Case Note & Summary
The appellant, Shankar Thorat, was the defendant in a suit for redemption of mortgage filed by the respondent, Haribhau Wakchoure (since deceased, represented by legal heirs). The suit property was Survey No. 73, admeasuring 2.26 hectares, situated at Virgaon, Akole, Ahmednagar. The respondent claimed that on 27.2.1969, he mortgaged the land to the appellant by a registered document of mortgage by conditional sale for a consideration of Rs. 5,000, which he needed for his daughter's marriage. In 1987, he sought to redeem the mortgage by tendering the mortgage money, but the appellant refused. The appellant contended that the transaction was an out-and-out sale with a condition of repurchase within three years, and after that period, no right remained with the respondent. The trial court decreed the suit in favor of the respondent, holding the transaction to be a mortgage. The first appellate court confirmed this decree. In second appeal, the High Court examined the document and the surrounding circumstances. The court noted that the respondent remained in possession of the land even after the transaction, which is inconsistent with an out-and-out sale. The consideration of Rs. 5,000 was grossly inadequate compared to the value of the land. The document itself used the term 'mortgage' and provided for repayment of the amount. The court held that the transaction was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882. The right of redemption is not lost merely because the stipulated period for repurchase has expired; the mortgagor's right to redeem continues until the mortgage is foreclosed or the property is sold. The suit was filed within 30 years from the date of mortgage, as per Article 61(a) of the Limitation Act, 1963, and was thus within time. The court dismissed the appeal, confirming the decree for redemption.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - Interpretation of Document - The court considered whether a document styled as a sale with a condition of repurchase within three years constituted a mortgage by conditional sale. Held that where the original owner remains in possession and the consideration is inadequate, the transaction is presumed to be a mortgage, and the right of redemption is not extinguished by the expiry of the repurchase period. (Paras 1-10) B) Limitation - Suit for Redemption - Article 61(a) of Limitation Act, 1963 - The suit for redemption filed in 1987 was held to be within limitation as the right to redeem subsists until the mortgage is terminated by a decree of foreclosure or sale. The period of limitation is 30 years from the date of mortgage when the mortgagee is in possession. (Paras 11-15)
Issue of Consideration
Whether the transaction dated 27.2.1969 was a mortgage by conditional sale or an out-and-out sale, and whether the suit for redemption was within limitation.
Final Decision
The High Court dismissed the second appeal, confirming the judgment and decree of the lower courts. The suit for redemption was decreed in favor of the plaintiff/respondent.
Law Points
- Mortgage by conditional sale
- Redemption
- Section 58(c) Transfer of Property Act
- 1882
- Limitation for redemption
- Interpretation of mortgage deed
