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REPORTABLE  

IN THE SUPREME COURT OF INDIA  

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO(S).  8793-8794 OF 2013    

ATUL CHANDRA DAS (D) THROUGH LRS.   APPELLANT(S)  

                               VERSUS    

RABINDRA NATH BHATTACHARYA (D)   

THR. LRS. & ORS.ETC.          RESPONDENT(S)  

 J U D G M E N T  

K.M. JOSEPH, J.        

1.  The appellants are the legal representatives of  

one Atul Chandra Das.  These appeals are directed against  

the common judgment of the Calcutta High court dismissing  

the First Appeal No.7 of 1989 and First Appeal No.8 of  

1989.  The appeals were filed by Atul Chandra Das against  

the dismissal of E.S. No.782 of 1979 filed by him for  

ejectment of the respondents from the plaint schedule  

property and decreeing of Suit no.1271 of 1980 filed by  

the respondents which would be referred to as the title  

suit.  Thus, the appeals before us are lodged against the

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concurrent finding of the courts below and maintained by  

special leave granted by this Court.  

2. The case set up by Atul Chandra Das is as follows:  

By a registered deed of conveyance dated 28.11.1959  

(the parties shall be referred to as in the position in  

the trial Court), the defendants sold for consideration  

the plaint schedule property to one Bholanath Auddy  

(hereinafter referred to as “Bholanath”).   

Simultaneously, Bholanath created tenancy in favour of  

the defendants at the monthly rent of Rs.50/-.  It was  

agreed that the share of corporation tax shall be paid by  

the defendants.  It was also agreed between Bholanath and  

defendants that the defendants were to vacate and deliver  

possession on the expiry of two years from 28.11.1959.   

Thereafter, an agreement for sale was entered into on  

15.8.1960 between Bholanath and Atul Chandra Das.  He  

agreed to sell plaint schedule property for Rs.9000/-.   

Since Bholanath failed to perform the obligation, O.S.  

No.171 of 1962 was filed by Atul Chandra Das for specific  

performance.  On 30.11.1977 a decree was passed in favour  

of Atul Chandra Das.  In terms of decree he deposited the  

balance consideration and finally a sale deed was

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executed in his favour.  He claimed to be the landlord of  

the building and alleging that defendants have no right  

to occupy the premises, he sought recovery of possession  

by evicting the defendants.  The defendants filed written  

statement. That apart they also filed the other suit  

namely Suit No.1271 of 1980. Therein the following  

averments were made inter alia:  

Smt. Annapurna Devi (since deceased) was the owner for  

life of the property and on her death, her three sons  

namely Late Ashutosh Bhattacharya, Late Dulal Krishna  

Bhattacharya and Rabindra Nath Bhattacharya (hereinafter  

referred to as ‘Bhattacharyas and who are the defendants  

in the suit filed by Atul Chandra Das and plaintiffs in  

O.S. No. 1271/1980) were given absolute rights, in terms  

of the will executed by Bijoy Kr. Ghosal, the owner of  

the property. They set up the case that a sum of  

Rs.8000/- came to be borrowed from Bholanath on  

28.9.1959.  To secure Rs.8000/- Bhattacharyas mortgaged  

by conditional sale, on 28.11.1959 the plaint schedule  

property in favour of Bholanath.  In order to give  

effect to mortgage an agreement for sale was entered  

into on 07.12.1959 with Aboya Devi (since deceased wife

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of Late Ashutosh Bhattacharya and deceased Late Karuna  

Bhattacharya, the wife of first plaintiff in a title  

suit and Late Smt. Rama Devi, daughter of Annapurna  

Devi) who were the nominees of the mortgagors for the  

agreement to sell of the house on payment of a sum of  

Rs. 10,000/- which was settled to be the mortgage money,  

no rate of interest having been stipulated. Two years  

was agreed to be the period of redemption of mortgage.  

The title deeds were to be kept with Bholanath by way of  

further security. The agreement which is referred to by  

Atul Chandra Das as an agreement for sale in his favour  

dated 15.8.1960 is described as a collusive and  

fraudulent agreement and it was entered into before the  

expiry of period of redemption. The plaint schedule  

property comprised of a three storied building standing  

upon an area of 1 cottah and 8 chittackas of land and  

the value at the relevant time would not have been less  

than Rs.30,000/-, the annual municipal value being  

Rs.1469/- declared at that point of time.  Bholanath was  

a mere mortgagee in a mortgage by conditional sale. The  

specific performance suit was described as a collusive  

suit. Bhattacharyas claimed to be the owners being

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legatees under the will. The relief sought by the  

plaintiffs in O.S. No.1271 of 1980 is relevant. The  

relevant portion reads as below:-  

“20. For the purpose of jurisdiction the suit  

is valued for declaration with consequential  

relief of perpetual injunction at Rs.51/-  

there being no objective standard of  

valuation and objectively for Rs.8500/- and  

Court fee stamp of Rs.4.15 is paid on the sum  

of Rs.51/- being the value for declaration  

with injunction and court fee stamp Rs.525.00  

is paid on the sum of Rs.6500/- being balance  

of the principal due the total court fee paid  

being Rs.529.15p.  

The plaintiffs therefore pray-  

(a) That the suit be decreed for:-    

(i) Declaration that the sale dated 28.11.59  for the consideration of Rs.8000/- of the  

property described in the schedule “A” below  

by               Sm. Annapurna Devi since  

deceased, Ashutosh Bhattacharyya, since  

deceased and the plaintiff nos.1 and 2 to  

Bhola Nath Duddya, since deceased followed by  

the condition of re-transfer as per agreement  

for sale dt. 7.12.59 by Bholanath Auddya  

since deceased in favour of Sm. Abhoya Devi,  

since deceased Sm. Karuna and Sm. Rama Devi  

since deceased, on payment of Rs.10,000/-  

within 2 years was on ostensible sale  

amounting to a mortgage by conditional sale  

and the sallers in the said deed of sale were  

mortgagors and the buyer therein was the  

mortgagee and the period of redemption was 2  

years as provided in the said agreement for  

sale dt. 7.12.59.  

(ii) declaration that either the defendant  Nos. 2 to 7 are the present mortgagee being  

the heirs and legal representatives of the  

said Bholanath Auddya, deceased or in  

alternative the defendant no. 1 is the

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present mortgages, by subrogation having  

stepped in the shoes of the said Bholanath  

Auddya by purchase.  

(iii) declaration that the right of  redemption of the said mortgage by  

conditional sale is still subsisting and the  

plaintiffs are entitled to redeem the said  

mortgage on deposit of the mortgage money  

amounting to Rs.8500/- in court or such  

amount as may be determined by the Court or  

payment of the same to who ever may be  

declared to be the mortgages or mortgagees.  

(iv) Declaration that the agreement dated  15.08.60 between the said Bholanath Auddya  

since deceased and the defendant No. 1 for  

sale of the property described in the  

schedule “A” below is a collusive and  

fraudulent agreement and not enforceable in  

law.  

(v) Declaration that the decree dated  30.11.77 of the Hon’ble High Court at  

Calcutta in Suit No. 171 of 62 for specific  

performance of contract for the sale of the  

property described on the schedule “A” below  

was obtained by practising fraud upon the  

court by the defendant No. 1 and the said  

Bhola Nath Auddya since deceased collusively.   

(vi) declaration that the said decree of the  Hon’ble High Court at Calcutta and the  

conveyance executed thereunder on 26.3.79 by  

the Registrar Original Side of the said  

Hon’ble High Court for sale of the property  

described in the schedule “A” below in favour  

of the defendant No. 1 are not enforceable in  

law and the defendant No. 1 cannot take any  

advantage under the said decree and/ or the  

said conveyance in enforcement of the same.   

(vii) declaration that the defendant No.  1 has no right title and interest in the  

property described in the schedule “A” below  

either as owner or as landlord nor has any  

right to file the Ej. Suit no. 782 of 1979 in  

the city civil court, Calcutta now pending  

before the Ld. Registrars’ Bench and/ or  

proceeding with the same.   

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That the suit be decreed for perpetual  

injunction restraining the defendant No. 1.   

i. From enforcing the said decree dt.  20.11.77 in suit no. 171 of 62 of the Hon’ble  

High Court at Calcutta and/ or enforcing the  

conveyance dt. 26.3.79 executed by the  

Registrar Original side, High Court at  

Calcutta in favour of the defendant No. 1  

under the said decree and/ or taking any  

advantage under the said decree and/ or  

taking any and/ or the said conveyance and  

interfering with the possession of the  

plaintiffs in the property described in the  

schedule “A” below in any way including  

recording his name in Calcutta Corporation  

and/ or in the Calcutta Collectorate.  

ii. From preceding with the Ej. Suit No. 782  of 79 now pending before the ld. Registrar’s  

Bench City Civil Court, Calcutta.  

iii. For temporary Injunction to the effect  as prayed for in prayer Nos. b(i) and (ii)  

above till the disposal of this suit.  

iv. That the suit be decreed for Rs.8500/-  or such other sum as may be determined by the  

court as the present balance of the mortgage  

money payable by the plaintiffs for  

redemption of the mortgage.  

c. That the property described in schedule  “A” below be freed from the mortgage on  

deposit in court or payment to whoever will  

be declared to be the mortgagee or mortgagees  

by the plaintiffs of the mortgage money to be  

decreed by the court.  

d. That the suit be decreed for Costs.    

e. That the suit be decreed for any other  

relief or reliefs to which the plaintiffs may  

be entitled under law and equity. “  

3.  The trial Court proceeded to consider the  

evidence and on the basis of same came to the conclusion

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that there is no merit in the case set up by Atul Chandra  

Das. It was found to be a case of mortgage by conditional  

sale and suit filed by Atul Chandra Das was dismissed and  

the suit filed by the Bhattacharyas came to be decreed.  

As already noticed, the High Court has confirmed the said  

decree.   

4.  We heard the learned counsel for the appellant  

and learned counsel for the Bhattacharyas.  

5.  The learned counsel for the appellant would  

submit before us that the courts below have proceeded to  

find that the sale dated 28.11.1959 executed by the  

previous owners, namely the defendants in favour of  

Bholanath was a mortgage without noticing that such a  

finding will be in the teeth of the proviso to Section  

58(c) of the Transfer of Property Act.  In other words,  

in order to constitute a mortgage by way of conditional  

sale, the proviso to Section 58(c) of the Transfer of  

Property Act mandates that the condition of agreement to  

sell which is what is relied upon by the Bhattacharyas to  

make Bholanath a mortgagee must have been incorporated in

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one document.  In this case on the other hand, there is  

no dispute that the Bhattacharyas relied upon a separate  

and distinct document namely an agreement to sell  

executed by Bholanath in favour of the Bhattacharyas  

dated 7.12.1959.  There is no condition for reconveying  

the property contained in the sale deed dated 28.11.1959.  

6.  The second submission is that the courts have  

gone wrong in relying on Section 37A of the Bengal Money-

Lenders Act, 1940 (hereinafter referred to as ‘the State  

Act’).  It is her contention that the suit filed by the  

Bhattacharhyas was not filed under the State Act.  There  

was no account demanded within the meaning of the Act.  

Support was sought to be drawn from the judgment of the  

Single Bench reported in Swarnalata Tat v. Chandni Charan  

Dey and Ors. AIR 1984 Calcutta page 130.   

7.  The last submission is as follows:-  

Section 37(A) contained under the State Act is repugnant  

to Central Law namely Section 58(c) of the Transfer of  

Property Act.   

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8.  Per contra, the learned counsel for the  

respondent supported the judgment. He submitted that  

Bholanath had not obtained any title under the purported  

sale deed dated 27.11.1959. He could not have conveyed  

any title to the Atul Chandra Das. The suit for specific  

performance was a collusive suit.   

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

reads as follows:-  

“58(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 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]”  

It is undoubtedly true that under Section 58(c), the  

proviso makes it indispensable to constitute a  

transaction a mortgage that one of the conditions

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mentioned in Section 58(c) be incorporated in the  

document by which the conditional sale is effected.  

However, it is now time to refer to Section 37(a) of the  

State Act. It reads as under:-  

“37(a) Saving as to mortgage by conditional  sale. – In the case where any loan is secured  

by a mortgage and the mortgagor ostensible  

sells the mortgaged property on any of the  

conditions specified in sub-section (c) of  

section 58 of the Transfer of Property Act,  

1882 (4 of 1882) then, notwithstanding anything  

to the contrary contained in the proviso to the  

said sub-section, the transaction shall always  

be deemed to be a mortgage by a conditional  

sale and the mortgagee a mortgagee by  

conditional sale for the purpose of the said  

sub-section.”  

10.  Keeping Section 58(c) side by side with Section  

37(a) of the State Act, the conclusion is inevitable that  

the State legislature has intended to override the effect  

of proviso to Section 58(c) of the Transfer of Property  

Act by enacting Section 37(a) in the State Act. Section  

37(a) was incorporated by way of an amendment in the  

State Act. Reading of Section 37(a) brings out the  

Legislative intent with unambiguous clarity and therefore  

the High court was right in relying upon Section 37(a) of  

the State Act to find that though it was by agreement  

dated 07.12.1959 which is a separate document that

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condition to make it a mortgage was incorporated it would  

not make any difference. We may also notice that despite  

the sale deed dated 27.11.1959, the Bhattacharyas  

continued to be in possession of the plaint scheduled  

property and it has been found that they paid the taxes.  

It is further found that the market value of the property  

would not have been less than Rs.30 thousand as on the  

date of the alleged sale namely 27.11.1959.   

11.  The next contention is that suit filed by  

Bhattacharya was not under the State Act. Support was  

sought to be drawn from the judgment of the Single Judge  

reported in Swarnalata Tat case (Supra). Para 12 of the  

judgment relied upon by the appellants reads as follows:-  

“12. The first question which calls for  

determination is whether the present suit is  

a suit under the Bengal Money Lenders Act,  

1940 (hereinafter referred to as the said  

Act). Section 36(1) of the said Act empowers  

the Court to re-open a decree in any suit to  

which the Act applies or in any suit brought  

by a borrower for relief under the Section,  

to re-open the transaction whether the suit  

has been heard ex parte or otherwise. Nowhere  

in Section 36, it is provided that a fixed  

court fee of Re. 1 is to be paid for  

initiating proceeding under Section 36 of the  

said Act. Section 38 provides that any  

borrower may make any application at any time  

to a Court which would have jurisdiction to  

entertain suit by the lender for the recovery  

of the principal and interest of a loan

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before or after the commencement of the said  

Act for taking accounts and for declaring  

amount due to the lender. Such application  

shall be in the prescribed form and shall be  

accompanied by a fee of one rupee and on  

receipt of such application the Court shall  

cause a notice thereon to be served on the  

lender. The Court shall thereafter take an  

account of the transaction between the  

parties and declare the amount, if any due  

and payable but not due by the borrower to  

the lender, whether as principal or interest  

or both. A proceeding under Section 38 shall  

be deemed to be a suit for the purpose of  

Section 11 of the Civil P.C. 1908.  

Admittedly, the plaintiff has not filed any  

application under Section 38 of the Act far  

less in the prescribed form. As such the  

question of payment of a fixed court fee of  

one rupee would not arise. Section 38 does  

not contemplate any suit. It enables a  

borrower to make an application in the  

prescribed form asking the Court to take an  

account and to declare the amount due to the  

lender. Merely because a fixed court fee of  

one rupee has been paid, the suit cannot be  

corrected into an application under Section  

38 of the said Act. Assuming that the Court  

should have treated the suit as an  

application under Section 38 of the said Act,  

even then the plaintiff cannot succeed in her  

contention. The requirements of Section 38  

have not been complied with. There is no  

prayer for taking account and for declaring  

the amount due to the lender. No borrower can  

call in and the procedure prescribed under  

Section 38 unless he asks for account and  

determination of the amount due to the  

lender. Even if the loan is secured, the  

borrower need not ask for redemption. He will  

be at liberty to file an application for  

determination only of the amount due from  

him. This was not done by the plaintiff, who  

claims to be the successor-in-interest of the  

borrower. On the contrary, the plaintiff has  

asked, inter alia, for the following reliefs  

in the plaint:—  

(a) For a decree declaring the aforesaid  

transaction is a loan transaction and

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declaring that the aforesaid deed of sale is  

an ostensible deed of sale as a security to  

repayment of the said loan is repaid.  

(b) For a decree of permanent injunction  

restraining the defendant No. 1 from claiming  

any right of ownership in the property in  

suit by virtue of the aforesaid deed of sale.  

Having regard to the provisions of Ss. 36 and  

38 of the said Act and the averments made in  

the plaint and the reliefs claimed in the  

suit, I am unable to accept the contention of  

Mr. Mullick that the present suit is suit  

under the Bengal Money Lenders Act, 1940.”  

12.  It is at once necessary to notice Section 2(12)  

of the State Act which defines the word “loan”.    

“2(12). “loan” means an advance, whether or  money or in kind, made on condition or  

repayment with interest and includes any  

transaction which is in substance a loan but  

does not include-  

(a) * * * *  (b) * * * *  (c) A loan taken or advanced by, by the Central  

Government or any State Government or by any  

local authority in West Bengal;  

(d) A loan advanced before or after the  commencement of this Act –  

(i) by a bank; or  (ii) by a co-operative life insurance society, co-

operative society, insurance company, life  

assurance company, Life Insurance Corporation  

of India, mutual insurance company, provident  

insurance society or from a provident fund;  

(e) an advance made on the basis of a negotiable  

instrument as defined in the Negotiable  

Instruments Act, 1881, (26 of 1881) other  

than a promissory note;  

(f) Omitted by W.B. Money Lender Amendment Act,  

(Act IV of 1931)  

(g)   *  * * *  

(h) a loan made to or by the Administrator General  

and Official Trustee of West Bengal or the  

Commissioner of Wakfs or the Official  

Assignee or the Official Receiver of the High

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Court in Calcutta;  

(i) a loan or debenture in respect of which  

dealings are listed on any Stock Exchange;”  

13.  Commercial loan is defined in Section 2(4) of  

the State Act. Section 2(22) defines suit to which this  

Act applies. It reads as follows:-  

“2(22) “suit to which this Act applies” means any  

suit or proceeding instituted or filed on or after  

the 1st day of January, 1939 or pending on that  

date and includes a proceeding in execution-  

(a) for the recovery of a loan advanced before or  after the commencement of this Act;  

(b) for the enforcement of any agreement entered  into before or after the commencement of this  

Act, whether by way of settlement of account  

or otherwise, or of any security so taken, in  

respect of any loan advanced whether before or  

after the commencement of this Act; or  

(c) for the redemption of any security given  before or after the commencement of this Act  

in respect of any loan advanced whether before  

or after the commencement of this Act.”  

14.  Section 36 comes under the heading ‘Reopening of  

transactions’. It deals with the power of the Court to  

exercise all or any of the various powers which are  

mentioned therein. Sub Section 4 of Section 36 reads as  

follows:-  

“36(4). This Section shall apply to any Suit,  

whatever it forms may be, if such suit is  

substantially one for the recovery of a loan or  

for the enforcement of any agreement of  

security in respect of a loan or for the  

redemption of money such security.”

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15.  It will be noticed that a Suit for redemption is  

mentioned as suit to which Section 36 applies. Section 38  

undoubtedly enables the borrowers to seek a direction for  

taking accounts.   

16.  We have noticed the relief which was sought in  

the suit which was considered by the learned Single Judge  

in Swarnalata Tat AIR 1984 Calcutta 130. In fact, Court  

in the said case could not find a mortgage proved also.  

The reliefs on the other hand in the suit filed by  

Bhattacharya include reliefs relating to redemption in  

the form it is asked for. In fact, no issue in this  

regard was taken before the Trial Court.  We see no  

reason to non-suit, the Bhattacharyas on this ground  

which is taken for the reasons which we have given.   

17.  The last contention taken is that Section 37(a)  

of the State Act is repugnant to Section 58(c) of the  

Central Act namely, the Transfer of Property Act. The  

contention runs as follows:-   

Money lending falls as entry (30) in the State List.

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Transfer of Property other than agricultural land falls  

in Entry 6 in the concurrent list. The State legislature  

in enacting Section 37(a) of the State Act, a law  

relating to money lending has made a law which is  

inconsistent and therefore, repugnant to the law made by  

the Parliament in Section 58(c) of the Transfer of  

Property Act.   

This contention is taken for the first time in this  

Court. We also see no merit in the same at any rate.  

Section 37(A) is traceable to the Entry ‘Transfer of  

Property’ which is found in the concurrent list. Article  

254 of the Constitution of India reads as follows:-  

“254. Inconsistency between laws made by  

Parliament and laws made by the Legislatures  

of States  

(1) If any provision of a law made by the  

Legislature of a State is repugnant to any  

provision of a law made by Parliament which  

Parliament is competent to enact, or to any  

provision of an existing law with respect to  

one of the matters enumerated in the  

Concurrent List, then, subject to the  

provisions of clause ( 2 ), the law made by  

Parliament, whether passed before or after  

the law made by the Legislature of such  

State, or, as the case may be, the existing  

law, shall prevail and the law made by the  

Legislature of the State shall, to the extent  

of the repugnancy, be void.  

(2) Where a law made by the Legislature of a  

State with respect to one of the matters  

enumerated in the concurrent List contains  

any provision repugnant to the provisions of  

an earlier law made by Parliament or an

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existing law with respect to that matter,  

then, the law so made by the Legislature of  

such State shall, if it has been reserved for  

the consideration of the President and has  

received his assent, prevail in that State:  

Provided that nothing in this clause shall  

prevent Parliament from enacting at any time  

any law with respect to the same matter  

including a law adding to, amending, varying  

or repealing the law so made by the  

Legislature of the State.”  

18.   In this case proceeding on the basis that there  

is an inconsistency between Section 58(c) of the Transfer  

of Property Act and Section 37(A) of the State Act, in  

view of the assent given by the President, the matter  

falls under Article 254(2). Therefore, despite the  

inconsistency, Section 37(A) of the State Act will  

prevail in the State.  

19.  The argument that being part of State Act which  

is the Money Lending Act and Money lending is in the  

state list and therefore, it is a case of legislative,  

incompetence, does not appeal to us. We have found that  

the provisions of 37(A) is traceable to the Entry  

‘Transfer of Property’ in the Concurrent List and that  

Article 254(2) saves the provision.  

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20.  We see no merit in the appeals and the appeals  

stand dismissed.   

…....................J.  [ASHOK BHUSHAN]  

 …....................J.  

[K.M. JOSEPH]  

NEW DELHI;  APRIL 04, 2019.