Deeds and Documents – ‘Mortgage by conditional sale’ or ‘Sale with a condition to repurchase’ – Respondents-plaintiffs case was that the suit property was mortgaged by their father in favour of the predecessor-in-interest of the appellants-defendants for Rs.2500/- – Pursuant thereto, a Deed (Ex.P-73) was executed by the parties – According to the respondents the said deed was a deed of ‘mortgage by conditional sale’ with a condition that if the amount is not repaid within a period of five years from the date of execution of the deed, then the same would be treated as an absolute sale between the parties conferring absolute right of ownership on predecessor-in-interest of the appellants-defendants and his legal representatives – It was alleged that father of respondents failed to repay the money within the stipulated period – After death of their father, respondents-plaintiffs filed a suit for redemption of the mortgage and contended that their father had paid Rs.800 (Ex. P69) – Appellant-defendant defended the suit on the basis that transaction was a sale with condition to repurchase – Trial court dismissed the suit holding that the relationship of debtor and creditor was not established – First Appellate Court set aside the judgment of the trial court and held that (Ex. P-73) was a ‘mortgage by conditional sale’ – Aggrieved, appellants preferred second appeal before the High Court which was dismissed – On appeal, held: Whether the document is a ‘mortgage by conditional sale’ or ‘sale with a condition to repurchase’ is to be ascertained from the intention of the parties – It is trite law that the intention of the parties should be gathered from the recitals of the document itself – In the instant case, by perusal of Ex.P-73 it was clear that eight days prior to Ex.P-73, father of respondents had borrowed orally a sum of Rs.700/- – Later, when Ex.P-73 was executed, the earlier borrowed amount of Rs.700 was adjusted from the sale consideration of Rs.2500/- – The intention of the parties in putting an end to the debtor-creditor relationship with respect to the sum of Rs.700/- was clear from the recitals of the document i.e. adjustment of Rs.700/from the total consideration of Rs.2500/- and parties intended to create a relationship of vendor and vendee by transfer of the suit property for a consideration of Rs.2500/- – Further, period of five years was fixed in Ex.P-73 within which father of respondents was to repay the said amount – Thus, clauses in Ex.P-73 were consistent with the intention of the parties that they made the transaction a conditional sale with an option to repurchase – Having not paid the amount within the stipulated period of five years, the plaintiffs lost their right to repurchase – Insofar as Ex. P-69 is concerned, it cannot be relied upon as corroborative piece of evidence to hold that part payment was made by father of respondents and that parties treated Ex.P-73 as ‘mortgage by conditional sale’ – Therefore, the Judgment of the High Court is set aside – Judgment of the trial court restored – Transfer of Property Act, 1882 – s.58(c). Allowing the appeals, the Court
HELD: 1. By perusal of Ex.P-73, it is clear that eight days prior to Ex.P-73, father of respondents-plaintiffs has borrowed orally a sum of Rs.700/- for the purpose of marriage of his daughter. At the time of execution of Ex.P-73 (28.07.1967), father of respondents-plaintiffs required more money for the same reason and he executed Ex.P-73-document titled as “mortgage by conditional sale” for a consideration of Rs.2500/- and on the date of execution of the said document, father of respondentsplaintiffs received only a sum of Rs.1800/-. The earlier borrowed amount of Rs.700/- was thus adjusted from the sale consideration of Rs.2500/-. The intention of the parties in putting an end to the debtor-creditor relationship with respect to the sum of Rs.700/- is clear from the recitals of the document i.e. adjustment of Rs.700/- from the total consideration of Rs.2500/- and parties intending to create a relationship of vendor and vendee by transfer of the suit property for a consideration of Rs.2500/-. Period of five years was fixed in Ex.P-73 within which father of the respondents-plaintiffs was to repay the said amount. On the date of execution of the document (Ex.P-73), the possession of the JOSHI (D) THR. LRs.
property was handed over to the appellants-defendants for cultivation. Further, recitals are to the effect that if the consideration amount is paid within five years, father of respondents-executant will get the mortgage redeemed. In case, the amount is not paid within the stipulated period of five years, the mortgage shall be treated as an absolute sale and thereafter predecessor-in-interest of the appellants-defendants to pay the land revenue to the government and all other charges for which executant will have no complaint. The recitals of the document make clear the intention of the parties that if the amount is not repaid within the stipulated period of five years, the transferee will have absolute right and the mortgage will be treated as an absolute sale and the transferee to pay the land revenue and the other charges. These clauses in Ex.P-73 are consistent with the intention of the parties making the transaction a conditional sale with an option to repurchase. [Para 16][269-B-G]
2. Mention of “borrowed a sum of Rs.700/-” in the document is incidental. Mere incorporation of the word “borrowed” and “mortgage by conditional sale” cannot by itself establish that there is a debtor-creditor relationship. In fact, as pointed out earlier, the recitals of the document make it clear that the parties expressed their intention to put an end to the debtor-creditor relationship with respect to the sum of Rs.700/- that existed prior to the execution of Ex.P-73 and creating a relationship of vendor and vendee by transfer of the suit property for consideration of Rs.2500/-. As rightly observed by the trial court, in Ex.P-73, there is no mention of the rate of interest, right of foreclosure that are essential in a deed of mortgage. [Para 18][270-D-E]
3. Insofar as Ex.P-69-receipt is concerned, the trial court pointed out that though PW-1 claims that he was present at the time of execution of Ex.P-69, PW-1 had not signed in it nor attested it, so PW-1’s evidence is of no help to prove the execution of the receipt. Be it noted that though Ex.P-69-receipt was of the year 1972, during his life time, based on Ex.P-69-receipt, father of respondents-plaintiffs had not taken any step to redeem the property. Even after the death of father of respondentsplaintiffs in 1973, Ex.P-69-receipt did not see the light of the day till 1980 when the notice was said to have been issued by the respondents-plaintiffs. In these factual circumstances, it cannot be said that the plaintiffs have discharged the burden in proving Ex.P-69-receipt as genuine to hold that the parties had intended that Ex.P-73-document is only a “mortgage by conditional sale” and not a sale with condition to repurchase. The receipt Ex.P-69 cannot be relied upon as corroborative piece of evidence to hold that part payment was made by father of respondents-plaintiffs and that the parties treated Ex.P-73 as a “mortgage by conditional sale”. [Para 25][273-C-E]
4. Though the transaction and condition to repurchase are embodied in one document, having regard to the intention of the parties and the surrounding circumstances, Ex.P-73 does not fall within the proviso to Section 58(c) of the Transfer of Property Act. Ex.P-73 a registered document, is not a mortgage but a transaction of sale with condition to repurchase. The High Court and the first Appellate Court did not properly appreciate the recitals in Ex.P-73 and that it does not create expressly or by implication the relationship of debtor and creditor. The High Court failed to note that since father of respondents-plaintiffs failed to pay the amount within the stipulated period of five years, the respondents-plaintiffs have lost their right to repurchase the property. When the findings of the first Appellate Court and the High Court though concurrent, where they are shown to be perverse, this Court would certainly interfere with the findings of fact recorded by the courts below. The High Court has not properly appreciated the evidence and Ex.P-73 in the light of the surrounding circumstances and the impugned judgment is liable to be set aside. [Para 27][274-A-D]
Bhaskar Waman Joshi (deceased) v. Shri Narayan
Rambilas Agarwal (deceased) [1960] 2 SCR 117 –
referred to.
Chunchun Jha v. Ebadat Ali and another AIR 1954 SC
345 : [1955] SCR 174 – relied on.
Vithal Tukaram Kadam and another v. Vamanrao
Sawalaram Bhosale and others (2018) 11 SCC 172 : [2017] 8 SCR 379 – distinguished.
JOSHI (D) THR. LRs.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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