In a second appeal regarding a suit for redemption of mortgaged property, the Madras High Court examined whether a disputed document was a mortgage by conditional sale or an absolute sale. The Court distinguished several precedents and held the document was a sale with a condition for re-transfer, dismissing the appeal.
Second appeal dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:09.03.2011
Coram:
THE HONOURABLE MR.JUSTICE G.RAJASURIA
S.A.No.12 of 2006
R.Ramaiah
vs.
Lakshmamma .. Respondent/Defendant
This second appeal is filed against the judgment and decree dat 28.04.2004 passed by the learned Subordinate Judge, Hosur in A.S.No.37 2002 confirming the judgment and decree dated 25.04.2001 passed by t learned District Munsif, Denkanikottai in O.S.No.67 of 1997.
For Appellant : Mr.V.Nicholas
For Respondent : Mr.V.Raghavachari
J U D G M E N T
This second appeal is focussed by the plaintiff, animadverting up the judgement and decree dated 28.04.2004 passed by the learn Subordinate Judge, Hosur in A.S.No.37 of 2002 confirming the judgment a decree dated 25.04.2001 passed by the learned District Munsi Denkanikottai in O.S.No.67 of 1997.
a] The plaintiff filed the suit seeking the following reliefs: - to redeem the mortgaged property by directing the defendant to execute reconveyance deed in favour of plaintiff and deliver possession of the property to the plaintiff.
(extracted as such)
b] Written statement was filed by the defendant resisting the suit
c] Whereupon issues were framed. On the side of the plaintiff, examined himself as P.W.1 along with P.Ws.1 and 2 Exs.A1 to A5 we marked. The defendant/Lakshmamma examined herself as D.W.1 along wi D.Ws.2 and 3 and marked Exs.B1 to B13.
d] Ultimately the trial court dismissed the suit, as against whic appeal was filed by the plaintiff for nothing but to be dismissed by t appellate court confirming the judgment and decree of the trial court.
(extracted as suc
i) It is not the nomenclature of the document that matters, but stricto sensu what it connotes and denotes should be taken in consideration; but both the courts below failed to do so.
ii) There is a clause in Ex.A2 to the effect that for a period five years, there shall not be any encumbrance created by the defenda and that itself is indicative of the fact that the said document was n intended to be acted upon as a sale simpliciter; with a condition for r transfer but it was intended only as a document of mortgage by condition sale.
iii) No doubt, beyond five years alone, the plaintiff did choose file the present suit for redemption and in view of the settl proposition that once a mortgage is always a mortgage, the time stipulat in the said document would have no bearing.
iv) There is nothing to indicate that the real transaction envisag under Ex.A2 was a sale transaction.
Accordingly, he would pray for setting aside the judgment and decre of both the courts below and for decreeing the suit as prayed for by t plaintiff.
a] There is absolutely no iota or shred, shard or minuscule, molecu or pint of evidence to demonstrate that the said document emerged due some loan transaction between the plaintiff and the defendant.
b] Had really the parties intended that the said document should treated as a mortgage by conditional sale, then they would have taken ca to specify about the loan transaction.
c] The document would exemplify and demonstrate that the plainti for the purpose of discharging his loans sold the property in favour the defendant with a condition for re-transfer within the period betwe three to five years, so to say, if he repays the sale consideration, th the defendant would be enjoined to re-transfer the said property. In su a case, by no stretch of imagination, the said document could be termed labelled as deed of mortgage by conditional sale.
Accordingly, he prays for the dismissal of the second appeal.
was intended to be acted as a document of mortgage by conditional sal then both parties should have signed it. But curiously, enough so f this document is concerned, only the plaintiff had signed it. I wou like to take a cue from the well known treatise D'Souzas Law and Practi of Conveyancing-Deeds and Documents 2010 Edition, which would convey t idea that in case of mortgage by conditional sale, both the mortgagor a the mortgagee should sign it. Over and above that jurisprudenti approach also warrants that such a measure is absolutely necessary becau in a deed of mortgage by conditional sale, one party would speak to t effect that he would be redeeming the mortgage within a certain perio whereupon the other party would be enjoining and binding himself to r transfer the property on receipt of the specified amount. As such, on there are undertakings by both, then they both should sign the documen then only it would have binding effect. However, in the case of the sa is concerned, only the vendor should execute the sale deed in favour the vendee, subject to exception emerged under the new amendment as p Section 34-A of the Registration Act, 1908, which is only of recent orig and it was not in vogue at the time of emergence of Ex.A2.
(i) (2011) 1 SCC 673 [Vijay Kumar Talwar v. Commissioner Income Tax, Delhi], certain excerpts from it would run thus:
"19. It is manifest from a bare reading of the section that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression "substantial question of law" is not defined in the act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements.
and the following principles are found enunciated in the decision report in (2006) 5 Supreme Court Cases 545 – HERO VINOTH (MINOR) VS. SESHAMMAL
(iii) The general rule is that High Court will not interfere with the concurrent findings of the Courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the Courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to "decision based on no evidence", it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding."
(ii) 2008(4) SCALE 300 – KASHMIR SINGH VS. HARNAM SINGH AND ANOTHER.
(iii) 2009-1-L.W.1 – STATE BANK OF INDIA & OTHERS vs. S.N.GOYAL
It is therefore crystal clear from the mere poring over and perusal of t aforesaid precedents that unless there is any perversity or illegality the rendering of the finding of facts by both the courts below, t question of interfering by the High Court under Section 100 of the Code Civil Procedure would not arise.
"16. A careful perusal of the document would clearly show that the document has been couched in a simple Tamil language. The recitals are clear and unambiguous. It is seen from the document that Munimalaiyan in favour of the appellant herein and in and by the said deed one of the properties which was given as security for the simple mortgage was sold to the appellant with a right d tot he said Munimalaiyan to repurchase the same within a period of 3 years on payment of Rs.3,000/-. The right to redeem the property within a period of 3 years was specifically reserved. The recitals, in our opinion, would only show that the deed in question is not a deed of sale but a mortgage by conditional sale.
or subject to the proviso that the sale shall be treated as void and the property re-transferred on payment being made.
"19. It may be true that level of a document is not decisive. The true nature of transaction must be determined having regard to the intention of the parties as well as the circumstances attributing thereto as also the wordings used in the document in question.
"10.We may, at the outset, notice that almost a similar question came up for consideration before a Division Bench of this Court in Bishwanath Prasad Singh Vs.Rajendra Prasad and Another, 2006(4) SCC 432, wherein it was held:
"A deed as is well known must be construed having regard to the language used therein. We have noticed hereinbefore that by reason of the said deed of sale, the right, title and interest of the respondents herein was conveyed absolutely in favour of the appellant. The sale deed does not recite any other transaction of advance of any sum by the appellant to the respondents whichw as entered into by and between the parties. In fact, the recitals made in the sale deed categorically show that the respondents expressed their intention to convey the property to the appellant herein as they had incurred debts by taking loans from various other creditors."
11.However, in that case keeping in view the recitals made in the deed and other circumstances surrounding thereto the Trial Court as also the First Appellate Court came to finding that the Respondents therein executed a deed of absolute sale in favour of the Appellant, who in turn executed an agreement for reconveyance in favour of the respondent. The term 'Baibulwafa' was held to be a deed of conditional sale with a contract of purchase and not a mortgage with conditional sale. The said findings were over-turned by the High Court.
This Court opined:
"The terminology 'vaibulwafa' used in the agreement does not carry any meaning. It could be either 'bai-ul-wafa' or 'bai-bil-wafa'.
It will bear repetition tos tate that with a view to ascertain the nature of a transaction the document has to be read as a whole. A sentence used or a term used may not be determinative of the real nature of transaction.
Baib-ul-wafa, it was held by the Trial Court connotes only an agreement for sale. In terms of Section 91 of the Evidence Act, if the terms of any disposition of property is reduced to writing, no evidence is admissible in proof of the terms of such disposition of property except the document itself."
13.Before we consider the stipulations contained in the 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 document. The condition precedent for arriving at a finding that the transaction 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 certain date, the sale shall become absolute or 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.
14.A distinction exists between a mortgage by way of conditional sale and a sale with condition of purchase. In the former the debt subsits 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 and, thus, right to redeem is not reserved thereby.
18.We have noticed hereinbefore that the nature of the deed described that the document is ambiguous as both the terms, viz., Kewala and Baibulwafa, were mentioned. The transaction, however, categorically states that the Appellant No.1 was to maintain the property in its present condition. Of course, permission for reconstruction of the structure was granted. But, if the contention of the parties was to transfer the property absolutely, no such stipulation was required to be made at all. In a case of absolute transfer, the vendee has an absolute right to deal with his property in any manner he likes. It was clearly stipulated in the deed that in the event that executant repayed the entire consideration by 30.12.1971, the purchaser would reconvey the property and furthermore deliver possession thereof. The sale was to become absolute only when the transferee failed to pay the said amount within the stipulated period. The Courts below have also taken into consideration the contemporaneous conduct of the parties in treating the transaction to be one of mortgage and not of sale. We are, therefore, of the opinion that the parties intended to enter into a transaction of mortgage and not sale." 3. AIR 1966 SC 902 [ P.L.Bapuswami v. N.Pattay Gounder]
"6. We consider that in the present case there are several circumstances to indicate that Ex. B-l was a transaction of mortgage by conditional sale and not a sale with a condition for retransfer. 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 that the consideration for Ex. B-l was Rs 4000, while the real value of the property was, according to the Munsif and the Subordinate Judge, Rs 8000. The High Court has dealt with this question and reached the. finding that the value of the property was Rs 5500, but it is submitted by Mr Ganapathi lyer on behalf of the appellant that the question of valuation 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 is justified and we must proceed on the basis that the valuation of the property was Rs 8000 and since the consideration for Ex- B-l was only Rs 4000 it was a strong circumstance suggesting that the transaction was a mortgage and not an outright sale. In the third place, there is the circumstance that the patta was not transferred to the 1st defendant after the execution of Ex. B-1 by Palani Moopan. It appears that Defendant 1 did not apply for the transfer of patta and the patta admittedly continued in the name of Palani Moopan even after the execution of Ex. B-l. Exhibits A-6 and A-7 are certified copies of thandal extract of patta for the years 1945-
54 and they prove this fact. These exhibits also show that the plaintiff had obtained 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 Palani Moopan. Lastly, there is the important circumstance that the consideration for reconveyance was Rs 4000, the same amount as the consideration for Ex. B-l. Having regard to the language of the document, Ex. B-l and examining it in the light of these circumstances we are of the opinion that the transaction under Ex. B-l was mortgage by conditional sale and the view taken by the High Court with regard to the legal effect of the transaction must be reversed. It follows, therefore, that the plaintiff is entitled to a preliminary decree for redemption under Order 34 Rule 7, Civil Procedure Code, for taking accounts and for declaration of the amounts due to the 1st defendant under Ex. B-l."
"20. I am of the view that the lower appellate Court has not considered the terms of the document properly. There is no dispute that the document in question is only to discharge the earlier subsisting mortgage debt. When the interest had been regularly paid till the date of execution of the document, there is no need for the defendant to insist for the discharge of the mortgage. If the deed has been executed by way of sale only to discharge the subsisting mortgage, then the defendant might not have agreed reconvey the property after three years for the same consideration mentioned in the sale deed. The contention of the counsel for the respondent that there is no mention about the payment of interest is concerned, it is admitted that eight acres of property have been given possession to the defendant to establish that the income from out of the property may not be sufficient enough to meet the stipulated interest as well as the payment of the kist as directed in the sale deed. The plaintiff's case is that the income from out of the property is more than enough to meet the interest as well as the payment of kist and only on that understanding the defendant had agreed to pay the kist for the three years. In the absence of any evidence contra, the plaintiffs case can be accepted.
22.So far as the value of the land is concerned, in the disputed document, the recital is that the present market value of the land is Rs.12,500/-. The extent is also more than 8 acres of land. Though the defendant contended that the entire area is a rocky land, the report of the Advocate-Commissioner does not support such contention.
In fact the report of the Advocate -Commissioner clearly reveals that barring an extent of 50 cents, which is rocky portion, the remaining extent are all cultivable land, even assuming that the guideline value may not be the conclusive proof to identify the market value of the land, unless the document clearly recites as to why the consideration under the sale deed is mentioned less than the guideline value, there is nothing wrong in accepting the guideline value fixed by the registering authority as the market value of the land. Similarly there is nothing in the document or in the evidence to show that the entire extent of 8 acres conveyed under the document is rocky land and uncultivable. Hence the plea of the defendant cannot be accepted. It can be safely concluded that the document Ex.A1 had been executed by the plaintiff only to discharge the mortgage debt and not as an absolute sale deed with a right of repurchase. The trial court has rightly found that the disputed document is only a mortgage by conditional sale and the lower appellate court, without considering the recitals in the document properly, has reversed the findings of the trial court."
I would also like to refer to the latest decision of the Hon'ble Ap Court reported in 2011(1) SCC 657 [ Raj Kishore (dead) by LRs. vs. Pr Singh and others]
"17. The broad statement of law made by the High Court to the effect that every sale accompanied by an agreement for reconveyance of the property will constitute a mortgage by conditional sale is not, therefore, correct. .................."
can be taken as a factor for deciding that Ex.A2 embodied the alleg transaction relating to mortgage.
The trial court also concentrated on the wordings used in Ex.A2/Ex.B1. N to put too fine a point on it, the word "Swatheenam" in Tamil wou indicate "absolute ownership" and that also was taken note of by the tri court and the appellate court, after analysing in accordance with Ord 41 Rule 31 of CPC, the oral and documentary evidence au fait with la arrived at the conclusion that the transaction was not a mortgage conditional sale.
2 issues framed by the court
Whether the document executed between the parties, recited as a sale, constitutes a mortgage by conditional sale or an absolute sale with a condition for re-transfer under Section 58(c) of the Transfe
Whether the conduct and intention of the parties indicate that the transaction was intended to be a loan/mortgage rather than a sale with a right of repurchase?
Colour shows how this judgement treated each authority
Vijay Kumar Talwar v. Commissioner of Income Tax, DelhiReferred¶48
(2011) 1 SCC 673 · Who else cites this
HERO VINOTH (MINOR) VS. SESHAMMALReferred¶51
(2006) 5 Supreme Court Cases 545
KASHMIR SINGH VS. HARNAM SINGH AND ANOTHERReferred¶55
2008(4) SCALE 300
Chennammal vs. Munimalaiyan and othersDistinguished¶59
2005 (5) CTC 370
Umabai and another vs. Nilkanth Dhondiba ChavanDistinguished¶64
2005 (6) SCC 243 · Who else cites this
Tulsi and Others vs. Chandrika Prasad and othersReferred¶67
2006 (4) CTC 766
Bishwanath Prasad Singh Vs. Rajendra Prasad and AnotherReferred¶68
2006(4) SCC 432 · Who else cites this
P.L. Babuswami v. N. Pattay GounderDistinguished¶79
AIR 1966 SC 902 · Who else cites this
Munimalaiyan and six others vs. ChennammalDistinguished¶83
1998-3-LW-422 (Madras High Court)
Raj Kishore (dead) by LRs vs. G.P. Singh and othersReferred¶88
2011(1) SCC 657 · Who else cites this
3 provisions across 3 enactments
R.Ramaiah
Lakshmamma
G. Rajasuria
Justice Rajasuria
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
