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Gujarat High Court
Judgename :D.C.Srivastava
DARBAR JADUBHAI NANBHA - Appellant
Versus
PATEL UKA DUDA - Respondent
SECOND APPEAL 105 of 1980
Decided On : 02/12/1998
Nomenclature of document is hardly conclusive and much importance cannot be attached to the nomenclature alone. However, if the nomenclautre in the document is consistent with the intention of the party it has to be taken into account.
In view of Sec. 58 of the Transfer of Property Act, mortgage by conditional sale is a transaction which presuppoes existence of a debt and relationship of debtor and creditor between the parties. Such debt may be pre-existing or it may be created at the time of execution of the deed. Relationship of debtor and creditor is a sine qua non of mortgage by conditional sale.
Stipulation for payment of interest though not conclusive yet it indicates that the transaction was mortgage. Sometimes in lieu of interest possession is handed over to the mortgagee who is permitted to use usufruct of the mortgaged property.
In view of Sec. 58 (c) of the Transfer of Property Act if two transactions are incorporated in one and the same document an inference can be drawn that it is mortgage by conditional sale but this is a presumption which is rebuttable. If there are two documents executed simultaneously transaction may be said to be sale with condition to repurchase but even a single document can give rise to such transaction, namely, sale with a condition to repurchase.
In case of mortgage by conditional sale vesting of title is postponed whereas in case of sale with condition to repurchase there is immediate vesting of title followed by possession. Rights of ownership are transferred in transaction the nature of sale with condition to repurchase whereas in mortgage mere possession is transferred and not ownership rights.
Inadequacy of consideration may indicate that under pressing circumstances mortgage was created because the amount received was not corresponding to the market value of the property but this is not universally applicable in all cases.
Reconveyance of the property on the same price on which it was conveyed to the mortgagee is not clinching circumstance for holding that the transaction is mortgage by conditional sale. It is possible that because the possession was transferred, so also, the ownership rights it might have been agreed for reconveyance of the property on the original consideration.
If there is transfer of title and ownership rights simultaneously and the transferee is authorised to deal with the property in any manner he likes such clause in the agreement will indicate that the transfer was a sale with condition to repurchase.
Intention of the parties is to be gathered from the evidence, from attending circumstances and also from the document. The conduct of the parties is also relevant though subsequent conduct is not very much material.
[Para 10]
( 1 ) IS is plaintiffs Second Appeal arising out of following facts :
( 2 ) BRIEF facts are that the plaintiffs are the owners of plot No. 31 measuring 6 Acres and 32 Gunthas. It was mortgaged by them with the defendants-respondents on 14-6-1963 for Rs. 6,000. 00. According to the plaintiffs it was mortgage by conditional sale and the transaction was for the safety of amount of Rs. 6,000. 00 advanced by the defendants to the plaintiffs. Market value of the land on the date of mortgage was Rs. 20,000. 00. The plaintiffs were in hard financial conditions, hence they mortgaged property for a sum of Rs. 6,000. 00 only. The plaintiffs wanted to redeem the mortgage after payment of Rs. 6,000. 00 but the defendants refused to accept the same. Accordingly, notice was served by the plaintiffs. The defendants in reply to the notice stated that it was outright sale and not mortgage by conditional sale. Accordingly, the suit for redemption was filed.
( 3 ) THE defendants contested the suit on the ground that it was time- barred and that the transaction was outright sale and not mortgage by conditional sale. Notice of the plaintiffs was properly replied by the defendants. The plaintiffs did not file the suit till 15-1-1969, hence, it was time-barred. It was denied that the market value of the land was Rs. 20,000. 00 and not Rs. 6,000. 00.
( 4 ) THE trial Court found that the document in question was sale deed and not mortgage by conditional sale. Accordingly, the suit of the appellants for redemption of mortgage was dismissed.
( 5 ) APPEAL was filed which too was dismissed with the observation that the document was sale deed and the transaction was outright sale and not mortgage by the conditional sale. It is, therefore, this Second Appeal.
( 6 ) IN this appeal following substantial question of law was formulated :"whether the deed in question is mortgage by conditional sale or sale with condition to repurchase ?"
( 7 ) THE original deed is in Gujarati and its translation was filed. The deed was executed on 14-6-1963. It is to be seen whether this deed is sale outright or sale with condition of repurchase or mortgage by conditional sale.
( 8 ) THE fate of this appeal hinges around the interpretation of this deed. The settled rule of interpretation is that the document is to be interpreted as it is to find out the real intention of the parties. If the document is clear and unambiguous pointing out to a particular type of transaction between the parties it hardly requires any interpretation. However, if there is some ambiguity in the document it requires interpretation and for that the real intention of the parties is to be gathered firstly from the document itself and the recitals contained therein and also from the attending circumstance emerging from the evidence adduced by the parties.
( 9 ) IN order to interpret such document nice distinction between mortgage by conditional sale and sale with condition of repurchase has to be kept in mind. Of course aid can be taken from various decisions to come to the conclusion whether a particular circumstance gives indication of real intention of the parties. Each case has to be decided on its own facts. Consequently particular decision, unless applicable on all force to the facts of the present case, cannot be applied or pressed in service for holding that the document is sale deed or mortgage by conditional sale.
( 10 ) CERTAIN tests had been laid down in various cases for interpreting such document. In short those tests, which are illustrative and not exhaustive, are enumerated below :- (1) Nomenclature of document is hardly conclusive and much importance cannot be attached to the nomenclature alone. However, if the nomenclature in the document is consistent with the intention of the party it has to be taken into account. (2) In view of S. 58 of the Transfer of Property Act, mortgage by conditional sale is a transaction which presupposes existence of a debt and relationship of
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