REPORABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7400 OF 2008

(Arising out of SLP (C) No.2227 of 2007)

C. Cheriathan … Appellant

Versus

P. Narayanan Embranthiri & Ors. … Respondent

J U D G M E N T

S.B. Sinha, J.

1.Leave granted.

2.Interpretation of a deed dated 27.10.1969 as to whether the same is

one of absolute conveyance with a condition of repurchase or a mortgage

with conditional sale, is the question involved in this appeal which arises

out of a judgment and order dated 1.11.2006 passed by the High Court of

Kerala in Second Appeal No.290 of 2003 setting aside a judgment and

decree dated 28.11.1988 passed by the Munsif’s Court, Manjeri in Original

Suit No.458 of 1984.

3.Respondent herein was owner of the land in question. He took the

said land on lease with one Cheriathan jointly from one Gopalan Nair by

reason of a deed of conveyance dated 21.12.1967. They made

improvements. They constructed buildings thereupon. Half of the said

leasehold rights was sought to be conveyed in favour of the appellant by

reason of the said deed. Indisputably, the first respondent executed a deed

of assignment in favour of the V. Devaki Amma in respect of his half share

for a consideration to repurchase the same by a document dated 27.10.1969.

She, by a deed of assignment dated 2.3.1976, transferred her right, title and

interest being half of the property to the appellant and, thus, according to

him, he became the full owner thereof.

Indisputably again, the appellant was granted a purchase certificate

under the Kerala Land Reforms Act in respect of the entire property in the

year 1978. First Respondent did not take any step to set aside the said

certificate for a long time. Only in the year 1984, he filed a suit for

redemption of mortgage and partition in respect of his half share in the

property alleging that the said deed dated 27.10.1969 represented only a

loan transaction. Appellant herein, however, took the usual stand that the

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said deed is in effect and substance a deed of sale with a condition to

repurchase.

In view of the pleadings of the parties, several issues were framed;

issue No.4 being :

“4.Whether the transaction involved in

document No.276/1970 is a mortgage?”

3.On construction of the document in question, the learned Trial Judge

opined that the transaction represented a sale. On an appeal having been

preferred thereagainst by the respondent, the First Appellate Court held that

the transaction was a mortgage by conditional sale and as the respondent did

not exercise his option to repurchase the property within a period of three

years, the said sale has become absolute.

Respondent filed a second appeal before the High Court which by

reason of the impugned judgment has been allowed interpreting the said

document to be a deed of mortgage and consequently holding that the suit

for partition and redemption was maintainable.

4.Mr. Krishnamoorthy, learned senior counsel appearing on behalf of

the appellant, would submit that the High Court committed a serious error in

passing the impugned judgment in so far as it failed to construe the

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provisions of Section 58 of the Transfer of Property Act in its proper

perspective. It was urged that apart from the fact that the value of the

property could not have been assessed at Rs.6,800/-, the High Court ignored

that only half share thereof was transferred. It furthermore failed to take

into consideration that no evidence had been brought on record to establish

the relationship of creditor and borrower between the parties. Possession

having been delivered, permission to attorn having been given and no

interest having been stipulated, it was submitted, the High Court should

have construed the document to be one of absolute sale with a condition of

repurchase.

5.Learned counsel appearing on behalf of the respondent No.1, on the

other hand, would contend that as appellant did not prefer any appeal

against the judgment and order passed by the First Appellate Court, the

contentions raised before us should not be permitted to be raised. For the

said purpose, it was contended, even the provisions of Order 41 Rule 33 of

the Code of Civil Procedure would not be applicable.

6.Before embarking upon the rival contentions raised before us, we may

notice the relevant portions of the deed in question which are (as translated

by the parties) as under :

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“The scheduled property was outstanding (sic) on

lease with Gopalan Nair from whom by Document

No.2034 of 1967 myself and Cheriyathan jointly

got an assignment of lease hold right and are

enjoying the same by effecting improvements and

buildings and I humbly (sic) conditionally assign

my one half right over the property with

possession and with the improvements thereon

with a stipulation that within a period of 3 years

from today, I shall repurchase the same at my

expense. I have received the sale consideration of

Rs.2,000/- in cash from you and I hereby

relinquish all my ½ right over the scheduled

property and hence by this assignment from today

till the period is over you are entitled to enjoy the

schedule property as a sale by efflux of time and

thereafter as an absolute sale. You will be entitled

to directly attorn to the landlord by paying rent

and hereafter I will have no right to deal with the

property in any manner.

Original sale deed is not handed over as it is a

joint document and I hereby assure you that there

are no encumbrances created in respect of my half

share.”

7.Whether a document is a mortgage by conditional sale or a sale with a

condition of repurchase is a vexed question.

Section 58(c) of the Transfer of Property Act, 1882 reads thus :

“Section 58 - ”Mortgage”, “mortgagor”,

“mortgagee”, “mortgage-money” and “mortgage-

deed” defined –

(a) …

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(b) …

(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 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 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.”

8.One of the ingredients for determining the true nature of transaction,

therefore, is that the condition of repurchase should be embodied in the

document which effects or purports to effect the sale. Indisputably, the said

condition is satisfied in the present case.

9.A document, as is well known, must be read in its entirety. When

character of a document is in question, although the heading thereof would

not be conclusive, it plays a significant role. Intention of the parties must be

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gathered from the document itself but therefor circumstances attending

thereto would also be relevant; particularly when the relationship between

the parties is in question. For the said purpose, it is essential that all parts of

the deed should be read in their entirety. [See P.S. Ramakrishna Reddy v.

M.K. Bhagyalakshmi & Anr. [(2007) 10 SCC 231].

10.In State Bank of India & Anr. v. Mula Sahakari Sakhar Karkhana Ltd.

[(2006) 6 SCC 293], it was held :

“22. A document, as is well known, must

primarily be construed on the basis of the terms

and conditions contained therein. It is also trite

that while construing a document the court shall

not supply any words which the author thereof did

not use.”

11.The deed in question is said to be a deed of sale. The source of title

has been disclosed. What was sought to be conveyed thereby was the

leasehold interest. Assignment was in respect of the vendor’s one half share

in the property. Possession of the properties had been handed over. A

stipulation was made therein that the vendor shall repurchase the same at his

expenses within a period of three years from the date of execution thereof.

He acknowledged receipt of sale consideration of Rs.2,000/- in cash. The

vendor relinquished all his right over the scheduled property. However, the

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nature of assignment was sought to be clarified as the words “till the period

is over” and “efflux of time and thereafter as an absolute sale” are used.

It is significant that thereby the vendee in terms of the said instrument

became entitled to attorn to the landlord by paying stipulated rent evidently

as a tenant and not as a mortgagee. The vendor accepted that he would have

no right to deal with the property in any manner. The reason why the

original deed of sale had not been handed over was also explained.

Declaration has been made that no encumbrances had been created in

respect of the vendor’s share in the property.

12.The High Court in its judgment proceeded on the basis that the value

of the property was Rs.6,800/- and, thus, consideration of Rs.2,000/- ex

facie was insufficient. What was not noticed was that by reason of the said

deed only half of the right of the vendor was sought to be assigned. It is

also not in dispute that the appellant had already acquired the right, title and

interest in respect of the other half of the property. As the word

‘repurchase’ has been used, the respondent was aware that he has to

repurchase the transferred property. What would be the consideration for

repurchase has not been stated. Ordinarily, in a case where deed of

mortgage is executed with a condition of repurchase, the amount of

consideration remains the same.

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We would, however, assume that the intention of the parties was that

amount of consideration would remain the same. The time for repurchase,

however, has been specified, namely, three years. No evidence has been

brought on record to show that any relationship of creditor and borrower

had come into being. As indicated hereinbefore, appellant had been

permitted to attorn to the landlord.

13.So as to enable us to determine the vexed question, it may be

profitable to notice a few decisions of this Court on some of which the High

Court relied upon.

In Seth Gangadhar v. Shankar Lal & Ors. [1959 SCR 509] whereupon

reliance has been placed by the High Court, it was admitted that the

transaction was that of a mortgage and Section 60 of the Transfer of

Property Act was applicable. It is in that view of the matter, this Court held

that the right of redemption could not have been taken away. The Court

held that therein the term of mortgage was 85 years and there existed no

stipulation entitling the mortgagor to redeem during that term which had not

expired. The document in question was held by this Court to be containing

a stipulation creating a clog on the equity of redemption which was found to

be illegal. Such is not the case here.

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In Pomal Kanji Govindji & Ors. v. Vrajlal Karsandas Purohit & Ors.

[(1989) 1 SCC 458], this Court held that whether a clause used in a

transaction of mortgage amounted to clog on the equity of redemption is a

mixed question of law and fact. In that case, there existed a provision for

payment of interest at the rate of half per cent per annum payable on the

principal amount at the end of the long period which led this Court to

conclude that there was a clog on equity on redemption. Furthermore, in

that case, materials were brought on record to show that the transaction was

entered into by way of security for the loan obtained

In Shivdev Singh & Anr. v. Sucha Singh & Anr. [(2000) 4 SCC 326],

this Court was dealing with a case of anomalous mortgage. Therein the

mortgage was to remain operative for a period of 99 years. It was in that

situation, this Court opined that the original owner having been in great

financial difficulty, the mortgagees took advantage of the said fact and

incorporated a 99 year’s term which constituted a clog on the equity of

redemption.

In this case, the term is only for a period of three years which is

reasonable.

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We may notice that in Bishwanath Prasad Singh v. Rajendra Prasad &

Anr. [(2006) 4 SCC 432], upon taking notice of a large number of decisions,

this Court observing that therein no stipulation had been made that the

vendee could not transfer the property and his name was mutated, held :

“18. We have noticed hereinbefore that the nature

of deed was stated to be an 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 the vendee have already

agreed that this case will remain as

vaibulwafa and as per the said sarait, the

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.

up to the month of June 1978 after

harvesting of the crops i.e. paddy or rabi,

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.”

19. 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

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deed was to be executed within a period of 23

months i.e. up to June 1978, evidently the

expression “vaibulwafa” as a condition was

loosely used.

20. 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.”

15.Bishwanath Pratap Singh, it must be placed on record, was

distinguished on facts in Tulsi & Ors. v. Chandrika Prasad & Ors. [(2006) 8

SCC 322], stating :

“18. In the instant case, the scribe of the document

was examined. His categorical statement was that

he had been asked by the parties to scribe a deed

of mortgage and not a deed of sale. Respondent 1,

as noticed hereinbefore, in the document itself

categorically stated that he was executing a deed

of mortgage. Indisputably, the amount of stamp

duty was also paid by him. In a case of deed of

sale, ordinarily the transferee pays the stamp duty.

Why such a deviation from the normal practice

was made has not been explained by the appellant.

19. We have noticed hereinbefore that the nature

of the deed described that the document is

ambiguous as both the terms viz. “Kewala” and

“Baibulwafa”, were mentioned. The transaction,

however, categorically states that Appellant 1 was

to maintain the property in its present condition.

Of course, permission for reconstruction of the

structure was granted. But, if the intention of the

parties was to transfer the property absolutely, no

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such stipulation was required to be made at all. In

a case of absolute transfer, the vendee has an

absolute right to deal with his property in any

manner he likes. It was clearly stipulated in the

deed that in the event the executant repayed the

entire consideration by 30-12-1971, the purchaser

would reconvey the property and furthermore

deliver possession thereof. The sale was to become

absolute only when the transferee failed to pay the

said amount within the stipulated period. The

courts below have also taken into consideration

the contemporaneous conduct of the parties in

treating the transaction to be one of mortgage and

not of sale. We are, therefore, of the opinion that

the parties intended to enter into a transaction of

mortgage and not sale.”

16.In Manjabai Krishna Patil (D) by LRs. v. Raghunath Revaji Patil &

Anr. [2007 (3) SCALE 331], this Court opined that no relationship of debtor

and creditor having come into being and no security had been created, the

instrument in question was a deed of sale with a condition of repurchase.

17.Another important factor which must be borne in mind in construing

the instrument in question is that appellant was already the owner in respect

of half of the property. As the parties were related to each other, it is

difficult to conceive that the other half of the property would be subject to

mortgage and not a sale. The intention of appellant that by reason of the

said transaction dated 27.10.1969, he would become the owner of the entire

property was obvious.

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18.Submission of the learned counsel that contentions raised before us

on behalf of the appellant were not available as the finding of the learned

First Appellate Court to the effect that the transaction evidenced on

mortgage with conditional sale does not appeal to us. Despite arriving at

the said finding, the appeal of respondent was dismissed and in that view of

the matter, it was not open to appellant to prefer an independent appeal

thereagainst. Order 41 Rule 22 of the Code of Civil Procedure, therefore,

had no application. It is in the aforementioned situation, it was legally

permissible for the appellant to support the decree passed in his favour by

attacking the finding of the First Appellant Court which were made against

him. Order 41 Rule 33 of the Code of Civil Procedure, therefore, was

available in this case. In S. Nazeer Ahmed v. State Bank of Mysore & Ors.

[(2007 (11) SCC 75], this Court held :

“Order 41 Rule 33 enables the appellate court to

pass any decree that ought to have been passed by

the trial court or grant any further decree as the

case may require and the power could be exercised

notwithstanding that the appeal was only against a

part of the decree and could even be exercised in

favour of the respondents, though the respondents

might not have filed any appeal or objection

against what has been decreed.”

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19.For the reasons aforementioned, the impugned judgment cannot be

sustained. It is set aside accordingly. The appeal is allowed. In the facts

and circumstances of the case, however, there shall be no order as to costs.

……………………………….J.

[S.B. Sinha]

..…………………………..…J.

[Cyriac Joseph]

New Delhi;

December 18, 2008

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