15 July 2024


Supreme Court

Suraj Narain Kapoor and Ors. Vs. Pradeep Kumar and Ors.




True nature of document has to be determined in facts of each case; precedents, in abundance, will not suffice alone

The Plaintiff's suit for redemption of mortgage, decreed by the trial Court and affirmed in first appeal, having been reversed by the High Court, the Plaintiff is in appeal. Appellants submits that, the High Court grievously erred in reversing the concurrent findings of two Courts that, Exhibit-A1 was a mortgage by conditional sale, and not a sale deed with an option to repurchase. The intention of the parties to create a mortgage by conditional sale only is apparent from the right to redemption being incorporated in the same document, fulfilling the statutory requirement under Section 58(C) of the Transfer of Property Act, 1882. Reservation of the right to redemption for five years only, was not relevant as the right would be co-extensive with the statutory period of 30 years.

The question whether a document is a mortgage by conditional sale, or a sale with an option to repurchase, is a vexed question to be determined in the facts of each case. In case of Bhoju Mandal v. Debnath Bhagat, it was observed that, there is a clear legal distinction between the two concepts, a mortgage by conditional sale and a sale with a condition of re-purchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor. The latter is an out and out sale whereby the owner transfers all his rights in the property to the purchaser reserving a personal right of re-purchase. The question to which category a document belongs presents a real difficulty which can only be solved by ascertaining the intention of the parties on a consideration of the contents of a document and other relevant circumstances. Decided cases have laid down many tests to ascertain the intentions of the parties but they are only illustrative and not exhaustive.

The true nature of the document therefore has to be determined in the facts of each case, dependent on the nature of the recitals in the document, intention of the parties, coupled with other attendant surrounding circumstances. There can be no hard and fast Rule for determining the nature of the document, devoid of these circumstances. Precedents, in abundance, will not suffice alone.

Reading of the original document reveals that, it is styled as a sale deed. The vendor specifically recites that, he had purchased the property for a sum of Rs. 1500/- by sale deed dated 22nd June, 1948, from its original owners. That he was the exclusive owner of the property, which was not encumbered in any manner and that he had absolute title and authority singularly, to deal with the same to the exclusion of his brothers, from whom he had separated long ago. He was selling the shop for a sum of Rs. 4000/- because he had purchased a motor vehicle, which he wanted to run on hire. On receipt of the consideration money, he was voluntarily transferring all right, title and interest in the property to the vendee and his legal heirs for all times to come. If the property was found to be encumbered in any manner, the vendee could approach the Court, for return of the sale amount, including against the immovable property of the vendor. If the amount was returned within a period of 5 years, either in instalments or in lump-sum, the purchaser would execute the sale deed in his favour.

The recitals reveal no reference to any loan taken or mortgage created with regard to any immovable property as security for such loan, much less to discharge any debt. It does not evince the creation of a debtor and creditor relationship. On the contrary, the recitals are specific that, the vendor was in need of money to run the vehicle purchased by him on hire, and was selling the shop to raise money for the purpose. The suit for redemption was also filed beyond the period of 5 years. Significantly, the first appellate Court observed that, the recitals indicated that it was a sale deed, but concluded that it was a mortgage by conditional sale, only because the right to redemption was incorporated in the same document, which was but only one of the factors amongst others, to determine the true nature of the document.

In the facts and circumstances of the present case, and there is no reason to interfere with the order impugned holding that, the document in question was a sale deed with an option to repurchase and not a mortgage by conditional sale. The appeal lacks merits and is dismissed.


Bhoju Mandal v. Debnath BhagatMANU/SC/0333/1962
: 1963 Supp (2) SCR 82

Tags : Document Nature Sale deed Option to repurchase

Share :