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J.C.SHAH, K.SUBBA RAO, P.B.GAJENDRAGADKAR
Bhaskar Waman Joshi – Appellant
Versus
Shrinarayan Rambilas Agarwal – Respondent
What is the true character of Ex. D-1: whether the deed constitutes a mortgage by conditional sale or an absolute sale with a reconveyance condition? What is the admissibility and role of extrinsic evidence (contemporaneous and subsequent conduct) in interpreting whether a sale deed is a mortgage by conditional sale? How does the court determine whether a transaction labeled as a sale with a repurchase clause should be classified as a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act and Section 92 of the Evidence Act?
Key Points: - The real character of Ex. D-1 is to be determined from the deed provisions read with surrounding circumstances, not solely the form of the document. (!) - A mortgage by conditional sale requires a debtor-creditor relationship created by the transfer of property as security, even if the deed is ostensible sale; form is not decisive. (!) (!) - Proviso and legislative approach: a condition must be embodied in the document effecting the sale to constitute a mortgage by conditional sale; but the intention is determined from language and surrounding facts. (!) (!) - Oral evidence of intention is not admissible to interpret covenants, but surrounding circumstances and contemporaneous conduct are admissible; subsequent conduct is inadmissible. (!) (!) - The High Court held the transaction was a mortgage by conditional sale; the Supreme Court affirmed, concluding Ex. D-1 was indeed a mortgage. (!) (!)
Judgment
SHAH, J.: This is an appeal against the decree of the High Court of Judicature of Nagpur in Civil Appeal No. 10 of 1954 reversing the decree passed by the Second Additional District Judge, Amravati in Civil Appeal No. 5-A of 1954. The High Court has by its decree directed the court of first instance to pass a decree for redemption.
2. The appeal raises a question as to the true effect of a deed dated September 10, 1931, executed by Shri Narayan Rambilas Aggarwal and his two sons Sadan Gopal and Murli Dhar in favouur of two brothers Bhaskar Waman Joshi and Trimbak Waman Joshi. The deed ostensibly conveys an absolute title to certain properties described therein. The transferors under the deed contend that the property transferred by the deed was intended to be mortgaged under a deed of conditional sale. The transferees contend that by the deed an absolute conveyance of the property thereby conveyed was intended and that the conveyance was subject to a condition to repurchase to be exercised within a period of five years from the date of the deed. The court of first instance dismissed the suit holding that the 303 transaction in the deed dated September 10, 1931, was of the at
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