Supreme Court of India
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS.versusNANA DINKAR YADAV (TANPURA) & ANR.
- Citation
- 2021 INSC 400
- Decided
- 13 August 2021
- Disposal
- Appeal(s) allowed
- Bench
- HEMANT GUPTA
Holding
The conditional sale deed is a mortgage by conditional sale covered by the proviso to Section 58(c) of the Transfer of Property Act, and the plaintiff’s suit for redemption is maintainable.
Summary
The plaintiff, the heir of Bhimrao Ramchandra Khalate, had executed a document titled “conditional sale deed” on 22‑Feb‑1969, borrowing Rs.3,000 from defendant No.1 and agreeing that the land would be reconveyed upon repayment within a year. Defendant No.1 refused to reconvey and later transferred the land to his brother, defendant No.2. The plaintiff sued for redemption of the mortgaged property, contending that the deed was in substance a mortgage by conditional sale under the proviso to Section 58(c) of the Transfer of Property Act, 1882. The Supreme Court examined whether the condition of re‑transfer was part of the same instrument, the applicability of Section 63 on improvements, and the limitation period for redemption. It held that the deed created a debtor‑creditor relationship, fell within the proviso to Section 58(c), and the suit was filed within the 30‑year limitation, thus the lower courts’ dismissal was unsustainable. The appeal was allowed, the earlier judgments set aside, and the suit for redemption decreed in favour of the plaintiff.
Issues considered
- The document titled ‘conditional sale deed’ is a mortgage by conditional sale under Section 58(c) proviso or an outright sale.
- Whether the condition of re‑transfer is embodied in the same document, satisfying the proviso to Section 58(c).
- Whether the suit for redemption is barred by limitation.
- Whether the mortgagee can claim reimbursement for improvements under Section 63 of the Transfer of Property Act.
Legislation cited
- Transfer of Property Act, 1882s. 58(c) proviso, s. 63
Subjects
mortgage by conditional saleredemption of mortgageTransfer of Property ActSection 58(c) provisoSection 63limitation periodusufructimprovement cost
Judgment
[2021] 8 S.C.R. 151 151
BHIMRAO RAMCHANDRA KHALATE (DECEASED) A
THROUGH LRS.
v.
NANA DINKAR YADAV (TANPURA) & ANR.
(Civil Appeal No. 10197 of 2010) B
AUGUST 13, 2021
[HEMANT GUPTA AND A. S. BOPANNA, JJ.]
Transfer of Property Act, 1882: ss. 58(c) proviso and 63 –
Redemption of mortgaged property – Plaintiff, owner of agricultural
C
land borrowed Rs.3,000/- from defendant No. 1 by executing a
document titled “conditional sale deed” as a security for the loan
amount, which was to be returned and the defendant was bound to
re-transfer the land – Plaintiff requested defendant No. 1 to
reconvey the suit land by accepting the loan amount of Rs.3,000/-
but defendant No. 1 refused to do so – Subsequently, defendant D
No. 1 transferred the suit land in favour of his brother-defendant
No. 2 – Suit for redemption of mortgaged property and possession
by plaintiff, claiming that the transaction was in the nature of
mortgage even though it was titled as the conditional sale – Dismissal
of suit by trial court and High Court – Sustainability of – Held: Not
E
sustainable – Condition of re-transfer is a part of the same
document, as expressed by the proviso of s. 58(c) – Transaction
which takes the outward form of a sale but in essence the
documents are of a mortgage, though it is couched in the form of
a sale – Document has to read as a whole and if any word is
ambiguous, then the intention of the parties has to be seen when F
such document was executed – Thus, reading of the document would
show that the document was executed for the reason that the plaintiff
has borrowed a sum of Rs.3,000/- and the defendant is bound to
re-transfer the land if the amount is paid within one year – Advance
of loan and return thereof are part of the same document which
G
creates a relationship of debtor and creditor – Thus, it would be
covered by proviso in s . 58(c) – Thus, the judgment and decree
passed by the First Appellate Court and that of the High Court are
set aside and the suit is decreed.
H
151
152 SUPREME COURT REPORTS [2021] 8 S.C.R.
A Allowing the appeal, the Court
HELD: 1.1 The intention of the parties has to be seen when
the document is executed. It is not in dispute that the condition
of re-transfer is a part of the same document. Such condition is
in terms of an amendment inserted by the proviso of Section
B 58(c) of the Transfer of Property Act, 1882 in the year 1929. A
transaction which takes the outward form of a sale can still be
considered in essence a mortgage. It is impossible to compare
one case with another. Each case must be decided on its own
facts and circumstances. The document has to read as a whole
and if any word is ambiguous, then to find out the intention of the
C parties when such document was executed. Therefore, a reading
of the document would show that the document was executed for
the reason that the plaintiff has borrowed a sum of Rs. 3,000/- for
his household expenses and the defendant is bound to re-transfer
the land if the amount is paid within one year. The advance of
D loan and return thereof are part of the same document which
creates a relationship of debtor and creditor. Thus, it would be
covered by proviso in Section 58(c) of the Act. [Paras 11, 12][160-
D-H]
1.2 Section 63 of the Act contemplates that any accession
E by the mortgagee, during the continuance of the mortgage, the
mortgagor shall on redemption be entitled to such accession in
the absence of a contract to the contrary. Under Section 63(a) of
the Act, the liability of mortgagor to pay for improvement will
arise if the mortgagee had to incur the costs to preserve the
property from destruction or deterioration or was necessary to
F prevent the security from becoming insufficient or being made in
compliance with the lawful order of any public servant or public
authority. None of the eventualities arose in the instant case
compelling the mortgagor to pay for the improvements if any
carried out by the mortgagee. A mortgagee spends such money
G as is necessary for the preservation of the mortgaged property
for destruction, forfeiture or sale; for supporting the mortgagor’s
title to the property; for making his own title thereto good against
the mortgagor; and when the mortgaged property is a renewable
lease-hold, for the renewal of the lease, such expenditure incurred
by the mortgagee can be added to the cost of improvements in
H
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 153
NANA DINKAR YADAV (TANPURA) & ANR.
the principal amount due. However, in the absence of any positive A
evidence of any improvement and the cost incurred, the
defendants are not entitled to recover anything more than the
mortgage amount. Since the possession was given to the
mortgagee, he has enjoyed usufruct from the mortgage property
which compensates not only of the user of the land but also
B
improvements made by him. The improvements were to enjoy
the usufruct of the property mortgaged. [Para 22][165-D-H; 166-
A]
1.3 The submission that plaintiff has filed suit for redemption
after 20 years of execution of the document is not tenable as the
suit for redemption can be filed within 30 years from the date C
fixed for redemption. The period of 30 years would commence
on 22.2.1969 and the suit was filed in the year 1989, which is
within the period of limitation. [Para 23][166-A-B]
1.4 The order of the First Appellate Court accepting the
appeal of the defendants and dismissing the suit for redemption D
is not sustainable in law, so as the order passed by the High
Court. Consequently, the judgment and decree passed by the
First Appellate Court and that of the High Court are set aside
and the suit is decreed. [Para 24][166-B-C]
Pandit Chunchun Jha v. Sheikh Ebadat Ali & Anr. AIR E
1954 SC 345 : [1955] 1 SCR 174; Shri Bhaskar Waman
Joshi v. Shri Narayan Rambilas Agarwal AIR 1960 SC
301 : [1960] 2 SCR 117; P. L. Bapuswami v. N. Pattay
Gounder AIR 1966 SC 902 : [1966] 2 SCR 918 – relied
on. F
Vanchalabai Raghunath Ithape (Dead) by LR v.
Shankarrao Baburao Bhilare (Dead) by LRs & Ors.
(2013) 7 SCC 173 : [2013] 8 SCR 1028 – per incuriam.
Umabai & Anr. v. Nilkanth Dhondiba Chavan (Dead)
by LRs & Anr. (2005) 6 SCC 243 : [2005] 3 SCR 521; G
Tulsi & Ors. v. Chandrika Prasad & Ors. (2006) 8 SCC
322 : [2006] 5 Suppl. SCR 255; Vithal Tukaram Kadam
& Anr. v. Vamanrao Sawalaram Bhosale & Ors. (2018)
H
154 SUPREME COURT REPORTS [2021] 8 S.C.R.
A 11 SCC 172 : [2017] 8 SCR 379; Ganpati Babji
Alamwar (Dead) by LRs Ramlu & Ors. v. Digambarrao
Venkatrao Bhadke & Ors. (2019) 8 SCC 651; Dharmaji
Shankar Shinde & Ors. v. Rajaram Shripad Joshi
(Dead) through LRs & Ors. (2019) 8 SCC 401 : [2019]
6 SCR 257; Sopan (Dead) through his LR v. Syed Nabi
B
(2019) 7 SCC 635 : [2019] 9 SCR 969 – referred to.
Case Law Reference
[1955] 1 SCR 174 relied on Para 11
C
[1960] 2 SCR 117 relied on Para 11
[1966] 2 SCR 918 relied on Para 11
[2005] 3 SCR 521 referred to Para 13
D
[2006] 5 Suppl. SCR 255 referred to Para 14
[2017] 8 SCR 379 referred to Para 15
(2019) 8 SCC 651 referred to Para 16
E
[2013] 8 SCR 1028 per incuriam Para 17
[2019] 6 SCR 257 referred to Para 18
[2019] 9 SCR 969 referred to Para 21
F
CIVIL APPELLATE JURISDICTION: Civil Appeal No.10197
of 2010.
From the Judgment and Order dated 11.08.2006 of the High Court
of Judicature at Bombay in Second Appeal No.832 of 2001.
G
Prashant Padmanabhan, T. Harish Kumar, Asish Sarkar, Advs.
for the Appellants.
Satyajit A Desai, Ms. Anagha S. Desai, Satya Kam Sharma, Advs.
for the Respondents.
H
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 155
NANA DINKAR YADAV (TANPURA) & ANR.
The Judgment of the Court was delivered by A
HEMANT GUPTA, J.
1. The plaintiff is in appeal before this Court aggrieved against
the judgment passed by the High Court on 11.8.2006 in second appeal
whereby the order passed by the First Appellate Court on 14.1.2000
was affirmed, while dismissing the suit for redemption of the mortgage B
property.
2. Brief facts leading rise to the present appeal are that the plaintiff
was the owner of 20 gunthas of agricultural land1 situated in Village
Khunte. The plaintiff was in need of money so he borrowed Rs.3,000/-
from defendant No. 1 on 22.2.1969 by executing a document titled C
“conditional sale deed” as a security for the loan amount. The plaintiff
requested defendant No. 1 to reconvey the suit land by accepting the
loan amount of Rs.3,000/- but defendant No. 1 refused to do so. On
25.2.1989, defendant No. 1 transferred the suit land in favour of his
brother (defendant No. 2). The plaintiff filed a suit against the defendants D
on 5.4.1989 under the Transfer of Property Act, 18822 for redemption of
mortgaged property and possession. The claim of the plaintiff is that the
transaction dated 22.2.1969 was in the nature of mortgage even though
it was titled as the conditional sale.
3. The entire dispute revolves around whether the document dated E
22.2.1969 is a document of conditional sale or a mortgage?
4. Before we advert to the nature and terms of the document,
certain principles of law need to be stated. Section 58(c) of the Act was
amended in the year 1929 when a proviso was inserted that “provided
that no such transaction shall be deemed to be a mortgage, unless the F
condition is embodied in the document which effects or purports to effect
the sale”.
5. In Pandit Chunchun Jha v. Sheikh Ebadat Ali & Anr.3, the
plaintiff’s suit for redemption was dismissed by the High Court but appeal
allowed by this court reading the deed as mortgage. The question
G
examined was whether a given transaction is a mortgage by conditional
sale or a sale outright with a condition of repurchase. It was held that
two documents are seldom expressed in identical terms and when it is
1
For short, the ‘suit land’
2
For short, the ‘Act’
3
AIR 1954 SC 345 H
156 SUPREME COURT REPORTS [2021] 8 S.C.R.
A necessary to consider the attendant circumstances the imponderable
variables which that brings in its train make it impossible to compare one
case with another. Each must be decided on its own facts. But certain
broad principles were stated. The Court found that the document had no
clause for retransfer and instead says (clause 6) that if the executants
pay the money within two years, the property shall come in exclusive
B
possession and occupation with the transferors. The document had no
clause for retransfer. In these circumstances, this Court held as under:
“12. The next step is to see whether the document is covered by
Section 58(c) of the Transfer of Property Act, for, if it is not, then
it cannot be a mortgage by conditional sale. The first point there is
C to see whether there is an “ostensible sale”. That means a
transaction which takes the outward form of a sale, for the essence
of a mortgage by conditional sale is that though in substance it is
a mortgage it is couched in the form of a sale with certain conditions
attached. The executants clearly purported to sell the property in
D clause (5) because they say so, therefore, if the transaction is not
in substance a mortgage, it is unquestionably a sale: an actual sale
and not merely an ostensible one. But if it is a mortgage, then the
condition about an “ostensible sale” is fulfilled.
13. We next turn to the Conditions. The ones relevant to the present
E purpose are contained in clauses (6) and (7). Both are ambiguous,
but we have already said that on a fair construction clause (6)
means that if the money is paid within the two years then the
possession will revert to the executants with the result that the
title which is already in them will continue to reside there. The
necessary consequence of that is that the ostensible sale becomes
F void. Similarly, clause (7), though clumsily worded, can only mean
that if the money is not paid, then the sale shall become absolute.
Those are not the actual words used but, in our opinion, that is a
fair construction of their meaning when the document is read as a
whole. If that is what they mean, as we hold they do, then the
G matter falls squarely within the ambit of Section 58(c).
20. ………….It is true this can also be read the other way but
considering these very drastic provisions as also the threat of a
criminal prosecution in sub-clause (a), we think the transferee
was out to exact more than his pound of flesh from the unfortunate
H rustices with whom he was dealing and that he would not have
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 157
NANA DINKAR YADAV (TANPURA) & ANR. [HEMANT GUPTA, J.]
agreed to account for the profits : indeed that is his own case, for A
he says that this was a sale out and out. In these circumstances,
there would be no need to keep a reasonable margin between the
debt and the value of the property as it ordinarily done in the case
of a mortgage. Taking everything into consideration, we are of
opinion that the deed is a mortgage by conditional sale under
B
Section 58 (c) of the Transfer of Property Act..”
6. In a judgment reported as Shri Bhaskar Waman Joshi v. Shri
Narayan Rambilas Agarwal4, a Bench of this Court has upheld the
right of redemption. The argument raised by the transferor was that the
property transferred was intended to be mortgage under a deed of
conditional sale. The transferees contended that the deed was absolute C
sale and that the conveyance was subject to a condition of repurchase.
It was, inter alia, held that a transaction shall not be deemed to be a
mortgage unless the condition referred to in the clause is embodied in
the document which affects or purports to affect the sale. It was held
that the mortgage by conditional sale postulates the creation by the D
transfer of a relation of mortgagor and mortgagee, the price being charged
on the property conveyed. The Court held as under:
“7. …………….. The question whether by the incorporation of
such a condition a transaction ostensibly of sale may be regarded
as a mortgage is one of intention of the parties to be gathered E
from the language of the deed interpreted in the light of the
surrounding circumstances. The circumstance that the condition
is incorporated in the sale deed must undoubtedly be taken into
account, but the value to be attached thereto must vary with the
degree of formality attending upon the transaction. The definition
of a mortgage by conditional sale postulates the creation by the F
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 the property within the G
period specified. What distinguishes 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 definition of a mortgage by conditional sale itself contemplates
4
AIR 1960 SC 301 H
158 SUPREME COURT REPORTS [2021] 8 S.C.R.
A an ostensible sale of the property. …………………… The
question in each case is one of determination of the real character
of the transaction to be ascertained from the provisions of the
deed viewed in the light of surrounding circumstances. If the words
are plain and unambiguous they must in the light of the evidence
of surrounding circumstances be given their true legal effect. It
B
there is ambiguity in the language employed, the intention may be
ascertained from the contents of the deed with such extrinsic
evidence as may by law be permitted to be adduced to show in
what manner the language of the deed was related to existing
facts. Oral evidence of intention is not admissible in interpreting
C the covenants of the deed but evidence to explain or even to
contradict the recitals as distinguished from the terms of the
documents may of course be given. Evidence of contemporaneous
conduct is always admissible as a surrounding circumstance; but
evidence as to subsequent conduct of the parties is inadmissible.
D xx xx xx
13. Counsel for the transferees sought to rely upon the evidence
of subsequent conduct of the transferors as indicative of the
character of the transaction as a sale, but as already observed,
that evidence is inadmissible.”
E 7. In another judgment reported as P.L. Bapuswami v. N. Pattay
Gounder5, this Court decreed the suit for redemption though the same
was dismissed by the High Court. The High Court held that the transaction
was an outright sale and not a mortgage by conditional sale. The
alternative plea based on the covenant for re-conveyance, the High Court
F considered that there was no proof that the plaintiff had tendered the
amount within the period stipulated in the document. In appeal, this court
held that the distinction between the conditional sale and mortgage is the
relationship of debtor and creditor and the transfer being a security for
the debt. The Court held as under:
G “5. …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
5
H AIR 1966 SC 902
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 159
NANA DINKAR YADAV (TANPURA) & ANR. [HEMANT GUPTA, J.]
conveyed, but the sale is subject to an obligation to retransfer A
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
B
ascertained from the provisions of the of 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. If there is ambiguity
in the language employed, the intention may be ascertained from
the contents of the deed with such extrinsic evidence as may by C
law be permitted to be adduced to show in what manner the
language of the deed was related to existing facts…”
8. In view of the Judgments referred to above, now we examine
the facts of present case. The deed in question is Ex. 68. The document
reads as under: D
“I, above Executant, given in writing that I am executing this
conditional sale deed in your favour in front of Sub-Registrar,
Phaltan as I am taking Rs.3,000/- (three thousand) in cash from
you for my household expenses in respect of land which is in my
possession owned by me and enjoyed by me absolutely on this E
date. The description of the land located within limits of town
Khunte, Division Satara, Tq. Phaltan, irrigated by Government
Canal. Its boundaries and other particulars are –
xx xx xx
The above land owned and enjoyed by me along with all materials F
standing on it including trees, stones, mud etc. is being handed
over to you by me for your possession on the condition that you
are giving back its possession to me anytime within one year from
the date of this sale deed when I repay the above amount to you
while re-transferring the above land to my name. In case non- G
payment by me of the said amount within the stipulated period,
this sale deed will be taken as a permanent one and you will enjoy
the possession of the land as your own. Any future disputes in
respect of the said land will be dealt by me if they arise.
I sign this sale deed today on 22nd February, 1969.”
H
160 SUPREME COURT REPORTS [2021] 8 S.C.R.
A 9. A perusal of the aforesaid document would show that:
(i) The plaintiff has borrowed a sum of Rs.3,000/- from the
defendant for his household expenses in respect of the
land which was in his possession.
(ii) The possession of land was handed over to the defendant
B on the condition that the possession will be given back to
him within one year from the date of conditional sale deed.
(iii) The defendant is bound to retransfer the land to the plaintiff
when he repays the amount of Rs.3,000/-.
C (iv) If the amount is not paid within the stipulated period, the
conditional sale deed may be taken as a permanent one.
10. A complete reading of the document would show that a sum
of Rs.3,000/- was taken as a loan from the defendant for household
expenses. The same was to be returned and the defendant was bound
D to retransfer the land. The condition that if the plaintiff is not able to pay
the loan amount within one year, the document will be taken as a
permanent sale deed is the contentious clause between the parties.
11. In view of the judgments mentioned above, the intention of the
parties has to be seen when the document is executed. It is not in dispute
that the condition of retransfer is a part of the same document (Ex. 68).
E
Such is the condition inserted by an amendment in the year 1929 expressed
by the proviso of Section 58(c) of the Act. As held in Pandit Chunchun
Jha, a transaction which takes the outward form of a sale but in essence
the documents are of a mortgage, though it is couched in the form of a
sale. This Court held that it is impossible to compare one case with
F another. Each case must be decided on its own facts and circumstances.
The document has to read as a whole and if any word is ambiguous,
then to find out the intention of the parties when such document was
executed.
12. Therefore, a reading of the document would show that the
G document was executed for the reason that the plaintiff has borrowed a
sum of Rs.3,000/- for his household expenses and the defendant is bound
to retransfer the land if the amount is paid within one year. The advance
of loan and return thereof are part of the same document which creates
a relationship of debtor and creditor. Thus, it would be covered by proviso
in Section 58(c) of the Act. Now, some of the later judgments of this
H
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 161
NANA DINKAR YADAV (TANPURA) & ANR. [HEMANT GUPTA, J.]
Court interpreting the proviso in Section 58(c) of the Act need to be A
considered.
13. This Court in Umabai & Anr. v. Nilkanth Dhondiba Chavan
(Dead) by LRs & Anr.6 was examining contemporaneous documents
executed on 30.12.1970 whereby the plaintiff had agreed to sell the
property for consideration of Rs.45,000/-. A sale deed was executed as B
well. Another agreement to sale was executed between the parties on
the same date where the defendants agreed to reconvey the property on
receipt of Rs.45,000/-. It was, thus, held that the benefit of Section 58(c)
of the Act would not be applicable to the plaintiff as the document of
reconveying the property was not part of the same document. This Court
held as under: C
“21. There exists a distinction between mortgage by conditional
sale and a sale with a condition of repurchase. 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. There does not exist any debt and no right to redeem D
is reserved thereby. An agreement to sell confers merely a personal
right which can be enforced strictly according to the terms of the
deed and at the time agreed upon. Proviso appended to Section
58(c), however, states that if the condition for retransfer is not
embodied in the document which effects or purports to effect a E
sale, the transaction will not be regarded as a mortgage.
………………”
14. In Tulsi & Ors. v. Chandrika Prasad & Ors.7, this Court
held that a distinction exists between a mortgage by way of conditional
sale and a sale with condition to repurchase. In the former the debt F
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, thus, right to redeem is not reserved. The circumstances
which weighed with the High Court holding are that the transaction in
question was mortgaged by way of sale, it reads thus:
G
“9. The following circumstances weighed with the learned trial
court as well as the High Court in arriving at the finding that the
transaction in question was a mortgage by way of a conditional
sale:
6
(2005) 6 SCC 243
7
(2006) 8 SCC 322 H
162 SUPREME COURT REPORTS [2021] 8 S.C.R.
A (i) The husband of Appellant 1 was a tenant in respect of the
property and he continued to occupy the same in the same capacity.
(ii) The appellants bore the costs of stamp duty which is not the
normal practice in a case of absolute sale.
(iii) The transaction essentially was a Baibulwafa viz. mortgage
B by conditional sale.
(iv) The land was required to be kept in the existing condition.
(v) The transferor had an option to repay the entire consideration
in one instalment whereupon a deed of reconveyance was to be
C executed by the transferor in her favour. For the said purpose a
specific date was fixed viz. 30-12-1971 and on obtaining such
amount the transferee was to restore possession of the land to
the plaintiff and only in the event of default on her part to repay
the same was the sale to become absolute and perfect.
D (vi) In the margin of the deed, the transferor categorically stated
that he had executed a deed of Baibulwafa in respect of two
parts of the shop.
(vii) The amount has been received by the transferor in the
presence of the husband of the transferee.”
E In view of the factors mentioned in para 9, the defendants appeal
was dismissed and, the decree for redemption was maintained.
15. In Vithal Tukaram Kadam & Anr. v. Vamanrao Sawalaram
Bhosale & Ors.8, the suit for redemption was decreed by setting aside
the judgment of the High Court. It was held as under:
F “14. The essentials of an agreement to qualify as a mortgage by
conditional sale can succinctly be broadly summarised. An
ostensible sale with transfer of possession and ownership, but
containing a clause for reconveyance in accordance with
Section 58(c) of the Act, will clothe the agreement as a mortgage
G by conditional sale. The execution of a separate agreement for
reconveyance, either contemporaneously or subsequently, shall
militate against the agreement being mortgage by conditional sale.
There must exist a debtor and creditor relationship. The valuation
of the property and the transaction value along with the duration
8
H (2018) 11 SCC 172
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 163
NANA DINKAR YADAV (TANPURA) & ANR. [HEMANT GUPTA, J.]
of time for reconveyance are important considerations to decide A
the nature of the agreement. There will have to be a cumulative
consideration of these factors along with the recitals in the
agreement, intention of the parties, coupled with other attendant
circumstances, considered in a holistic manner.”
16. In another judgment reported as Ganpati Babji Alamwar B
(Dead) by LRs Ramlu & Ors. v. Digambarrao Venkatrao Bhadke &
Ors.9, the decree in a suit for redemption was maintained by the High
Court. The Court held as under:
“10. Whether an agreement is a mortgage by conditional sale or
sale with an option for repurchase is a vexed question to be C
considered in the facts of each case. The essentials of an
agreement, to qualify as a mortgage by conditional sale, can
succinctly be summarised. An ostensible sale with transfer of
possession and ownership, but containing a clause for
reconveyance in accordance with Section 58(c) of the Act, will
clothe the agreement as a mortgage by conditional sale. The D
execution of a separate agreement for reconveyance, either
contemporaneously or subsequently, shall militate against the
agreement being mortgage by conditional sale. There must exist
a debtor and creditor relationship. The valuation of the property,
and the transaction value, along with the duration of time for E
reconveyance, are important considerations to decide the nature
of the agreement. There will have to be a cumulative consideration
of these factors, along with the recitals in the agreement, intention
of the parties, coupled with other attendant circumstances,
considered in a holistic manner. The language used in the
agreement may not always be conclusive.” F
17. On the other hand, learned counsel for the defendants relied
upon Vanchalabai Raghunath Ithape (Dead) by LR v. Shankarrao
Baburao Bhilare (Dead) by LRs & Ors.10. It was a case where the
suit for redemption filed by plaintiff-appellant was maintained. However,
the judgment of this Court reported in Umabai and Tulsi were not brought G
to the notice of this Court. In the absence of consideration of such
judgments, we find that the judgment of this Court in Vanchalabai
Raghunath Ithape will not lay down a binding precedent.
9
(2019) 8 SCC 651
10
(2013) 7 SCC 173 H
164 SUPREME COURT REPORTS [2021] 8 S.C.R.
A 18. In Dharmaji Shankar Shinde & Ors. v. Rajaram Shripad
Joshi (Dead) through LRs & Ors.11, the defendants appeal was allowed
by this court and the suit for redemption was dismissed. It was, inter
alia, held that if the sale and agreement to repurchase are embodied in
the separate documents then the transaction cannot be a “mortgage by
conditional sale” irrespective of whether the documents are
B
contemporaneously executed; but the converse does not hold good. This
Court held as under:
“22. ………………. Considering the contemporaneous conduct
of the parties, it is clear that Shankar Shinde and thereafter the
appellants were dealing with the suit property as if they were the
C owners of the land. The clause in Ext. P-73 that if the amount is
not paid within a period of five years, the transaction will become
a permanent sale deed and thereafter, the transferee will have
the absolute right over the property are consistent with the express
intention of parties making the transaction a conditional sale with
D option to repurchase.”
19. A perusal of the above judgment shows that the plaintiff has
borrowed a sum of Rs.7000/- for the marriage of his daughter eight
days prior to execution of the document. While executing document on
28.7.1967, the plaintiff borrowed an additional amount and a document
E titled as “mortgage by conditional sale” was executed for a consideration
of Rs.2500/-, but the plaintiff received Rs.1800/- only. This Court held
that 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. It was held that clauses in the document are consistent
with the intention of the parties making the transaction of a conditional
F sale with an option to repurchase. The Court held that there are no
recitals in the document to establish creditor debtor relationship, nor does
it contain the right of foreclosure, payment of interest etc. which are
essential requirements in a mortgage deed. The Court held that
undetermined mortgage amount for which the interest in the immovable
G property was created as security, indicates that the parties have never
intended to create a mortgage deed.
20. The said judgment does not help the argument raised by the
defendants, as the document in the present case clearly stipulates the
amount of Rs.3000/- was borrowed by the plaintiff and on return of
H 11
(2019) 8 SCC 401
BHIMRAO RAMCHANDRA KHALATE (DECEASED) THROUGH LRS. v. 165
NANA DINKAR YADAV (TANPURA) & ANR. [HEMANT GUPTA, J.]
such amount, a mandate to defendant No. 1 to execute reconveyance of A
suit land was asked for which was refused by defendant no.1.
21. Another judgment referred to by the learned counsel for the
defendants is Sopan (Dead) through his LR v. Syed Nabi12 but that
was a case where the registered sale deed was executed on 10.12.1968
and on the same date, a separate agreement was executed whereby the B
plaintiff has agreed to repay the amount and secure reconveyance of
the property. Since the two separate documents were executed, this
Court has rightly found that it is not a document of mortgage but of
conditional sale which is not covered by the proviso to Section 58(c) of
the Act.
C
22. Learned counsel for the defendants has also referred to the
fact that the suit for redemption was filed after twenty years of the
document being executed and, in the meantime, defendants have made
improvements over the land. Thus, the plaintiff would not be entitled to
seek redemption. Section 63 of the Act contemplates that any accession
by the mortgagee, during the continuance of the mortgage, the mortgagor D
shall on redemption be entitled to such accession in the absence of a
contract to the contrary. Under Section 63(a) of the Act, the liability of
mortgagor to pay for improvement will arise if the mortgagee had to
incur the costs to preserve the property from destruction or deterioration
or was necessary to prevent the security from becoming insufficient or E
being made in compliance with the lawful order of any public servant or
public authority. None of the eventualities arose in the present case
compelling the mortgagor to pay for the improvements if any carried out
by the mortgagee. A mortgagee spends such money as is necessary for
the preservation of the mortgaged property for destruction, forfeiture or
sale; for supporting the mortgagor’s title to the property; for making his F
own title thereto good against the mortgagor; and when the mortgaged
property is a renewable lease-hold, for the renewal of the lease, such
expenditure incurred by the mortgagee can be added to the cost of
improvements in the principal amount due. However, in the absence of
any positive evidence of any improvement and the cost incurred, the G
defendants are not entitled to recover anything more than the mortgage
amount. Since the possession was given to the mortgagee, he has enjoyed
usufruct from the mortgage property which compensates not only of the
12
(2019) 7 SCC 635 H
166 SUPREME COURT REPORTS [2021] 8 S.C.R.
A user of the land but also improvements made by him. The improvements
were to enjoy the usufruct of the property mortgaged.
23. The argument that plaintiff has filed suit for redemption after
20 years of execution of the document is not tenable as the suit for
redemption can be filed within 30 years from the date fixed for redemption.
B The period of 30 years would commence on 22.2.1969 and the suit was
filed in the year 1989, which is within the period of limitation.
24. In view thereof, we find the order of the First Appellate Court
accepting the appeal of the defendants and dismissing the suit for
redemption is not sustainable in law, so as the order passed by the High
C Court. Consequently, the judgment and decree passed by the First
Appellate Court and that of the High Court are set aside and the suit is
decreed. The plaintiff may pay or deposit the mortgage amount within
three months of the receipt of copy of the order. The appeal is allowed
with no order as to costs.
D
Nidhi Jain Appeal allowed.
E
F
G
H
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