Whether time is essence of contract in case of agreement of re-conveyance?

 In the Judgment of Raj Kishor (Dead) by LRs. Vs. Prem Singh and Ors. (Supra) also, in paragraph No. 19, it was held that,

"In a case where the parties have entered into the transaction of sale and also executed 'Agreement of Re-conveyance' of the property sold, time stipulated for re-conveyance is the essence of the contract. If the original vendor fails to act punctually according to the terms of the contract, the right to re-purchase will be lost and cannot be specifically enforced."

29. In the said case, it was further held that,

"As the Plaintiff has failed to prove that he has tendered the amount to the purchaser within the time stipulated for 'Agreement of Re-conveyance', he has lost his Right of Re-conveyance' and he cannot be saved from forfeiture".

30. In the Judgment of Smt. Bismillah Begum (Dead), by LRs. Vs. Rahmatullah Khan (Dead), by LRs. (Supra) also, it was held that, in such 'Agreement of Re-conveyance', the 'time' is the 'essence' of the contract and the common law stipulations as to contract cannot be made applicable to such 'Agreements of Re-conveyance'.

31. In the Judgment of this Court in the case of Hasam Nurani Malak Vs. Mohansingh and Anr. (Supra), the Division Bench was pleased to reproduce the observations of the Privy Council in the case of Jamshed Vs. Bruiorii, MANU/PR/0015/1915 : AIR 1915 PC 83, and held that,

"There is distinction between a "contract of sale of immovable property" and a "contract of re-sale or reconveyance of immovable property". An Agreement to re-convey property, after the vendor transferred it by sale to the vendee, is essentially in the nature of, according to the strict requirements of 'Agreement of Re-conveyance' and hence, it has to be performed within the stipulated period."

IN THE HIGH COURT OF BOMBAY

Second Appeal No. 37 of 1993

Decided On: 08.06.2018

Parasharam Sakharam Dhumal Vs.  Shamrao Mahadeo Dhumal 

Hon'ble Judges/Coram:

Dr. Shalini Phansalkar Joshi, J.

Citation: 2019(3) MHLJ 71

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What is distinction between mortgage by conditional sale or sale with condition of repurchase?

 Bare   reading   of   the

registered Sale Deed dated 21.02.1980 shows that the plaintiff and his
father sold the suit land to the defendants for an amount of Rs.6000/­
without any condition for repurchase.  Though the plaintiffs relied on
the agreement dated 29.06.1986 by which the defendants agreed to
reconvey the suit land in their favour, that agreement was not admitted
by the defendants.   Even the plaintiffs failed to prove the same by
cogent evidence to show that the said agreement was duly signed by
the defendants. 

 In order to consider as to whether the document is a document of
mortgage by conditional sale, or is a sale with condition of repurchase,
the distinction between two transactions must be borne in mind.  In the
former case, there is a relationship of debtors and creditors and the
transfer is by way of security for repayment of debt, whereas in the
later case, there is condition of reconveyance in the event the amount
equivalent to the consideration is paid by the vendor to the purchaser.
If the condition of repurchase is contained in a separate deed, the
original sale deed can never be regarded as mortgage in view of the
provisions of Section 58(c) of the Transfer of Property Act, 1882. 
It is true that the condition of the repurchase is not contained in
the   document   of   transfer   itself,   but   it   is   contained   in   a   separate
document. The document of transfer cannot be regarded as a mortgage
by a conditional sale, in view of provisions of Section 58(c) of the
Transfer of Property Act, where a condition is contained in a separate
document. The deed of transfer would be regarded as an out­and­out
sale and the condition contained in a separate document would only be
regarded as separate agreement for reconveyance. In that event, the
conditions   for   reconveyance   including   condition   of   time   would   be
required to be strictly complied.   In case of Agreement for Sale of
immovable   property,   time   is   generally   not   an   essence   of   Contract.
However,   the   Agreement   to   reconvey   is   essentially   entered   by   the
purchaser with the vendor in the nature of concession, wherein timewould ordinarily be regarded as an essence of contract.  In that event,
the   original   vendor   would   be   required   to   strictly   comply   with   the
conditions including the condition of time, contained in the agreement
of reconveyance.
 Admittedly, in the case in hand, there was no provision in the
Sale deed dated 21.02.1980 to reconvey the property to the plaintiffs.
There   was   an   alleged   separate   agreement   dated   29.06.1986.
Therefore, in view of Section 58(c) of the Transfer of Property Act,  in
view of the Judgment of the Apex Court in the matter of Vanchalabai
(supra) and in the matter of C. Cheriathan (Supra), it is crystal clear
that on the basis of sale deed dated 21.02.1980 and the subsequent
agreement dated 29.06.1986, the plaintiffs are not entitled for decree
to direct the defendants to execute the reconveyance in respect of the
suit land in their favour. These facts are properly considered by the
Appellate Court, hence, I do not find any reason to interfere in the well

reasoned order on this point. 

IN THE HIGH COURT OF  JUDICATURE AT BOMBAY.
CIVIL APPELLATE JURISDICTION.
SECOND APPEAL NO.   161  OF   2013
WITH
CIVIL APPLICATION NO.  502  OF   2013
 Shri. Nanda @ Sadanand Dattu Barmukh 
Vs
Shri. Chhotubhai Kasambhai Inamdar 
CORAM : K. K. TATED, J.
DATED   : 04/09/2015.
Citation; 2016(2) ALLMR162

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