Transfer of Property Act, 1882 – s.58(c) – Mortgage by conditional sale – The dispute centers around a piece of land and the plaintiff-respondent is the undisputed owner of this land – In 1990, the plaintiff in need of funds approached the defendant-appellant and mortgaged the suit land – In pursuant thereto, a mortgage deed dated 17.10.1990 was executed and registered – It was orally agreed that plaintiff could redeem the mortgage within three years – Thereafter, in 1993, the plaintiff attempted to redeem the mortgage – However, the defendant refused to accept the payment, asserting that, according to the terms of the mortgage deed, the mortgage had transformed into an absolute sale due to the plaintiff's failure to repay the amount within the stipulated time – Correctness: Held: The ingredients of a mortgage by conditional sale u/s.58(c) of the Act are as follows: (i) The mortgagor ostensibly sells the mortgaged property to the mortgagee – (ii) Such ostensible sale is subject to any one of the following conditions: On default of payment of the mortgage money on a certain date, the sale shall become absolute; or on payment of the mortgage-money on a certain date, the sale shall become void; or on payment of the mortgage-money on a certain date, the buyer shall re-transfer the property to the seller – (iii) The condition should be embodied in the same document which effects or purports to effect the sale – In the instant case, the mortgage deed indicates that the mortgagor agreed to mortgage her land to the mortgagee for a sum of ₹75,000 due to personal financial needs, so the first condition i.e. Ostensible Sale of the Property is satisfied – The mortgage deed contains explicit condition that upon default in payment within the stipulated period, the sale would become absolute, satisfying the second ingredient under the first condition specified in s.58(c) of the Act that on default of payment on a certain date, the sale shall become absolute – As far as the last ingredient is concerned, as required under the proviso of s.58(c), the condition regarding the conversion of the mortgage into an absolute sale upon default is embodied within the same document i.e., the mortgage deed dated 17.10.1990 – This is evident from the clauses of the mortgage deed – Therefore, it can be concluded that all the essential ingredients of a mortgage by conditional sale u/s.58(c) of the Act are satisfied in the present case as there was an ostensible sale of the property by the mortgagor to the mortgagee and the sale was conditional, stipulating that upon default of payment within three years, the sale would become absolute as well as that the condition was embodied in the same document, i.e. the mortgage deed, that effected the transaction – Also, the permissive possession by the plaintiff in the present case does not alter the character of the transaction – The mortgage deed dated 17.10.1990 constitutes a mortgage by conditional sale u/s.58(c) of the Act – The condition converting the mortgage into an absolute sale upon default is valid and enforceable. [Paras 14, 15, 16, 17, 18, 21, 26]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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