Smt. Maya Devi Pandey vs Sumit Mathur And Others
2013 Latest Caselaw 3546 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved on 29.04.2013
 
Delivered on 03.07.2013
 
Court No. - 34
 

 
Case :- SECOND APPEAL No. - 86 of 2013
 
Appellant :- Smt. Maya Devi Pandey
 
Respondent :- Sumit Mathur And Others
 
Counsel for Appellant :- Dhruva Narayana, Aashish Shrivastav, Anadi Krishna Narayana
 
Counsel for Respondent :- Manish Kr. Jain, Ramesh Chandra Srivastava, Udyan Nandan
 

 
Hon'ble Sudhir Agarwal,J.

1. Heard Sri Dhruv Narain, learned Senior Advocate assisted by Sri A.K. Narayana, learned counsel for the appellant, Sri Udyan Nandan, Advocate for respondents no. 1 to 8 and Sri R.C. Srivastava, Advocate for respondents no. 9 to 12.

2. This is a defendant's appeal filed under Section 100 C.P.C. It has arisen from the judgment and decree dated 16.10.2012 passed by Sri Sanjay Khare, Additional District Judge, Court No. 9, Kanpur Nagar in Civil Appeal No. 45 of 2011, arising from Original Suit No. 295 of 1979 decided vide judgment and decree dated 18.12.2010 of Sri Manoj Kumar Agarwal, Special Chief Judicial Magistrate/Additional Civil Judge (Senior Division), Kanpur Nagar.

3. The Trial Court (hereinafter referred to as the "TC") had decreed the suit and the said judgment and decree has been confirmed by Lower Appellate Court (hereinafter referred to as the "LAC").

4. The only substantial question of law which has been formulated in this case after hearing appeal under Order 41 Rule 11 C.P.C. is as under:

"Whether the instrument dated 25.07.1967 contains both clauses, i.e., sale and re-conveyance/redemption of a particular period of time and/or it is a document which is only a sale deed and there is no clause for re-conveyance or re-sale."

5. The dispute relates to Plot No. 24, area 970.165 sq. yards, (municipal No. 8/219A), situated at Mohalla Arya Nagar, Kanpur Nagar. Late Ram Prasad Mathur was the owner of house in question which came to his share after partition of family property with his brother. After the death of Sri Ram Prasad Mathur (the initial plaintiff), the property in dispute succeeded by plaintiffs No. 1/2 and 1/4.

6. The plaint case set up by Sri Ram Prasad Mathur, the sole plaintiff (now deceased and substituted by his legal heirs) is that he executed a mortgage by conditional sale deed (Baya Kul Wafa) dated 29.12.1965 with Sri Kailash Nath Agrawal on a consideration of Rs. 10,000/- which he actually obtained as loan. The property was mortgaged for a period of two years on the condition of payment within aforesaid period. Sri Kailash Nath Agrawal, however, got two documents executed, one a sale deed and another an agreement for re-conveyance though intention of parties was to execute a mortgage by conditional sale. Another agreement was also executed for creating tenancy at Rs. 125/- per month and all the three documents were executed on 29.12.1965.

7. After about one and half a year, the plaintiff needed more money and approached Sri Ram Kumar Shukla, one of his friend who agreed to advance Rs. 25,000/- on the condition of mortgage of disputed property with stipulation of re-conveyance within three years. There also he got a tenancy agreement executed separately in lieu of interest on Rs. 25,000/- and these three documents were executed on 25.07.1967.

8. The plaintiff subsequently sought redemption of property but it was not agreed and in the meantime Sri Ram Kumar Shukla died on 07.05.1979, hence the suit for redemption of mortgage in respect of property in dispute was instituted. It was also pleaded that value of property was more than a lac and this shows that there was no justification for outright sale of property on a much lesser consideration.

9. The suit was contested by defendants no. 1, 2 and 3 sons of late Ram Kumar Shukla and defendant no. 5, to whom it appears that property was sold subsequently. Defendants no. 3 and 5 filed a joint written statement while defendant no. 2 filed a separate written statement.

10. The TC formulated nine issues and issue No. 2, relevant for this appeal, reads as under:

^^2- D;k jke izlkn ekFkqj ,oa jke dqekj 'kqDyk o Jherh ek;knsoh ds e/; esa fnukad 25-07-67 dks okni= esa of.kZr lEO;ogkj cU/kd l'krZ fcdz; ¼jguukek c;cqyoQk½ gS ;k iw.kZ fodz; gS\**

"2. Whether the transaction mentioned in the plaint as on 25.07.1967 between Ram Prasad Mathur, Ram Kumar Shukla and Smt. Maya Devi is a mortgage by conditional sale or an absolute sale." (English translation by the Court)

11. While considering issue No. 2, the TC held that admittedly house was initially owned by Sri Ram Prasad Mathur and had been consistently in his possession. House tax, water tax, electricity bill, sewerage tax etc. was continuously paid by him. The defendants no. 1 and 2 also admitted that document dated 25.07.1967 was actually a mortgage by conditional sale, i.e., Rahannama Baya-Bul-Wafa. The defendant no. 1 received and accepted Rs. 6,000/- which was his share which included principal amount of Rs. 4166.66 and interest of Rs. 1833.4 and thereupon defendants 1 and 2 discharged debt and resumed mortgage.

12. The defendants no. 3 and 5, however, took a stand that disputed property was sold by plaintiff to Sri Kailash Nath Agrawal for a consideration of Rs. 10,000/-. However, an agreement for re-conveyance in a period of two years was also separately executed with Sri Kailash Nath Agrawal. Subsequently, the plaintiff transferred his right of repurchase and Sri Kailash Nath Agrawal transferred his entire ownership rights to Sri Ram Kumar Shukla and Smt. Maya Devi for a sale consideration of Rs. 25,000/-. Therewith the plaintiff also requested and got an agreement for re-conveyance with a period of three years with Sri Ram Kumar Shukla and Smt. Maya Devi. On the request of plaintiff, he was allowed to stay in the disputed house on rent. It was also pleaded that out of Rs. 25,000/-, Rs. 10,000/- was received by Sri Kailash Nath Agarwal and Rs. 15,000/- by Sri Ram Prasad Mathur. The TC then construed the instruments in question, dated 25.07.1967, and held it an instrument of "mortgage by conditional sale", as contemplated under Section 58(c) of Transfer of Property Act, 1882 (hereinafter referred to as the "Act, 1882") and decided Issue No. 2 in favour of plaintiff. The suit, therefore, was decreed. LAC has confirmed the aforesaid judgment and decree of TC.

13. The only question up for consideration is the construction of instrument dated 25.07.1967, whether it is an instrument of outright sale or a mortgage by conditional sale.

14. It is not in dispute between parties that there are two instruments, i.e., paper No. 7-C and 8-C executed on 25.07.1967 which are up for consideration. One is a sale deed and another is an agreement for re-conveyance of disputed property. The TC had read both the documents together so as to arrive at a finding that the same constitute mortgage by conditional sale and not a complete sale.

15. Sri Dhruv Narain, learned Senior Advocate appearing for appellant contended, where the same document does not contain stipulation for re-purchase of property in dispute it would not satisfy the definition of "mortgage by conditional sale" under Section 58(c) of Act, 1882 and the courts below have committed manifest error by construing two separate documents together so as to constitute a "mortgage by conditional sale". He placed reliance on Apex Court's decisions in Gauri Shankar Prasad and others Vs. Brahma Nand Singh, 2008(5) Supreme 201; Raj Kishore (dead) by Lrs. Vs. Prem Singh and others, 2010(8) Supreme 466; and, Vishwanath Dadoba Karale Vs. Prisa Shantappa Upadhye (D) Th. Lrs., 2008(2) Supreme 566. He further contended, if there are two documents, one for ostensible sale and another, an agreement to sell property, back to original seller, in such circumstances the suit for redemption of mortgage would not lie but the plaintiff ought to have filed a suit for specific performance of the agreement for sale and has to satisfy the requirement of Section 16 of Specific Relief Act, 1963 (hereinafter referred to as the "Act, 1963"). In the present case since the suit was not instituted for specific performance of agreement to sale, the suit in question for redemption of mortgage could not have been decreed. He pointed out that courts below in relying on a decision of Smt. Indira Kaur and others Vs. Shri Sheo Lal Kapoor, AIR 1988 SC 1074 have miserably failed to notice that it was a suit for specific performance of agreement for sale and not a suit for mere resumption of mortgage and, therefore, was not applicable in the present case. He further submitted that courts below have completely ignored to consider proviso to Section 58(c) which provides that the sale and agreement to repurchase, if, are embodied in separate documents, then the transaction cannot be a mortgage, whether the documents are contemporaneously executed or not and placed reliance on Chunchun Jha Vs. Ebadat Ali and another, AIR 1954 SC 345.

16. Sri Udyan Nandan, learned counsel for plaintiffs-respondents placed heavy reliance on the decision in Smt. Indira Kaur (supra) to support the judgments in question and contended that the documents have been executed contemporaneously, hence intention of parties can be gathered from both the documents, read together. On the construction of document as to how it should be construed, he placed reliance on Vishwanath Dadoba Karale (supra) and Tulsi and others Vs. Chandrika Prasad and others, 2006(8) SCC 322.

17. The question formulated above, therefore, can be answered by examining, whether the execution of two documents would make any difference in the case in hand and whether the transaction in question can be said to be a mortgage by way of conditional sale or it is a sale with condition of purchase.

18. Both the parties have referred repeatedly Section 58(c), which reads as under:

"58 (c) Mortgage by conditional sale.-Where, the mortgagor ostensibly sells the mortgaged property--on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or

on condition that on such payment being made the sale shall become void, or

on condition that on such payment being made the buyer shall transfer the property to the seller,

the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale:

Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale."

19. So far as paper No. 7-C dated 25.07.1967 is concerned, counsel for the parties could not dispute that it is an instrument of outright sale and there is nothing in the document which may suggest even for a little that the seller/vendor did not intend to transfer his absolute ownership rights to vendee. In the aforesaid document it is not shown that there is any stipulation of re-transfer of property to vendor. There is a recital about the earlier documents executed with Sri Kailash Nath Agrawal, i.e., on 29.12.1965 and it mentioned that property in dispute was sold to Sri Kailash Nath Agrawal for consideration of Rs. 10,000/- by registered sale deed dated 29.12.1965, registered on 22.03.1966 in respect whereto Sri Ram Prasad Mathur, the vendor also had entered into an agreement for repurchase within a period of two years and this right of re-purchase he was not able to avail due to lack of funds and, therefore, with the consent of Sri Kailash Nath Agrawal, in order to avail adequate consideration of property, the right of re-purchase as also the property was being sold by both the parties, namely, Sri Ram Prasad Mathur and Sri Kailash Nath Agrawal to Sri Ram Kumar Shukla and Smt. Maya Devi on an adequate consideration of Rs. 25,000/- which is consistent with market value of property and there is no expectation of higher value than that. The property was sold without reserving any right of any kind to vendor.

20. Sri Udyan Nandan, learned counsel for respondents, having gone through the aforesaid document could not dispute that the same transferred property in dispute, absolutely without reservation of any right to vendor(s) and it is nothing but an out and out sale of disputed property to the vendees.

21. He, however, submitted that paper No. 8-C agreement for re-purchase, discloses intention of parties that in effect the transaction of sale was a mortgage with conditional sale, which could have been exercised by vendor within three years. Sri Dhruv Narain, learned Senior Advocate appearing for appellant said that once it is admitted that paper No. 7-C was an absolute sale, the suit in question for redemption of mortgage was neither maintainable nor could have been decreed since it was not a mortgage by conditional sale particularly when there was no suit for specific performance of agreement for sale so as to satisfy the requisite pleading and requirement of law for such relief.

22. So far as distinction between a mortgage and sale with a condition of re-transfer, it cannot be doubted that both stand differently. A sale with a condition of re-transfer is not a mortgage. For the relationship of debtor and creditor it is not subsisted and there is no debt for which transfer is a security. It is not a partial transfer but is a transfer of all rights of property reserving only a personal right of re-purchase or pre-emption, which is lost if not exercised within stipulated time. The Privy Council in Bhagwan Sahai Vs. Bhagwan Din, (1890) ILR 12 All 387, quoted with approval the following passage from Alderson Vs. White(1858) 2 De G and J 97:

"The rule of law on this subject is one dictated by common sense that prima facie an absolute conveyance containing nothing to show that the relation of debtor and creditor is to exist between the parties do not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to purchase."

23. The above quote is reiterated in Hans Raj Vs. Mat Ram, AIR 1952 Punjab 181. Unfortunately in the present case the sale deed dated 25.07.1967 does not contain even an stipulation or a condition of re-transfer and it is a document of absolute conveyance. In order to constitute mortgage the document must show that it is a transfer of interest in specific immoveable property as security for repayment of debt but such interest itself is immoveable property. In a case of mortgage by conditional sale the ostensible sale is conditional and intended as a security for debt. The basic ingredient of mortgage, therefore, would have continued to exist.

24. A controversy similar to the present one earlier came to be considered in Chunchun Jha (supra). The Court quoted passage from Bhagwan Sahai Vs. Bhagwan Din (supra), as noted above, in para 6 of the judgment, and said, that due to confusions created by multitude of conflicting decisions, the legislature intended to remove it by amending Section 58(c) of Act, 1882. Though still there is some conflict of authorities but something is clear which the Court expresses as under:

"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."

25. In P. L. Bapuswami Vs. N. Pattay Gounder 1966(2) SCR 918 again the Court said:

"In the first place, there is the important circumstance that the condition for repurchase is embodied in the same document."

26. In Tulsi and others Vs. Chandrika Prasad (supra) in para 14 the Court said:

"It may be noticed that in terms of Section 58(c) of the Transfer of Property Act, a transaction may be held to be a mortgage with conditional sale if it is evidenced by one document."

27. In Vishwanath Dadoba Karale (supra) the Court quoted the observations made in P. L. Bapuswami (supra) and Tulsi and others Vs. Chandrika Prasad (supra) to show, if the transaction is evidenced by one document, Section 58(c) will apply and not otherwise. Similar view has been expressed in Raj Kishore (supra), where, in para 12, the Court said:

"12. A bare reading of the above would show that for a transaction to constitute mortgage by conditional sale it is necessary that the condition is embodied in the document that purports to effect the sale. That requirement is stipulated by the proviso which admits of no exceptions."

28. It is also important to notice that the Court specifically has disapproved High Court's finding that whenever conveyance of any property is accompanied by a document for re-conveyance of the same to the seller, the transaction would amount to a mortgage. This is evident from para 11 of Raj Kishore (supra), where the Court said:

"As seen above, the High Court has, while dealing with the substantial question of law framed by it for determination, held that whenever conveyance of any property is accompanied by a document for re-conveyance of the same to the seller the transaction would amount to a mortgage. That proposition of law is not in our opinion correctly stated."

29. Having said so in para 13, the Court clearly said that High Court has overlooked proviso, according to which, the stipulation regarding payment of mortgage money as a condition for transfer of property to the seller must be embodied in the sale deed itself. The Court further referred to its earlier decision in K. Simrathmull Vs. Nanjalingiah Gowder, AIR 1963 SC 1182 and said:

"This Court held that the sale-deed and the deed of conveyance and rent were no doubt parts of the same transaction yet the transaction did not constitute a mortgage by conditional sale."

30. To the same effect is another recent decision in Gauri Shankar Prasad and others Vs. Brahma Nand Singh (supra) where in para 13 the Court said:

"This Court has in several cases held that if sale and agreement to repurchase are embodied in separate documents, it cannot be a case of the mortgage...."

31. Construing proviso to Section 58(c) same view has also been taken in Vidhyadhar Vs. Mankikrao and another, 1999(3) SCC 573; Mushir Mohammed Khan (Dead) By Lrs. Vs. Smt. Sajeda Bano and others, 2000(3) SCC 536; Bhaskar Waman Joshi (deceased) and others Vs. Shrinarayan Rambilas Agarwal (deceased) and others, AIR 1960 SC 301. Various High Courts have also followed the same and some of such authorities are, Bahadur Vs. Motiram and another, AIR 1972 Raj. 250; Pobbati Obayya v. Amilineni Chinna Venkatappa, AIR 1974 AP 232; Askaran v. Madan Lal, AIR 1995 Raj. 130; Hasam Nurani Malak v. Mohansingh and Anr., AIR 1974 Bom. 136; and, Amir Bee v. The Sub-Divisional Magistrate, Sakaleshpur and Ors., AIR 1980 Kant. 154.

32. The TC in taking an otherwise view, by reading both the documents together, has obviously referred to decision in Smt. Indira Kaur (supra). There is another decision, i.e., Tamboli Ramanlal Motilal (dead) by Lrs. Vs. Ghanshi Chimanlal Keshvlal (dead) by Lrs. and another, 1992(2) ARC 164 but that is referred to for the purpose of the principle to be followed in construction of a document and for the proposition that two contemporaneous document can be read together to constitute a mortgage by conditional sale, the reference is made to the decision in Smt. Indira Kaur (supra). The LAC has also reiterated the aforesaid authorities so as to affirm the view taken by TC.

33. Unfortunately, none of the courts below have endeavoured to read the Apex Court's decision in Smt. Indira Kaur (supra) in its entirety and that is how have trapped themselves in committing a mistake and misreading of judgment. In Smt. Indira Kaur (supra) the Apex Court only construed the two documents without referring to proviso to Section 58(c) of Act, 1882 and then declined to go into the details of this issue by observing that plaintiff having not come for redemption of mortgage but has filed suit for specific performance to enforce the agreement for sale, therefore, it is not necessary to go into the deeper probe with respect to Section 58(c) of Act, 1882. This is evident from para 5 of the judgment at the end whereof the Apex Court has said:

"But then it is not necessary to examine this dimension of the matter inasmuch as the plaintiff has not prayed for redemption though in the plaint an averment has been made that the real intention of the parties was to create a mortgage. As the plaint stands, and as the plaintiff himself has preferred to enforce the agreement for specific performance, it is not necessary to examine the question as to whether or not the real nature of the transaction was mortgage though it was given an appearance of transaction of a sale. For the same reason we need not examine the question as the whether or not Section 58(c) of the Transfer of Property Act would have disabled the plaintiff from claiming the relief of redemption on the basis that the real intention of the parties was to create a mortgage and not an absolute sale coupled with an agreement for reconveyance. This question will have to be dealt with at an appropriate time having regard to the fact that there is an increasing tendency in recent years to enter into such transactions in order to deprive the debtor of his right of redemption within the prescribed period of limitation. In fact very often the mortgagee in place of getting a mortgage deed executed in lieu of a loan, obtains and agreement to sell in his favour from the mortgagor so as to bring pressure on the mortgagor to obtain possession of the property for an amount smaller than the real value of his property. We need not however probe the matter any further for the purpose of disposing of the present appeal for the reasons reasons stated earlier."

34. The Court clearly left this probe unfolded and unanswered so as to be considered in another case. Both the courts below having failed to notice the above observations, have committed a manifest error by looking into that part of observations which has not been settled finally as a proposition of law and, therefore, the aforesaid judgment cannot be considered to be an authority for the proposition it has been relied by courts below. The reliance thereon is clearly mistaken and shows a manifest misreading thereof.

35. In the result the question formulated above is answered in favour of defendant-appellant. The judgements up for consideration, therefore, cannot sustain, inasmuch as once the very foundation for the suit disappear, the suit has to be dismissed.

36. In the result, the appeal is allowed. The judgments and decrees dated 18.12.2010 and 16.10.2012 are hereby set aside and as a result thereof, the Original Suit No. 295 of 1979 stands dismissed.

37. The defendant-appellant shall be entitled to costs throughout.

Order Date :-03.07.2013

AK