C. Cheriathan Vs. P.
Narayanan Embranthiri  INSC 2210 (18 December 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7400 OF 2008 (Arising
out of SLP (C) No.2227 of 2007) C. Cheriathan ... Appellant Versus P. Narayanan
Embranthiri & Ors. ... Respondent JUDGM ENT S.B. Sinha, J.
of a deed dated 27.10.1969 as to whether the same is one of absolute conveyance
with a condition of repurchase or a mortgage with conditional sale, is the
question involved in this appeal which arises out of a judgment and order dated
1.11.2006 passed by the High Court of Kerala in Second Appeal No.290 of 2003
setting aside a judgment and 2 decree dated 28.11.1988 passed by the Munsif's
Court, Manjeri in Original Suit No.458 of 1984.
herein was owner of the land in question. He took the said land on lease with
one Cheriathan jointly from one Gopalan Nair by reason of a deed of conveyance
dated 21.12.1967. They made improvements. They constructed buildings thereupon.
Half of the said leasehold rights was sought to be conveyed in favour of the
appellant by reason of the said deed. Indisputably, the first respondent
executed a deed of assignment in favour of the V. Devaki Amma in respect of his
half share for a consideration to repurchase the same by a document dated
She, by a deed of
assignment dated 2.3.1976, transferred her right, title and interest being half
of the property to the appellant and, thus, according to him, he became the
full owner thereof.
the appellant was granted a purchase certificate under the Kerala Land Reforms
Act in respect of the entire property in the year 1978. First Respondent did
not take any step to set aside the said certificate for a long time. Only in
the year 1984, he filed a suit for redemption of mortgage and partition in
respect of his half share in the property alleging that the said deed dated
27.10.1969 represented only a loan transaction. Appellant herein, however, took
the usual stand that the 3 said deed is in effect and substance a deed of sale
with a condition to repurchase.
In view of the
pleadings of the parties, several issues were framed;
issue No.4 being :
"4. Whether the
transaction involved in document No.276/1970 is a mortgage?"
3. On construction of
the document in question, the learned Trial Judge opined that the transaction
represented a sale. On an appeal having been preferred thereagainst by the
respondent, the First Appellate Court held that the transaction was a mortgage
by conditional sale and as the respondent did not exercise his option to
repurchase the property within a period of three years, the said sale has
Respondent filed a
second appeal before the High Court which by reason of the impugned judgment
has been allowed interpreting the said document to be a deed of mortgage and
consequently holding that the suit for partition and redemption was
Krishnamoorthy, learned senior counsel appearing on behalf of the appellant,
would submit that the High Court committed a serious error in passing the
impugned judgment in so far as it failed to construe the 4 provisions of
Section 58 of the Transfer of Property Act in its proper perspective. It was urged
that apart from the fact that the value of the property could not have been
assessed at Rs.6,800/-, the High Court ignored that only half share thereof was
transferred. It furthermore failed to take into consideration that no evidence
had been brought on record to establish the relationship of creditor and
borrower between the parties. Possession having been delivered, permission to
attorn having been given and no interest having been stipulated, it was
submitted, the High Court should have construed the document to be one of
absolute sale with a condition of repurchase.
counsel appearing on behalf of the respondent No.1, on the other hand, would
contend that as appellant did not prefer any appeal against the judgment and
order passed by the First Appellate Court, the contentions raised before us
should not be permitted to be raised. For the said purpose, it was contended,
even the provisions of Order 41 Rule 33 of the Code of Civil Procedure would
not be applicable.
embarking upon the rival contentions raised before us, we may notice the
relevant portions of the deed in question which are (as translated by the
parties) as under :
scheduled property was outstanding (sic) on lease with Gopalan Nair from whom
by Document No.2034 of 1967 myself and Cheriyathan jointly got an assignment of
lease hold right and are enjoying the same by effecting improvements and
buildings and I humbly (sic) conditionally assign my one half right over the
property with possession and with the improvements thereon with a stipulation
that within a period of 3 years from today, I shall repurchase the same at my
expense. I have received the sale consideration of Rs.2,000/- in cash from you
and I hereby relinquish all my = right over the scheduled property and hence by
this assignment from today till the period is over you are entitled to enjoy
the schedule property as a sale by efflux of time and thereafter as an absolute
sale. You will be entitled to directly attorn to the landlord by paying rent
and hereafter I will have no right to deal with the property in any manner.
Original sale deed is
not handed over as it is a joint document and I hereby assure you that there
are no encumbrances created in respect of my half share."
a document is a mortgage by conditional sale or a sale with a condition of
repurchase is a vexed question.
Section 58(c) of the
Transfer of Property Act, 1882 reads thus :
"Section 58 -
"Mortgage", "mortgagor", "mortgagee",
"mortgage-money" and "mortgage- deed" defined - (a) ...
6 (b) ...
(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 a
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."
of the ingredients for determining the true nature of transaction, therefore,
is that the condition of repurchase should be embodied in the document which
effects or purports to effect the sale. Indisputably, the said condition is
satisfied in the present case.
document, as is well known, must be read in its entirety. When character of a
document is in question, although the heading thereof would not be conclusive,
it plays a significant role. Intention of the parties must be 7 gathered from
the document itself but therefor circumstances attending thereto would also be
relevant; particularly when the relationship between the parties is in
question. For the said purpose, it is essential that all parts of the deed
should be read in their entirety. [See P.S. Ramakrishna Reddy v. M.K.
Bhagyalakshmi & Anr. [(2007) 10 SCC 231].
State Bank of India & Anr. v. Mula Sahakari Sakhar Karkhana Ltd. [(2006) 6
SCC 293], it was held :
"22. A document,
as is well known, must primarily be construed on the basis of the terms and
conditions contained therein. It is also trite that while construing a document
the court shall not supply any words which the author thereof did not
deed in question is said to be a deed of sale. The source of title has been
disclosed. What was sought to be conveyed thereby was the leasehold interest.
Assignment was in respect of the vendor's one half share in the property.
Possession of the properties had been handed over. A stipulation was made
therein that the vendor shall repurchase the same at his expenses within a
period of three years from the date of execution thereof.
receipt of sale consideration of Rs.2,000/- in cash. The vendor relinquished
all his right over the scheduled property. However, the 8 nature of assignment
was sought to be clarified as the words "till the period is over" and
"efflux of time and thereafter as an absolute sale" are used.
It is significant
that thereby the vendee in terms of the said instrument became entitled to
attorn to the landlord by paying stipulated rent evidently as a tenant and not
as a mortgagee. The vendor accepted that he would have no right to deal with
the property in any manner. The reason why the original deed of sale had not
been handed over was also explained.
Declaration has been
made that no encumbrances had been created in respect of the vendor's share in
High Court in its judgment proceeded on the basis that the value of the
property was Rs.6,800/- and, thus, consideration of Rs.2,000/- ex facie was
insufficient. What was not noticed was that by reason of the said deed only
half of the right of the vendor was sought to be assigned. It is also not in
dispute that the appellant had already acquired the right, title and interest
in respect of the other half of the property. As the word `repurchase' has been
used, the respondent was aware that he has to repurchase the transferred
property. What would be the consideration for repurchase has not been stated.
Ordinarily, in a case where deed of mortgage is executed with a condition of
repurchase, the amount of consideration remains the same.
9 We would, however,
assume that the intention of the parties was that amount of consideration would
remain the same. The time for repurchase, however, has been specified, namely,
three years. No evidence has been brought on record to show that any
relationship of creditor and borrower had come into being. As indicated
hereinbefore, appellant had been permitted to attorn to the landlord.
as to enable us to determine the vexed question, it may be profitable to notice
a few decisions of this Court on some of which the High Court relied upon.
In Seth Gangadhar v.
Shankar Lal & Ors. [1959 SCR 509] whereupon reliance has been placed by the
High Court, it was admitted that the transaction was that of a mortgage and
Section 60 of the Transfer of Property Act was applicable. It is in that view
of the matter, this Court held that the right of redemption could not have been
taken away. The Court held that therein the term of mortgage was 85 years and
there existed no stipulation entitling the mortgagor to redeem during that term
which had not expired. The document in question was held by this Court to be
containing a stipulation creating a clog on the equity of redemption which was
found to be illegal. Such is not the case here.
Pomal Kanji Govindji & Ors. v. Vrajlal Karsandas Purohit & Ors. [(1989)
1 SCC 458], this Court held that whether a clause used in a transaction of
mortgage amounted to clog on the equity of redemption is a mixed question of
law and fact. In that case, there existed a provision for payment of interest
at the rate of half per cent per annum payable on the principal amount at the
end of the long period which led this Court to conclude that there was a clog
on equity on redemption. Furthermore, in that case, materials were brought on
record to show that the transaction was entered into by way of security for the
loan obtained In Shivdev Singh & Anr. v. Sucha Singh & Anr. [(2000) 4
SCC 326], this Court was dealing with a case of anomalous mortgage. Therein the
mortgage was to remain operative for a period of 99 years. It was in that
situation, this Court opined that the original owner having been in great
financial difficulty, the mortgagees took advantage of the said fact and
incorporated a 99 year's term which constituted a clog on the equity of
In this case, the
term is only for a period of three years which is reasonable.
11 We may notice
that in Bishwanath Prasad Singh v. Rajendra Prasad & Anr. [(2006) 4 SCC
432], upon taking notice of a large number of decisions, this Court observing
that therein no stipulation had been made that the vendee could not transfer
the property and his name was mutated, held :
"18. We have
noticed hereinbefore that the nature of deed was stated to be an agreement
(ekrarnama), the nature of the document was not stated to be
"bai-ul-wafa", the relevant clause whereof reads as under:
vendor today of this date has sold the property of this deed to the vendee
through registered agreement on the vaibulwafa condition and during this period
the vendor and the vendee have already agreed that this case will remain as
vaibulwafa and as per the said sarait, the vendor of this deed agrees that the
vendee of this deed or his successors or heirs whenever will pay the
consideration amount of this deed amount to Rs.3000 (three thousand) within 23
months from today i.e. up to the month of June 1978 after harvesting of the
crops i.e. paddy or rabi, then I the vendor or my legal heirs or my successors
after receiving the said consideration amount of Rs.3000 will execute the sale
deed pertaining to the property mentioned in column 5 of this deed in favour of
the vendee or his legal heirs or successor."
19. It is of some
significance to note that therein the expressions "vendor",
"vendee", "sold" and "consideration" have been
used. These expressions together with the fact that the sale 12 deed was to be
executed within a period of 23 months i.e. up to June 1978, evidently the
expression "vaibulwafa" as a condition was loosely used.
20. Furthermore, the
agreement was also executed for a fixed period. The other terms and conditions
of the said agreement (ekrarnama) also clearly go to show that the parties
understood the same to be a deed of reconveyance and not mortgage or a
Pratap Singh, it must be placed on record, was distinguished on facts in Tulsi
& Ors. v. Chandrika Prasad & Ors. [(2006) 8 SCC 322], stating :
"18. In the
instant case, the scribe of the document was examined. His categorical
statement was that he had been asked by the parties to scribe a deed of
mortgage and not a deed of sale. Respondent 1, as noticed hereinbefore, in the
document itself categorically stated that he was executing a deed of mortgage.
Indisputably, the amount of stamp duty was also paid by him. In a case of deed
of sale, ordinarily the transferee pays the stamp duty.
Why such a deviation
from the normal practice was made has not been explained by the appellant.
19. We have noticed
hereinbefore that the nature of the deed described that the document is
ambiguous as both the terms viz. "Kewala" and "Baibulwafa",
were mentioned. The transaction, however, categorically states that Appellant 1
was to maintain the property in its present condition.
Of course, permission
for reconstruction of the structure was granted. But, if the intention of the
parties was to transfer the property absolutely, no 13 such stipulation was
required to be made at all. In a case of absolute transfer, the vendee has an
absolute right to deal with his property in any manner he likes. It was clearly
stipulated in the deed that in the event the executant repayed the entire
consideration by 30-12-1971, the purchaser would reconvey the property and
furthermore deliver possession thereof. The sale was to become absolute only
when the transferee failed to pay the said amount within the stipulated period.
The courts below have also taken into consideration the contemporaneous conduct
of the parties in treating the transaction to be one of mortgage and not of
sale. We are, therefore, of the opinion that the parties intended to enter into
a transaction of mortgage and not sale."
Manjabai Krishna Patil (D) by LRs. v. Raghunath Revaji Patil & Anr. [2007
(3) SCALE 331], this Court opined that no relationship of debtor and creditor
having come into being and no security had been created, the instrument in
question was a deed of sale with a condition of repurchase.
important factor which must be borne in mind in construing the instrument in
question is that appellant was already the owner in respect of half of the
property. As the parties were related to each other, it is difficult to
conceive that the other half of the property would be subject to mortgage and
not a sale. The intention of appellant that by reason of the said transaction
dated 27.10.1969, he would become the owner of the entire property was obvious.
of the learned counsel that contentions raised before us on behalf of the
appellant were not available as the finding of the learned First Appellate
Court to the effect that the transaction evidenced on mortgage with conditional
sale does not appeal to us. Despite arriving at the said finding, the appeal of
respondent was dismissed and in that view of the matter, it was not open to
appellant to prefer an independent appeal thereagainst. Order 41 Rule 22 of the
Code of Civil Procedure, therefore, had no application. It is in the
aforementioned situation, it was legally permissible for the appellant to
support the decree passed in his favour by attacking the finding of the First
Appellant Court which were made against him. Order 41 Rule 33 of the Code of
Civil Procedure, therefore, was available in this case. In S. Nazeer Ahmed v.
State Bank of Mysore & Ors. [(2007 (11) SCC 75], this Court held :
"Order 41 Rule
33 enables the appellate court to pass any decree that ought to have been
passed by the trial court or grant any further decree as the case may require
and the power could be exercised notwithstanding that the appeal was only
against a part of the decree and could even be exercised in favour of the
respondents, though the respondents might not have filed any appeal or
objection against what has been decreed."
the reasons aforementioned, the impugned judgment cannot be sustained. It is
set aside accordingly. The appeal is allowed. In the facts and circumstances of
the case, however, there shall be no order as to costs.