Non-Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.7023 of 2012

BIBI FATIMA & ORS. .... Appellant(s)

Versus M. AHAMED HUSSAIN & ORS.

….Respondent(s)

J U D G M E N T

L. NAGESWARA RAO, J.

The first Respondent-Plaintiff filed a suit for redemption of

a  mortgage  and  for  re-conveyance  of  the  suit  schedule

property  which  was  decreed.    The  Appeal  filed  by  the

Appellant-first  Defendant  in  the  suit  was  allowed  and  the

judgment and decree of the Trial Court were set aside.   The

High Court reversed the judgment of the first Appellate Court

and restored the judgment of the Trial Court in favour of the

first Respondent-Plaintiff.  Hence, this appeal.

2. For the sake of convenience, the parties will be referred to

as they were arrayed before the Trial Court.  The father of the

Plaintiff, Mavada Mokthesar Ummar Saheb (hereinafter referred

to as Ummar Saheb),  obtained a loan from Vijaya Bank and

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defaulted in repayment of the loan.  The suit filed by Vijaya

Bank was decreed.  In the execution petition filed by the Bank,

the land and building belonging to Ummar Saheb were brought

to sale.   He approached his son-in-law, the first Defendant and

took  Rs.5,900/-  for  which  he  executed  a  document  on

02.07.1964,  which  was  exhibited  as  P-1  in  the  suit.   It  was

stated therein that he needed the money for repayment of his

debts which were to the tune of Rs.5,900/-.   The breakup of

Rs.5,900/-  was also  given in  the document  as Rs.4,577/-  for

payment to the Bank and Rs.1,323/- for clearing other debts.

The suit schedule property was sold to the first Defendant who

was  given  an  absolute  right  to  enjoy  the  property  and  the

income realised therefrom.  It was mentioned in the deed that

if  the  amount  of  Rs.5,900/-  was  repaid  after  two  years  and

within five years, the first Defendant would have to re-transfer

the property to Ummar Saheb and in case the re-transfer is not

made  on  payment  of  Rs.5,900/-,  damages  not  exceeding

Rs.5,900/- would have to be paid.

3. Ummer  Saheb  died  on  17.07.1978.   Thereafter,  the

Plaintiff requested for re-conveyance of the property which was

the subject matter  of  the document dated 02.07.1964.   The

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first Defendant refused the request of the Plaintiff which led to

the filing of  a  suit  for  redemption and re-conveyance of  the

property in dispute.  Plaintiff asserted that the document was a

mortgage by conditional sale governed by Section 58 (c) of the

Transfer of Property Act, 1882 (hereinafter referred to as ‘the

Act’).  He averred that his father took a loan of Rs.5,900/- from

the first Defendant to clear his debts.  He further urged that the

property  was  worth  more  than  Rs.10,000/-.   Reliance  was

placed  on  the  condition  pertaining  to  re-conveyance  of  the

property  on  payment  of  Rs.5,900/-  which  according  to  the

Plaintiff  would  show that  the  document  was  a  mortgage  by

conditional sale.  It was also pleaded by the Plaintiff that his

father  continued to  be in  possession of  the property till  the

date of his death i.e. 14.07.1978.

4. The first Defendant through a general power of attorney

filed  a  written  statement  in  which  he  contended  that  the

document is a sale deed with a condition of re-purchase.  The

first  Defendant  stated  in  the  written  statement  that  Ummar

Saheb requested him to purchase the property as he had to

clear  his  debts.  He  further  submitted  that  the  condition  of

re-purchase by itself does not make the document a mortgage

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deed.  Though Ummar Saheb offered to give possession of the

house,  the  first  Defendant  permitted  him  to  continue  in

possession.   According to the first Defendant, a Badige Karar

(rental  agreement)  was  executed  by  the  first  Defendant  in

1969 pursuant to which Ummar Saheb resided in the house as

a tenant.

5. Amongst  others,  the  Trial  Court  framed  an  issue  as  to

whether  the  transaction  covered  by  the  document  dated

02.07.1964 is  a  mortgage by conditional  sale  or  an outright

sale.  After appreciating the evidence on record, the Trial Court

accepted the case of the Plaintiff and held that the condition of

re-conveyance  of  the  property  on  payment  of  Rs.5,900/-  by

Ummar  Saheb  created  a  relationship  of  debtor  and  creditor

between him and the first Defendant.  The Trial Court held that

the  transaction  covered  by  document  Exhibit  P-1  dated

02.07.1964 was a mortgage by conditional sale and decreed

the suit.

6. The First  Appellate  Court  reversed the judgment  of  the

Trial Court by holding that Exhibit P-1 was a sale deed and not a

mortgage by conditional sale.  The First Appellate Court held

that Ummar Saheb sold the property to the first Defendant to

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clear his debts.  It was also held that the possession of Ummar

Saheb was pursuant to a rental agreement.  The First Appellate

Court further held that the amount of consideration shown in

the sale deed was at par with the market price at the relevant

time.  The Plaintiff filed a second appeal which was allowed by

the High Court.   The High Court restored the findings of the

Trial Court and decreed the suit.

7. The  question  whether  a  transaction  is  a  mortgage  by

conditional sale or a sale with a condition of re-purchase has to

be decided on the basis of interpretation of the document itself.

The  intention  of  the  parties  is  the  determining  factor.  The

intention  has  to  be  gathered,  in  the  first  place,  from  the

document.  If the words are express and clear, effect must be

given  to  them  and  any  extraneous  enquiry  into  what  was

thought or intended is ruled out.  The real question in such a

case is not what the parties intended or meant but what is the

legal effect of the words which they used.  If, however, there is

ambiguity in the language employed, then it is permissible to

look into the surrounding circumstances to determine what was

intended (See: Pandit Chunchun Jha v. Sheikh Ebadat Ali,

(1955)  1  SCR 174).  The  extrinsic  evidence  of  surrounding

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circumstances, as may be required to show in what manner the

language of the document is relating to the existing facts, is a

relevant criteria.  (See: Balkishen Das v. Legge [(1899) L.R.

27 IA 58]).

8. This  Court  in  Pandit  Chunchun  Jha’s  case  (supra)

considered the background in which the amendment was made

to  Section  58  (c)  of  the  Act  by  the  Transfer  of  Property

(Amendment) Act, 1929 and held as  follows:

“Because  of  the  welter  of  confusion  caused  by  a multitude  of  conflicting  decisions  the  legislature stepped  in  and  amended  Section  58(c)  of  the Transfer of Property Act. Unfortunately that brought in  its  train  a  further  conflict  of  authority.  But  this much  is  now  clear.  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. But the converse does not hold good, that is to say, the mere fact that there is only one document does  not  necessarily  mean  that  it  must  be  a mortgage and cannot be a sale. If  the condition of repurchase is embodied in the document that effects or purports to effect the sale, then it is a matter for construction  which was  meant.  The legislature  has made  a  clear  cut  classification  and  excluded

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transactions embodied in more than one document from  the  category  of  mortgages,  therefore  it  is reasonable to  suppose that  persons who,  after  the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace  that  presumption  by  clear  and  express words;  and  if  the  conditions  of  Section  58(c)  are fulfilled, then we are of opinion that the deed should be construed as a mortgage”.

9. One circumstance which favours the document being read

as  a  mortgage  by  conditional  sale  is  that  the  relationship

between  the  parties  is  of  a  debtor  and  creditor  and the

transaction is  a  loan (See:  Bhaskar  Waman Joshi  v.  Narayan

Rambilas  Agarwal,  (1960)  2  SCR  117,  at  p.122-123).  The

consideration  amount  being  lesser  than the  market  value  is

another circumstance by which the document can be treated

as a mortgage by conditional sale.  (See: P.L. Bapuswami v. N.

Pattay Gounder, (1966) 2 SCR 918 at p. 923). The mutation not

being done in favour of the transferee (See: Tulsi v. Chandrika

Prasad, (2006) 8 SCC 322 ¶9), the possession being with the

transferor and the length of the period for re-transfer of the

property (See: Indira Kaur v.  Sheo Lal  Kapoor,  (1988) 2 SCC

488¶5),  are  all  circumstances  which  are  indicative  of  a

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document being a mortgage by conditional sale.   

10. On the other hand, it is settled law that a mere condition

of  repurchase  will  not  make  a  document  a  mortgage  by

conditional  sale  as  there  can  be  an  absolute  sale  with  a

condition for repurchase.  It is also no more res integra that the

mere title of the document is not determinative of the nature of

the  document  and  the  document  must  be  looked  at  in  its

entirety.  (See: P.L. Bapuswami v. N. Pattay Gounder  (1966) 2

SCR 918 at p. 921).

11. In  the  light  of  the  principles  laid  down  by  this  Court

regarding the resolution of a dispute as to whether a document

is a mortgage by conditional sale or a sale with a condition for

repurchase,  we  proceed  to  interpret  the  sale  deed  dated

02.07.1964 which is reproduced below:   

“ABSOLUTE SALE DEED OF IMMOVABLE PROPERTY AND BUILDINGS HELD ON MOOLY RIGHTS FOR RUPEES 5,900/-

This  sale deed is  executed on this  the 2nd day of  July  1964 by Moktesai Ummer Saheb, S/o. Mavada Koktesai Moidin Saheb, Farmer, Majkooru Taluk and Village,

In favour of

Mohammed Hussain  Athra  Miraja  Saheb,  S/o.  Haji  Borappa  yane  Ummer Saheb,  Farmer,  resident  of  No.2,  Yedthare  Village,  Kundapur  Taluk, WITNESSETH AS FOLLOWS: WHEREAS, myself and 4 others had obtained a loan from Vijaya Bank Ltd., Mangalore through its Byndoor Branch,  AND WHEREAS, the said bank had obtained a money decree against us in O.S. No. 190 of 1961 on the file of the sub-ordinate Judge of Udupi and had also filed an execution petition in Ex. Case No. 45 of 1963 and in the said execution case, the lands and buildings mentioned below were brought for auction,

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And whereas out of the said sums, as I could not repay the amounts due by me namely Rs. 4577-00, I, after thought, in the interest of my family decided to sell the below mentioned land and buildings for payment of the debts of (Mavada Mattesra Ummer Saheb) upon receipt of Rs. 5900/- in the manner stated here below, hereby execute this sale deed in your favour in respect of the land and buildings mentioned hereinbelow.  Hence hereafter you should hold and enjoy the property hereby sold and held Muli rights and also the income thereof from this Krodhi  year and also to pay assessment to the Government from 1965 and also shall enjoy the profit and income thereof as well as land and the buildings sold hereby absolutely by you and your family from generation to generation.  Hereafter I shall have no rights over the said land and buildings or over the produce or income thereof or over the land and buildings and neither myself nor my legal heirs shall have any right to make  any  claim  demanding  payment  of  any  more  sums  for  whatever reasons.  Particulars of the receipt of consideration under this sale deed.  I have received a consideration of Rs. 4577/- for payment of debts due in Ex. Case No. 190 of 1961 and another sum of Rs. 1323/- to pay off the debts arisen on account of the legal necessities of the family.  Thus, in all I hereby acknowledge the receipt of a sum of Rs. 5900/- as consideration for this sale deed. Particulars of the property sold Immovable property situated in No. 2, Yothere Village, Kundapur Taluk within the registration sub-district of Byndoor sub-division of D.K. District held on absolute  rights  and  comprised  within  the  limits  of  Kundapur  Taluk Development Board.

 Boundaries East : Portion of Survey No. 77/1 West : Road North : Portion of Survey No. 75/12B Including  the  tree  growth,  right  of  way,  water  right,  residential  house, bathroom, toilet room etc. etc.

The sum of Rs. 5900/- which is the consideration of this sale deed if repaid after 2 years and within 5 years from this date in one lumpsum, you deserve to make a transfer deed to give the same to me.  Thus, when the Vendor makes the repayment of Rs. 5900/-, if the PURCHASER fails to give back, the PURCHASER and his family members are liable to make good to the Vendor an amount of loss not exceeding the amount of consideration under this sale deed to the Vendor or his successors subject to which this sale deed of muli rights is executed.

Sd/- M.H.M. Mirana (M.H. Ahmed Mirana in Husain)  

Witnesses

M. Mohammed Hussain, S/o. Mukta Ummer Saheb,

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Adthare Village.

Written by  

Mary Muthu Shunge, S/o. S. Suhaya Shunge, H.O.S.O.R.P. Village, Book No.1, Volume No. 207, Pages 407 in the year 1964, Registered as No. 2531 16th July 1964

Sd/- Govindan Naidu

Sub-registrar” (Underlining supplied)

12. It is clear from a plain reading of the document that there

has  been  an  absolute  transfer  of  rights  in  the  property  by

Ummar  Saheb  in  favour  of  the  first  Defendant  for  a

consideration of  Rs.5,900/-,  which was the exact  amount  he

required  to  clear  his  debts.   There  is  a  condition  in  the

document that the first Defendant had to transfer the property

back to Ummar Saheb on repayment of Rs.5,900/-  after  two

years and within five years from the date of execution of the

document i.e. from 02.07.1964.

13. It  is the admitted case of both sides before us that the

transaction was entered into by Ummar Saheb for clearing his

existing dues, which were to the tune of Rs.5,900/-.  A breakup

of the said dues was also mentioned in the sale deed dated

02.07.1964.   It is apparent from the document that there has

been an absolute sale.  It is also clear that there is a condition

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for  transfer  of  the  property  in  favour  of  the  transferor  on

repayment  of  Rs.5,900/-.   It  is  very  difficult  to  decide  the

present dispute only on the basis of the aforesaid two facts.

14. As it is very difficult to find out the intention of the parties

on a plain reading, it is necessary to look into the surrounding

circumstances  for  the  purpose  of  determining  whether  the

document dated 02.07.1964 was intended to be a genuine sale

deed or was merely an ostensible sale.

15. The Defendant, who appeared through his general power

of  attorney,  contended that  the  transaction  was  an  outright

sale.  According to the first Defendant, Rs.5,900/- represented

the  then  existing  market  value  of  the  schedule  property.

Though the First Appellate Court found this point in favour of

the first Defendant, the Trial Court and the High Court did not

accept the submission of the first Defendant.

16. We are unable to accept the submission on behalf of the

first  Defendant  that  Rs.5,900/-  was  the  market  value  of  the

property  in  1964.   It  is  clear  from  the  sale  deed  dated

02.07.1964  that  there  was  a  decree  obtained  by  the  Bank

against  Ummar  Saheb  for  Rs.4,577/-.    Ummar  Saheb  also

required Rs. 1,323/- on account of debts incurred for domestic

purpose.   The  amount  of  Rs.5,900/-  was  the  exact  amount

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which Ummar Saheb needed to repay his creditors.    By no

stretch  of  imagination  can  it  be  said  that  the  parties  even

considered  the  market  value  of  the  property  at  the  time of

execution of the document in 1964.

17.  The first Defendant further submitted that he permitted

Ummar Saheb to continue in possession of the property after

execution of the sale deed dated 02.07.1964.  He further urged

that Ummar Saheb continued in the property as a tenant.  In

support of this  contention,  the first Defendant relied upon a

Badige Karar (rental agreement) executed by Ummar Saheb.

Though the First Appellate Court placed heavy reliance on this

document, the Trial Court and the High Court held that the first

Defendant could not prove the Badige Karar.   After a detailed

examination of the record, we are unable to find any evidence

regarding the actual amount of rent or the details of payment

of such rent by Ummar Saheb.  Hence this submission of the

first Defendant also deserves to be rejected.

18. Having rejected the submissions of the first Defendant, we

have to examine the points urged on behalf of the Plaintiff to

find out whether the document is a mortgage by conditional

sale.   There  is  no  dispute  that  there  is  only  one  document

which  was  executed  on  02.07.1964  which,  according  to  the

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presumption postulated in Section 58 (c) of the Act should be

construed  as  a  mortgage.   Undisputedly,  Ummar  Saheb

continued to be in possession from 02.07.1964 till the date of

his  death  i.e.  17.07.1978.   Evidence  was  adduced  by  the

Plaintiff to show that notices from the Electricity Department,

etc. were received in the name of Ummar Saheb. The mutation

was also not affected by the first Defendant in his name till

17.07.1978. In light of the above, the Plaintiff’s case that his

father raised a loan to discharge his debts for which purpose he

executed the mortgage dated 02.07.1964, merits acceptance.

The Plaintiff is also right in submitting that there is no condition

in the deed that the sale will become absolute after the expiry

of  five  years’  period.   Ummar  Saheb’s  continuance  in

possession until  the time of his death,  payment of statutory

dues and absence of mutation by the first Defendant of the

property during Ummar Saheb’s lifetime would all point to the

document being a mortgage by conditional sale.  One of the

conditions of sale was that the transferor would be entitled for

the loss incurred, not exceeding Rs. 5,900/-, in the event of the

first  Defendant  not  re-transferring  the  property  after  the

re-payment by the transferor.  It is evident from this condition

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that  Rs.  5,900/-  is  a  debt  and  a  relationship  of  debtor  and

creditor existed between the parties.  In view of the above, we

hold  that  the document dated 02.07.1964 is  a  mortgage by

conditional sale.

19. For the aforesaid reasons, we uphold the judgment of the

High Court and dismiss the appeal.           

                       .…...............................J                                                            [L. NAGESWARA RAO]

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

New Delhi, August 01, 2017

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