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AMICUS AI
Citation Codes
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Case Number
Attorney(S)
  • — R.N Dhorde for A.V Savant.
  • — P.N Joshi for M.L Dudhat.
Judges
  • S.P Bharucha, J.
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • — R.N Dhorde for A.V Savant.
  • — P.N Joshi for M.L Dudhat.
Judges
  • S.P Bharucha, J.
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Smart Summary

Summary of the Opinion

Factual and Procedural Background

This is a second appeal from the judgment and order of the District Judge, Ahmednagar, sitting in appeal from the judgment and order of the Joint Civil Judge, Junior Division, Ahmednagar.

Key events in the litigation, as set out in the opinion, are:

  • 3 May 1950: The 10th respondent (original 1st plaintiff) executed a deed in favour of one Madhav in respect of the land in suit.
  • 18 November 1957: Madhav transferred the rights under the deed to the 5th respondent.
  • 1957: Sohanlal, holder of a decree against the first plaintiff, purchased the land in execution of the decree through court sale; the sale was confirmed on 13 June 1958.
  • 1966: The 1st plaintiff filed a suit for redemption, alleging the deed was a mortgage by way of conditional sale and that the mortgage amount had been repaid by rent; the 5th respondent was impleaded as a defendant in that redemption suit.
  • 1967: Sohanlal filed a suit for possession, making the parties to the redemption suit defendants to his suit. On 28 November 1967 the appellant purchased the land from the original 1st plaintiff and was impleaded as 2nd plaintiff in the redemption suit.
  • 4 November 1969: The redemption suit was dismissed at trial, the trial Court holding the deed to be a deed of sale with a condition of repurchase.
  • 28 November 1969: Sohanlal's suit was dismissed, the Court relying on the 4 November 1969 judgment in the redemption suit; Sohanlal did not proceed further.
  • An appeal against the dismissal of the redemption suit resulted in a remand. On remand the trial Court on 30 March 1972 again held the deed to be a deed of sale with a condition of repurchase and dismissed the redemption suit.
  • In the subsequent appeal it was held that the deed was a deed of mortgage by way of conditional sale but that the plaintiffs' title had been extinguished by the earlier sale in execution in favour of Sohanlal, and the plaintiffs were therefore not entitled to redeem.
  • The present second appeal is preferred by the 2nd plaintiff (the appellant before the Court in this opinion) against that dismissal.

Legal Issues Presented

  1. Whether the deed in question is a deed of mortgage by way of conditional sale or a deed of sale with a condition of repurchase.
  2. Whether the earlier finding in Sohanlal's suit (that the deed was a deed of sale with a condition of repurchase) operates as res judicata against the appellant.

Arguments of the Parties

5th Respondent's Arguments

  • The 5th respondent contended that the finding in Sohanlal's suit that the deed was a deed of sale with a condition of repurchase was binding on the appellant by reason of res judicata, because the 1st plaintiff and the 5th defendant in the redemption suit were defendants in Sohanlal's suit and the issue as to the character of the deed had been decided in that suit.
  • Mr. Joshi, counsel for the 5th respondent, argued that it was not open to the appellant to seek to redeem the mortgage (assuming the transaction to be a mortgage) because it had already been held in Sohanlal's suit that he had no equity of redemption.

Appellant's Arguments

  • The appellant (and counsel appearing for him — including Mr. Dhorde as recorded) argued that the deed should be treated as a mortgage by way of conditional sale, citing circumstances such as a recital that the amount received was for a daughter's marriage and family expenses and an assertion that the transfer was at an undervaluation (the latter being rejected by the trial Court).
  • The appellant also argued that, since the Court in first appeal had held the deed to be a deed of mortgage by way of conditional sale, the 5th respondent could not challenge that finding before the Court below because he had not filed cross-objections; this point was contested by the Court, which noted the settled principle that a respondent may support the decree on grounds decided against him without filing cross-objections.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
S.P.A. Annamalay Chetty v. B.A. Thornhill, AIR 1931 PC 263 (Privy Council) Held that a decree from which an appeal lay and had in fact been taken was not final between the parties for the purpose of res judicata; the finality of such a decree was qualified by the appeal actually taken. Applied to say that the judgment in the redemption suit relied upon by the Court in Sohanlal's suit had been effaced by the remand/appeal, and therefore the decision in Sohanlal's suit could not operate as res judicata against the appellant.
Bai Nathi v. Narsi Dullabh, ILR 44 Bom. 321 Supports the proposition that a finding is not final where there could be no appeal against it because the decree was in favour of the party against whom the finding was recorded; such a finding is not finally conclusive as res judicata. Relied upon to support the view that the finding in Sohanlal's suit was not final against the appellant because the finding was adverse to the appellant but Sohanlal's suit itself was dismissed, leaving the appellant with no opportunity to appeal.
Chunchun Jha v. Ebadat Ali, AIR 1954 SC 345 Holds that each question must be decided on its own facts and that the intention of the parties, as shown by the document, is the determining factor; an absolute conveyance containing a right of repurchase does not necessarily become a mortgage unless the document shows that relation of debtor and creditor was intended. Used to support the proposition that the deed must be construed upon its language and surrounding circumstances and that a recital of a right to repurchase does not automatically convert an absolute conveyance into a mortgage.
Bhaskar Waman Joshi v. Shrinarayan Rambilas Agaral, AIR 1960 SC 301 Explains that whether an ostensible sale with a condition of repurchase is a mortgage depends on the intention of the parties; the definition of a mortgage by conditional sale presupposes creation of a mortgagor-mortgagee relation and that the price is charged on the property, whereas a reconveyance obligation shows no such relation. Applied in construing the deed: the Court examined whether the deed created a debtor-creditor relationship or charged the price on the land, and concluded that it did not, supporting the conclusion that the deed was a sale with a condition of repurchase rather than a mortgage by conditional sale.

Court's Reasoning and Analysis

The Court proceeded in two linked strands of analysis: first addressing the claim of res judicata and rights to challenge prior findings, and second construing the deed to determine its legal character.

Res judicata and prior findings

  1. The Court rejected the contention that the finding in Sohanlal's suit that the deed was a sale with a condition of repurchase operated as res judicata against the appellant for three reasons:
    1. The judgment in Sohanlal's suit had expressly relied upon the earlier judgment of the trial Court in the redemption suit (dated 4 November 1969), but that judgment had been effaced by the fact that an appeal lay and was taken (remand ordered). Citing S.P.A. Annamalay Chetty v. B.A. Thornhill, the Court held that a decree from which an appeal lay and had been taken was not final for res judicata purposes.
    2. The conclusion in Sohanlal's suit about the character of the deed could not be said to be based upon the merits, since the Court had relied upon the earlier (effaced) judgment.
    3. The finding in Sohanlal's suit was adverse to the appellant (who was a defendant in that suit), but Sohanlal's suit itself was dismissed, so the appellant had no opportunity to appeal against that finding; relying on Bai Nathi v. Narsi Dullabh, the Court held that such a finding could not be finally conclusive against the appellant.
  2. The Court also dealt with an argument that the appellant could not be permitted to seek redemption because Sohanlal's suit had held he had no equity of redemption. The Court rejected this, observing that Sohanlal's suit was dismissed and Sohanlal did not pursue an appeal; it would be improper for a mortgagee or his assignee (the 5th respondent) to set up title in another (Sohanlal) to destroy the mortgagor's or his assignee's equity of redemption.
  3. The Court addressed the procedural point that the 5th respondent had not filed cross-objections to a finding in the first appeal. The Court applied the settled principle that a respondent to an appeal may support the decree on grounds decided against him without filing cross-objections, and therefore the 5th respondent was entitled to contend before the Court that the deed was a sale with a condition of repurchase.

Construction of the deed

  1. The Court identified the principal question as whether the deed was a mortgage by way of conditional sale or an outright sale with a condition of repurchase. The deed itself was not on record; the parties submitted an agreed translation, which the Court accepted and quoted.
  2. The Court applied authority from the Supreme Court (Chunchun Jha and Bhaskar Waman Joshi) that the character of such a transaction depends upon the intention of the parties as shown by the document and surrounding circumstances; distinguishing factors include whether the transfer creates a relationship of debtor and creditor and whether the price is charged on the property.
  3. The Court examined the text of the deed and the surrounding circumstances and noted the following relevant features admitted on the face of the deed or established in the record:
    • The deed did not create, expressly or by implication, a relationship of debtor and creditor.
    • The amount paid by the transferee was not made a charge on the land, and there was no provision as to interest.
    • Possession of the land was handed over to the transferee, who was made responsible for municipal taxes and was to enjoy the property.
    • A five-year period was stipulated within which the transferor might repurchase the property by making payment; if payment was not made within that period the deed would be treated as a permanent sale and the transferee would retain ownership forever without claim by the transferor or his successors.
  4. The Court considered the appellant's contentions that the recital about money received for a daughter's marriage and an assertion of undervaluation indicated a mortgage by way of conditional sale. The Court found the recital about marriage and family expenses not indicative either way (a man in need of money might either sell or mortgage), and noted the trial Court had rightly rejected the undervaluation contention, which was supported only by the appellant's bare assertion.
  5. On balance, interpreting the deed in the light of its language and the surrounding circumstances and applying the stated authorities, the Court concluded that the deed is a deed of sale with a condition of repurchase.

Holding and Implications

Appeal dismissed.

Implications and direct consequences as stated in the opinion:

  • The Court held that the deed is a deed of sale with a condition of repurchase, not a mortgage by way of conditional sale.
  • Accordingly, the appellant's second appeal fails and is dismissed.
  • Having regard to the protracted litigation recited in the opinion, the Court ordered that the parties shall bear and pay their own costs.

The opinion does not assert the setting of any new legal precedent beyond its application of existing authorities; it confines its holding to the facts and deed before the Court and the direct effect on the parties.

Order recorded in the opinion: Appeal dismissed.

Show full summary ...

    Nana Tukaram Jaikar v. Sonabai Madhav Saindate And Others

    1. This is a second appeal directed against the judgment and order of the District Judge, Ahmednagar, sitting in appeal on the judgment and order of the Joint Civil Judge, Junior Division, Ahmednagar.

    2. On 3rd May, 1950 the 10th respondent (the original 1st plaintiff) executed a deed in favour of one Madhav in respect of the land in suit. On 18th November, 1957 Madhav transferred the rights conferred upon him by the deed in favour of the 5th respondent. In 1957 one Sohanlal, the holder of a decree against the first plaintiff, purchased the land in suit in execution of the decree through a Court sale. On 13th June, 1958 the sale was confirmed. In 1966 the 1st plaintiff filed a suit for redemption alleging that the deed was a mortgage by way of conditional sale and that the mortgage amount had been repaid by virtue of the rent collected. The 5th respondent was impleaded as a defendant (the 5th defendant) in the redemption suit. He pleaded that the deed was a deed of sale with a condition of repurchase. In 1967 Sohanlal filed a suit for possession of the land making the 1st plaintiff and 5th defendant in the redemption suit defendants to his suit. On 28th November, 1967 the appellant before me purchased the land from the original 1st plaintiff. He was thereafter impleaded as the 2nd plaintiff in the redemption suit. On 4th November, 1969 the redemption suit was dismissed, it being held that the deed was a deed of sale with a condition of repurchase. On 28th November, 1969 Sohanlal's suit was dismissed, reliance being placed upon the judgment dated 4th November, 1969 in the redemption suit. Sohanlal did not proceed further. Against the dismissal of the redemption suit an appeal was filed. In appeal a remand was ordered. On remand the trial Court held on 30th March, 1972 that the deed was a deed of sale with a condition of repurchase and that the sale in execution in favour of Sohanlal conferred upon him no title to the land. The trial Court, therefore, dismissed the redemption suit. The plaintiffs preferred an appeal. In the appeal it was held that the deed was a deed of mortgage by way of conditional sale but that the plaintiffs' title to the property had been extinguished by virtue of the sale in execution in favour of Sohanlal and the plaintiffs were, therefore, not entitled to redeem. Against the dismissal of the appeal this second appeal is preferred by the 2nd plaintiff.

    3. It was contended on behalf of the only contesting respondent, the 5th respondent, that the finding in Sohanlal's suit that the deed was a deed of sale with a condition of repurchase was binding upon the appellant by reason of res judicata. The 1st plaintiff in the redemption suit (from whom the appellant before me claims title) and the 5th defendant in the redemption suit (the 5th respondent before me) were defendants in Sohanlal's suit. The point as to whether the deed was a deed of mortgage by way of conditional sale or a deed of sale with a condition to repurchase was an issue that was decided in that suit. There are, however, three reasons why the decision in Sohanlal's suit does not operate as res judicata against the appellant.

    4. First, it is apparent from a reading of the judgment in Sohanlal's suit that the Court relied upon the judgment in the redemption suit of the trial Court of 4th November, 1969 to hold that the deed was a deed of sale with a condition to repurchase. That judgment in the redemption suit was effaced when the appeal Court ordered a remand. It cannot then be said that the decision in Sohanlal's case operates as res judicata against the appellant. Reference may be made in this connection to the judgment of the Privy Council in S.P.A Annamalay Chetty v. B.A Thornhill . AIR 1931 PC 263.. The Privy Council held that no decree from which an appeal lay and had in fact been taken was final between the parties so as to form res judicata. Where an appeal lay and was taken the finality of the decree was qualified by the appeal and the decree was not final in the sense that it formed res judicata between the same parties.

    5. Secondly, the conclusion about the character of the deed in Sohanlal's suit cannot be said to be based upon merits since the Court relied upon the conclusion arrived at on 4th November, 1969 in the redemption suit.

    6. Thirdly, it will be noted that the finding in Sohanlal's suit that the deed was a deed of sale with a condition of repurchase was a finding adverse to the appellant, who was a defendant in that suit, but Sohanlal's suit was dismissed. The appellant had, therefore, no opportunity to appeal against the finding. The finding in Sohanlal's suit cannot then be said to be finally decided against the appellant and cannot operate as res judicata against him. In that behalf a decision of this Court in Bai Nathi v. Narsi Dullabh . ILR 44 Bom. 321., may be referred to. The Court said, “We think that the finding of the Court in the previous suit was not final, inasmuch as………there could be no appeal against it, because the decree was in favour of the party against whom the finding was recorded”.

    7. It was contended by Mr. Joshi, learned counsel for the 5th respondent, that it was not open to the appellant to seek to redeem the mortgage, assuming the transaction to be such, because it had been held in Sohanlal's suit that he had no equity of redemption. This is but another way of putting the same argument. It can be answered slightly differently. Sohanlal sought to establish his title to the land and obtain possession of it. His suit was dismissed. He went no further. It does not lie in the mouth of a mortgagee or his assignee (the 5th respondent) to set up title in another (Sohanlal) to destroy the mortgagor's or his assign's (the appellant's) equity of redemption. In that sense, once a mortgage always a mortgage. The 5th respondent obtained the land from Madhav, who obtained it from the 1st plaintiff under the deed. The 5th respondent is still in possession of it. If the deed is a deed of mortgage by way of conditional sale it is, in these circumstances, not open to the 5th respondent to plead that no equity of redemption exists.

    8. It was urged on behalf of the appellant that, since the Court in first appeal had held the deed to be a deed of mortgage by way of conditional sale, it was not open to the 5th respondent to challenge that finding before me because he had not filed cross-objections. It is well settled that a respondent to an appeal may without filing cross-objections support the decree on grounds decided against him by the lower Court. It is, therefore, open to the 5th respondent to plead here that the deed is a deed of sale with a condition of repurchase and not a deed of mortgage by way of conditional sale.

    9. The principal question, then, to be decided in this second appeal is whether the deed is a deed of mortgage by way of conditional sale or a sale with a condition of repurchase. The deed was not on record. Counsel have submitted an agreed translation of it upon which, by consent, I place reliance. The deed, as translated, reads thus:

    “Conditional sale-deed of house in Nagpur city for Rs. 2,000 dated 3rd May, 1980.

    M.B Saidare … Executor K.M Kothar … Executant

    Received Rs. 375 before eight days Rs. 1625. I will receive Rs. 1625 (Sixteen hundred twenty five only) before the Sub-Registrar, A'nagar.

    Total Rs. 2000 Received Rupees Two thousand for the marriage of daughter and family expenses.

    In exchange thereof, the house which was inherited by me as my ancestral property as my share which is without any incumbrance description.

    As per the said above description the house and the land on which it is constructed and the things appurtenant thereto is sold to you conditionally for five years. The same has been given completely in your possession. Hence till the stipulated limit you should pay the municipal tax and enjoy the property, within that period I will repurchase the property after making payment. If the amount is not paid within stipulated period this deed will be treated as permanent sale-deed. Thereafter you should enjoy the property forever so that myself and my successors will not claim any ownership”.

    10. For construing the deed reliance was placed upon the judgments of the Supreme Court in Chunchun Jha v. Ebadat Ali . AIR 1954 SC 345. and Bhaskar Waman Joshi v. Shrinarayan Rambilas Agaral . AIR 1960 SC 301.. In the former judgment it was held that each such question had to be decided upon its own facts and that the intention of the parties as shown by the document was the determining factor. Prima facie, an absolute conveyance, containing nothing to show that the relation of debtor and creditor was to exist between the parties, did not cease to be an absolute convtyance and become a mortgage merely because the vendor stipu-lated that he had a right to repurchase. If the sale and the agreement to repurchase were embodied in separate documents then the transaction could not be a mortgage, whether the documents were contemporaneously executed or not. But the converse did not hold good. If the condition of repurchase was embodied in the document that effected or purported to effect the sale then it was a matter for construction which was meant. In the later judgment the Supreme Court said that the question whether by the incorporation of a condition of sale a transaction ostensibly of sale could be regarded as a mortgage was one of the intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The definition of a mortgage by conditional sale postulated the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there was no relation of debtor and creditor nor was the price charged upon the property conveyed, but the sale was subject to an obligation to retransfer the property within the period specified. What distinguished the two transactions was the relationship of debtor and creditor, the transfer being security for the debt.

    11. In the instant case the deed does not create, expressly or by implication, the relationship of debtor and creditor, nor is the amount paid by the transferee to the transferor made a charge on the land. There is no provision in the deed in regard to interest. Possession of the land is handed over to the transferee. Municipal taxes are made payable by the transferee. A period is stipulated, viz., five years, within which the transferor may purchase the land after making payment of the amount for which it was originally transferred. The statement in the deed that if the amount was not paid within the stipulated period the deed was to be treated as a permanent sale deed and the transferee could thereafter enjoy the land forever without the transferor and his successors claiming any ownership emphasises that the condition of repurchase was to operate only within the stipulated period and no further. These, as I see it, are indications of a sale with a condition of repurchase. Mr. Dhorde placed reliance upon the recital in the deed that the amount bad been received by the transferor for the marriage of his daughter and family expenses. He submitted that this was indicative that the transaction was a transaction of mortgage by way of conditional sale. This recital is not indicative either way. A man may, when he is in need of moneys, sell his property or he may mortgage it. Mr. Dhorde also submitted that it was the appellant's case that the property had been transferred at an under — valuation, which was indicative of a mortgage, but the trial Court rejected that contention. It had done so quite rightly since it was sought to be established by nothing more than the appellant's bare word.

    12. In the result, I am inclined to take the view, having regard to the text of the deed interpreted in the light of surrounding circumstances, that it is a deed of sale with a condition of repurchase.

    13. In that view of the matter the appeal must fail and is dismissed. Having regard to the tortuous litigation to which I have earlier made reference, the fair order is that the parties shall bear and pay their own costs.

    Appeal dismissed.
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    Comments

    Nana Tukaram Jaikar v. Sonabai Madhav Saindate And Others
    (Feb 15, 1982)