0

Supreme Court: Sale With Just Condition of Retransfer Not Mortgage

Author: Astha Srivastava, Guru Gobind Singh Indraprastha University, New Delhi

Supreme Court has held that sale with a mere condition of retransfer is not a mortgage. It further held that any recital relating to mortgage or the transaction being in the nature of conditional sale should be an intrinsic part of the very same sale deed which will be the subject matter.

In case of Sopan vs. Syed Nabi, It was not disclosed in the sale deed transaction made is for mortgage or is a conditional sale. The suit was filed by the plaintiff to seek judgment and decree for redemption of mortgage and recovery.

A registered sale deed was executed in favour of defendant when plaintiff received a sum of money from him, which was construed as consideration for the land owned by the plaintiff. Another contemporaneous document (Exh. 4) was also relied upon which indicated that the transaction is a mortgage and the relationship of debtor and the creditor is established by the same.

Under Section 58(c) of the Transfer of Property Act, 1882 Mortgage by Conditional Sale is defined. 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 on condition not 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, so the transaction is called a mortgage by conditional sale and the mortgagee a mortgage by conditional sale.

The proviso to section 58(c) indicates that no transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to affect the sale. Therefore, any recital relating to mortgage or the transaction being in the nature of a conditional sale should be an intrinsic part of the very sale deed which will be the subject matter.

In a previous case of Dharmaji Shankar Shinde & Ors. vs. Rajaram Sripad Joshi (D) Lrs. and Ors. It was observed that, keeping in mind the proviso of section 58(c), if the sale and agreement to repurchase are embodied in separate documents then the transactions cannot be a mortgage by conditional sale irrespective of whether the documents are the contemporaneously executed. In the said case, it was also held that even in the case of a single document the real character of the transaction is to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances and intention of the parties.

In the present case, the bench observed that the claim of the plaintiff is based more upon the reliance placed on a contemporaneous document at Exh. 24. Hence, it is evident that the claim of the plaintiff cannot overcome the rigour of law to term it as mortgage by conditional sale. At the best, the said agreement (Exh. 24) can only be treated as an agreement whereby the defendant had agreed to reconvey the property subject to the repayment being made as provided thereunder. Exhibit 23 is a sale deed conveying absolute right and title to the defendant.

To Read Judgment: Click Here!

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

We are sorry that this post was not useful for you!

Let us improve this post!

Leave a Reply

Your email address will not be published. Required fields are marked *