Case: DHARMAJI SHANKAR SHINDE  Vs. RAJARAM SHRIPAD JOSHI (DEAD) THROUGH LRS

2. Facts giving rise to these appeals are that the respondents- plaintiffs filed a suit for redemption of the suit property bearing S.No.147 present G.No.750 admeasuring 2 Hectares 18 Are situated in village Kudal, Jawli taluka and district Satara. Case of the respondents-plaintiffs is that the suit property was mortgaged by their father Shripad Joshi on 28.07.1967 in favour of Shankar Shinde who is the predecessor-in-interest of the appellants- defendants for Rs.2500/-. The said deed (Ex.P-73) is a deed of mortgage by conditional sale with a condition that if the amount is not repaid within a period of five years from the date of execution of the deed, then the same would be treated and construed as an absolute sale between the parties conferring absolute right of ownership on Shankar Shinde and his legal representatives. As per the recitals in the document, the possession of the suit property was also handed over to Shankar Shinde on the date of execution of the deed. The respondents-plaintiffs further averred that on 26.07.1972, their father had paid an amount of Rs.800/- to Shankar Shinde and to that effect Ex.P-69-receipt was executed. Shripad Joshi died in the year 1973 and the respondents-plaintiffs succeeded to his estate. Further case of the respondents-plaintiffs is that in spite of repeated request to the appellants-defendants for redemption of the suit property and delivery of possession of the property, they failed to receive the money and had not handed over the possession of the property. After issuance of legal notice dated 19.02.1980, the plaintiffs filed the suit for redemption of the mortgage3. The appellants-defendants resisted the suit contending that the transaction between their father-Shankar Shinde and the father of the respondents-plaintiffs-Shripad Joshi was a sale with condition to repurchase within a stipulated period of five years. Case of defendants is that since Shripad Joshi, father of the respondents-plaintiffs failed to repay the money within the stipulated period of five years and failed to take any step to get the property reconveyed to them, after the period of five years as per the terms and conditions of Ex.P-73, father of the appellants- defendants Shankar Shinde has become the absolute owner of the suit property and the plaintiffs have no right, title or interest in the suit property4. The trial court dismissed the respondents-plaintiffs suit by holding that the relationship of debtor and creditor is not established and the respondents have failed to prove that the transaction (Ex.P-73) was a mortgage and therefore, they are not entitled to redemption and possession of the suit property. After referring to the recitals in Ex.P-73, the trial court held that the respondents-plaintiffs have agreed that if Shripad Joshi does not pay the amount within stipulated period of five years, the said document was to be treated as sale deed and in his life time executant Shripad Joshi did not take any action to get the property reconveyed. The trial court also held that Ex.P-69-receipt has not been proved by the respondents-plaintiffs and the respondents- plaintiffs are not entitled to the decree prayed for by them5. In appeal, the first Appellate Court set aside the judgment of the trial court by holding that Ex.P-73 is a mortgage by conditional sale and not an absolute sale deed or a sale with a condition to repurchase. The first Appellate Court held that payment of Rs.800/- by Shripad Joshi has been proved and that the respondents have proved the execution of Ex.P-69-receipt by examining Prabhakar (PW-2) who is the son of the scribe of Ex.P- 69-receipt. The first Appellate Court held that Ex.P-73 was a mortgage with conditional sale as per proviso to clause (c) of Section 58 of the Transfer of Property Act and that the respondents are entitled to redeem the mortgage subject to the payment of balance amount of Rs.1700/-. Being aggrieved by the judgment of the first Appellate Court, the appellants preferred second appeal before the High Court which came to be dismissed by the impugned judgment.

Reasoning:
14. The question in each case is the determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances. If the words are plain and unambiguous then in the light of the evidence of the surrounding circumstances, it must be given their true legal effect. If there is any ambiguity in the language employed, the intention is to be ascertained from the contents of the deed and the language of the deed is to be taken into consideration to ascertain the intention of the parties. Evidence of contemporaneous conduct of the parties is to be taken into consideration as the surrounding circumstances16. Intention of the parties as seen from the recitals of Ex.P-73:- By perusal of Ex.P-73, it is clear that eight days prior to Ex.P-73, Shripad Joshi has borrowed orally a sum of Rs.700/- for the purpose of marriage of his daughter. At the time of execution of Ex.P-73 (28.07.1967), Shirpad Joshi required more money for the same reason and he executed Ex.P-73-document titled as mortgage by conditional sale for a consideration of Rs.2500/- and on the date of execution of the said document, Shripad Joshi received only a sum of Rs.1800/-. The earlier borrowed amount of Rs.700/- was thus adjusted from the sale consideration of Rs.2500/-. The intention of the parties in putting an end to the debtor-creditor relationship with respect to the sum of Rs.700/- is clear from the recitals of the document i.e. adjustment of Rs.700/- from the total consideration of Rs.2500/- and parties intending to create a relationship of vendor and vendee by transfer of the suit property for a consideration of Rs.2500/-. Period of five years was fixed in Ex.P-73 within which Shirpad Joshi-father of the respondents-plaintiffs was to repay the said amount. On the date of execution of the document (Ex.P-73), the possession of the property was handed over to the appellants-defendants for cultivation. Further, recitals are to the effect that if the consideration amount is paid within five years, Shripad Joshi- executant will get the mortgage redeemed. In case, the amount is not paid within the stipulated period of five years, the mortgage shall be treated as an absolute sale and thereafter Shankar Shinde to pay the land revenue to the government and all other charges for which executant will have no complaint. The recitals of the document make clear the intention of the parties that if the amount is not repaid within the stipulated period of five years, the transferee will have absolute right and the mortgage will be treated as an absolute sale and the transferee to pay the land revenue and the other charges. These clauses in Ex.P-73, in our view, are consistent with the intention of the parties making the transaction a conditional sale with an option to repurchase17. Admittedly, executant of Ex.P-73, Shripad Joshi expired in the year 1973 and till his life time, he never took any action or step to get the property reconveyed. After death of Shripad Joshi in the year 1973, no immediate action was taken by his successor. Obviously, all the legal action were started in the year 1980 by the present plaintiffs based upon a receipt-Ex.P-69 dated 26.07.1972 under which an amount of Rs.800/- is said to have been paid to Shankar Shinde. Much emphasis has been placed by the respondents-plaintiffs on Ex.P-69-receipt which we would refer a little later. When being confronted with the recitals in Ex.P-73, in his cross-examination, PW-1-Rajaram Joshi admitted that the transaction was that of sale with the condition of repurchase and neither parties are described therein as mortgagor or mortgagee. Admission of PW-1 is a formidable evidence indicating the intention of the parties. Having not paid the amount within the stipulated period of five years, the plaintiffs have lost their right to repurchase18. Mention of borrowed a sum of Rs.700/- in the document is incidental. Mere incorporation of the word borrowed and mortgage by conditional sale cannot by itself establish that there is a debtor-creditor relationship. In fact, as pointed out earlier, the recitals of the document make it clear that the parties expressed their intention to put an end to the debtor-creditor relationship with respect to the sum of Rs.700/- that existed prior to the execution of Ex.P-73 and creating a relationship of vendor and vendee by transfer of the suit property for consideration of Rs.2500/-. As rightly observed by the trial court, in Ex.P-73, there is no mention of the rate of interest, right of foreclosure that are essential in a deed of mortgage19. The contention of the respondents is that in view of the mandatory provisions of the proviso to clause (c) of Section 58 of the Act, since the sale and the agreement to repurchase are embodied in the same document (Ex.P-73), the transaction is to be taken as a mortgage and the conditions enumerated in proviso to Section 58(c) of the Transfer of Property Act have been satisfied in the present case. On behalf of the respondents, it was submitted that the existence of creditor-debtor relationship can be derived from the recital in the document I have borrowed. As pointed out earlier, there are no recitals in the document to establish creditor-debtor relationship; nor does it contain the right of foreclosure, payment of interest etc. which are essential requirements in a deed of mortgage20. As per Section 58(a) of the Transfer of Property Act, the mortgage is the transfer of an interest in specific immovable property as security for the repayment of the debt; but such interest itself is immovable property. In the case in hand, non- mention of the mortgage amount for which the interest in the immovable property was created as security, indicate that the parties have never intended to create a mortgage deed. If really the parties have intended the transaction to be a mortgage, while handing over possession of the property to Shankar Shinde for cultivation, the parties would have stated that the cultivation and enjoyment of usufructs are in lieu of the interest payable by Shripad Joshi on the amount. But that was not to be so. The transfer of possession and right to cultivate the suit land could be conceived as the intention of the executant to transfer the right, title and interest in the property which are essentials in any transaction of a sale21. Moreover, as per the clauses in Ex.P-73-document, the possession of the suit property was also handed over to Shankar Shinde-father of the appellants. Though, it is stated that the transferee-Shankar Shinde was to pay the revenue to the government after five years, according to the appellants, ever since 1967, land revenue was paid by the father of the appellants. In his evidence, PW-1 admitted that revenue cess of the suit property has been paid by Shankar Shinde from 1967 and after his demise, by his legal heirs. Likewise, a mutation was also effected in the name of Shankar Shinde even in the year 1967. During his life time, father of the respondents-Shripad Joshi has not raised any objection to the mutation nor for the payment of the revenue cess by Shankar Shinde. Considering the contemporaneous conduct of the parties, it is clear that Shankar Shinde and thereafter the appellants were dealing with the suit property as if they were the owners of the land. The clause in Ex.P-73 that if the amount is not paid within a period of five years, the transaction will become a permanent sale deed and thereafter, the transferee will have the absolute right over the property are consistent with the express intention of parties making the transaction a conditional sale with option to repurchase22. The respondents-plaintiffs contended that the market value of the suit property was higher than the transaction value and therefore, Ex.P-73 is to be construed as a mortgage. In support of their contention, reliance was placed upon the judgment in Vithal Tukaram.The facts in Vithal Tukaram are clearly distinguishable with the facts and evidence on record in the present case. In that case, the value of the land was Rs.3500/- far in excess of the amount of Rs.700/- mentioned in the document. Considering the evidence of the respondent- defendant thereon and the facts of the said case, the Supreme Court held that the value of the land was far in excess of Rs.700/- mentioned in the agreement. Further, in the said case, the defendant thereon did not take any step for mutation of the land for three long years and the plaintiff thereon specifically objected to mutation in the name of respondent-defendant. The case in hand is clearly distinguishable on facts23. In the present case, there are no averments in the plaint as to the market value of the property and as to the inadequacy of the consideration. In his evidence, PW-1 has stated that the transaction of absolute sale could have been worth Rs.60,000- 70,000/- in the year 1967; but the respondents-plaintiffs have not produced the certificate of valuation of the land or the circle rate of the property at the time when Ex.P-73 was executed.The appellants contended that the suit property was sold for a proper consideration and relied upon the transaction that took place in the village in the year 1957 to establish that the sale consideration is appropriate.The trial court while deciding issue No.4 has held that the respondents-plaintiffs have failed to adduce any evidence to show that the market value of the suit property in the year 1967 was much more than what was paid by the appellants-defendantsIn these factual circumstances, it cannot be said that the plaintiffs have discharged the burden in proving Ex.P-69-receipt as genuine to hold that the parties had intended that Ex.P-73- document is only a mortgage by conditional sale and not a sale with condition to repurchase. The receipt Ex.P-69 cannot be relied upon as corroborative piece of evidence to hold that part payment was made by Shripad Joshi and that the parties treated Ex.P-73 as a mortgage by conditional sale26. When Ex.P-73 is clear and unambiguous, the first Appellate Court erred in relying upon Ex.P-69-receipt to draw inference as to the intention of the parties. The first Appellate Court did not keep in view that the appellants-defendants have denied Ex.P-69- receipt, hence, burden lies upon the plaintiffs to prove the contents of Ex.P-69 to bring in the intention of the parties that the transaction between the parties was only a mortgage by conditional sale. When the recitals in Ex.P-73-document is sufficient to gather the intention of the parties, the first Appellate Court erred in placing reliance on Ex.P-69-receipt to ascertain the intention of the parties to upset the findings of fact recorded by the trial court. The findings of the first Appellate Court and the High Court in placing reliance upon Ex.P-69-receipt to conclude that the transaction was a mortgage and not a sale are erroneous and the same cannot be sustained27. Though the transaction and condition to repurchase are embodied in one document, having regard to the intention of the parties and the surrounding circumstances, in our considered view, Ex.P-73 does not fall within the proviso to Section 58(c) of the Transfer of Property Act. Ex.P-73 a registered document, in our considered view, is not a mortgage but a transaction of sale with condition to repurchase. The High Court and the first Appellate Court did not properly appreciate the recitals in Ex.P-73 and that it does not create expressly or by implication the relationship of debtor and creditor. The High Court failed to note that since Shripad Joshi failed to pay the amount within the stipulated period of five years, the respondents-plaintiffs have lost their right to repurchase the property. When the findings of the first Appellate Court and the High Court though concurrent, whey they are shown to be perverse, this Court would certainly interfere with the findings of fact recorded by the courts below. The High Court has not properly appreciated the evidence and Ex.P-73 in the light of the surrounding circumstances and the impugned judgment is liable to be set aside.