In Tulsi and Others vs. Chandrika Prasad and Others 1
(2006) 8 SCC 322
this Court explaining difference between mortgage by
conditional sale or sale with condition to repurchase has
observed as under:
“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 Gounder
AIR 1966 SC 902
, 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”.
12. In Vishwanath Dadoba Karale vs. Parisa Shantappa
Upadhya
, 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
, 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”.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4683 OF 2016
Patel Ravjibhai Bhulabhai (D) Thr. LRS.
V
Rahemanbhai M. Shaikh (D) Thr. LRS. & Ors.
Citation:(2016) 12 SCC216
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
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
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
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—
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
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
“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
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
“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.
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.
(2006) 8 SCC 322
this Court explaining difference between mortgage by
conditional sale or sale with condition to repurchase has
observed as under:
“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 Gounder
AIR 1966 SC 902
, 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”.
12. In Vishwanath Dadoba Karale vs. Parisa Shantappa
Upadhya
, 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
, 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”.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4683 OF 2016
Patel Ravjibhai Bhulabhai (D) Thr. LRS.
V
Rahemanbhai M. Shaikh (D) Thr. LRS. & Ors.
Citation:(2016) 12 SCC216
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
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
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
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—
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
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
“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
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
“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.
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.
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