1. Again a vexed question as to whether a deed Exh.30 is a mortgage with conditional sale or sale with condition to repurchase has been posed for consideration of this Court in this Second Appeal.
2. The appellant was original defendant against whom the respondents preferred Civil Suit No.138 of 1988, praying for redemption of the mortgaged property with further prayer for directing the appellant-defendant to handover the possession of the suit property.
3. The appellant- defendant resisted the suit by filing written statement at Exh.17, contending that the transaction contained in the deed was a sale with condition to repurchase on payment of the amount stated in the deed within a period of five years and that on non-payment of the said amount within the period of five years, the transaction would become absolute sale in favour of the defendant, that the plaintiffs having not repaid the above-said amount within a period of five years, are not entitled to any relief in the suit, that the transaction in the deed for all purposes had become absolute sale in favour of the defendant, that the suit, which was filed in the year 1988, was time barred.
4. On the basis of the pleadings, the learned Trial Judge framed the issues at Exh.20 and one of the main issues was as to “whether the plaintiffs prove that they had given the suit houses bearing No.3043 situated at Umreth at Malekvada to the defendant on 1.7.1960 at Rs.1500/- on mortgage for five years ?”
5. The plaintiffs did not enter into the witness box but examined one witness, named Yasinmiya Humayumiya Malek, at Exh.26. Through the said witness, the plaintiffs also produced documentary evidence including the deed in question at Exh.30. So far as defendant is concerned, the defendant neither entered into the witness box nor examined any witness.
6. The learned Trial Judge on appreciation of the evidence on record, came to the conclusion that the transaction in the deed at Exh.30 was mortgage with conditional sale and the plaintiffs had given notice at Exh.27 for releasing the property from the mortgage and the suit was filed within the period of limitation. Learned Trial Judge thus allowed the suit and passed decree for redemption of the mortgage and ordered the defendant to handover the peaceful possession of the suit house to the plaintiffs.
7. The original defendant, therefore, challenged the judgment and decree passed by the learned Trial Judge by filing Regular Civil Appeal No.27 of 1996. Two of the points for determination raised by the learned Appellate Judge are as under:-
(1) Whether the appellant proves that he purchased the suit land only on 30.6.1960 by absolute sale with a condition to repurchase ?
(2) Whether the respondents prove that the agreement as to suit land was a mortgage by conditional sale ?
8. On construction of the deed in question at Exh.30 as also keeping in mind the principles of law laid down by the Hon'ble Supreme Court in the case of Bhoju Mandal and others Vs. Debnath Bhagat and others reported in AIR 1963 SC 1906 as well as by this Court in the case of Darbar Jadubhai Nanbha Vs. Patel Uka Daada reported in 1998(1) GLR 633, learned Appellate Judge came to the conclusion that the deed in question was mortgage with conditional sale and not a sale with condition to repurchase. Learned Appellate Judge also further came to the conclusion that the deed clearly reveals and shows that mere possession was given to the defendant and title remained with the plaintiffs for petty long period of five years and the learned Appellate Judge further observed that condition of re- transfer within the period of five years provided in the deed itself was clog on redemption. Learned Appellate Judge further came to the conclusion that the transaction took place on 30.6.1960 and the suit was filed on 11.8.1988, and a period of 30 years is provided for filing the suit and therefore, the suit was also within time limit. Accordingly, learned Appellate Judge dismissed the appeal by judgment and decree dated 24.11.1988. It is this judgment and decree which is under challenge before this Court.
9. This appeal was admitted by order dated 26.11.2001 on the following substantial questions of law:-
“1. Whether the document Agreement Exhibit 30 executed by the respondents in favour of the appellant is mortgaged by conditional sale or is an absolute sale with a condition to repurchase?
2. Whether the interpretation made by both the Courts below in interpreting Agreement Exhibit 30 are illegal, perverse and contrary to provisions of Transfer of Property Act?
3. Whether the suit is barred by Law of Limitation and whether it suffers from delay, laches and acquiescence?
4. Whether the provisions of Section 58 at all is attracted and is applicable while interpreting document at Exhibit 30 in the present case?”
10. I have heard learned advocates for the parties.
11. Learned advocate Mr. R.D.Dave for the appellant submitted that the Courts below have committed an error in construing the deed at Exh.30 as a mortgage with conditional sale and not sale with condition to repurchase. He submitted that the language of the deed clearly depicts the intention of the parties to take transaction contained in the deed as absolute sale but with right given to the plaintiffs to take back the property or to repurchase the property on payment of the amount stated in the deed itself within a period of five years. He submitted that the condition was to the effect that the sale in favour of the appellant would become absolute if on expiry of five years, payment was not made and since no payment was made, such sale had become absolute in favour of the appellant.
11.1. Learned advocate Mr. Dave further submitted that there was no any evidence adduced by the plaintiffs personally to prove that there was any relationship between the parties of debtor and creditor. Mr. Dave pointed out that there is no mention in the deed itself that the plaintiffs required the amount stated in the deed from the appellant to come out from the financial crunches, nor even there is anything in the deed to suggest that the amount stated in the deed was not representing full value of the property. He submitted that in absence of any evidence from the side of the plaintiffs and terms of the deed, being very clear and unambiguous to come to the conclusion that the transaction was sale in favour of the appellant with only condition to repurchase the suit property within a period of five years, the Courts below ought not to have held the transaction contained in the deed was that of mortgage with conditional sale. Mr. Dave submitted that the evidence of witness at Exh.26 examined by the plaintiffs could not have been relied on as undisputably, it has come in evidence that the said witness was only five years of age when the deed in question was executed and he had no personal knowledge of transaction between the parties as also the intention of the parties.
11.2. Mr. Dave also submitted that the deed was executed with condition to repurchase. If any right was there with the plaintiff to get back the suit property, then for enforcement of such right, the suit was required to be filed within a period of 12 years from the date of transaction. He submitted that the suit was time barred and in such suit, the plaintiffs were not entitled to any relief. He ultimately urged to allow the appeal on the above-referred substantial questions of law on behalf of the appellant.
11.3. In reply, learned advocate Mr. H.M. Parikh appearing for the respondents-plaintiffs submitted that to find out as to whether particular transaction is a mortgage with conditional sale or sale with condition to repurchase, the terms of the deed are relevant. He submitted that if the language of the deed is clear so as to find out whether the transaction contained in the deed is a mortgage with condition sale or sale with condition to repurchase, then the Court is not required to consider or look at any other evidence or circumstances. Mr. Parikh submitted that in the case on hand, the terms of the deed are clear to know intention of the parties. From the deed itself, Mr. Parikh pointed out that what was conveyed by the deed was transfer of possession and at the end of five years, the defendant was under obligation to give back the suit property on payment of Rs.1500/-. He submitted that though the deed is named as conditional sale but what is material and relevant is not nomenclature of the deed but ultimate intention of the parties which could call out from the language of the deed. Mr. Parikh submitted that the deed specifically provides for giving of possession of the suit house, by taking Rs.1500/- from the defendant and it is specifically mentioned in the said deed that on repayment of Rs.1500/- within a period of five years, the defendant shall handover the possession of the suit house by executing deed. Mr. Parikh stated that though it is provided in the very deed that after a period of five years, the suit house was to be available to the defendant by way of sale but such would amount to clog on equity of redemption of the mortgage. Mr. Parikh therefore, submitted that the terms of the deed being very clear, no other circumstances need to be looked at and both the Courts having rightly construed the deed to be mortgage with conditional sale, such would be a finding of fact on appreciation of the construction of the deed in question, this Court may not interfere with the present Second Appeal by exercising the powers under Section 100 of the Code of Civil Procedure. He ultimately urged to dismiss the appeal.
12. Having heard the learned advocates for the parties, having perused the judgment and decree passed by both the Courts below and also the record and proceedings available to this Court, it appears that before both the Courts below, the main issue in focus was as to whether the transaction contained in the deed Exh.30 could be said to be a transaction of mortgage by conditional sale or an absolute sale with condition to repurchase. On this main issue, other incidental issues were also considered by the Courts below,including the issue of limitation.
13. During the course of argument, learned advocate Shri Dave has relied on one judgment of the Hon'ble Supreme Court in the case of Smt. Bismillah Begul (dead) by LRs. Vs. Rahmatullah Khan (dead) by LRs. reported in AIR 1998 SC 970. On the basis of the said judgment, he submitted that if time is provided for re-conveyance of the immovable property in a particular deed, such time is always an essence of the contract and if option is not exercised to repurchase the property within the stipulated time, such right to repurchase would lapse. However, the attention of Mr. Dave was drawn to the facts of the case in the above-referred judgment of the Hon'ble Supreme Court. In that case, the facts noted by the Hon'ble Supreme Court were that registered sale deed was executed on 8.2.1955 for Rs.2000/- and simultaneously, a separate agreement for re- conveyance was also executed. On the basis of such base facts, coupled with other evidence, the Hon'ble Supreme Court has held that time in that case was essence of the contract and if option was not exercised to repurchase the property within the time bound period, right to repurchase would lapse. Present is not the case with such facts situation. Therefore, the said decision would be of no help to the appellant.
14. This Court in Second Appeal No.107 of 1994, after considering catena of decisions of the Hon'ble Supreme Court, has held as under:
“15. In light of the above, what is relevant is the terms of the deed contained the transaction in question and in the case of any ambiguity, the attendant circumstances. If the terms and language of the deed are not ambiguous and are clear to construe the intention of the parties so as to make out whether a deed could be said to be a deed of mortgage or sale, no other evidence or circumstance would be required to be considered.
The question whether a particular deed can be construed to be transaction of mortgage with conditional sale would be required to be considered only when condition to re-transfer is provided in the same document but by incorporation of such condition, whether the intention of the parties to take such transaction as ostensible sale or mortgage could be gathered only from the language of the deed. Therefore, as held by the Hon'ble Supreme Court in the case of Tamboli Ramanlal Motilal (supra), one should be guided by the terms of the document alone without much help from the case law and it is further observed that of course, the cases could be referred for the purpose of interpreting particular clause to gather the intention and that it is also settled law that the nomenclature of the document is hardly conclusive and it is always the intention of the parties which requires to be gathered from the document.”
15. Therefore, we need to first refer the relevant terms of the deed Exh.30, they are translated and reproduced as under:
“Thus, the house of my ownership and possession of the description of four directions is given to you on conditional sale with possession for Rs.1500/-. Therefore, you may pay municipal tax of the said house and you may utilize and use the said house as per your own wish on independent ownership right with which I or my heirs will not create any disturbance or obstruction and if such obstruction is created, the same shall stand cancelled. Possession of the said house is given to you on conditional sale with assurance that the said house is without any encumbrance. If anybody claims any right in respect of the said house, we will provide kind of reply which you want against such claimant. We have received Rs.1500/-, being consideration of the said document, and the said document is being executed as per our own wish and the same is true and the same would bind to our heirs. Consideration of Rs.1500/- of the said document when we repay to you within a period of five years, you shall execute written document and handover the possession of the property to us and if we do not pay after five years, i.e. after 1.7.1965, the said property will be available to you with rights of sale. With this condition, this conditional sale is executed in your favour.”
16. Learned Trial Judge has considered the relevant terms of the deed by observing that there was specific condition of transfer of the possession of the suit house if payment is made within a period of five years and such being a condition stipulated in the deed, there was a clear intention of the plaintiffs to just pledge the suit house with the defendants for Rs.1500/- and in lieu of Rs.1500/-, the defendant was given right to use the suit house. However, on non- payment of such amount within the time stipulated and on expiry of time, the transaction would not become transaction of sale.
17. Similarly, learned Appellate Judge on considering and construing the terms of the deed and keeping in mind the principles of law laid down by the Hon'ble Supreme Court, has held that there was no vesting of absolute title in favour of defendant but in fact, the defendant was bound by a condition to re-transfer the property on payment of Rs.1500/- by the plaintiffs. Learned Appellate Judge further observed that in the case of absolute sale, there is no question of postponement of vesting of title but right is given to repurchase. Whereas, in the case on hand, right to purchase the property has been been postponed and because of the condition of re-transfer, at least for a period of five years, there was no vesting of title in favour of the defendant. Therefore, the transaction with such condition could not be titled or termed as sale with a condition to repurchase though the parties might have provided nomenclature to the deed as 'conditional sale'. Learned Appellate Judge further held that by the document, a mere possession was handed over to the defendant and the title all throughout remained with the plaintiffs at least for a petty long time of five years and such would amount to mortgage by conditional sale and the terms providing that after 1.7.1965, the rights of sale would accrue to the defendant, would amount to clog on redemption. On the basis of such findings, learned Appellate Judge held that the plaintiffs were entitled to redeem the mortgage and such right was available to be exercised within a period of 30 years and since the suit is filed on 11.8.1988, which was within a period of 30 years, the suit was within time limit. Ultimately, learned Appellate Judge on such findings dismissed the appeal.
18. I have reproduced above the terms of the deed and independently gathered the intention of the parties from the language of the deed. It clearly comes out from the language of the deed that the possession of the suit house was given to the defendant just to get an amount of Rs.1500/-. The fact that the defendant agreed to re- transfer the property within a period of five years and fact that specific condition provided at the instance of the plaintiffs to get back the property if the amount is paid within five years, goes to show that the defendant was not to get any clear title of sale till the end of five years. The true and correct meaning of providing the condition of time period of five years could be that even on the next day of the deed, it was open to the plaintiffs to get back their property from the defendant on payment of money and if this was the intention of the parties, it could be said that parties never intended to take transaction as that of absolute sale in favour of the defendant.
19. In my view, therefore, the Courts below have rightly construed the deed at Exh.30 being the deed of mortgage with conditional sale.
20. The question then remains as to whether what would be the effect of the condition provided in the very deed, for making the defendant to believe the rights of sale accrued in his favour on expiry of five years. In my view, when the transaction contained in the deed is taken and believed to be the transaction of mortgage with conditional sale, any other condition foreclosing the rights of the executant/ original owner of the property to get back the properties, would amount to clog on equity of redemption of mortgage. Therefore, the Courts below have rightly construed such condition to be clog on equity of redemption of mortgage.
21. Section 60 of the Transfer of Property Act, 1882 in this regard needs to be referred and the same reads as under:-
“60. Right of mortgagor to redeem.- At any time after the principal money has become [due], the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage-money, to require the mortgagee (a) to deliver [to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee], (b) where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and (c) at the cost of the mortgagor either to re-transfer the mortgaged property to him or to such third person as he may direct, or to execute and (where the mortgage has been effected by a registered instrument) to have registered in acknowledgment in writing that any right in derogation of his interest transferred to the mortgagee has been extinguished:
Provided that the right conferred by this section has not been extinguished by the act of the parties or by [decree] of a Court.
The right conferred by this section is called a right to redeem and a suit to enforce its is called a suit for redemption.
Nothing in this section shall be deemed to render invalid any provision to the effect that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed, the mortgagee shall be entitled to reasonable notice before payment or tender of such money.”
22. Issue about extinguishment of the right of redemption by an act of the party is explained by the Hon'ble Supreme Court in the case of Narandas Karsondas versus S.A. Kamtam and another, (1977) 3 SCC 247. In the said judgment, the Hon'ble Supreme Court has held in para 30, 31,33, 34 and 35 as under:
“30. The principal question in this appeal is whether the right to redemption has been extinguished by any act of the parties. The English decisions are based on the provisions of the Law of Property Act, 1925. In England sale is effected by the contract of sale, and in India an agreement for sale is not a sale or transfer of interest. In England, a mortgagee gets an equitable interest in the property. Under the English doctrine a contract of sale transfers an equitable estate to the purchaser. The Court does not assist the mortgagor by granting him a remedy unless there is collusion on the part of the mortgagee. In India there is no equity or right in property created in favour of the purchaser by the contract between the mortgagee and the proposed purchaser.
31. In India, there is no distinction between legal and equitable estates. The law of India knows nothing of that distinction between legal and equitable property in the sense in which it was understood when equity was administered by the Court of Chancery in England. Under the Indian law, there can be but one owner that is, the legal owner. See Rani Chhatra Kumari v. Mohan Bikram Shah [(1931) 58 IA 279:AIR 1931 PC 196]
33. In India, the word "transfer" is defined with reference to the word "convey". The word "transfer" in English law in its narrower and more usual sense refers to the transfer of an estate in land. Section 205 of the Law of Property Act in England defines: "Conveyance" includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument. The word "conveys" in section 5 of the transfer of Property Act is used in the wider sense of conveying ownership.
34. The right of redemption which is embodied in section 60 of the Transfer of Property Act is available to the Mortgagor unless it has been extinguished by the Act of parties. The combined effect of section 54 of the Transfer of Property Act and section 17 of the Indian Registration Act is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a Mortgage Deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale.
35. The mortgagor's right to redeem will survive until there has been completion of sale by the mortagee by a registered deed. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served on the mortgagor. Further section 69(3) of the Transfer of Property Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemption.”
23. In the present case, there is no document for extinguishment of rights of redemption of the plaintiffs. What is relied on by learned advocate for the appellant is condition provided in the deed itself. Such condition could not be read as separate legal act on the part of the plaintiffs for the purpose of relinquishment or extinguishment of the right of redemption. Therefore, when there is no separate registered agreement executed by the plaintiffs for the purpose of relinquishment or extinguishment of the right of redemption of the mortgagor, condition provided in the deed at Exh.30 cannot be read and taken as extinguishment of the rights of the plaintiffs. Such condition is held to be clog on equity of redemption of the mortgage. Therefore, I see no reason to interfere with such findings recorded by the Courts below.
24. In view of the above, I do not find that there was any perversity in the consideration of the evidence by both the Courts below as suggested in the second substantial question of law raised at the instance of the appellant. So far as third substantial question of law as regards limitation is concerned, I have already discussed above that since the transaction itself is held to be transaction with conditional sale and since the suit was filed within a period of 30 years, the suit was also not barred by law of Limitation.
25. In view of the above, this appeal deserves to be dismissed. Accordingly, the Appeal is dismissed. Interim relief,if any, stands vacated forthwith.
26. Record and proceedings be sent back to the concerned Trial Court.
omkar Sd/-
(C.L. SONI, J.)