Prasad Singh Vs. Rajendra Prasad & Anr  Insc 99 (24 February 2006)
out of SLP(C)No.26865/2004) S.B. SINHA, J :
appeal is directed against the Judgment and Order dated 11th September, 1988
passed by a learned Single Judge of the Jharkhand High Court, Ranchi in Appeal
from Appellate Decree No.176 of 1988 whereby and whereunder a second appeal
preferred by the respondents herein from a Judgment and Decree dated 18.7.1988
passed by the 6th Additional District Judge, Palamau at Daltonganj in Title
Appeal No.26 of 1987 setting aside the Judgment and Decree dated 27.6.1987
passed by Munsif, Daltonganj in Title Suit No.11 of 1986, was allowed.
respondents herein filed a suit against the appellant, inter alia, for a
declaration that the transaction dated 24.6.1977, although ostensibly expressed
in the shape of a deed of sale, was in fact a transaction of usufructuary
mortgage and for a further declaration that the said transaction stands
redeemed under Section 12 of the Bihar Money Lenders Act, 1974.
respondents herein further sought for a decree directing the appellant to
deliver vacant possession of the suit land to them, failing which they might be
put back in possession thereof through the process of Court. The respondents
averred that they were occupancy raiyats of the suit land. The appellant herein
allegedly gave an advance of Rs.3,000/- on their executing a deed of usufructuary
mortgage in respect of the suit land. However, allegedly the appellant asked
them to execute a deed of sale on the ground that he did not possess any money
lending licence, whereupon indisputably such a deed was executed on 24.6.1977.
The appellant in turn executed a registered deed of agreement in his favour
whereby and whereunder the respondent agreed to execute a deed of reconveyance
on his receipt of the said sum of Rs.3,000/-.
appellant herein in his written statement, on the other hand, contended that in
fact a deed of sale was executed on 24.6.1977 by the respondents in his favour.
It is, however, accepted that the appellant executed a deed of an agreement for
sale on the same day. It is furthermore not in dispute that the respondents
herein filed an application in the Court of Munsif, Daltonganj being Miscellaneous
Case No.14 of 1978 purporting to be under Section 83 of the Transfer of
Property Act seeking its permission to deposit an amount of Rs.3,000/- By an
Order dated 22.3.1979, despite an objection taken in this behalf by the
appellant herein that the transaction in question was not a mortgage, the
respondents were permitted to deposit the said amount.
also not in dispute that the property in question was mutated in the name of
the appellant in the Revenue Records of Rights.
Trial Court, in view of the pleadings of the parties, framed the following issues
" Is the
suit, as framed maintainable?
plaintiffs got cause of action for the suit?
Is the sale deed
dated 24.6.1977 real transaction of usufructuary mortgage deed in view of the agreement
of the same day executed by the defendant and, if so, are the plaintiffs
entitled to a decree as prayed for?
To what relief
or reliefs, if any, the plaintiffs are entitled?" The said suit was
dismissed holding that the deed of sale dated 24.6.1977 coupled with the said
agreement of reconveyance of the same date did not constitute a mortgage. It
was further held that the remedy available to the respondents was only to file
a suit for specific performance of the contract and as such a relief had not
been availed of by them within a period of three years, no relief could be
granted in their favour. The appeal preferred by the respondents herein thereagainst
was also dismissed.
respondents thereafter filed a second appeal before the High Court which was
allowed by the impugned judgment.
purported substantial question of law framed by the High Court is as under :
in view of the admission made by respondent no.2 in Ext.2 to the effect that
the parties understood the document to be a deed of Baibulbafa, learned court
committed error of law in construing Ext.A without taking into consideration
the admissions made by the parties to the aforementioned effect, in view of the
decision reported in AIR 1988 SC 1074." The High Court in its judgment
came to the conclusion that the recital of both the documents spelt out that
the real intention of the parties was that the transaction was to be one of
mortgage holding that the said deed of mortgage was executed by the respondents
in favour of the appellant for the purpose of securing a loan of Rs.3,000/-. It
was also held that the agreement for sale dated 24.6.1977 did not have the
efficacy to control the import of the recitals made in the said conveyance
P.S. Mishra, learned Senior Counsel appearing on behalf of the appellant raised
a short question in support of this appeal. It was contended that having regard
to the provisions of Section 58(C) of the Transfer of Property Act, the High
Court committed a manifest error in holding the transaction to be one of
mortgage as the said plea could not have been raised having regard to the
provisions of Sections 91 and 92 of the Indian Evidence Act. It was further
contended that the order dated 22.3.1979 passed by the Civil Court in Miscellaneous
Case No.14 of 1978 filed under Section 83 of the Transfer of Property Act, did
not operate as res judicata as thereby no issue between the parties was heard
and finally decided. It was further submitted that in view of the recitals in
the said deed dated 24.6.1977, the High Court committed an error in holding
that by reason thereof the right title and interest of the respondents did not
pass on to the appellant herein. It was argued that the High Court also
committed a manifest error in interfering with the concurrent findings of the
Trial Court as also the First Appellate Court.
Vijay Hansaria, learned Senior Counsel appearing on behalf of the respondents,
on the other hand, supported the judgment of the High Court. It was submitted
that the order dated 22.3.1979 would operate as res judicata in view of the
fact that the issue as to whether the said transaction evidenced by the deed
dated 24.6.1977 constituted a mortgage or a sale, had been determined thereby.
not in dispute that the deed in question was titled as a 'deed of sale'. The
respondents were described as 'vendor' and the appellant as a 'vendee'. The
nature of the deed was mentioned as 'Sale Deed (Kewala)'.
amount paid by the appellant to the respondents was treated to be the
consideration money. In the recitals made therein the purpose of executing the
deed of sale was stated to be as for repaying the debts taken by the
respondents from several money lenders and it was recited that they did not
have any source of income to repay the debts and no means of liquidating the
debts except to sell out the said land. It was categorically stated:
vendors on their own wishes and in good mental capacity sold the property/land
mentioned in column 5 aforesaid for a consideration of Rs.3000/- to the
aforesaid vendee Sh. Vishwanath Prasad Singh and accordingly transferred all
rights pertaining to this land to Sh. Vishwanath Singh. From today neither
Vendors nor their successors or legal heirs have no right or title over this land."
On the same date, as noticed hereinbefore, an agreement for sale (Ekrarnama)
was executed where again the parties were described as 'Vendor' and 'Vendee'.
In the said agreement for sale, the parties referred to the deed of sale
executed on the said date by the respondents. However, it was stated therein
that the said deed of sale was executed on the Baibulbafa condition. It was
also stated that the 'vendees' agreed that the 'vendor' or his successors or
heirs whenever would pay the consideration amount of Rs.3,000/- within 23
months from that date, i.e., upto the month of June, 1978, then he would
execute the deed of sale pertaining to the said property.
learned Trial Court as also the learned First Appellate Court arrived at a
concurrent finding that the said transaction did not constitute a mortgage but
thereby the respondents executed a deed of sale in favour of the appellant and
the appellant in turn executed an agreement for reconveyance in their favour. 'Baibulwafa'
was held to be a deed of conditional sale with a contract of repurchase and not
a mortgage with conditional sale. On the aforesaid findings it was
categorically held that a suit for declaration that the said transactions in
effect and substance constitute a mortgage, was not maintainable.
as is well known must be construed, having regard to the language used therein.
We have noticed hereinbefore that by reason of the said deed of sale, the
right, title and interest of the respondents herein was conveyed absolutely in favour
of the appellant. The sale deed does not recite any other transaction of
advance of any sum by the appellant to the respondents was entered into by and
between the parties. In fact, the recitals made in the sale deed categorically
show that the respondents expressed their intention to convey the property to
the appellant herein as they had incurred debts by taking loans from various
not oblivious of the fact that the term 'Bai-bil-wafa' or 'Bye- bil-wuffa/wafa'
is an Arabic term which may mean a mortgage or a condition sale but the said
term is not synonymous to 'Bai-ul-wafa'. In P. Ramanatha Aiyar's Advanced Law
Lexicon, 3rd edition at page 442, it is stated:
There is no unanimity of opinion among the jurisconsults of Islam on the point
whether a transaction of Bail-ul-wafa is a valid sale, a fasid sale or a
mortgage. Hence, it was held that "the Court is consequently, free to
choose any of the opinions (of jurists) which might be conformable to the
equities of the case and may carry out the real intention of the parties."
It was further held that "in this type of transaction, the contract
between the parties is to the effect that the transferee sells to the
transferee the property in question for either within a fixed period or at any
undefined time, the sale would to the transferor".
have noticed hereinbefore that the nature of deed was stated to be agreement (Ekrarnama),
the nature of the document was not stated to be 'Bai-ul-wafa', the relevant
clause whereof reads as under:
the 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 vendee has already agreed that this case will remain as Vaibulwafa
and as per the said Sarait, 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. upto the month of June, 1978 after harvesting of the crops i.e. Paddy or Ravi,
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." 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 deed was executed to be within a period of 23 months, i.e., upto
June, 1978, evidently the expression 'Vaibulwafa' as a condition was loosely
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
terminology 'Vaibulwafa' used in the agreement does not carry any meaning. It
could be either 'Bai-ul-wafa' or 'Bai-bil-wafa'. It will bear repetition to
state that with a view to ascertain the nature of a transaction the document
has to be read as a whole. A sentence used or a term used may not be
determinative of the real nature of transaction.
it was held by the trial court connotes only an agreement for sale. In terms of
Section 91 of the Evidence Act, if the terms of any disposition of property is
reduced to writing, no evidence is admissible in proof of the terms of such
disposition of property except the document itself.
Dass Jain (D) through Lrs. v. Sohan Lal (D) by Lrs. [(2000) 1 SCC 434] this
Court in a case where a transaction in question was said to be a sham
transaction opined that oral evidence was not admissible when a party relied
upon the said document.
Kumar v. Mohan Thedani [(2003) 6 SCC 595] the Court laid down the parameters of
best evidence rule in the following terms:
91 relates to evidence of terms of contract, grants and other disposition of
properties reduced to form of document. This section merely forbids proving the
contents of a writing otherwise than by writing itself; it is covered by the
ordinary rule of law of evidence, applicable not merely to solemn writings of
the sort named but to others known sometimes as the "best-evidence
rule". It is in reality declaring a doctrine of the substantive law,
namely, in the case of a written contract, that all proceedings and
contemporaneous oral expressions of the thing are merged in the writing or
displaced by it. (See Thayer's Preliminary Law on Evidence, p. 397 and p. 398; Phipson's
Evidence, 7th Edn., p. 546; Wigmore's Evidence, p. 2406.) It has been best
described by Wigmore stating that the rule is in no sense a rule of evidence
but a rule of substantive law. It does not exclude certain data because they
are for one or another reason untrustworthy or undesirable means of evidencing
some fact to be proved. It does not concern a probative mental process the
process of believing one fact on the faith of another. What the rule does is to
declare that certain kinds of facts are legally ineffective in the substantive
law; and this of course (like any other ruling of substantive law) results in
forbidding the fact to be proved at all. But this prohibition of proving it is
merely that dramatic aspect of the process of applying the rule of substantive
law. When a thing is not to be proved at all the rule of prohibition does not
become a rule of evidence merely because it comes into play when the counsel
offers to "prove" it or "give evidence" of it; otherwise,
any rule of law whatever might be reduced to a rule of evidence. It would
become the legitimate progeny of the law of evidence. For the purpose of
specific varieties of jural effects sale, contract etc. there are specific
requirements varying according to the subject. On the contrary there are also
certain fundamental elements common to all and capable of being generalised.
Every jural act may have the following four elements:
the enaction or
creation of the act;
or embodiment in a single memorial when desired;
solemnization or fulfilment of the prescribed forms, if any; and
interpretation or application of the act to the external objects affected by
it." Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage
by conditional sale in the following terms:
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 :
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 bare perusal of the said provision clearly shows that a mortgage by
conditional sale must be evidenced by one document whereas a sale with a
condition of re-transfer may be evidenced by more than one document. A sale
with a condition of retransfer, is not mortgage. It is not a partial transfer.
By reason of such a transfer all rights have been transferred reserving only a
personal right to the purchaser, and such a personal right would be lost,
unless the same is exercised within the stipulated time.
Chunchun Jha v. Sheikh Ebadat Ali & Anr [(1955) 1 SCR 174] this Court
think that is a fruitless task because two documents are seldom expressed in
identical terms and when it is necessary to consider the attendant
circumstances the imponderable variables which that brings in its train make it
impossible to compare one case with another. Each must be decided on its own
facts" Yet again in Mushir Mohammed Khan (D) Lrs. v. Sajeda Bano (Smt.)
& Ors. [(2000) 3 SCC 536] this Court upon construing Section 58 (c) of the
Act and opined:
proviso to this clause was added by Act 20 of 1929 so as to set at rest the
conflict of decisions on the question whether the conditions, specially the
condition relating to reconveyance contained in a separate document could be
taken into consideration in finding out whether a mortgage was intended to be
created by the principal deed. The legislature enacted that a transaction shall
not be deemed to be a mortgage unless the condition for reconveyance is contained
in the document which purports to effect the sale." Referring to Chunchun Jha
(supra) it was held:
the principles laid down above, the two documents read together would not
constitute a "mortgage" as the condition of repurchase is not
contained in the same documents by which the property was sold. The proviso to
clause (c) of Section 58 would operate in the instant case also and the
transaction between the parties cannot be held to be a "mortgage" by
conditional sale" In Umabai and Another v. Nilkanth Dhondiba Chavan (Dead)
by Lrs. And Another [(2005) 6 SCC 243], wherein of us was a party, this Court held
"There exists a distinction between mortgage by conditional sale and a sale with
a condition of repurchase.
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
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 v. Sk. Ebadat Ali, Bhaskar Waman Joshi v. Narayan Rambilas Agarwal, K. Simrathmull
v. S. Nanjalingiah Gowder, Mushir Mohammed Khan and Tamboli Ramanlal Motilal.)"
The High Court relied upon Smt. Indira Kaur & Ors. v. Sheo Lal Kapoor
[(1988) 2 SCC 488] therein the court took into consideration the factors
adumbrated therein, particularly, a long stipulated period of 10 years for
conveying the property and the vendee was prohibited from selling and parting
with his right, title and interest for 10 years. The vendor was allowed to
occupy the property as a tenant on payment of Rs. 80/- per month. No order of
mutation was passed in his favour. It was held:
In the present case having regard to the facts and circumstances highlighted in
the course of the discussion pertaining to the question as to whether or not
the transaction was a transaction of mortgage having regard to the real
intention of the parties it would be difficult to hold that the agreement to
sell executed by the defendant in favour of the plaintiff was by way of a
"concession". It was a transaction entered into by the defendant who
was a hard-headed businessman and the documents in question have been carefully
framed in legal terminology taking into account the relevant provisions of law.
The transaction also discloses the awareness of the defendant about Section
58(c)4 of the Transfer of Property Act as is evident from the fact that the reconveyance
clause is not embodied in the sale deed itself. In the agreement to sell, no
reference has been made to the transaction of sale though it has been executed
contemporaneously. The defendant who has permitted the plaintiff to continue in
possession on payment of rent equivalent to about 13= per cent interest and was
evidently aware of all the dimensions of the matter would not have granted any
concession or executed the agreement by way of a concession. The agreement was
executed evidently because the plaintiff would not have executed the sale deed
unless an agreement to sell by a contemporaneous document was also executed to
enable the plaintiff to enforce specific performance within ten years. It was
therefore a transaction entered into with open eyes by the defendant and there
was no question of granting any concession." In the instant case, as
noticed hereinbefore, the transfer is complete and not partial, no stipulation
has been made that the appellant cannot transfer the property. Not only that
the appellant was put in possession of the land, his name was also mutated.
and Another v. Phagua and Others [(2006) 1 SCC 168], this Court having regard
to the peculiar fact situation obtaining therein opined:
our opinion, agreement to reconvey the property will not ipso facto lead to the
conclusion that the sale is nominal and in view of the stand of Defendant 8, as
also of the fact that the property worth Rs. 700 has been purportedly sold for Rs.
400, we are of the considered opinion that the sale deed dated 1-12-1965 did
not convey any title to Defendant 8. It is well settled by a catena of
decisions that the vendor cannot convey to the vendee better title than she
herself has." As of fact, it was held therein that the sale deed in question
was not a real sale deed but was by way of a surety. In that case, furthermore,
the defendant categorically admitted that the plaintiff had taken loan. It is
in that situation, the transaction was held to be a mortgage. Apart from it,
there were other circumstances which led the court to arrive at the said
conclusion. The said decision, therefore, cannot have any application in the
question which now arises for consideration is as to whether the aforementioned
order dated 22.3.1979 passed in Misc. Case No. 14/78 would operate as res judicata.
Section 83 of the Transfer of Property Act reads as under:
to deposit in Court money due on mortgage.- At any time after the principal
money payable in respect of any mortgage has become due and before a suit for
redemption of the mortgaged property is barred, the mortgagor, or any other
person entitled to institute such suit, may deposit, in any court in which he
might have instituted such suit, to the account of the mortgagee, the amount remaining
due on the mortgage.
to money deposited by mortgagor.- The court shall thereupon cause written
notice of the deposit to be served on the mortgagee, and the mortgagee may, on
presenting a petition (verified in manner prescribed by law for the verification
of plaints) stating the amount then due on the mortgage, and his willingness to
accept the money so deposited in full discharge of such amount, and on
depositing in the same court the mortgage-deed and all documents in his
possession or power relating to the mortgaged property, apply for a and receive
the money, and the mortgage-deed, and all such other documents so deposited
shall be delivered to the mortgagor or such other person as aforesaid.
the mortgagee is in possession of the mortgaged property, the court shall,
before paying to him the amount so deposited, direct him to deliver possession
thereof to the mortgagor and at the cost of the mortgagor either to re-transfer
the mortgaged property to the mortgagor or to such third person as the
mortgagor may direct or to execute and (where the mortgage has been effected by
a registered instrument) have registered an acknowledgement in writing that any
right in derogation of the mortgagor's interest transferred to the mortgagee
has been extinguished." The provision merely permits the mortgagor to
deposit the mortgage amount. Even in a case where such deposit is made, in the
event the mortgagee refused to accept the deposit, the mortgagor would have no
option but to institute a suit for redemption relying on the mortgage money
deposited. The respondent did not file a suit for redemption. It may be that
the appellant objected to the said deposit but despite the fact that the
purported mortgage amount was allowed to be deposited, the same being not
binding upon the mortgagee as he could not be compelled to accept the same, the
question of applying the principles of res judicata would not arise. [See Chandramani
Pradhan v. Hari Pasayat, AIR 1974 Orissa 47]. By reason of such deposit the
status of the parties is not altered. For filing a suit for redemption by the
mortgager, deposit under Section 83 is not a precondition. It is well-known
that the function of a court in terms of Section 83 Transfer of Property Act is
procedural in nature.
attracting the principles of res judicata, the submissions of Mr. Hansaria is
that the court of the Munsif was a court exercising limited jurisdiction while
entertaining an application under Section 83 of the Transfer Property Act and
the decision of such a court of limited jurisdiction would also operate as res judicata.
Strong reliance has been placed by Mr. Hansaria on Sulochana Amma v. Narayanan Nair[
(1994) 2 SCC 14]. He submitted that in that case a suit was filed before a
court of limited pecuniary jurisdiction and in view of the decision thereon,
explanation VIII to Section 11 of the Code of Civil Procedure was held to be
Kumar v. Kalyan (Dead) by Lrs. [(2000) 8 SCC 99] this Court merely held that
the expression 'court of limited jurisdiction' is of wide amplitude. The Court
made a distinction between a procedural statute and a substantive statute for
applicability of the principles of res judicata.
that case the earlier suit was filed before a court of competent jurisdiction.
Bajrangi (Dead) through Lrs. & Ors. v. Badribai w/o Jagannath & Anr.
[(2003) 2 SCC 464] this Court clearly held that the principles of res judicata
would be applicable only when an issue arose directly and substantially in an
earlier suit, a finding regarding an incident or collateral question reached
for the purpose of arriving at the final decision would not constitute res judicata.
In Union of India v. Pramod
Gupta (D) by Lrs. & Ors. [JT (2005) 8 SC 203] this Court opined:
The principle of res judicata would apply only when the lis was inter parties
and had attained finality in respect of the issues involved. The said principle
will, however, have no application inter alia in a case where the judgment
and/or order had been passed by a court having no jurisdiction therefore,
and/or in a case involving pure question of law. It will also have no
application in a case where the judgment is not a speaking one." The
question of determination of being a pure question of law, the principles of res
judicata shall have no application. Therefore, the High Court, in our opinion
committed a manifest error in interfering with the judgment and decree passed
by the trial court as also the appellate court in exercise of its jurisdiction
under Section 100 of the Civil Procedure Code.
the reasons aforementioned, the impugned judgment of the High Court cannot be
sustained. It is set aside accordingly. The appeal is allowed with cost.
Counsel's fee quantified at Rs. 5,000/-.