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Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  4683   OF 2016 (Arising out of S.L.P. (Civil) No. 9513 of 2013)

 Patel Ravjibhai Bhulabhai (D) Thr. LRS.                …..Appellants

Versus

 Rahemanbhai M. Shaikh (D) Thr. LRS. & Ors.       .….Respondents

J U D G M E N T

Prafulla C. Pant, J.

Leave granted.

2. This  appeal  is  directed  against  judgment  and  decree  

dated 20/21/24-09-2012, passed by High Court of Gujarat at  

Ahmedabad,  whereby  Second  Appeal  No.  107  of  1994  is  

allowed,  and dismissal  of  suit  by trial  court  as affirmed by  

First  Appellate  Court  is  reversed.  The  suit  of  the  

respondents/plaintiffs  for  redemption  of  suit  property  is

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decreed by High Court on the payment of Rs.10,000/- within a  

period of  six  months  by  the  plaintiffs  from the  date  of  the  

decree.

3. We  have  heard  learned  counsel  for  the  parties  and  

perused the papers on record.

4. Brief facts of the case are that original plaintiffs Shaikh  

Rahemanbhai  Mohamadbhai  (since  died)  and  Shaikh  

Ismailbhai Moahamadbhai, executed a deed dated 30.12.1960  

in favor of  defendant nos. 1 and 2, namely, Patel  Ravjibhai  

Bhulabhai  (since  died)  and  Patel  Dahyabhai  Bhudarbhai,  

which was titled as conditional sale, for a sum of Rs.10,000/-  

providing therein that if the repayment is made within a period  

of five years, the defendants shall  give back the property in  

suit with possession to the plaintiffs with further stipulation  

that the plaintiffs would have no right to get back the property  

after  the  expiry  of  the  period  of  five  years.  The  plaintiffs  

instituted Civil Suit No. 156 of 1984 before Civil Judge, Junior  

Division,  Dakor,  for  redemption of  property  in question (i.e.  

Survey No. 148, admeasuring 3 acres 29 guntas situated in

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Village  Rustampura,  Taluk  Thasra)  on  repayment  of  the  

mortgage  money  under  the  deed  dated  30.12.1960,  and  

further sought to recover the possession of the property with  

mesne profits.  The plaintiffs pleaded that the deed in question  

was a mortgage deed, and as such they have right to redeem  

the same.  

5. The defendants contested the suit, and pleaded that deed  

dated  30.12.1960  is  not  a  mortgage  transaction  but  a  

conditional sale with stipulation of repurchase within a period  

of  five  years.   Denying that  the plaintiffs  have any right  to  

redeem the property, it is stated by the defendants that the  

land was purchased by the defendants for a consideration of  

Rs.10,000/- and possession was delivered to  them in 1960  

along with execution of the deed.

6. The  trial  court  after  framing  issues,  and  recording  of  

evidence,  held  that  plaintiffs  have  failed  to  prove  that  the  

transaction was a mortgage. The trial court further held that  

suit is barred by time, and, as such, dismissed the suit on  

27.11.1987.  The  First  Appellate  Court  (2nd Joint  District

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Judge, Nadiad) affirmed the decree of dismissal of suit passed  

by  the  trial  court,  vide  its  judgment  and  order  dated  

30.09.1993.  The plaintiffs preferred Second Appeal (S.A. No.  

107 of 1994) before the High Court, and the High Court after  

hearing  the  parties  reversed  the  decree  passed  by  the  two  

courts below. Hence the defendants are in appeal before this  

Court.

7. At the outset we may state that issue of limitation is not  

pressed  before  us  as  Article  60(a)  of  Limitation  Act,  1963  

provides thirty years period for filing the suit for redemption.  

The question before us is that whether document Exh. 23, in  

its  true  interpretation,  is  mortgage  by  conditional  sale,  as  

interpreted  by  High  Court,  or  the  sale  with  option  to  

repurchase as held by the two courts subordinate to it.

8. Section  58  (c)  of  The  Transfer  of  Property  Act,  1882  

defines mortgage by conditional sale, and reads as under:-

“(c)  Mortgage  by  conditional  sale.—Where,  the  mortgagor ostensibly sells the mortgaged property—

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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.”

Section 60 of The Transfer of Property Act, 1882 provides  

right of mortgagor to redeem the property.

9. Distinguishing features between ‘mortgage by conditional  

sale’ and ‘sale with an option to repurchase’ are enumerated in  

Mulla’s Transfer of Property Act (11th Edition) as under:-

“(i) In a mortgage with conditional sale, the relation  of a debtor and a creditor subsists while in a  sale with an option of re-purchase, there is no  such relationship and the parties stand on an  equal footing.

(ii) A mortgage by conditional sale is effected by a  single document, while a sale with an option of

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repurchase is generally effected with the help of  two independent documents.

(iii) In  a  mortgage  with  conditional  sale  the  debt  subsists  as  it  is  a  borrowing  arrangement,  while in a sale with an option of repurchase,  there is no debt but a consideration for sale.

(iv) In  a  mortgage  with  conditional  sale,  the  amount of consideration is far below the value  of the property in the market but in a sale with  an  option  of  repurchase  the  amount  of  consideration is generally equal to or very near  to the value of the property.

(v) In a mortgage with conditional sale, since this  is  a  mortgage  transaction,  the  right  of  redemption subsists in favour of the mortgagor  despite the expiry of the time stipulated in the  contract for  its  payment.   The mortgagor has  the  option  to  redeem the  mortgage  and  take  back  the  property  on  the  payment  of  the  mortgage money, after the specified time, but in  a  sale  with  an  option  of  re-purchase,  the  original  seller  must  re-purchase  the  property  within  the  stipulated  time  period.   If  he  commits a default the option of re-purchase is  lost.”

10. In Tulsi and Others vs. Chandrika Prasad and Others1,  

this  Court  explaining  difference  between  mortgage  by  

conditional  sale  or  sale  with  condition  to  repurchase  has  

observed as under:

1 (2006) 8 SCC 322

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“15. A distinction exists between a mortgage by way  of  conditional  sale  and  a  sale  with  condition  of  purchase.  In the former the debt subsists and a  right to redeem remains with the debtor but in case  of  the latter the transaction does not evidence an  arrangement  of  lending  and borrowing  and,  thus,  right to redeem is not reserved thereby”.  

11. In  P.L. Bapuswami vs.  N. Pattay Gounder2,  it  is held  

that:

“The  definition  of  a  mortgage  by  conditional  sale  postulates the creation by the transfer of a relation  of  mortgagor  and  mortgagee,  the  price  being  charged on the property conveyed. In a sale coupled  with an agreement to reconvey there is no relation  of debtor and creditor nor is the price charged upon  the property conveyed, but the sale is subject to an  obligation to retransfer  property within the period  specified.  The  distinction  between  the  two  transactions  is  the  relationship  of  debtor  and  creditor  and the  transfer  being  a  security  for  the  debt. The form in which the deed is clothed is not  decisive.  The  question  in  each  case  is  one  of  determination  of  the  real  character  of  the  transaction to be ascertained from the provisions of  the  document  viewed,  in  the  light  of  surrounding  circumstances.  If  the  language  is  plain  and  unambiguous it must in the light of the evidence of  surrounding circumstances, be given its true legal  effect”.

2 AIR 1966 SC 902

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12. In  Vishwanath  Dadoba  Karale vs.  Parisa  Shantappa  

Upadhya3, the facts of the case were somewhat similar to the  

present case, and as is evident from paragraph 2 in said case,  

the Court held the deed was a mortgage by conditional sale,  

and upheld the decree of redemption for mortgage.  

13. In  C.Cheriathan vs.  P. Narayanan Embranthiri 4,  the  

principle relating to interpreting of  document as to whether  

the  sale  is  mortgage  by  conditional  sale  or  sale  with  a  

condition to repurchase was discussed, and this Court held as  

under:  

“12.   A document, as is well known, must be read  in its entirety. When character of a document is in  question, although the heading thereof would not be  conclusive,  it  plays a significant  role.  Intention of  the  parties  must  be  gathered  from the  document  itself but therefor circumstances attending thereto  would  also  be  relevant;  particularly  when  the  relationship between the parties is in question. For  the said purpose, it is essential that all parts of the  deed should be read in their entirety”.

14. In the case at hand the document in question (Exh. 23)  

contains the condition as under: - 3 (2008)11 SCC 504 4 (2009) 2 SCC 673

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“In this deed condition is that the said amount of  Rs.10,000.00 when we pay back to you within five  years  from  today,  you  shall  give  back  the  said  property to us with possession.  And in the same  manner,  we  shall  have  no  right  to  ask  back  the  same after expiry of the time limit.”

The  above  condition  in  Exh.23  that  if  the  plaintiffs  

(respondents) make repayment of Rs.10,000/- within a period  

of five years, the defendants shall handover the possession of  

property in suit back to the plaintiffs, reflects that the actual  

transaction  between  the  parties  was  of  a  loan,  and  the  

relationship was of debtor and creditor existed, as such, we  

are of the view that the High Court has rightly held that the  

deed in question Exh.23 read with Exh. 37 is a mortgage by  

way of conditional sale and the decree passed in favour of the  

plaintiffs does not require to be interfered with. Needless to  

say, since the possession of the land was handed over to the  

mortgagee,  no  interest  was  charged.  It  has  also  come  on  

record that  the defendants leased the land to third parties,  

after  possession was given by the plaintiffs  in 1960.  In the  

circumstances,  after  perusal  of  the  evidence  on  record,  we  

agree with the view taken by the High Court.

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15. For the reasons as discussed above, we find no force in  

this  appeal.   Accordingly,  the  appeal  is  dismissed  with  no  

order as to costs.

……………………………..J. [Ranjan Gogoi]

……………………………..J.  [Prafulla C. Pant]

New Delhi; May 02, 2016.