Summary
The Court held that an absolute sale and a separate same-day agreement permitting repurchase did not constitute a mortgage by conditional sale. Section 58(c) requires the reconveyance condition to be contained in the instrument effecting the sale. The documents here transferred ownership outright and reserved only a time-limited right to repurchase.
Issues
- Whether the sale deed and separate reconveyance agreement together created a mortgage by conditional sale.
- Whether the limitation finding on the challenge to the sale could be reopened in this appeal.
Provisions considered
- Section 58(c), proviso, Transfer of Property Act, 1882The condition for reconveyance must be embodied in the document effecting the sale. Separate contemporaneous instruments here evidenced a sale with an option to repurchase rather than a redeemable mortgage. (¶¶ 23, 24, 25, 25.1, 25.2, 25.3, 25.4, 26, 27, 28, 29, 30, 31)
Held
- The trial court’s limitation finding concerning the challenge to the sale deed was not raised before the High Court, whose framed questions concerned whether the transaction was a mortgage. That distinct limitation issue could not be pursued before the Supreme Court. (¶¶ 19, 20, 21)
- A mortgage by conditional sale requires the relevant condition in the instrument effecting the sale. Executing a separate agreement for reconveyance on the same day does not satisfy the statutory proviso. In a mortgage the debt and right to redeem subsist; a sale with a repurchase condition instead creates a personal right governed by that agreement. (¶¶ 23, 24, 25, 25.1, 25.2, 25.3, 25.4)
- The sale deed conveyed absolute ownership, recorded consideration and delivery of possession, and permitted mutation and enjoyment as owner. The separate agreement acknowledged the completed sale and allowed repurchase for Rs 5,000 within five years, after which it would cease. These terms evidenced an absolute sale with a repurchase option, not a mortgage. (¶¶ 26, 27, 28, 29, 30, 31)
Result
Appeal dismissed; High Court judgment upholding dismissal of the suit sustained. No costs.