Bhoju Mandal Vs. Debnath Bhagat 
INSC 313 (14 November 1962)
IMAM, SYED JAFFER MUDHOLKAR, J.R.
CITATION: 1963 AIR 1906 1963 SCR Supl. (2) 82
Construction of Document-Mortgage by
conditional saleSale with a condition of repurchase-Distinction-Intention of
The High Court in dismissing the suit for
redemption brought by the appellant in reversal of the decisions of the courts
below held that the document on which the suit was based was one of sale and
not a mortgage by conditional sale. It was executed to meet pressing demands
and not merely , to discharge a previous mortgage in favour of the respondent.
it provided that in case of defect of title
and consequent dispossession of the vendees, the executants would remain bound
to refund, the consideration with interest which would be a charge on the
property and that the executant would pay the rent for a short period after the
execution. The document described itself as "tamashuk sarti kebala".
The total area of the land mortgaged. to the respondent in the previous year
was 13.17 acres and the amount advanced was Rs. 1,600/-. Only a year thereafter
12.6 acres out of the aforesaid area were transferred for Rs. 2,800/to the
respondents who were put in possession. There was no dispute that the lattter
amount represented the real value of the land.
Held, that there is a clear distinction
between A mortgagee by conditional sale and a sale with a condition of
repurchase. The former is a niortgagee and the right to redeem remains with.
the debtor. The latter is an out and out sale by which by the owner divest and
his rights to the property, reserving a right of repurchase. The question to
which category a document belongs can be decided only by ascertaining the
intention of the parties on a consideration of the document and other relevant
circumstances. Decided cases are only illustrative and not exhaustive.
In the instant case, the cumulative effect of
the terms of the document and the surrounding circumstances left no manner of
doubt that the document in question was not a mortgage but 83 a sale with . the
condition of repurchase. Whatever ambiguity there, might,, be in the document
the crucial circumstance that smaller area of the land was sold for a
higher-amount in discharge of an earlier mortgage of a large area for a smaller
amount, 'left no doubt as to the real character of the document.
Pandit Chunchun Jha v. Sheikh Ebadat Ali
 1 S.C.R.
A decision on the construction of a document
can hardly afford any guidance for ascertaining the intention of the parties in
another unless the terms used arc exactly similar.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No.204 of 1960.
Appeal by special leave from the judgment and
decree dated -March 31., 1958 of the Patna High Court in Appeal from Appellate
Decree No. 582 of 1954.
Jagadish Ohandra Sinha and R. R. Biswas, for
Bhawani Lal and P. C. Agarwala, for
Respondents.Nos. I to 16.
1962. November 14. The judgment of the Court
was delivered by SUBBA RAO, J -The only question in this appealis whether the
suit document is a mortgage by, conditional sale or a sale with a condition of
The facts that gave rise; to this appeal may
be briefly stated : On February 2, 1924, the appellants 1 & 2, their father
late Matooki Mandal and their uncle late 'Lila Maridal executed a deed
purporting to-convey a property of the extent of 12.6 acres in favour of
respondents 1 & 2 for a consideration of Rs, 2,800/and put them in
possession of the same. In 1950 the appellants instituted 'title suit No. 73 of
84 1950 in the Court of the Munsif, 1st Court, Bhagalpur, Bihar for redemption
on the ground that the said document was a mortgage by conditional sale. The
contesting defendants i.
e., respondents 1 & 2 pleaded that the
said document was not a mortgage but an out and out sale and therefore the suit
for redeemption was not maintainable. The Munsif and on appeal the Subordinate
judge, Bhagalpur, accepted the contention of the appellant and decreed the suit
but on second appeal the High Court held that the document was a sale and on
that finding the appeal was allowed and the suit was dismissed with costs
throughout. The appellants by Special cave preferred the present appeal against
the decree and judgment of the High Court.
The only question in this appeal is whether
the said document is a mortgage or sale. As the question turns upon the
construction of the provisions of the sale deed, it would be convenient to read
the document as the High Court did omitting the unnecessary words :"1. We,
the executants, executed a registered Sudbharna bond, dated 1-3-1923, in favour
of Deonath Bhagat and Raghunath Bhagat and received the entire consideration
2. We, the executants, are badly in need of
some money in cash for repayment of debt of Sumeri Kapri and are in great need
of some more money in cash for meeting the expenses of cultivation, purchasing
bullocks and also for meeting the household expenses and repayment of petty
debts to creditors.
3. We, the executants, cannot arrange the
aforesaid money in cash without selling some property.
4. Deonath Bhagat and Raghunath Bhagat
aforesaid have, not up till now entered into 85 possession of the Sudbharna
property and they are, making a demand for the money and it is absolutely
necessary to repay the money to the said creditors.
5. Hence on negotiation for sale of the some
property with the said Bhagats by way of conditional sale the said Bhagats
agreed to purchase our property and to pay money in cash for repayment of the
debts of Sumeri Kapri and for meeting other expenses.
6. Hence we, the executants, have sold and
vended 12.6 acres of Nakdi jot land for Rs. 2,800/to Deonath Bhagat and
7 . We declare that in the month of Baisakh
1334 Fasli we shall on repayment of the said amount in full and in one lump sum
to the said Bhagats, take back the vended property from the said Bhagats and,
that in case of failure of repayment of the consideration money of this deed of
sale in full within the stipulated time, this deed of sale will remain in force
and we the executants, or our heirs, shall not be competent to demand the
return of the vended property.
8. Out of the consideration money of this
sale deed Rs. 1,600/due to the said Bhagats under the bond dated 1-3-1923 was
paid up in full and on receipt of the remaining consideration money the dues of
Sumeri Kapri amounting to Rs. 500/was paid up and with the balance of Rs. 700/we
met the above expenses.
9. We, the executants, put the said vendees
in possession of the vended property and authorise 86 them, to remain in
possession thereof and appropriate the produce thereof in such manner as, they
like and, the payment of the rent of the vended land from 1332 fasli remained
the concern of the said vendees.
10. If due to a defect in, the title the said
vendees are dispossessed of the vended property or any portion thereof, we
shall, be liable to refund the consideration money of the sale deed with
interest at the rate of, Rs,, 3/2/per hundred rupees per month.
11. Whatever rights and interests they said
vendees had under the bond' dated 1-3-1923 remained, intact under the sale
12. Hence we have put into writing these few
words by way of a deed of absolute sale conditional sale, so, that it may be of
use when required," There is a clear legal distinction, between the two
concepts-a mortgage by conditional sale and, a sale with a condition of
repurchase. 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 intend 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. Let us therefore look at the terms of the
document extracted above.
The learned, counsel for the appellant relied
87 upon the following circumstance &:
1. The consideration of the document went
mainly in the dscharge of a registered sudbharna bond dated March 1, 1923,
given in favour of the respondents 1 & 2. It indicates that relationship
'of: creditor and debtor was continued under-the document.
2. There are no words of conveyance in the
3. There are no words of re-conveyance after
the stipulated date.
4. There is a term that if there was a defect
in the title and the vendees we're dispossessed the executants would be liable
to the refund of the consideration with interest with a charge on the property
covered by the document.
The term creating a charge on the property
transferred it is said indicates that the executants contained to be the owners
of the land despite the document.
5. The executants took upon themselves the
liability of the entire rent for 13311 falsi though the document was executed
in the Magh of 1331 fasli. The fact that the executant s continued to be liable
to pay for a period after the execution of the sale deed,it is suggested
indicates that the document was not an out and out sale but one in which the
appellants continued to have an interest in the land.
6. In the execution portion of the document
it is describecd as 'tamashuk sarti kebala'and the appellants' counsel says
that the said expression means mortgage conditional sale.
88 If there was any ambiguity in the rest of
the document the argument proceeds that the parties clearly expressed their
intention by so describing the nature of the document.
It is not accurate to say that the suit
document was executed 'only to discharge the mortgage bond dated March 1, 1923.
The document itself narrates that the executants were badly in need of money
not only for repaying the debt under the said bond but also for repaying the
debts of one Sumeri Kapri and for meeting the expenses in connection with cultivation,
purchase of bullocks and household. It is, therefore, not a document executed
in renewal of an earlier mortgage bond but was brought into existence to meet
the pressing demands on the appellants. It is also not correct that the
document does not contain words of conveyance or re-conveyance. The document
says in express terms that the property "was sold and vended', which are
certainly words of conveyance, and that after the prescribed period and after
the amount was paid the appellants would "take back the vended property'
from the respondents' which are again words of reconveying. Though the words of
"conveyance' and 'reconveyance' are not expressed in phraseology found in
documents prepared by trained draftsmen, they are expressed in words usually
adopted by village document writers. The taking over of the liability to pay
the rent by the executable for a short period subsequence to the execution of
the document may be due to the fact that the rent had become due before the
execution of the document or for some other circumstance which is not clear
from the document.
This is at best a neutral circumstance. The
fact that in case of any defect in title the vendees were dispossessed, the
consideration amount with interest was charged on the property is nothing more
than an indication of the intention to keep alive The mortgagee's rights under
89 the earlier document. The said clause only makes explicit what the
respondents would be entitled to in law. The translation of the words 'tamashuk
sarti kebala' as mortgage by conditional sale does not appear to be correct.
The learned Subordinate juage observes that if those words. were literally
translated, they would mean 'a bond by way of conditional sale'. If that was
the meaning the said expression would be consistent both with a mortgage by
conditional sale as well as a sale with a right of repurchase. In law Lexicon,
P. Ramanatha Iyer gives the following meanings to the word "kebala'; 'Any
deed of conveyance or transfer of right or property, any contract of bargain or
sale, a bond, a bill sale, title-deeds, and the like'. Even accepting the
widest meaning given to that word, the expression can only mean a bond or a
contract by way. of. conditional sale. So translated the expression is
consistent with a mortgage, as well as with a sale and therefore that is a
neutral circumstance. On the other hand the executant describes the transaction
as a sale and respondents as vendees. The amount paid is described as
consideration for the sale.
Usual covenant of title is given and there is
a provision of re-conveyance in case of payment of the prescribed amount within
the time agreed upon. No doubt these recitals would be found in a document
which purports to be an ostensible sale and they do not in themselves are
decisive of the question raised but there is one factor which dispels any doubt
in regard to the construction of the document. The total area of the land
mortgage in the year 1923 was 13.17 acres and the amount advanced there under
was Rs. 1,600/-.
Only one year thereafter out of the said
extent 12.6 acres was transferred by the document in question for a sum of Rs.
2,800/-, that is if the contention of the
appellant was correct, a smaller extent of land was mortgaged for higher
amount. It is improbable 90 that a mortgagee would advance an additional amount
and take a mortgage. of a smaller extent in discharge of an earlier mortgage
wherounder a larger extent of land was given as security. Unless there are
extraordinary reasons for this conduct, this would be a clinchina circumstance
in favour of holding that a document was a sale. The learned counsel for the
appellant realizing the importance of this: circumstance at tempted to explain
it away by a suggestion that under the earlier document the respondents were
not put in possession of the land and that the reduction 'of the extent of the
mortgaged property under the subsequent document was-due to the fact that they
secured possession of the lands mortgaged there under. This was not put either
to the witnesses or suggested in any of the three courts below. We cannot
therefore accept this argument advanced for the first time before us, for there
may have been many e explanations for the respondents in respect of this
suggestion. What is more, it is not disputed that the sum of Rs. 2,800/represents
the real value of the 1 and sold to the respondents' and it is high improbable
to say the least that a person would evidence the amount equivalent to the
value of the. land mortgaged without keeping a reasonable margin for realizing
his amount. This is sought to be explained by throwing a suggestion that as the
respondents were put in possession, they would be getting the interest and
therefore there was no chance of the debt exceeding the value of the property.
Even so a mortgagee in lending mounies would insist upon a reasonable margin in
the value of the property to provide against the possible contingency of the
properties going down in value and the amount due to him swelling by the
addition of cost, damage, etc., in the event of his filing a suit to recover
the name. in our view whatever ambiguity there may be in the document, the fact
that only a portion of the land already mortgaged was sold for a proper and
adequate 91 consideration is a circumstance which stamps the document as an
out, and out sale.
Reliance:is placed by the learned counsel for
the appellants on a judgment of this court in "Pandit Chunohun Jha v. Sheikh
Ebadat Ali' (1). It may be stated at, the outset that for ascertaining the
intention of the-, parties under one documental decision on a construction of
the terms of another document cannot ordinarily afford any guidance unless the
terms are exactly similar to each other. It is true that, some of the terms of
the document in that case may be approximated to some of the terms in the
present document but the judgment of this Court really turned upon a crucial
circumstance. There is one important recital found in the document in that case
which does not appear in the document in question and there is another
important recital found here which is not present there. There the document
under scrutiny was executed on April 15, 1930. Before the execution of the
document the executants initiated commutation proceedings under s. 40 of the
Bihar Tenancy Act. Those proceedings continued till February 18, 1931 i.e.' for
some ten months after the deed. The executants borrowed Rs. 65/6/to enable them
to carry on the commutation proceedings even after they executed the document.
Bose.1., speaking for the court adverting to the said circumstance observed at
page 183: "This we think, is crucial. Persons who are selling their
property would hardly take the trouble to, borrow money in order to continue
revenue proceedings. which could no longer benefit them an could only ensure
for the good of their transferees." It is, therefore, obvious that this
circumstance clinched the case in favour of the executants.
The crucial circumstance in the present case,
namely that a smaller extent was sold for a higher amount in discharge of an
earlier mortgage of a larger extent for a smaller amount was not present in
that case. The said 1(1955) 1.S.R. 174.
92 crucial circumstances make the two cases
entirely dissimilar and therefore the said judgment of this court is not of any
help in construing the document in question. On a consideration of the
cumulative effect of the terms of the document in the context of the surrounding
circumstances we hold that the document in question is not a mortgage but a
sale with the condition of repurchase. The conclusion arrived at by the High
Court is correct.
The appeal fails and as the advocate for the
respondent is not present in Court it is dismissed without costs.