Judgment

MOHAN, J.:- The facts leading to this civil appeal lie in a short compass.

2. The appellant filed Civil Suit No. 1621 of 1966 on the file of the Court of Civil Judge (J.D.) at Baroda. The suit was for redemption of the properties mortgaged under registered document dated 11th December, 1950. The mortgage was executed by the plaintiff in favour of the first defendant by way of conditional sale. The period of redemption was fixed at five years from the date of transaction. The consideration was a sum of Rs. 5,000/-. The first defendant (the first respondent herein) sold a portion of the suit property in favour of the second defendant (the second respondent herein). The appellant had executed a rent note agreeing to pay an annual rent of Rs. 330/- for the premises which represented interest at 6% per annum. The first defendant had made alterations and changes in the property to the detriment of the plaintiff. In spite of the offer of the mortgage amount, the first defendant refused to accept the same and refused to allow the redemption of the properties. Hence the suit.

3. The first defendant filed the written statement to the effect that it was not a mortgage by conditional sale. On the contrary, it was a sale with an option to repurchase within a period of five years. The house in 1958 had fallen down. Thereafter, it was reconstructed by incurring an expenditure of Rs. 13,000/-. In so far as the Option to repurchase had not been exercised within five years, that right was barred and the first defendant had become the owner.

4. The second defendant averred in his written statement that the sale in his favour was with the knowledge of the plaintiff. After he purchased the property he has spent a sum of Rs. 16,000/ -over the two houses. The suit was misconceived.

5. The learned trial Judge held that the transaction was a mortgage by conditional sale in view of the fact that initially there was a relationship of debtor and creditor. Further, title did not pass on the execution of the document in question Accordingly, he passed a preliminary decree for redemption. However, he directed that the cost of improvement be paid by the plaintiff before redemption. In so far as the plaintiff was directed to pay the cost of the improvement, he preferred Civil Appeal No. 345 of 1970 to the District Court at Baroda, while the respondents aggrieved by the preliminary decree for redemption preferred Civil Appeal No. 351 of 1970.

6. Both the appeals were heard together. By common judgment dated 19-4-71 he dismissed Civil Appeal No. 351 of 1970. In the result, he confirmed the finding that the document in question dated 11-12-1950 was only a mortgage by conditional sale.

7. In view of the above, the respondents took up the matter to the High Court of Gujarat in Second Appeal No. 359 of 1971. By judgment dated 10-12-1975 the High Court set aside the concurrent findings of the courts below holding that Ex. 26 was not a mortgage by conditional sale; on the contrary a sale with an option to repurchase. In the result, the suit was dismissed.

8. Thereafter, the special leave petition was moved by the petitioner on 13-7-1976. Leave was granted on 6-10-1976. However, the first respondent, Ghanchi Chimanlal Keshavlal died on 9-10-1980 and his legal heirs were brought on record on 23-3-1984. The sole appellant died on 6-12-1990 and his legal representatives were allowed to be substituted.

9. Mr.P. K. Goswami, learned counsel after taking us through Ex. 26 would urge that the High Court erred in holding the document to be a sale with an option to repurchase. First of all, there was a prior relationship of debtor and the creditor.

10. Secondly, the High Court was wrong in concluding that the accounts between the parties had been completely settled ignoring the fact that there was Ex. 39, the accounts evidencing that such a relationship continued. The next submission of the learned counsel is that merely because of the rights including the right to passage and