Second Appeal No.352 of 1990,Civil Application No.3824 of 1990

6th September, 2007

Petitioner Counsel: Mr. R. P. DHAS,Mr. A. H. VAISHNAV
Respondent Counsel: Mr. S. P. DESHMUKH,Mr. P. R. DESHMUKH

Cases Cited:
Nana Tukaram Jaikar Vs. Sonabai Madhav Saindate, 1982 Mh.L.J. 538 [Para 6]
P. L. Bapuswami Vs. N. Pattay Gounder, AIR 1966 S.C. 902 [Para 6]
Bhaskar Waman Joshi (deceased) Vs. Shrinarayan Rambilas Agarwal (deceased), AIR 1960 S.C. 301 [Para 6]
Chennammal Vs. Munimalaiyan, 2005 AIR SCW 5280 [Para 6]
Chunchun Jha Vs. Ebadat Ali, A.I.R. 1954 S.C. 345 [Para 6]
Vasantrao Vinayakrao Deshmukh Vs. Tulsabai w/o. Karbhari Bondare, 2005(3) Mh.L.J. 943 [Para 6]
Banwarilal (deceased by LRs.) Vs. Puran Chand, AIR 1985 P & H 189 [Para 9]
Murarilal since deceased and after his death his newly substituted legal representative Umedi Lal Vs. Devlaram since deceased and after his death his legal representatives, Jagan Prasad, AIR 1965 S.C. 225 [Para 9]

JUDGMENT

JUDGMENT :- This Second Appeal arises out of judgment rendered by learned Second Additional District Judge, Jalna, in appeal bearing Regular Civil Appeal No.114 of 1984. By the impugned judgment, the learned Additional District Judge was pleased to set aside dismissal of suit for redemption of mortgage and granted decree for redemption.

2. The appellants are legal representatives of deceased Vasantrao Neb, who was original defendant No.1. The respondents are legal representatives of deceased Shankarrao Neb. They are original plaintiff and defendant Nos.2 to 6. Deceased Shankarrao Neb was the owner of suit house property. He executed a document dated 03-02-1953, in favour of deceased defendant Vasantrao, whereby the suit-house property was mortgaged for 7,000/- Osmaniya Sikke. The mortgage deed is styled as "Rahan Bil Kabja", and is written in Urdu script. It was agreed between the parties that the suit property would be given in possession of Vasantrao Neb. It was agreed that from day of execution of the mortgage deed he would continue to remain in possession till the amount was repaid. It was further agreed that there shall be no rent for the house property, which comprised of a shop, and the amount advanced to Shankarrao Neb will not be charged with any interest. They agreed that the mortgage amount will be repaid within period of five years by Shankarrao Neb and on his failure to pay the said amount within stipulated period, it will be deemed that the suit house property is sold and mortgagee i.e. Vasantrao Neb will be treated as owner thereof.

3. Respondent No.1 filed suit for redemption of mortgage alleging that he was entitled to redeem the mortgage on repayment of the mortgage amount to the mortgagee i.e. original defendant No.1 - Vasant Neb. He asserted that deceased Vasant refused to accept the amount and redeem the mortgage. According to deceased defendant No.1 Vasant, the plaintiff's father never made any attempt for redemption of mortgage and therefore the suit was barred by limitation. He asserted that the document was conditional sale. The condition regarding repayment within five years was not fulfilled by the plaintiff's father and hence the ownership rights were transferred as per terms of the document. He asserted that he became owner of the house property in question, after period of stipulated five years and as such the suit for redemption of mortgage is barred by limitation. Hence, he sought dismissal of the suit.

4. The parties went to trial over certain issues struck below Exh.16. The learned Trial Judge held that the defendant No.1 - deceased Vasant Neb became owner of the house property, because the transaction was conditional sale. The Trial Court held that the document itself was to be treated as absolute sale from the date of breach of condition to repay the amount within stipulated period of five years. Hence, the suit was dismissed. The first Appellate Court reversed the dismissal of the suit. The first Appellate Court held that the suit house property was mortgaged and the condition incorporated in the document created a clog on mortgage. The first Appellate Court held that such condition is void in the eye of law. The first Appellate Court, therefore decreed the suit.

5. The Second Appeal was admitted on ground Nos.1 to 6 and ground No.8 shown in the appeal memo. Same questions may be repeated if these grounds are reproduced. Therefore, in order to avoid repetition and to ensure that the substantial questions raised in the appeal do not overlap, I deem it proper to articulate the substantial questions of law in the following way :

(1) Whether in the facts and circumstances of the present case, document dated 03-02-1953 styled as "Rahan Bil Kabja" (mortgage with possession) is a mortgage or that it is a conditional sale and the appellants become owner due to failure of the plaintiff's father to repay the mortgage amount within period of five years as agreed ?

(2) Whether the first Appellate Court committed patent error while holding that the suit is governed by Article 61-A of the Limitation Act and is not barred by limitation ?

My findings on the above points are thus : (1) It is a mortgage and the condition is clog on redemption (2) No.

The reasons are discussed hereinafter.

6. Mr. Dhas, learned Advocate appearing for the appellants would submit that the transaction was a conditional sale. He contended that after five years period, the transfer of ownership is ensured by the document itself. He argued that the first Appellate Court misinterpreted terms of the document. He seeks to rely on "Nana Tukaram Jaikar Vs. Sonabai Madhav Saindate and others" 1982 Mh.L.J. 538. In the given case, this Court illustrated distinction between mortgage by conditional sale and sale with a condition of re-purchase. It was held that the document was styled as conditional sale-deed and it was agreed that it was sold conditionally for five years. This Court held in view of peculiar term of the document that the deed did not create expressly or by implication the relationship of debtor and creditor. Mr. Dhas also referred to "P. L. Bapuswami Vs. N. Pattay Gounder" AIR 1966 Supreme Court 902. In the set of facts obtained in the given case, the Apex Court held that the document was mortgage by conditional sale and not a sale with condition for retransfer. Mr. Dhas further seeks to rely on certain observation in "Bhaskar Waman Joshi (deceased) and others Vs. Shrinarayan Rambilas Agarwal (deceased) and others" AIR 1960 Supreme Court 301. He would submit that the test is laid down to determine whether the document can be regarded as mortgage and not sale. He contended that there was no relationship of creditor and debtor. There was no agreement for reconveyance of the property. Hence, he would submit that the document cannot be treated as mortgage, but it was a conditional sale. He also relied on some observations in "Chennammal Vs. Munimalaiyan and others" 2005 AIR SCW 5280. The Apex Court held that document in the particular facts of the said case was a mortgage by conditional sale. Mr. Dhas also referred to "Chunchun Jha Vs. Ebadat Ali and another" A.I.R. 1954 S.C. 345. The Apex Court held that the question whether a given transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase is a vexed one and must be decided on facts of each case. It is further observed that in such cases the intention of the parties is the determining factor. There cannot be any quarrel with the legal proposition referred to above. Mr. Dhas further invited my attention to certain observations in "Vasantrao Vinayakrao Deshmukh Vs. Tulsabai w/o. Karbhari Bondare and others" 2005(3) Mh.L.J. 943. I fail to see as to how this authority is of any help to the appellants. In the given case, it is held that in case of mortgage by conditional sale, there is a relationship of debtor and creditor and the transfer is by way of a security for payment of the debt, whereas in the case of sale with condition of repurchase, there is condition of reconveyance in the event the amount equivalent to the consideration is paid by the vendor to the purchaser.

7. It is well settled that if the condition of reconveyance is enumerated in document itself, then it has to be regarded as mortgage as provided under Section 58(c) of the Transfer of property Act, 1882. The question is always of intention of the parties. The extraneous evidence can be considered only when the terms of the documents are vague. However, if the terms of the document are clear enough then it is not necessary to consider the other evidence. In the present case, there was no concession granted as such. What is explicit from the terms of the document is that if the mortgage amount is returned within period of five years, then mortgage will be redeemed and if it is not so done, then document itself would be treated as sale. Obviously, understanding between parties to the document was clear. They intended to bring about mortgage. It is not a case where right of ownership was transferred in favour of said Vasantrao Neb or his father. The amount was also referred as "mortgage amount" (i|²ee¢r j'kc). The condition incorporated in the document is to the effect that in case the mortgage money would not be paid within five years period, the document will be deemed as sale. In other words, the transaction was not of out and out sale, when the document was brought about. No right of ownership had passed in favour of the mortgagee. Then, deceased Shankarrao had not recognized the fact that his interest in the property was relinquished due to such transaction. The document clearly supports the condition which creates clog on redemption of the mortgage. There is no substratum on record to reach conclusion that the parties intended to sale the suit house property by giving concession to deceased Shankarrao to repurchase the same on certain condition.

8. On perusal of the testimony of P.W. Kisan, it is revealed that deceased Shankarrao executed mortgage dated 03-12-1953 and had agreed to return the amount within five years. His version purports to show that he had approached defendant No.1 Vasantrao and had requested him to accept the amount of Rs.7,000/- from him. His request to release the suit house property from the mortgage was turned down. He corroborated document Exh.28. His cross-examination could not yield any tangible material to reach conclusion that the transaction was of sale with condition to repurchase. As against this, the version of D.W.1 Vasant reveals that he advanced amount of 6,000/- Osmaniya Sikke (Indian Currency = Rs.7,000/-) to deceased Shankarrao. His version purports to show that in case said amount had not been repaid by Shankarrao, then the document was to be treated as sale deed. He admitted that only six years prior, his name was recorded by Grampanchayat as owner. Thus, his name was entered in the village panchayat record somewhere in 1977-78. Prior to 1977 he was not recognized as owner of the suit house property. He never attempted to get his name mutated as owner, immediately after execution of the document styled as "Rahan Bil Kabja" (Exh.28). He admitted that his younger brother by name Madhukar was the Sarpanch of the village. It is suggested to him that with the help of said Madhukar he got entered his name in the relevant record. There appears ring of truth in such suggestion. It is not necessary to consider the entries in the village panchayat property register. No-where D.W. Vasant stated that he had purchased the so called property. He did not state in clear words that the transaction was of out and out purchase and that concession was given to deceased Shankarrao to repurchase the house property on condition of repayment. Obviously, it is difficult to find fault with the conclusion drawn by the first Appellate Court that the transaction was of mortgage and that the term enumerated in the document was a clog on redemption.

9. In "Banwarilal (deceased by LRs.) Vs. Puran Chand and others" AIR 1985 P & H 189, it is laid down that such a clause whereby transaction of mortgage would be turned into sale is clog on equity of redemption and therefore void. So also, the Apex Court in "Murarilal since deceased and after his death his newly substituted legal representative Umedi Lal and others Vs. Devlaram since deceased and after his death his legal representatives, Jagan Prasad and others" AIR 1965 Supreme Court 225, held that stipulation that if mortgage is not redeemed within 15 years the shop would be deemed as an absolute transfer 'Mala Kalam' amounted to clog on equity of redemption. Therefore, the Court has to ignore such stipulation and enforce mortgagor's right to redeem on principle of justice, equity and good conscience. There is no difficulty in holding that the term indicated in the document (Exh.28) is clog on equity of redemption. The condition stipulated in the document, in this context, is illegal and void. That has to be overlooked and set apart from the document. Under the circumstances, the first Appellate Court rightly held that the plaintiff was entitled to redeem the suit house property.

10. Mr. Dhas further contended that the suit is barred by limitation. Had this been suit for enforcement of the right of repurchasing the property, then such argument could be entertained. The right to sue accrued after 3rd February, 1958 i.e. after five years of the mortgage period for redemption. The suit is covered by Article 61(a) of the Limitation Act, 1963. The suit was filed within 30 years. It is difficult, therefore, to say that the suit was barred by limitation. Mr. Dhas further argued that document filed by the appellants along with Civil Application No.3824 of 1990 should be considered. He has filed copy of registered document styled as "Bechikhat" executed by deceased Shankarrao Neb on 19-08-1959. It is stated in the document that house property was sold for Rs.400/- as per the agreement which was settled prior to three days. This document was not produced before the Trial Court, nor it is case of the appellant that under this document, same house property was purchased from deceased Shankarrao. The description of the said house also is not clear from the document. The house property described in this suit is a shop of 3.5 khans, whereas copy of document dated 19-08-1959 pertains to house property. It will be improper to allow such production at the stage of second appeal. For, again there will be need to consider several issues including that of limitation and the interpretation of the said document. In this view of the matter, I am not inclined to allow the Civil Application for production of documents, particularly when no substantial reason is given as to why said documents were not produced before the Trial Court or the first Appellate Court.

11. For the reasons stated above, I do not find any substance in the Second Appeal. The Second Appeal is, therefore, dismissed. No costs. The Civil Application is dismissed.

Application dismissed.