relevant factors to be considered for denial of relief to the

plaintiffs. The execution of the instalment bond had been

concealed in the suit.  The institution of the suit for redemption

seven years  later after expiry of  time for repayment under the

agreement, coupled with possession already having been

delivered to defendant no.1 on the date of the agreement,

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redemption of the mortgage ought not to have been allowed in the

facts and circumstances of the case. The plaintiffs did not have a

case for an undervalued sale also. Defendant no.2 was a bonafide

purchaser. Considering the nature of the contractual agreement,

the intention of the parties has to be deciphered from their

conduct, including after the agreement.   Reliance in support of

the submissions was placed on The Godhra Electricity Co. Ltd.

and another vs. The State of Gujarat and another, (1975) 1

SCC 199,  Vanchalabai Raghunath Ithape  (Dead) by Lr.  vs.

Shankarrao Baburao Bhilare (Dead) by Lrs. and others,

(2013)  7  SCC  173,  Bibi  Fatima  and  others vs.  M.  Ahmad

Hussain and others, (2017) 11 SCC 832 and Vithal Tukaram

Kadam and another vs. Vamanrao Sawalaram Bhosale and

others, (2018) 11 SCC 172.  

5. Learned counsel for the respondents submitted that Exhibit

52 was not a sale deed, but a conditional sale deed.   The

existence of a debtor and creditor relationship is clearly

established from the recitals in the agreement itself.  The right of

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reconveyance was incorporated in the same agreement in

accordance with  Section 58(c)  of the  Transfer  of  Property  Act,

1882 (hereinafter called as “the Act”).  The fact that the dues may

not have been paid within the period stipulated in the instalment

bond  or  under the  agreement cannot  deprive the right  of the

respondents to bring a suit for redemption within a period of 30

years from the date of agreement in accordance with Article 61(a)

of the Limitation Act, 1963.  The appellants were conscious of the

fact, and therefore did not move for mutation for three long years

after expiry of the period for repayment.  The appellants did not

file any suit under Section 67 of the Act for foreclosure.  

6. We have considered the respective submissions on behalf of

the parties. The appeal raises a singular question of  law as to

whether the agreement dated 29.04.1971, Exhibit 52, was a

mortgage by conditional sale or it was a sale with an option to

repurchase.   

7. The plaintiffs owed Rs.10,500/­ to defendant no.1 for credit

purchases of daily necessities from the shop of the latter.   The

instalment bond was executed by the plaintiffs on 26.04.1970, to

repay the amount in three instalments falling due on the  Gudi

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Padwa day in 1971, 1972 and 1973.  On failure to pay the first

instalment in 1971, the agreement in question, Exhibit 52, came

to be executed on 29.04.1971.  Defendant no.1 got the mutation

done in his name after notice to the plaintiffs on 13.05.1976, i.e.

three years after the last date for payment of instalments on Gudi

Padwa  in 1973.   Defendant no.1 then resold the land to

defendant no.2 on 13.02.1978.   The suit for redemption of

mortgage was filed in 1980.

8. We deem it necessary to incorporate the agreement dated

29.04.1971 for better appreciation of the controversy falling for

adjudication by us.

“Exh.52 Stamp

Sub­ Registrar, Degloor. Conditional Sale Deed

    The Conditional Sale deed of land out of Taulka Degloor, Dist; Nanded, Muncipal Council, Degloor, agricultural land bearing Survey No. 156/A) Admeasuring 99 Arrs, assessment Rs. 5­14 paise. Consideration Rs. 11.000/­. date: 29.04.1971 Purchasers:    Dukan “Sadasaukh Jankidash” Degloor                       owners:­                       1­ Gangadas s/o Satnarayanlal Daga                       2­ Haridas s/o Satnarayanlal Daga                       3­ Sridas s/o Satnarayanlal Daga

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                     4­ Jagmohandas s/o Satnarayanlal Daga                       Age: 17 years Minor through Guardian                       Mother Chanddevi w/o Satnarayanlal Daga                       5­ Shelabai w/o Ajay Kumar                       6­ Sundrabai d/o Satnarayanlal                       7­ Chanddevi w/o Satnarayanlal                       8­ Laxmibai w/o Kedarnath

All R/o Hyderabad Andhra Pradesh (A.P.)  Through General Power of Attorney  Ramnivas s/o Bankatlal Jhawar  Age: 55 Years,  Occ. Agriculture & Private Service, R/o Degloor, Tq: Degloor.

 Transferors: 1) Venkat Nagorao Bhadke 2) Keshavrao 3) Digamberrao 4) Dattatryarao 5) Suryakant Father of all Venkatrao Bhadke Age: 71, 36, 33, 31, 29 respectively.   Occupation of all: Agri.  Residents of Degloor.

For the reasons the conditional sale deed is executed, that in District  Nanded, Taluka Degloor,  at  Degloor proper we own & possess agricultural land survey no. 156/1 admeasuring  99 Arrs,  assessment  Rs.  5.14  paise,  having four boundaries towards East: Agri Land of Nagnath Devji Motewar, West: Road, North: Agri Land of Tukaram Nagorao, South : Agri. Land of Ramrao Nagorao, this agricultural land today on 29.04.1971 is given to you till the Gudi Padwa of the year 1973 by this deed for consideration of  Rs. 11,000/­  (In words Eleven Thousand Only) by this conditional sale and the possession of said agricultural land is handed over to you. That we will pay the above consideration on expiry of the above term and then will seek the possession of our agricultural land. If we fail to make the payment after the expiry of said period then you can consider this as permanent sale deed and can cultivate the property for perpetuity. If anyone objects your cultivation then we will

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make redressal of the same. If  any private or government encumbrance is  found on the land then we will  be solely responsible for the same. That in all there are total dues of Rs. 10,500/­ (Ten thousand five hundred only) to be paid by us to you.   That we have examined & confirmed the accounts & have executed instalment bond on 26.04.1970. That amount & Rs.500/­ which we have received earlier in cash from you.   Accordingly there is no objection or grievance for receiving  Rs.11,000/­ (in  words  Rs.  Eleven thousand only)  & giving possession.  The purchasers are agriculturists.   Even after purchase of this land their land holding will not be excess than the ceiling limits as per the provisions of Maharashtra Agricultural Lands (Ceiling & Holdings) Act, 1961 & not more than 2/3 of minimum holding prescribed under the Act.   Therefore for this transaction there is no need to seek permission of Deputy Collector as required under Hyderabad Tenancy & Agricultural Lands (Amendment) Act, 1965.  The executants of this deed are not from Scheduled Caste and Scheduled Tribes.  Hence this Conditional Sale deed is executed by us with free will & satisfaction & signed on 29 April 1971.”

9. Section 58, clause (c) of the Transfer of Property Act defines

mortgage by conditional sale as follows:­

“Where the mortgagor ostensibly sells the mortgaged property— on condition that on default of payment of the mortgage­money 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 a  mortgage  by conditional sale  and  the  mortgagee,  a  mortgagee  by conditional sale;

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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. Whether an agreement is a mortgage by conditional sale or

sale  with  an  option for repurchase is  a vexed  question to  be

considered in the facts of each case.  The essentials of an

agreement, to qualify as a  mortgage by conditional sale, can

succinctly be summarised.   An ostensible sale with transfer of

possession and ownership, but containing a clause for

reconveyance  in accordance with Section 58(c)  of the Act,  will

clothe the agreement as a mortgage by conditional sale. The

execution of a separate agreement for reconveyance, either

contemporaneously  or subsequently, shall  militate  against the

agreement being mortgage by conditional sale.  There must exist

a debtor and creditor relationship.  The valuation of the property,

and the transaction value, along with the duration of  time for

reconveyance, are important considerations to decide the nature

of the agreement.   There will have to be a cumulative

consideration of these factors, along with the recitals in the

agreement, intention of the parties, coupled with other attendant

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circumstances, considered  in  a  holistic  manner.  The  language

used in the agreement may not always be conclusive.  

11. In  Bhaskar Waman Joshi (deceased) and Ors. vs.

Shrinarayan Rambilas Agarwal (deceased) and Ors.,  AIR

1960 SC 301, the principles for determination of the nature of

the document were explained as follows:­

“7…The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the  deed viewed  in  the light  of  surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts.”

12.   In the light of the aforesaid discussion and the facts of the

present case,   an examination of the recitals in the agreement

dated 29.04.1971 holistically, including the heading of the

document, we are left with no doubt that it was not a sale deed

with an option for repurchase but a document of mortgage by

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conditional sale.   An agriculturist  will normally not so easily

dispose his agricultural land, the source of his survival and

livelihood merely for purchases made by him on credit. The dire

financial straits of the plaintiffs is evident from the fact that they

were left with no option but to mortgage 2½ acres of their

agricultural lands  for  credit  purchase of  daily  necessities.  The

financial stringency of the plaintiffs is apparent from their failure

to repay anything even after execution of the instalment bond.

Given the limitations of the plaintiffs because of their poor

financial status, the fact that they may not have objected to the

mutation so done three years later cannot be considered as

sufficient for  a  contrary interpretation of the  agreement  dated

29.04.1971, especially  when the Appellate Court held  that  the

plaintiffs  were  in possession of the  lands.   In the facts of the

case, a debtor and creditor relationship stands clearly

established and hardly needs further elucidation.  The limitation

for the right to redeem, under Article 61(a) of the Limitation Act

1963, is 30 years.  The suit for redemption was therefore within

limitation.   In the facts of the present case, we do not consider

the delay of seven years in filing the suit so fatal, as to disinherit

the plaintiff from his agricultural lands.

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13. In  Vanchala Bhai  (supra), there was a finding that their

existed no relationship of debtor and creditor.   In that

background, the delay of 11 years in institution of the suit for

redemption was considered as a relevant factor.

14.  In  Bibi  Fatima  (supra), the  agreement  was held to  be a

mortgage by conditional sale as the respondent had continued to

be in possession of the lands and the loan was raised to

discharge debts.

15. The observations in  Vithal Tukaram Kadam  (supra) that

attendant surrounding circumstances should be considered, and

upon which learned counsel for the appellant laid much

emphasis, in our opinion is of no avail to him in the facts and

circumstances of the present case.  The question whether the

appellant was a bonafide purchaser or not cannot be considered

relevant in the facts of the present case and may require further

evidence.   It is therefore left open for consideration vis­à­vis

defendant no.1 in an appropriate proceeding if instituted by the

appellant.

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16. We find no merit in the appeal.  The appeal is dismissed.

…………...................J. [NAVIN SINHA]

…………...................J. [INDIRA BANERJEE]

NEW DELHI SEPTEMBER 12, 2019

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