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Karnataka High Court · body

2009 DIGILAW 567 (KAR)

Bharati v. Seema

2009-07-30

H.N.NAGAMOHAN DAS

body2009
JUDGMENT 1. This second appeal is directed against the Judgment and Decree dated 30.08.99 O.S.No.394/96 passed by III Addl. City Civil Judge (Jr. Dn.) Belgaum and the Judgment and Decree dated 15.04.02 in R.A.No.242/99 passed by Prl. Civil Judge (Sr. Dn.) Belgaum decreeing the suit of the plaintiff for redemption of mortgage. 2. Appellant is the defendant and respondent is the plaintiff before the Trial Court. In this judgment for convenience, the parties are referred to their status before the Trial Court. 3. It is the case of the plaintiff that he is the owner of plaint schedule property and under a registered deed dated 06.05.1974, he mortgaged the same by conditional sale for a sum of Rs.10,000/- in favour of the defendant. One of the stipulations in this deed is that in the event of plaintiff paying the mortgage money within 5 years from the date of deed, the defendant shall redeem the mortgage and return the original deed. In the event of plaintiff failing to tender the mortgage money, the defendant will become the absolute owner of the schedule property. Though plaintiff tendered the mortgage money within the time of 5 years, the defendant evaded to receive the same. Subsequently, on 12.11.90, the defendant accepted the mortgage money but refused to redeem the mortgage and to return the original deed. Despite repeated requests, demands and lawyer notice, the defendant refused to redeem the mortgage and return the deed and put the plaintiff in possession of the schedule property. Therefore, the plaintiff filed O.S.No.394/96 against the defendant for redemption of mortgage and for other reliefs. 4. The defendant entered appearance before the Trial Court and filed written statement inter alia contending that the deed dated 06.05.1974 is a conditional sale deed and not a mortgage deed. Since the plaintiff failed to pay the money within the time stipulated under the deed, he forfeits his right in the schedule property. The defendant denied the receipt of Rs.10,000/- from plaintiff. With effect from 07.05.1979 the defendant became the absolute owner. On these grounds, the defendant opposed the claim of plaintiff. 5. On the basis of pleadings, the Trial Court framed the following issues for its consideration: 1. Whether plaintiff proves that plaintiff has paid the mortgage money to the defendant? 2. Whether plaintiff proves that defendant is avoiding to redeem the suit property and returning the original documents of suit property? 5. On the basis of pleadings, the Trial Court framed the following issues for its consideration: 1. Whether plaintiff proves that plaintiff has paid the mortgage money to the defendant? 2. Whether plaintiff proves that defendant is avoiding to redeem the suit property and returning the original documents of suit property? 3. Whether defendant proves that he became the absolute owner of the suit property from 7.5.1979 as per para-5 of his W.S? 4. Whether suit is bad for non-joinder of necessary party? 5. Whether court fee paid is not correct? 6. Whether plaintiff is entitled for the reliefs as sought for? 7. Whether defendant is entitled for compensatory costs of Rs.5,000/-? 8. What order or decree? 6. Before the Trial Court, plaintiff examined one witness as PW-1 and got marked Exs.P1 to P15. The defendant examined two witnesses as DW-1 and DW-2 and got marked Exs.D1 to D8. The Trial Court after hearing both the parties and on appreciation of the pleadings, oral and documentary evidence held that the deed dated 06.05.1974 is a mortgage by conditional sale and consequently decreed the suit of plaintiff. Aggrieved by this judgment of the Trial Court, the defendant filed an appeal before the Lower Appellate Court in R.A.No.242/99. The Lower Appellate Court framed the following points for its consideration: 1. Whether the Plaintiff – respondent has proved the transaction dated 6/5/1974 is only mortgage by conditional sale and that the same is redeemable? 2. Whether the defendant – appellant has proved that after completion of 5 years period from 6/5/1974, she has become the absolute owner of the suit property? 3. Whether the plaintiff – respondent has proved that the mortgage amount is already paid to the defendant – appellant? 4. Whether the defendant – appellant has proved that she has spent Rs.48,000/- for entire renovation of suit house from the year 1979 onwards? 5. Whether the suit is bad for non-joinder of necessary parties? 6. Whether the plaintiff – respondent is entitled for the relief sought for? 7. Whether the Judgment and Decree of the Trial Court needs to be interfered with? 8. For what decree or order the parties are entitled to? 7. The Lower Appellate Court, on re-appreciation of the entire material on record passed the impugned judgment dismissing the appeal and confirming the judgment of the Trial Court. Hence this second appeal by the defendant. 8. 8. For what decree or order the parties are entitled to? 7. The Lower Appellate Court, on re-appreciation of the entire material on record passed the impugned judgment dismissing the appeal and confirming the judgment of the Trial Court. Hence this second appeal by the defendant. 8. This Court Vide order dated 16.01.03 while admitting this second appeal framed the following substantial question of law: “Whether the respondent is entitled for possession of the property notwithstanding the fact that the Court has held that the document Ex.P8 is a mortgage deed?” 9. Heard Smt. Girija S. Hiremath, learned counsel on behalf of Sri Umesh R. Malimath for the appellant and Sri Ravikumar Gokakakar, learned counsel for the respondents and perused the entire record. 10. At this stage, it is necessary to notice the law laid down by this Court on the question of mortgage with conditional sale. A Division Bench of this Court in the case of ‘LAXMANRAO KRISHNAJI KULKARNI Vs. BALAKRISHNA YELLAPPA GHODAKE” reported in ILR 1988 KAR 1987 held as under: “9.2 It has always been anxious to protect the right of redemption. It has always been the attempt not to recognise a condition in the mortgage deed which has the effect of placing fetter on the right of redemption. In this connection, it is very relevant to notice the words “in the absence of any contract to the contrary” which are found in many of the Sections of the Transfer of Property Act (for short the T.P. Act) are not found in Section 60 of the T.P. Act. When the legislature has enacted Section 60 of the T.P. Act in unqualified terms, the Courts have endeavoured and must endeavour to relieve the mortgagors from a condition in the mortgage deed which fetters their right of redemption by refusing to recognise and enforce it or by declaring it as void. Right redemption is on the very nature, and essence of the mortgage. It is inherent in the mortgage. To put it axiomatically “Once a mortgage always a mortgage.” This maxim is further reinforced by Lord Davey in NOAKES Vs. Right redemption is on the very nature, and essence of the mortgage. It is inherent in the mortgage. To put it axiomatically “Once a mortgage always a mortgage.” This maxim is further reinforced by Lord Davey in NOAKES Vs. RICE (1902 AC 24) by adding to it the words “and nothing but a mortgage.” Of course, we are aware that still there are some decisions which have adopted the line of reasoning that even though Section 60 of the T.P. Act is unqualified in its terms, but nothing prevents the parties to agree to the contrary. Whether a particular term in the contract should be regarded as a clog on the right of redemption depends upon the terms of the mortgage and the circumstances as they existed at the time of the execution of the mortgage. No hard and fast rule can be laid down. If on taking into consideration the circumstances that existed at the time of execution of the mortgage and all the terms of the mortgage deed, the Court is able to come to the conclusion that a particular covenant is undoubtedly hard and unconscionable and has the effect of nullifying the right of redemption or restricts the exercise of right of redemption in such manner as practically to deny it, such a covenant can be regarded as a clog on the right of redemption and as such it has to be ignored and the party has to be relieved from it. As far as the condition in a mortgage deed which enables the mortgagee to continue in possession of the mortgaged property even after redemption as a permanent lessee is concerned, it is a settled position in law in India that such a condition is invalid and unenforceable.” 11. In the case of E.S. VENKATESHA GUPTHA Vs. SAVITHRAMMA reported in ILR 1991 KAR 2445 it is held as under: “Held: (i) For the purpose of determining the point, the Court has to look to not only the recitals of the documents, but also the surrounding circumstances and the conduct of the parties to ascertain as to how they have understood and enforced the document. (ii) Normally contemporaneous conduct of the parties to the document is taken into account for determining the nature of a document. (ii) Normally contemporaneous conduct of the parties to the document is taken into account for determining the nature of a document. But in a case where the subsequent conduct of the parties is closely connected with document itself and they have treated the document in a particular manner and have acted accordingly, the fact that such a conduct is subsequent to the document could not in any way be made a ground to exclude such conduct from consideration in determining the nature of the document; as such conduct being relevant cannot at all be excluded from consideration.” 12. In the case of RAGHUNATHJI SARAF Vs. SYED SHAH BAQUR HUSSAINI & OTHERS reported in 1991 (1) KLJ 107 this Court held as under: “Even in the mortgage deed if mortgagers did not pay the amount within 10 years from the date of mortgage, the deed operates as a deed of sale. Condition held to be a clog on equity of redemption and as such invalid and the mortgage will continue to subsist until period for mortgage for redemption imposed by law of limitation expires.” 13. Learned Single Judge of this Court after considering the entire case law on the point in ILR 2000 KAR 2173 (B. JAYASHANKARAPPA AND OTHERS Vs. D.S. GULWADI) held as under: “23. The consideration of above cases reveals the following basic principles:- (a) That the sale is a transfer of ownership and to constitute a sale there must be transfer of ownership from one person to another i.e., all rights and interests of the owner as owner of property are transferred by transferor to another person. In case of a mortgage, that is not so. It is only a transfer of an interest in the immovable property concerned. It is not the transfer of full ownership rights therein, instead some interest is retained by the owner when making the transfer. The transfer of an/the interest under mortgage is for the purpose of securing the payment of money advanced as loan. (b) That a document of ostensible sale and the agreement to recovery or agreement agreeing to either of the conditions referred to in Clause(c) of Section 58 if the two are contained in two separate documents, they cannot be considered and cannot be deemed to be mortgage. (b) That a document of ostensible sale and the agreement to recovery or agreement agreeing to either of the conditions referred to in Clause(c) of Section 58 if the two are contained in two separate documents, they cannot be considered and cannot be deemed to be mortgage. (c) That if there is an ostensible sale or a purported sale and transaction of ostensible sale or purported sale is made subject to either of the conditions mentioned in Section 58 (c) such as agreement to recovery or agreement to hand over ie. Return the possession or the like and the two i.e. ostensible sale and the condition concerned are contained in one document that may be a circumstance showing or exhibiting the intention of parties not to intend the transaction to be a sale and in the words of Their Lordship of the Supreme Court as observed in Pandit Chunchun Jha’s case. “The legislature has made a clear cut classification and excluded transactions embodied in more than one document from the category of mortgages, therefore it is reasonable to suppose that persons who, after the amendment, choose not to use two documents, do not intend the transaction to be a sale, unless they displace that presumption by clear and express words; and if the conditions of Section 58(c) are fulfilled, then we are of opinion that the deed should be construed as a mortgage.” No doubt, if the condition of repurchase is embodied in the document which effects or purports to effect the sale, then that is a matter of construction. The intention to treat the transaction as an out and out sale or as a mortgage has to be found out on consideration of the contents of the deed in the light of the surrounding circumstances. (d) The oral evidence of intention is not admissible in interpreting the contents of the deed, but evidence to explain or even contradict the recitals as distinct from the terms of the document may be given. The evidence of contemporaneous conduct is admissible as surrounding circumstances, but evidence as to subsequent conduct of parties is inadmissible vide BHASKAR WAMAN JOSHI vs SHRINARAYAN RAMBILAS AGARWAL. (e) If the words are plain and unambiguous, they must, in the light of the evidence of surrounding circumstances, be given their true legal effect. The evidence of contemporaneous conduct is admissible as surrounding circumstances, but evidence as to subsequent conduct of parties is inadmissible vide BHASKAR WAMAN JOSHI vs SHRINARAYAN RAMBILAS AGARWAL. (e) If the words are plain and unambiguous, they must, in the light of the evidence of surrounding circumstances, be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as by law be permitted to be adduced to show in what manner the language of the deed is related to existing facts.” 14. Keeping in view the law laid down in the decisions referred to supra, it is necessary to examine the fact situation in the present case. Ex.P8 is the copy of registered deed dated 06.05.1974 and its original is at Ex.D2. Ex.D2 is in Marathi language. The English translated copy of Ex.D2 is marked as Ex.P8(A). The nomenclature of this deed reads as “Muddatti Khardl Patra”. The document Ex.D2 discloses that defendant paid a sum of Rs.10,000/- to the plaintiff for a period of five years and the defendant was put in possession of the plaint schedule property. It further reads that in the event of plaintiff paying an amount of Rs.10,000/-, then, the defendant shall redeem the property and return the document within the time of 5 years, plaintiff fail to pay the money then, the defendant will become the absolute owner of the property. These averments in Ex.D2 clearly establishes the fact that on the date of the deed, actual sale had not taken place. The conditions in the deed specifies that the title in the schedule property will transfer from plaintiff to defendant after 5 years and that too in default to pay the amount of Rs.10,000/-. Therefore, when ownership rights were not transferred and only possession was transferred on the date of the deed, it is nothing but an ostensible sale and not actual sale. Both the Courts below on careful appreciation of the averments made in Ex.D2 have rightly concluded that the deed in question is mortgage by conditional sale. This concurrent finding of both the Courts below is in accordance with law and I find no justifiable ground to interfere with the same. 15. Both the Courts below on careful appreciation of the averments made in Ex.D2 have rightly concluded that the deed in question is mortgage by conditional sale. This concurrent finding of both the Courts below is in accordance with law and I find no justifiable ground to interfere with the same. 15. This Court in RAGHUNATH SARAF’s case (supra) held “that condition in the mortgage deed if mortgagers do not pay the amount within 10 years from the date of mortgage the deed to operate as a deed of sale is nothing but a clog on equity of redemption and as such invalid and the mortgage will continue to subsist until period for mortgage for redemption imposed by law of limitation expires.” Therefore, in the instant case, the condition in the deed Ex.D2 that in the event of plaintiff failing to pay the sum of Rs.10,000/- within 5 years, then the defendant will become the absolute owner of the suit property is invalid and the mortgage for will continue to subsist until the period of mortgage for redemption imposed by law of limitation expires. 16. In Ex.D2 there is a stipulation that on payment of mortgage money by the plaintiff, the defendant to continue to reside in the schedule premises as a tenant. In identical circumstances, in LAXMANRAO’s case (supra), a Division Bench of this Court held “that the condition to the effect the mortgagers to continue as tenants even after the redemption of mortgage is unconscionable and it is undoubtedly a clog on the right of redemption. It comes in the way of mortgagers to secure possession of mortgaged properties even after redemption”. Therefore, the condition in the mortgage deed Ex.D2 that even after redemption of mortgage, the defendant is entitled to continue to reside in the schedule premises as a tenant is unenforceable. Therefore, the plaintiff is entitled for recovery of possession of the plaint schedule property on redemption of mortgage. 17. Both the Courts below on appreciation of the oral and documentary evidence, concurrently held that plaintiff has paid and defendant has received the mortgage money of Rs.10,000/- in the year 1990. No argument is advanced by the learned counsel for the defendant in this regard and it is not shown to me as to what is the error committed by both the Courts below. I find no justifiable ground to interfere with the impugned Judgment and Decree. No argument is advanced by the learned counsel for the defendant in this regard and it is not shown to me as to what is the error committed by both the Courts below. I find no justifiable ground to interfere with the impugned Judgment and Decree. The question of law framed above is answered in affirmative. 18. For the reasons stated above, the appeal is hereby dismissed with no order as to costs.