Case Note & Summary
The case involves a second appeal filed by the original defendants against the concurrent decrees of the trial court and the first appellate court, which declared that two sale deeds dated 08.06.1977 and 10.05.1991 were illegal and restrained the defendants from interfering with the plaintiffs' possession. The plaintiffs, Natthu s/o Bhikudeo Dhopre (plaintiff no.1) and another, alleged that the first sale deed was executed as security for a loan of Rs.2,500 taken by plaintiff no.2 for the treatment of plaintiff no.1. There was an oral agreement that the property would be reconveyed upon repayment. The plaintiffs claimed that substantial amounts were repaid, and when they sought to repay the balance of Rs.500, the defendant no.1 refused to accept it and instead mutated his name in revenue records. The plaintiffs filed a suit in 1992 seeking a declaration that the sale deeds were illegal and for permanent injunction. The defendants contended that the sale deed was an out-and-out sale and that the suit was barred by limitation. The trial court decreed the suit, holding that the transaction was a mortgage by conditional sale and that the suit was within limitation. The first appellate court affirmed the decree. In the second appeal, the High Court framed substantial questions of law regarding the nature of the transaction and limitation. The court held that the transaction was a mortgage by conditional sale, as the consideration was inadequate, possession remained with the plaintiffs, and there was an oral agreement to reconvey. The court also held that the suit was not barred by limitation as the cause of action arose when the defendants refused to accept repayment and entered their names in revenue records. The appeal was dismissed, and the concurrent decrees were upheld.
Headnote
A) Transfer of Property Act - Mortgage by Conditional Sale - Section 58(c) - Nature of Transaction - The court examined whether the sale deed dated 08.06.1977 was an out-and-out sale or a mortgage by conditional sale. The plaintiffs contended that the deed was executed as security for a loan, with an oral agreement for reconveyance upon repayment. The court held that the transaction was a mortgage by conditional sale, as the evidence showed the loan amount was small compared to the property value, possession remained with the plaintiff, and there was an oral agreement to reconvey. (Paras 2-10) B) Indian Evidence Act - Admissibility of Oral Evidence - Section 92 - Exception to Bar - The court considered whether oral evidence was admissible to prove that the sale deed was intended as a mortgage. Relying on the proviso to Section 92, the court held that oral evidence is admissible to show that the transaction was a mortgage, as it does not contradict the terms of the deed but explains the real nature of the transaction. (Paras 11-15) C) Limitation Act - Suit for Declaration - Article 58 - Period of Limitation - The court examined whether the suit filed in 1992 was barred by limitation. The cause of action arose when the defendants refused to reconvey the property and entered their names in revenue records in 1985. The court held that the suit was within limitation as the plaintiffs continued to be in possession and the refusal to accept repayment gave rise to a fresh cause of action. (Paras 16-20)
Issue of Consideration
Whether the sale deeds dated 08.06.1977 and 10.05.1991 were out-and-out sales or mortgages by conditional sale, and whether the suit for declaration was barred by limitation.
Final Decision
The High Court dismissed the second appeal, upholding the concurrent decrees of the trial court and first appellate court. The sale deeds were declared illegal, and the defendants were restrained from interfering with the plaintiffs' possession.
Law Points
- Mortgage by conditional sale
- Section 58(c) Transfer of Property Act
- 1882
- Burden of proof on party asserting mortgage
- Admissibility of oral evidence to prove nature of transaction
- Section 92 Indian Evidence Act
- 1872 exception
- Limitation for suit for declaration
- Section 34 Specific Relief Act
- 1963
