Sale With A Mere Condition Of Retransfer Is Not A Mortgage, Reiterates SC [Read Judgment]

The Supreme Court has reiterated that a sale with a mere condition of retransfer is not a mortgage.

In this case (Sopan vs. Syed Nabi), the sale deed dated 10th December, 1968 does not disclose that the transaction is one of mortgage or that of a conditional sale. However, another contemporaneous document was relied upon by the plaintiff to claim that the same indicates that the transaction is a mortgage and the relationship of debtor and the creditor is established by the said document.

The bench comprising Justice R. Banumathi and Justice AS Bopanna referring to proviso to Section 58(c) of the Transfer of Property Act and a recent judgment in Dharmaji Shankar Shinde & Ors. vs. Rajaram Sripad Joshi (D) Lrs., observed that, if the sale and agreement to repurchase are embodied in separate documents then the transactions cannot be a mortgage by conditional sale irrespective of whether the documents are the contemporaneously executed. In the said judgment, it was also held that even in the case of a single document the real character of the transaction is to be ascertained from the provisions of the deed viewed in the light of the surrounding circumstances and intention of the parties. The bench further observed:

"From a perusal of the proviso to Section 58(c) as emphasised, it indicates that no transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to effect the sale. Therefore, any recital relating to mortgage or the transaction being in the nature of a conditional sale should be an intrinsic part of the very sale deed which will be the subject matter."

The bench observed that even if the other agreement is taken note, the same cannot alter recitals in the sale deed to treat the same as a mortgage by conditional sale. At best the said agreement (Exh.24) can only be treated as an agreement whereby the defendant had agreed to reconvey the property subject to the repayment being made as provided thereunder, the court said.

In this case, the suit in question was filed seeking a judgment and decree for redemption of mortgage and recovery of the possession of the suit scheduled land. The court observed that the suit seeking redemption of mortgage was not sustainable and rather a suit seeking for the relief of specific performance ought to have been filed. 

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