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Prakasam Alias Padmini Vs. Rajambal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberApp. No. 428 of 1968
Judge
Reported inAIR1975Mad282
ActsTransfer of Property Act, 1882 - Sections 58
AppellantPrakasam Alias Padmini
RespondentRajambal and ors.
DispositionAppeal partly allowed
Cases ReferredPattay Gounder v. Babusami
Excerpt:
property - conditional sale - section 58 of transfer of property act, 1882 - whether finding of lower court that document in favour of a was not mortgage by conditional sale unsustainable and contrary to law - document stated that on payment of principal amount of rs. 8500 property will be re-conveyed - it established that document was mortgage by conditional sale and not absolute sale in favour of a - as such plaintiff entitle to decree for redemption. - - 8,500 and proceeds to state that since the consideration as stated above has been received, the said papammal shall, as per the sale deed, hold and enjoy the property absolutely. these facts, according to the learned counsel, clearly establish that the document is a mortgage by conditional sale and not an absolute sale in favour..........one shanmugha mudaliar, who died in the year 1959. the first defendant is the mother of the said shanmugha mudaliar and the second defendant is his wife and the mother of the plaintiffs. the suit was filed by her challenging certain alienations made by shanmugha mudaliar on various grounds. the said shanmugha mudaliar had executed a document dated 5-5-1948 in favour of one papammal, whose legal representatives are defendants 3 to 6 in the suit. in respect of this transaction, the plaintiff's case was that it was executed at a time when the said shanmugha mudaliar was insane, that it was therefore null and void and that no right or interest was created in favour of papammal, alternatively it was contended that the document is a mortgage by conditional sale or it is a sale with a right.....
Judgment:

V. Ramaswami, J.

1. The plaintiff is the appellant. She is the daughter of one Shanmugha Mudaliar, who died in the year 1959. The first defendant is the mother of the said Shanmugha Mudaliar and the second defendant is his wife and the mother of the plaintiffs. The suit was filed by her challenging certain alienations made by Shanmugha Mudaliar on various grounds. The said Shanmugha Mudaliar had executed a document dated 5-5-1948 in favour of one Papammal, whose legal representatives are defendants 3 to 6 in the suit. In respect of this transaction, the plaintiff's case was that it was executed at a time when the said Shanmugha Mudaliar was insane, that it was therefore null and void and that no right or interest was created in favour of Papammal, Alternatively it was contended that the document is a mortgage by conditional sale or it is a sale with a right of reconveyance and that in either case the plaintiff is entitled to redeem or to get a reconveyance of the same on payment of the sale consideration of Rs. 8,500 as recited in the document itself. The next transaction which was challenged in the suit is a mortgage dated 23-8-1946 executed by Shanmugha Mudaliar in favour of the 10th defendant for a sum of Rs. 2,000. The 10th defendant has assigned the said mortgage in favour of the 9th defendant on 25-11-1952. The 9th defendant filed a suit, O. S. 785 of 1959 on the file of the court of the District Munsif, Tiruchirapalli, obtained a decree on the mortgage and in execution of that decree he himself had purchased that property. This mortgage in favour of the 10th defendant was challenged on the ground that it was executed by Shanmugha Mudaliar at a time when he was insane and that therefore the said mortgage was invalid and could not have been enforced.

2. The plaintiff also challenged certain other transactions in favour of defendants 7, 8 and 11. Since the appellant did not advance any argument relating to the transactions in respect of these defendants, we confirm the finding of the court below in regard to the sameand therefore no detailed discussion is necessary.

3. The main contention of the learned counsel for the appellant in this case is that the findings of the court below that Ex. B-2 dated 5-5-1948 in favour of Papammal is not a mortgage by conditional sale is unsustainable and that it is contrary to law. The document was executed by Shanmugha Mudaliar. It recites that he agreed to convey the property to Papammal in consideration of a sum of Rs. 8,500. Then it sets out the details of the consideration paid amounting to Rs. 8,500 and proceeds to state that since the consideration as stated above has been received, the said Papammal shall, as per the sale deed, hold and enjoy the property absolutely. There is also a recital that there are no encumbrances over the property and that if any encumbrance is to be found the said Shanmugha Mudaliar shall be liable to discharge the same. Therefore, we find the following recital in the document:

(Original in Tamil omitted.--Ed]

The effect of the above recital is that should the said Shanmugha Mudaliar pay in cash the aforesaid sale consideration of Rs. 8,500 after a period of seven years and within a period of ten years, from the date of execution of the deed, the said Papammal should reconvey the property at the expense of the said Shanmugha Mudaliar. The document is styled as a sale deed. But the stamp papers were provided by the vendor Shanmugha Mudaliar himself.

4. The learned counsel for the appellant contended that the property conveyed under Ex. B-2 is an extent of 7 acres. 94 cents of valuable land, that even at the time of the sale, the property was worth much more than Rs. 30,000, but, the consideration shown in the document was only Rs. 8,500, and that neither a patta transfer application was filed at the time of sale, nor was patta transferred till August 1962. Though the liability of reconveyance is after a period of 7 years and within a period of 10 years from the date of sale, the consideration payable is the same sum of Rs. 8,500, recited in the document, irrespective of the market value of the land as on the date of reconveyance. Further, the document also uses the expression (original in Tamil omitted--Ed.) The word...... means 'principal'. The document thus states that on payment of the principal amount of Rs. 8,500. the property will have to be reconveyed. These facts, according to the learned counsel, clearly establish that the document is a mortgage by conditional sale and not an absolute sale in favour of Papammal.

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

'58 (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 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.'

The proviso to the section is satisfied in this case, as the condition is embodied in the document itself. The document also is ostensibly in the form of a sale deed. The learned counsel relies on that portion of the definition -which states 'on condition that on such payment being made, the buyer shall transfer the property to the seller' and contends that this condition is satisfied in this case and that therefore the document in this case is a mortgage by conditional sale and not an absolute sale. We are of the view that the learned counsel is well founded in this contention.

6. It is seen from the evidence that the consideration stated in the document works out at the rate of Rs. 1,015 per acre and that actually the value of the property at the time of the transaction was much more than what is recited in the document. Even D.W. 3 the karnam of the village, who was examined on behalf of the defendants, admits in cross-examination that in 1948, nanja lands in Killiyur were sold from Rs. 700 to Rs. 1,700 per acre, though he would add that the suit lands were not worth more than Rs. 1,000 per acre then. The plaintiff has produced a sale deed. Ex. A-3, (registration copy) dated 18-3-1953, under which the property was sold at the rate of Rs. 2,586 per acre. There is no dispute that that property is adjoining the property now under discussion except that the sale under Ex. A-3 was about 5 years after the suit transaction. But there is no evidence to show that the price of properties was increasing in that area or that the increase was so much as from Rs. 1,000 to Rs. 2,500 per acre. We should also bear in mind that the suit property is an agricultural land and unlike house sites in urban area, the increase in value of agricultural lands could not have been so phenomenal. InEx. B-14, dated 7-8-1962, which is a lawyer's notice issued by the plaintiff prior to the filing of the suit, the plaintiff had stated that the property was worth much more than Rs. 30,000, at the time of the transaction. Of course, in the reply notice, the defendants had denied that the property was sp valuable. But in spite of these assertions by the plaintiff, the defendants had not chosen to let in proper evidence to discredit the evidence of the plaintiff that the suit property was much more valuable than what was recited in the document itself. We have also got the admission of the karnam as D.W. 3 that even at the time of the registration of the document, no patta transfer application was filed. If really the transaction was intended to be a sale, one would normally expect that such a patta transfer application would be filed even at the time of the registration. We find in this case that as late as August 1962, there was no patta transfer and that after the lawyer's notice was issued by the plaintiff to the defendants, the defendants appear to have got the patta transferred just prior to the suit.

7. One other important circumstance in this case is that admittedly Mudaliar provided the stamp papers for the execution of Ex. B-2. Under the Stamp Act, in the ease of sales, normally, unless there is a contract to the contrary, it is the purchaser who will have to provide- the stamp papers and in the case of mortgages, it is the mortgagor who will have to provide the stamp papers. The supply of stamp papers by Shanmugha Mudalier is in consonance with the fact that it should have been intended to be a mortgage and not a sale. It may be noted that there is neither allegation much less any evidence that there was any contract to the contrary requiring the vendor himself to provide the stamp papers for the execution of the sale deed. These circumstances, in our opinion, clearly show that the document was intended to be and was a mortgage by conditional sale and not an outright sale of immovable property.

8. We are fortified in this opinion by a decision of the Supreme Court in P. L. Bapusami v. Pattay. : [1966]2SCR918 . In that case also, the transaction was identically worded and the deed itself is set out at pages 903-904 of the report. After stating that the consideration was settled at Rs. 4,000, the document proceeded to state-

'As, in all, I have received the sale consideration of Rs. 4,000 as detailed above, you yourself shall, in future, hold and enjoy absolutely the under mentioned properties. In future, neither myself nor my heirs shall have any right or futureclaim, whatever, in respect of these properties. There is no other encumbrance, whatever, except the encumbrance mentioned above in respect of these properties. In case anything is left out, I am bound to get the same discharged from and out of my other properties........Should I pay in cash the aforesaid sale consideration of Rs. 4,000 after a period of five years within a period of seven years from the date of the execution of the deed, during the date of expiry of the said deed of any year (the said properties) should be reconveyed for the very same amount to me. This condition is not valid after the aforesaid period.'

Except the last sentence that this condition is not valid, after the aforesaid period, the rest of the recitals in the document is almost identical with those in the document now in question. The Supreme Court held that there were a number of circumstances to indicate that the document was a transaction of mortgage by conditional sale and not a sale with a condition for retransfer. In the words of the Supreme Court-

'In the first place there is the important circumstance that the condition for re-purchase is embodied in the same document. In the second place, there is the significant fact that the consideration for Ex. B-1 was Rs. 4,000, while the real value of the property was, according to the Munsif and the Subordinate Judge Rs. 8,000......... In the third place, thereis the circumstance that the patta was not transferred to the 1st defendant after the execution of Ex. B-1by Palani Moo-pan......... There is also the circumstancethat the kist for the land was continued to be paid by Palani Moopan and after his death, by the sons of Palani Moopan. Lastly, there is the important circumstance that the consideration for reconveyance was Rs. 4,000, the same amount as the consideration for Ex. B-l.'

In those circumstances, the Supreme Court held that the document was a mortgage by conditional sale. Except that the kist was paid by the defendants in this case, all the other circumstances pointed out by the Supreme Court are present in this case. We consider that the payment of kist by the defendants does not in any way alter the situation. The Supreme Court also specifically pointed out that there need not be any debtor-creditor relationship prior to the transaction itself in order to make the transaction a mortgage by conditional sale, though if there had existed a debtor-creditor relationship even prior to that document that would be a very consideration, as pointed out by this court in Ramachandrayya v. Lakshminarayana Rao, : (1956)2MLJ565 . In the abovedecision of this court, it was held further, that the circumstance that the stamp papers were purchased in the name of the transferor is also very relevant in holding that the transaction is a mortgage by conditional sale. We may also point out that the decision relied on by the court below in Pattay Gounder v. Babusami, : AIR1961Mad276 in support of its view that the document is not a mortgage by conditional sale is the very decision which, on appeal, was reversed by the Supreme Court in : [1966]2SCR918 , referred to already.

9. For the foregoing reasons, differing from the court below, we hold that the transaction evidenced by Ex. B-2 dated 5-5-1948 is a mortgage by conditional sale and not an outright sale of the suit properties.

10. Now that we have held that the document is a mortgage by conditional sale, no further question arises. But it should be pointed out that there is no evidence to show that Shanmugha Mudaliar was insane even at the time of the transaction in. 1948, though there is evidence to show that he was not in a sound state of mind in 1955. The document is therefore not vitiated on the ground that Shanmugha Mudaliar was not in a sound disposing state of mind in 1948 when the deed was executed. It is not in dispute that if the document were to be construed as a mortgage by conditional sale, the suit is in time and that the plaintiff is entitled to a decree for redemption.

11. Accordingly we set aside the judgment and decree of the court below in so far as Ex. B-2 is concerned and there will be a preliminary decree for redemption of the mortgage Ex. B-2 dated 5-5-1948. The plaintiff will be entitled to proportionate costs in the suit.

12. Though the learned counsel challenged the finding of the court below that the mortgage executed in favour of the 10th defendant was not binding on the plaintiff, since the only ground on which that mortgage was challenged was on the basis that Shanmugha Mudaliar was insane even at the time of that mortgage in 1946 and since that plea has not been established, we have to confirm the finding of the court below that the mortgage in favour of the 10th defendant is valid and binding on the plaintiff.

13. In the result, the appeal is partly allowed in so far as Ex. B-2 dated 5-5-1948 is concerned and dismissed in other respects. The appellant will pay the court-fee due to the Government on the memorandum of appeal. The parties will bear their respective costs in this appeal.


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