Supreme Court: Transaction Cannot Be Regarded As Mortgage By Condition Sale If Condition For Reconveyance Is Not Specified In Same Deed | TP Act

The Supreme Court in the case Prakash (Dead) By LR. V G. Aradhya and Ors observed and has held that under Section 58(c) of the Transfer of Property Act,1882 no transaction shall be deemed to be a mortgage unless the condition for reconveyance is contained in the document which purports to effect the sale.
The Division bench comprising of Justice Hima Kohli and Justice Rajesh Bindal in the case observed while dealing with the case wherein two documents were being executed on the same day, one was the sale deed and the other was a reconveyance or agreement of buy back deed.
The Apex Court in the case observed and has held that the proviso stated under Section 58(c) of the Act was added to create a deeming fiction that a transaction cannot be deemed to be a mortgage unless the condition for reconveyance is contained in the document which purports to effect the sale.
The Supreme Court in the case referred to the catena of judgments with regards to the interpretation as stated under Section 58(c) of the Act to reach this conclusion.
Further, the appellant approached the Apex Court against the order of the Karnataka High Court and the trial court wherein the court refused to grant him relief in a suit filed for redemption of mortgage.
the issue raised before the Apex Court for consideration was weather the transaction between the parties was an absolute sale of the property or a mortgage.
The counsel, Sr. Adv. Kiran Suri appearing for the Appellant argued before the court that on interpretation of the documents, the intention of the vendor to mortgage the property is clearly established. Thus, the intention of the parties can be inferred from two separate documents which are executed on the same date.
It has also been argued before the court that even if under Section 58(c) of the Act, it is provided that clauses to treat the transaction of sale as a mortgage are to be in a single document, it being not a pre-condition.
On other hand, the counsel, Sr. Adv. Aditya Sondhi appearing for the Respondents argued before the court that the case of mortgage, is not made out from the documents on record.
Adding to it, the respondent argued that Section 58(c) of the Act states that whether it is a mortgage or not, can be inferred from the document only when it is a single document and the clauses are contained therein. Thus, the same would be applicable to the said matter as two separate documents were executed.
The Apex Court in the case observed and has examined the Sale Deed which specified that it was an absolute sale for consideration of ₹5,000/- (Rupees Five Thousand) to meet the expenses of the vendor.
Further, the court in the case observed that the possession of the property was to be delivered on registration of the Sale Deed, according to its terms.
Therefore, the Apex Court in the case observed and has refused to interfere with the order of the High Court, finding that the two deeds for sale and reconveyance together cannot be said to constitute a transaction of mortgage of property, in terms of the Sale Deed and the Reconveyance Deed, reconsidered in the light of the enunciation of law, as referred to above, thus, the same cannot be held to be a transaction of mortgage of property and the Sale of property initially, was absolute. By way of execution of Reconveyance Deed, namely, on the same day and the only right which is being given to the appellants was to repurchase the property.