Summary
A deed styled as a sale was held to be a mortgage by conditional sale when its reconveyance clause, the debtor-creditor relationship, inadequate consideration and long repayment period were considered together. The High Court erred in treating it as an outright sale with an option to repurchase and reversing the redemption decree.
Issues
- Whether the deed constituted a mortgage by conditional sale or a sale with an option to repurchase.
Provisions considered
- Section 58(c), Transfer of Property Act, 1882A qualifying condition must appear in the document effecting the ostensible sale; the transaction’s true character depends on its terms and circumstances. (¶¶ 8, 14–18)
Held
- No single formula decides the distinction. The instrument’s recitals, parties’ intention, debtor-creditor relationship, property value relative to consideration and time allowed for reconveyance require holistic consideration. A separate reconveyance agreement militates against a mortgage by conditional sale. (¶ 7–14)
- Here the same deed required return of the land if the money was repaid within ten years. Prior borrowing, substantial disparity between value and consideration, the demand for money with interest, mutation history and the long period reinforced its mortgage character. (¶ 15–17)
- The contractual ten-year period did not by itself defeat the mortgage redemption claim; the Court rejected the High Court’s reliance on failure to repurchase within that period. (¶ 16–18)
Result
Appeals allowed; High Court order set aside. The deed held to be a mortgage by conditional sale, sustaining the redemption decree of the courts below.