Case Note & Summary
The appellant, Balbhim Sakharam Magar, filed an appeal against the judgment and order dated 10th July, 2003 in Regular Civil Appeal No. 25 of 1993, which had dismissed his suit for reconveyance and possession of land Survey No. 206 admeasuring 1 Hector situated at Ambajogai. The appellant, as original plaintiff, claimed that he was the owner and possessor of the suit land. In 1976, he needed Rs. 4,000 for domestic expenses and approached defendant No. 1, Sonbaba Sidharam Mane, who agreed to lend the amount on condition that the plaintiff execute a sale deed of the suit land as security. It was agreed that defendant No. 1 would cultivate the land and give 1/4th share of the produce to the plaintiff as interest, while retaining 3/4th share. The sale deed was executed on 7th April, 1976 in favour of defendant No. 2, Bhanudas Ganpatrao Khandade, as a third party. The plaintiff alleged that defendant No. 2 subsequently executed a sale deed in favour of defendant No. 1 on 17th March, 1978, which was bogus and illegal. When defendant No. 1 refused to give the plaintiff his share of the income, the plaintiff issued a notice on 6th October, 1984 and filed the suit on 15th November, 1984 for reconveyance of the sale deed and possession of the suit land. The trial court decreed the suit, but the first appellate court reversed the decree, holding that the sale deed was an absolute sale and not a mortgage by conditional sale. The High Court, in appeal, examined the evidence and the terms of the sale deed, particularly the clause for reconveyance upon repayment of Rs. 4,000. The court held that the transaction was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882, as the intention was to create a security for the loan. The court also held that the suit was within limitation under Article 61 of the Limitation Act, 1963, as the plaintiff remained in possession. The High Court allowed the appeal, set aside the judgment of the first appellate court, and restored the decree of the trial court, directing the defendants to execute a reconveyance deed and deliver possession of the suit land to the plaintiff.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - Sale Deed as Security - The transaction where a sale deed is executed with an agreement to reconvey upon repayment of loan constitutes a mortgage by conditional sale, not an absolute sale. The court held that the intention of the parties, as evidenced by the agreement to reconvey and the possession arrangement, determines the nature of the transaction. (Paras 1-10) B) Limitation - Suit for Reconveyance - Article 61 of Limitation Act, 1963 - The period of limitation for a suit for reconveyance of property sold with a condition of repurchase is 30 years from the date of the sale deed when the plaintiff remains in possession. The court held that the suit filed in 1984 for reconveyance of a 1976 sale deed was within limitation. (Paras 11-15) C) Evidence - Burden of Proof - The burden to prove that a sale deed is absolute lies on the party asserting it, especially when the deed contains a clause for reconveyance. The court held that the plaintiff's consistent case of loan and security, supported by the agreement to reconvey, shifts the burden to the defendants to prove the sale was absolute. (Paras 16-20)
Issue of Consideration
Whether the sale deed dated 7th April, 1976 executed by the plaintiff in favour of defendant No. 2 was an absolute sale or a mortgage by conditional sale, and whether the plaintiff is entitled to reconveyance and possession of the suit land.
Final Decision
Appeal allowed. The judgment and order dated 10th July, 2003 in Regular Civil Appeal No. 25 of 1993 is set aside. The decree passed by the trial court is restored. The defendants are directed to execute a reconveyance deed and deliver possession of the suit land to the plaintiff.
Law Points
- Mortgage by conditional sale
- Reconveyance deed
- Sale deed as security
- Section 58(c) Transfer of Property Act
- 1882
- Limitation for suit for reconveyance
