Vanchalabai Raghunath Ithape(d)by Lr. Vs Shankarrao Baburao Bhilare(d)by Lrs.&ors

Page 1

‘ REPORTABLE’

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4833 OF 2013 (Arising out of Special Leave Petition (Civil) No.578 of 2005)

VANCHALABAI RAGHUNATH ITHAPE (D) BY LR. Appellant(s)

VERSUS

SHANKARRAO BABURAO BHILARE (D) BY LRS. AND OTHERS Respondent(s)

JUDGMENT

M.Y. EQBAL, J.

Delay condoned. Leave granted.

2. This appeal by special leave is directed against the

judgment and order dated 19.7.2004 passed by the High

Court of Judicature at Bombay in Second Appeal No.295 of

1988, whereby the second appeal filed by the plaintiff-

appellant was dismissed and the order of the first appellate

court was confirmed. The appellant is the legal heir of the

original plaintiff/widow who was admittedly the owner of the

Page 2

suit property bearing Block No.126 of village Degaon

admeasuring 62 R.

3. The facts of the case can be summarized as under:

4. Plaintiff’s case is that a deed (Ex.31) was executed

by Vanchalabai Raghunath Ithape (the original plaintiff - now

deceased and represented through her legal representative)

in favour of defendant No.1 Shankarrao Baburao Bhilare (the

original defendant/respondent No. 1 herein and now

represented through his legal representatives) on 12.7.1967

for a consideration of Rs.3,000/-, by which the suit land

along with 4 annas share in the mango trees was transferred

to defendant No.1 and possession of the same was handed

over, with a specific stipulation to the effect that the land

was sold on the condition that after receiving Rs.3,000/- in

lump sum within 5 years before end of any Falgun month by

the defendant, the land was to be returned to the plaintiff.

The plaintiff’s case is that it was a mortgage transaction and

the land was to be returned by the original defendant after

receiving the said consideration of Rs.3,000/- within 5 years.

The plaintiff further alleged that the period of 5 years was

2

Page 3

nominal as there was no condition that after 5 years the sale

would become final. According to the plaintiff, till 1978 the

defendant was agreeing to redeem the suit property, but

thereafter he started avoiding to do it. On 20.7.1979,

plaintiff issued a notice calling upon defendant to reconvey

the suit property after accepting the amount. Upon non-

compliance, plaintiff filed a suit being RCS No.226 of 1979

for redemption of the suit property against defendant No.1

and his brothers/relatives as a suit for partition, which also

included the suit property, was stated to be pending

between them. However, only defendant No.1 contested the

suit by filing written statement contending that the

transaction in question (Exh.31) is not a mortgage

transaction, but was that of outright sale. He denied of

having any relationship of mortgagee and mortgagor

between him and the plaintiff. According to him, the plaintiff

had sold the suit property to him as per the said sale deed,

but only as a concession the period of 5 years was

mentioned in the deed to reconvey the said suit property

3

Page 4

and since there was no repayment in 5 years no re-

conveyance could be claimed.

5. Considering the pleadings and evidence tendered

by the parties, the trial court opined that the suit land was

originally owned by the plaintiff and after execution of the

said deed, possession is with the defendant. On perusing

said Exhibit 31, the trial court found it in the nature of the

sale deed, but in the last paragraph of the said deed, there is

a mention that the said amount of Rs.3,000/- was to be

repaid by the plaintiff within the period of 5 years at the end

of Falgun, and that at that time the defendant was to accept

the said amount and to reconvey the suit land thereafter.

Considering the said recital coupled with the evidence of the

defendant and provisions of Section 58(c) of the Transfer of

Property Act, 1882, the trial court did not consider it to be a

sale transaction and held it to be a mortgage transaction by

conditional sale. The trial court also answered the issue

“whether defendant No.1 proved that time was the essence

of the said contract …” in negative. The suit of the plaintiff

for redemption was accordingly decreed by the trial court

4

Page 5

declaring that the plaintiff is entitled to redeem the suit

property after paying the amount of Rs.3,000/- to the

defendant.

6. Aggrieved by aforesaid judgment and order, the

defendant preferred first appeal before the District Judge,

Satara, who, after hearing both the parties, allowed the

appeal holding that there was no relationship of debtor and

creditor between the parties nor it was it the case of the

plaintiff that the defendant was known to her before the

transaction and thus the transaction in question was an

absolute sale with a condition of repurchase, but the plaintiff

failed to get the land reconveyed within stipulated period.

7. The plaintiff took exception to the aforesaid

judgment by filing second appeal before the High Court

raising several contentions. The High Court dismissed the

second appeal mainly relying on the observations made by

the first appellate court that admittedly there was no

relationship of debtor and creditor between the parties nor

was it the case of the plaintiff that the defendant was known

to her before the transaction was settled and there was

5

Page 6

nothing on record to show that the said observation was

incorrect and thus the document in question was of absolute

sale with condition of repurchase. The High Court held that

the findings recorded by the first appellate court were

neither perverse nor illegal and, therefore, no interference

was called for in the second appeal under Section 100 of the

Code of Civil Procedure.

8. We have heard Mr. Sushil Karanjkar, learned

counsel appearing on behalf of the appellant and Mr. Vinay

Navare, learned counsel appearing for legal representatives

of respondent No.1.

9. Admittedly, the plaintiff filed the suit claiming a decree

for redemption of the suit property. According to the

plaintiff, the suit land was mortgaged by her to the original

defendant for the mortgaged amount of Rs. 3,000/-; a period

of five years mentioned in the sale deed is nominal; and in

fact it was agreed between the plaintiff and the defendant

that whenever the plaintiff repay the said amount of Rs.

3,000/-, defendant No.1 was to take back the said amount

and redeem the suit property. The trial court decreed the

6

Page 7

suit by passing a decree of redemption. The first appellate

court reversed the findings recorded by the trial court and

allowed the appeal and set aside the judgment and decree of

the trial court. As against that, the plaintiff preferred the

second appeal. The High Court did not interfere with the

findings of fact recorded by the first appellate court.

10. Since the first appellate court has gone into the

details of facts and evidence and recorded findings to the

effect that the transaction in question was not a mortgage

but contract sale, we would refer some of the findings

recorded by the first appellate court. Paragraphs 19, 20, 25,

26 and 29 of its judgment are worth quoting herein:

“19. Admittedly the plaintiff is a widow but she has adopted her grand son. Rajaram stays at Malgaon. Both the plaintiff and Rajaram have admitted that they were in need of money, not only to purchase another land at Malgaon but the amount was also necessary for payment of the Society debts of Rajaram. In case of mortgage as well as sale transaction it is quite possible that for the necessity alienation takes place. So by itself these two circumstances would not weigh in favour of the plaintiff or the defendant. It is admitted that with the consideration

7

Page 8

amount of this sale deed Exh.31, a land was purchased at Malgaon and that too in the name of Rajaram. This clearly indicates that in order to enable Rajaram to cultivate the land it was purchased at Malgaon Rajaram obviously is managing the affairs of the plaintiff.

20. Apart from the term incorporated in Exh.31, it is the contention of the plaintiff that a separate document was executed by the defendant covering the suit transaction. That document according to the plaintiff was taken back by the defendant at the time of Akshya Tritiya of 1979, stating that it was required for the partition suit between the brothers. A bare perusal of different stages of the suit indicate that from time to time the plaintiff has tried to make improvements in her story. The defendant has flatly denied that there was any other document executed on the date of the sale. For about 11 years after the transaction the plaintiff was quite silent. In the plaint, it is mentioned that after 1978, the defendant was ready to abide by the terms but later he avoided the transaction. In this connection it may be noted that in the notice Exh.32, issued by the plaintiff, there is absolutely no mention of the fact that any such document had been executed much less, that it was taken by the defendant on the Akshya tritiya day. No doubt, it is an admitted fact that defendant No.2 had filed the Civil suit for partition of the

8

Page 9

suit land and that suit was still pending at the date of the present suit. A pointed question was asked to the plaintiff as to why in the notice the fact that another document had been executed and it was taken at the time of Akshya Tritiya is not mentioned. She has no explanation to offer. According to her nobody else was present when this document was taken.

xxx xxx xxx

25. Thus, ultimately what remains is the fact that the sale deed Exh.31 contains the provision of re-conveyance. Whether by itself is it sufficient to conclude that the transaction was a mortgage transaction. Not only the sale deed is drafted a pure and simple sale deed but the plaintiff has tried to make out inconsistent case. If it had been agreed that the transaction was to be a mortgage, normally the Bond writer would have styled the document as (conditional sale deed). Rajaram states that the defendant No.1 was to enjoy the land in lieu of interest. Neither any such case is made out nor there any clue from the recitals in the document. Entire blot is tried to be put on the Bond writer by stating that he prompted that some period should be mentioned. In fact the suggestion made to the defendant is that, the bond writer Sapkar is his friend and he gets document written from Sapkal, thereby suggesting that Sapkal had written some terms not consistent with the agreement between the parties. It is

9

Page 10

strange, even such a suggestion made when neither plaintiff nor Sapkal have come out with a positive case that the document does not incorporate the terms agreed. At the most their stand is that, there was contemporaneous agreement of re-conveyance and that document has been suppressed. The existence of the separate document has been discarded by me.

26. Admittedly, there was no relationship of debtor and creditor between the parties, nor is it the case of the plaintiff that the defendant was known to her or Rajaram before the transaction was settled. The document does not purport to create any relationship of landlord and tenant. The shorter period in which the land was to be got re-conveyed is an indication of absolute sale with a concession to the vendor to get back the land in the stipulated period. In the R of R also in the other right column there is reference to this term and the period is of 5 years only. If there was any other document, it is not the case of the plaintiff that it was shown to the village officer. Naturally we have to proceed on the basis that the agreement of re-conveyance was an integral part of the sale deed Exh.31. No parole evidence to vary the terms of the same can be allowed. It is quite easy to make such a case to get over the obstacle in the way of the plaintiff but unless the circumstances justify it cannot be believed.

1

Page 11

xxx xxx xxx

29. As against this, the document Exh.31, apparently shows that it was a sale absolute. Not only title passed to the defendant No.1 because there was consistent recitals that plaintiff and her heirs have no subsisting interest and defendant has become full owner. Only at the end a concession was given to get the land re-conveyed in 5 years. Hence in my opinion, the learned Civil Judge was completely in error in concluding that the transaction was a mortgage transaction. I hold that the transaction was an absolute sale. The plaintiff has failed to get the land re-conveyed within stipulated period. Hence, she has lost her remedy. The appeal therefore, must succeed.”

11. At the very outset, we are of the view that the

findings recorded by the lower appellate court are pure

findings of fact and hence the High Court has rightly refused

to interfere with those findings in second appeal under

Section 100 of the Code of Civil Procedure. However, we

would like to discuss some of the relevant points on the

basis of those findings recorded by the first appellate court.

The only question for consideration befpre us and which has

rightly been considered by the first appellate court, is as to

1

Page 12

whether the transaction in question is mortgage transaction

or it is a sale transaction with a condition of repurchase.

12. The document in question has been described as

Sale Deed transferring the land along with the fixtures and

possession was handed over to the defendant. The relevant

portion of the Sale Deed is extracted hereinbelow:-

“Thus the sale land along with the fixtures and all rights is being sold to you with all rights along with its possession. Thus you may cultivate the same. Hence forth I or my heirs shall not be having any right over the same and you have become the owner of the said land. Any obstruction would be removed at my cost. I have received the consideration for the same for which there is no complaint. If Rs. 3000/- is paid within 5 years at the end of any Falgun month at that time you should accept the said amount and return the land to me and on this condition the land is being sold to you.”

13. Section 58(a) and (c) of the Transfer of Property Act,

1882, needs to be reproduced here:-

“58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed” defined. -- (a) A mortgage is the transfer of an interest

1

Page 13

in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage- deed.

(b) …..

(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:

1

Page 14

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.”

14. From a perusal of the aforesaid provisions

especially, Section 58(c), it is evidently clear that for the

purpose of bringing a transaction within the meaning of

`mortgage by conditional sale’, the first condition is that the

mortgagor ostensibly sells the mortgaged property on the

condition that on such payment being made, the buyer shall

transfer the property to the seller. Although there is a

presumption that the transaction is a mortgage by

conditional sale in cases where the whole transaction is in

one document, but merely because of a term incorporated in

the same document it cannot always be accepted that the

transaction agreed between the parties was a mortgage

transaction.

15. In the case of Williams vs. Owen, 1840, 5

My.&Cr.303 = English Reports 41 (Chancery) 386, a similar

1

Page 15

question arose for consideration as to whether a conveyance

by the plaintiff’s father to the defendant was to be

considered as having been a mortgage as contended by the

plaintiff, or as having been a sale, with a right of repurchase

at a given date. It was held that in a mortgage the debt

subsists and a right to redeem remains with the debtor, but

a sale with a condition of repurchase is not a lending and

borrowing arrangement; no debt subsists and no right to

redeem is reserved by the debtor, but only a personal right

to purchase. This personal right can only be enforced strictly

according to the terms of the deed and at the time agreed

upon.

16. In the instant case, the trial court committed grave

error in construing the document and erroneously held that

the transaction is mortgage and hence, the plaintiff is

entitled to decree of redemption.

17. In the case of Vasudeo Bhikaji Joshi v. Bhau

Lakshman Ravut & Others reported in ILR 1897 XXI 528 a

Bench (comprising Sir C. Farran, Kt., Chief Justice and Mr.

1

Page 16

Justice Parsons) of the High Court at Bombay considered a

similar question in which the fact was that the plaintiffs sued

to redeem an alleged mortgage made in 1823 by their

ancestor to the ancestor of the defendant. The alleged

mortgage recited a previous mortgage under which the

mortgagee Gopal Gokhale was in possession, and it stated

that a sale had been contemplated, but the parties could not

agree as to price, but that they had now settled it at Rs.

125/- and the amount due on the mortgage at Rs. 200/-, and

that it was agreed that if within four years the mortgagor

paid Rs. 125/- with interest, he should get back the land; if

not, that the land should be the absolute property of

Gokhale. On these facts, the Court held that:-

“This was not a mortgage but a sale. It was an agreement which put an end to the previously existing mortgage. A mere stipulation for repurchase does not make a transaction a mortgage. To make a mortgage there must be a debt, and here there was no debt, nor was the property here conveyed as security.”

1

Page 17

18. In the case of Tamboli Ramanlal Motilal (Dead)

by LRs. v. Ghanchi Chimanlal Keshavlal (Dead) by

LRs. & Another, AIR 1992 SC 1236, the facts of the case

were similar to this case. In that case, a document of

transfer was executed and the property was handed over.

At the same time, the document proceeded to state that the

property is sold conditionally for a period of five years and

possession is handed over. The document stated:

“Therefore, you and your heirs and legal representatives are

hereafter entitled to use, enjoy and lease the said houses

under the ownership right.” The further clause in the

document was to the effect that the executant shall repay

the amount within a period of five years and in case he fails

to repay neither he nor his heirs or legal representatives

would have any right to take back the said properties. The

last important clause was that after the period of five years

the transferee would have a right to get the municipal

records mutated in his name and pay tax. On these facts,

this Court held that:-

1

Page 18

“16. In order to appreciate the respective contentions, it is necessary for us to analyse Ex. 26 dated December 11, 1950. Before that, it is necessary to utter a word of caution. Having regard to the nice distinctions between a mortgage by conditional sale and a sale with an option to repurchase, one should be guided by the terms of the document alone without much help from the case law. Of course, cases could be referred for the purposes of interpreting a particular clause to gather the intention. Then again, it is also settled law that nomenclature of the document is hardly conclusive and much importance cannot be attached to the nomenclature alone since it is the real intention which requires to be gathered. It is from this angle we propose to analyse the document. No doubt the document is styled as a deed of conditional sale, but as we have just now observed, that is not conclusive of the matter.

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 27-1-1944 and (b) Rs. 1,600 by a further mortgage on 31-5- 1947 totalling 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.

1

Page 19

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.”

This Court, therefore, held that the document was not a

mortgage by conditional sale, rather the document was

transfer by way of sale with a condition to repurchase.

19. In the instant case, the alleged sale document was

executed in the year 1967 transferring the suit property by

way of sale subject to one stipulation/condition that on

receiving the sale amount of Rs. 3,000/- within five years the

land was to be returned to the plaintiff-vendor. It is also not

in dispute that after transfer of the land the defendant-

1

Page 20

respondent No. 1 came in possession and used & enjoyed

the suit property as an absolute owner. It was only after 11

years that the plaintiff-appellant filed the suit alleging that

the suit property was mortgaged in favour of the

defendant/respondent No.1 herein with a condition to

reconvey the land.

20. In the aforesaid premises, we do not find any

reason to interfere with the findings recorded by the first

appellate court. As stated above, the High Court has rightly

not interfered with the findings of fact recorded by the first

appellate court.

21. For the aforesaid reasons, we do not find any

merit in this appeal which is, accordingly, dismissed, but

without any costs.

…………………………….J. (P. Sathasivam)

…………………………….J. (M.Y. Eqbal)

New Delhi,

2

Page 21

July 1, 2013.

2