2nd Year B.B.A., L.L. B. (Hons.

) – Semester IV (2022-27)

2nd Internal Assessment – Property Law

Name: Suhasini Shettar

PRN: 22010126040

Course: BBA LLB (H)

Division: A

Batch: 2022-27

Word Count: 1,061

Submission Date: 26-04-2024

 TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................1

IDENTIFICATION OF CORE ISSUES.............................................................................................2

FACTS OF THE CASE.............................................................................................................2

ISSUES....................................................................................................................................2

THE REASONING GIVEN BY THE COURT...................................................................................3

CRITICAL ANALYSIS..................................................................................................................4

SUGGESTIONS & CONCLUSION.................................................................................................6

REFERENCES..............................................................................................................................7

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 IDENTIFICATION OF CORE ISSUES
FACTS OF THE CASE

The plaintiff owned 20 gunthas of agricultural land in Village Khunte and needed money, so
they borrowed Rs. 3,000 from defendant No. 1 on 22nd February 1969. To secure the loan,
the plaintiff executed a document titled "conditional sale deed" for the land, which served as
security. Later, the plaintiff requested defendant No. 1 to reconvey the land upon loan
repayment, but defendant No. 1 refused. On 25th February 1989, defendant No. 1 transferred
the land to his brother, defendant No. 2. Subsequently, on 5th April 1989, the plaintiff filed a
suit against the defendants under the Transfer of Property Act, 1882, seeking redemption of
the mortgaged property and possession. The plaintiff claims that although the transaction was
labelled as a conditional sale, it was, in fact, a mortgage.

ISSUES

1. The plaintiff is in appeal before this Court aggrieved against the judgment passed by the
High Court on 11.8.2006 in the second appeal whereby the order passed by the First
Appellate Court on 14.1.2000 was affirmed while dismissing the suit for redemption of the
mortgaged property.

2. The entire dispute revolves around whether the document dated 22.2.1969 is a document of
conditional sale or a mortgage.

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 THE REASONING GIVEN BY THE COURT
Interpreting clauses (6) and (7) within the document holds paramount significance in grasping
its legal ramifications. Clause (6) explicitly states that if payment is rendered within two
years, possession of the property reverts to the original owners, effectively nullifying the
purported sale. Similarly, clause (7) implies that a failure to meet the payment deadline
results in the sale becoming absolute, as prescribed by Section 58(c) of the law.

Upon meticulous scrutiny, several pivotal points emerge from the document. Firstly, the
plaintiff borrowed Rs. 3,000 from the defendant for household expenses. Secondly, the
transfer of possession of the land to the defendant was contingent upon its retransfer within
one year from the date of the conditional sale deed. Thirdly, the failure to fulfill the loan
repayment within the specified period would convert the conditional sale deed into a
permanent one. Additionally, the document affords the transferor the option to settle the entire
consideration in one instalment by a fixed date, the failure of which would lead to the sale
becoming absolute.

It is imperative to comprehensively consider these factors, along with the parties' intentions
and surrounding circumstances, in determining the true nature of the agreement. The
language employed in the agreement may not always be conclusive in this regard.

Regarding the defendant's contention of having made improvements on the land during the
mortgage period, it is essential to note that unless evidence substantiating such improvements
and the costs incurred is presented, the defendants are not entitled to recover more than the
mortgage amount. Furthermore, the suit for redemption filed after twenty years falls well
within the thirty-year limitation period stipulated by law.

In summation, the clauses delineated in the document and the surrounding circumstances
collectively suggest a conditional sale agreement subject to specific conditions and timelines.
Any assertions regarding improvements made by the defendants necessitate evidential
support, and the suit for redemption is well within the statutory limitation period.

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 CRITICAL ANALYSIS
Before we advert to the nature and terms of the document, certain principles of law need to be
stated. Section 58(c) of the Act was amended in the year 1929 when a provision was inserted
that “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 sale”.

Mortgage by conditional sale. —

Where, the mortgagor ostensibly sells the mortgaged property—

 on condition that on default of payment of the mortgage-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
sale.

It's indeed possible to interpret the situation differently, but given the severe provisions
outlined, including the potential for criminal prosecution as mentioned in sub-clause (a), it
appears that the transferee aimed to extract more from the unsuspecting rural individuals with
whom he was transacting. His reluctance to account for profits further supports this notion, as
he staunchly argues for an outright sale. In such circumstances, the necessity to maintain a
reasonable margin between the debt and the property's value, customary in mortgages,
becomes irrelevant. Considering all factors, it is my view that the document constitutes a
mortgage by conditional sale under Section 58 (c) of the Transfer of Property Act.

Drawing parallels with analogous cases such as Shri Bhaskar Waman Joshi v. Shri Narayan
Rambilas Agarwal1 and P.L. Bapuswami v. N. Pattay Gounder 2, let's examine the particulars
of the present case. The document in question, marked as Ex. 68, was executed on February

1
Shri Bhaskar Waman Joshi v. Shri Narayan Rambilas Agarwal, AIR 1960 SC 301.
2
P.L. Bapuswami v. N. Pattay Gounder, P.L. Bapuswami v. N. Pattay Gounder, AIR 1966 SC 424.

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22, 1969. It records the Executant acknowledging receipt of Rs. 3,000 in cash for household
expenses, against a parcel of land situated in the town of Khunte, Division Satara, Tq.
Phaltan, irrigated by a Government Canal. The land, along with all its appurtenances, was
transferred into the possession of the other party, subject to the condition of being returned
within one year upon repayment of the aforementioned amount. Failure to meet this
obligation within the specified period would result in the sale deed becoming permanent,
thereby granting permanent possession to the other party. Additionally, any future disputes
concerning the land were to be resolved by the Executant.

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 SUGGESTIONS & CONCLUSION
To rectify the shortcomings highlighted in the existing legal framework, it is imperative to
contemplate legislative reforms aimed at providing clearer delineations between mortgage by
conditional sale and absolute sale. This may necessitate the introduction of statutory
definitions and criteria to aid in the determination of the actual nature of transactions.
Moreover, concerted efforts should be undertaken to bolster transparency and facilitate well-
informed decision-making among stakeholders engaged in property dealings. Implementation
of standardized documentation practices and mandatory disclosures holds promise in
mitigating misunderstandings and diminishing the likelihood of contentious disputes.

In summation, the court's ruling in this case underscores the criticality of accurately
ascertaining the essence of property transactions and discerning the genuine intentions of the
involved parties. However, it also underscores the pressing need for legal reforms aimed at
addressing ambiguities and fostering clarity and equity within property law.

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 REFERENCES
Transfer of Property Act, 1882, Section 58(c), Acts of Parliament, 1949 (India).

Indian Kanoon, https://indiankanoon.org/doc/168504469/ (26th April 2024).

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