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specific performance of an agreement of re-conveyance of the suit land. is not maintainable =The District Court also held that Ex-18, the alleged agreement of re-conveyance did not mention that there was a loan transaction between the parties and that Ex-19, the sale deed was not to be acted upon. It did not mention the date and period within which the suit land was to be re-conveyed after payment of the loan amount. Therefore, the case that Ex-19 was a nominal sale deed cannot be accepted. = Ex-19 is a genuine sale deed. It clearly speaks of an out and out sale. We have stated that Ex-18 is not an agreement to re- convey the land on repayment of loan. The sale deed [Ex-19] is clearly worded leaving no scope of ambiguity. So far as Ex-18 is concerned, it is so worded as not to establish any link with Ex-19. It does not speak of any loan transaction at all. Though there is no ambiguity in Ex-19 and we are certain that the transaction in question is a genuine sale transaction, to lend support to our conclusion we may touch upon the surrounding circumstances. If Ex-18 was to be an agreement for re-conveyance, it would not have been titled as ‘Receipt’. It would have been signed by the original plaintiff and the defendant. It is pertinent to note that it is signed only by the defendant. It is executed on a simple paper. It does not state within what time the amount was to be repaid and the agreement of repurchase was to be executed. It is also important to note that in the cross-examination, original plaintiff has clearly admitted that Ex- 18 was executed before execution of sale deed [Ex-19]. Hence, the original plaintiff’s case that the defendant insisted that he would lend money to him only if he would execute nominal sale deed and, therefore, the nominal sale deed was executed and the loan was advanced, does not stand to reason. The District Court has rightly said that at the most it could be said that Ex-18 culminated into a genuine sale deed [Ex-19]. The original plaintiff’s case that the transaction of sale was followed by agreement for re-transfer is not substantiated. It is also hit by Section 58(c) of the Transfer of Property Act which this Court analyzed in Chunchun Jha and stated that if sale and agreement for re-purchase are embodied in separate deeds then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. Here we clearly have two separate documents. Similar view has been taken by this Court in Raj Kishore v. Prem Singh[3]. The High Court, therefore, clearly erred in holding that there was an agreement for re-conveyance and the original plaintiff was entitled to specific performance thereof.- In the result, the appeal is allowed. The impugned order dated 20/7/2004 is set aside. The judgment and order dated 12/3/1986 passed by the District Judge, Buldana in Regular Civil Appeal No.130 of 1983 is restored.

‘ IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1648 OF 2006 DASHRATH KACHRU KAKDE … APPELLANT Versus VIKRAM S/O. DHONDU AWHALE …RESPONDENT (DECEASED) THROUGH LRs. O R D E R (SMT.) RANJANA PRAKASH DESAI, J. 1. This appeal, by special leave, is filed by the original defendant. The challenge is to the judgment and order dated 20/07/2004 passed by the Nagpur Bench of the Bombay High Court in Second Appeal No.24 of 1987. 2. One Vikram Dhondu Awhale (‘original plaintiff’ – for convenience), represented by his heirs, filed Regular Civil Suit No.166/78 in the court of Second Joint Civil Judge, Junior Division, Mehkar against the appellant (‘the defendant’ – for convenience) for specific performance of an agreement of re-conveyance of the suit land. 3 The gist of the original plaintiff’s case needs to be stated. According to the original plaintiff, as he was badly in need of money, on 10/5/1976 he approached the defendant and requested him to advance a loan of Rs. 2,000/- to him. The defendant asked him to execute a nominal sale deed pertaining to the suit land in his favour by way of security for the loan. The defendant agreed to re-convey the suit land on repayment of loan. It was also agreed that the defendant would enjoy produce of crops grown on the suit land in lieu of interest. Thus, according to the original plaintiff, there was an oral agreement between the parties which was, in fact, a loan transaction. The original plaintiff was, therefore, constrained to execute a nominal sale deed dated 10/5/1976 by way of security for the loan of Rs. 2,000/- in favour of the defendant. According to the original plaintiff, the defendant gave a writing to him on the same day agreeing to re-convey the suit land to him upon repayment of the loan amount. He, thereafter, sent two notices to the defendant asking him to accept the money, re-convey the suit land and hand over possession thereof to the original plaintiff. Since the defendant failed to comply, the original plaintiff filed suit for specific performance of the agreement of re-conveyance and for mesne profits. The defendant denied the original plaintiff’s case. He contended that the transaction was an out and out sale transaction and not a money lending transaction. There was no agreement either oral or written between the parties admitting the nature of the transaction to be a loan transaction. The defendant contended that the document purporting to be an agreement to re-convey the suit land in favour of the original plaintiff on re-payment of loan amount is obtained by misrepresentation and is vitiated by fraud. 4. The original plaintiff examined himself. The original plaintiff produced document of re-conveyance [Ex-18] and sale deed [Ex-19]. He examined Sudhakar Gangaram Kakde the attesting witness of Ex-18 and Ex- 19, who claimed to be present when the alleged talk took place. The defendant examined himself and one Shivaji Dagdu Avale and Trimbak Kachru Kakde. The trial court held that the original plaintiff had proved that Ex-18, the document of re-conveyance, was executed by examining the scribe. According to the trial court by proving Ex-18, the original plaintiff had established that the sale deed dated 10/5/1976 [Ex-19] was a nominal sale deed and it was not to be acted upon. The trial court further held that oral evidence about the execution of nominal sale deed [Ex-19] was admissible under Section 92 of the Evidence Act. The trial court, in the circumstances, decreed the suit. 5. The defendant carried an appeal to the Court of District Judge, Buldana being Civil Appeal No.130/83. Upon perusal of Ex-18 and Ex-19 and the oral evidence, the District Court held that it was not permissible for the original plaintiff to seek relief of specific performance of the alleged agreement of re-conveyance when it was not embodied in Ex-19, the sale deed dated 10/5/1976. The District Court also held that Ex-18, the alleged agreement of re-conveyance did not mention that there was a loan transaction between the parties and that Ex-19, the sale deed was not to be acted upon. It did not mention the date and period within which the suit land was to be re-conveyed after payment of the loan amount. Therefore, the case that Ex-19 was a nominal sale deed cannot be accepted. The District Court, in the circumstances, allowed the appeal. 6. The original plaintiff carried second appeal to the High Court. The substantial question of law which was formulated by the High Court was as under: “Whether the transaction in question is covered by Section 58(c) of the Transfer of Property Act, 1882, being ‘a mortgage by conditional sale‘ and whether parties can be allowed to lead evidence to prove that the transaction was by way of security in view of Sections 91 and 92 of the Evidence Act.” The High Court held that the plaintiff had never raised the plea that there was a mortgage by conditional sale. According to the High Court, the District Court did not notice the real issue involved in the case. It overlooked the fact that the plaintiff’s case was that the sale deed was a nominal sale deed executed as a security for the loan transaction and that there was an agreement of re-conveyance of the suit land upon repayment of the loan. The High Court held that evidence can be adduced to prove the real nature of transaction. The High Court was of the view that the plaintiff was entitled to specific performance of the agreement of re-conveyance. In the circumstances, the High Court allowed the second appeal and restored the trial court’s decree. Hence, this appeal, by special leave, by the defendant. 7. We have heard learned counsel for the parties at length, carefully perused the evidence and Ex-18 and Ex-19. In our opinion, the High Court misdirected itself in reversing the District Court’s judgment for the reasons, we shall now state. 8. Since the original plaintiff’s case was that the transaction was a loan transaction; that the sale deed was a nominal sale deed and that there was an agreement of re-conveyance executed on the same day; it follows that his case was premised on the alleged existence of a relationship of creditor and debtor between him and the defendant. Obviously, according to him, there was no absolute transfer of all the rights in the suit property i.e. it was not a case of an out and out sale. The defendant, on the other hand, denied this case and contended that the sale deed was genuine. In such circumstances, it was obligatory on the court to find out what was the real nature of the transaction. Whether the plaintiff used the words “mortgage by conditional sale” or not, in the facts of this case reference to Section 58(c) of the Transfer of property Act, 1882 was inevitable. The High Court was, therefore, wrong in holding that the District Court’s approach was erroneous. 9. We must first turn to the plaint. The plaint is very cryptic, sans necessary averments in support of the original plaintiff’s case. It is extremely vague. It states that on 10/5/1976, as the original plaintiff was in need of Rs.2,000/-, he approached the defendant for a loan. The defendant asked him to execute a nominal sale deed of the suit land as a security for the loan. The defendant was to enjoy the crop grown on the suit land in lieu of interest. It is further averred that as per the oral agreement on 10/5/1976, nominal sale deed was executed. There is no clear averment that on the same day, an agreement of re-conveyance was executed. The plaint states that the defendant gave a writing on the same day agreeing to re-convey the land. There is, however, no averment that the repayment of loan was to be done on a particular date or within a specified period. Period or date of specific performance of the agreement of re-conveyance is not stated. In paragraph 7, it is stated that the original plaintiff does not rely upon any specific or particular document. In the same paragraph, it is stated that he relies on writing given by the defendant. There is no averment in the plaint that the original plaintiff was ready and willing to perform his part of the contract. The original plaintiff appears to be unsure about his case. 10. To examine the original plaintiff’s case that Ex-19, the sale deed, was a nominal sale deed executed as a security for loan and that there was an agreement to re-convey the land we must turn to both these documents. We must first go to Ex-19, the sale deed. A careful reading of this sale deed leads us to the irresistible conclusion that it is not a nominal sale deed but a genuine sale deed. The contents of the sale deed clearly establish that the transaction between the original plaintiff and the defendant was an out and out sale transaction. It does not say that any agreement of re-conveyance was executed between the parties in respect of the suit land. It is now necessary to go to Ex-18, the alleged agreement of re-conveyance. It is executed on a simple paper. It is titled as a receipt. It bears the same date as of sale deed [Ex-19] i.e. 10/5/1976. It is stated in this document that the defendant had purchased the suit property and that after the amount of Rs.2,000/- was repaid, the defendant would re- convey the suit land to the original plaintiff. It is not, however, stated in this document that there was any loan transaction between the parties. It is not stated that sale deed [Ex-19] was executed between the parties and that it was not to be acted upon. It is not stated that the defendant had agreed to enjoy crops grown on the suit land in lieu of interest. It is signed by the defendant and not by the original plaintiff. It is, therefore, impossible to come to a conclusion that it is an agreement executed by the defendant to re- convey the suit land to the original plaintiff if he repaid the loan. The original plaintiff’s case that the transaction evidenced by Ex-18 and Ex-19 is a nominal sale with a condition of repurchase is difficult to accept. We reject the evidence of the original plaintiff and his witness that there was any oral agreement about a loan transaction and re-conveyance of suit land on repayment of loan. This story is totally unsustainable. 11. The question whether a given transaction is a ‘mortgage by conditional sale’ or a sale outright with a condition of repurchase was considered by this Court in Chunchun Jha v. Ebadat Ali and another[1]. This Court held that the question whether a given transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase is a vexed one and must be decided on its own facts. In such cases the intention of the parties is the determining factor. The intention must be gathered in the first place from the document itself. If the words are express and clear effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. This court further observed that if, however, there is ambiguity in the language employed then it is permissible to look to the surrounding circumstances to determine what was intended. This Court quoted from Bhagwan Sahai v. Bhagwan Din[2] where it is observed by the Privy Council that the rule of law on this subject is one dictated by commonsense; that prima facie an absolute conveyance, containing nothing to show that the relation of debtor and creditor is to exist between the parties, does not cease to be an absolute conveyance and become a mortgage merely because the vendor stipulates that he shall have a right to repurchase. …….. In every such case the question is, what upon a fair construction, is the meaning of the instruments?” This court further observed that the converse also holds good and if, on the face of it, an instrument clearly purports to be a mortgage it cannot be turned into a sale by reference to a host of extraneous and irrelevant considerations. Difficulty only arises in the border line cases where there is ambiguity. This Court further observed that because of the welter of confusion caused by conflicting decisions of the courts, the legislature amended Section 58(c) of the Transfer of Property Act and now it is absolutely clear that if the sale and the agreement to repurchase are embodied in separate documents then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. 12. Before we proceed further it would be advantageous to reproduce Section 58(c) of the Transfer of Property Act so that the law laid down by this Court in Chunchun Jha could be better appreciated. “58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed” defined. – (a) xxx xxx xxx (b) xxx xxx xxx (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 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.]” 13. The gist of the conclusions drawn by this Court in Chunchun Jha which are relevant for the present case is that the nature of the document must be firstly determined by the language employed in it. If the language is clear, then there is no need to look into anything else. What is the nature of transaction must be decided on the facts of each case. In this, intention of the parties is the determining factor. In case of ambiguity in the language employed, surrounding circumstances could be looked into. If the sale and the agreement to repurchase are embodied in separate documents then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. 14. We have already adverted to Ex-18 and Ex-19. After analyzing the averments of these documents, we have noted our conclusion that Ex-19 is a genuine sale deed. It clearly speaks of an out and out sale. We have stated that Ex-18 is not an agreement to re- convey the land on repayment of loan. The sale deed [Ex-19] is clearly worded leaving no scope of ambiguity. So far as Ex-18 is concerned, it is so worded as not to establish any link with Ex-19. It does not speak of any loan transaction at all. Though there is no ambiguity in Ex-19 and we are certain that the transaction in question is a genuine sale transaction, to lend support to our conclusion we may touch upon the surrounding circumstances. If Ex-18 was to be an agreement for re-conveyance, it would not have been titled as ‘Receipt’. It would have been signed by the original plaintiff and the defendant. It is pertinent to note that it is signed only by the defendant. It is executed on a simple paper. It does not state within what time the amount was to be repaid and the agreement of repurchase was to be executed. It is also important to note that in the cross-examination, original plaintiff has clearly admitted that Ex- 18 was executed before execution of sale deed [Ex-19]. Hence, the original plaintiff’s case that the defendant insisted that he would lend money to him only if he would execute nominal sale deed and, therefore, the nominal sale deed was executed and the loan was advanced, does not stand to reason. The District Court has rightly said that at the most it could be said that Ex-18 culminated into a genuine sale deed [Ex-19]. The original plaintiff’s case that the transaction of sale was followed by agreement for re-transfer is not substantiated. It is also hit by Section 58(c) of the Transfer of Property Act which this Court analyzed in Chunchun Jha and stated that if sale and agreement for re-purchase are embodied in separate deeds then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not. Here we clearly have two separate documents. Similar view has been taken by this Court in Raj Kishore v. Prem Singh[3]. The High Court, therefore, clearly erred in holding that there was an agreement for re-conveyance and the original plaintiff was entitled to specific performance thereof. 15. In the result, the appeal is allowed. The impugned order dated 20/7/2004 is set aside. The judgment and order dated 12/3/1986 passed by the District Judge, Buldana in Regular Civil Appeal No.130 of 1983 is restored. ……………………………………………..J. (G.S. SINGHVI) ……………………………………………..J. (RANJANA PRAKASH DESAI) NEW DELHI MARCH 6, 2013. ITEM NO.104 COURT NO.3 SECTION IX S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CIVIL APPEAL NO(s). 1648 OF 2006 DASHRATH Appellant (s) VERSUS VIKRAM S/O DHONDU A. (D) TH. LRS. Respondent(s) Date: 06/03/2013 This Appeal was called on for hearing today. CORAM : HON’BLE MR. JUSTICE G.S. SINGHVI HON’BLE MRS. JUSTICE RANJANA PRAKASH DESAI For Appellant(s) Mr. Manish Pitale, Adv. Mr. Sunil Kumar, Adv. For Respondent(s) Mr. Nikhil Mehra, Adv. UPON hearing counsel the Court made the following O R D E R We have heard learned counsel for the parties and perused the record. The appeal is allowed in terms of the signed order. The impugned order dated 20/07/2004 is set aside. The judgment and order dated 12/3/1986 passed by the District Judge, Buldana in Regular Civil Appeal No.130 of 1983 is restored. |(Parveen Kr.Chawla) | |(Phoolan Wati Arora) | |Court Master | |Court Master | | | | | [signed order is placed on the file] ———————– [1] AIR 1954 SC 345 [2] 17 Ind. App. 98 [3] AIR 2011 SC 382

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