RAMVILAS (DEAD) THR. LRS. & ANR. Vs. KARIM KHAN & ANR.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 2078 of 2008, Judgment Date: Dec 01, 2016
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2078/2008
RAMVILAS (DEAD) THR. LRS. & ANR. Appellant(s)
VERSUS
KARIM KHAN & ANR. Respondent(s)
J U D G M E N T
R. Banumathi, J.
1. The present appeal arises out of the judgment of the High Court of
Judicature of Madhya Pradesh, Jabalpur: Bench at Gwalior in Second Appeal
No.374 of 1998 dated 22.06.2005, confirming the findings of the Courts
below that the Sale Deed executed in favour of the appellants-defendants
was only a mortgage as a security for repayment of the loan taken by the
1st respondent-plaintiff.
2. It is not necessary for us to refer to the pleadings of the 1st
respondent-plaintiff and the appellants-defendants as they are referred in
detail in the judgments of the Courts below.
3. Challenging the concurrent findings of the Courts below, the learned
counsel for the appellants-defendants Mr. Puneet Jain submitted that
whenever a conveyance of the property by a Sale Deed is accompanied by a
separate document, it has to be taken as re-conveyance and it was not a
mortgage and the Courts below erred in holding that the Sale Deed dated
14.06.1972 in favour of the appellants-defendants was a security for the
loan taken by the 1st respondent-plaintiff. Learned counsel further
submitted that the Sale Deed was accompanied by an Agreement Exhibit P/1
dated 14.06.1972 under which the 1st respondent-plaintiff had agreed to pay
an amount of Rs.5000/- by 14.06.1973, which the 1st respondent-plaintiff
did not comply with, and subsequent Agreement Exhibit P/2 dated 05.06.1974
was executed under which the 1st respondent-plaintiff paid an amount of
Rs.6700/-; and after a lapse of about 17 years, the 1st respondent-
plaintiff filed the suit for declaration that the Sale Deed was null and
void. It was further submitted that in the absence of a prayer for
cancellation of the Sale Deed dated 14.06.1972, the suit filed by the 1st
respondent-plaintiff ought to have been dismissed, more so, when the suit
was filed nearly after a gap of 17 years from the date of execution of the
Sale Deed i.e 14.06.1972. In support of his contention, learned counsel
placed reliance on a number of judgments of this Court reported as
Bishwanath Prasad Singh v. Rajendra Prasad and Anr. - (2006) 4 SCC 432, Raj
Kishore (Dead) by LRs. v. Prem Singh and Ors. - (2011) 1 SCC 657 and Gauri
Shankar Prasad and Ors. v. Brahma Nand Singh - (2008) 8 SCC 287.
4. On the other hand, taking us through the judgments of the Courts
below, learned counsel for the 1st respondent-plaintiff submitted that
based on the oral and documentary evidence, the Courts below rightly
recorded concurrent findings of fact that Exhibit D/1 Sale Deed dated
14.06.1972 was executed as security for the loan taken by the 1st
respondent-plaintiff. Learned counsel for the 1st respondent-plaintiff has
drawn our attention to the finding of the trial Court to submit that at the
relevant point of time, the value of the land under the Sale Deed dated
14.06.1972 would have been more than Rs.15000/- and an inadequate
consideration of Rs.3000/-, as stated in Exhibit D/1 Sale Deed by itself
would show that it was executed only as a security for the loan and it was
never the intention of the parties to sell the land. It was submitted that
the concurrent findings recorded by the Courts below do not suffer from
infirmity warranting any interference.
5. We have carefully considered the rival submissions and perused the
impugned judgment and the material on record. In the decision relied upon
by the learned counsel for the 1st respondent-plaintiff reported as Bhaskar
Waman Joshi (D) and Ors. v. Shrinarayan Rambilas Agarwal (D) and Ors. - AIR
1960 SC 301, this Court has succinctly considered the question as to
whether a transaction ostensibly of a sale may be regarded as a mortgage
and held that it is one of intention of the parties to be gathered from the
language of the deed interpreted in the light of the surrounding
circumstances.
6. We can usefully refer to the relevant portion of the judgment which
reads as under:
“7.The proviso to this clause was added by Act XX of 1929. Prior to the
amendment there was a conflict of decisions on the question whether the
condition contained in a separate deed could be taken into account in
ascertaining whether a mortgage was intended by the principal deed. The
Legislature resolved this conflict by enacting 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 effects or purports to effect the sale.
But it does not follow that if the condition is incorporated in the deed
effecting or purporting to effect a sale a mortgage transaction must of
necessity have been intended. 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 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 transfer of a relation of mortgagor and the 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 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 an ostensible sale of the property.
As pointed out by the Judicial Committee of the Privy Council in
Narasingerji Gyanagerji v. P. Parthasaradhi, 51 Ind App 305: (AIR 1924 PC
226), the circumstance that the transaction as phrased in the document is
ostensibly a sale with a right of repurchase in the vendor, the appearance
being laboriously maintained by the words of conveyance needlessly
iterating the description of an absolute interest or the right of
repurchase bearing the appearance of a right in relation to the exercise of
which time was of the essence 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 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. 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 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 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.”
7. In the light of the above well settled principles, we may now
consider Exhibit D/1 Sale Deed and Exhibit P/1 Agreement both dated
14.06.1972. In Exhibit D/1 Sale Deed no condition is incorporated
indicating that it would constitute mortgage by that conditional sale. It
is clear that the 1st respondent-plaintiff had never intended to sell the
property to the appellants-defendants. As rightly pointed out by the Courts
below, in Exhibit P/1 Agreement dated 14.06.1972, it is clearly stated that
if 1st respondent-plaintiff pay back Rs.5000/- by 14.06.1973, then the Sale
Deed would be cancelled and 1st respondent-plaintiff would get back the
land sold to the appellants-defendants. As held by the Courts below, had
it been the intention of the parties to sell the property, the parties
would not have agreed for return of the land on payment of Rs.5000/- by
14.06.1973.
8. The judgments cited by learned counsel for the appellants hold that
for a transaction to constitute mortgage by conditional sale, it is
necessary that the condition is embodied in the document that purports to
effect the sale deed. In Raj Kishore (Dead) by LRs. v. Prem Singh and
Ors. - (2011) 1 SCC 657, it was held as under:
“15. A bare reading of the above would show that for a transaction to
constitute mortgage by conditional sale it is necessary that the condition
is embodied in the document that purports to effect the sale. That
requirement is stipulated by the proviso which admits of no exceptions.
...…...............
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18. This Court in K. Simrathmull case observed: (AIR p.1183, para 4)
“4. The sale deed, the deed of reconveyance Ext.A-1 and the rent note Ext.B-
1 were undoubtedly parts of the same transaction. The plea of the plaintiff
that the sale deed Ext.A-1 constituted a transaction of mortgage by
conditional sale is inadmissible, because the sale deed and the covenant
for reconveyance are contained in separate documents.”
19. The finding of the High Court as to the legal effect of the transaction
of sale followed by an agreement for retransfer of the property is not,
therefore, legally sound.”
9. As pointed out earlier, Exhibit D/1 Sale Deed executed by the 1st
respondent-plaintiff in the instant case does not embody any condition as
stipulated in Section 58 (e) of the Transfer of Property Act, 1882. On
facts and evidence, Courts below rightly held that Exhibit D/1 Sale Deed
would not constitute a mortgage by conditional sale.
10. On the basis of oral and documentary evidence, the Courts below
recorded that Exhibit D/1 Sale Deed dated 14.06.1972 and Exhibit P/1
Agreement dated 14.06.1972 having been executed on the same day and both
ought to be read together. The Courts below have also recorded a
concurrent finding of fact that Exhibit D/1 Sale Deed was executed only as
a security for the loan and it was never the intention of the 1st
respondent-plaintiff to convey the suit property. Since 1st respondent-
plaintiff has paid back the loan amount i.e. Rs.6,700/- as is evident from
the subsequent Agreement Exhibit P/2 dated 05.06.1974, the Courts below
rightly recorded the concurrent findings of fact that Exhibit D/1 Sale Deed
is not binding on the 1st respondent-plaintiff. Once repayment was made,
the 1st respondent-plaintiff was entitled to the declaration as prayed for.
11. Yet another reason could be pointed out for affirming the impugned
judgment of the High Court. It has been held by the trial Court that at
the time of selling the suit property the extent was more than 10 Bighas
i.e. 1/3rd share of 1st respondent-plaintiff in 2.856 hectares of the total
land. Referring to the oral and documentary evidence of 1st respondent-
plaintiff's witness Ajay Singh, the trial Court recorded a finding that at
the time of sale of the land in 1972, the market value of the land in
Padariya was Rs.2000/- per Bigha and at the time of the sale, the value of
the property would have been not less than Rs.15000/-. The inadequacy of
the sale consideration stated in Exhibit D/1 Sale Deed is yet another
circumstance to indicate that the 1st respondent-plaintiff could not have
intended to sell the property to the appellants-defendants.
12. Having regard to the concurrent findings of the Courts below, we do not
find any reason to interfere with the impugned judgment.
13. Accordingly, the appeal is dismissed. The parties shall bear their own
costs.
…...............J.
[R.K. AGRAWAL]
…...............J.
[R. BANUMATHI]
December 01, 2016;
New Delhi.
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