Munimalaiyan & Ors  Insc 574 (19 October 2005)
Arijit Pasayat & Dr. Ar.
Lakshmanan Dr. Ar. Lakshmanan, J.
This appeal is directed against the final judgment and order dated
06.03.1998 passed by the High Court of Madras in Second Appeal No. 1966 of 1984
allowing the same and reversing the judgment and order dated 15.11.1983 passed
in A.S. No. 51 and 1982 by the Additional Subordinate Judge, Dharmapuri at
Krishnagiri and restoring the order and judgment dated 20.11.1981 passed by the
District Munsiff, Hosur in O.S.
No. 542 of 1978.
The short facts of the case are as follows:- The defendant is the appellant
in this civil appeal. One Munimalaiyan (plaintiff) executed a simple mortgage
in favour of the appellant for a sum of Rs.3,000/-. For securing the due
repayment, 3 items of properties belonging to Munimalaiyan was given as
security. Munimalaiyan was unable to discharge the simple mortgage and on the
intervention of Panchayatdars, a deed was executed by Munimalaiyan in favour of
the appellant herein (Chennammal). In and by the said deed, one of the
properties which was given as security for the simple mortgage was sold to the
appellant herein with a right reserved to the said Munimalaiyan to repurchase
the same within a period of 3 years on payment of Rs.3,000/-. A legal notice
was issued by the said Munimalaiyan to the appellant herein seeking redemption
of the property which was the subject-matter of the deed dated 22.10.1970. The
appellant issued a reply notice contending that the deed dated 20.10.1970 was a
deed of sale and not a mortgage by conditional sale as sought to be contended
by the said Munimalaiyan.
The said Munimalaiyan instituted a suit in O.S. No. 542 of 1978 on the file
of the District Munsiff, Hosur against the appellant herein praying for a
decree for redemption.
It was contended that the deed dated 20.10.1970 was a mortgage by
conditional sale and that pursuant to the sale, the appellant was put in
possession of the suit property and that the deed is not a sale deed and that a
right to redeem the property within a period of 3 years was reserved and
failing which the appellant herein was entitled to have the patta transferred
in her own name. As on 20.10.1970, the property was valued at Rs.12,500/-. It
was further contended that Munimalaiyan was paying the kist for the suit
properties and that the appellant had raised various crops and derived
sufficient income every year and that the mortgaged debt has to be scaled down
as per Section 8 of Act 5 of 1978 and that since the appellant has been in
possession for 8 years Rs.2,400/- ought to be deducted and that the appellant
herein is entitled only to Rs.600/- as per law and that the said sum of
Rs.600/- has been deposited into Court and that, therefore, the property has to
be re-transferred and possession handed over.
On these allegations the said Munimalaiyan prayed for the aforesaid relief.
Pending the suit, the said Munimalaiyan died and his LRs were brought on
record as his legal representatives and they continued to prosecute the suit.
The appellant herein resisted the suit contending that the deed dated
20.10.1970 was an outright sale and that since Munimalaiyan was unable to
discharge the simple mortgage the deed in question came to be executed and that
the sale consideration under the document was adjusted towards the amounts due
under the simple mortgage deed of the year 1961 and that the said document was
executed on the advise of the Panchayatdars and that half the property is rocky
and unfit for cultivation and that the income therefrom was very meagre and
that a right to repurchase had been reserved under the document within a period
of three years failing which the document stipulated that the appellant would
have absolute rights and that the option to repurchase was not exercised within
the stipulated period of three years and that from the date of the document the
appellant has been in possession as absolute owner and has been paying kist and
that patta has also been transferred in her name and that the appellant had
made certain portions of the property cultivable and the value thereof has
increased and in order to get the benefit of the increase in value the present
suit has been laid wrongly alleging that the document is a mortgage by
conditional sale and that the suit is barred by time and that the provisions of
Act 40 of 1978 are not applicable to the facts of the case and that the
question of scaling down of the debt does not arise and that court fee paid is
incorrect. On these allegations the appellant herein prayed for the dismissal
of the suit.
The District Munsiff, Hosur who tried the suit held that the document in
question which was marked as Exhibit A1/B1 was only a mortgage by conditional
sale and that it is not a sale deed as contended by the appellant herein and
that from the intention of the parties and the document in question, it was
clear that only a mortgage by conditional sale had been executed and that
Munimalaiyan was entitled to the benefits under Act 40 of 1978 and that,
therefore, only Rs.600/- was due and that the question of mesne profits was
relegated to the final decree proceedings. The trial Court thus passed a
preliminary decree for redemption.
Aggrieved by the preliminary decree, the appellant preferred an appeal on
the file of the Additional Subordinate Judge, Dharmapuri. The Additional
Subordinate Judge on an interpretation of the document in question held that
the document was only an outright sale and not a mortgage by conditional sale.
In this view of the matter, the Additional Subordinate Judge allowed the appeal
and thereby set aside the judgment and decree passed by the District Munsiff.
The respondents herein being aggrieved by the appeal being allowed and their
suit being dismissed, preferred S.A. No. 1966 of 1984 on the file of the High
Court at Madras.
S. Jagadeesan, J. who heard the second appeal allowed the same and restored
the judgment and decree of the trial Court by setting aside the judgment and
decree of the Appellate Court. The High Court held that the document in
question is only a mortgage by conditional sale since vesting absolute rights
in the property had been postponed under the document and that since interest
had been paid regularly there was no necessity for a sale deed to be executed
by discharging the earlier mortgage and that there was no necessity for the
appellant to agree to re-convey the property after the period of 3 years and
that the value of the property though Rs.12,500/- had been shown as only
Rs.3,000/- and that all these factors could only lead one to conclude that the
document in question is only a mortgage by conditional sale. On these findings,
the second appeal was allowed.
We have carefully perused the judgment under appeal in the second appeal and
also the judgment and decree passed by the Appellate Court and also of the
trial Court and perused the document conditional deed of sale for Rs.3,000/-
We have also perused the certified copy of the Tamil version of the document
and the translated English version.
We heard Mr. V. Prabhakar, learned counsel for the appellant/defendant and
K.K. Mani, learned counsel for the respondents/plaintiffs.
Mr. V. Prabhakar, learned counsel for the appellant, made the following
submissions:- 1) the recitals in the disputed document Ex.A1/B1 are unambiguous
and clearly refer to an absolute sale and not a mortgage by conditional sale;
2) the document in question had been executed due to the inability to
discharge the principal under the simple mortgage and, therefore, the High Court
should have held that the document in question is an outright sale;
3) the High Court has overlooked the very fact that the document in question
recites that the property would be reconveyed if the money is paid within 3
years would clearly show that a right of re-purchase alone had been reserved
while the sale effected was absolute;
4) the High Court has failed to note that the absence of stipulation as to
payment of interest but containing recitals as to payment of taxes, handing
over of possession and a right to re-purchase the property coupled with a
pointed recital that the sale is being effected would clearly establish that
the document in question is an outright sale;
5) that the term "mortgage by conditional sale" referred to in
Section 58(c) of the Transfer of
Property Act, 1882 could only mean that an ostensible sale effected with
the right to redeem being reserved vide in instant case an outright sale has
been effected with a right to re- purchase alone being reserved which is
sufficient in itself to indicate that the document in question is an outright
6) that the High Court erred in interpreting the document in question as one
of mortgage by conditional sale despite clear recitals therein that the sale is
an absolute sale;
7) that the respondents having lost the right to re-purchase the property by
not exercising the option as recited in the document within the period
stipulated therein cannot turn around and contend that the document in question
is a mortgage by conditional sale.
Mr. Prabhakar, learned counsel for the appellant, has taken us through the
pleadings, judgments and also the Ex.A1/B1. In support of his contention, he
relied on the following judgments:- 1) Tamboli Ramanlal Motilal (dead) by L.Rs.
vs. Ghanchi Chimanlal Keshavlal (dead) by L.Rs. and Another, AIR 1992 SC 1236
2) Chunchun Jha vs. Ebadat Ali and Another, AIR 1954 SC 345 3) Bhaskar Waman
Joshi (deceased) and Others vs. Shrinarayan Rambilas Agarwal (deceased) and
Others, AIR 1960 SC 301 4) Umabai and Another vs. Nilkanth Dhondiba Chavan
(dead) by LRs and Another, (2005) 6 SCC 243 According to Mr. K.K. Mani, learned
counsel for the respondents, the document in question was a) a mortgage by conditional
b) pursuant to the sale, the appellant was put in possession of the suit
c) right to redeem the property within a period of 3 years was reserved
failing which the appellant was entitled to have the patta transferred in her
d) though the value of the property as on 22.10.1970 was Rs.12,500/- but the
deed was executed for Rs.3,000/-;
e) since Munimalaiyan was unable to discharge the simple mortgage, he
executed the document in favour of the appellant herein;
f) one of the property which was given as security for the simple mortgage
was sold to the appellant with a right reserved to Munimalaiyan to re-purchase
the same within a period of 3 years on payment of Rs.3,000/-.
He also invited our attention to the very same Ex.A1/B1 and placed strong
reliance on the judgment of this Court in P.L. Bapuswami vs. N. Pattay Gounder,
AIR 1966 SC 902 In the above factual background, the only question for
determination is whether the document in question is a mortgage by conditional sale
as contended by plaintiff/respondent herein or a sale out and out with a
condition of re-purchase as alleged by the defendants. If the former, the
plaintiff/respondent succeeds. If the latter appellant/defendant are out of
Court. Therefore, the entire case is based on the construction of the document.
Before proceeding to consider the rival submissions, we feel it is
beneficial to reproduce the conditional deed of sale for Rs.3,000/- i.e.
Ex.A1/B1 document "Conditional Deed of Sale executed on 22.10.1970 (Twenty
Second Day of October, Nineteen Seventy) by Munimayan, S/O Ariyan, Harijan,
Cultivation residing at No. 252, Odyanda Halli, Kuruppu, Odayanda Halli
Village, Denkanikottai Taluk, in favour of Chennammal, W/O Govindachami,
residing at the said village, in respect of the properties mentioned hereunder
in the presence of the Panchayatadar mentioned hereunder is as follows:
The Punja Land described hereunder is belonging to me as self acquired
property and in my possession and enjoyment and registered as Document No.
4625/1961 dated 20.12.1961.
(1 Book 867 Volume Pages 63 to 70). As per the advice of the Panchayatdar I
have executed this Deed of Sale in respect of the said Punja Lands (inclusive
of the same properties) in favour of you for consideration of Rs.3,000/-
(Rupees three thousand only). Since I could not pay the principle amount of
Rs.3,000/- found in the document, I have handed over the possession of the
undermentioned property to you today in the presence of the witnesses signed
hereunder. Since I have received the sale consideration by way of returning the
document dated 20.12.1961. I shall purchase the said property from you within
the period of three years, at my cost. Till then, you shall pay the kist to the
Government from Fasli 1380. In case of failure on my part to purchase the
property from you within the period of three years, you and your heirs shall
hold and enjoy the property with absolute rights, from the next day onwards. I
undertake that neither my heirs nor myself and would give any trouble by
indulging in civil and criminal proceedings, in respect of the said property.
If it is so, it has no proof. My heirs and myself shall stand surety for the
said sale consideration of Rs.3,000/-. You shall apply for transfer of patta for
the property on the next day of the expiry of the three years period. I shall
not raise any objection, then. This property is situated within the limits of
Kelamangalam Panchayat Union, Rayalkottai, Panchayat.
SCHEDULE OF PROPERTY Dharmapuri Dist. Rayakottai Sub-Registration District Denkarikottai
Taluk 256 No. Oadayanda Halli Group Thinu Halli Village, West of the land
belonging to Manthedu Gounder, East of the land belonging to Kalan and
South of the Onipuram Pathway; comprised within these limits, Punja AC.8.05
in Re-survey No. 80/1 Kist is 9.02. The said extent of the land is the subject
matter of this conditional sale.
Present value Rs.12,500/-.
L.T.I. of Munimayan WITNESSES 1) Venkatappan s/o Thayappan @ Venkatan,
Oadayanda Halli 2) M.M. Ramaiah, s/o M. Munivenkatan, Royakottai 3) L.T.I. of
Narayana Gounder, s/o Thimmu Gounder, Oadayanda Halli Scribed by : R.V.
Venkataraman." A careful perusal of the document would clearly show that
the document has been couched in a simple Tamil language. The recitals are
clear and unambiguous. It is seen from the document that Munimalaiyan was
unable to discharge the simple mortgage. Panchayatdars intervene and amicably
settled the matter. A deed was executed thereupon by Munimalaiyan in favour of
the appellant herein and in and by the said deed one of the properties which
was given as security for the simple mortgage was sold to the appellant with a
right reserved to the said Munimalaiyan to re- purchase the same within a
period of 3 years on payment of Rs.3,000/-. The right to redeem the property
within a period of 3 years was specifically reserved. The recitals, in our
opinion, would only show that the deed in question is not a deed of sale but a
mortgage by conditional sale.
Section 58(c) of the Transfer of
Property Act, 1882 deals with mortgage by conditional sale. The said
section reads thus:
"58(c) Mortgage by conditional sale Where, the mortgagor ostensibly
sells the mortgaged property- on condition that on default of payment of the
mortgage-money on a certain date the sale shall become absolute, or on
condition that on such payment being made the sale shall become void, or on
condition that on such payment being made the buyer shall transfer the property
to the seller, the transaction is called mortgage by conditional sale and the
mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to be a mortgage, unless
the condition is embodied in the document which effects or purports to effect
the sale." A mortgage by conditional sale takes the form of an ostensible
sale of the property with the condition superadded that it shall become an
absolute sale on default of payment on a certain date or subject to the proviso
that the sale shall be treated as void and the property re-transferred on
payment being made.
We shall now consider the judgments cited;
1) Tamboli Ramanlal Motilal (dead) by L.Rs. vs. Ghanchi Chimanlal Keshavlal
(dead) by L.Rs. and Another, AIR 1992 SC 1236 This Court, in this case, held as
"13. The attendant circumstances could be looked into only to gather
the intention. Such an intention, if explicitly expressed in the document
itself, there is no scope for looking at the attendant circumstances. If,
therefore, there is no relationship of the debtor and the creditor, the
question of it being a mortgage by conditional sale does not arise.
16. In order to appreciate the respective contentions, it is necessary for
us to analyse Ex.26 dated 11.12.1950. Before that, it is necessary to utter a
word of caution. Having regard to the nice distinctions between a mortgage by
conditional sale and a sale with an option to repurchase, one should be guided
by the terms of the document alone without much help from the case law. Of
course, cases could be referred for the purposes of interpreting a particular
clause to gather the intention. Then again, it is also settled law that
nomenclature of the document is hardly conclusive and much importance cannot be
attached to the nomenclature alone since it is the real intention which
requires to be gathered. It is from this angle we propose to analyse the
document. No doubt the document is styled as a deed of conditional sale, but as
we have just now observed, that is not conclusive of the matter." 2)
Chunchun Jha vs. Ebadat Ali and Another, AIR 1954 SC 345 We have perused the
above judgment. The judgment explains as to how a document has to be construed.
The judgment says that the intention must be gathered from the document itself
and if the words are express and clear, effect must be given to them and any
extraneous enquiry into what was thought or intended is ruled out. The real
question in such a case is not what the parties intended or meant but what is
the legal effect of the words which they used and if there is ambiguity in the
language employed, then it is permissible to look to the surrounding
circumstances to determine what was intended.
3) Bhaskar Waman Joshi (deceased) and Others vs. Shrinarayan Rambilas
Agarwal (deceased) and Others, AIR 1960 SC 301 This Court, in this case, has
explained the circumstance that the condition incorporated in the sale deed
must undoubtedly be taken into account, but the value to be attached thereto
must vary with the degree of formality attending upon the transaction. The
definition of a mortgage by conditional sale postulates the creation by the
transfer of a relation of mortgagor and the mortgagee, the price being charged
on the property conveyed. This Court further held that in a sale coupled with
an agreement to re-convey there is no relation of debtor and creditor nor is
the price charged upon the property conveyed, but the sale is subject to an
obligation to retransfer the property within the specified period. This Court
also held that the question in each case is one of determination of the real
character of the transaction to be ascertained from the provisions of the deed
viewed in the light of surrounding circumstances. If the words are plain and
unambiguous they must in the light of the evidence of surrounding circumstances
be given their true legal effect. If there is ambiguity in the language
employed, the intention may be ascertained from the contents of the deed with
such extrinsic evidence as may by law be permitted to be adduced to show in
what manner the language of the deed was relating to existing facts.
4) Umabai and Another vs. Nilkanth Dhondiba Chavan (dead) by LRs and
Another, (2005) 6 SCC 243 Paras 19 & 21 of the above judgment was relied on
by counsel for the appellant which reads thus:
"19. It may be true that level of a document is not decisive. The true
nature of transaction must be determined having regard to the intention of the
parties as well as the circumstances attributing thereto as also the wordings
used in the document in question.
21. There exists a distinction between mortgage by conditional sale and a
sale with a condition of repurchase. In a mortgage, the debt subsists and a
right to redeem remains with the debtor; but a sale with a condition of
repurchase is not a lending and borrowing arrangement. There does not exist any
debt and no right to redeem is reserved thereby. An agreement to sell confers
merely a personal right which can be enforced strictly according to the terms
of the deed and at the time agreed upon. Proviso appended to Section 58(c),
however, states that if the condition for retransfer is not embodied in the
document which effects or purports to effect a sale, the transaction will not
be regarded as a mortgage. (See Pandit Chunchun Jha vs. Sk. Ebadat Ali, (1955)
1 SCR 174, Bhaskar Waman Joshi v. Narayan Ramblidas Agarwal, (1960) 2 SCR 117,
K. Simrathmull v. S. Nanjalingiah Gowder, 1962 Supp (3) SCR 476, Mushir
Mohammed Khan v. Sajeda Bano, (2000) 3 SCC 536 and Tamboli Ramanlal Motilal v.
Ghanchi Chimanlal Keshavlal,1993 Supp (1) SCC 295." 5) P.L. Bapuswami vs.
N. Pattay Gounder, AIR 1966 SC 902 (Four Judges) was cited by Mr. K.K. Mani,
learned counsel appearing for the respondent.
In this case, one Palani Moopan executed a document in favour of the
defendant for a consideration of Rs.4,000/- on May 28, 1946. The document was
in the form of a sale-deed but it contained a stipulation that the first
defendant should re- convey the property to Palani Moopan on his repaying the
amount of Rs.4,000/- after 5 years and before the end of the 7th year. This
Court held as under:
"that there were several circumstances to indicate that the document
was a transaction of mortgage by conditional sale and not a sale with a
condition for retransfer. In the first place, the condition for repurchase was
embodied in the same document. In the second place, the consideration for the
transaction was Rs.4,000/- while the real value of the property was Rs.8,000/-.
In the third place, the patta was not transferred to the 1st defendant after
the execution of the document by Palani Moopan. The kist for the land was also
continued to be paid by Palani Moopan and after his death, by his sons. Lastly,
the consideration for reconveyance was Rs.4,000/-, the same amount as the
consideration for the original transaction. The plaintiff was entitled to
preliminary decree for redemption under O.34, R.7, Civil Procedure Code, for
taking accounts and for declaration of the amounts due to the 1st defendant
under the document." The above judgment, in our opinion, squarely applies
to the facts and circumstances of the case on hand. They are:
1) the transaction in question is a mortgage by conditional sale;
2) the condition for re-purchase of 3 years was embodied in the same
3) the consideration for the transaction was Rs.3,000/- while the real value
of the property was Rs.12,500/-;
4) patta was not transferred to the defendant after the execution of the
5) as per the evidence available on record, the kist for the land was
continued to be paid by the plaintiff Munimalaiyan;
6) the consideration for re-conveyance was only for Rs.3,000/-;
7) the appellant was given liberty to have the patta transferred and also to
enjoy the property absolutely after the period of 3 years expired;
8) the trial Court granted a preliminary decree which was reversed by the
lower Appellate court and again interfered with by the High Court.
We have considered all the attendant circumstances to cover the intention of
the parties. The intention is explicitly expressed in the document itself.
There is, therefore, no scope for looking at the attendant circumstances. There
is no relationship of the debtor and the creditor. This Court also in Tamboli
Ramanlal Motilal (dead) by L.Rs.
vs. Ghanchi Chimanlal Keshavlal (dead) by L.Rs. and Another, AIR 1992 SC
1236 has pointed out that the Court should be guided by the terms of the
document alone without much help from the case law. Viewed from any angle, we
are of the opinion that the document in question is a mortgage by conditional
In the result, the appeal stands dismissed and the judgment and decree of
the High Court is affirmed. However, we order no costs.