MAIN POINT
Distinction between ‘Mortgage by conditional sale’ or ‘sale with option to repurchase’ discussed and applied.

JUDGMENT :

Prafulla C. Pant, J.

Leave granted.

2. This appeal is directed against judgment and decree dated 20/21/24-09-2012, passed by High Court of Gujarat at Ahmedabad, whereby Second Appeal No. 107 of 1994 is allowed, and dismissal of suit by trial court as affirmed by First Appellate Court is reversed. The suit of the respondents/plaintiffs for redemption of suit property is decreed by High Court on the payment of Rs.10,000/- within a period of six months by the plaintiffs from the date of the decree.

3. We have heard learned counsel for the parties and perused the papers on record.

4. Brief facts of the case are that original plaintiffs Shaikh Rahemanbhai Mohamadbhai (since died) and Shaikh Ismailbhai Moahamadbhai, executed a deed dated 30.12.1960 in favor of defendant nos. 1 and 2, namely, Patel Ravjibhai Bhulabhai (since died) and Patel Dahyabhai Bhudarbhai, which was titled as conditional sale, for a sum of Rs.10,000/- providing therein that if the repayment is made within a period of five years, the defendants shall give back the property in suit with possession to the plaintiffs with further stipulation that the plaintiffs would have no right to get back the property after the expiry of the period of five years. The plaintiffs instituted Civil Suit No. 156 of 1984 before Civil Judge, Junior Division, Dakor, for redemption of property in question (i.e. Survey No. 148, admeasuring 3 acres 29 guntas situated in Village Rustampura, Taluk Thasra) on repayment of the mortgage money under the deed dated 30.12.1960, and further sought to recover the possession of the property with mesne profits. The plaintiffs pleaded that the deed in question was a mortgage deed, and as such they have right to redeem the same.

5. The defendants contested the suit, and pleaded that deed dated 30.12.1960 is not a mortgage transaction but a conditional sale with stipulation of repurchase within a period of five years. Denying that the plaintiffs have any right to redeem the property, it is stated by the defendants that the land was purchased by the defendants for a consideration of Rs.10,000/- and possession was delivered to them in 1960 along with execution of the deed.

6. The trial court after framing issues, and recording of evidence, held that plaintiffs have failed to prove that the transaction was a mortgage. The trial court further held that suit is barred by time, and, as such, dismissed the suit on 27.11.1987. The First Appellate Court (2nd Joint District Judge, Nadiad) affirmed the decree of dismissal of suit passed by the trial court, vide its judgment and order dated 30.09.1993. The plaintiffs preferred Second Appeal (S.A. No. 107 of 1994) before the High Court, and the High Court after hearing the parties reversed the decree passed by the two courts below. Hence the defendants are in appeal before this Court.

7. At the outset we may state that issue of limitation is not pressed before us as Article 60(a) of Limitation Act, 1963 provides thirty years period for filing the suit for redemption. The question before us is that whether document Exh. 23, in its true interpretation, is mortgage by conditional sale, as interpreted by High Court, or the sale with option to repurchase as held by the two courts subordinate to it.

8. Section 58(c) of The Transfer of Property Act, 1882 defines mortgage by conditional sale, and reads as under:-

“(c) Mortgage by conditional sale.-

Where, the mortgagor ostensibly sells the mortgaged property –

on condition that on default of payment of the mortgage-money on a 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,

the transaction is called mortgage by conditional sale, and the mortgagee, a mortgagee by conditional sale:

Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects