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Andhra Pradesh High Court
Judges : GOPALRAO EKBOLE, SRIRAMULU
Velagala Peda Nalla Venkayya - Appellant
Versus
Govindaraju Seetharamanjaneya Sarma - Respondent
Decided On : 12-27-71
SALE DEED - MORTGAGE BY CONDITIONAL SALE - DISTINCTION - TRANSFER OF PROPERTY ACT, 1882, SECTION 58(C) - LIMITATION ACT, 1908, ARTICLE 134 - APPLICABILITY - BURDEN OF PROOF - GOOD FAITH - TRANSFEROR'S INTENTION - RELEVANT FACTORS - COURT'S ANALYSIS AND CONCLUSION.
Fact of the Case:
Plaintiff filed a suit for declaration that the suit document is a mortgage by conditional sale and permit him to redeem the same. The defendants contended that the suit document is a sale deed and not a mortgage. The trial court dismissed the plaintiff's suit. The plaintiff preferred an appeal, which was also dismissed. The plaintiff then filed a second appeal.
Finding of the Court:
The court held that Exhibit A-4 is a sale out and out and not a mortgage by conditional sale. The court found that the document recited itself as a sale deed, mentioned consideration of the property sold, possession with all proprietary rights was given to the vendee, the transferee was required to pay Government revenue and to enjoy the property from generations to generation, the title of the vendor which he transferred has been guaranteed, an indemnity clause is provided, the time fixed for repurchase is short and time is made the essence of the contract, the earlier mortgage debt was treated as wiped out and the mortgagee was allowed to retain the earlier mortgage deed as a voucher for the payment of the sale consideration, the debt was not renewed. These features, in the court's view, clearly and unequivocally bring out intention of the parties that they intended to effectuate a sale out and out and not a mortgage by conditional sale.
Issues: 1. Whether Exhibit A-4 is a mortgage by conditional sale or a sale out and out with a condition of repurchase? 2. Whether the suit is barred by limitation under Article 134 of the Limitation Act, 1908?
Ratio Decidendi: 1. The court held that the document is a sale out and out and not a mortgage by conditional sale. The court found that the document recited itself as a sale deed, mentioned consideration of the property sold, possession with all proprietary rights was given to the vendee, the transferee was required to pay Government revenue and to enjoy the property from generations to generation, the title of the vendor which he transferred has been guaranteed, an indemnity clause is provided, the time fixed for repurchase is short and time is made the essence of the contract, the earlier mortgage debt was treated as wiped out and the mortgagee was allowed to retain the earlier mortgage deed as a voucher for the payment of the sale consideration, the debt was not renewed. These features, in the court's view, clearly and unequivocally bring out intention of the parties that they intended to effectuate a sale out and out and not a mortgage by conditional sale. 2. The court held that the suit is barred by limitation under Article 134 of the Limitation Act, 1908. The court found that the sale deed was executed in 1935 and the present suit has been brought in 1959 after 24 years and it is now well settled that after a lapse of considerable time cogent evidence would be required to hold that the transaction is not what it purports to be.
Final Decision: The court allowed both the appeals, set aside the Judgment of the learned Judge and dismissed the plaintiffs suit with costs throughout.
( 1 ) DEFENDANTS 2, 16 and 17 are the appellants in L. P. A. No. 167 of 1967. 11th defendant is the appellant in L. P. A. No. 48 of 1968. These two appeals are directed against the judgment of our learned brother krisnha Rao,. J. , given in S. A. No. 648 of 1963 on 27th July, 1967, whereby the learned Judge allowed the appeal and decreed the plaintiff s suit. He passed a preliminary decree for redemption and gave six months time to the plaintiff to redeem.
( 2 ) THE relevant facts in order to appreciate the contentions raised before us are that the plaintiff filed the suit for declaration that the suit document Exhibit A-4, dated 19th March, 1935, is a mortgage by conditional sale and permit him to redeem the same. His contention was that defendants r to 4 are mortgagees and the rest of the defendants are the alienees or their heirs. The mortgaged property is the ancestral property of the plaintiff and his deceased father Ramachandrarao. The father on behalf of himself and as the guardian of the plaintiff executed a simple mortgage on 1st March, 1929, in favour of defendants 1 to 3 and one Dhanireddi, the deceased father of the 4th defendant. In 1935, when defendants 1 to 3 and Dhanireddi made demands for the payment of the mortgage debt the plaintiff and his father executed exhibit A-4 styling it as a sale deed but embodying therein all the recitals of a mortgage by conditional sale. The amount was to be paid within one year, that is before 19th March, 1936, with interest. The plaintiff therefore, contended that it was a mortgage deed and consequently he is entitled to redeem.
( 3 ) THE plaintiff gave notice on 3rd august, 1945, asking the defendants to render accounts of the profits. They did not however give any reply. The plaintiff therefore, sent another notice on 17th september, 1945, to which the 2nd defendant sent a reply on loth October, 1945 that Exhibit A-4 is a sale deed and not a mortgage. The other defendants also sent reply on the same basis. The plaintiff then filed O. S. No. 48 of 1946 before the District Munsif s court, Tanuku, which was transferred and renumbered as O. S. No. 82 of 1947 at Bhimavaram, for a declaration that the suit document was a mortgage bond by conditional sale. The suit, however, was dismissed on the ground that a suit for mere declaration would not lie. The same was confirmed in a. S. No. 19 of 1948 by the Subordinate judge, Narsapur. On second appeal, the High Court also held that the suit was not maintainable for bare declaration. The plaintiff then filed a suit for a declaration that the suit document was a mortgage by conditional sale and for consequential reliefs in the Court of District munsiff of Tanuku which was numbered as O. S. No. 6 of 1960.
( 4 ) DEFENDANTS 1 and 2 in their written statement contended that the suit document is a sale deed and not a mortgage.
( 5 ) DEFENDANTS 3 to 5 remained ex parti. We are not concerned with the other defendants as nothing turns upon their defence.
( 6 ) THE nth defendant contended that he purchased Ac. 1-40 cents in R. S. No. 168/1 and Ac. 0-95 cents in R. S. No. 151/2, under a registered sale deed dated nth march, 1940, from Velagala Dhanireddi for Rs. 1,650, and that he is a bona fide purchaser without notice and for consideration.
( 7 ) THE District Munsif after a proper trial held that Exhibit A-4 is an out and out sale with a condition to repurchase the same within one year and is not a mortgage by conditional sale. Consequently he dismissed the plaintiff s suit,
( 8 ) THE plaintiff preferred an appeal. A. S. No. 92 of 1962, in the District Court west Godavari. The appeal was later, transferred to the Subordinate Judge s court, Eluru and was re-numbered as a. S. No. 132 of 1962. The Subordinate judge by his judgment dated 2oth december, 1962 held that there is no relationship of debtor and creditor between the plaintiff and defendants 1 to 3 he also found that the sale price under exhibit A-4 was adequate. As a re
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