2005 Supreme(SC) 634

2005(3) Supreme 508
Supreme Court of India
(From Bombay High Court)
H.K. Sema & S.B. Sinha, JJ.
Umabai & Anr. —Appellants
versus
Nilkanth Dhondiba Chavan (Dead) by Lrs. and Anr. —Respondents
Civil Appeal No. 2583 of 2005
(Arising out of S.L.P. (Civil) No. 23864 of 2004)
Decided on 13-4-2005
Counsel for the Parties :
For the Appellants : A.S. Bhasme and Sanjay K. Dubey, Advocates.
For the Respondents : A.V. Sawant, Sr. Advocate, S.V. Deshpande and Mrs. Anuradha Rustagi, Advocates.

Important point
Level of a document is not decisive. A true nature of transaction must be determined having regard to the intention of the parties as well as the circumstances attributing thereto as also the wordings used in the document in question.

Headnote:(i) Transfer of Property Act, 1882—Section 58(c)—Specific Relief Act, 1963—Section 16(c)—Suit for specific performance—Dispute as to whether the transaction was one of mortgage or an agreement of sale—Appellant was tenant in the ground floor of the suit premises—First respondent executed a deed of sale in favour of first appellant to repay loan amount—First appellant agreed to reconvey the said property in favour of first respondent on receipt of said sum of Rs. 45,000/- between a period of seven years and nine years—A notice was sent by plaintiff respondents to appellants wherein the transaction was said to be a mortgage—It was contended that first appellant had already received more than Rs. 50,000/- out of the income from the said property by way of rent—Civil suit filed by respondent alleging that the ‘sale deed transaction’ is a ‘mortgage transaction’ and that he was ‘ready to act as per the agreement’—Trial Court dismissed the suit holding that the transaction was one of sale and not of mortgage—Whether the transaction in question was a mortgage by way of conditional sale—(No)—Plea of automatic redemption of mortgage and discharge from debt raised on part of ­respondents cannot stand with a plea of readiness and willingness on his part to perform their part of contract.

       Held :It may be true that level of a document is not decisive. A true nature of transaction must be determined having regard to the intention of the parties as well as the circumstances attributing thereto as also the wordings used in the document in question. In this case, admittedly, two documents were executed on the same day. In view of the express provisions contained in Section 58(c) of the Transfer of Property Act, indisputably the transaction in question was not a mortgage by way of conditional sale. There exists a distinction between mortgage by conditional sale and a sale with a condition of repurchase. 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. There does not exist any debt and no right to redeem is reserved thereby. An agreement to sell confers merely a personal right which can be enforced strictly according to the terms of the deed and at the time agreed upon. Proviso appended to Section 58(c), however, states that if the condition for re-transfer is not embodied in the document which effects or purports to effect a sale, the transaction will not be regarded as a mortgage. (Paras 19 to 21)

       The plaintiff in a suit for specific performance of contract may raise an alternative plea that the transaction is a mortgage by way of conditional sale but he must be ready and willing either to repay the debt or pay the amount of consideration as agreed upon. In the instant case, the First Respondent herein, however, raised a specific plea that he was a debtor and that the deed of mortgage was executed only because the Appellants were not licensed money lenders. He not only approached the competent authority under the Maharashtra Debt Relief Act for a declaration that he was a debtor and stood discharged from his debt, but also in the plaint he sought for a decree for possession of the suit land on the premise that the provisions of the Maharashtra Debt Relief Act were attracted. He even asked for a decree of accounting. (Para 22)

       Reading the plaint as a whole, it becomes evident that the First Respondent principally raised a contention that the transaction was of mortgage and the sale stood redeemed and he was discharged from the debt. He moreover prayed for a decree for accounting, but contended that only in the event, such prayer is not granted, he was ready to pay the defendants the said sum of Rs. 45,000/-. The averments made in the pleadings must be construed reasonably and so read the statement made as regard purported readiness and willingness to pay the stipulated amount to the defendants according to the conditions mentioned in the agreement cannot be read in isolation. (Para 26)

       It is now well-settled that the conduct of the parties, with a view to arrive at a finding as to whether the plaintiff-Respondents were all along and still are ready and willing to perform their part of contract as is mandatorily required under Section 16(c) of the Specific Relief Act must be determined having regard to the entire attending circumstances. A bare averment in the plaint or a statement made in the examination-in-chief would not suffice. The conduct of the plaintiff-Respondents must be judged having regard to the entirety of the pleadings as also the evidences brought on records. (Para 28)

       Furthermore, the First Respondents had raised inconsistent plea in the sense that he had categorically taken a standing that the debt stood discharged. Such a plea was irreconcilable with the plea that he had all along been ready and willing to perform his part of contract. It is in that situation, the decision of this Court in Prem Raj (supra) is attracted wherein it was held that although inconsistent reliefs by a party to the suit is maintainable but it must be shown that each of such pleas is maintainable. The plea of automatic redemption of mortgage and discharge from debt raised on the part of the Respondents herein cannot stand with a plea of readiness and willingness on his part to perform their part of contract. The Division Bench of the High Court, thus, posed a wrong question unto itself. It also failed to take into consideration the statement of the plaintiff in his cross-examination and in particular paragraphs 12 and 19 thereof in their proper perspective. The statements made by the plaintiff before the court, if read as a whole would clearly show that he was neither in a position to raise any fund. He proceeded on the basis that he was not required to pay any amount. (Paras 37 to 39)

       As regard the question as to whether the transaction was undervalued, the Appellate Court committed a manifest error in taking into consideration the fact that payment of Rs. 45,000/- was to be made after 7 years and before 9 years without any interest is a circumstance to hold that discretion should be exercised in favour of the plaintiff-Respondents. (Para 41)

       (ii) Civil Procedure Code, 1908—Sections 96 and 100—Appeal—Power of Appellate Court in intra Court ­appeal is not exactly the same as contained in Section 100 of the Code—Entertainment of a Letters Patent Appeal is discretionary—Normally the Division Bench would not, unless there exist cogent reasons, differ from a finding of fact arrived at by the Single Judge—A Court of first appeal which is the ­final Court of appeal on fact may have to exercise some amount of restraint. (Para 48)