Vs. Mankikrao & ANR  INSC 77 (17 March 1999)
S. Saghir Hamad S.SAGHIR AHMAD, J.
the appellant before us, who shall hereinafter be referred to as plaintiff, had
instituted a suit against the respondents, who shall hereinafter be referred to
as defendant Nos. 1 and 2 respectively, for redemption of the mortgage by
conditional sale or in the alternative for a decree for specific performance of
the contract for repurchase which was decreed by the trial court on 29.4.1975.
The decree was upheld by the Lower Appellate Court by its judgment dated
28.9.1976 but the High Court, by the impugned judgment dated 3.5.1991, set
aside both the judgments and passed a unique order to which a reference shall
be made presently in this judgment. The plaintiff is in appeal before us.
property in dispute is 4.04 acres of land of survey plot No. 15 of Kasba Amdapur,
District Buldana. The whole area of survey plot No.15 is 16.09 acres and except
the land in dispute, namely, an area of 4.04 acres, the entire land is in
possession of the plaintiff. Defendant No.2 was the owner of the whole Plot
No.15. On 24th of March, 1971, he executed a document styled as "Kararkharedi"
in favour of defendant No.1 for a sum of Rs. 1500/- and delivered possession
thereof to the latter. There was a stipulation in the document that if the
entire amount of Rs.1500/- was returned to defendant No.1 before 15th of March,
1973, the property would be given back to defendant No.2. This land was subsequently
transferred by defendant No.2 in favour of the plaintiff for a sum of Rs.5,000/-
by a registered sale deed dated 19.6.1973.
having obtained the sale deed, the plaintiff filed the aforesaid suit in which
it was given out that defendant No.2 had offered the entire amount to defendant
No.1 but the latter did not accept the amount and, therefore, defendant No.2
had to send it by money order on 7.6.1973 which was refused by defendant No.1.
A notice, dated 5.6.1973, had also been sent by defendant No.2 to defendant
No.1. It was pleaded that since the document, executed by defendant No.2 in favour
of defendant No.1, was a mortgage by conditional sale, the property was liable
to be redeemed. It was also pleaded in the alternative that if it was held by the
Court that the document did not create a mortgage but was an out and out sale,
the plaintiff as transferee of defendant No.2, was entitled to a decree for reconveyance
of the property as defendant No.2 had already offered the entire amount of sale
consideration to defendant No.1 which, the latter, had refused and which amount
the plaintiff was still prepared to offer to defendant No.1 and was also
otherwise ready and willing to perform his part of the contract. Defendant No.2
admitted the whole claim of the plaintiff by filing a one-line written
statement in the trial court. But defendant No.1 contested the suit and pleaded
that the document in his favour was not a mortgage by conditional sale but was
an out and out sale and since the amount of consideration had not been tendered
within the time stipulated therein, the plaintiff could not claim reconveyance
of the property in question. The trial court framed the following issues:-
"1. Does the plaintiff prove that the defendant No.2 mortgaged the suit
field with the defendant No.1 for Rs.1500/- on 24.3.71?
Does the plaintiff prove that the suit field was purchased by him from the
defendant No.2 for Rs.5,000/- on 19.6.73?
the plaintiff entitled to redeem the mortgage executed by the defendant No.2 in
favour of defendant No.1?
the defendant No. 2 ready and willing to repurchase the suit field prior to
the plaintiff entitled to claim retransfer of the suit field from the defendant
Relief and costs?" The finding on issue No.1 was that defendant No.2 had
mortgaged the land in question to defendant No.1 for Rs.1500/- on 24.3.1971. On
issue No.2, it was found that defendant No.2 had transferred the property in favour
of the plaintiff for a sum of Rs.5,000/- on 19.6.1973 by a registered sale deed
and, therefore, the plaintiff was entitled to redeem the mortgage executed by
defendant No.2 in favour of defendant No.1. Issue Nos. 4 and 5 were decided in
the negative as the trial court had held the document in question to be a mortgage
deed. In view of these findings, the suit was decreed and the trial court
passed the following order:- "It is hereby declared that the amount due to
the defendant-1 on the mortgage mentioned in the plaint dated 24-3-71 is Rs.1500/-. It is further ordered and decreed that
the plaintiff to pay into court on or before 29-10-75 or any later date into
which time for payment may be extended by the Court the said sum of Rs.1500/-.
on such payment and on payment thereafter before such date as the Court may fix
of such amount as the Court may adjudge due interest as may be payable under
rule 10, together with such subsequent interest as may be payable under rule 11
of the order 34 of the first schedule to the Code of Civil Procedure 1908, the
defendant-1 shall bring into Court all documents in his possession or power
relating to the mortgage property in the plaint mentioned and all such
documents shall be delivered over to the plaintiff or to such person as he
appoints, and the defendant-1 shall, if so required, reconvey or retransfer the
said property from the said mortgage and clear of and from all encumbrances
created by the defendant-1 or any person claiming under him or any person under
who he claims, and free from all liability whatsoever arising from the mortgage
or this suit and shall, deliver up the plaintiff quiet and peaceful possession
of the said property. And it is further ordered and decreed - that, in default
of payment as aforesaid, the defendant-1 may apply to the Court for a final
decree that the plaintiff be debarred from all right to redeem the
property." This decree was confirmed in appeal but, as pointed out above,
was reversed by the High Court in the second appeal.
High Court was of the opinion that the plaintiff had not paid the entire amount
of sale consideration to defendant No.2. Out of a sum of Rs.5,000/-, for which
sale deed was executed, a sum of Rs.500/- alone had been paid to defendant No.2
before the Sub-Registrar and the rest of the amount was not paid. The High
Court further held that the document "Kararkharedi" which purports to
have been executed for a sum of Rs.1500/- by defendant No.2 in favour of
defendant No.1 was, in fact, executed for a sum of Rs.800/- which was paid
before the Sub-Registrar. The High Court, then, disposed of the suit by
directing that the land in question shall be restored to defendant No.2 who
shall pay back a sum of Rs.800/- (in instalments) to defendant No.1 and a sum
of Rs.500/- (in instalments) to the plaintiff.
counsel for the appellant has contended that the sale deed, executed by
defendant No.2 in favour of the plaintiff, was not challenged by defendant No.2
who, on the contrary, had admitted the entire claim set out by the plaintiff in
his plaint and, therefore, the High Court was in error in setting aside the
sale deed. It is also contended that defendant No.1 who had challenged the sale
deed as fictitious had not appeared as a witness in the case and had avoided
the witness box in order to avoid cross-examination and, therefore, an adverse
inference should have been drawn against him and this plea ought to have been
rejected by the High Court which, it is also contended, could not have legally
set aside the findings of fact in second appeal. It is also contended that
defendant No.1 being a stranger to the sale deed should not have been allowed
to raise the plea relating to inadequacy or non-payment of consideration money.
counsel for defendant No.1, on the contrary, has tried to justify the
interference by the High Court at the stage of second appeal by contending that
the findings recorded by the Courts were not borne out by the evidence on
record and were perverse which could be set aside under Section 100 C.P.C. He
also contended that the document of title in favour of defendant No.1 was
misread as a mortgage deed although it constituted an out and out sale.
Moreover, on the commission of default, as contemplated by the document in
question, the whole transaction, even if it was a mortgage, converted itself
into an absolute sale as agreed upon between the parties. The sale having thus
become absolute in favour of defendant No.1, no title was left in defendant
No.2 to convey it to the plaintiff through the sale deed in question.
examine the respective contentions. Beginning with the pleadings, defendant
No.2 in his written statement filed before the trial court, admitted the claim
of the plaintiff.
P-III to the Special Leave Petition is the true translation of the copy of
written statement filed by defendant No.2 in the suit. It reads as under:-
"IN THE COURT OF HON'BLE CIVIL JUDGE SENIOR DIVISION BULDANA:- R.C.
S.No.195/73 F.F.__________ Plaintiff : Vidhyadhar Vishnupant Ratnaparkhi -
Versus - Defendant : 1) Manikrao Babarao Deshmukh 2) Pandu Ganu Bhalerao -
WRITTEN STATEMENT OF DEFENDANT NO.2 PANDU GANU BHALERAO 1) The suit filed by
Plaintiff is admitted. Hence this written statement.
Dt.20.12.73 Sd/- ( Pandu Ganu Bhalerao ) I, defendant No. 2 state on oath that
the contents of para 1 of the written statement are true as per my personal
this affidavit is signed and executed at Buldana on this 20.12.73.
Pandu Ganu Bhalerao )" The Lower Appellate Court has noticed this and
observed in its judgment as under:- "Defendant No.2 filed his written
statement at Ex.15 which is extremely brief comprising only a sentence, stating
that the suit filed by the plaintiff is admitted by him." Even while
plaintiff was in the witness box, defendant No.2 declined to cross examine the
plaintiff which shows that defendant No.2 after admitting the case of the
plaintiff, had no interest in the litigation particularly as he had already
transferred the property in favour of the plaintiff.
defendant No.1 who contended that the sale deed, executed by defendant No.2 in favour
of the plaintiff, was fictitious and the whole transaction was a bogus
transaction as only Rs.500/- were paid as sale consideration to defendant No.2.
He further claimed that payment of Rs.4,500/- to defendant No.2 his home before
the registration of the deed was wholly incorrect. This plea was not supported
by defendant No.1 as he did not enter into the witness box. He did not state
the facts pleaded in the written statement on oath in the trial court and
avoided the witness box so that he may not be cross examined. This, by itself,
is enough to reject the claim that the transaction of sale between defendant
No.2 and the plaintiff was a bogus transaction.
a party to the suit does not appear into the witness box and states his own
case on oath and does not offer himself to be cross examined by the other side,
a presumption would arise that the case set up by him is not correct as has
been held in a series of decisions passed by various High Courts and the Privy
Council beginning from the decision in Sardar Gurbakhsh Singh vs. Gurdial Singh
and another, AIR 1927 Privy Council 230. This was followed by the Lahore High
Court in Kirpa Singh vs. Ajaipal Singh and others, AIR 1930 Lahore 1 and the
Bombay High Court in Martand Pandharinath Chaudhari vs. Radhabai Krishnarao Deshmukh,
AIR 1931 Bombay 97. The Madhya Pradesh High Court in Gulla Kharagjit Carpenter
vs. Narsingh Nandkishore Rawat, AIR 1970 Madhya Pradesh 225 also followed the
Privy Council decision in Sardar Gurbakhsh Singh's case (supra).
High Court in Arjun Singh vs. Virender Nath and another, AIR 1971 Allahabad 29 held that if a party abstains
from entering the witness box, it would give rise to an inference adverse
against him. Similarly, a Division Bench of the Punjab & Haryana High Court
in Bhagwan Dass vs.
Chand and others, AIR 1974 Punjab & Haryana
7, drew a presumption under Section 114 of the Evidence Act against a party who
did not enter into the witness box. Defendant No.1 himself was not a party to
the transaction of sale between defendant No.2 and the plaintiff. He himself
had no personal knowledge of the terms settled between defendant No.2 and the
plaintiff. The transaction was not settled in his presence nor was any payment
made in his presence. Nor, for that matter, was he a scribe or marginal witness
of that sale deed. Could, in this situation, defendant No.1 have raised a plea
as to the validity of the sale deed on the ground of inadequacy of
consideration or part-payment thereof? Defendant No.2 alone, who was the executant
of the sale deed, could have raised an objection as to the validity of the sale
deed on the ground that it was without consideration or that the consideration
paid to him was highly inadequate. But he, as pointed out earlier, admitted the
claim of the plaintiff whose claim in the suit was based on the sale deed,
executed by defendant No.2 in his favour.
property having been transferred to him, the plaintiff became entitled to all
the reliefs which could have been claimed by defendant No.2 against defendant
No.1 including redemption of the mortgaged property.
counsel for defendant No.1 contended that since the plaintiff had filed the
suit on the basis of sale deed, executed by defendant No.2 in his favour and had
sought possession over that property from defendant No.1, it was open to the
latter to show that plaintiff had no title to the property in suit and,
therefore, the suit was liable to be dismissed. It was contended that in his
capacity as a defendant in the suit, it was open to defendant No.1 to raise all
the pleas on the basis of which the suit could be defeated.
Achal Ram vs. Raja Kazim Hussain Khan, 1905 (32) Indian Appeals 113, the Privy
Council laid down the principle that a stranger to a sale deed cannot dispute
payment of consideration or its adequacy. This decision has since been
considered by various High Courts and a distinction has been drawn between a
deed which was intended to be real or operative between the parties and a deed
which is fictitious in character and was never designed as a genuine document
to effect transfer of title. In such a situation, it would be open even to a
stranger to impeach the deed as void and invalid on all possible grounds. This
was also laid down in Kamini Kumar Deb vs. Durga Charan Nag & Ors., AIR
1923 Calcutta 521 and again in Saradindu Mukherjee
vs. S.M. Kunja Kamini Roy & Ors., AIR 1942 Calcutta 514. The Patna High
Court in Jugal Kishore Tiwari & Anr. vs. Umesh Chandra Tiwari & Ors.,
AIR 1973 Patna 352 and the Orissa High Court in Sanatan Mohapatra and others
vs. Hakim Mohammad Kazim Mohammad and others, AIR 1977 Orissa 194 have also
taken the same view.
above decisions appear to be based on the principle that a person in his
capacity as a defendant can raise any legitimate plea available to him under
law to defeat the suit of the plaintiff. This would also include the plea that
the sale deed by which title to the property was intended to be conveyed to
plaintiff was void or fictitious or, for that matter, collusive and not
intended to be acted upon. Thus, the whole question would depend upon the
pleadings of the parties, the nature of the suit, the nature of the deed, the
evidence led by the parties in the suit and other attending circumstances. For
example, in a landlord- tenant matter where the landlord is possessed of many
properties and cannot possibly seek eviction of his tenant for bona fide need
from one of the properties, the landlord may ostensibly transfer that property
to a person who is not possessed of any other property so that that person,
namely, the transferee, may institute eviction proceedings on the ground of his
genuine need and thus evict the tenant who could not have been otherwise
evicted. In this situation, the deed by which the property was intended to be transferred,
would be a collusive deed representing a sham transaction which was never
intended to be acted upon.
would be open to the tenant in his capacity as defendant to assert, plead and
prove that the deed was fictitious and collusive in nature. We, therefore,
cannot subscribe to the view expressed by the Privy Council in the case of Lal Achal
Ram (supra) in the broad terms in which it is expressed but do approve the law
laid down by the Calcutta, Patna and Orissa High Courts as pointed out above.
instant case, the property which was mortgaged in favour of defendant No.1 was
transferred by defendant No.2, who was the owner of the property, to plaintiff.
This transfer does not, in any way, affect the rights of defendant No.1 who was
the mortgagee and the mortgage in his favour, in spite of the transfer,
subsisted. When the present suit for redemption was filed by the plaintiff,
defendant No.2, as pointed out above, admitted the claim of the plaintiff by
filing a one-sentence written statement that the claim of the plaintiff was
admitted. When the plaintiff entered into the witness box, defendant No.2 did
not cross examine him. He did not put it to the plaintiff that the entire
amount of consideration had not been paid by him. Defendant No.1 alone raised
the question of validity of the sale deed in favour of the plaintiff by
pleading that it was a fictitious transaction as the sale consideration had not
been paid to defendant No.2 in its entirety. Having pleaded these facts and
having raised the question relating to the validity of the sale deed on the
ground that the amount of consideration had not been paid, defendant No.2 did
not, in support of his case, enter into the witness box.
he deputed his brother to appear as a witness in the case. He did enter into
the witness box but could not prove that the sale consideration had not been
paid to defendant No.2. On a consideration of the entire evidence on record,
the trial court recorded a positive finding of fact that the sale deed,
executed by defendant No.2 in favour of the plaintiff, was a genuine document
and the entire amount of sale consideration had been paid. This finding was
affirmed by the Lower Appellate Court but the High Court intervened and
recorded a finding that although the property which was mentioned to have been
sold for a sum of Rs.5,000/-, the plaintiff had, in fact, paid only Rs. 500/-
to defendant No.2. The amount of Rs.4,500/- which was indicated in the sale
deed to have been paid to defendant No.2, prior to registration, was not
correct. It was for this reason that the High Court while redeeming the
property directed that the amount of sale consideration which was paid by the
plaintiff to defendant No.2 shall be returned by defendant No.2 and the
property would revert back to him.
findings of fact concurrently recorded by the trial court as also by the Lower
Appellate Court could not have been legally upset by the High Court in a second
appeal under Section 100 C.P.C. unless it was shown that the findings were
perverse, being based on no evidence or that on the evidence on record, no
reasonable person could have come to that conclusion.
findings of fact concurrently recorded by the lower Courts on the question of
title of the plaintiff on the basis of sale deed, executed in his favour by
defendant No.2, have been upset by the High Court on the ground that full
amount of consideration does not appear to have been paid by plaintiff to
defendant No.2. It will be worthwhile to reproduce the findings recorded by the
High Court on this question. The High Court observed:- "14. As already
stated above, the plaintiff had paid a nominal amount of Rs.500/- before the
Sub-Registrar and got the document executed considering the plight of the
defendant No.2 that his seven acres of land was already mortgaged with the
plaintiff and, in fact, no further consideration of Rs.4,500/-, as alleged, had
been paid to the defendant No.2. This conclusion is supported by the conduct of
the defendant No.2, who had served the plaintiff with a notice alleging that
the sale-deed executed in his favour was a sham and bogus one and without any
consideration. Even a complaint came to be made before the police about the
said bogus transaction, which was subsequently withdrawn in view of the fact
that the defendant No.2's lands to the extent of 7 acres were already mortgaged
with the plaintiff. All these would show that the plaintiff was pursuing the
defendant No.2 to transfer his property in his favour to the extent of 4 acres
4 gunthas and under pressure the defendant No.2 admitted to have received the
sum of Rs.4,500/-. As stated above, this admission was made by the defendant
No.2 in one sentence.
considering all these aspects, the learned lower appellate Court has held that
no consideration has passed in favour of the defendant No.2 except the sum of
Rs.500/- only alleged to have been paid before the Sub- Registrar. It is
apparent that the plaintiff might have purchased the property only for
Rs.2,000/- i.e. Rs.1,500/- which were to be paid to the defendant No.1 for
redemption of mortgage and Rs.500/- paid to the defendant No.2 before the
Considering all the above facts and circumstances, I am of the view that the
conclusion arrived at by the learned lower appellate Court directing the
defendant No.1 to receive the amount of redemption and to deliver the
possession of the suit field to the plaintiff is not correct. It is pertinent
to note that the transaction between the defendant No.1 and 2 itself was a
money- lending transaction and that the sale-deed was a mortgage sale.
the defendant No.1 cannot become the owner of the property. Even, as held by
the learned trial Court, that nothing has been placed on record by the
defendant No.1 to support his contention that he had paid Rs.700/- at home, and
the consideration of Rs.800/- had been paid before the Sub-Registrar to
defendant No.2, the learned trial Court observed that it is doubtful whether
this amount of Rs.700/- has also been paid to the defendant No.2 by the
defendant No.1. This shows that the said mortgage was only for Rs.800/- and
that the amount of Rs.700/- has not passed to the defendant No.2 from defendant
No.1. It is clear that except Rs.500/- nothing has been paid by the plaintiff
to defendant No.2 as the amount of Rs.4,500/- alleged to have been paid at home
to the defendant No.2 has not been established. Therefore, the view taken by
both the Courts below under no circumstances, can be sustained." The
circumstances relied upon by the High Court had already been considered by the
Courts below and ultimately the Lower Appellate Court proceeded to say as
under:- "But it would appear as though that all this discussion is wothless
in view of the fact that deft. No.2 himself admitted in his deposition that he
executed the sale deed in favour of the plaintiff and accepted the price. His
written statement and deposition is quite eloquent on that point. On the fact
of these admission, there cannot be any other circumstance which would assist
the Court to hold that the document executed in favour of the plaintiff by
defendant No.2 as bogus, sham and without consideration, notwithstanding the
fact that the circumstances and the facts of the case infallibly point that the
document of sale does not convey the real transaction that had taken place
between plaintiff and defendant No.2. As such although with reluctance, it has
to be held that the plaintiff had purchased the property from defendant
No.2." In the face of the findings recorded by the trial court as also by
the Lower Appellate Court on the question of execution of sale deed by
defendant No.2 in favour of the plaintiff with the further finding that it was
a valid sale deed which properly conveyed the title of the property in question
to the plaintiff, it was not expected of the High Court to set aside those
findings merely on the ground that the circumstances which had already been
considered by the lower Courts, appeared to suggest some other conclusion from
scrutinise the circumstances relied upon by the High Court.
order to prove his case, the plaintiff had examined defendant No.2 as a witness
who admitted to have executed the sale deed in favour of the plaintiff and
further admitted to have received the entire amount of sale consideration. The
High Court has adversely commented upon the production of defendant No.2 as a
witness by saying as under:- "Next witness examined by the plaintiff was
defendant No.2. The plaintiff, while examining this witness, has not incorporated
the name of this witness in the list of witness nor any application was made
for the examination of defendant No.2. The willingness of the defendant No.2
was also not placed on record, to appear as a witness for the plaintiff."
This is wholly an erroneous view.
and attendance of witnesses has been provided for in Order 16 of the Code of
16 Rule 1 which speaks of list of witnesses and summons to witnesses provides
as under:- "R. 1. List of witnesses and summons to witnesses.
or before such date as the Court may appoint, and not later than fifteen days
after the date on which the issues are settled, the parties shall present in
Court a list of witnesses whom they propose to call either to give evidence or
to produce documents and obtain summons to such persons for their attendance in
party desirous of obtaining any summons for the attendance of any person shall
file in Court an application stating therein the purpose for which the witness
is proposed to be summoned.
The Court may, for reasons to be recorded, permit a party to call, whether by
summoning through Court or otherwise, any witness, other than those whose names
appear in the list referred to in sub-rule (1), if such party shows sufficient
cause for the omission to mention the name of such witness in the said list.
Subject to the provisions of sub-rule (2), summons referred to in this rule may
be obtained by parties on an application to the Court or to such officer as may
be appointed by the Court in this behalf." Rule 1A which allows production
of witnesses without summons provides as under:- "R. 1A. Production of
witnesses without summons.
to the provisions of sub-rule (3) of Rule 1, any party to the suit may, without
applying for summons under rule (1), bring any witness to give evidence or to
produce documents." These two Rules read together clearly indicate that it
is open to a party to summon the witnesses to the Court or may, without
applying for summons, bring the witnesses to give evidence or to produce
documents. Sub-Rule (3) of Rule 1 provides that although the name of a witness
may not find place in the list of witnesses filed by a party in the Court, it
may allow the party to produce a witness though he may not have been summoned
through the Court. Rule 1A which was introduced by the Code of Civil Procedure
(Amendment) Act, 1976 with effect from 1.2.1977 has placed the matter beyond
doubt by providing in clear and specific terms that any party to the suit may
bring any witness to give evidence or to produce documents. Since this Rule is
subject to the provisions of Sub-Rule (3) of Rule 1, all that can be contended
is that before proceeding to examine any witness who might have been brought by
a party for that purpose, the leave of the Court may be necessary but this by
itself will not mean that Rule 1A was in derogation of Sub-Rule (3) of Rule 1.
The whole position was explained by this Court in Mange Ram vs. Brij Mohan
& Ors., AIR 1983 SC 925 = (1983) 4 SCC 36 = 1983 (3) SCR 525, in which it
was held that Sub-Rule (3) of Rule 1 and Rule 1A operate in two different areas
and cater to two different situations. It was held:- "There is no inner
contradiction between sub-rule (1) of Rule 1 and Rule 1A of Order XVI. Sub-rule
(3) of Rule 1 of Order XVI confers a wider jurisdiction on the Court to cater
to a situation where the party has failed to name the witness in the list and
yet the party is unable to produce him or her on his own under Rule 1A and in
such a situation the party of necessity has to seek the assistance of the Court
under sub-rule (3) to procure the presence of the witness and the Court may if
it is satisfied that the party has sufficient cause for the omission to mention
the name of such witness in the list filed under sub-rule (1) of Rule 1, the
Court may still extend its assistance for procuring the presence of such a
witness by issuing a summons through the Court or otherwise which ordinarily
the Court would not extend for procuring the attendance of a witness whose name
is not shown in the list. Therefore, sub-rule (3) of Rule 1 and Rule 1A operate
in two different areas and cater to two different situations." In view of
the above, even though the name of Defendant No.2 was not mentioned in the list
of witnesses furnished by the plaintiff, he was properly examined as a witness
and his testimony was not open to any criticism on the ground that he was
produced as a witness without being summoned through the Court and without his
name being mentioned in the list of witnesses.
next circumstance relied upon by the High Court in discarding the sale deed is
that defendant No.2 himself had given a notice to the plaintiff in which it was
set out that the sale deed was a sham transaction for which the consideration
was not paid. In relying upon this circumstance, the High Court overlooked the
fact that defendant No.2, in his capacity as a witness for the plaintiff, had
stated in clear terms that this notice was issued to the plaintiff at the
instance of defendant No.1.
No.2 also stated that the complaint made by him to the police in that regard
was withdrawn by him. This circumstance, therefore, also could not have been
legally relied upon by the High Court in holding that full amount of
consideration was not paid.
could not be ignored that the plaintiff's case had been admitted in unequivocal
terms by defendant No.2 in his written statement. It could also not be ignored
that when plaintiff examined himself as a witness in the suit, defendant No.2
refused to cross-examine him. The circumstance, which, however, clinches the matter
is the statement of defendant No.2 on oath in which he admitted that he had
executed a sale deed in favour of the plaintiff and had obtained full amount of
consideration. The sale deed is a registered document which recites that out of
the amount of Rs.5,000/-, which was the sale price, a sum of Rs.
had been paid earlier while Rs.500/- was paid before the Sub-Registrar. This
recital read in the light of the admission made by defendant No.2 in his
written statement and, thereafter, in his statment on oath as a witness clearly
establishes the fact that defendant No.2 had executed a sale deed in favour of
plaintiff for a price which was paid to defendant No.2.
if the findings recorded by the High Court that the plaintiff had paid only
Rs.500/- to defendant No.2 as sale consideration and the remaining amount of
Rs.4,500/- which was shown to have been paid before the execution of the deed
was, in fact, not paid, the sale deed would not, for that reason, become
invalid on account of the provisions contained in Section 54 of the Transfer of
Property Act which provide as under:- "54. "Sale" is a transfer
of ownership in exchange for a price paid or promised or part- paid and part-promised.
transfer, in the case of tangible immoveable property of the value of one
hundred rupees and upwards, or in the case of a reversion or other intangible
thing, can be made only by a registered instrument.
case of tangible immoveable property, of a value less than one hundred rupees,
such transfer may be made either by a registered instrument or by delivery of
of tangible immoveable property takes place when the seller places the buyer,
or such person as he directs; in possession of the property.
contract for the sale of immoveable property is a contract that a sale of such
property shall take place on terms settled between the parties.
does not, of itself, create any interest in or charge on such property."
The definition indicates that in order to constitute a sale, there must be a
transfer of ownership from one person to another, i.e., transfer of all rights
and interests in the properties which are possessed by that person are
transferred by him to another person. The transferor cannot retain any part of
his interest or right in that property or else it would not be a sale. The
definition further says that the transfer of ownership has to be for a
"price paid or promised or part-paid and part-promised". Price thus
constitutes an essential ingredient of the transaction of sale. The words
"price paid or promised or part-paid and part- promised" indicate
that actual payment of whole of the price at the time of the execution of sale
deed is not sine qua non to the completion of the sale. Even if the whole of
the price is not paid but the document is executed and thereafter registered,
if the property is of the value of more than Rs.100/-, the sale would be
is a catena of decisions of various High Courts in which it has been held that
even if the whole of the price is not paid, the transaction of sale will take
effect and the title would pass under that transaction. To cite only a few, in Gyatri
Prasad vs. Board of Revenue & Ors., 1973 Allahabad Law Journal 412, it was
held that non-payment of a portion of the sale price would not effect validity
of sale. It was observed that part payment of consideration by vendee itself
proved the intention to pay the remaining amount of sale price. To the same effect
is the decision of the Madhya Pradesh High Court in Sukaloo & Anr. vs. Punau,
AIR 1961 M.P. 176 = ILR (1960) M.P. 614.
real test is the intention of the parties. In order to constitute a
"sale", the parties must intend transfer the ownership of the
property and they must also intend that the price would be paid either in presentii
or in future. The intention is to be gathered from the recital in the sale
deed, conduct of the parties and the evidence on record.
these principles to the instant case, it will be seen that defendant No.2
executed a sale deed in favour of the plaintiff, presented it for registration,
admitted its execution before the Sub-Registrar before whom remaining part of
the sale consideration was paid and, thereafter, the document was registered.
The additional circumstances are that when the plaintiff instituted a suit on
the basis of his title based on the aforesaid sale deed, defendant No.2, who
was the vendor, admitted in his written statement, the whole case set out by
the plaintiff and further admitted in the witness box that he had executed a
sale deed in favour of the plaintiff and had also received full amount of
consideration. These facts clearly establish that a complete and formidable
sale deed was executed by defendant No.2 in favour of the plaintiff and the
title in the property passed to plaintiff. The findings recorded by the High
Court on this question cannot, therefore, be upheld.
judgment of the High Court on this point is also erroneous for the reason that
it totally ignored the provisions contained in Section 55(4)(b) of the Transfer
of Property Act which are set out below:- "55. In the absence of a
contract to the contrary the buyer and seller of immoveable property
respectively are subject to the liabilities, and have the rights, mentioned in
the rules next following, or such of them as are applicable to the property
The seller is entitled- (a) ................................... (b) Where the
ownership of the property has passed to the buyer before payment of the whole
of the purchase-money, to a charge upon the property in the hands of the buyer,
any transferee without consideration or any transferee with notice of
non-payment, for the amount of the purchase-money, or any part thereof
remaining unpaid, and for interest on such amount or part from the date on
which possession has been delivered.
........................................." Clause (b) extracted above
provides that where the ownership of the property is transferred to the buyer
before payment of the whole of the sale price, the vendor is entitled to a
charge on that property for the amount of the sale price as also for interest
thereon from the date of delivery of possession. Originally, there was no
provision with regard to the date from which interest would be payable on the
amount of unpaid purchase money. The Special Committee which suggested an
amendment in this Section gave the following reason:- "This Clause is also
silent as to the date from which the interest on the unpaid purchase money
should run. It seems fair that it should run from the date when the buyer is
put in possession." It was on the recommendation of the Special Committee
that the words "from the date on which possession has been delivered"
were inserted into this Clause by Section 17 of the Transfer of Property
(Amendment) Act, 1929 (XX of 1929).
Clause obviously applies to a situation where the ownership in the property has
passed to the buyer before the whole of the purchase money was paid to the
seller or the vendor. What is contained in this Clause is based on the English
doctrine of Equitable Lien as propounded by Baron Rolfe in Goode & Anr. v.
Burton, (1847) 74 RR 633 = 1 Ex.
This Clause confers statutory recognition on the English Doctrine of Equitable
Lien. As pointed out by the Privy Council in Webb & Anr. vs. Macpherson, 30
Indian Appeals 238, the statutory charge under this paragraph is inflexible.
The charge does not entitle the seller to retain possession of the property as
against the buyer but it positively gives him a right to enforce the charge by
suit. (See: Venkataperumal Naidu vs. Rathnasabhapathi Chettiar, AIR 1953 Madras
821; Shobhalal Shyamlal Kurmi vs. Sidhelal Halkelal Bania, AIR 1939 Nagpur 210
and Basalingaya Revanshiddappa vs. Chinnaya Karibasappa, AIR 1932 Bombay 247).
view of the above, the High Court was wholly in error in coming to the
conclusion that there was no sale as only a sum of Rs.500/- was paid to
defendant No.2 the balance amount of Rs.4,500/- was not paid. Since the title
in the property had already passed, even if the balance amount of sale price
was not paid, the sale would not become invalid. The property sold would stand
transferred to the buyer subject to the statutory charge for the unpaid part of
the sale price.
counsel for defendant No.1 thereafter contended that the deed dated 24th of
March, 1971 was not a mortgage deed but an out and out sale with the result
that the property having been transferred to defendant No.1 was not available
for being sold to plaintiff. This contention must meet the same fate as it met
in the Courts below.
document is headed as MORTGAGE BY CONDITIONAL SALE (KARARKHAREDI). It is
mentioned in this deed that the immovable property which was described in areas
and boundaries was being mortgaged by conditional sale in favour of defendant
No.1 for a sum of Rs.1500/- out of which Rs.700/- were paid at home while
Rs.800/- were paid before the Sub-Registrar. The further stipulation in the
deed is that the aforesaid amount of Rs.1500/- would be returned to defendant
No.1 on or before 15th March, 1973 and the property would be reconveyed to
defendant No.2. If it was not done then defendant would become the owner of the
by conditional sale is defined under Section 58(c) as under:- "58.
(c)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 mortgage a mortgagee by conditional sale:
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.
The Proviso to this Clause was added by Section 19 of the Transfer of Property
(Amendment) Act, 1929 (XX of 1929).
Proviso was introduced in this Clause only to set at rest the controversy about
the nature of the document;
the transaction would be a sale or a mortgage. It has been specifically
provided by the Amendment that the document would not be treated as a mortgage
unless the condition of repurchase was contained in the same document.
basic principle is that the form of transaction is not the final test and the
true test is the intention of the parties in entering into the transaction. If
the intention of the parties was that the transfer was by way of security, it
would be a mortgage. The Privy Council as early as in Balkishen Das & Ors.
vs. Legge, 27 Indian Appeals 58, had laid down that, as between the parties to
the document, the intention to treat the transaction as an out and out sale or
as a mortgage has to be found out on a consideration of the contents of
document in the light of surrounding circumstances. The decision of this Court
in Bhaskar Waman Joshi vs. Shrinarayan Rambilas Agarwal, AIR 1960 SC 301 = 1960
(2) SCR 117 and C.I.T., Assam, Tripura & Manipur vs. Nand Lal Agarwal, AIR
1966 SC 902 = 1966 (2) SCR 918 are also to the same effect.
contents of the document have already been considered above which indicate that
defendant No.2 executed a mortgage by conditional sale in favour of defendant
promised to pay back Rs.1500/- to him by a particular date failing which the
document was to be treated as a sale deed. The intention of the parties is
reflected in the contents of the document which is described as a mortgage by
conditional sale. In the body of the document, the mortgage money has also been
specified. Having regard to the circumstances of this case as also the fact
that the condition of repurchase is contained in the same document by which the
mortgage was created in favour of defendant No.1, the deed in question cannot
but be treated as a mortgage by conditional sale. This is also the finding of
the Courts below.
as the contention of the learned counsel for defendant No.1 that the mortgage
money was not paid within the time stipulated in the document and, therefore,
the transaction, even if it was a mortgage, became an absolute sale, is
concerned, the finding of the Courts below is that this money was tendered to
defendant No.1 who refused to accept it. Defendant No.2 had thus performed his
part of the agreement and had offered the amount to defendant No.1 so that the
property may be reconveyed to him but defendant No.1 refused to accept the
money. He, therefore, cannot complain of any default in not paying the amount
in question within the time stipulated in the deed. Since there was no default
on the part of defendant No.2, the document would not convert itself into a
sale deed and would remain a mortgage deed. The suit for redemption was,
therefore, properly filed by the plaintiff who was the assignee of defendant
No.2. For the reasons stated above, the appeal is allowed and the impugned
judgment passed by the High Court is set aside. The judgment and decree passed
by the trial court as upheld by the Lower Appellate Court are restored but
without any order as to costs.