Full Judgment Text
REPORABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7400 OF 2008
(Arising out of SLP (C) No.2227 of 2007)
C. Cheriathan … Appellant
Versus
P. Narayanan Embranthiri & Ors. … Respondent
J U D G M E N T
S.B. Sinha, J.
1. Leave granted.
2. Interpretation of a deed dated 27.10.1969 as to whether the same is
one of absolute conveyance with a condition of repurchase or a mortgage
with conditional sale, is the question involved in this appeal which arises
out of a judgment and order dated 1.11.2006 passed by the High Court of
Kerala in Second Appeal No.290 of 2003 setting aside a judgment and
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decree dated 28.11.1988 passed by the Munsif’s Court, Manjeri in Original
Suit No.458 of 1984.
3. Respondent herein was owner of the land in question. He took the
said land on lease with one Cheriathan jointly from one Gopalan Nair by
reason of a deed of conveyance dated 21.12.1967. They made
improvements. They constructed buildings thereupon. Half of the said
leasehold rights was sought to be conveyed in favour of the appellant by
reason of the said deed. Indisputably, the first respondent executed a deed
of assignment in favour of the V. Devaki Amma in respect of his half share
for a consideration to repurchase the same by a document dated 27.10.1969.
She, by a deed of assignment dated 2.3.1976, transferred her right, title and
interest being half of the property to the appellant and, thus, according to
him, he became the full owner thereof.
Indisputably again, the appellant was granted a purchase certificate
under the Kerala Land Reforms Act in respect of the entire property in the
year 1978. First Respondent did not take any step to set aside the said
certificate for a long time. Only in the year 1984, he filed a suit for
redemption of mortgage and partition in respect of his half share in the
property alleging that the said deed dated 27.10.1969 represented only a
loan transaction. Appellant herein, however, took the usual stand that the
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said deed is in effect and substance a deed of sale with a condition to
repurchase.
In view of the pleadings of the parties, several issues were framed;
issue No.4 being :
“4. Whether the transaction involved in
document No.276/1970 is a mortgage?”
3. On construction of the document in question, the learned Trial Judge
opined that the transaction represented a sale. On an appeal having been
preferred thereagainst by the respondent, the First Appellate Court held that
the transaction was a mortgage by conditional sale and as the respondent did
not exercise his option to repurchase the property within a period of three
years, the said sale has become absolute.
Respondent filed a second appeal before the High Court which by
reason of the impugned judgment has been allowed interpreting the said
document to be a deed of mortgage and consequently holding that the suit
for partition and redemption was maintainable.
4. Mr. Krishnamoorthy, learned senior counsel appearing on behalf of
the appellant, would submit that the High Court committed a serious error in
passing the impugned judgment in so far as it failed to construe the
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provisions of Section 58 of the Transfer of Property Act in its proper
perspective. It was urged that apart from the fact that the value of the
property could not have been assessed at Rs.6,800/-, the High Court ignored
that only half share thereof was transferred. It furthermore failed to take
into consideration that no evidence had been brought on record to establish
the relationship of creditor and borrower between the parties. Possession
having been delivered, permission to attorn having been given and no
interest having been stipulated, it was submitted, the High Court should
have construed the document to be one of absolute sale with a condition of
repurchase.
5. Learned counsel appearing on behalf of the respondent No.1, on the
other hand, would contend that as appellant did not prefer any appeal
against the judgment and order passed by the First Appellate Court, the
contentions raised before us should not be permitted to be raised. For the
said purpose, it was contended, even the provisions of Order 41 Rule 33 of
the Code of Civil Procedure would not be applicable.
6. Before embarking upon the rival contentions raised before us, we may
notice the relevant portions of the deed in question which are (as translated
by the parties) as under :
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“The scheduled property was outstanding (sic) on
lease with Gopalan Nair from whom by Document
No.2034 of 1967 myself and Cheriyathan jointly
got an assignment of lease hold right and are
enjoying the same by effecting improvements and
buildings and I humbly (sic) conditionally assign
my one half right over the property with
possession and with the improvements thereon
with a stipulation that within a period of 3 years
from today, I shall repurchase the same at my
expense. I have received the sale consideration of
Rs.2,000/- in cash from you and I hereby
relinquish all my ½ right over the scheduled
property and hence by this assignment from today
till the period is over you are entitled to enjoy the
schedule property as a sale by efflux of time and
thereafter as an absolute sale. You will be entitled
to directly attorn to the landlord by paying rent
and hereafter I will have no right to deal with the
property in any manner.
Original sale deed is not handed over as it is a
joint document and I hereby assure you that there
are no encumbrances created in respect of my half
share.”
7. Whether a document is a mortgage by conditional sale or a sale with a
condition of repurchase is a vexed question.
Section 58(c) of the Transfer of Property Act, 1882 reads thus :
“ Section 58 - ”Mortgage”, “mortgagor”,
“mortgagee”, “mortgage-money” and “mortgage-
deed” defined –
(a) …
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(b) …
(c) Mortgage by conditional sale. - Where, the
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
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,
the transaction is called a 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
the sale.”
8. One of the ingredients for determining the true nature of transaction,
therefore, is that the condition of repurchase should be embodied in the
document which effects or purports to effect the sale. Indisputably, the said
condition is satisfied in the present case.
9. A document, as is well known, must be read in its entirety. When
character of a document is in question, although the heading thereof would
not be conclusive, it plays a significant role. Intention of the parties must be
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gathered from the document itself but therefor circumstances 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. [See P.S. Ramakrishna Reddy v.
M.K. Bhagyalakshmi & Anr. [(2007) 10 SCC 231].
10. In State Bank of India & Anr. v. Mula Sahakari Sakhar Karkhana Ltd.
[(2006) 6 SCC 293], it was held :
“22. A document, as is well known, must
primarily be construed on the basis of the terms
and conditions contained therein. It is also trite
that while construing a document the court shall
not supply any words which the author thereof did
not use.”
11. The deed in question is said to be a deed of sale. The source of title
has been disclosed. What was sought to be conveyed thereby was the
leasehold interest. Assignment was in respect of the vendor’s one half share
in the property. Possession of the properties had been handed over. A
stipulation was made therein that the vendor shall repurchase the same at his
expenses within a period of three years from the date of execution thereof.
He acknowledged receipt of sale consideration of Rs.2,000/- in cash. The
vendor relinquished all his right over the scheduled property. However, the
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nature of assignment was sought to be clarified as the words “till the period
is over” and “efflux of time and thereafter as an absolute sale” are used.
It is significant that thereby the vendee in terms of the said instrument
became entitled to attorn to the landlord by paying stipulated rent evidently
as a tenant and not as a mortgagee. The vendor accepted that he would have
no right to deal with the property in any manner. The reason why the
original deed of sale had not been handed over was also explained.
Declaration has been made that no encumbrances had been created in
respect of the vendor’s share in the property.
12. The High Court in its judgment proceeded on the basis that the value
of the property was Rs.6,800/- and, thus, consideration of Rs.2,000/- ex
facie was insufficient. What was not noticed was that by reason of the said
deed only half of the right of the vendor was sought to be assigned. It is
also not in dispute that the appellant had already acquired the right, title and
interest in respect of the other half of the property. As the word
‘repurchase’ has been used, the respondent was aware that he has to
repurchase the transferred property. What would be the consideration for
repurchase has not been stated. Ordinarily, in a case where deed of
mortgage is executed with a condition of repurchase, the amount of
consideration remains the same.
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We would, however, assume that the intention of the parties was that
amount of consideration would remain the same. The time for repurchase,
however, has been specified, namely, three years. No evidence has been
brought on record to show that any relationship of creditor and borrower
had come into being. As indicated hereinbefore, appellant had been
permitted to attorn to the landlord.
13. So as to enable us to determine the vexed question, it may be
profitable to notice a few decisions of this Court on some of which the High
Court relied upon.
In Seth Gangadhar v. Shankar Lal & Ors. [1959 SCR 509] whereupon
reliance has been placed by the High Court, it was admitted that the
transaction was that of a mortgage and Section 60 of the Transfer of
Property Act was applicable. It is in that view of the matter, this Court held
that the right of redemption could not have been taken away. The Court
held that therein the term of mortgage was 85 years and there existed no
stipulation entitling the mortgagor to redeem during that term which had not
expired. The document in question was held by this Court to be containing
a stipulation creating a clog on the equity of redemption which was found to
be illegal. Such is not the case here.
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In Pomal Kanji Govindji & Ors. v. Vrajlal Karsandas Purohit & Ors.
[(1989) 1 SCC 458], this Court held that whether a clause used in a
transaction of mortgage amounted to clog on the equity of redemption is a
mixed question of law and fact. In that case, there existed a provision for
payment of interest at the rate of half per cent per annum payable on the
principal amount at the end of the long period which led this Court to
conclude that there was a clog on equity on redemption. Furthermore, in
that case, materials were brought on record to show that the transaction was
entered into by way of security for the loan obtained
In Shivdev Singh & Anr. v. Sucha Singh & Anr. [(2000) 4 SCC 326],
this Court was dealing with a case of anomalous mortgage. Therein the
mortgage was to remain operative for a period of 99 years. It was in that
situation, this Court opined that the original owner having been in great
financial difficulty, the mortgagees took advantage of the said fact and
incorporated a 99 year’s term which constituted a clog on the equity of
redemption.
In this case, the term is only for a period of three years which is
reasonable.
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We may notice that in Bishwanath Prasad Singh v. Rajendra Prasad &
Anr. [(2006) 4 SCC 432], upon taking notice of a large number of decisions,
this Court observing that therein no stipulation had been made that the
vendee could not transfer the property and his name was mutated, held :
“ 18. We have noticed hereinbefore that the nature
of deed was stated to be an agreement
(ekrarnama), the nature of the document was not
stated to be “bai-ul-wafa”, the relevant clause
whereof reads as under:
“Because the vendor today of this date has
sold the property of this deed to the vendee
through registered agreement on the
vaibulwafa condition and during this period
the vendor and the vendee have already
agreed that this case will remain as
vaibulwafa and as per the said sarait, the
vendor of this deed agrees that the vendee
of this deed or his successors or heirs
whenever will pay the consideration amount
of this deed amount to Rs.3000 (three
thousand) within 23 months from today i.e.
up to the month of June 1978 after
harvesting of the crops i.e. paddy or rabi,
then I the vendor or my legal heirs or my
successors after receiving the said
consideration amount of Rs.3000 will
execute the sale deed pertaining to the
property mentioned in column 5 of this deed
in favour of the vendee or his legal heirs or
successor.”
19. It is of some significance to note that therein
the expressions “vendor”, “vendee”, “sold” and
“consideration” have been used. These
expressions together with the fact that the sale
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deed was to be executed within a period of 23
months i.e. up to June 1978, evidently the
expression “vaibulwafa” as a condition was
loosely used.
20. Furthermore, the agreement was also executed
for a fixed period. The other terms and conditions
of the said agreement (ekrarnama) also clearly go
to show that the parties understood the same to be
a deed of reconveyance and not mortgage or a
conditional sale.”
15. Bishwanath Pratap Singh, it must be placed on record, was
distinguished on facts in Tulsi & Ors. v. Chandrika Prasad & Ors. [(2006) 8
SCC 322], stating :
“ 18. In the instant case, the scribe of the document
was examined. His categorical statement was that
he had been asked by the parties to scribe a deed
of mortgage and not a deed of sale. Respondent 1,
as noticed hereinbefore, in the document itself
categorically stated that he was executing a deed
of mortgage. Indisputably, the amount of stamp
duty was also paid by him. In a case of deed of
sale, ordinarily the transferee pays the stamp duty.
Why such a deviation from the normal practice
was made has not been explained by the appellant.
19. 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 Appellant 1 was
to maintain the property in its present condition.
Of course, permission for reconstruction of the
structure was granted. But, if the intention of the
parties was to transfer the property absolutely, no
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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 the 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.”
16. In Manjabai Krishna Patil (D) by LRs. v. Raghunath Revaji Patil &
Anr. [2007 (3) SCALE 331], this Court opined that no relationship of debtor
and creditor having come into being and no security had been created, the
instrument in question was a deed of sale with a condition of repurchase.
17. Another important factor which must be borne in mind in construing
the instrument in question is that appellant was already the owner in respect
of half of the property. As the parties were related to each other, it is
difficult to conceive that the other half of the property would be subject to
mortgage and not a sale. The intention of appellant that by reason of the
said transaction dated 27.10.1969, he would become the owner of the entire
property was obvious.
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18. Submission of the learned counsel that contentions raised before us
on behalf of the appellant were not available as the finding of the learned
First Appellate Court to the effect that the transaction evidenced on
mortgage with conditional sale does not appeal to us. Despite arriving at
the said finding, the appeal of respondent was dismissed and in that view of
the matter, it was not open to appellant to prefer an independent appeal
thereagainst. Order 41 Rule 22 of the Code of Civil Procedure, therefore,
had no application. It is in the aforementioned situation, it was legally
permissible for the appellant to support the decree passed in his favour by
attacking the finding of the First Appellant Court which were made against
him. Order 41 Rule 33 of the Code of Civil Procedure, therefore, was
available in this case. In S. Nazeer Ahmed v. State Bank of Mysore & Ors.
[(2007 (11) SCC 75], this Court held :
“Order 41 Rule 33 enables the appellate court to
pass any decree that ought to have been passed by
the trial court or grant any further decree as the
case may require and the power could be exercised
notwithstanding that the appeal was only against a
part of the decree and could even be exercised in
favour of the respondents, though the respondents
might not have filed any appeal or objection
against what has been decreed.”
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19. For the reasons aforementioned, the impugned judgment cannot be
sustained. It is set aside accordingly. The appeal is allowed. In the facts
and circumstances of the case, however, there shall be no order as to costs.
……………………………….J.
[S.B. Sinha]
..…………………………..…J.
[Cyriac Joseph]
New Delhi;
December 18, 2008