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Ambalal Jethabhai Patel Vs. Valand Parshottamdas Naranbhai and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtGujarat High Court
Decided On
Judge
Reported in(1979)2GLR51
AppellantAmbalal Jethabhai Patel
RespondentValand Parshottamdas Naranbhai and anr.
Cases Referred and Duma v. Nathu
Excerpt:
- - strong reliance was placed on the provision contained in the document with regard to the right of the vendor to take action according to law with regard to reconveyance of the property in case the purchaser fails to reconvey the same on payment of the amount of rs. it was contended that this clause indicates that in case of failure to reconvey the property, the right which was reserved to the vendor was to take legal steps for getting back the property and ots possession, which would indicate that he would be entitled to file a suit for specific performance of the contract of reconveyance of the property. 811, the absence of provision for interest or rent or about reeimbursement regarding out-goings was not very material because the executing party may have to enjoy the property in..........may be briefly stated.2. a document dated 11th may 1956 purporting to be a document of sale with a right to repurchase, but claimed to be mortgage with conditional sale by the plaintiff was exevuted by the plaintiff on 11th may, 1956 in favour of defendant no. 1 and possession was also transferred to defendant no. 1 on payment of the said amount of rs. 900/-. the document, inter alia, provided that the land was conditionally sold to defendant no. 1 for a consideration of rs. 900/- and the plaintiff was entitled to get the same reconveyed to him from the said defendant on repayment of the said amount of rs. 900/-. it may be stated at the stage that defendant no. 2 is the brother of the plaintiff and as he had also signed the said document as an exevutant, as surety of the plaintiff, he.....
Judgment:

M.K. Shah, J.

1. This second appeal arises out of a suit fiked by respondent No. 1 original plaintiff, against the appellant-original defendant No. 2, for redemption of mortgage of payment of the mortgage amount of Rs. 900/- in respect of the suit land bearing survey number 971/1 admeasuring 9 acres-1 guntha situate in village Limbasi, taluka Matar, district Kaira. A few facts giving rise to the litigation between parties may be briefly stated.

2. A document dated 11th May 1956 purporting to be a document of sale with a right to repurchase, but claimed to be mortgage with conditional sale by the plaintiff was exevuted by the plaintiff on 11th May, 1956 in favour of defendant No. 1 and possession was also transferred to defendant No. 1 on payment of the said amount of Rs. 900/-. The document, inter alia, provided that the land was conditionally sold to defendant No. 1 for a consideration of Rs. 900/- and the plaintiff was entitled to get the same reconveyed to him from the said defendant on repayment of the said amount of Rs. 900/-. It may be stated at the stage that defendant No. 2 is the brother of the plaintiff and as he had also signed the said document as an exevutant, as surety of the plaintiff, he was also joined as formal defendant that is-defendant No. 2 in the said suit. It was the plaintiff's case that though ostensibly a document of sale Ex. 40 was in fact a deed of mortgage by conditional sale and the plaintiff was, therefore, entitled to redeem the same on payment of the consideration of the amount of Rs. 900/-. As the defendant refused to redeem, the plaintiff had to file the said suit for redemption.

3. Defendant No. 1 resisted the suit inter alia on the ground that the transaction as evidenced by the document Ex. 40 was a sale out and out and it was not a transaction of mortgage and the plaintiff was, therefore, not entitled to a decree for redemption. As regards the alternative relief claimed by the plaintiff of specific performance of the agreement to reconvey the property in the event of the transaction being held a sale with condition to repurchase, it was contended by the defendant that on 20th July, 1957, the plaintiff and his brother, that is-defendant No. 2 and deceased Motibhai Baranbhai accepted a sum of Rs. 639/- from him and relinquished their right to repurchase the property and the plaintiff was, therefore, not entitled to the relief of specific performance.

4. Though the learned Civil Judge (Junior Division) at Kaira on an assessment of the evidence on record, came to the conclusion that the plaintiff had established his case that he had mortgaged the suit property by the said document dated 11th May 1956 and that the transactioon was a mortgage with conditional sale, on his finding that the plaintiff and his brother had waived their right of reconveyance on 20th July 1957 by receiving the said amount of Rs. 639/-, from defendant No. 1, he dismissed the plaintiff's suit with costs.

5. The plaintiff, therefore, preferred an appeal in the court of the learned Extra Assistant Judge of Kaira at Nadiad being civil appeal No. 48 of 1973. The learned Extra Assistant Judge on hearing the appeal, though he confirmed the finding of the trial court with regard to the nature of the transaction as evidenced by Ex. 40 and held that it created a mortgage by conditional sale, he negatived the defendant's contention that the plaintiff had voluntarily and legally relinquished his right of redemption by accepting a further payment of Rs. 639/- on 20th July 1957 as alleged by the defendant; and he, therefore, came to the conclusion that the plaintiff was entitled to a decree for redemption. He, therefore, partially allowed the appeal and decreed the plaintiff's suit for redemption and after fixing the mortgage amount of Rs. 900/-, he ordered for a preliminary decree for redemption as prescibed under the Code of Civil Procedure to be drawn. It is this judgment and decree of the lower appellate court which is the subject matter of the second appeal this Court, original defendant No. 1 having approached this Court in appeal against the said decision of the lower appellate Court.

6. The very fast contention which was raised by the learned Advocate appearing for the appellant was that Ex. 40 dated 11th May, 1956 cannot be admitted on record because as it was claimed to be a deed of mortgage which required attestation atleast by two persons, it was incumbent on the plaintiff to examine one of the attesting witnesses to incumbent on the plaintiff to examine one of the attesting witnesses to prove the said document. Strong reliance was placed on the provision contained in the document with regard to the right of the vendor to take action according to law with regard to reconveyance of the property in case the purchaser fails to reconvey the same on payment of the amount of Rs. 900/- as set out earlier. It was contended that this Clause indicates that in case of failure to reconvey the property, the right which was reserved to the vendor was to take legal steps for getting back the property and ots possession, which would indicate that he would be entitled to file a suit for specific performance of the contract of reconveyance of the property. This term is, therefore, it was submitted, consistent with the concept of sale with a right to repurchase and inconsistent with the concept of mortgage with conditional sale. 1 am unable to accept this contention. In a mortgage with conditional sale also, ostensibly, the document would mention similar terms. It would contain a stipulation to the effect that the vendor will have a right to get the property reconveyed to him on payment of the purchase price and in default, to take legal action in the matter. In a suit for redemption of mortgage, legal action includes action for getting the property reconveyed to the mortgagor from the mortgagee and, therefore, a condition to the effect that the vendor will have a right in case of default to get the property reconveyed and to get its possession after taking legal steps, is not inconsistent with the concept of a mortgage with conditional sale.

7. It is, true, as provided in Section 59 of the Transfer of Property Act, a deed of mortgage would require attestation by two persons. But I am unable to accept the contention raised on behalf of the appellant that provision of Section 68 of the Evidence Act would come into play in the instant case, and that by virtue thereof, use of the document as evidence is excluded as contended by the learned Advocate for the appellant. Section 68 does provide that if the document is required by law to be attested, it shall not be used as evidence until one attesting witness at least has been called for the purpose of providing its execution, if there be an attesting witness alive, and subject to the process of the court and capable of giving evidence. But the Proviso to this section lays down that it shall not be necessary to call an attesting withness in proof of the execution of any document, not being a will, which has been registered in accordance with the provisions of the Indian Registration Act, 1908, unless its execution by the person by whom it purports to have been executed, is specifically denied. Now, in the instant case, the mortgage deed is registered and it purports to have been executed by the plaintiff. He admits it and no question, therefore, of his specifically denying the same arises, Hence, the proviso would apply because it is an admitted position that Ex.40 is a registered document.

8. The second point urged on behalf of the appelant was that the lower courts erred in construing Ex. 40 as a mortgage by conditional sale and that it should have been held that it recorded a transaction of a sale with a right to repurchase. Reference may be had in this connection, first of all to Section 58(c) of the Transfer of Property Act which reads thus:

58. (c) Where the Mortgage 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 sales.

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

Now, there is no dispute that Ex. 40 is ostensibly a document of sale embodying a condition in the document itself to the effect that on payment of the sale price of Rs. 900/- being made by the vendor, the buyer shall transfer the property to the vendor. Thus, prima facie it contains the ingredients required under Sub-section (c) of Section 58 of the Transfer of Property Act. But the ral question would be whether the intention of the parties was to bring into existence a transaction in the nature of a mortgage by conditional sale or a sale with a condition of repurchase. As observed by the Supreme Court in Bhoju Mandal and Ors. v. Debnath Bhagat and Ors. A.I.R. 1906:

There is a clear legal distinction between the two concepts, a mortgage by conditional sale and a sale with a condition of re-purchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor-The latter is an out and out sale whereby the owner transfers all his right in the property to the purchaser reserving a personal right of repurchase.

The Supreme Court also observed:

The question to which category a docunment belongs presents a real difficulty which can only be solved by ascertaining the intention of the parties on a consideration of the contents of a document and othe relevant circumstances. Decided cases have laid down many tests to ascertain the intention of the parties but they are only illustrative and not exhaustive. For ascertaining the intention of the parties under the document a decision on a construction of the terms of another document cannot ordinarily afford any guidance unless the terms are exactly similar to each other.

Bearing this legal distinction between the two concepts in mind, let us now examine the contents of the document as also look to other relevant circumstances which are on record in connection with the transaction. Ex. 40 is described on the top of the document as 'document of conditional sale' (sic). After referring to the land which is the subject matter of the document and stating that the same is of the ownership of the vendor and is under his personal cultivation, possession and enjoyment, it is stated that by relinquishing all his rights, possession of the land is handed over to the purchaser for a consideration of Rs. 900/- for whcih the land is transferred on conditional sale on the conditions set out in the document. The conditions set out are to the effect that whenever the vendor or his heirs and assigns pay upm the said amount of Rs. 900/- to the purchaser or his heirs and assigns, then, in that case, the purchaser or his heirs and assigns, as the case may be, have to reconvey the property along with possession to the vendor or his heirs and assigns, as the case may be. It is then provided that in case of default by the purchaser or his heirs and assigns, the vendor or his heirs and assigns would be entitled to get the property reconveyed to them as also put into their possession by taking legal steps. It is then mentioned that after the said transaction, the purchaser and his successor-in-title would be entitled, because of the right they got on account of conditional sale, to cultivate the land or to get it cultivated, to have its income, or to transfer their rights to a third party and the vendor and his successors-in-title would bot create any obstruction or take any objection in the same and if any body else puts up any claim or creates any obstruction, then, the vendor and his successors-in-title would be responsible to meet the same. It is then provided that from the date of the transaction, the purchaser has to pay the Government tax and he would be entitled to the income arising from the land. It then ends by saying that the consideration is taken in cash and the said document of conditional sale is voluntarily executed by the vendor and is binding on his heirs and successors. Now, as rightly held by the lower appellate court on interpretation of the contents of this document, the circumstance that no time limit was fixed for reconveyance repurchase does indicate that the parties intended the transaction to be a mortgage with conditional sale and not a sale with a right to repurchase. The condition that the vendor was entitled to get back the property at any time without any period of limitation gives a clear indication of the intention of the parties which was to create a mortgage and not an out and out sale with a mere right to repurchase. Another important circumstance which has weighed with the lower appellate court and which, in my opinion, is a very relevant and material circumstance is that defendant No. 2 joined in execution of the document as a surety. If it was a mere transaction of sale with a right to repurchase, there would not be any such necessity of getting it also signed by the surety and this further strengthens the plaintiff's case that it was a transaction of mortgage.

9. Several circumstances were relied upon by the learned Advocate appeaing for the appellant in support of the appellant's contention that the transaction was in the nature of sale with a right to repurchase and not a mortgage with conditional sale. In my opinion, none of these circumstances, either taken singly or together, leads to any such inference as the learned Advocate wants me to draw. The circumstances relied upon are:

(1) There were no money dealings between the parties prior to the document Ex. 40 and there was, therefore, no relationship of a creditor and debtor between the parties when the document was executed. I think this circumstance is for no importance. It is not necessary for creating a mortgage that there should be relationship of a creditor and a debtor existing prior to the date of the mortgage. Such a relationship may come into existence on the date of the mortgage itself;

(2) It was on the date of the execution of the document Ex. 40 that the defendant was put in possession by the plaintiff and the right in respect of the property were transferred by that plaintiff to the defendant as per Ex. 40. To my mind, this also is a circumstance consistent with the transaction being a mortgage because in a mortgage with possession also, the mortgagee has to be put in possession on the date of the mortgage and the property has to be conveyed to him by a deed of mortgage;

(3) There was no stipulation with regard to payment for rent. This circumstance also is not such as would necessarily lead to the inference about the sale. As observed by this Court in Bai Kanku v. Victorbhai 10, G.L.R. 811, 'the absence of provision for interest or rent or about reeimbursement regarding out-goings was not very material because the executing party may have to enjoy the property in liey of interest and therefore no question would survive for making any provision for interest or rent'.

4. No fixed period was provided for reconveyance of the property. In my opinion, this is a circumstance which rather supports the case of the plaintiff than that of the defendant. If the transaction is intended to be an out and out sale, with a mere right of repurchase given to the vendor, than one would expect some period being provided for the exercise of the right of repurchase. A person who purchases property and want to treat the same as his own, would certainly insist on the period being provided on repayment of the price paid. Usually and naturally, therefore, if the transaction is in the nature of sale with a right to repurchase, some period of limitation will prescribed for exercising the option of repurchase.

5. Stamp paper was purchased by the vendor as is normal in a transaction of sale. There is no such rule or practice estanlished. Any of the parties can purchase a stamp paper.

6. There was no absolute obligation on the vendor to pay Rs. 900/-. This circumstance, in my opinion, has no significance. What the document sets out is that on payment of Rs. 900/- by the vendor to the purchaser the purchaser would reconvey the property to the vendor and would hand over possession. It is, therefore, obligatory on the part of the vendor if he wants to get back his property to pay this amount. But if he does not want to get back the property, there is no obligation. In a mortgage also, if the purchaser wants to redeem the property, he has to pay the mortgage debt and without payment, the property would not be reconveyed to him This term, therefore, cannot be said to be inconsistent with the mortgage. It was next urged that there was evidence on record showing that an amount of Rs. 639/- had been paid on 20th July 1957 by the defendant to the plaintiff and his brother who accepted the said amount and by an oral agreement, they had agreed to relinquish their right to repurchase the property. Reliance, in this connection, was placed on mutation entry Ex. 49 dated 27th May, 1961, and it was found by the lower appellate court that there was an oral agreement between the plaintiff and the defendant to the effect that on the defendant paying Rs. 639/- to the plaintiff, the plaintiff agreed to relinquish all his rights over the suit property. As rightly held by the lower appellate court, the right to redeem the property cannot be legally relinquished by such an oral agreement because of the bar contained in Section 17 of the Registration Act which provides that such a document relinquishing right in an immovable property worth more than Rs. 100/- requires compulsory registration. But then, it was argued before the lower appllate court and the same argument is repeated here, on behalf of the appellant, that the defendant has a right to protect his possession under Section 53-A of the Transfer of Property Act. Hear also, I am in agreement with the view taken by the lower appellate court that under Section 53-A, there must be a writing under which the party claims protection and unless there is a writing under which the defendant is put in possession or continued in possession, the defendant cannot claim ptrotection under Section 53-A of the Transfer of Property Act. It was submitted that such protection can be claimed because entry at Ex. 49 dated 27th May 1957 by which the property was mutated to the name of the defendant on the strength of the statements made by the plaintiff and the defendent, shows that the rigtht was relinquished under the said writing. There is no substance in this contention The mutation entry is made on the basis of the oral statement of the parties and such an entry in pursuance of such an oral statement, therefore, cannot give protection under Section 53-A. Section 53-A refers to an instrument of transfer. Such an entry or statement in pursuance of which such entry is made cannot be equated with any instrument of transfer as is referred to in Section 53-A. It cannot be said that the defendent has taken possession of the property or os continued in possession in part performance of any such contract embodied in the said entry Ex. 49 or statement of the parties in pursuance of which the said entry was made. The defendant was put in possession much earlier and that was by virtue of the document Ex. 40. The amount of Rs. 639/- is alleged to have been paid on 20th July 1957. The entry is made on 27th May 1961. It cannot, therefore, have any connection with the possession of the defendant which was already with him such earlier.

10. It was then urged that the plaintiff in his deposition Ex. 50, para 4, admitted that he had sold the suit land to the defendant, relying on the following statement appearing in his Gujarati deposition : Translated into English it reads 'this land was given in sale by me to Ambalal Jethalal,' that is-the defendant. Nowm this sentence taken in isolation from the other parts of the deposition of the plaintiff cannot alount to ab admission on his part that the transaction was in the nature of sale with a right to repurchase. If we read the earlier part of the deposition as also the latter part, it is clear that he was referring to the ostensible sale which according to him, was a transaction in the nature of mortgage with conditional sale. The very next sentence which follows the statement relied upon, a state that it was correct that there was a condition that on payment of the amount, the property was to be reconveyed. This statement, therefore, is in consonance with the plaintiff's case of an ostensible sale with a condition of reconveyance which amounts to a mortgage with conditional sale.

11. It was next urged that by virtue of the fact that the plaintiff had accepted the sum of Rs. 639/- and had orally agreed to relinquish his rights in respect of reconveyance of the property to him, he is estopped from claiming reconveyance. I do not find any substance in this contention. The question with regard to payment of Rs. 639/- and the oral agreement has already been dealt with and as earlier discussed, such an oral agreement does not help the defendant and no question of estoppel arises here.

12. It was lastly urged in respect of the condition which is embodied in the document. Ex. 40 to the effect that on payment of Rs. 900/-, the defendant will reconvey the property and will hand over possession thereof, that the same is not a legal condition enforceable at law because such a promise to pay an amount in an indefinite period is without consideration and the contract therefore, is not enforceable. Reliance was placed in support of this contention on Vishvashwar Subrao Kulkarni v. Sadashiv Venkatramanayya Harite A.I.R. 1926, Bom. 54. This was a case in which in the early part of 1900, a darkhast was filed against the plaintiff for recovery of certain amount under a mortgage decree. He approached the defendant, who was his father's sister's son. for the necessary amount, and as a result, it was arranged that the defendant should bid for the mortgaged property, which included a certain house, provided that the amount he had to bid was not more than Rs. 1,200/-. The defendant actually did purchase that property at that sum and it was held proved by both the lower courts that there was a simultaneous agreement under which the defendant was to reconvey the suit land to the plaintiff whenever he tendered a sum of Rs. 1268/- The matter came up before the Bombay High Court arising out which the plaintiff had filed in 1921 for specific performance of that agreement praying reconveyance of the suit laid. The High Court confirmed the order of the District Judge in appeal reversing the trial Court's order and dismissing the plaintiff's suit for specific performance, inter alia, on the ground that there was no consideration for the agreement so that it was unenforceable.

13. I am unable to perceive any universal rule as emerging from this decision to the effect that in all cases, where there is a promise to pay an amount in an indefinite period the agreement is without consideration and therefore unenforceable. This case can be distinguished on its exceptional and peculiar facts. As observed by the Bombay High Court:

Here, it seems perfectly clear that the operative motive for the defendant making this agreement was, as the District Judge has put it, the affection which existed between close relations like plaintiff and the defendant No. 1, and that there is no real consideration in the present case, merely because the plaintiff undertook to pay Rs. 1,268/- if he exercised his option of repurchasing the property.

It was in this context the High Court made the following observations on whcih reliance is placed by trhe learned Advocate for the appellant:

I think, the words 'at the desire of the promisor, in Clause (d) imply a defendant said has a real effect in conducing to the contract. Here all that the defendant said was that he had no objection to favour the plainriff by giving him this particular option. An 'option' to buy is not equivalent to an 'agreement' to buy; it only becomes such an agreement, if and when the option is exercised of Helby v. Matthews (1895) A.C. 471 : 64 L.J.Q.B. 465 : 11 R. 282-72 L.T. 841-43 W.R. 561 : 60 J.P. 20 and Duma v. Nathu : AIR1925Bom431 . If this is borne in mind, it becomes clear that at any rate in a case like the present, the question is what was the considaration for the defendant's giving the plaintiff this option of repurchases which imposed on the defendant an obligation not to sell to any one else ; and the mere fact that, should the option be exercised, there would be consideration for the actual sale is immaterial. Therefore, I think the view that the District Judge has taken is correct, and as the agreement was not expressed in writing and registered it is not enforceable against the defendant.

The earlier observations relied upon by the learned advocate for the appellant may also be noted at this stage:

But in the present case, I find it difficult to say that the plaintiff's promise to pay Rs. 1,268/- at some indefinite time was a promise made 'at the desire of the promisor' within the meaning of this Clause (d)'.

These observations were made after considering the question in the light of Section 2(d) of the Indian Contract Act. The following observations commencing with the categorization of the agreement as one of an exceptional kind are very significant in this context:

But the agreement is one of an exceptional kind. It is not a case where the plaintiff was himself selling the property to the defendant, and where it was part of the terms on which he was willing to sell the property to the defendant, that he should have a right of repurchase of the kind now under consideration. Nor is it a case where the owner of property independently enters into a contract to sell it to another person. In the former case there obviously is consideration for the covenant to repurchase, as part of the general terms of the transaction. The purchaser finds that he cannot obtain the property he wants to buy, unless he concedes this right as part of the terms on which the purchase is made, and he agrees accordingly. Again when a person agrees to sell his property as an independent transaction he has a say in fixing the price, and obviously the consideration for the agreement to sell is the promise of the other party to pay the amount agreed upon. The owner may want to sell for special reasons and be willing to take less than the property is really worth; or he may be wanting to make a profit by selling at the price agreed upon. In either case he desires the other party to promise to pay the amount agreed upon and he case is one which falls under the definition of consideration in Clause (d) of Section 2 of the Indian Contract Act.

These observations do not leave any doubt that the case with which we are concerned is the one which falls within Clause (b) of Section 2 and would, therefore, be one having a valid consideration.

These were all the arguments advanced in support of the appeal. As none of them has been made good, the appeal fails and is, therefore, dismissed with costs.


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