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K. Ramamurty Subudhi and ors. Vs. Dinabandhu Behera and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtOrissa High Court
Decided On
Case NumberFirst Appeal No. 83 of 1963
Judge
Reported inAIR1967Ori191
ActsTransfer of Property Act, 1882 - Sections 58
AppellantK. Ramamurty Subudhi and ors.
RespondentDinabandhu Behera and anr.
Appellant AdvocateR.N. Misra and ;R.C. Patnaik, Advs.
Respondent AdvocateP.V. Ramdas and B. Mohapatra, Advs.
DispositionAppeal dismissed
Cases ReferredBhaskar Joshi v. Shrinarayan Rambilas
Excerpt:
.....ever with right to effect sale or gift etc. and enjoy the property in such manner as you like. it is well settled that the question whether a particular transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase, has to be decided with reference to the terms of the document. it was held there that notwithstandmg the expressions like 'sale-deed',sale-price' used in such document, it is a deed of mortgage by conditional sale and not a sale out and out. , observed that persons who are selling their property would hardly take the trouble to borrow money in order to continue revenue proceedings which could no longer benefit them and could only enure for the good of the transferee. he was to enjoy the usufruct and had to reconvey the property on payment of..........of redemption and whatever interest she had in respect of the said property to the plaintiff under sale-deed, ext. i for a cash consideration of rs. 7000/- on 12-12-60. the plaintiff has filed the present suit for redemption of the mortgage.2. the case of the plaintiff as also his vendor, sarojini, was that ext. 2 represents a mortgage transaction and that the plaintiff is entitled to redeem the same, being a purchaser of the equity of redemption. the plaintiff alleged that after such purchase, he issued a notice through his advocate on 17-12-00 to the mortgagee, the first defendant, tendered the principal amount of rs. 8400/- and demanded redemption, but the first defendant gave a reply through his lawyer on 30-12-60 wherein he claimed that the document ext. 2 is not a mortgage, but a.....
Judgment:

Das, J.

1. The disputed property comprising an area of 8.80 acres in the district of Ganjam belonged to Sarojini Devi (defendant-2) respondent-2 in this appeal She on 8-6-51 executed a document, Ext. 2 (same as Ext. A) in favour of K. R. Subudhi, the first defendant and original appellant (since deceased), for a consideration of Rs. 8,400. The said document was styled as 'Baida Bandi Bikraya Dustabuj' Sarojini treated the document, Ext. 2, as a mortgage-deed and sold the equity of redemption and whatever interest she had in respect of the said property to the plaintiff under sale-deed, Ext. I for a cash consideration of Rs. 7000/- on 12-12-60. The plaintiff has filed the present suit for redemption of the mortgage.

2. The case of the plaintiff as also his vendor, Sarojini, was that Ext. 2 represents a mortgage transaction and that the plaintiff is entitled to redeem the same, being a purchaser of the equity of redemption. The plaintiff alleged that after such purchase, he issued a notice through his advocate on 17-12-00 to the mortgagee, the first defendant, tendered the principal amount of Rs. 8400/- and demanded redemption, but the first defendant gave a reply through his lawyer on 30-12-60 wherein he claimed that the document Ext. 2 is not a mortgage, but a sale-deed and the plaintiff had no right of redemption and to tender the amount. So the plaintiff was obliged to file the present suit for redemption.

3. At the trial, the defendant-2 supported the case of the plaintiff, but defendant-1 took the stand that no right of redemption is available to the plaintiff as he (defendant-1) had purchased the disputed property under the sale-deed Ext. 2 on payment of the market price and is in possession of the said property as its full owner since the date of its execution.

4. The learned Subordinate Judge held the document to be a mortgage by conditional sale and passed a preliminary decree for redemption in favour of the plaintiff. Hence the appeal by defendant No. I.

5. The sole question for consideration in the trial Court as also in the appeal is whether Ext. 2 executed by defendant-2 in favour of defendant-1 is a mortgage by conditional sale as held by the Subordinate Judge or an out and out sale as contended on behalf of the appellant. It is necessary at this stage to recite the English translation of the relevant portions and conditions of the deed, Ext. 2 which has been styled as

'Baida Bandi Bikraya Dustabij'

'(a) 1 sold you today for Rs. 8400/- the land mentioned in the document and the mango topes and other trees standing thereon and gave over possession to you.

(b) You will possess the properties as Satwadhikari (owner). You shall have no right to sell or make gift of the same from 8-6-51 to 7-6-54. If within the aforesaid period of three years, I would pay you your Rs. 8400/-, you would execute and register a sale-deed in my favour in respect of the said property.

(c) If I fail to make you such payment within the said period, then after the said period is over, Baida Gata Tarikha Tharu, you would enjoy the suit-properties as full-owner (Purna Satwadhikan Hoi) and you and your heirs and successors from generation to generation will enjoy the said property for ever with right to effect sale or gift etc. and enjoy the property in such manner as you like.

(d) After expiry of the said period, I and my heirs would not have any claim, right or interest in the suit-properties.

(e) Till the expiry of the said period, I would continue to pay cist etc. due to the Government in respect of the said property.

6. The result of the case depends upon the construction of the document, Ext. 2. If ft is held to be a mortgage by conditional sale, then the plaintiff will have a right of redemption, otherwise not. It is well settled that the question whether a particular transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase, has to be decided with reference to the terms of the document. The real Intention of the parties has to be gathered from the document itself, If the words are clear and unambiguous, then the true legal effect must be given to them. But if they are not so, then it is permissible to look to the surrounding circumstance to determine the real intention of the parties. (See AIR 1954 SC 845, Ghunchun v. Ebadet All: ILR (1951) Cut 281 = (AIR 1951 Ori 362) (FB), Nilamoni Bewa v. Mrutunjaya).

The title of the document shows that it has been styled as Baid Bandi Bakryaya Dustabij. which itself makes it clear that it is not a sale-deed, pure and simple, in which case it would have been styled merely as 'Bikraya Dustabij' or a Kabala. In a decision of this Court reported in ILR (1961) Cut 487, B. Kamaraju v. A. S. Krishnamurty; a document with similar description as Baida Bandi Kabala, came up for consideration, as to whether the same is a mortage by conditional sale or a sale with condition of repurchase. It was held there that notwithstandmg the expressions like 'sale-deed', 'sale-price' used in such document, it is a deed of mortgage by conditional sale and not a sale out and out. The word 'Baida' signifies a particular date or period. Thus, the title of the document though not decisive, is at least indicative of the fact that it is not an unconditional sale-deed or a sale-deed out and out.

7. Section 58(c) of the Transfer of Property Act defines a mortgage by conditional sale and it runs as follows:

'(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 td the seller, the transaction is called a mortgage by conditional sale and the mortgagee, a mortgages 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'.

The proviso has been inserted by the Amending Act, XX of 1929. Prior to the Amendment, there was a conflict of decision as to whether the conditions contained in a separate sale-deed could be taken into account in ascertaining whether a mortgage was intended by principal deed. To resolve this conflict the amendment was made enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. Of course the converse is not correct. It does not follow that if the conditions are incorporated in one document it necessarily means a mortgage and not a sale. The question is one of the intention of the parties as is to be gathered from the language of the deed. The form in which the deed is couched is not decisive.

In the aforesaid decision of the Supreme Court reported in AIR 1954 SC 345, their Lordships observed that by the said Amendment 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 the presumption by clear and express words and if the conditions of Section 58(c) are fulfilled, then the deed should be construed as a mortgage. In the case reported in AIR 1966 SC 902, P.L. Bapuswami v. N. Patty the fact that the condition of repurchase was embodied in the same document was considered to be an important circumstance indicative of the transaction being a mortgage by conditional sale. In the present case both tne conditions have found place in Ex. 2. Thus, on the basis of the aforesaid position of law, the document is indicative of its being a mortgage and not a sale.

8. There is yet another important circumstance which negatives the theory of sale. It is the essence of a transaction of sale that there will be complete extinction of the title of the vendor and the absolute and unconditional transference of the title in favour of the vendee. There is no question of postponement of the acquisition of title in a case of sale.

9. It is, however, clear from the terms of the document, Ext. 2 that the full title (Purnasatwadhikari) was only to pass to defendant-1 after a stipulated period of three year ending on 7-6-54 was over and during the period between the date of execution of thedocument (6-6-91) till 7-6-54, defendant-2 would not have the right to affect any transfer of the property by way of sale, gift etc., but would only retain possession of the property and would use its usufruct during this period of three years. If defendant-1 would pay back the sum of Rs. 8400/- then he would get a reconveyance of the property from defendant-2. Thus, there was no total extinction of the title of defendant-2 on the transference of absolute title in favour of defendant-1. The passing of title was postponed for a period of three years.

10. Another important condition inserted in the document as pointed out by Mr. Mohapatra, is mat during this period of three years the responsibility of paying the cist due to the Government was left on defendant-2 and it is the admitted case of defendant-1 that in fact within the stipulated period the defendant-2 paid the cist in respect of the suit-land. If in fact the transaction represented a sale out and put, then there was no necessity for the first defendant to go on paying rent even when she had parted with title of the property. This is an important circumstance indicative of a mortgage rather than a sale. In the aforesaid ease reported in AIR 1906 SC 902, the fast for the land was continued to be paid by me original owner even after the execution of the document. Their Lordships took the fact as an important circumstance in support of a case of mortgage.

In the case reported in AIR 1964 SC 345, the document under scrutiny was executed on 18-4-30. Before the execution of the document the executants initiated commutation proceeding under Section 40 of the Bihar Tenancy Act, These proceedings continued till 18-2-31 i.e., about ten months after the deed. The executants borrowed some money to carry on the commutation proceedings Speaking for the Court, Bose J., observed that persons who are selling their property would hardly take the trouble to borrow money in order to continue revenue proceedings which could no longer benefit them and could only enure for the good of the transferee. This was taken as a crucial point to clinche the case in support of a mortgage and against a case of sale.

It is eaually inconceivable that defendant-2 would go on paying the cist to the Government if in fact she effected a sale in favour of defendant-1. This is a pointer in favour of a case of mortgage. This was also the view taken by this Court reported in ILR 1961 Cut 487, referred to above where continuance of payment of municipal tax by the alleged vendor during the stipulated (Baida) period concerning the disputed house was considered to be a condition inconsistent with the document being treated as a sale out and out.

11. Mr. Misra, learned counsel for the appellant urged that the consideration of Rs. 8400 paid on Ext. 2 represents the market price of the property on the date of execution of the document in the year 1951 and the fact that the property was sold in 1960 for Rs. 15,400 (i. e., Rs. 7000 cash and Rs. 8400 representing the mortgage-amount) is no evidence of inadequacy of price, as it is common knowledge that the price of land went up during this period. He placed some evidence and pointed out that the sum of Rs. 8400/-represented the market price in 1951. He further contended that normally a mortgagee would keep a substantial margin from the market price to provide against contingencies and such margin should be about one third of the value of the mortgaged-property as provided by the explanation to Section 86 of the Transfer of Property Act which lays down, that security is insufficient within the meaning of this section unless the value of the mortgaged-property exceeds by one-third, or, if consisting of buildings exceeds by one-half, the amount for the time being due on the mortgage.

The section, however, applies to a case where the mortgagor remained in possession of the property under mortgage. No doubt, gross inadequacy of price is an important circumstance in favour of the transaction being held, a mortgage, and its adequacy in support of a sale hut that is not the only factor that has to be taken into consideration. There are eases where the adequacy of consideration may be explained. Here the possession was delivered to the first defendant. He was to enjoy the usufruct and had to reconvey the property on payment of the same amount of Rs. 8400/-and is not accountable for the income to defendant-2. In the aforesaid decision of the Supreme Court reported in AIR 1954 SC 345, it was observed that:

'The point made on behalf of the respondent about the adequacy of consideration and the absence of interest can be explained. The transferee was to take possession of the property and would thus get the produce and it is evident to us from the tenor of the document that he was not to be accountable for it'.

There is nothing in the evidence to suggest that there was any bargaining fixing the market price. The adequacy of consideration and the absence of a reasonable margin is thus fully explained.

12. It was pointed out by Mr. Misra that it has been expressly laid down in Ext. 2 that the property shall be reconveyed to defen-dant-2 if the amount is paid within the stipulated period and that is an indication of the fact that full title had passed to defendant-1 on the date of execution. But as has been held by the Supreme Court in the case reported in AIR 1960 SC 301, Bhaskar Joshi v. Shrinarayan Rambilas, the description of the document as one of an absolute sale and the right of repurchase within a stipulated time were not decisive of the true nature of the transaction. Having regard to the language of Ext. 2 and the surrounding circumstances we are of the opinion that the transaction was a mortgage by conditional sale. The decision of the learned Subordinate Judge is correct and is upheld.

The plaintiff is entitled to preliminary decree for redemption under Order 34, Rule 7 of the Code of Civil Procedure. A period of three months from today is wanted for payment of the amount under the preliminary decree. The appeal is accordingly dismissed.

As the whole case was based upon a controversy regarding the interpretation of a document, the parries shall bear their own costs throughout.

Misra, J.

13. I agree.


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