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IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD
ROHIT W. JOSHI, J.
Shaikh Papamiya Chandbhai (Since deceased) Through his L.Rs.- Shaikh Aspiya Papamiya and Ors. – Appellants
Versus
Rupchand Nana Bhane and Ors. – Respondents
Second Appeal No. 277 Of 2002
Decided On : 13-03-2025
(A) Transfer of Property Act, 1882 - Sections 54 and 58(c) - Mortgage by conditional sale - Dispute over the nature of a document executed in 1978 - The document was deemed a mortgage by conditional sale, allowing the plaintiff to redeem the property - The right to reconveyance was not extinguished despite the ten-year period specified in the document - The courts ruled that any clause creating a clog on the right of redemption is invalid under Section 60. (Paras 1, 6, 27, 28)
(B) Right of Redemption - The right of redemption is a statutory right that cannot be taken away by any agreement - Any clause in a mortgage deed restricting the right to redeem is void and must be ignored. (Paras 15, 18)
Facts of the case:
The plaintiff mortgaged agricultural land to the defendant in 1978 for a loan of Rs.7,000, with a right to redeem after 8 years. The defendant denied the right to reconveyance after 10 years, leading to a legal dispute. (Paras 3, 4)
Findings of Court:
The document was held to be a mortgage by conditional sale, allowing the plaintiff to redeem the property despite the defendant's claims of an absolute sale. The courts affirmed the plaintiff's entitlement to reconveyance based on evidence of readiness and willingness. (Paras 27, 29)
Issues: The court addressed whether the document constituted a mortgage by conditional sale or an outright sale with a right of repurchase. (Paras 1, 6)
Ratio Decidendi: The courts concluded that the document's title and provisions indicated a mortgage by conditional sale, and any clause restricting the right of redemption was invalid. The plaintiff's actions demonstrated readiness and willingness to redeem. (Paras 27, 29)
Result: Second appeal dismissed; the plaintiff is entitled to reconveyance.
JUDGMENT :
1. The present second appeal was admitted vide order dated 25.01.2007 on the following substantial question of law :-
“(i) Whether the deed Exhibit – 45 dated 23.11.1978 is mortgage by conditional sale or sale with condition of reconveyance ?
2. The present appeal is preferred by original defendant no.1, who has suffered two concurrent decrees in a suit filed against him by respondent no.1 herein. The other respondents are family members of respondent no.1. Respondent no.1 is hereinafter referred to as “plaintiff” and appellant is referred to as “defendant no.1”.
3. The plaintiff had filed a suit for redemption of mortgage with respect to the suit property, which is an agricultural land bearing Gut No.36/1 admeasuring 1.01 HR situated at village Hasanapur, Tq.Shrirampur, Dist.Ahmednagar. It is the case of the plaintiff that he had mortgaged the suit property with defendant no.1 in consideration of loan amount of Rs.7,000/- vide document, being mortgage by conditional sale dated 23.11.1978. The said document is at Exhibit-45 in the record of the learned trial court. The plaintiff contends that in terms of the said document dated 23.11.1978, defendant no.1 was placed in possession of the suit property. He contends that in terms of the said document, the plaintiff was entitled to redeem the mortgage by making repayment of the loan amount of Rs.7,000/- to defendant no.1 after a period of 8 years and before a period of 10 years from the date of execution of the document and upon such payment, defendant no.1 was bound to execute the deed of reconveyance with respect to the suit property in his favour and to deliver back possession of the suit property to him. The plaintiff contends that despite repeated requests, defendant no.1 avoided to reconvey the suit property, and therefore, the plaintiff had issued legal notice dated 30.11.1988. He further states that since the legal notice also did not yield the desired result, he was constrained to file the suit. The suit came to be registered as Regular Civil Suit No.335/1989.
4. On being served with the suit summons, defendant no.1 entered appearance in the matter and filed written statement contending that the document dated 23.11.1978 was not a document of mortgage by conditional sale but, a document of out and out sale coupled with a condition for repurchase. He contended that the right to repurchase was to be exercised between a period of 8 to 10 years from the date of execution of the document i.e. between 23.11.1986 to 22.11.1988 and after completion of a period of 10 years on 22.11.1988, the right to seek reconveyance was not available to the plaintiff. Defendant No.1 contended that the plaintiff did not exercise the right to obtain reconveyance within stipulated period of 10 years, and therefore, the suit was liable to be dismissed.
5. Learned Trial Court framed issues in the matter, on which the plaintiff and defendant no.1 led evidence. The plaintiff examined himself at Exhibit-43 and the two attesting witnesses to the document dated 23.11.1978 as witnesses nos.2 and 3 and closed his evidence. As against this, defendant no.1 examined himself at Exhibit-57. It will be pertinent to note that the plaintiff had deposited amount of Rs.7,000/-before the learned Trial Court on 04.03.1991.
6. After recording the evidence, learned Trial Court heard arguments of rival parties and was pleased to pass a decree in favour of the plaintiff, thereby directing defendant no.1 to tender all documents in his custody with respect to the suit property in the court for delivering the same to the plaintiff, direction to reconvey the suit property free from all encumbrances to the plaintiff and also to deliver peaceful vacant possession of the suit property to the plaintiff. The learned Trial Court has held that the document in question was not a out and out sale but a document of mortgage by conditional sale. The learned Trial Court has also rejected the argument that if reconveyance was not obtain
A mortgage by conditional sale cannot have its redemption rights restricted by any clause, which is deemed invalid under Section 60 of the Transfer of Property Act.
A deed titled as a mortgage by conditional sale establishes a lender-borrower relationship, and any clause restricting the right of redemption is void under Section 60 of the Transfer of Property Act....
Redemption of mortgaged property – In absence of any positive evidence of any improvement and cost incurred, defendants are not entitled to recover anything more than mortgage amount.
The document was determined to be a sale with a condition to repurchase rather than a mortgage, emphasizing the necessity of a debtor-creditor relationship for a true mortgage.
The court affirmed that a sale deed is valid unless proven to be a mortgage by conditional sale under Section 58(c), emphasizing the necessity of matching documentary intentions.
The main legal point established is that the nature of a sale deed, the right to repurchase, and the applicable limitation for the suit are crucial factors in determining the outcome of property disp....
Redemption of mortgage – No transaction shall be deemed to be a mortgage, unless condition is embodied in document which effects or purports to effect sale.
The intention of parties in a transaction determines its nature, and the title of the document is not solely decisive in classifying it as a mortgage by conditional sale or an absolute sale.
The court clarified that a mortgage by conditional sale requires a debtor-creditor relationship, which was not found; thus, the document was held as a sale deed with a right of repurchase.
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