Case Note & Summary
The case involves a dispute over a house property in Ratna Pimpri village, Jalgaon district. The original plaintiff, Vitthal Maharu Patil (since deceased, represented by his legal heirs), filed a suit for possession and retransfer of the suit house, claiming that a deed executed on 22.01.1963 was a mortgage by conditional sale, not an outright sale. The plaintiff alleged that he needed Rs.1000 and approached the defendant, Fakira Bhavsing Patil (since deceased, represented by his legal heirs), who did not have a money lending license. The defendant suggested executing a mortgage deed for Rs.100 to circumvent the licensing issue, but due to difficulties with mortgage, a sale deed was executed instead. The plaintiff contended that the transaction was essentially a loan secured by the property, and he remained in possession. The defendant, however, claimed it was an absolute sale for Rs.1000, with possession transferred to him. The trial court (Civil Judge, Junior Division, Parola) decreed the suit in favor of the plaintiff on 31.08.1981 in Regular Civil Suit No. 46 of 1975, holding the transaction to be a mortgage. The defendant appealed, and the Additional District Judge, Jalgaon, allowed the appeal on 15.01.1987 in Regular Civil Appeal No. 373 of 1981, reversing the trial court's decision and dismissing the suit. The plaintiff then filed a second appeal in the Bombay High Court. The High Court framed a substantial question of law: whether the transaction was a sale or a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882. The court analyzed the evidence, noting that the plaintiff remained in possession of the suit house, the consideration of Rs.1000 was grossly inadequate compared to the property's value, and the defendant failed to prove that possession was transferred. The court held that the lower appellate court's finding was perverse and not based on evidence. Relying on the principle that the burden of proof lies on the mortgagee to show a sale, the court concluded that the transaction was a mortgage by conditional sale. Consequently, the High Court allowed the second appeal, set aside the appellate judgment, and restored the trial court's decree, directing the defendant to retransfer the property to the plaintiff upon payment of the mortgage amount.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - Determination of Transaction - The court considered whether a deed executed as a sale was actually a mortgage by conditional sale. The plaintiff alleged the transaction was a mortgage to secure a loan of Rs.1000, while the defendant claimed it was an outright sale. The court held that the absence of transfer of possession, the existence of a debtor-creditor relationship, and the inadequacy of consideration indicated the transaction was a mortgage. The appellate court's finding of a sale was reversed. (Paras 1-10) B) Evidence Act - Burden of Proof - Section 101 - Onus on Mortgagee - In a suit for redemption, the burden is on the mortgagee to prove that the transaction is a sale. The court noted that the defendant failed to discharge this burden, as the evidence showed the plaintiff remained in possession and the consideration was grossly inadequate. (Paras 8-10) C) Civil Procedure Code - Second Appeal - Section 100 - Substantial Question of Law - The court framed a substantial question of law regarding the nature of the transaction. It held that the lower appellate court's finding was perverse and not based on evidence, warranting interference under Section 100 CPC. (Paras 1, 10)
Issue of Consideration
Whether the transaction dated 22.01.1963 was a sale or a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882
Final Decision
Second Appeal allowed. The judgment and order dated 15.01.1987 passed by the Additional District Judge, Jalgaon in Regular Civil Appeal No. 373 of 1981 is set aside. The judgment and decree dated 31.08.1981 passed by the Civil Judge, Junior Division, Parola in Regular Civil Suit No. 46 of 1975 is restored. The defendant is directed to retransfer the suit property to the plaintiff upon payment of the mortgage amount.
Law Points
- Mortgage by conditional sale
- Section 58(c) Transfer of Property Act
- 1882
- Intention of parties
- Absence of possession transfer
- Debtor-creditor relationship
- Burden of proof on mortgagee
- Reversal of appellate decree
