Suraj Narain Kapoor vs Pradeep Kumar .

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.1300 OF 2009

SURAJ NARAIN KAPOOR AND OTHERS ........APPELLANT(s)

VERSUS

PRADEEP KUMAR AND OTHERS ......RESPONDENT(s)

JUDGMENT

NAVIN SINHA, J.

The plaintiff’s suit for redemption of mortgage, decreed by

the trial court and affirmed in first appeal, having been

reversed by the High Court, the plaintiff is in appeal. The

parties shall be referred to by their respective position in the

suit, for convenience.

Signature Not Verified 2. Learned counsel for the appellants submits that the High Digitally signed by NEETU KHAJURIA Date: 2017.10.24 17:22:59 IST Reason: Court grievously erred in reversing the concurrent findings of

two courts that Exhibit-A1 was a mortgage by conditional sale, 1 and not a sale deed with an option to repurchase. The

intention of the parties to create a mortgage by conditional

sale only is apparent from the right to redemption being

incorporated in the same document, fulfilling the statutory

requirement under Section 58(C) of the Transfer of Property

Act. Reservation of the right to redemption for five years only,

was not relevant as the right would be co-extensive with the

statutory period of 30 years.

3. Conversely the submission on behalf of the respondents

is that the High Court on an examination of Exhibit-A1 has

rightly held that it was a sale with a condition for repurchase,

and not mortgage by conditional sale. The recitals in the

document were self-explanatory and did not evidence any

mortgage or loan, much less to discharge any debt, or the

relationship of debtor and creditor. Merely because there may

have been an option for repurchase within 5 years

incorporated in the same document, would not ipso fact confer

on it the nature of a mortgage by conditional sale. The suit for

redemption was also not filed within five years.

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4. We have considered the submissions. The question

whether a document is a mortgage by conditional sale, or a

sale with an option to repurchase, is a vexed question to be

determined in the facts of each case. Reference may

appropriately be made to Bhoju Mandal vs. Debnath

Bhagat, 1963 Supp (2) SCR 82, observing as follows:-

4. There is a clear legal distinction between the two concepts, a mortgage by conditional sale and a sale with a condition of re-purchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor. The latter is an out and out sale whereby the owner transfers all his rights in the property to the purchaser reserving a personal right of re-purchase. The question to which category a document belongs presents a real difficulty which can only be solved by ascertaining the intention of the parties on a consideration of the contents of a document and other relevant circumstances. Decided cases have laid down many tests to ascertain the intentions of the parties but they are only illustrative and not exhaustive.

5. The true nature of the document therefore has to be

determined in the facts of each case, dependent on the nature

of the recitals in the document, intention of the parties,

coupled with other attendant surrounding circumstances.

3 There can be no hard and fast rule for determining the nature

of the document, devoid of these circumstances. Precedents,

in abundance, will not suffice alone, as observed in Pandit

Chunchun Jha vs. Sheikh Ebadat Ali and another, 1955

SCR 174, as follows:-

“There are numerous decisions on the point and much industry has been expended in some of the High Courts in collating and analyzing them. We think that it is a fruitless task because two documents are seldom expressed in identical terms and when it is necessary to consider the attendant circumstances the imponderable variables which that brings in its train make it impossible to compare one case with another. Each case must be decided on its own facts.”

6. In the facts of the instant case, considering that the suit

had been decreed by two courts, it was considered prudent to

re-examine the deed document in its original vernacular

version, rather than to rely upon the meaning assigned to the

recitals according to the unofficial translators understanding.

4 7. A bare reading of the original document reveals that it is

styled as a sale deed. The vendor specifically recites that he

had purchased the property for a sum of Rs.1500/- by sale

deed dated 22.6.1948, from its original owners. That he was

the exclusive owner of the property, which was not

encumbered in any manner and that he had absolute title and

authority singularly, to deal with the same to the exclusion of

his brothers, from whom he had separated long ago. He was

selling the shop for a sum of Rs.4000/- because he had

purchased a motor vehicle, which he wanted to run on hire.

On receipt of the consideration money he was voluntarily

transferring all right, title and interest in the property to the

vendee and his legal heirs for all times to come. If the property

was found to be encumbered in any manner, the vendee could

approach the court, for return of the sale amount, including

against the immovable property of the vendor. If the amount

was returned within a period of 5 years, either in installments

or in lump-sum, the purchaser would execute the sale deed in

his favour.

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8. The recitals reveal no reference to any loan taken or

mortgage created with regard to any immovable property as

security for such loan, much less to discharge any debt. It

does not evince the creation of a debtor and creditor

relationship. On the contrary, the recitals are specific that the

vendor was in need of money to run the vehicle purchased by

him on hire, and was selling the shop to raise money for the

purpose. The suit for redemption was also filed beyond the

period of 5 years. Significantly, the first appellate court

observed that the recitals indicated that it was a sale deed, but

concluded that it was a mortgage by conditional sale, only

because the right to redemption was incorporated in the same

document, which was but only one of the factors amongst

others, to determine the true nature of the document.

9. In Tamboli Ramanlal Motilal (Dead) by Lrs. vs.

Ghanchi Chimanlal Keshavlal (Dead) by Lrs. and another,

1993 Supp. (1) SCC 295, the question was similar with regard

to the nature of the document, in absence of any intention

expressed with regard to creation of a debtor and creditor

6 relationship. Holding that the document was not a mortgage

by conditional sale but sale with an option to repurchase, it

was held:-

“17. What does the executant do under the document? He takes a sum of Rs.5,000 in cash. The particulars are (a) Rs.2,499 i.e. Rs. 899 by mortgage of his house on January 27, 1944 and

(b) Rs. 1,600 by a further mortgage on May 31, 1947 totaling to Rs. 2,499. Thereafter, an amount of Rs. 2,501 in cash was taken from the transferee. The purpose was to repay miscellaneous debts and domestic expenses and business. It has to be carefully noted that this amount of Rs.5,000 was not taken as a loan at all. As rightly observed by the High Court, by executing this document the executant discharges all the prior debts and outstandings.

Where, therefore, for a consideration of a sum of Rs.5,000 with the conditional sale is executed, we are unable to see how the relationship of debtor and creditor can be forged in. In other words, by reading the documents as a whole, we are unable to conclude that there is a debt and the relationship between the parties is that of a debtor and a creditor. This is a vital point to determine the nature of the transaction.

18. The property is sold conditionally for a period of five years and possession is handed over. At the same time, the document proceeds to state ’Therefore, you and your heirs and legal representatives are hereafter entitled to use, enjoy and lease the said houses under the ownership right’.” (emphasis supplied)

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10. In the facts and circumstances of the present case, and

for reasons discussed, we find no reason to interfere with the

order impugned holding that the document in question was a

sale deed with an option to repurchase and not a mortgage by

conditional sale.

11. The appeal lacks merits and is dismissed.

………………………………….J. (Ranjan Gogoi)

……….………………………..J. (Navin Sinha) New Delhi, October 24, 2017.

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