Summary
A registered transfer containing a five-year repurchase condition was held to be a sale with an option to repurchase, rather than a mortgage by conditional sale. Incorporating both terms in one deed satisfied a necessary statutory condition for a mortgage but did not conclusively establish one. The deed, admission of the plaintiffs’ witness and contemporaneous conduct showed a sale without a continuing debtor-creditor relationship. The alleged part-payment receipt was not satisfactorily proved, and the redemption suit was dismissed.
Issues
- Whether a repurchase condition in the same deed necessarily established a mortgage by conditional sale.
- Whether the deed and surrounding circumstances showed a secured debt or a sale.
- Whether the alleged part-payment receipt proved continued treatment of the transaction as a mortgage.
Provisions considered
- Section 58(c), including proviso, Transfer of Property Act, 1882A repurchase condition must be in the instrument effecting the sale for a mortgage by conditional sale, but a single instrument does not conclusively establish a mortgage; its legal effect depends on the parties’ intention. (¶¶ 10–15, 27)
Held
- Separate sale and repurchase instruments exclude a mortgage by conditional sale, but combining them does not necessarily establish one. Intention is gathered primarily from the deed; surrounding circumstances assist where its language is ambiguous. A secured debtor-creditor relationship distinguishes a mortgage from a sale with an obligation to reconvey. (¶ 10–15)
- Adjustment of the earlier borrowing in the consideration, transfer of possession, the deed’s terms, the plaintiffs’ witness’s admission and unopposed mutation and revenue payments supported a vendor-vendee relationship. References to borrowing or mortgage did not themselves establish a continuing debt. (¶ 16–21)
- The alleged inadequacy of consideration was not established by the pleadings and evidence. The disputed receipt also remained unproved given its defects, the evidence adduced and the parties’ conduct; it could not corroborate the claimed mortgage or part-payment. (¶ 22–26)
- The transfer was a sale with a repurchase condition, and failure to pay within five years extinguished the contractual repurchase right. The contrary concurrent appellate findings were perverse and warranted interference. (¶ 27)
Result
Appeals allowed without costs. High Court and first appellate decisions displaced; the trial court’s dismissal of the redemption suit restored.