NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.1300 OF 2009

SURAJ NARAIN KAPOOR AND OTHERS ........APPELLANT(s)

VERSUS

PRADEEP KUMAR AND OTHERS ......RESPONDENT(s)

JUDGMENT

NAVIN SINHA, J.

The plaintiff’s suit for redemption of mortgage, decreed by

the  trial  court  and  affirmed  in  first  appeal,  having  been

reversed  by  the  High  Court,  the  plaintiff  is  in  appeal.  The

parties shall be referred to by their respective position in the

suit, for convenience.

2. Learned counsel for the appellants submits that the High

Court grievously erred in reversing the concurrent findings of

two courts that Exhibit-A1 was a mortgage by conditional sale,

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and  not  a  sale  deed  with  an  option  to  repurchase.   The

intention of  the  parties to create  a mortgage by conditional

sale  only  is  apparent  from  the  right  to  redemption  being

incorporated  in  the  same  document,  fulfilling  the  statutory

requirement under Section 58(C) of  the Transfer of Property

Act. Reservation of the right to redemption for five years only,

was not relevant as the right would be co-extensive with the

statutory period of 30 years.   

3. Conversely the submission on behalf of the respondents

is that the High Court on an examination of Exhibit-A1 has

rightly held that it was a sale with a condition for repurchase,

and  not  mortgage  by  conditional  sale.   The  recitals  in  the

document  were  self-explanatory  and  did  not  evidence  any

mortgage  or  loan,  much less  to  discharge  any debt,  or  the

relationship of debtor and creditor.  Merely because there may

have  been  an  option  for  repurchase  within  5  years

incorporated in the same document, would not ipso fact confer

on it the nature of a mortgage by conditional sale. The suit for

redemption was also not filed within five years.  

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4. We  have  considered  the  submissions.  The  question

whether a document is a mortgage by conditional sale, or a

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

determined  in  the  facts  of  each  case.  Reference  may

appropriately  be  made  to  Bhoju  Mandal  vs.  Debnath

Bhagat, 1963 Supp (2) SCR 82, observing as follows:-

4. There is a clear legal distinction between the two concepts, a mortgage by conditional sale and a  sale  with  a  condition  of  re-purchase.  The former is a mortgage, the relationship of debtor and  creditor  subsists  and  the  right  to  redeem remains with the debtor. The latter is an out and out  sale  whereby  the  owner  transfers  all  his rights in the property to the purchaser reserving a personal right of re-purchase. The question to which category a document belongs presents a real  difficulty  which  can  only  be  solved  by ascertaining  the  intention  of  the  parties  on  a consideration of the contents of a document and other  relevant  circumstances.  Decided  cases have  laid  down  many  tests  to  ascertain  the intentions  of  the  parties  but  they  are  only illustrative and not exhaustive.  

5. The  true  nature  of  the  document  therefore  has  to  be

determined in the facts of each case, dependent on the nature

of  the  recitals  in  the  document,  intention  of  the  parties,

coupled  with  other  attendant  surrounding  circumstances.

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There can be no hard and fast rule for determining the nature

of the document, devoid of these circumstances.  Precedents,

in abundance, will  not suffice alone, as observed in  Pandit

Chunchun Jha vs. Sheikh Ebadat Ali and another, 1955

SCR 174, as follows:-

“There  are  numerous  decisions  on  the  point and  much  industry  has  been  expended  in some  of  the  High  Courts  in  collating  and analyzing them. We think that it is a fruitless task  because  two  documents  are  seldom expressed  in  identical  terms  and  when  it  is necessary  to  consider  the  attendant circumstances  the  imponderable  variables which  that  brings  in  its  train  make  it impossible to compare one case with another. Each case must be decided on its own facts.”   

6. In the facts of the instant case, considering that the suit

had been decreed by two courts, it was considered prudent to

re-examine  the  deed  document  in  its  original  vernacular

version, rather than to rely upon the meaning assigned to the

recitals according to the unofficial translators understanding.  

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7. A bare reading of the original document reveals that it is

styled as a sale deed. The vendor specifically recites that he

had purchased the property for a sum of Rs.1500/- by sale

deed dated 22.6.1948, from its original owners.  That he was

the  exclusive  owner  of  the  property,  which  was  not

encumbered in any manner and that he had absolute title and

authority singularly, to deal with the same to the exclusion of

his brothers, from whom he had separated long ago. He was

selling  the  shop  for  a  sum  of  Rs.4000/-  because  he  had

purchased a motor vehicle, which he wanted to run on hire.

On  receipt  of  the  consideration  money  he  was  voluntarily

transferring all right, title and interest in the property to the

vendee and his legal heirs for all times to come.  If the property

was found to be encumbered in any manner, the vendee could

approach the court, for return of the sale amount, including

against the immovable property of the vendor.  If the amount

was returned within a period of 5 years, either in installments

or in lump-sum, the purchaser would execute the sale deed in

his favour.

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8. The  recitals  reveal  no  reference  to  any  loan  taken  or

mortgage created with regard to any immovable property as

security  for  such loan,  much less to discharge any debt.  It

does  not  evince  the  creation  of  a  debtor  and  creditor

relationship.  On the contrary, the recitals are specific that the

vendor was in need of money to run the vehicle purchased by

him on hire, and was selling the shop to raise money for the

purpose.  The suit  for  redemption was also filed beyond the

period  of  5  years.  Significantly,  the  first  appellate  court

observed that the recitals indicated that it was a sale deed, but

concluded that  it  was  a  mortgage  by  conditional  sale,  only

because the right to redemption was incorporated in the same

document,  which  was  but  only  one  of  the  factors  amongst

others, to determine the true nature of the document.

9. In  Tamboli  Ramanlal  Motilal  (Dead)  by  Lrs.  vs.

Ghanchi Chimanlal Keshavlal (Dead) by Lrs. and another,

1993 Supp. (1) SCC 295, the question was similar with regard

to the nature of  the document, in absence of  any intention

expressed  with  regard  to  creation  of  a  debtor  and  creditor

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relationship. Holding that the document was not a mortgage

by conditional sale but sale with an option to repurchase, it

was held:-

“17.  What  does  the  executant  do  under  the document?  He takes a sum of Rs.5,000 in cash. The particulars are (a) Rs.2,499 i.e. Rs. 899 by mortgage of his house on January 27, 1944 and (b) Rs. 1,600 by a further mortgage on May 31, 1947  totaling  to  Rs.  2,499.   Thereafter,  an amount of Rs. 2,501 in cash was taken from the transferee.   The  purpose  was  to  repay miscellaneous debts and domestic expenses and business.  It has to be carefully noted that this amount of Rs.5,000 was not taken as a loan at all.   As rightly observed by the High Court, by executing  this  document  the  executant discharges all the prior debts and outstandings. Where, therefore, for a consideration of a sum of Rs.5,000 with the conditional  sale  is  executed, we  are  unable  to  see  how  the  relationship  of debtor and creditor can be forged in.  In other words, by reading the documents as a whole, we are unable to conclude that there is a debt and the relationship between the parties is that of a debtor and a creditor.   This is a vital  point to determine the nature of the transaction.

18. The property is sold conditionally for a period  of  five  years  and  possession  is  handed over.  At the same time, the document proceeds to state ’Therefore, you and your heirs and legal representatives  are  hereafter  entitled  to  use, enjoy  and  lease  the  said  houses  under  the ownership right’.”    

(emphasis supplied)

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10. In the facts and circumstances of the present case, and

for reasons discussed, we find no reason to interfere with the

order impugned holding that the document in question was a

sale deed with an option to repurchase and not a mortgage by

conditional sale.  

11. The appeal lacks merits and is dismissed.  

………………………………….J.  (Ranjan Gogoi)  

……….………………………..J.    (Navin Sinha)  

New Delhi, October 24, 2017.

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