UMABAI AND ANR. versus NILKANTH DHONDIBA CHAVAN BY LRS. AND ANR.

Citation: [2005] 3 S.C.R. 521 · Decided: 13-04-2005 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Appeal(s) allowed

Cited by 10 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

UMABAI AND ANR. 
v. 
NILKANTH DHONDIBA CHA VAN BY LRS. AND ANR. 
APRIL 13, 2005 
[H.K. SEMA AND S.B. SINHA, JJ.) 
Special Relief Act, 1963-Sections 16(c)-Specific performance of 
contract-Equitable relief-Grant of-Vendor executing sale deed of property 
A 
B 
in favour of vendee to repay his foan-On same day execution of another deed C 
for reconveyance of property in favour of vendor on receipt of consideration 
amount-Suit for specific performance of contract for reconveyance of property 
sold-Held: Plea raised by vendor that transaction was mortgage, safe stood 
redeemed, and was discharged from debt, prayed for decree of accounting are 
irreconcilable with plea that he had all along been ready and willing to 
perform his part of contract-Further vendor stated that he was not in a D 
position to raise any fund-Bare averment that ready and willing to pay not 
sufficient-Also conditional offer do not meet requirement of law-:-Moreover, 
deposit at appellate stage would not establish readiness and willingness-
Hence, plea of specific performance of contract, cancellation of debt and/or 
decree for accounting inconsistent. 
Transfer of property Act, 1882-Mortgage by conditional sale and sale 
with condition of repurchase-Difference between-Discussed 
Deeds and documents: Transaction-Nature, determination of-Held: 
E 
N(lture of transaction is determined by intention of the parties, attributing F 
circumstances, and words used therein. 
High Courts : Letters Patent Appeal-Scope of-Held: Entertainment of 
Letters Patent Appeal is discretionary-Normally Division Bench interferes 
with the finding of fact arrived at by Single Judge only when there exist cogent 
reasons-On facts, when Single Judge of High Court held the property to be G 
properly valued, Division Bench erred in exercising its discretion in Letters 
Patent Appeal on the ground that the consideration amount was to be paid 
after a long period without any interest. 
First respondent entered into an agreement of sale of property with 
521 
fl 
522 
SUPREME COURT REPORTS 
[2005) 3 S.C.R. 
A appellants for Rs 45,000 to repay his loan. Respondent executed sale deed 
in favour of first appellant. On the same day, parties entered into another 
sale agreement whereby first appellant agreed to reconvey the property 
in favour of first respondent on receipt of Rs 45,000 within specified 
period. Respondent treating the transaction as mortgage sought 
declaration from the Competent Authority under the Maharashtra Debt 
B Relief Act that he is a debtor and his debt should be discharged and also 
sent a notice. Respondent filed suit in which alternative prayers of specific 
performance of agreement of reconveyance and redemption of mortgage 
were made. Trial Court dismissed the suit holding that the suit property 
was undervalued; that the transaction was one of sale and not mortgage; 
C that suit property was not self- redeemed under the Maharashtra Debt 
Relief Act; and that the plaintiffs were not ready and willing to perform 
their part of contract. Single Judge of High Court upheld the order. 
However, Division Bench of the High Court allowed the Letters Patent 
Appeal and set aside the order of the High Court. Hence the present 
D appeal. 
Allowing the appeal, the Court 
HELD : 1.1. The label 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 
E used in the document in question. [531-H; 532-A) 
1.2. In the instant case, 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 
F a mortgage by way of conditional sale. [532-A-B) 
1.3. 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 safe with a condition 
of repurchase is not a lending and borrowing arrangement. There does 
G 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, 

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