JUDGMENT
D.G. Karnik, J.
1. Heard the learned Counsel for the parties.
2. This Second Appeal is directed against the Judgment and Order dated 30th January, 1989, passed by the learned IInd Additional District Judge, Jalgaon allowing the appeal filed by the respondents, bearing Civil Appeal No. 344/1983.
3. The property, bearing Gat No. 211/A (old Survey No. 98/1), admeasuring 2 H 30 Rs of village Rohini, Taluka Chalisgaon, Dist. Jalgaon (hereinafter referred to as “the suit property”), originally belonged to one Tatyasaheb Parbatrao Deshmukh. By a document dated February 16, 1972, styled as a “conditional Sale-Deed”, (Exh-20), he transferred the suit property to Second Karbhari Tanha Bondare for a sum of Rs. 3500/-. Present respondents are the heirs of the purchase Karbhari Tanha Bondare. The said conditional sale-deed contains a condition that in the event the vendor returned the sum of Rs. 3500/-within a period of three years, the purchaser would reconvey the suit land. Subsequently, by another registered sale-deed, dated January 1, 1980, the original owner Tatyasaheb Parbatrao Deshmukh sold and conveyed the suit property to Vasantrao Vinayakrao Deshmukh, the appellant herein. The said sale-deed dated January 1, 1980 recites that the suit land has been transferred by way of a conditional sale to Karbhari Tanha Bondare for a sum of Rs. 3500/- and on his death was in possession of his heirs, and therefore, the purchaser Vasantrao should repay the mortgage loan of Rs. 3500/- to the heirs of Karbhari Bondare and get it reconveyed in his own favour. After purchase of the suit land by a sale-deed, dated January 1, 1980, the appellant issued a notice to the respondents i.e. the heirs of Karbhari Bondare on January 7, 1980 for redemption of mortgage and calling upon them to reconvey the suit property to him. By a letter dated January 24, 1980, the respondents admitted that Karbhari Bondare had purchased the land under a conditional sale-deed. They, however, denied that it was a deed of mortgage. They further contended that as the amount of Rs. 3500/- was not returned within a period of three years, the sale had become final and Karbhari had become an absolute owner of the suit land. They, therefore, declined to execute a deed of reconveyance. The appellant, therefore, filed a Suit bearing Civil Suit No. 40/1980 in the Court of Civil Judge, Junior Division, Chalisgaon against the respondents for redemption of mortgage and reconveyance of the suit land in his favour. The respondents contested the suit by filing a written statement. They reiterated that the sale-deed, dated February 16, 1972 (Exh-20), styled as “conditional sale-deed” was not a deed of mortgage, but was a sale-deed with a condition of re-purchase within a period of three years. Since the vendor failed to get the property reconveyed within three years, the sale had become absolute, and the vendor and the present appellant who claimed through the vendor were not entitled for a reconveyance.
4. After considering the evidence adduced before it, the trial Court held that the document, dated February 16, 1972 (Exh-20) was not an out-and-out sale, but was in the nature of mortgage by a conditional sale. It further held that the appellant had purchased the right to redeem the mortgage (i.e. equity of redemption) by a sale-deed dated 1st January, 1980 and was entitled for redemption of the mortgage. The trial Court, therefore, decreed the Suit of the appellant and passed an order for redemption of the mortgage in favour of the appellant. Aggrieved by the Judgment and Decree, the respondents filed an appeal, bearing Civil Appeal No. 344/1983 in the District Court, Jalgaon. The lower Appellate Court held that the document, dated February 16, 1972 was not in the nature of mortgage. In view of this, the lower Appellate Court allowed the appeal and dismissed the Suit filed by the appellant. That judgment and Order is impugned in this second appeal.
5. The substantial question of law that arises for consideration in this second appeal is whether the document dated 16-2-1972 styled as “Conditional Sale-Deed”, executed by Tatyasaheb Parbatrao Deshmukh in favour of Karbhari Tanha Bondare, is a mortgage by conditional sale, or it is an out-and-out sale with a condition of re-purchase?
6. The original sale-deed dated February 16, 1972 is in possession of the respondents, who have not produced the original on record. The appellant, therefore, produced its certified copy which was admitted in evidence and marked as Exhibit-20. The learned counsel for the parties do not dispute before me the correctness of the admission in evidence of the said certified copy. The said document is titled as “Conditional Sale-Deed”. Tatyasaheb Parbatrao Deshmukh is shown as the Vendor and Karbhari Tanha Bondare is shown as the purchaser. The document recites that the suit property was sold by the vendor to the purchaser by way of a conditional sale, and that in the event the vendor returned to the purchaser the sum of Rs. 3500/- within a period of three years, the purchaser would execute a deed of reconveyance in favour of the vendor. The condition of reconveyance is contained in the document of sale itself. Relying upon the decision of the Supreme Court in P.L. Bapuswami v. N. Pattay Gounder, reported in AIR 1966 SC 902, the learned Counsel for the respondents submits that the mere fact that the condition of reconveyance is contained in the deed of conveyance would not necessarily mean that the transaction of ostensible sale must be regarded as a transaction of mortgage. In order to consider as to whether the document is a document of “mortgage by conditional sale”, or is a “sale with a condition of repurchase”, the distinction between two transactions must be borne in mind. In the former case, there is a relationship of debtor and creditor and the transfer is by way of a security for repayment of the debt, whereas in the latter case, there is a condition of re-conveyance in the event the amount equivalent to the consideration is paid by the vendor to the purchaser. If the condition of re-purchase is contained in a separate deed, the original sale-deed can never be regarded as mortgage in view of the amended provisions of Section 58(c) of the Transfer of Property Act, 1882, but the mere fact that the condition of re-purchase is incorporated in the deed of transfer itself does not mean that the deed of transfer is not an out-and-out sale, but is a mortgage by conditional sale. The learned Counsel further submits that the intention of the parties must be ascertained when one is to construe whether the document is a “mortgage by conditional sale’, or whether it is an “out-and-out sale with an agreement of re-conveyance”. The intention of the parties must be ascertained from the conditions incorporated in the document itself and if there is ambiguity in the language of the document, the intention can be gathered from the surrounding circumstances.
7. It is true that when the condition of re-purchase is not contained in the document of transfer itself, but is contained in a separate document, the document of transfer cannot be regarded as a “mortgage by a conditional sale”, in view of the amended provisions of Section 58(c) of the Transfer of Property Act. Where a condition is contained in a separate document, the deed of transfer would be regarded as an “out-and-out sale” and the condition contained in a separate document would only be regarded as a separate agreement of reconveyance. In that event, the conditions for reconveyance including condition of time would be required to be strictly complied. In case of agreement for sale of immovable property, time is generally not an essence of contract. However, an agreement to reconvey is essentially entered by the purchaser with the vendor in the nature of a concession, wherein time would ordinarily be regarded as an essence of the contract. In that event, original vendor would be required to strictly comply with the conditions including the condition of time, contained in the agreement of reconveyance.
8. Where the owner of a property transfers the property to the purchaser and a document of transfer itself contains a condition that the transferee would reconvey the property to the transferor in the event of transferor re-pays to the purchaser the amount of consideration, such a document may amount to a form of mortgage – “mortgage by conditional sale”. As laid down by the Supreme Court in the case of P.L. Bapuswami v. N. Pattay (supra), that the mere fact that condition of reconveyance is contained in the deed of transfer, by itself would not mean that the document is necessarily a mortgage by conditional sale. It would depend on the intention of the parties as to whether they intended it to be “mortgage by a conditional sale”, or an “out-and-out sale with a condition of repurchase”. The intention of the parties must primarily be gathered from the contents of the document itself, and if there is any ambiguity, the surrounding circumstances may be taken into consideration. It would, therefore, be necessary to refer to the contents of the document of transfer, dated February 16, 1972 (Exh-20). As stated earlier, the document bears the title “Conditional Sale”. In the body of the deed, it is stated that transferor had transferred the property by way of a conditional sale. Thereafter, the document states that if the money is refunded back within a period of three years, the transferee would retransfer the property to the transferor. The plain reading of the document unmistakenly shows that it was a document of mortgage by conditional sale and not an out-and-out sale, as contended by the learned Counsel for the respondents.
If at all there is any ambiguity in the document of transfer, and the surrounding circumstances are required to be taken into consideration, I would proceed to examine them presently. On 28-12-1974, Karbhari Tanha Bondare issued a notice (Exh-23) to Tatyasaheb Parbatrao Deshmukh. In paragraph 1 of the said notice, Karbhari states that the suit property has been purchased by him for a sum of Rs. 3500/- on 16-2-1972 by way of a conditional sale. He then states that he was ready and willing to act as per the deed of conditional sale and if the vendor Tatyasaheb paid to him Rs. 3500/- within a period of three years, he was willing to execute the deed of re-conveyance. The notice further states that if the money was not re-paid within a period of three years, the sale would become absolute. This notice is a clear indication that the transferee himself regarded the document to be a conditional sale and not an out-and-out sale with an agreement of re-conveyance. So far as the transferor is concerned, he also regarded the document (Exh-20) to be a mortgage by conditional sale. He sold the suit property to the present appellant under a sale-deed dated January 1, 1980. Perusal of the sale-deed (Exh-21) shows that Tatyasaheb Deshmukh, the original owner, by that deed transferred his right of redemption commonly called as equity of redemption to the present appellant. The document specifically states that the vendor Tatyasaheb had executed a conditional sale-deed in favour of Karbhari Tanha Bondare and that the appellant/purchaser should get the property reconvened in his favour by redemption of mortgage. Thus, even the original vendor treated the document (Exh-20) to be a deed of mortgage. The surrounding circumstances also, therefore, indicate that the parties regarded the document (Exh-20) to be a “mortgage by conditional sale”.
9. In view of above findings, the lower Appellate Court erred in coming to the conclusion that the deed of transfer, dated February 16, 1972 (Exh-20) was not a “mortgage by conditional sale”, but was an “out-and-out sale”. Under Article 61 of the Limitation Act, the period for redemption of mortgage is thirty years. The mortgage by conditional sale is dated February 16, 1972. The Suit for redemption has been filed in the year 1980, which is within the prescribed period of limitation of thirty years. Hence, the appellant is entitled to a decree for redemption of mortgage. The trial Court was right in passing a decree of redemption of mortgage and the Appellate Court erred in reversing the said decree.
10. For these reasons, this Second Appeal is allowed and the impugned Judgment and Order, dated 30-1-1989, passed by the learned IInd Additional District Judge, Jalgaon in Civil Appeal No. 344/1983, is hereby quashed and set aside. The Judgment and Decree, dated 28-1-1983 passed by the learned Civil Judge, Junior Division in Civil Suit No. 40/1980, is restored.
11. At the request of the learned Counsel for the respondent, the operation of this Judgment and Order is stayed for a period of two months, on the condition that the respondent shall not create any third party interests in the suit property and shall maintain the staus quo.