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CASE NO.:

Appeal (civil) 1276 of 2006

PETITIONER:

Bishwanath Prasad Singh

RESPONDENT:

Rajendra Prasad & Anr

DATE OF JUDGMENT: 24/02/2006

BENCH:

S.B. Sinha

JUDGMENT:

J U D G M E N T

(Arising out of SLP(C)No.26865/2004)

S.B. SINHA, J :

Leave granted.

This appeal is directed against the Judgment and Order dated 11th

September, 1988 passed by a learned Single Judge of the Jharkhand High

Court, Ranchi in Appeal from Appellate Decree No.176 of 1988 whereby

and whereunder a second appeal preferred by the respondents herein from a

Judgment and Decree dated 18.7.1988 passed by the 6th Additional District

Judge, Palamau at Daltonganj in Title Appeal No.26 of 1987 setting aside

the Judgment and Decree dated 27.6.1987 passed by Munsif, Daltonganj in

Title Suit No.11 of 1986, was allowed.

The respondents herein filed a suit against the appellant, inter alia,

for a declaration that the transaction dated 24.6.1977, although ostensibly

expressed in the shape of a deed of sale, was in fact a transaction of

usufructuary mortgage and for a further declaration that the said transaction

stands redeemed under Section 12 of the Bihar Money Lenders Act, 1974.

The respondents herein further sought for a decree directing the appellant to

deliver vacant possession of the suit land to them, failing which they might

be put back in possession thereof through the process of Court. The

respondents averred that they were occupancy raiyats of the suit land. The

appellant herein allegedly gave an advance of Rs.3,000/- on their executing

a deed of usufructuary mortgage in respect of the suit land. However,

allegedly the appellant asked them to execute a deed of sale on the ground

that he did not possess any money lending licence, whereupon indisputably

such a deed was executed on 24.6.1977. The appellant in turn executed a

registered deed of agreement in his favour whereby and whereunder the

respondent agreed to execute a deed of reconveyance on his receipt of the

said sum of Rs.3,000/-.

The appellant herein in his written statement, on the other hand,

contended that in fact a deed of sale was executed on 24.6.1977 by the

respondents in his favour. It is, however, accepted that the appellant

executed a deed of an agreement for sale on the same day. It is furthermore

not in dispute that the respondents herein filed an application in the Court of

Munsif, Daltonganj being Miscellaneous Case No.14 of 1978 purporting to

be under Section 83 of the Transfer of Property Act seeking its permission

to deposit an amount of Rs.3,000/- By an Order dated 22.3.1979, despite an

objection taken in this behalf by the appellant herein that the transaction in

question was not a mortgage, the respondents were permitted to deposit the

said amount.

It is also not in dispute that the property in question was mutated in

the name of the appellant in the Revenue Records of Rights.

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The Trial Court, in view of the pleadings of the parties, framed the

following issues :

"(i) Is the suit, as framed maintainable?

(ii) Have the plaintiffs got cause of action for the suit?

(iii) Is the sale deed dated 24.6.1977 real transaction of

usufructuary mortgage deed in view of the

agreement of the same day executed by the

defendant and, if so, are the plaintiffs entitled to a

decree as prayed for?

(iv) To what relief or reliefs, if any, the plaintiffs are

entitled?"

The said suit was dismissed holding that the deed of sale dated

24.6.1977 coupled with the said agreement of reconveyance of the same

date did not constitute a mortgage. It was further held that the remedy

available to the respondents was only to file a suit for specific performance

of the contract and as such a relief had not been availed of by them within a

period of three years, no relief could be granted in their favour. The appeal

preferred by the respondents herein thereagainst was also dismissed.

The respondents thereafter filed a second appeal before the High

Court which was allowed by the impugned judgment.

The purported substantial question of law framed by the High Court

is as under :

"Whether in view of the admission made by respondent

no.2 in Ext.2 to the effect that the parties understood the

document to be a deed of Baibulbafa, learned court

committed error of law in construing Ext.A without

taking into consideration the admissions made by the

parties to the aforementioned effect, in view of the

decision reported in AIR 1988 SC 1074."

The High Court in its judgment came to the conclusion that the recital

of both the documents spelt out that the real intention of the parties was that

the transaction was to be one of mortgage holding that the said deed of

mortgage was executed by the respondents in favour of the appellant for the

purpose of securing a loan of Rs.3,000/-. It was also held that the agreement

for sale dated 24.6.1977 did not have the efficacy to control the import of

the recitals made in the said conveyance dated 24.6.1977.

Mr. P.S. Mishra, learned Senior Counsel appearing on behalf of the

appellant raised a short question in support of this appeal. It was contended

that having regard to the provisions of Section 58(C) of the Transfer of

Property Act, the High Court committed a manifest error in holding the

transaction to be one of mortgage as the said plea could not have been raised

having regard to the provisions of Sections 91 and 92 of the Indian Evidence

Act. It was further contended that the order dated 22.3.1979 passed by the

Civil Court in Miscellaneous Case No.14 of 1978 filed under Section 83 of

the Transfer of Property Act, did not operate as res judicata as thereby no

issue between the parties was heard and finally decided. It was further

submitted that in view of the recitals in the said deed dated 24.6.1977, the

High Court committed an error in holding that by reason thereof the right

title and interest of the respondents did not pass on to the appellant herein.

It was argued that the High Court also committed a manifest error in

interfering with the concurrent findings of the Trial Court as also the First

Appellate Court.

Mr. Vijay Hansaria, learned Senior Counsel appearing on behalf of

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the respondents, on the other hand, supported the judgment of the High

Court. It was submitted that the order dated 22.3.1979 would operate as res

judicata in view of the fact that the issue as to whether the said transaction

evidenced by the deed dated 24.6.1977 constituted a mortgage or a sale, had

been determined thereby.

It is not in dispute that the deed in question was titled as a 'deed of

sale'. The respondents were described as 'vendor' and the appellant as a

'vendee'. The nature of the deed was mentioned as 'Sale Deed (Kewala)'.

The amount paid by the appellant to the respondents was treated to be the

consideration money. In the recitals made therein the purpose of executing

the deed of sale was stated to be as for repaying the debts taken by the

respondents from several money lenders and it was recited that they did not

have any source of income to repay the debts and no means of liquidating

the debts except to sell out the said land. It was categorically stated:

"Therefore, vendors on their own wishes and in good

mental capacity sold the property/land mentioned in

column 5 aforesaid for a consideration of Rs.3000/- to

the aforesaid vendee Sh. Vishwanath Prasad Singh and

accordingly transferred all rights pertaining to this land

to Sh. Vishwanath Singh. From today neither Vendors

nor their successors or legal heirs have no right or title

over this land."

On the same date, as noticed hereinbefore, an agreement for sale

(Ekrarnama) was executed where again the parties were described as

'Vendor' and 'Vendee'. In the said agreement for sale, the parties referred

to the deed of sale executed on the said date by the respondents. However,

it was stated therein that the said deed of sale was executed on the

Baibulbafa condition. It was also stated that the 'vendees' agreed that the

'vendor' or his successors or heirs whenever would pay the consideration

amount of Rs.3,000/- within 23 months from that date, i.e., upto the month

of June, 1978, then he would execute the deed of sale pertaining to the said

property.

The learned Trial Court as also the learned First Appellate Court

arrived at a concurrent finding that the said transaction did not constitute a

mortgage but thereby the respondents executed a deed of sale in favour of

the appellant and the appellant in turn executed an agreement for

reconveyance in their favour. 'Baibulwafa' was held to be a deed of

conditional sale with a contract of repurchase and not a mortgage with

conditional sale. On the aforesaid findings it was categorically held that a

suit for declaration that the said transactions in effect and substance

constitute a mortgage, was not maintainable.

A deed as is well known must be construed, having regard to the

language used therein. We have noticed hereinbefore that by reason of

the said deed of sale, the right, title and interest of the respondents herein

was conveyed absolutely in favour of the appellant. The sale deed does not

recite any other transaction of advance of any sum by the appellant to the

respondents was entered into by and between the parties. In fact, the

recitals made in the sale deed categorically show that the respondents

expressed their intention to convey the property to the appellant herein as

they had incurred debts by taking loans from various other creditors.

We are not oblivious of the fact that the term 'Bai-bil-wafa' or 'Bye-

bil-wuffa/wafa' is an Arabic term which may mean a mortgage or a

condition sale but the said term is not synonymous to 'Bai-ul-wafa'. In P.

Ramanatha Aiyar's Advanced Law Lexicon, 3rd edition at page 442, it is

stated:

"Bai-ul-wafa. There is no unanimity of opinion

among the jurisconsults of Islam on the point

whether a transaction of Bail-ul-wafa is a valid

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sale, a fasid sale or a mortgage. Hence, it was

held that "the Court is consequently, free to

choose any of the opinions (of jurists) which

might be conformable to the equities of the case

and may carry out the real intention of the

parties." It was further held that "in this type of

transaction, the contract between the parties is to

the effect that the transferee sells to the transferee

the property in question for either within a fixed

period or at any undefined time, the sale would to

the transferor".

We have noticed hereinbefore that the nature of deed was stated to be

agreement (Ekrarnama), the nature of the document was not stated to be

'Bai-ul-wafa', the relevant clause whereof reads as under:

"Because the vendor today of this date has sold

the property of this deed to the vendee through

registered agreement on the Vaibulwafa

condition and during this period the vendor and

vendee has already agreed that this case will

remain as Vaibulwafa and as per the said Sarait,

vendor of this deed agrees that the vendee of this

deed or his successors or heirs whenever will pay

the consideration amount of this deed amount to

Rs. 3000/- (three thousand) within 23 months

from today i.e. upto the month of June, 1978 after

harvesting of the crops i.e. Paddy or Ravi, then I

the vendor or my legal heirs or my successors

after receiving the said consideration amount of

Rs. 3000/- will execute the sale deed pertaining to

the property mentioned in column 5 of this deed

in favour of the vendee or his legal heirs or

successor."

It is of some significance to note that therein the expressions

"vendor", "vendee", "sold" and "consideration" have been used. These

expressions together with the fact that the sale deed was executed to be

within a period of 23 months, i.e., upto June, 1978, evidently the expression

'Vaibulwafa' as a condition was loosely used.

Furthermore, the agreement was also executed for a fixed period. The

other terms and conditions of the said agreement (Ekrarnama) also clearly

go to show that the parties understood the same to be a deed of

reconveyance and not mortgage or a conditional sale.

The terminology 'Vaibulwafa' used in the agreement does not carry

any meaning. It could be either 'Bai-ul-wafa' or 'Bai-bil-wafa'.

It will bear repetition to state that with a view to ascertain the nature

of a transaction the document has to be read as a whole. A sentence used or

a term used may not be determinative of the real nature of transaction.

Baibulwafa, it was held by the trial court connotes only an agreement

for sale. In terms of Section 91 of the Evidence Act, if the terms of any

disposition of property is reduced to writing, no evidence is admissible in

proof of the terms of such disposition of property except the document

itself.

In Ishwar Dass Jain (D) through Lrs. v. Sohan Lal (D) by Lrs.

[(2000) 1 SCC 434] this Court in a case where a transaction in question

was said to be a sham transaction opined that oral evidence was not

admissible when a party relied upon the said document.

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In Roop Kumar v. Mohan Thedani [(2003) 6 SCC 595] the Court laid

down the parameters of best evidence rule in the following terms:

"Section 91 relates to evidence of terms of contract,

grants and other disposition of properties reduced to

form of document. This section merely forbids proving

the contents of a writing otherwise than by writing

itself; it is covered by the ordinary rule of law of

evidence, applicable not merely to solemn writings of

the sort named but to others known sometimes as the

"best-evidence rule". It is in reality declaring a doctrine

of the substantive law, namely, in the case of a written

contract, that all proceedings and contemporaneous oral

expressions of the thing are merged in the writing or

displaced by it. (See Thayer's Preliminary Law on

Evidence, p. 397 and p. 398; Phipson's Evidence, 7th

Edn., p. 546; Wigmore's Evidence, p. 2406.) It has been

best described by Wigmore stating that the rule is in no

sense a rule of evidence but a rule of substantive law. It

does not exclude certain data because they are for one or

another reason untrustworthy or undesirable means of

evidencing some fact to be proved. It does not concern a

probative mental process \027 the process of believing

one fact on the faith of another. What the rule does is to

declare that certain kinds of facts are legally ineffective

in the substantive law; and this of course (like any other

ruling of substantive law) results in forbidding the fact

to be proved at all. But this prohibition of proving it is

merely that dramatic aspect of the process of applying

the rule of substantive law. When a thing is not to be

proved at all the rule of prohibition does not become a

rule of evidence merely because it comes into play when

the counsel offers to "prove" it or "give evidence" of it;

otherwise, any rule of law whatever might be reduced to

a rule of evidence. It would become the legitimate

progeny of the law of evidence. For the purpose of

specific varieties of jural effects \027 sale, contract etc.

there are specific requirements varying according to the

subject. On the contrary there are also certain

fundamental elements common to all and capable of

being generalised. Every jural act may have the

following four elements:

(a) the enaction or creation of the act;

(b) its integration or embodiment in a single memorial

when desired;

(c) its solemnization or fulfilment of the prescribed

forms, if any; and

(d) the interpretation or application of the act to the

external objects affected by it."

Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage

by conditional sale in the following terms:

"(c) Mortgage by conditional sale.- 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

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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 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."

A bare perusal of the said provision clearly shows that a mortgage by

conditional sale must be evidenced by one document whereas a sale with a

condition of re-transfer may be evidenced by more than one document. A

sale with a condition of retransfer, is not mortgage. It is not a partial

transfer. By reason of such a transfer all rights have been transferred

reserving only a personal right to the purchaser, and such a personal right

would be lost, unless the same is exercised within the stipulated time.

In Pandit Chunchun Jha v. Sheikh Ebadat Ali & Anr [(1955) 1 SCR

174] this Court clearly held:

"\005We think that is a fruitless task because two

documents are seldom expressed in identical terms and

when it is necessary to consider the attendant

circumstances the imponderable variables which that

brings in its train make it impossible to compare one case

with another. Each must be decided on its own facts\005"

Yet again in Mushir Mohammed Khan (D) Lrs. v. Sajeda Bano (Smt.)

& Ors. [(2000) 3 SCC 536] this Court upon construing Section 58 (c) of the

Act and opined:

"9-The proviso to this clause was added by Act 20 of

1929 so as to set at rest the conflict of decisions on the

question whether the conditions, specially the condition

relating to reconveyance contained in a separate

document could be taken into consideration in finding

out whether a mortgage was intended to be created by

the principal deed. The legislature enacted that a

transaction shall not be deemed to be a mortgage unless

the condition for reconveyance is contained in the

document which purports to effect the sale."

Referring to Chunchun Jha (supra) it was held:

"14-Applying the principles laid down above, the two

documents read together would not constitute a

"mortgage" as the condition of repurchase is not

contained in the same documents by which the property

was sold. The proviso to clause (c) of Section 58 would

operate in the instant case also and the transaction

between the parties cannot be held to be a "mortgage"

by conditional sale"

In Umabai and Another v. Nilkanth Dhondiba Chavan (Dead) by Lrs.

And Another [(2005) 6 SCC 243], wherein of us was a party, this Court

held :

"21. There exists a distinction between mortgage by

conditional sale and a sale with a condition of repurchase.

In a mortgage, the debt subsists and a right to redeem

remains with the debtor; but a sale with a condition of

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repurchase is not a lending and borrowing arrangement.

There does not exist any debt and no right to redeem is

reserved thereby. An agreement to sell confers merely a

personal right which can be enforced strictly according to

the terms of the deed and at the time agreed upon. Proviso

appended to Section 58(c), however, states that if the

condition for retransfer is not embodied in the document

which effects or purports to effect a sale, the transaction

will not be regarded as a mortgage. (See Pandit

Chunchun Jha v. Sk. Ebadat Ali, Bhaskar Waman Joshi v.

Narayan Rambilas Agarwal, K. Simrathmull v. S.

Nanjalingiah Gowder, Mushir Mohammed Khan and

Tamboli Ramanlal Motilal.)"

The High Court relied upon Smt. Indira Kaur & Ors. v. Sheo Lal

Kapoor [(1988) 2 SCC 488] therein the court took into consideration the

factors adumbrated therein, particularly, a long stipulated period of 10 years

for conveying the property and the vendee was prohibited from selling and

parting with his right, title and interest for 10 years. The vendor was

allowed to occupy the property as a tenant on payment of Rs. 80/- per

month. No order of mutation was passed in his favour. It was held:

"6. In the present case having regard to the facts and

circumstances highlighted in the course of the

discussion pertaining to the question as to whether or

not the transaction was a transaction of mortgage having

regard to the real intention of the parties it would be

difficult to hold that the agreement to sell executed by

the defendant in favour of the plaintiff was by way of a

"concession". It was a transaction entered into by the

defendant who was a hard-headed businessman and the

documents in question have been carefully framed in

legal terminology taking into account the relevant

provisions of law. The transaction also discloses the

awareness of the defendant about Section 58(c)4 of the

Transfer of Property Act as is evident from the fact that

the reconveyance clause is not embodied in the sale

deed itself. In the agreement to sell, no reference has

been made to the transaction of sale though it has been

executed contemporaneously. The defendant who has

permitted the plaintiff to continue in possession on

payment of rent equivalent to about 13= per cent

interest and was evidently aware of all the dimensions

of the matter would not have granted any concession or

executed the agreement by way of a concession. The

agreement was executed evidently because the plaintiff

would not have executed the sale deed unless an

agreement to sell by a contemporaneous document was

also executed to enable the plaintiff to enforce specific

performance within ten years. It was therefore a

transaction entered into with open eyes by the defendant

and there was no question of granting any

concession\005."

In the instant case, as noticed hereinbefore, the transfer is complete

and not partial, no stipulation has been made that the appellant cannot

transfer the property. Not only that the appellant was put in possession of

the land, his name was also mutated.

In Ramlal and Another v. Phagua and Others [(2006) 1 SCC 168],

this Court having regard to the peculiar fact situation obtaining therein

opined:

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"In our opinion, agreement to reconvey the property

will not ipso facto lead to the conclusion that the

sale is nominal and in view of the stand of

Defendant 8, as also of the fact that the property

worth Rs. 700 has been purportedly sold for Rs.

400, we are of the considered opinion that the sale

deed dated 1-12-1965 did not convey any title to

Defendant 8. It is well settled by a catena of

decisions that the vendor cannot convey to the

vendee better title than she herself has."

As of fact, it was held therein that the sale deed in question was not a

real sale deed but was by way of a surety. In that case, furthermore, the

defendant categorically admitted that the plaintiff had taken loan. It is in

that situation, the transaction was held to be a mortgage. Apart from it,

there were other circumstances which led the court to arrive at the said

conclusion. The said decision, therefore, cannot have any application in the

instant case.

The question which now arises for consideration is as to whether the

aforementioned order dated 22.3.1979 passed in Misc. Case No. 14/78

would operate as res judicata. Section 83 of the Transfer of Property Act

reads as under:

"Power to deposit in Court money due on mortgage.-

At any time after the principal money payable in respect

of any mortgage has become due and before a suit for

redemption of the mortgaged property is barred, the

mortgagor, or any other person entitled to institute such

suit, may deposit, in any court in which he might have

instituted such suit, to the account of the mortgagee, the

amount remaining due on the mortgage.

Right to money deposited by mortgagor.- The court

shall thereupon cause written notice of the deposit to be

served on the mortgagee, and the mortgagee may, on

presenting a petition (verified in manner prescribed by

law for the verification of plaints) stating the amount

then due on the mortgage, and his willingness to accept

the money so deposited in full discharge of such

amount, and on depositing in the same court the

mortgage-deed and all documents in his possession or

power relating to the mortgaged property, apply for a

and receive the money, and the mortgage-deed, and all

such other documents so deposited shall be delivered to

the mortgagor or such other person as aforesaid.

Where the mortgagee is in possession of the mortgaged

property, the court shall, before paying to him the

amount so deposited, direct him to deliver possession

thereof to the mortgagor and at the cost of the

mortgagor either to re-transfer the mortgaged property

to the mortgagor or to such third person as the

mortgagor may direct or to execute and (where the

mortgage has been effected by a registered instrument)

have registered an acknowledgement in writing that any

right in derogation of the mortgagor's interest

transferred to the mortgagee has been extinguished."

The provision merely permits the mortgagor to deposit the mortgage

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amount. Even in a case where such deposit is made, in the event the

mortgagee refused to accept the deposit, the mortgagor would have no

option but to institute a suit for redemption relying on the mortgage money

deposited. The respondent did not file a suit for redemption. It may be that

the appellant objected to the said deposit but despite the fact that the

purported mortgage amount was allowed to be deposited, the same being

not binding upon the mortgagee as he could not be compelled to accept the

same, the question of applying the principles of res judicata would not arise.

[See Chandramani Pradhan v. Hari Pasayat, AIR 1974 Orissa 47]. By

reason of such deposit the status of the parties is not altered. For filing a

suit for redemption by the mortgager, deposit under Section 83 is not a

precondition.

It is well-known that the function of a court in terms of Section 83

Transfer of Property Act is procedural in nature.

For attracting the principles of res judicata, the submissions of Mr.

Hansaria is that the court of the Munsif was a court exercising limited

jurisdiction while entertaining an application under Section 83 of the

Transfer Property Act and the decision of such a court of limited jurisdiction

would also operate as res judicata. Strong reliance has been placed by Mr.

Hansaria on Sulochana Amma v. Narayanan Nair[ (1994) 2 SCC 14]. He

submitted that in that case a suit was filed before a court of limited

pecuniary jurisdiction and in view of the decision thereon, explanation VIII

to Section 11 of the Code of Civil Procedure was held to be attracted.

In Rajendra Kumar v. Kalyan (Dead) by Lrs. [(2000) 8 SCC 99] this

Court merely held that the expression 'court of limited jurisdiction' is of

wide amplitude. The Court made a distinction between a procedural statute

and a substantive statute for applicability of the principles of res judicata.

In that case the earlier suit was filed before a court of competent

jurisdiction.

In Mahila Bajrangi (Dead) through Lrs. & Ors. v. Badribai w/o

Jagannath & Anr. [(2003) 2 SCC 464] this Court clearly held that the

principles of res judicata would be applicable only when an issue arose

directly and substantially in an earlier suit, a finding regarding an incident or

collateral question reached for the purpose of arriving at the final decision

would not constitute res judicata.

In Union of India v. Pramod Gupta (D) by Lrs. & Ors. [JT (2005) 8

SC 203] this Court opined:

"28- The principle of res judicata would apply only

when the lis was inter parties and had attained finality in

respect of the issues involved. The said principle will,

however, have no application inter alia in a case where

the judgment and/or order had been passed by a court

having no jurisdiction therefore, and/or in a case

involving pure question of law. It will also have no

application in a case where the judgment is not a

speaking one."

The question of determination of being a pure question of law, the

principles of res judicata shall have no application. Therefore, the High

Court, in our opinion committed a manifest error in interfering with the

judgment and decree passed by the trial court as also the appellate court in

exercise of its jurisdiction under Section 100 of the Civil Procedure Code.

For the reasons aforementioned, the impugned judgment of the High

Court cannot be sustained. It is set aside accordingly. The appeal is

allowed with cost. Counsel's fee quantified at Rs. 5,000/-.