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SUPREME COURT OF INDIA
NAVIN SINHA, INDIRA BANERJEE, JJ.
GANPATI BABJI ALAMWAR (D) BY LRs. RAMLU AND OTHERS – APPELLANT(S)
VERSUS
DIGAMBARRAO VENKATRAO BHADKE AND OTHERS – RESPONDENT(S)
CIVIL APPEAL NO(s). 3960 OF 2011
Decided On : 12-09-2019
(A) Transfer of Property Act, 1882 – Section 58(c) – Redemption of mortgage – Whether an agreement is a mortgage by conditional sale or sale with an option for repurchase is a vexed question to be considered in the facts of each case – Essentials of an agreement, to qualify as a mortgage by conditional sale, can succinctly be summarised – An ostensible sale with transfer of possession and ownership, but containing a clause for reconveyance in accordance with Section 58(c) of Act, will clothe agreement as a mortgage by conditional sale – Execution of a separate agreement for reconveyance, either contemporaneously or subsequently, shall militate against agreement being mortgage by conditional sale – There must exist debtor and creditor relationship – Valuation of property and transaction value, along with duration of time for reconveyance, are important considerations to decide nature of agreement – There will have to be cumulative consideration of these factors, along with recitals in agreement, intention of parties, coupled with other attendant circumstances, considered in a holistic manner – Language used in agreement may not always be conclusive. (Para 10)
(B) Transfer of Property Act, 1882 – Section 58(c) – Limitation Act 1963 – Article 61(a) – Redemption of mortgage – Document was not a sale deed with option for repurchase but a document of mortgage by conditional sale – An agriculturist will normally not so easily dispose his agricultural land, source of his survival and livelihood merely for purchases made by him on credit – Financial stringency of plaintiffs is apparent from their failure to repay anything even after execution of instalment bond – Limitation for right to redeem under Article 61(a) of Limitation Act 1963, is 30 years – Suit for redemption was within limitation – In facts of present case, delay of seven years in filing suit is not so fatal as to disinherit plaintiff from his agricultural lands – Question whether appellant was a bonafide purchaser or not cannot be considered relevant in facts of present case and may require further evidence – It is left open for consideration vis-à-vis defendant no.1 in an appropriate proceeding if instituted by appellant – Appeal dismissed. (Paras 12, 15 and 16)
Facts of Case:
Appellants, who were the original defendants are aggrieved by dismissal of their second appeal, affirming judgment of First Appellate Court, which reversed dismissal of suit for redemption of mortgage filed by plaintiffs.
Findings of Court:
An agriculturist will normally not so easily dispose his agricultural land, the source of his survival and livelihood merely for purchases made by him on credit. Dire financial straits of plaintiffs is evident from the fact that they were left with no option but to mortgage 2½ acres of their agricultural lands for credit purchase of daily necessities. Financial stringency of plaintiffs is apparent from their failure to repay anything even after execution of the instalment bond. Given the limitations of the plaintiffs because of their poor financial status, the fact that they may not have objected to mutation so done three years later cannot be considered as sufficient for a contrary interpretation of the agreement dated29.04.1971, especially when Appellate Court held that plaintiffs were in possession of the lands. In the facts of the case, debtor and creditor relationship stands clearly established and hardly needs further elucidation.
Result : Appeal dismissed.
JUDGMENT
NAVIN SINHA, J.
The appellants, who were the original defendants are aggrieved by the dismissal of their second appeal, affirming the judgment of the First Appellate Court, which reversed the dismissal of the suit for redemption of mortgage filed by the plaintiffs.
2. The parties shall be referred to by their original position in the suit for convenience. The plaintiffs purchased daily necessities from the shop of defendant no.1 on credit. A sum of Rs.10,500/ became outstanding after verification of accounts. On 26.04.1970, the plaintiffs executed an instalment bond, Exhibit 53, to pay the dues in three yearly instalments on the occasion of Gudi Padwa in 1971, 1972 and 1973. The plaintiffs defaulted in payment of the first instalment itself. On 29.04.1971, Exhibit 52, the plaintiffs executed a conditional sale deed for sale of their agricultural lands measuring 2½ acres in favour of defendant no.1 for a sum of Rs.11,000/. The earlier dues of Rs.10,500/ formed part of the consideration. The plaintiffs admitted having received a sum of Rs.500/ earlier. The agreement provided that the plaintiffs upon repayment of the dues by Gudi Padwa of 1973 shall be entitled to reconveyance of the lands. In the event of their failure to do so, the sale would become absolute. The plaintiffs having failed to repay the dues, defendant no.1 obtained mutation of the lands in his name on 13.05.1976 and sold the lands to defendant no.2 by a registered sale deed dated 13.02.1978. The plaintiffs thereafter filed the suit for redemption in the year 1980.
3. The Civil Judge held that the nature of the document coupled with the recitals therein and conduct of the plaintiff, left him in no doubt that the document was a sale deed. The First Appellate Court and the High Court on an interpretation of the document held it to be a mortgage by conditional sale, opining that their existed the relationship of a debtor and a creditor, and not that of a transferor or transferee. Thus, the present appeal.
4. Learned counsel for the appellants submitted that even if Exhibit 52 is interpreted as a mortgage by conditional sale, nonetheless the intention of the parties, the attendant circumstances, including the conduct of the plaintiffs in failing to repay and redeem the property in accordance with the instalment bond within the stipulated time, the failure to object to the mutation proceedings despite notice or to challenge the final order of mutation dated 13.05.1976 in favour of defendant no.1, are all relevant factors to be considered for denial of relief to the plaintiffs. The execution of the instalment bond had been concealed in the suit. The institution of the suit for redemption seven years later after expiry of time for repayment under the agreement, coupled with possession already having been delivered to defendant no.1 on the date of the agreement, redemption of the mortgage ought not to have been allowed in the facts and circumstances of the case. The plaintiffs did not have a case for an undervalued sale also. Defendant no.2 was a bonafide purchaser. Considering the nature of the contractual agreement, the intention of the parties has to be deciphered from their conduct, including after the agreement. Reliance in support of the submissions was placed on The Godhra Electricity Co. Ltd. and another vs. The State of Gujarat and another, (1975) 1 SCC 199, Vanchalabai Raghunath Ithape (Dead) by Lr. vs. Shankarrao Baburao Bhilare (Dead) by Lrs. and others, (2013) 7 SCC 173, Bibi Fatima and others vs. M. Ahmad Hussain and others, (2017) 11 SCC 832 and Vithal Tukaram Kadam and another vs. Vamanrao Sawalaram Bhosale and others, (2018) 11 SCC 172.
5. Learned counsel for the respondents submitted that Exhibit 52 was not a sale deed, but a conditional sale deed. The existence of a debtor and creditor relationship is clearly established from the recitals in the agreement itself. The right of reconveyance was incorporated in the same agreement in accordance wit
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