JUDGMENT Kingaonkar V.R., J.
1. This Second Appeal arises out of concurrent findings rendered by the trial Court and the first Appellate Court holding that document dated 29th October, 1963 styled as "Mudat Kharedi Khat" executed by deceased defendant Shivram in favour of Sadashiv Laxman Sanap, is a mortgage by conditional sale. The trial Court decreed suit for redemption of the mortgage. The first Appellate Court dismissed defendants' appeal (R.C.A. No. 490/1989). The legal representatives of deceased defendant Shivram have, therefore, preferred this Second Appeal.
2. Undisputedly, the plaintiff - Sadashiv owned the suit land bearing Gat No. 81, admeasuring 61 Ares, which he transferred in favour of deceased defendant - Shivram by virtue of the document in question i.e "Mudat Kharedi Khat" dated 29th October, 1963, for Rs. 400/-. The possession was delivered to the defendant at the time of execution of the document. The defendant was to pay the land revenue. The parties agreed that the amount of Rs. 400/-. would be paid to the defendant within a period of 5 years at any time when there would be no standing crop in the suit land and in that event the defendant would reconvey the property. It was agreed between them that in case the amount of Rs. 400/-. is not paid within the stipulated period of 5 years, then it would be deemed as fault of the plaintiff and, thereafter, the deceased defendant was to become absolute owner of the suit land. In such event the deceased defendant and his legal representatives were entitled to enjoy the suit land as full owners.
3. The plaintiffs case is that the transaction was that of a mortgage. He gave notice dated 21.11.1981 (Exh. 29) and claimed redemption of the mortgage. He called upon the deceased defendant to accept the amount of Rs. 400/-. which the latter refused to accept during the relevant period covered by the transaction. He expressed willingness to get the suit land released from the debt and desired to obtain the redemption. The defendant gave reply to the said notice on 30.12.1981 and refused to comply with the demand.
4. The defendant's case before the trial Court was that the transaction was out and out sale with concession given to the plaintiff for obtaining reconveyance of the suit land under certain conditions enumerated in the document. It is denied that there was relationship of mortgagor and mortgagee between the plaintiff and the deceased defendant. It was contended that the plaintiff failed to exercise the option of repurchase within the stipulated period and hence, cannot claim any relief because the title of the deceased defendant became absolute. It was further pleaded that the suit was barred by limitation.
5. The parties went to trial over certain issues framed by the trial Court at Exh. 21. They adduced oral and documentary evidence in support of the rival contentions. The trial Court construed the document in question as a mortgage deed. The trial Court, therefore, decreed the suit for redemption of the mortgage. The deceased defendant unsuccessfully challenged the decree in the First Appeal, which was dismissed.
6. My learned predecessor (Mhase, J.) admitted this second appeal on the substantial question of law pertaining to construction of the document (Exh. 28) styled as "Mudat Kharedi Khat" dated 29.10.1963. The substantial question of law formulated is as follows:
Whether document at Exh. 28 is a mortgage or a sale with condition to repurchase which requires consideration in mew of Nana Tukaram v. Sonabai and Tamboli Ramanlal Motilal v. Ghanchi Chimanlal Keshavlal 1992 DGLS 192 : AIR. 1992 Supreme Court 1236
7. The nature of the transaction can be determined from the terms of the document, intention of the parties and the attending circumstances. The recitals of the document itself would be of paramount consideration.
8. Mr. Dhorde R.N., learned Counsel appearing for the appellants would submit that the trial Court as well as the first Appellate Court committed patent error while construing the document as a mortgage by conditional sale. He would submit that there is no material to infer relationship of debtor and creditor between the deceased defendant and the plaintiff. He would further submit that the terms of the document only show that passing of absolute ownership was deferred but enjoyment of the defendant as owner of the property was contemplated under the document inasmuch as he was required to pay the land revenue. He pointed out that there was no agreement regarding interest payable on the amount nor the amount of Rs. 400/-. was to be treated as loan given by the deceased defendant - Shivram. He contended that there is no evidence on record to show that the suit property was under valued. According to the learned Counsel Mr. Dhorde, the terms of the document are clearly indicative of the sale transaction irrespective of the fact that absolute ownership was to be created only after the stipulated period of 5 years. He seeks to rely on Tamboli Ramanlal Motilal (dead) by L.Rs. v. Ghanchi Chimanlal Keshavlal (dead) by L.Rs. and Anr. , Vasant Panda @ Pandurang Birwatkar and Anr. v. Shankar Dhondu Ghole and Anr. , Vamanrao Sawalaram Bhosale and Ors. v. Vithal Tukaram Kadam and Anr. . Mr. Dhorde, learned Counsel took me through the terms of the document and the judgments of both the Courts. He strenuously argued that both the Courts below fell in error while construing the terms of the "Mudat Kharedi Khat" (Exh. 28) dated 25.10.1963. He would submit that the suit is liable to be dismissed by allowing this appeal. Per contra, Mr. Darak, learned Counsel appearing for the respondent has supported the impugned judgment.
9. At the threshold, the terms of the document (Exh.28) styled as "Mudat Kharedi Khat" may be stated in order to understand the real nature of the transaction. The parties agreed that in lieu of Rs. 400/-. paid to the plaintiff in two instalments, initially of Rs. 275/- paid before about one year so as to purchase a sewing machine and remaining amount of Rs. 125/- paid on the date of document towards hand loan for repayment of the loan and for domestic expenses, the suit land was delivered into actual possession of the defendant. It was further agreed that the amount of Rs. 400/- could be repaid by the plaintiff within a period of 5 years and the suit land was to be returned to him which he would be entitled to get released. The parties agreed that till the release of the suit land, the defendant shall enjoy the same on payment of the land revenue. The parties further agreed that the plaintiff would be entitled to get the suit land released on making repayment of Rs. 400/- only when there would not be standing crops. The last and most important term of the document is that if the plaintiff will fail to repay the amount of Rs. 400/-. then it would be deemed as his fault and, thereafter, the document was to be treated as absolute sale and the defendant was to enjoy the suit land as owner thereof. These stipulated terms must be kept at back of the mind while determining the nature of the transaction.
10. The settled legal position is that in case of a mortgage by conditional sale the price is being charged on the property conveyed, and relationship of mortgagor and mortgagee is created. In a sale coupled with an agreement to reconvey, there is no relationship of debtor and creditor nor price is charged on the property conveyed but the sale is subject to an obligation to transfer the property within the period specified. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The document needs to be construed on touch stone of Section 58(c) of the Transfer of Property Act. The document shows that about 12 months prior i.e. somewhere in September/October 1962 an amount of Rs. 275/- was obtained by the plaintiff from the defendant in order to purchase a sewing machine. He further obtained Rs. 125/- at the time of the execution of the document by way of hand loan. Needless to say the terms of the document do not show that both these amounts were treated as payment towards consideration of the suit land. The document itself does not show the agreed price of the suit land. The terms of the document do not show that prior to the execution of the document in question, there was an agreement to alienate the suit land under certain terms. The terms of the document also do not show that immediately the ownership of the suit land was transferred and the defendant was allowed to enjoy the property as a owner. The mere fact that he was supposed to pay the land revenue is of no avail. He was placed into possession of the suit land and was to enjoy the usufruct. Obviously, he was required to pay the land revenue as a person in possession of the suit land.
11. In case of "Tamboli Ratanlal Motilal" (supra), the Apex Court interpreted the document as a conditional sale with option to repurchase. The Apex Court held that the document was not a mortgage by conditional sale for the reason that the amount shown under the document was not paid as loan. It was also noticed that by executing the said document, the executant had discharged all the prior debts which was outstanding. There was a specific stipulation in the document to the effect:
Therefore, you and your heirs and legal representatives are hereafter entitled to use, enjoy and lease the said houses under the ownership right.
It is under such circumstances that the transaction was held to be a conditional sale with option to repurchase. The above referred terms clearly indicated that the ownership rights were immediately transferred under the document. The fact situation in the present case is quite different. There is no whisper in the document to show that the parties intended transfer of the ownership in favour of the defendant, immediately after the execution of the said document. The plaintiff had not cleared any prior debts of third parties by obtaining amounts on the two occasions from the defendant. The plaintiff had taken the amount of loan from the defendant on both the occasions so as to meet out his domestic needs.
12. The terms of the document in case of Vamanrao Sawalaram Bhosale and Ors. v. Vithal Tukaram Kadam (supra) were found to be indicative of out right sale transaction with a condition of repurchase. The specific term in the document is highlighted by the Single Bench in the judgment. It was stated in the document:
Therefore, now hereafter you shall go on carrying out the vahivat (management) of the said land by paying Government taxes, perpetually, from generation to generation in the capacity of being owner, freely and as per your wish. Now, neither I nor my heirs and descendants have left any rights, claim, ownership thereto in any manner whatsoever. You have become an absolute owner of the said land.
It was because of such specific recitals that the document was construed as a sale with condition of repurchase and not a mortgage by conditional sale. I do not find parallels in the fact situation of that case and the present case before me. Similarly, the observations in Vasant Pandu @ Pandurang Birwatkar v. Shankar Dhondu Ghole . (supra) are also of no much avail to the case of the appellants.
13. In the present case, the recitals of the document (Exh.28) would give rise to following inferences:
(a) The price was not settled prior to the agreement.
(b) The document itself does not immediately transfer the title in favour of the appellant/defendant
(c) There was no oral or written agreement of sale preceding the document styled as Mudat Kharedi Khat (Exh.28).
(d) The appellant/defendant was not assigned right to enjoy the property as a owner and his name was not agreed to be mutated as owner on the basis of the said document.
(e) The suit property was to be released after the period of 5 years on repayment of Rs. 400/- by the respondent/plaintiff, inasmuch as it is stated "(....) i.e. by reconveyance it will be returned. There was clog on the right to get the suit property released after 5 years if the amount could not be paid within the stipulated period.
(f) The repayment of the amount was to be made at any time within 5 years but the possession could not be demanded when the crops would be standing. (In other words the usufructs were to be enjoyed by the appellants.)
14. The above terms go to show that the deceased defendant was to enjoy the property in lieu of interest. The above terms may not specifically show that the amount of Rs. 400/- was to be treated as loan advanced to the plaintiff but then such inferential finding can be given on the basis of the peculiar terms stated above and particularly when the title was not perfectly passed in favour of the defendant immediately on execution of the document.
15. The attending circumstances also will have to be taken into account as supportive evidence. The pleadings of the plaintiffs would show that he asserted the right to obtain the suit land by reconveyance as he was ready to pay the amount of Rs. 400/-. There is no denial to such pleadings of the plaintiff. In the written statement, no specific plea is raised that the transaction was out and out sale. The defendant did not plead that it was a transaction of sale with concession granted to the plaintiff for his repurchase of the suit land. Nowhere it is stated that it was a conditional sale. In the absence of such pleadings, it may be gathered that the defendant was well aware about the fact that the transaction was that of a mortgage by conditional sale. Secondly, it is important to note that the plaintiff served a notice dated 25.11.1981 on the deceased defendant and demanded reconveyance of the suit land. In the demand notice (Exh.29) it is clearly stated that the suit land was mortgaged in lieu of Rs. 400/- and that the plaintiff was ready to get the same redeemed. The deceased defendant replied the notice (Exh.56). In the reply to the notice, the appellant asserted that the suit land ought to have been got discharged from the debt upto the year 1968 which was not done and, therefore, he claimed to have become owner. In other words, he did not controvert the fact that there was mortgage transaction. This response of the appellant at the first blush is more relevant and significant. It does imply that there was relation of creditor and debtor between the appellant and the respondent. The notice clearly purports to show that the plaintiff demanded redemption of the mortgage and release of the suit land. The plaintiffs name continued to appear in the revenue record as owner of the suit land. The defendant did not seek change of the revenue record and never objected to the entries appearing in the plaintiffs name.
16. The cross-examination of the plaintiff would show that it was suggested that in 1968 the deceased defendant (appellant) had approached him and demanded Rs. 400/-for redemption of the land. This suggestion shows that the transaction was that of mortgage. In his statement, deceased defendant -Shivram has not explained about the statements made in reply notice (Exh.56). He categorically admitted that the contents of the said reply notice Exh.56 are correct. He deposed that previously the suit land was mortgaged with one Marwadi person by the plaintiffs father. He further deposed that he paid Rs. 1,000/- (Rupees One thousand) towards mortgage money to the grand son of said Marwadi by name Narsing Chandu and got redeemed the suit land. Obviously, on his own showing, the suit land was worth more than Rs. 1,000/- and could not be purchased for palpably low price of Rs. 400/-. These are tale telling circumstances. Considered together, the only inference which can be drawn is that the transaction was that of mortgage because the parties are inter related and were having fiduciary relationship inasmuch as the deceased defendant stated that he had given hand loan to the respondent on many other occasions.
17. The Apex Court in P.L. Bapuswami v. N. Pattay Gounder held that the circumstances and the terms of the document should be read together. In Pomal Kanji Govindji and Ors. v. Vrajlal Karsandas Puruhit and Ors. , it is held that the doctrine of clog on equity of redemption is a rule of justice, equity and good conscience. It is a right of mortgagor on redemption by reason of the very nature of the mortgage, to get back the subject of the mortgage and to hold and enjoy as he was entitled to hold and enjoy it before the mortgage. Litmus test which distinguishes a sale and mortgage by conditional sale is settled in Bhaskar Woman Joshi (deceased) and Ors. v. Shrinarayan Rambilas Agarwal (deceased) and Ors. . It is well settled that caption of the document or mere language used therein may not be decisive. The nature of the transaction is required to be determined on consideration of the intention of the parties which can be gathered from the attending circumstances and the terms of the document.
18. There was controversy in the past regarding permissibility of the aliunde evidence against terms of the document. Sub-clause (c) of Section 58 was introduced in order to avoid the dichotomy. In Pandit Chunchun Jha v. Sheikh Ebadat Ali , it is held:
Because of the welter of confusion caused by a multitude of conflicting decisions the Legislature stepped in and amended Section 58(c) of the Transfer of Property Act. Unfortunately that brought in its train a further conflict of authority. But this much is now clear. If the sale and agreement to repurchase are embodied in separate documents, then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. But the converse does not hold good, that is to say, the mere fact that there is only one document does not necessarily mean that it must be a mortgage and cannot be a sale. If the condition of repurchase is embodied in the document that effects or purports to effect the sale, then it is a matter for construction which was meant. The Legislature has made a clear cut classification and excluded transactions embodied in more than one document from the category of mortgages, therefore it is reasonable to suppose that persons who, after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words : and if the conditions of Section 58(c) are fulfilled, then we are of opinion that the deed should be construed as a mortgage.
(Emphasis supplied)
19. The above observations of the Apex Court would make it explicit that presumption may be drawn when the persons, who after the amendment of Section 58(c) of the T.P. Act choose not to use two documents, do not intend the transaction to be a sale. The deceased defendant (appellant) has not adduced sufficient evidence to displace that presumption. Consequently, it will have to be said that the transaction is one of the mortgage by conditional sale and not sale with condition to allow repurchase.
20. Both the courts below have properly appreciated the relevant circumstances and facts obtained in the instant case. I do not find any perversity in the concurrent findings of facts. The document styled as "Mudat Kharedi Khat" (Exh. 28) being held as mortgage deed, the decree for redemption of the mortgage is legal and proper. There cannot be a clog on the mortgage. The rights of the mortgagor would remain unabated inspite of the condition that after 5 years it would be treated as out and out sale. Considering all the relevant aspects, I am of the opinion that the appeal deserves to be dismissed.
21. In the result, the appeal is dismissed with costs.