Case: GANPATI BABJI ALAMWAR (D) BY LRS Vs. DIGAMBARRAO VENKATRAO BHADKE AND ORS.

26.04.1970. That amount & Rs.500/- which we have received earlier in cash from you. Accordingly there is no objection or grievance for receiving Rs.11,000/- (in words Rs. Eleven thousand only) & giving possession. The purchasers are agriculturists. Even after purchase of this land their land holding will not be excess than the ceiling limits as per the provisions of Maharashtra Agricultural Lands (Ceiling & Holdings) Act, 1961 & not more than 2/3 of minimum holding prescribed under the Act. Therefore for this transaction there is no need to seek permission of Deputy Collector as required under Hyderabad Tenancy & Agricultural Lands (Amendment) Act, 1965. The executants of this deed are not from Scheduled Caste and Scheduled Tribes. Hence this Conditional Sale deed is executed by us with free will & satisfaction & signed on 29 April 1971.?9. Section 58, clause (c) of the Transfer of Property Act defines mortgage by conditional sale as follows:-?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, oron condition that on such payment being made the sale shall become void, oron 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.?10. Whether an agreement is a mortgage by conditional sale or sale with an option for repurchase is a vexed question to be considered in the facts of each case. The essentials of an agreement, to qualify as a mortgage by conditional sale, can succinctly be summarised. An ostensible sale with transfer of possession and ownership, but containing a clause for reconveyance in accordance with Section 58(c) of the Act, will clothe the agreement as a mortgage by conditional sale. The execution of a separate agreement for reconveyance, either contemporaneously or subsequently, shall militate against the agreement being mortgage by conditional sale. There must exist a debtor and creditor relationship. The valuation of the property, and the transaction value, along with the duration of time for reconveyance, are important considerations to decide the nature of the agreement. There will have to be a cumulative consideration of these factors, along with the recitals in the agreement, intention of the parties, coupled with other attendant circumstances, considered in a holistic manner. The language used in the agreement may not always be conclusive.11. In Bhaskar Waman Joshi (deceased) and Ors. vs. Shrinarayan Rambilas Agarwal (deceased) and Ors., AIR 1960 SC 301 , the principles for determination of the nature of the document were explained as follows:-?7…The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts.?12. In the light of the aforesaid discussion and the facts of the present case, an examination of the recitals in the agreement dated 29.04.1971 holistically, including the heading of the document, we are left with no doubt that it was not a sale deed with an option for repurchase but a document of mortgage by conditional sale. An agriculturist will normally not so easily dispose his agricultural land, the source of his survival and livelihood merely for purchases made by him on credit. The dire financial straits of the plaintiffs is evident from the fact that they were left with no option but to mortgage 2½ acres of their agricultural lands for credit purchase of daily necessities. The financial stringency of the plaintiffs is apparent from their failure to repay anything even after execution of the instalment bond. Given the limitations of the plaintiffs because of their poor financial status, the fact that they may not have objected to the mutation so done three years later cannot be considered as sufficient for a contrary interpretation of the agreement dated 29.04.1971, especially when the Appellate Court held that the plaintiffs were in possession of the lands. In the facts of the case, a debtor and creditor relationship stands clearly established and hardly needs further elucidation. The limitation for the right to redeem, under Article 61(a) of the Limitation Act 1963, is 30 years. The suit for redemption was therefore within limitation. In the facts of the present case, we do not consider the delay of seven years in filing the suit so fatal, as to disinherit the plaintiff from his agricultural lands.13. In Vanchala Bhai (supra), there was a finding that their existed no relationship of debtor and creditor. In that background, the delay of 11 years in institution of the suit for redemption was considered as a relevant factor.14. In Bibi Fatima (supra), the agreement was held to be a mortgage by conditional sale as the respondent had continued to be in possession of the lands and the loan was raised to discharge debts.15. The observations in Vithal Tukaram Kadam (supra) that attendant surrounding circumstances should be considered, and upon which learned counsel for the appellant laid much emphasis, in our opinion is of no avail to him in the facts and circumstances of the present case. The question whether the appellant was a bonafide purchaser or not cannot be considered relevant in the facts of the present case and may require further evidence. It is therefore left open for consideration vis-à-vis defendant no.1 in an appropriate proceeding if instituted by the appellant. 16.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]7. The plaintiffs owed Rs.10,500/- to defendant no.1 for credit purchases of daily necessities from the shop of the latter. The instalment bond was executed by the plaintiffs on 26.04.1970, to repay the amount in three instalments falling due on the Gudi Padwa day in 1971, 1972 and 1973. On failure to pay the first instalment in 1971, the agreement in question, Exhibit 52, came to be executed on 29.04.1971. Defendant no.1 got the mutation done in his name after notice to the plaintiffs on 13.05.1976, i.e. three years after the last date for payment of instalments on Gudi Padwa in 1973. Defendant no.1 then resold the land to defendant no.2 on 13.02.1978. The suit for redemption of mortgage was filed in 1980.In the light of the aforesaid discussion and the facts of the present case, an examination of the recitals in the agreement dated 29.04.1971 holistically, including the heading of the document, we are left with no doubt that it was not a sale deed with an option for repurchase but a document of mortgage by conditional sale. An agriculturist will normally not so easily dispose his agricultural land, the source of his survival and livelihood merely for purchases made by him on credit. The dire financial straits of the plaintiffs is evident from the fact that they were left with no option but to mortgage 2½ acres of their agricultural lands for credit purchase of daily necessities. The financial stringency of the plaintiffs is apparent from their failure to repay anything even after execution of the instalment bond. Given the limitations of the plaintiffs because of their poor financial status, the fact that they may not have objected to the mutation so done three years later cannot be considered as sufficient for a contrary interpretation of the agreement dated 29.04.1971, especially when the Appellate Court held that the plaintiffs were in possession of the lands. In the facts of the case, a debtor and creditor relationship stands clearly established and hardly needs further elucidation. The limitation for the right to redeem, under Article 61(a) of the Limitation Act 1963, is 30 years. The suit for redemption was therefore within limitation. In the facts of the present case, we do not consider the delay of seven years in filing the suit so fatal, as to disinherit the plaintiff from his agricultural lands.The observations in Vithal Tukaram Kadam (supra) that attendant surrounding circumstances should be considered, and upon which learned counsel for the appellant laid much emphasis, in our opinion is of no avail to him in the facts and circumstances of the present case. The question whether the appellant was a bonafide purchaser or not cannot be considered relevant in the facts of the present case and may require further evidence. It is therefore left open for consideration vis-à-vis defendant no.1 in an appropriate proceeding if instituted by the appellant.