Important point
When one of the properties which was given as security for simple mortgage was sold to mortgagee with a right reserved to mortgagor to repurchase the same within 3 years on payment of mortgage amount, deed in question was not a deed of sale by a mortgage by conditional sale.

Headnote:Transfer of Property Act, 1882—Section 58(c)—Mortgage by conditional sale—Respondent plaintiff executed a simple mortgage in favour of appellant for Rs. 3000—Three items of properties were given as security—Plaintiff was unable to discharge simple mortgage and on intervention of Panchayatdars, plaintiff executed a deed whereby one property was sold to appellant-defendant with a right reserved to plaintiff to repurchase same within a period of three years on payment of Rs.3000/—Suit for redemption—Question whether document in question was a mortgage by conditional sale or a sale out and out with a condition of repurchase—Right to redeem the property within three years was specifically reserved in the deed—Recitals showed that deed was not a deed of sale but a mortgage by conditional sale—No interference was warranted in judgment decreeing the suit.
       Held : A careful perusal of the document would clearly show that the document has been couched in a simple Tamil language. The recitals are clear and unambiguous. It is seen from the document that Munimalaiyan was unable to discharge the simple mortgage. Panchayatdars intervene and amicably settled the matter. A deed was executed thereupon by Munimalaiyan in favour of the appellant herein and in and by the said deed one of the properties which was given as security for the simple mortgage was sold to the appellant with a right reserved to the said Munimalaiyan to re-purchase the same within a period of 3 years on payment of Rs. 3,000/-. The right to redeem the property within a period of 3 years was specifically reserved. The recitals, in our opinion, would only show that the deed in question is not a deed of sale but a mortgage by conditional sale. (Para 17)
       The above judgment, in our opinion, squarely applies to the facts and circumstances of the case on hand. They are:
       1) the transaction in question is a mortgage by conditional sale;
       2) the condition for re-purchase of 3 years was embodied in the same document;
       3) the consideration for the transaction was Rs. 3,000/- while the real value of the property was Rs. 12,500/-;
       4) patta was not transferred to the defendant after the execution of the document;
       5) as per the evidence available on record, the kist for the land was continued to be paid by the plaintiff - Munimalaiyan;
       6) the consideration for re-conveyance was only for Rs. 3,000/-;
       7) the appellant was given liberty to have the patta transferred and also to enjoy the property absolutely after the period of 3 years expired;
       8) the trial Court granted a preliminary decree which was reversed by the lower Appellate court and again interfered with by the High Court.
       We have considered all the attendant circumstances to cover the intention of the parties. The intention is explicitly expressed in the document itself. There is, therefore, no scope for looking at the attendant circumstances. There is no relationship of the debtor and the creditor. This Court also in Tamboli Ramanlal Motilal (dead) by L.Rs. vs. Ghanchi Chimanlal Keshavlal (dead) by L.Rs. and Another, AIR 1992 SC 1236 has pointed out that the Court should be guided by the terms of the document alone without much help from the case law. Viewed from any angle, we are of the opinion that the document in question is a mortgage by conditional sale. (Paras 21 and 22)

Judgment

Dr. AR. Lakshmanan, J.—This appeal is directed against the final judgment and order dated 06.03.1998 passed by the High Court of Madras in Second Appeal No. 1966 of 1984 allowing the same and reversing the judgment and order dated 15.11.1983 passed in A.S.No. 51 and 1982 by the Additional Subordinate Judge, Dharmapuri at Krishnagiri and restoring the order and judgment dated 20.11.1981 passed by the District Munsiff, Hosur in O.S.No. 542 of 1978.

2. The short facts of the case are as follows:-

The defendant is the appellant in this civil appeal. One Munimalaiyan (plaintiff) executed a simple mortgage in favour of the appellant for a sum of Rs. 3,000/-. For securing the due repayment, 3 items of properties belonging to Munimalaiyan was given as security. Munimalaiyan was unable to discharge the simple mortgage and on the intervention of Panchayatdars, a deed was executed by Munimalaiyan in favour of the appellant herein (Chennammal). In and by the said deed, one of the properties which was given as security for the simple mortgage was sold to the appellant herein with a right reserved to the said Munimalaiyan to repurchase the same within a period of 3 years on payment of Rs. 3,000/-. A legal notice was issued by the said Munimalaiyan to the appellant herein seeking redemption of the property which was the subject-matter of the deed dated 22.10.1970. The appellant issued a reply notice contending that the deed dated 20.10.1970 was a deed of sale and not a mortgage by conditional sale as sought to be contended by the said Munimalaiyan.

3. The said Munimalaiyan instituted a suit in O.S.No. 542 of 1978 on the file of the District Munsiff, Hosur against the appellant herein praying for a decree for redemption. It was contended that the deed dated 20.10.1970 was a mortgage by conditional sale and that pursuant to the sale, the appellant was put in possession of the suit property and that the deed is not a sale deed and that a right to redeem the property within a period of 3 years was reserved and failing which the appellant herein was entitled to have the patta transferred in her own name. As on 20.10.1970, the property was valued at Rs. 12,500/-. It was further contended that Munimalaiyan was paying the kist for the suit properties and that the appellant had raised various crops and derived sufficient income every year and that the mortgaged debt has to be scaled down as per Section 8 of Act 5 of 1978 and that since the appellant has been in possession for 8 years Rs. 2,400/- ought to be deducted and that the appellant herein is entitled only to Rs. 600/- as per law and that the said sum of Rs. 600/- has been deposited into Court and that, therefore, the property has to be re-transferred and possession handed over. On these allegations the said Munimalaiyan prayed for the aforesaid relief.

4. Pending the suit, the said Munimalaiyan died and his LRs were brought on record as his legal representatives and they continued to prosecute the suit.

5. The appellant herein resisted the suit contending that the deed dated 20.10.1970 was an outright sale and that since Munimalaiyan was unable to discharge the simple mortgage the deed in question came to be executed and that the sale consideration under the document was adjusted towards the amounts due under the simple mortgage deed of the year 1961 and that the said document was executed on the advise of the Panchayatdars and that half the property is rocky and unfit for cultivation and that the income therefrom was very meagre and that a right to repurchase had been reserved under the document within a period of three years failing which the document stipulated that the appellant would have absolute rights and that the option to repurchase was not exercised within the stipulated period of three years and that from the date of the document the appellant has been in possession as absolute owner and has been paying kist and that patta has also been transferred in her name and that the appel

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2005 Supreme(SC) 1365

Important pointWhen one of the properties which was given as security for simple mortgage was sold to mortgagee with a right reserved to mortgagor to repurchase the same within 3 years on payment of mortgage amount, deed in question was not a deed of sale by a mortgage by conditional sale.

Cases Referred (5)

Important point
When one of the properties which was given as security for simple mortgage was sold to mortgagee with a right reserved to mortgagor to repurchase the same within 3 years on payment of mortgage amount, deed in question was not a deed of sale by a mortgage by conditional sale.