Supreme Court of India
PATEL RAVJIBHAI BHULABHAJ (D) THR. LRS.versusRAHEMANBHAI M .. SHAIKH (D) THR. LRS. & ORS.
- Citation
- 2016 INSC 1181
- Decided
- 2 May 2016
- Disposal
- Dismissed
- Bench
- RANJAN GOGOI
Holding
The deed is a mortgage by way of conditional sale, and the decree granting redemption to the plaintiffs stands.
Summary
The parties executed a deed on 30‑December‑1960 titled a conditional sale for Rs 10,000, containing a clause that if the plaintiffs repaid the amount within five years the defendants would return possession of the land, and after five years the plaintiffs would have no right to claim it back. The plaintiffs later sued for redemption, asserting that the deed was in fact a mortgage by way of conditional sale, while the defendants contended it was a simple sale with an option to repurchase. The trial court held it was not a mortgage and dismissed the suit; the High Court reversed, holding the deed to be a mortgage by conditional sale under Sec. 58(c) of the Transfer of Property Act, 1882, and allowed redemption. On appeal, the Supreme Court examined the language of the deed, the surrounding circumstances and the distinction between a mortgage by conditional sale and a sale with an option to repurchase, and concluded that the deed created a debtor‑creditor relationship indicative of a mortgage. Consequently, the Supreme Court upheld the High Court’s decree in favour of the plaintiffs and dismissed the appeal.
Issues considered
- Whether the deed dated 30‑December‑1960 constitutes a mortgage by conditional sale under Sec. 58(c) of the Transfer of Property Act, 1882, or a sale with an option to repurchase.
- Whether the plaintiffs are entitled to redeem the property under Sec. 60 of the Transfer of Property Act.
Legislation cited
- Transfer of Property Act, 1882s. 58(c), s. 60
Subjects
mortgageconditional saleredemptionTransfer of Property Actdeed interpretationdebtor‑creditor relationship
Judgment
[2016] 2 S.C.R.1002
A PATEL RAVJIBHAI BHULABHAJ (D) THR. LRS.
v.
RAHEMANBHAI M ..SHAIKH (D) THR. LRS. & ORS.
(Civil Appeal No. 4683 of20J 6)
B MAY02;2016
[RANJAN GOGOi AND PRAFULLA C. PANT, JJ.]
Transfer. of Property Act, 1882 - ss.58(c), 60 .-.Ex.ecution of
deed between parties -· lnterpretatiOn of - Mortgage by conditional
sale or sale with optiolT to repurchase.- Held: There was a condition
C in the deed that if pl'aintiffs-respondents make repayment of Rs.
I 0, 000/- within a period .offive years, defendants would handover
the possession of proeprty in suit back to plaintiffs - Condition
reflects that the actual transaciion between the parties was of a
loan, and the relationship of debtor and creditor existed - Thus,
the High Court rightly held that the deed is a mortgage by way of
D conditional sale - Decree passed in favour of the plaintiffs does
not"ca/l for interference.
Dismissing the appeal, the Court
HELD: The condition in the deed that if the plaintiffs
(respondents) make repayment of Rs.10,000/- within a period of
E five years; the defendants shall handover the possession of
property in suit back to tbe plaintiffs and in the same manner
respondents shall have no right..tP.ask back the same after expiry
of the time limit, reflects that the actual transaction between the
parties was of a loan, and the relationship was of debtor and
F creditor existed, as such, the High Court rightly held that the .•
deed is amortgage by way of condidonal sale and tl)e decree
passed in favour of the plaintiffs does not require to be interfered
with. Since the possession of the land was handed over to the
mortgagee, no interest was charged. The defendants leased the
land to third parties, after possession was given by the plaintiffs
G in 1960. In the circumstances, after perusal of the evidence on
record, the view taken by the High Court is accepted. [Para 14]
[1007-D-G]
Tulsi and Others vs. Chandrika Prasad and Others
(2006) 8 SCC 322; P.L. Bapuswami vs. N. Pattay Gounde
H AIR 1966 SC 902: 1966 SCR 918; Vishwanath
1002
PATELRAVJIBHAI BHULABHAi (D)THR. LRS. v. RAHEMANBHAI 1003
M. SHAIKH (D) THR. LRS. & ORS.
Dadoba Kara/e vs. Parisa Shantappa Upadhya (2008) A
11 SCC 504: 2008 (4) SCR 993 : C.Cheriathan vs. P
Nardpanan Embranthiri (2009) 2 SCC 673:2008 (17)
SCR 1239 - referred to.
Mu/la's Tran~fer of Property Act (Jltil Edition) ~
referred to.
B
Case Law Reference
(2006) 8 sec 322 referred to Para 10
1966 SCR 918 referred to Para 11
2008 (4) SCR 993 referred to Para 12
2008 (1'7)--SCR 1239 referred to Para 13 c
.~ .-.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4683 of
2016.
From the Judgment and Order dated 20/21/24.09.2012ofthe High
Court of Gujarat at Ahmedabad in Second Appeal No. 107of1994.
D
Haresh Raichura, Ms. Saroj Raichura, Kalp Raichura, Rajat Vats,
Advs. for the Appellants.
Purvish Jitendra Malkan, Jitendra Malkan, Ms. Dharita Malkan
S. Arora, A. Singh, Advs. for the the Respondents.
The Judgment of the Court was delivered by E
PRAFULLA C. PANT, J. I. Leave granted ..
2. This appeal is directed against judgment and decree dated 20/
21/24-09-2012, passed by High Court of Gujarat atAhmedabad, whereby
Second Appeal No. I 07of1994 is allowed, and dismissal of sujt by trial_
court as affirmed by First Appellate Court is reversed. The suit of the F
respondents/plaintiffs for redemption of suit property is decreed by High
· Court on the payment of Rs. I 0,000/- 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. G
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 H
1004 SUPREME COURT REPORTS (2016] 2 S.C.R.
A of Rs. I 0,000/- 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. 156of1984
before Civil Judge, Junior Division, Dakor, for redemption of property in
B
question (i.e. Survey No. 148, admeasuring 3 acres 29 guntas situated in
Village Rustampura, Taluk Thasra) on repayment of the mo1tgage 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
c 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 ofrepurchase within a period of five years. Denying that the
plaintiffs have any right to redeem the property, it is stated by the
D defendants that the land was purchased by the defendants for a
consideration of Rs. I 0,000/- 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
E 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. I 07of1994) before
the High Court, and the High Court after hearing the parties reversed
F 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
G 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
11101tgage by conditional sale, and reads as under:-
H
PATEL RAVJ!BHAI BHULABHAI (D)THR. LRS. v. RAHEMANBHAI 1005
M. SHAIKH (D) THR. LRS. & ORS. [PRAFULLA C. PANT, J.]
"(c) Mortgage by conditional saie.-Where, the mortgagor A
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 B
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 mo1tgagee by conditional sale:
Provided that no such transaction shall be deemed to be a C
mortgage, unless the condition is embodied in the document which
effects or purports to effect the sale."
Section 60 of The Transfer of Proper(y Act, 1882 provides right
of mortgagor to redeem the property.
9. Distinguishing features between 'mortgage by conditional sale' D
and 'sale with an option to repurchase' are enumerated in Mulla's
Transfer of Proper(y Act (I I th Edition) as under:-
"(i) In a mo1tgage 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 patties stand on an equal E
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 F
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 ofconsideration
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 G
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 mo1tgagor has the option to redeem the
H
1006 SUPREME COURT REPORTS [2016] 2 S.C.R.
A mortgage and take back the property on the payment of the
mortgage money, after the specified time, but in a sale with an
option ofre-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."
B I 0. In Tutsi and Others vs. Chandrika Prasad and Others',
this Court explaining difference between mortgage by conditional sale
or sale with condition to repurchase has observed as under:
"I 5. A distinction exists between a mortgage by way ofconditional
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
c of the latter the transaction does not evidence an arrangement of
lending and borrowing and, thus, right to redeem is not reserved
thereby".
i I. In P.L. Bapuswami vs. N.Pattay Gounder', it is held that:
"The definition ofa mortgage by conditional sale postulates the
D creation by the transfer ofa 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 obl.igation to retransfer property within the
E period specified. The distinction between the two ttansactions 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
F 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 Sliantappa
Upadhya', the facts of the case were somewhat similar to the present
G 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.
'(2006J s sec 322
2
AIR I 966 SC 902
H '(2008)I r sec 504
PATEL RAVJ!BHAI BHULABHAI (D) THR. LRS. v. RAHEMANBHAI 1007
M. SHAIKH (D) THR. LRS. & ORS. [PRAFULLA C. PANT, J.)
13. In C.Cheriathan vs. P. Narayanan Embranthiri', the A
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 B
thereof would not be conclusive, it plays a significant role. Intention
of the parties must be gathered from the document itself but
therefor cfrcumstances 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" .. c
14. In the case l}t hand the document in question (Exh. 23') contains
the condition as under: -
"In this deed condition is that the said amount of Rs. I 0,000.00
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 D
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. I 0,000/- 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 relation'ship 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 F
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·J 960. In the circumstances,
after perusal of the evidence on record, we agree with the view taken
by the High Court,
G
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.
Nidhi Jain Appeal dismissed.
• (2009) 2 sec 673
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