Summary
Reversing concurrent findings, the Supreme Court held that a registered deed describing the mortgagee as a 'conditional purchaser' and providing that the deed would be treated as a sale if the money was not repaid within three years was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882, not a simple mortgage. The mortgagor's permissive possession did not change its character, and her suit for redemption was dismissed.
Issues
- Whether the mortgage deed dated 17.10.1990 was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882 or a simple mortgage, and whether the plaintiff could redeem it.
- Whether the mortgagor's continued possession of the land showed that the transaction was not a mortgage by conditional sale.
- Whether the transaction was invalid under Section 165 of the Chhattisgarh Land Revenue Code, 1959.
Provisions considered
- Section 58(c) and proviso, Transfer of Property Act, 1882The Court identified three ingredients: an ostensible sale, a condition such as the sale becoming absolute on default of payment on a certain date, and the condition being embodied in the same document. It found all three in the deed's clauses 1, 6 and 7. (¶¶ 13, 14, 15, 16, 17, 18, 26)
- Section 165(2), Chhattisgarh Land Revenue Code, 1959The restriction on a Bhumiswami transferring agricultural land if under 10 acres of unencumbered un-irrigated land would remain was held not established, as the plaintiff produced no revenue records or proof of the land's agricultural character or of her remaining holding; in any case such a transaction would be only voidable and neither the State nor the plaintiff challenged it in time. (¶¶ 24, 25, 26)
Held
- Clause 1 of the deed called the mortgagee a 'conditional purchaser' and allowed her to use the land, and further provided that on failure to repay within three years the deed would be treated as a sale deed and the mortgagor's right to redeem would end; with the condition contained in the same deed, all ingredients of a mortgage by conditional sale under Section 58(c) were met. (¶¶ 15, 16, 17, 18)
- The courts below wrongly inferred a simple mortgage from the mortgagor's continued possession. Her possession was permissive, allowed by the mortgagee so that the land would be guarded, as DW1 deposed; it did not alter the nature of the transaction, which turns on the terms of the deed and the parties' intention. Allowing her both the possession and the loan money without performing her obligations would be unjust enrichment. (¶¶ 19, 20, 21)
- The plaintiff gave no credible evidence that she tendered the amount within three years, and she did not enter the witness box; her husband, deposing as power of attorney holder, could not speak to matters within her personal knowledge. (¶¶ 22, 23, 26)
- The condition converting the mortgage into an absolute sale on default was valid and enforceable, and the courts below erred in treating it as a clog on the equity of redemption while disregarding the express terms of the registered deed. (¶¶ 26, 27)
- Since the plaintiff's possession had continued throughout, the defendant was left free to pursue an appropriate remedy for possession in accordance with law. (¶ 28)
Result
Appeals allowed; the judgments of the High Court in First Appeal No. 28 of 2004 and Review Petition No. 222 of 2018 and the trial court's decree set aside and the suit dismissed; the trial court to refund the plaintiff's deposit with accrued interest; no order as to costs.