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2006 (2) TMI 669 - SUPREME COURT

2006 (2) TMI 669 - SUPREME COURT - 2006 AIR 2965, 2006 (2) SCR 566, 2006 (4) SCC 432, 2006 (3) JT 221, 2006 (2) SCALE 699 - Civil Appeal No. 1276 of 2006 - Dated:- 24-2-2006 - S.B. Sinha J. JUDGMENT: Leave granted. This appeal is directed against the Judgment and Order dated 11th September, 1988 passed by a learned Single Judge of the Jharkhand High Court, Ranchi in Appeal from Appellate Decree No.176 of 1988 whereby and whereunder a second appeal preferred by the respondents herein from a Judgm .....

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a further declaration that the said transaction stands redeemed under Section 12 of the Bihar Money Lenders Act, 1974. The respondents herein further sought for a decree directing the appellant to deliver vacant possession of the suit land to them, failing which they might be put back in possession thereof through the process of Court. The respondents averred that they were occupancy raiyats of the suit land. The appellant herein allegedly gave an advance of ₹ 3,000/- on their executing a .....

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tatement, on the other hand, contended that in fact a deed of sale was executed on 24.6.1977 by the respondents in his favour. It is, however, accepted that the appellant executed a deed of an agreement for sale on the same day. It is furthermore not in dispute that the respondents herein filed an application in the Court of Munsif, Daltonganj being Miscellaneous Case No.14 of 1978 purporting to be under Section 83 of the Transfer of Property Act seeking its permission to deposit an amount of &# .....

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plaintiffs got cause of action for the suit? (iii) Is the sale deed dated 24.6.1977 real transaction of usufructuary mortgage deed in view of the agreement of the same day executed by the defendant and, if so, are the plaintiffs entitled to a decree as prayed for? (iv) To what relief or reliefs, if any, the plaintiffs are entitled?" The said suit was dismissed holding that the deed of sale dated 24.6.1977 coupled with the said agreement of reconveyance of the same date did not constitute a .....

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of law framed by the High Court is as under : "Whether in view of the admission made by respondent no.2 in Ext.2 to the effect that the parties understood the document to be a deed of Baibulbafa, learned court committed error of law in construing Ext.A without taking into consideration the admissions made by the parties to the aforementioned effect, in view of the decision reported in AIR 1988 SC 1074." The High Court in its judgment came to the conclusion that the recital of both the .....

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appellant raised a short question in support of this appeal. It was contended that having regard to the provisions of Section 58(C) of the Transfer of Property Act, the High Court committed a manifest error in holding the transaction to be one of mortgage as the said plea could not have been raised having regard to the provisions of Sections 91 and 92 of the Indian Evidence Act. It was further contended that the order dated 22.3.1979 passed by the Civil Court in Miscellaneous Case No.14 of 1978 .....

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rent findings of the Trial Court as also the First Appellate Court. Mr. Vijay Hansaria, learned Senior Counsel appearing on behalf of the respondents, on the other hand, supported the judgment of the High Court. It was submitted that the order dated 22.3.1979 would operate as res judicata in view of the fact that the issue as to whether the said transaction evidenced by the deed dated 24.6.1977 constituted a mortgage or a sale, had been determined thereby. It is not in dispute that the deed in q .....

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did not have any source of income to repay the debts and no means of liquidating the debts except to sell out the said land. It was categorically stated: "Therefore, vendors on their own wishes and in good mental capacity sold the property/land mentioned in column 5 aforesaid for a consideration of ₹ 3000/- to the aforesaid vendee Sh. Vishwanath Prasad Singh and accordingly transferred all rights pertaining to this land to Sh. Vishwanath Singh. From today neither Vendors nor their suc .....

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39; agreed that the 'vendor' or his successors or heirs whenever would pay the consideration amount of ₹ 3,000/- within 23 months from that date, i.e., upto the month of June, 1978, then he would execute the deed of sale pertaining to the said property. The learned Trial Court as also the learned First Appellate Court arrived at a concurrent finding that the said transaction did not constitute a mortgage but thereby the respondents executed a deed of sale in favour of the appellant .....

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einbefore that by reason of the said deed of sale, the right, title and interest of the respondents herein was conveyed absolutely in favour of the appellant. The sale deed does not recite any other transaction of advance of any sum by the appellant to the respondents was entered into by and between the parties. In fact, the recitals made in the sale deed categorically show that the respondents expressed their intention to convey the property to the appellant herein as they had incurred debts by .....

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a valid sale, a fasid sale or a mortgage. Hence, it was held that "the Court is consequently, free to choose any of the opinions (of jurists) which might be conformable to the equities of the case and may carry out the real intention of the parties." It was further held that "in this type of transaction, the contract between the parties is to the effect that the transferee sells to the transferee the property in question for either within a fixed period or at any undefined time, .....

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fa and as per the said Sarait, vendor of this deed agrees that the vendee of this deed or his successors or heirs whenever will pay the consideration amount of this deed amount to ₹ 3000/- (three thousand) within 23 months from today i.e. upto the month of June, 1978 after harvesting of the crops i.e. Paddy or Ravi, then I the vendor or my legal heirs or my successors after receiving the said consideration amount of ₹ 3000/- will execute the sale deed pertaining to the property menti .....

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s also executed for a fixed period. The other terms and conditions of the said agreement (Ekrarnama) also clearly go to show that the parties understood the same to be a deed of reconveyance and not mortgage or a conditional sale. The terminology 'Vaibulwafa' used in the agreement does not carry any meaning. It could be either 'Bai-ul-wafa' or 'Bai-bil-wafa'. It will bear repetition to state that with a view to ascertain the nature of a transaction the document has to be .....

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n a case where a transaction in question was said to be a sham transaction opined that oral evidence was not admissible when a party relied upon the said document. In Roop Kumar v. Mohan Thedani [(2003) 6 SCC 595] the Court laid down the parameters of best evidence rule in the following terms: "Section 91 relates to evidence of terms of contract, grants and other disposition of properties reduced to form of document. This section merely forbids proving the contents of a writing otherwise th .....

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's Evidence, 7th Edn., p. 546; Wigmore's Evidence, p. 2406.) It has been best described by Wigmore stating that the rule is in no sense a rule of evidence but a rule of substantive law. It does not exclude certain data because they are for one or another reason untrustworthy or undesirable means of evidencing some fact to be proved. It does not concern a probative mental process the process of believing one fact on the faith of another. What the rule does is to declare that certain kinds .....

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ot; of it; otherwise, any rule of law whatever might be reduced to a rule of evidence. It would become the legitimate progeny of the law of evidence. For the purpose of specific varieties of jural effects sale, contract etc. there are specific requirements varying according to the subject. On the contrary there are also certain fundamental elements common to all and capable of being generalised. Every jural act may have the following four elements: (a) the enaction or creation of the act; (b) it .....

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age-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 .....

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the stipulated time. In Pandit Chunchun Jha v. Sheikh Ebadat Ali & Anr [(1955) 1 SCR 174] this Court clearly held: "We think that is a fruitless task because two documents are seldom expressed in identical terms and when it is necessary to consider the attendant circumstances the imponderable variables which that brings in its train make it impossible to compare one case with another. Each must be decided on its own facts Yet again in Mushir Mohammed Khan (D) Lrs. v. Sajeda Bano (Smt.) .....

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deemed to be a mortgage unless the condition for reconveyance is contained in the document which purports to effect the sale." Referring to Chunchun Jha (supra) it was held: "14-Applying the principles laid down above, the two documents read together would not constitute a "mortgage" as the condition of repurchase is not contained in the same documents by which the property was sold. The proviso to clause (c) of Section 58 would operate in the instant case also and the trans .....

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orrowing arrangement. There does not exist any debt and no right to redeem is reserved thereby. An agreement to sell confers merely a personal right which can be enforced strictly according to the terms of the deed and at the time agreed upon. Proviso appended to Section 58(c), however, states that if the condition for retransfer is not embodied in the document which effects or purports to effect a sale, the transaction will not be regarded as a mortgage. (See Pandit Chunchun Jha v. Sk. Ebadat A .....

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. The vendor was allowed to occupy the property as a tenant on payment of ₹ 80/- per month. No order of mutation was passed in his favour. It was held: "6. In the present case having regard to the facts and circumstances highlighted in the course of the discussion pertaining to the question as to whether or not the transaction was a transaction of mortgage having regard to the real intention of the parties it would be difficult to hold that the agreement to sell executed by the defend .....

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n the agreement to sell, no reference has been made to the transaction of sale though it has been executed contemporaneously. The defendant who has permitted the plaintiff to continue in possession on payment of rent equivalent to about 13= per cent interest and was evidently aware of all the dimensions of the matter would not have granted any concession or executed the agreement by way of a concession. The agreement was executed evidently because the plaintiff would not have executed the sale d .....

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ssion of the land, his name was also mutated. In Ramlal and Another v. Phagua and Others [(2006) 1 SCC 168], this Court having regard to the peculiar fact situation obtaining therein opined: "In our opinion, agreement to reconvey the property will not ipso facto lead to the conclusion that the sale is nominal and in view of the stand of Defendant 8, as also of the fact that the property worth ₹ 700 has been purportedly sold for ₹ 400, we are of the considered opinion that the sa .....

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re other circumstances which led the court to arrive at the said conclusion. The said decision, therefore, cannot have any application in the instant case. The question which now arises for consideration is as to whether the aforementioned order dated 22.3.1979 passed in Misc. Case No. 14/78 would operate as res judicata. Section 83 of the Transfer of Property Act reads as under: "Power to deposit in Court money due on mortgage.- At any time after the principal money payable in respect of a .....

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d in manner prescribed by law for the verification of plaints) stating the amount then due on the mortgage, and his willingness to accept the money so deposited in full discharge of such amount, and on depositing in the same court the mortgage-deed and all documents in his possession or power relating to the mortgaged property, apply for a and receive the money, and the mortgage-deed, and all such other documents so deposited shall be delivered to the mortgagor or such other person as aforesaid. .....

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ortgagor's interest transferred to the mortgagee has been extinguished." The provision merely permits the mortgagor to deposit the mortgage amount. Even in a case where such deposit is made, in the event the mortgagee refused to accept the deposit, the mortgagor would have no option but to institute a suit for redemption relying on the mortgage money deposited. The respondent did not file a suit for redemption. It may be that the appellant objected to the said deposit but despite the fa .....

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of a court in terms of Section 83 Transfer of Property Act is procedural in nature. For attracting the principles of res judicata, the submissions of Mr. Hansaria is that the court of the Munsif was a court exercising limited jurisdiction while entertaining an application under Section 83 of the Transfer Property Act and the decision of such a court of limited jurisdiction would also operate as res judicata. Strong reliance has been placed by Mr. Hansaria on Sulochana Amma v. Narayanan Nair[ (19 .....

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