2006 Supreme(SC) 773

2006(6) Supreme 582
SUPREME COURT OF INDIA
(From Jharkhand High Court)
S.B. Sinha and Dalveer Bhandari, JJ.
Tulsi & Ors. — Appellants
versus
Chandrika Prasad & Ors. — Respondents
Civil Appeal No. 3631 of 2006
(Arising out of SLP (Civil) No. 19581 of 2004)
Decided on 24-8-2006
Counsel for the Parties :
For the Appellants : S.B. Upadhyay, Shiv Mangal Sharma and Mrs. Sharmila Upadhyay, Advocates.
For the Respondents : V. Shekhar, Amrit Pal Singh Gambhir, Pradeep K. Dubey and S. Ganesh Advocates.

IMPORTANT POINT
Distinction between a mortgage by way of conditional sale and a sale with condition of purchase is that in former the debt subsists and right to redeem remains with debtor but in case of latter the transaction does not evidence an arrangement of lending and borrowing and right to redeem is not reserved.

Headnote:Transfer of Property Act, 1882 — Section 58(c) — Mortgage with conditional sale — Distinction between mortgage with conditional sale and a sale with condition of purchase — In former the debt subsists and a right to redeem remains with debtor but in latter transaction does not evidence an arrangement of lending and borrowing and right to redeem is not reserved thereby — By a deed dt. 30-12-1968 part of house property, which was in tenancy of husband of appellant, was transfer by mortgage for a consideration of Rs. 4300/- repayable by 30-1-1971 — Suit for redemption — Trial Court held the document in question was a deed of mortgage with conditional sale and not a deed of sale with a condition of purchase and decreed the suit — Decree was upheld in 1st and 2nd appeal — Appeal — Instrument in question was described as “Kewala Baibulwafa” and expression “Kewala” denoted sale — Scribe of document examined in the case stated that he was asked by parties to scribe a deed of mortgage and not a deed of sale — Amount of stamp duty was paid by plaintiff which ordinarily was paid by vendee in a case of sale — Deed stipulated that in the event executant repayed the entire consideration by 30-12-1971, purchaser would reconvey property and deliver possession thereof — Sale was to become absolute only when transferee failed to pay said amount — Appellant did not examine to rebut plaintiffs claim that tender mortgage amount was made — No infirmity in judgment of Courts below.

       Held : We consider the stipulations contained in the deed dated 30.12.1968, it may be noticed that in terms of Section 58(c) of the Transfer of Property Act, a transaction may be held to be a mortgage with conditional sale if it is evidenced by one document. The condition precedent for arriving at a finding that the transaction involves mortgage by way of conditional sale is that there must be an ostensible sale. It must contain a condition that on default of payment of mortgage money on certain date, the sale shall become absolute or 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. (Para 13)

       A distinction exists between a mortgage by way of conditional sale and a sale with condition of purchase. In the former the debt subsists and a right to redeem remains with the debtor but in case of the latter the transaction does not evidence an arrangement of lending and borrowing and, thus, right to redeem is not reserved thereby. (Para 14)

       The transaction in this case has been evidenced by one document. Section 58(c) of the Transfer of Property Act will, therefore, apply. (Para 16)

       In the instant case, the scribe of the document was examined. His categorical statement was that he had been asked by the parties to scribe a deed of mortgage and not a deed of sale. The Respondent No. 1, as noticed hereinbefore, in the document itself categorically stated that he was executing a deed of mortgage. Indisputably, the amount of stamp duty was also paid by him. In a case of deed of sale ordinarily the transferee pays the stamp duty. Why such a deviation from the normal practice was made has not been explained by the Appellant. (Para 17)

       We have noticed hereinbefore that the nature of the deed described that the document is ambiguous as both the terms, viz., Kewala and Baibulwafa, were mentioned. The transaction, however, categorically states that the Appellant No. 1 was to maintain the property in its present condition. Of course, permission for reconstruction of the structure was granted. But, if the contention of the parties was to transfer the property absolutely, no such stipulation was required to be made at all. In a case of absolute transfer, the vendee has an absolute right to deal with his property in any manner he likes. It was clearly stipulated in the deed that in the event, the executant repayed the entire consideration by 30.12.1971, the purchaser would reconvey the property and furthermore deliver possession thereof. The sale was to become absolute only when the transferee failed to pay the said amount within the stipulated period. The courts below have also taken into consideration the contemporaneous conduct of the parties in treating the transaction to be one of mortgage and not of sale. We are, therefore, of the opinion that the parties intended to enter into a transaction of mortgage and not sale.(Para 18)

       (ii) Evidence Act, 1872 — Section 91 — Provision forbids proving of contents of a writing otherwise than by writing itself — Does not prohibit parties to adduce evidence in a case the deed is capable of being construed differently to show how they understood the same.(Para 14)