Umabai v. Nilkanth Dhondiba Chavan, (SC) BS82636
SUPREME COURT OF INDIA

Before:- H.K. Sema and S.B. Sinha, JJ.

Civil Appeal No. 2583 of 2005 [Arising out of S.L.P. (Civil) No. 23864 of 2004]. D/d. 13.4.2005.

Umabai & Anr. - Appellant

Versus

Nilkanth Dhondiba Chavan (Dead) by Lrs. & Anr. - Respondents

For the Appellant :- A.S. Bhasme and Sanjay K. Dubey, Advocates.

For the Respondents :- A.V. Sawant, Sr. Advocate with S.V. Deshpande and Mrs. Anuradha Rustagi, Advocates.

A. Specific Relief Act, 1963, Section 16(c) - Suit for specific performance for re-conveyance of agreement - "Ready and willingness" - Conduct of parties - Test - Held :-
(i) Must be determined having regard to the entire attending circumstances. A bare averment in the plaint or a statement made in examination-in-chief would not suffice.
(ii) The plaintiff must plead that he has been and still is ready and willing specifically to perform the agreement on his part.
(iii) Deposit of any amount in court at the appellate stage by itself would not establish the 'readiness and willingness' to perform their part of contract.

[Paras 24, 25 and 33]

B. Transfer of Property Act, 1882, Section 58(c) - Distinction between mortgage by conditional sale and a sale with a condition of repurchase ? - Held :-
In a mortgage, the debt subsists and right to redeem remains with the debtor; but a sale with a condition of repurchase is not a lending and borrowing arrangement - There does not exist any debt and no right to redeem is reserved.

[Para 19]

C. Civil Procedure Code, 1908, Order 7, Rule 7, Forms No. 47 and 48 appended to Appendix A - Suit for specific performance - Inconsistent pleadings and relief - Pleas of automatic redemption of mortgage and discharge from the debt cannot stand with a plea of readiness and willingness.

[Para 31]

D. Civil Procedure Code, 1908, Section 100 - Letters Patent Appeal is discretionary - Division Bench would not, unless there exist cogent reasons, differ from a finding of fact arrived at by the learned single judge.

[Para 37]

Cases Referred :-

Prem Raj v. D.L.F. Housing & Construction Pvt. Ltd. [(1968)3 SCR 648].

Mahabir Prasad Jain v. Ganga Singh, 1999(4) RCR (Civil) 464 (SC) : [(1999)8 SCC 274].

Pushparani S. Sundaram v. Pauline Manomani James (Deceased) [(2002)9 SCC 582].

Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa, 2003(2) RCR (Civil) 713 (SC) : [(2003)10 SCC 390].

Pukhraj D. Jain v. G. Gopalakrishna, 2004(3) RCR (Civil) 171 (SC) : [(2004)7 SCC 251].

Smt. Asha Devi v. Dukhi Sao [(1974)2 SCC 492].

Bank of India Ltd. v. Jamsetji A.H. Chinoy and Messrs Chinoy and Co. [ AIR 1950 Privy Council 90].

Nathulal v. Phoolchand [(1969)3 SCC 120].

Smt. Indira Kaur v. Sheo Lal Kapoor [(1988)2 SCC 488].

Tamboli Ramanlal Motilal (Dead) by Lrs. v. Ghanchi Chimanlal Keshavlal (Dead) by Lrs., 1992(2) RCR (Rent) 75 : 1992(2) R.R.R. 24 : [(1993) Supp. (1) SCC 295].

Mushir Mohammed Khan (Dead) by Lrs. v. Sajeda Bano (Smt.), 2000(2) RCR (Civil) 156 (SC) : [(2000)3 SCC 536].

Pandit Chunchun Jha v. Sheikh Ebadat Ali, (1955)1 SCR 174.

Shri Bhaskar Waman Joshi v. Shri Narayan Rambilas Agarwal (deceased), (1960)2 SCR 117.

K. Simrathmull v. Nanjalingiah Gowder, AIR 1963 Supreme Court 1182.

N.P. Thirugnanam (Dead) by Lrs. v. Dr. R. Jagan Mohan Rao, 1995(3) RRR 190 (SC) : [(1995)5 SCC 115].

Sargunam (Dead) by Lr. v. Chidambram, 2004(4) RCR (Civil) 721 (SC) : [(2005)1 SCC 162].

M.V. Shankar Bhat v. Claude Pinto (Deceased) by Lrs., (2003)4 SCC 86.

Collector of Customs, Bombay v. Swastic Woollens (P) Ltd. [(1988) Supp. SCC 796].

West Bengal Electricity Regulatory Commission v. CESC Ltd. (2002)8 SCC 715.

Commissioner of Customs, Chennai v. Adani Exports Ltd., (2004)4 SCC 367.

JUDGMENT

S.B. Sinha, J. - Leave granted.

2. This appeal is directed against a judgment and order dated 3.9.2004 passed by the Bombay High Court in Letters Patent Appeal No. 102 of 1990 whereby and whereunder the Appeal preferred against a judgment and order dated 30.1.1990 passed by a learned Single Judge of the said Court in First Appeal No. 120 of 1984 affirming the judgment and decree dated 5.9.1983 passed by the Civil Judge, Sr. Division, Kolhapur in Special Suit No. 1 of 1979; was allowed.

3. The basic fact of the matter is not in dispute. The suit premises measure about 346 sq. yds. of land. Structures consisting of ground and first floor were built thereupon. The Appellant No. 2 was a tenant in the ground floor of the said building.

4. A decree at the instance of his creditor was said to have been passed against the plaintiff-Respondents herein. The First Respondent with a view to repay the said loan entered into an agreement of sale with the Appellants on or about 30.12.1970. In terms of the said agreement, the plaintiff-Respondents agreed to sell the said property for a consideration of Rs. 45,000/-, out of which a sum of Rs. 3,434/- was paid by way of earnest money and the rest being sum of Rs. 40,076/- was to be disbursed to the creditors. Pursuant to or in furtherance of the said agreement, the plaintiff-Respondents executed a deed of sale in favour of the First Appellant herein. An agreement of sale was also entered into by and between the parties on the same day, in terms whereof the First Appellant agreed to reconvey the said property in favour of the First Respondent on receipt of the said sum of Rs. 45,000/- between a period of seven years and nine years from the said date. The Respondents treating the said transaction to be one of mortgage filed an application purported to be under Sections 4(e) and 7(f) before the competent authority under the Maharashtra Debt Relief Act, inter alia, for a declaration that he is a 'debtor' thereunder and his debt should be discharged. While the said application was pending, a notice was sent by the plaintiff-Respondents to the Appellants herein wherein the aforementioned transaction was said to be a mortgage. A plea was raised therein that the said debt stood discharged under the provisions of the Maharashtra Debt Relief Act. It was contended that the First Appellant herein had already received more than Rs. 50,000/- out of the income from the said property by way of rent. Despite the same, the Appellants asked for specific performance of the said agreement of re-conveyance. In her reply, the First Appellant offered to reconvey the property on receipt of a further sum of Rs. 4,646/-, which allegedly was spent by her towards repairs of the house. Thereafter, the suit was filed by the Respondents herein in the Court of Civil Judge, Senior Division at Kolhapur on 30.12.1978 which was marked as Civil Suit No. 1 of 1979. The Respondents in their plaint raised a plea that the value of the suit property was about Rs. 2 lacs but despite the same with a view to discharge their dues they requested the Appellants to advance a loan of Rs. 50,000/- and to which the Appellants agreed for a sum of Rs. 45,000/-; whereupon the suit property was agreed to be mortgaged. It was further contended that as the Appellants did not possess a money lenders' licence and the period of repayment was large, the parties agreed that the Respondents would execute a deed of mortgage by way of conditional sale; but the said document was termed as a deed of sale wherein a clause of re-conveyance was to be incorporated. However, such condition having mistakenly been not mentioned in the deed of sale and which having been noticed, the First Appellant entered into an agreement of re-conveyance of the suit property in the name of the Respondents on the same day. Both the deeds were said to be part of the same transaction and in fact, it was categorically averred that the "sale deed transaction" is a "mortgage transaction". As regard readiness and willingness on the part of the Respondents, it was averred in the plaint :

In the said suit, the plaintiff-Respondents prayed for the following reliefs :

The Appellants, however, in their written statement denied and disputed the contentions raised in the plaint. It was averred that the transaction was for a sale with an agreement of reconveyance. The Appellants denied and disputed that the First Respondent was 'ready to act as per the agreement'. It was contended that he never offered any amount to the Appellants. It was further contended :

5. The Trial Court dismissed the said suit holding (i) the suit property was not undervalued; (ii) consideration of Rs. 45,000/- mentioned in the document was not inadequate; (iii) the transaction was one of sale and not of mortgage; (iv) the suit property was not self-redeemed under the Maharashtra Debt Relief Act; (v) the plaintiffs were not ready and willing to perform their part of contract; and (vi) the defendants had spent a sum of Rs. 4,646/- over the repairs of the suit property.

6. Before the High Court, the First Respondent herein gave up the plea that he was a debtor in terms of the Maharashtra Debt Relief Act. The learned Single Judge of the High Court while holding that the transaction was that of sale and not mortgage proceeded also to consider as to whether the transaction was a mortgage or not. As regard the plea of purported readiness and willingness on the part of the Respondents, it was opined :

7. The Division Bench of the High Court, however, by reason of the impugned judgment reversed the said findings holding that although evidences were led to show that the amount of Rs. 45,000/- paid by the Appellants to the Respondents was a loan but having regard to Section 58(c) of the Transfer of Property Act, the document could not be construed to be a deed of mortgage.

8. The Division Bench differed from the learned Single Judge and the learned Trial Judge on their finding as regard valuation of the property holding that the Respondents had proved that the sale-deed was under-valued, observing :

9. As regard readiness and willingness on the part of the Respondents to perform their part of contract in terms of the said agreement of reconveyance dated 1.1.1971, the Division Bench came to the conclusion that the plaintiff-Respondents had pleaded and proved the said fact.

10. Mr. Ajit S. Bhasme, learned counsel appearing on behalf of the Appellants, in support of the appeal would urge that the Division Bench of the High Court clearly erred in holding that the Respondents were ready and willing to perform their part of contract. According to the learned counsel, the plea taken by the Respondents that the amount of debt stood satisfied from the income therefrom by way of rent and, thus, the debt stood discharged was wholly inconsistent with a plea of readiness and willingness. Totality of circumstances, the learned counsel would contend, vis-a-vis the conduct of the parties would be relevant for determining as to whether the plaintiff-Respondents have been able to satisfy the court as regard fulfillment of the conditions laid down under Section 16(c) of the Special Relief Act, 1963.

11. Mr. Bhasme would submit that a manifest error had been committed by the Division Bench of the High Court in arriving at the finding that the plaintiff-Respondents pleaded and proved that they had all along been ready and willing to perform their part of contract; without taking into consideration that they initiated proceedings before the competent authority under the Maharashtra Debt Relief Act and raised insufficient plea in that behalf in the notice dated 9.6.1978 and furthermore made clear averments in the plaint that they were debtors and their debt stood discharged.

12. The learned counsel would contend that from a perusal of the plaint, it would appear that the plaintiffs made a conditional offer which does not satisfy the requirement of Section 16(c) of the Specific Relief Act. In support of the said contention, the learned counsel would relied upon Prem Raj v. D.L.F. Housing & Construction Pvt. Ltd. & Another [(1968)3 SCR 648], Mahabir Prasad Jain v. Ganga Singh, 1999(4) RCR (Civil) 464 (SC) : [(1999)8 SCC 274], Pushparani S. Sundaram and Others v. Pauline Manomani James (Deceased) and Others [(2002)9 SCC 582], Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa and Others, 2003(2) RCR (Civil) 713 (SC) : [(2003)10 SCC 390] and Pukhraj D. Jain and Others v. G. Gopalakrishna, 2004(3) RCR (Civil) 171 (SC) : [(2004)7 SCC 251].

13. Mr. Bhasme would submit that the Division Bench had wrongly interfered with the concurrent findings of fact arrived at by the two courts.

14. Mr. A.V. Sawant, the learned Senior Counsel appearing on behalf of the Respondents, on the other hand, would contend that there is no limitation as regard exercise of jurisdiction by a Division Bench of the High Court while entertaining a Letters Patent Appeal as in such an appeal, the Court is entitled to consider the questions of both fact and law. Reliance, in this behalf, has been placed on Smt. Asha Devi v. Dukhi Sao and Another [(1974)2 SCC 492].

15. Mr. Sawant would submit that the plea that a transaction is a mortgage vis-a-vis an ostensible sale cannot be said to be fraudulent nor dishonest which would debar the court from granting an equitable relief for specific performance of contract.

16. The learned counsel would argue that the Trial Judge as also the learned Single Judge of the High Court overlooked the pleadings of Respondents in the plaint as also the evidence adduced in this behalf as regard readiness and willingness on their part of contract and, thus, the Division Bench of the High Court cannot be said to have committed any error in interfering therewith. Readiness and willingness to perform one's part of contract must be judged, Mr. Sawant would submit, upon taking into consideration all the attending circumstances as also the conduct of both the parties and, therefore, it is not necessary to deposit the amount in court or to be possessed of the requisite amount at all times. Strong reliance, in this behalf, has been placed on The Bank of India Ltd. and Others v. Jamsetji A.H. Chinoy and Messrs. Chinoy and Co. [ AIR 1950 Privy Council 90], Nathulal v. Phoolchand [(1969)3 SCC 120], Smt. Indira Kaur and Others v. Sheo Lal Kapoor [(1988)2 SCC 488], Tamboli Ramanlal Motilal (Dead) by Lrs. v. Ghanchi Chimanlal Keshavlal (Dead) by Lrs. And Another, 1992(2) RCR (Rent) 75 : 1992(2) R.R.R. 24 : [(1993) Supp. (1) SCC 295]; and Mushir Mohammed Khan (Dead) by Lrs. v. Sajeda Bano (Smt.) and Others, 2000(2) RCR (Civil) 156 (SC) : [(2000)3 SCC 536].

17. It may be true that level of a document is not decisive. A true nature of transaction must be determined having regard to the intention of the parties as well as the circumstances attributing thereto as also the wordings used in the document in question.

18. In this case, admittedly, two documents were executed on the same day. In view of the express provisions contained in Section 58(c) of the Transfer of Property Act, indisputably the transaction in question was not a mortgage by way of conditional sale.

19. There exists a distinction between mortgage by conditional sale and a sale with a condition of repurchase. In a mortgage, the debt subsists and a right to redeem remains with the debtor; but a sale with a condition of repurchase is not a lending and borrowing 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 re-transfer 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. Sheikh Ebadat Ali and Another (1955)1 SCR 174, Shri Bhaskar Waman Joshi and Others v. Shri Narayan Rambilas Agarwal (deceased) and Others (1960)2 SCR 117], K. Simrathmull v. Nanjalingiah Gowder, AIR 1963 Supreme Court 1182; Mushir Mohammed Khan (supra); and Tamboli Ramanlal Motilal (supra)].

20. The plaintiff in a suit for specific performance of contract may raise an alternative plea that the transaction is a mortgage by way of conditional sale but he must be ready and willing either to repay the debt or pay the amount of consideration as agreed upon. In the instant case, the First Respondent herein, however, raised a specific plea that he was a debtor and that the deed of mortgage was executed only because the Appellants were not licensed money lenders. He not only approached the competent authority under the Maharashtra Debt Relief Act for a declaration that he was a debtor and stood discharged from his debt, but also in the plaint he sought for a decree for possession of the suit land on the premise that the provisions of the Maharashtra Debt Relief Act were attracted. He even asked for a decree of accounting.

21. It may be true that the plaintiff had made alternative prayers of specific performance of the agreement of reconveyance and redemption of mortgage but it appears that the plaints starts with the description of the mortgage property.

In the plaint, the plaintiffs averred :

22. After reciting the relevant stipulations contained in the registered deed of agreement of sale to the effect that the First Appellant would reconvey the suit property in his name and got a document registered, it was averred :

However, from paragraph 6 onwards, a plea as regard creation of a mortgage was raised specifically contending :

It was further averred :

23. Reading the plaint as a whole, it becomes evident that the First Respondent principally raised a contention that the transaction was of mortgage and the sale stood redeemed and he was discharged from the debt. He moreover prayed for a decree for accounting, but contended that only in the event, such prayer is not granted, he was ready to pay the defendants the said sum of Rs. 45,000/-. The averments made in the pleadings must be construed reasonably and so read the statement made as regard purported readiness and willingness to pay the stipulated amount to the defendants according to the conditions mentioned in the agreement cannot be read in isolation.

In his examination-in-chief although he stated :

but in his cross-examination, he admitted :

The learned trial Judge further noticed the following statement of the plaintiffs in paragraph 18 of the cross-examination :

24. It is now well-settled that the conduct of the parties, with a view to arrive at a finding as to whether the plaintiff-Respondents were all along and still are ready and willing to perform their part of contract as is mandatorily required under Section 16(c) of the Specific Relief Act must be determined having regard to the entire attending circumstances. A bare averment in the plaint or a statement made in the examination-in-chief would not suffice. The conduct of the plaintiff-Respondents must be judged having regard to the entirety of the pleadings as also the evidences brought on records.

25. In terms of Form Nos. 47 and 48 appended to Appendix A of the Civil Procedure Code, 'the plaintiff must plead that he has been and still is ready and willing specifically to perform the agreement on his part of which the defendant has had notice' or 'the plaintiff is still ready and willing to pay the purchase-money of the said property to the defendant'. The offer of the plaintiff in the instant case is a conditional one and, thus, does not fulfill the requirements of law.

In Bank of India (supra), it was held :

26. The said decision was, thus, rendered on its own fact. Such a conclusion was arrived at having regard to the fact that ample material had been brought on records. There must, thus, be some evidence to show that the plaintiff could arrange for the amount stipulated for payment to the vendor as and when called upon to do so. In this case no such evidence was disclosed.

27. In Nathulal (supra), the contract was required to be performed in certain sequence. Therein it was found that certain arrangements had been made by the Respondent therein for paying the amount due. It was held that so long as Nathulal did not carry out his part of contract, Phoolchand could not be called upon to pay the balance of the price and it was in that situation held that latter at all relevant time was ready to perform his part of contract.

28. The said decision also has no application in the instant case.

29. In Smt. Indira Kaur (supra), this Court merely held that for determining the question as regard readiness and willingness on the part of the plaintiff to perform his part of contract, the Court must examine the position of both the parties. This Court did not say, as was submitted by Mr. Sawant, that the conduct of both the parties must be taken into consideration. In that case, the defendant's contention that he had not received the notice of the plaintiff was held to be incorrect, as despite his alleged receipt of notice, he admitted to have visited the Sub-Registrar's office on 16.8.1977. In that situation it was held that the defendant was not ready and willing to perform his part of contract. It was held that as of fact that the plaintiff had done what he could do. He went to the Sub-Registrar's Office, he filed an application for recording his presence. The said decision, therefore, has no application in the instant case.

On the other hand in Mahabir Prasad Jain (supra), it has been held :

In Pushparani S. Sundaram (supra), it was opined :

It was further held -

In N.P. Thirugnanam (Dead) by Lrs. v. Dr. R. Jagan Mohan Rao and Others, 1995(3) RRR 190 (SC) : [(1995)5 SCC 115], this Court held :

Yet again in Manjunath Anandappa (supra), this Court held :

In Pukhraj D. Jain (supra), it was held :

30. Furthermore, the First Respondents had raised inconsistent plea in the sense that he had categorically taken a standing that the debt stood discharged. Such a plea was irreconcilable with the plea that he had all along been ready and willing to perform his part of contract. It is in that situation, the decision of this Court in Prem Raj (supra) is attracted wherein it was held that although inconsistent reliefs by a party to the suit is maintainable but it must be shown that each of such pleas is maintainable.

31. The plea of automatic redemption of mortgage and discharge from debt raised on the part of the Respondents herein cannot stand with a plea of readiness and willingness on his part to perform their part of contract.

32. The Division Bench of the High Court, thus, posed a wrong question unto itself. It also failed to take into consideration the statement of the plaintiff in his cross-examination and in particular paragraphs 12 and 19 thereof in their proper perspective. The statements made by the plaintiff before the court, if read as a whole would clearly show that he was neither in a position to raise any fund. He proceeded on the basis that he was not required to pay any amount. The Division Bench furthermore misdirected itself in holding :

33. It was for the plaintiff to prove his readiness and willingness to pay the stipulated amount and it was not for the Appellants to raise such question. The Division Bench furthermore considered irrelevant facts in holding that the plaintiff deposited the amount of Rs. 60,000/- in the Court of Appeal to arrive at the conclusion that the plaintiff-Appellant was ready and willing to perform his part of contract. Deposit of any amount in court at the appellate stage by the plaintiffs by itself would not establish their readiness and willingness to perform their part of the contract within the meaning of Section 16(c) of the Specific Relief Act. It further erred in holding that the mere fact that he did not have money at the time of issuance of the notice, the day when plaint was filed or at the time of his evidence was of no consequence in total disregard of statutory mandate contained in Section 16(c) of the Specific Relief Act. Similarly, the finding of the Division Bench that the prayer for grant of specific performance of contract and in the alternative for redemption of mortgage or cancellation of debt cannot be said to be pleas which could not be raised or be a bar for the court to consider to grant the relief of specific performance, cannot be accepted, as pleas of specific performance of contract and cancellation of debt and/or a decree for accounting are inconsistent.

34. As regard the question as to whether the transaction was undervalued, the Appellate Court committed a manifest error in taking into consideration the fact that payment of Rs. 45,000/- was to be made after 7 years and before 9 years without any interest is a circumstance to hold that discretion should be exercised in favour of the plaintiff-Respondents.

In Sargunam (Dead) by Lr. v. Chidambram and Another, 2004(4) RCR (Civil) 721 (SC) : [(2005)1 SCC 162], this Court observed :

35. [See also M.V. Shankar Bhat and Another v. Claude Pinto since (Deceased) by Lrs. And Others, (2003)4 SCC 86].

36. It is furthermore trite that normally a court of appeal would not interfere with a concurrent finding of fact which is based on appreciation of oral evidence.

In Bank of India (supra) whereupon Mr. Sawant placed reliance, the Privy Council held :

Yet in Manjunath Anandappa (supra), it was held :

The question also came up for consideration in Collector of Customs, Bombay v. Swastic Woollens (P) Ltd. and Others [(1988) Supp. SCC 796]

[See also West Bengal Electricity Regulatory Commission v. CESC Ltd., (2002)8 SCC 715 and Commissioner of Customs, Chennai v. Adani Exports Ltd. and another, (2004)4 SCC 367]

37. It may be, as has been held in Asha Devi (supra) that the power of the Appellate Court in intra court appeal is not exactly the same as contained in Section 100 of the Civil Procedure Code but it is also well-known that entertainment of a Letters Patent Appeal is discretionary and normally the Division Bench would not, unless there exist cogent reasons, differ from a finding of fact arrived at by the learned Single Judge. Even as noticed hereinbefore, a court of first appeal which is the final court of appeal on fact may have to exercise some amount of restraint.

For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeal is allowed. In the facts and circumstances of the case, however, there shall be no order as to costs.

Appeal allowed.