Holding

The deed evidences a mortgage by conditional sale, not an absolute sale, and the suit for redemption of mortgage is maintainable.

Summary

The respondent, who owned a plot of land in Kolhapur, executed a deed titled "Conditional Sale Deed" with the appellant on 7 October 1969, agreeing to transfer possession for Rs.500 for a period of five years, with a clause that repayment of the amount would require the appellant to reconvey the property. The appellant later refused to accept the repayment, claiming an absolute title, and the respondent filed a suit for redemption of mortgage. While the trial court and first appellate court dismissed the suit as a sale, the High Court reversed, holding that the transaction was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882, and that the suit was maintainable. On appeal, the Supreme Court examined the language of the deed, the surrounding circumstances, and relevant case law, concluding that the transaction could not be an absolute sale because the title was limited to a period and the repayment clause created a right of redemption. Consequently, the Court upheld the High Court’s view that the deed constituted a mortgage by conditional sale and dismissed the appeal.

Issues considered

Whether the deed titled as a conditional sale constitutes a sale with an option to repurchase or a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882.
Whether a suit for redemption of mortgage is maintainable in the circumstances.

Legislation cited

Transfer of Property Act, 1882s. 58(c)

Subjects

mortgageconditional saleTransfer of Property Actredemptionsale vs mortgageproperty law

Judgment

[2008) 4 S.C.R. 993

VISHWANATH DADOBA KARALE
v.
PRISA SHANTAPPA UPADHYE (D) TH. LRS ..
(Civil Appeal No. 1958 of 2008)
MARCH 13, 2008.
B
· (S,B. SINHA AND V.S. SIRPURKAR, JJ.)

Transfer of Property Act, 1882:
s.58(c) - Mortgage by conditional sale - Deed executed
selling immovable property for five years with stipulation to C
re-purchase the same for the same amount within five years -
HELD: Having regard to terms of the deed, High Court rightly
held that. transaction evidenced a mortgage and not sale -
Suit for redemption of mortgage was maintainable which was
rightly decreed by High Court. D
The predecessor-in-interest of the respondent
executed a conditional deed of sale of the suit property
for Rs.500/-for five years with a stipulation to re-purchase
the same by paying back Rs.500/- at any time within the
said period of five years. When he offered the said amount E
of Rs.500/- to the appellant, the latter did not accept it
stating that he had acquired an absolute title to the
property. The landowner filed a suit for redemption of
mortgage against the appellant. The trial court and the
first appellate court dismissed the suit, but the High Court F
in second appeal decreed the suit holding the deed to be
a conditional mortgage.
In the instant appeal it was contended for the
defendant-appellant that the High Court erred in setting G
aside the concurrent finding of both the courts below that
the transaction was that of a sale and not mortgage.
Dismissing the appeal, the Court

993 H.
994 SUPREME COURT REPORTS [2008] 4 S.C.R.

A HELD: 1.1 An answer to the question as to whether
the transaction is a sale or a mortgage not only would
depend upon the language used in the deed, but also the
circumstances attending thereto. In the instant case, the
plaintiff in his deposition categorically stated that his
B father had taken by way of loan a sum of Rs.500/- from
the appellant. There are also evidences on record to
show that the market price of the land was higher than
....
Rs. 500/- at the relevant point of time. [para 6-7] [997-A, BJ
1.2 When an absolute transfer of property is made, it
c cannot be limited to a period. In the insta.nt case, the
transaction shows that the appellant was to have title in
the property and to remain in possession thereof only for
a period of five years. The plaintiff/respondent was entitled
to tender the said amount of Rs.500/- not only at the expiry
D of the said period but even prior thereto. On tender of such
document, the appeUant was required to execute a deed ..
of reconveyance in favour of the plaintiff/respondent.
Such a transaction cannot be construed to be a
transaction of sale. The terms of the sale and condition of
E repurchase were recorded in one document. Having
regard to the terms of the transaction the High Court was
correct in its opinion that the transaction evidenced a
mortgage and not a sale. A suit for redemption of
mortgage, therefore, was maintainable. A suit for
F redemption is essentially a suit for recovery of
possession. [para 8-12] [997-C, D; 998-D; 1002-C]
PL. Bapuswami vs. N. Pattay Gounder (1966) 2 SCR
918; Tu/si and Ors. Vs. Chandrika Prasad and Ors. (2006) 8
G SCC 322; Manjabai Krishna Patil (0) by Lrs. Vs. Raghunath
Revaji Patil & Anr. (2007) 3 SCALE 331 - relied on.
Bishwanath Prasad Singh vs. Rajendra Prasad and Anr.
(2006) 4 sec 432 - distinguished.
Tamboli Raman/al Motilal (Dead) by Lrs. Vs. Ghanchi
H
I

e VISHWANATH DADOBA KARALE v. PRISA SHANTAPPA 995
UPADHYE (D) TH. LRS. [S.8. SINHA, J.]

Chimanlal Kesha via/ (Dead) by Lrs. And Anr. 1993 Supp,(1) A
sec 295 - held inapplicable.
CIVILAPPELLATE JURISDICTION : Civil Appeal No. 1958
of 2008
From the final Judgment and Order dated 17.08.2006 of 8
the High Court of Judicature at Bombay in Second Appeal No.
525 of 2001.

Shivaji M. Jadhav for the Appellant.

Vinay Navare and Abha R. Sharma for the Respondents. c
The Judgment of the Court was delivered by
S.8. SINHA, J. Leave granted.
1. Parisa Shantappa Upadhye, the predecessor in interest
of the respondent, was the owner of the land. He entered into a D
. transaction with the appellant herein on or about 7 .10.1969. The
~ deed was titled as Conditional Sale Deed of immovable property.
The land, in question, was situate in the town of Kolhapur in a
market area. A shed was constructed thereupon. The relevant
terms of the said document evidencing the transaction in E
question are as under:-
"2. The property described above is sold by me for a
~.
period of five years and you are put into possession
thereof. Consideration of Rs. 500/- for the said sale is
F
paid by you to me and I have received the same and there
"i
is no grievance with respect to the said receipt.
3. You are entitled to enjoy the possession of the said
property till the said period and get the property transferred
in your name and pay the municipal assessment with G
respect thereto.

4. In case the above said amount of Rs. 500/- is repaid to
'1 you by the end of the above said period or prior thereto,
you will accept the same and restore the said property in
H
996 SUPREME COURT REPORTS [2008] 4 S.C.R. •
A my possession and execute the sal.e deed in my favour as
per the agreement between us.
5. At the end of the period mentioned hereinabove or also
before the expiry of the said period at any time if we return
the sale deed amount of Rs. 500/-, after accepting the
8 said amount you have to return the possession in our favour
and to execute sale deed in our favour. This is agreed
between us."
2. The plaintiff/respondent offered to return the said amount
c of Rs. 500/- to the appellant/defendant. It was not accepted on
the premise that he. had acquired an absolute title thereto, A·
.suit for redemption of mortgage was filed on or about 24.2j981. ·
The iss.uewhich arose for consideration before the courts:b~fow
was as to whether the transaction in question conteryiplated ;
a
D conditional sale with an option to purchase or it was conditional '

mortgage.
' . ' · ...

3. The High Court by reason of the impu:gned judgment
upon construction. of the said deed dated 7,~10 ..1969 (Exhibit
40) opined that_ the transaction constituted a mortgage and not
E an out and out sale. Notice was taken of the ·tact.t~at only one
document was executed. ·
4. Mr. Shivaji M. Jadhav, learned counsel. appearing on
behalf ofthe appellant would submit that the High Court
committed a serious error in passing the impugned· judgment
F insofar as it failed to take into consideration the concurrent
finding of both the ieatned Trial Judge as also the first appellaie
court that the transaction was that of a sale and not a mortgage.
The-High Court, it was urged, committed a serious errorih re-
appreciating the evidence in a second appeal.
5. Mr. Vinay Navare, the learned counsel appearing-on
behalf ofthe respondent, on the other hand, would support the
judgment contending that not oHly that a.safe for a fixed period
is not envisaged under the Transfer of Property Act, the amount
of loan could have been returned even before the expiry of a
H
r
}

VISHWANATH DADOBA KARALE v. PRISA SHANTAPPA 997
UPADHYE (D) TH. LRS. [S.B. SINHA, J.]

period of five years. A
6. An answer to the question as to whether the transaction
is a sale or a mortgage not only would depend. upon the
language used in the deed, but also the circumstances attending
thereto. The plaintiff in his deposition categorically stated that
his father had taken by way of a loan a sum of Rs. 500/- from the B
appellants.

-; 7. There are also evidences on record to show that the
mark~t price of the land was higher tha11Rs.500/- at the relevant
point of time. c
8. When an absolute transfer of property is made, it cannot
be limited to a period. The transaction shows that the appellant
was .to have title in the property for a period of five years.
Appellant was to remain in possession thereof only for the said
period. Plaintiff/respondent was entitled fo tender the said D
amount of Rs. 500/- not only at the expiry of the said period but
even prior thereto. On tender of such document, the appellant
was required to execute a deed of reconveyance in favour of
the plaintiff/respondent.
9. Such a transaction, in our opinion cannot be construed E
to be a transaction of sale. It was a mortgage as has rightly
been held by the High Court.

A suit for redemption of mortgage, therefore was
maintainable. A suit for redemption is essentiany a suit for .F
recovery of possession.
Section 58(c) of the Transfer of Property Act, 1882 reads
as under:-
"58 "Mortgage", "mortgagor", "mortgagee", G
"mortgage-money" and "mortgage-deed" defined.-
(a) **** **** ****
(b) **** **** **** **** . ****

(c) Mortgage by conditional sale - Where, the H
A
998 SUPREME COURT REPORTS [2008] 4 S.C.R.

mortgagor 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

B. on condition that on such payment being made the
sale shall become void, or
on condition that on such payment being made the
buyer shall transfer the property to the seller,
;

c "' the transaction is called mortgage by conditional sale
and the mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed
to be a mortgage, unless the condition is embodied
in the· document which effects or purports to effect
D the sale."
10. In this case, the terms of the sale and condition of
repurchase were recorded in one document.
The question came up for consideration in P.L Bapuswami
E Vs. N. Pattay Gounder [(1966) 2 SCR 918], where this Court
laid down the law in the following terms;
" ..... In the first place, there is the important circumstance
that the condition for repurchase is embodied in the same
document. In the second place, there is the significant fact
F that the consideration for Ex. B-1 was Rs. 4,000/-, while
<
the real value of the property was, according to the Munsif
and the Subordinate Judge, Rs. 8,000/-. The high Court
has dealt with this question and reached the finding that
the value of the property was Rs. 5,500/-, but it is submitted
G by Mr. Ganapathi Iyer on behalf of the appellant that the
·question of valuaticn was one of fact and the High Court
was not entitled to go into the question in the second
appeal. The criticism of learned. Counsel for the appellant y
is justified and we must proceed on the basis that the
H valuation of the property was Rs. 8,000/- and since the

,..,., ..
• VISHWANATH DADOBA KARALE v. PRISA SHANTAPPA
UPADHYE (D) TH. LRS. [S.B. SINHA, J.]
999

consideration for Ex. B-1 was only Rs. 4,000/- It was a A
strong circumstance suggesting that the transaction was
a mortgage and not an out right sale. In the third place,
there is the circumstance that the patta was not transferred
to the 1st defendant after the execution of Ex. 8-1 by Palani
Moopan. It appears that defendant no. 1 did not apply for B
the transfer of patta and the patta admittedly continued in
the name of Palani Moopan even after the execution of
Ex. 8-1. Exhibits A-6 and A-7 are certified copies of thandal
extract of patta for the years 1945-54 and they prove thi_s
fact. These exhibits also show that the plaintiff had obtained c
patta for the land on the basis of Ex. A-2. The registered
deed of transfer of patta was executed by the sons of
Palani Moopan in favour of the plaintiff. There is also the
circumstance that the kist for the land was continued to be
paid by Palani Moopan and after his death, by the sons of
D
Palani Moopan. Lastly, there is the important circumstance
~
that the consideration for reconveyance was Rs. 4,000/-
, the same amount as the consideration for Ex. 8-1. Having
regard to the language of the document, Ex. 8-1 and
examining it in the light of these circumstances we are of
the opinion that the transaction under Ex. 8-1 wa_s E
mortgage by conditional sale and the view taken by the
~ High Court with regard to the legal effect of the transaction
must be reversed ..... "
11. This Court in Bishwanath Prasad Singh Vs. Rajendra F
Prasad and Another [(2006) 4 SCC 432] noticing Pandit
Chunchun Jha Vs. Sk. Ebadat Ali [(1955) 1 SCR 174] and
several other decisions, opined that although the deed was
termed as "vaibulwafa", but therein the transfer was complete
and not partial.
G
However, in Tutsi and Others Vs. Chandrika Prasad and
Others [(2006) 8 SCC 322] distinguishing Bishwanath Prasad
Singh (supra), it was held;
"14. Before we consider the stipulations contained in the
H
1000 SUPREME COURT REPORTS [2008] 4 S.C.R.
•
A deed dated 30-12-1968, it may be noticed that in terms
of Section 58(c) of the Transfer of Property Act, a
transaction may be held to be a mortgage with conditional
sale if it is evidenced by one document. The condition
precedent for arriving at a finding that the transaction
s involves mortgage by way of conditional sale is that there
must be an ostensible sale. It must contain a condition
that on default of payment of 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,
C or on condition that on such payment being made the
buyer shall transfer the property to the seller.
15. A distinction exists between a mortgage by way of
conditional sale and a sale with condition of purchase. In
the former the debt subsists and a right to redeem remains
D, with the debtor but in· case of the latter the transaction
does not evidence an arrangement of lending and
borrowing and, thus, right to redeem is not reserved
thereby.
16. The proviso appended to Section 58(c) of the Transfer
E of Property Act was added by Act 20 of 1929 for resolution
of the conflict in decisions on the question whether the
condition relating to reconveyance contained in a separate
document could be taken into consideration in finding out
whether a mortgage was intended to be created by the
F principal deed.
17. The transaction in this case has been evidenced by
one document. Section 58(c) of the Transfer of Property
Act will, therefore, apply."
G Recently in Manjabai l<rishna Patil (0) by LRs. Vs.
Raghunath Revaji Patil & Anr [2007 (3) SCALE 331 ], it was
held;
"12. Proviso appended to Section 58(c) is clear and
unambiguous. A legal fiction is created thereby that the
H

. ;;,·
.:.~
VISHWANATH DADOBA KARALE v. PRISA SHANTAPPA 1001
UPADHYE (D) TH. LRS. [S.B. SINHA J.]

transaction shall not be held to be a mortgage by A
conditional sale, unless a condition is emb.odied in the
document which effects or purports to effect the sale. Were
two documents are executed, the transaction in question
would not amount to a mortgage by way of conditional
sale. In a case of this nature, ordinarily the same would be B
considered to be a deed of sale coupled with an agreement
of reconveyance."
. In the facts of that case, however, it was held that no
relationship of debtor and creditor came in existence and no
security was created and in fact conveyance of the title of the c
property by the respondent to the appellant was final and
absolute.
12. Strong reliance, however, has been placed by Mr.
Jadhav on Tamboli Raman/al Motilal (Dead) by Lrs. Vs.
D
Ghanchi Chimanlal Keshavlal (Dead) by Lrs. and Another
[1993 Supp. (1) sec 295].
The said decision cannot be said to have any application
in the instant case. Therein an absolute title was conveyed. It
was in the aforementioned fact situation, this Court held; E
"21. The last important clause is after the period of five
years the transferee will have a right to get the municipal
record mutated in his name and pay tax. Thereafter, the
transferee will have an absolute right to mortgage, sell, or
gift the suit property. Neither executant nor any one else F
could dispute, the title. All the above clauses are clearly
consistent with the express intention of making the
transaction a conditional sale with an option to repurchase.
Ex. 39 was pressed into service But we do no think much
assistance can be derived by the appellant. That only shows G
there were dealings between the parties. Further, it also
contains account relating to betel leaves. That has nothing
to do with the suit transaction."

Therein also this Court observed;
f--4
1002 SUPREME COURT REPdRTS
,,
[2008) 4 S.C.R.
•
A "16 .... Having regard to the nice distinctions between a
,,
mortgage by conditional sale and a sale with an option to I-
repurchase, one should be guided by the terms of the
document alone without much help from the case law. Of
course, cases could be referred for the purposes of
B interpreting a particular clause to gather the intention. Then
again, it is also settled law that nomenclature of the
document is hardly conclusive and much importance cannot
r
be attached to the nomenclature alone since it is the real
intention which requires to be gathered. It is from this angle
c we propose to analyse the document. No doubt the
document is styled as a deed of conditional sale, but as
we have just observed, that it not conclusive of the matter."
Having regard t.o the terms of the transaction, we are of
the opinion that the High Court was correct in its opinion that
D the transaction evidenced a mortgage and not a sale.
13. For the reasons aforementioned, there is no merit in r

this appeal which is dismissed with costs. Counsel's fee ;
assessed at Rs. 10, 000/.-. -

E RP. Appeal dismissed.

,_