VANCHALABAI RAGHUNATH ITHAPE(D)BY LR. vs. SHANKARRAO BABURAO BHILARE(D)BY LRS.&ORS

‘ REPORTABLE’ IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4833 OF 2013 (Arising out of Special Leave Petition (Civil) No.578 of 2005) VANCHALABAI RAGHUNATH ITHAPE (D) BY LR. Appellant(s) VERSUS SHANKARRAO BABURAO BHILARE (D) BY LRS. AND OTHERS Respondent(s) JUDGMENT M.Y. EQBAL, J. Delay condoned. Leave granted. 2. This appeal by special leave is directed against the JUDGMENT judgment and order dated 19.7.2004 passed by the High Court of Judicature at Bombay in Second Appeal No.295 of 1988, whereby the second appeal filed by the plaintiff- appellant was dismissed and the order of the first appellate court was confirmed. The appellant is the legal heir of the original plaintiff/widow who was admittedly the owner of the Page 1 suit property bearing Block No.126 of village Degaon admeasuring 62 R. 3. The facts of the case can be summarized as under:

by Vanchalabai Raghunath Ithape (the original plaintiff - now deceased and represented through her legal representative) in favour of defendant No.1 Shankarrao Baburao Bhilare (the original defendant/respondent No. 1 herein and now represented through his legal representatives) on 12.7.1967 for a consideration of Rs.3,000/-, by which the suit land along with 4 annas share in the mango trees was transferred to defendant No.1 and possession of the same was handed over, with a specific stipulation to the effect that the land JUDGMENT was sold on the condition that after receiving Rs.3,000/- in lump sum within 5 years before end of any Falgun month by the defendant, the land was to be returned to the plaintiff. The plaintiff’s case is that it was a mortgage transaction and the land was to be returned by the original defendant after receiving the said consideration of Rs.3,000/- within 5 years. The plaintiff further alleged that the period of 5 years was 2 Page 2 nominal as there was no condition that after 5 years the sale would become final. According to the plaintiff, till 1978 the defendant was agreeing to redeem the suit property, but

plaintiff issued a notice calling upon defendant to reconvey the suit property after accepting the amount. Upon non- compliance, plaintiff filed a suit being RCS No.226 of 1979 for redemption of the suit property against defendant No.1 and his brothers/relatives as a suit for partition, which also included the suit property, was stated to be pending between them. However, only defendant No.1 contested the suit by filing written statement contending that the transaction in question (Exh.31) is not a mortgage JUDGMENT transaction, but was that of outright sale. He denied of having any relationship of mortgagee and mortgagor between him and the plaintiff. According to him, the plaintiff had sold the suit property to him as per the said sale deed, but only as a concession the period of 5 years was mentioned in the deed to reconvey the said suit property 3 Page 3 and since there was no repayment in 5 years no re- conveyance could be claimed. 5. Considering the pleadings and evidence tendered

originally owned by the plaintiff and after execution of the said deed, possession is with the defendant. On perusing said Exhibit 31, the trial court found it in the nature of the sale deed, but in the last paragraph of the said deed, there is a mention that the said amount of Rs.3,000/- was to be repaid by the plaintiff within the period of 5 years at the end of Falgun, and that at that time the defendant was to accept the said amount and to reconvey the suit land thereafter. Considering the said recital coupled with the evidence of the JUDGMENT defendant and provisions of Section 58(c) of the Transfer of Property Act, 1882, the trial court did not consider it to be a sale transaction and held it to be a mortgage transaction by conditional sale. The trial court also answered the issue “whether defendant No.1 proved that time was the essence of the said contract …” in negative. The suit of the plaintiff for redemption was accordingly decreed by the trial court 4 Page 4 declaring that the plaintiff is entitled to redeem the suit property after paying the amount of Rs.3,000/- to the defendant.

defendant preferred first appeal before the District Judge, Satara, who, after hearing both the parties, allowed the appeal holding that there was no relationship of debtor and creditor between the parties nor it was it the case of the plaintiff that the defendant was known to her before the transaction and thus the transaction in question was an absolute sale with a condition of repurchase, but the plaintiff failed to get the land reconveyed within stipulated period. 7. The plaintiff took exception to the aforesaid JUDGMENT judgment by filing second appeal before the High Court raising several contentions. The High Court dismissed the second appeal mainly relying on the observations made by the first appellate court that admittedly there was no relationship of debtor and creditor between the parties nor was it the case of the plaintiff that the defendant was known to her before the transaction was settled and there was 5 Page 5 nothing on record to show that the said observation was incorrect and thus the document in question was of absolute sale with condition of repurchase. The High Court held that

neither perverse nor illegal and, therefore, no interference was called for in the second appeal under Section 100 of the Code of Civil Procedure. 8. We have heard Mr. Sushil Karanjkar, learned counsel appearing on behalf of the appellant and Mr. Vinay Navare, learned counsel appearing for legal representatives of respondent No.1. 9. Admittedly, the plaintiff filed the suit claiming a decree for redemption of the suit property. According to the JUDGMENT plaintiff, the suit land was mortgaged by her to the original defendant for the mortgaged amount of Rs. 3,000/-; a period of five years mentioned in the sale deed is nominal; and in fact it was agreed between the plaintiff and the defendant that whenever the plaintiff repay the said amount of Rs. 3,000/-, defendant No.1 was to take back the said amount and redeem the suit property. The trial court decreed the 6 Page 6 suit by passing a decree of redemption. The first appellate court reversed the findings recorded by the trial court and allowed the appeal and set aside the judgment and decree of

second appeal. The High Court did not interfere with the findings of fact recorded by the first appellate court. 10. Since the first appellate court has gone into the details of facts and evidence and recorded findings to the effect that the transaction in question was not a mortgage but contract sale, we would refer some of the findings recorded by the first appellate court. Paragraphs 19, 20, 25, 26 and 29 of its judgment are worth quoting herein: “19. Admittedly the plaintiff is a widow but she has adopted her grand son. Rajaram stays at Malgaon. Both the plaintiff and Rajaram have admitted that they were in need of money, not only to purchase another land at Malgaon but the amount was also necessary for payment of the Society debts of Rajaram. In case of mortgage as well as sale transaction it is quite possible that for the necessity alienation takes place. So by itself these two circumstances would not weigh in favour of the plaintiff or the defendant. It is admitted that with the consideration JUDGMENT 7 Page 7

20. Apart from the term incorporated in Exh.31, it is the contention of the plaintiff that a separate document was executed by the defendant covering the suit transaction. That document according to the plaintiff was taken back by the defendant at the time of Akshya Tritiya of 1979, stating that it was required for the partition suit between the brothers. A bare perusal of different stages of the suit indicate that from time to time the plaintiff has tried to make improvements in her story. The defendant has flatly denied that there was any other document executed on the date of the sale. For about 11 years after the transaction the plaintiff was quite silent. In the plaint, it is mentioned that after 1978, the defendant was ready to abide by the terms but later he avoided the transaction. In this connection it may be noted that in the notice Exh.32, issued by the plaintiff, there is absolutely no mention of the fact that any such document had been executed much less, that it was taken by the defendant on the Akshya tritiya day. No doubt, it is an admitted fact that defendant No.2 had filed the Civil suit for partition of the JUDGMENT 8 Page 8

xxx xxx xxx 25. Thus, ultimately what remains is the fact that the sale deed Exh.31 contains the provision of re-conveyance. Whether by itself is it sufficient to conclude that the transaction was a mortgage transaction. Not only the sale deed is drafted a pure and simple sale deed but the plaintiff has tried to make out inconsistent case. If it had been agreed that the transaction was to be a mortgage, normally the Bond writer would have styled the document as (conditional sale deed). Rajaram states that the defendant No.1 was to enjoy the land in lieu of interest. Neither any such case is made out nor there any clue from the recitals in the document. Entire blot is tried to be put on the Bond writer by stating that he prompted that some period should be mentioned. In fact the suggestion made to the defendant is that, the bond writer Sapkar is his friend and he gets document written from Sapkal, thereby suggesting that Sapkal had written some terms not consistent with the agreement between the parties. It is JUDGMENT 9 Page 9

26. Admittedly, there was no relationship of debtor and creditor between the parties, nor is it the case of the plaintiff that the defendant was known to her or Rajaram before the transaction was settled. The document does not purport to create any relationship of landlord and tenant. The shorter period in which the land was to be got re-conveyed is an indication of absolute sale with a concession to the vendor to get back the land in the stipulated period. In the R of R also in the other right column there is reference to this term and the period is of 5 years only. If there was any other document, it is not the case of the plaintiff that it was shown to the village officer. Naturally we have to proceed on the basis that the agreement of re-conveyance was an integral part of the sale deed Exh.31. No parole evidence to vary the terms of the same can be allowed. It is quite easy to make such a case to get over the obstacle in the way of the plaintiff but unless the circumstances justify it cannot be believed. JUDGMENT 1 Page 10 xxx xxx xxx

11. At the very outset, we are of the view that the findings recorded by the lower appellate court are pure JUDGMENT findings of fact and hence the High Court has rightly refused to interfere with those findings in second appeal under Section 100 of the Code of Civil Procedure. However, we would like to discuss some of the relevant points on the basis of those findings recorded by the first appellate court. The only question for consideration befpre us and which has rightly been considered by the first appellate court, is as to 1 Page 11 whether the transaction in question is mortgage transaction or it is a sale transaction with a condition of repurchase. 12. The document in question has been described as

possession was handed over to the defendant. The relevant portion of the Sale Deed is extracted hereinbelow:- “Thus the sale land along with the fixtures and all rights is being sold to you with all rights along with its possession. Thus you may cultivate the same. Hence forth I or my heirs shall not be having any right over the same and you have become the owner of the said land. Any obstruction would be removed at my cost. I have received the consideration for the same for which there is no complaint. If Rs. 3000/- is paid within 5 years at the end of any Falgun month at that time you should accept the said amount and return the land to me and on this condition the land is being sold to you.” JUDGMENT 13. Section 58(a) and (c) of the Transfer of Property Act, 1882, needs to be reproduced here:- “ 58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed” defined. -- (a) A mortgage is the transfer of an interest 1 Page 12

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money, and the instrument (if any) by which the transfer is effected is called a mortgage- deed. (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 JUDGMENT 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 mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: 1 Page 13 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.” 14. From a perusal of the aforesaid provisions especially, Section 58(c), it is evidently clear that for the purpose of bringing a transaction within the meaning of `mortgage by conditional sale’, the first condition is that the mortgagor ostensibly sells the mortgaged property on the condition that on such payment being made, the buyer shall transfer the property to the seller. Although there is a presumption that the transaction is a mortgage by conditional sale in cases where the whole transaction is in JUDGMENT one document, but merely because of a term incorporated in the same document it cannot always be accepted that the transaction agreed between the parties was a mortgage transaction. 15. In the case of Williams vs. Owen , 1840, 5 My.&Cr.303 = English Reports 41 (Chancery) 386, a similar 1 Page 14 question arose for consideration as to whether a conveyance by the plaintiff’s father to the defendant was to be considered as having been a mortgage as contended by the

at a given date. It was held that in a mortgage the debt subsists and a right to redeem remains with the debtor, but a sale with a condition of repurchase is not a lending and borrowing arrangement; no debt subsists and no right to redeem is reserved by the debtor, but only a personal right to purchase. This personal right can only be enforced strictly according to the terms of the deed and at the time agreed upon. 16. In the instant case, the trial court committed grave JUDGMENT error in construing the document and erroneously held that the transaction is mortgage and hence, the plaintiff is entitled to decree of redemption. 17. In the case of Vasudeo Bhikaji Joshi v. Bhau Lakshman Ravut & Others reported in ILR 1897 XXI 528 a Bench (comprising Sir C. Farran, Kt., Chief Justice and Mr. 1 Page 15 Justice Parsons) of the High Court at Bombay considered a similar question in which the fact was that the plaintiffs sued to redeem an alleged mortgage made in 1823 by their

mortgage recited a previous mortgage under which the mortgagee Gopal Gokhale was in possession, and it stated that a sale had been contemplated, but the parties could not agree as to price, but that they had now settled it at Rs. 125/- and the amount due on the mortgage at Rs. 200/-, and that it was agreed that if within four years the mortgagor paid Rs. 125/- with interest, he should get back the land; if not, that the land should be the absolute property of Gokhale. On these facts, the Court held that:- JUDGMENT “This was not a mortgage but a sale. It was an agreement which put an end to the previously existing mortgage. A mere stipulation for repurchase does not make a transaction a mortgage. To make a mortgage there must be a debt, and here there was no debt, nor was the property here conveyed as security.” 1 Page 16 18. In the case of Tamboli Ramanlal Motilal (Dead) by LRs. v. Ghanchi Chimanlal Keshavlal (Dead) by LRs. & Another, AIR 1992 SC 1236 , the facts of the case

transfer was executed and the property was handed over. At the same time, the document proceeded to state that the property is sold conditionally for a period of five years and possession is handed over. The document stated: “Therefore, you and your heirs and legal representatives are hereafter entitled to use, enjoy and lease the said houses under the ownership right.” The further clause in the document was to the effect that the executant shall repay the amount within a period of five years and in case he fails JUDGMENT to repay neither he nor his heirs or legal representatives would have any right to take back the said properties. The last important clause was that after the period of five years the transferee would have a right to get the municipal records mutated in his name and pay tax. On these facts, this Court held that:- 1 Page 17

JUDGMENT 17. What does the executant do under the document? He takes a sum of Rs. 5,000/- in cash. The particulars are ( a ) Rs 2,499/- i.e. Rs 899/- by mortgage of his house on 27-1-1944 and ( b ) Rs. 1,600 by a further mortgage on 31-5- 1947 totalling to Rs 2,499/-. Thereafter, an amount of Rs 2,501/- in cash was taken from the transferee. The purpose was to repay miscellaneous debts and domestic expenses and business. It has to be carefully noted that this amount of Rs 5,000/- was not taken as a loan at all. 1 Page 18

This Court, therefore, held that the document was not a mortgage by conditional sale, rather the document was transfer by way of sale with a condition to repurchase. JUDGMENT 19. In the instant case, the alleged sale document was executed in the year 1967 transferring the suit property by way of sale subject to one stipulation/condition that on receiving the sale amount of Rs. 3,000/- within five years the land was to be returned to the plaintiff-vendor. It is also not in dispute that after transfer of the land the defendant- 1 Page 19 respondent No. 1 came in possession and used & enjoyed the suit property as an absolute owner. It was only after 11 years that the plaintiff-appellant filed the suit alleging that

defendant/respondent No.1 herein with a condition to reconvey the land. 20. In the aforesaid premises, we do not find any reason to interfere with the findings recorded by the first appellate court. As stated above, the High Court has rightly not interfered with the findings of fact recorded by the first appellate court. JUDGMENT 21. For the aforesaid reasons, we do not find any merit in this appeal which is, accordingly, dismissed, but without any costs. …………………………….J. (P. Sathasivam) …………………………….J. (M.Y. Eqbal) New Delhi, 2 Page 20 July 1, 2013. JUDGMENT 2 Page 21