Case Note & Summary
The dispute arose from a transaction involving agricultural land measuring 6 acres 2 guntas in Survey No.2/A. The plaintiff (respondent) had taken financial assistance from the defendant (appellant) over time. On receiving Rs.5,000, the plaintiff executed a registered sale deed dated 10th December 1968 (Exhibit 23) in favor of the defendant, who was already in possession. On the same day, a separate agreement (Exhibit 24) was executed whereby the defendant agreed to reconvey the property if the plaintiff repaid Rs.5,000 with interest. Subsequently, on 29th August 1969, another agreement (Exhibit 14/1) was executed under which the plaintiff received an additional Rs.2,224, making the total amount Rs.7,224, and agreed that if the amount was not repaid by 'Velamavasya', the sale deed would become absolute. The plaintiff failed to repay and later issued a notice in 1980 claiming the transaction was a mortgage and offering to repay. The defendant disputed this. The plaintiff filed Regular Civil Suit No.237 of 1980 for redemption of mortgage and possession. The trial court decreed the suit, treating the transaction as a mortgage. The lower appellate court reversed, holding it was an absolute sale. The High Court in second appeal restored the trial court's decree. The defendant appealed to the Supreme Court. The Supreme Court analyzed the documents and Section 58(c) of the Transfer of Property Act, 1882. It held that the proviso to Section 58(c) requires the condition of mortgage to be embodied in the sale deed itself. Since the sale deed (Exhibit 23) contained no such condition and was an absolute conveyance, and the agreement for reconveyance was in a separate document (Exhibit 24), the transaction could not be a mortgage by conditional sale. The Court also noted that the plaintiff had received additional money and failed to repay, and mutation entries had been made in the defendant's name. The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the lower appellate court's decree dismissing the suit.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - Condition Embodied in Sale Deed - The proviso to Section 58(c) mandates that for a transaction to be deemed a mortgage by conditional sale, the condition must be embodied in the document which effects or purports to effect the sale. A separate contemporaneous agreement for reconveyance cannot convert an absolute sale into a mortgage. (Paras 5-8) B) Transfer of Property Act - Sale with Condition of Retransfer - Not a Mortgage - A sale with a mere condition of retransfer is not a mortgage. If the sale and agreement to repurchase are embodied in separate documents, the transaction cannot be a mortgage by conditional sale, irrespective of contemporaneous execution. (Paras 7-8) C) Evidence - Contemporaneous Documents - Interpretation - The character of a transaction is to be ascertained from the sale deed itself. A separate agreement for reconveyance cannot alter the recitals in the sale deed to treat it as a mortgage. (Paras 5, 8) D) Property Law - Mutation Entries - Evidentiary Value - Mutation entries in revenue records, though not conclusive, are a formidable circumstance to show that the sale deed conveyed absolute right and title, especially when unchallenged for a long period. (Para 9)
Issue of Consideration
Whether a sale deed executed along with a separate contemporaneous agreement for reconveyance constitutes a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882.
Final Decision
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and restored the judgment and decree of the lower appellate court dismissing the suit. The transaction was held to be an absolute sale, not a mortgage by conditional sale.
Law Points
- Mortgage by conditional sale requires condition embodied in sale deed itself
- Separate contemporaneous agreement for reconveyance does not create mortgage
- Sale with mere condition of retransfer is not a mortgage
- Burden on plaintiff to prove mortgage
- Mutation entries as corroborative evidence of title
