Holding

The deed is a mortgage by conditional sale, and the appellate decree granting specific performance is set aside; the second appeal is dismissed.

Summary

The appellant filed a second appeal under Section 100 of the CPC challenging the appellate court’s decree granting specific performance in a suit concerning a shop mortgaged by a conditional sale deed dated 24‑09‑1979. The deed required the plaintiff to repay Rs.13,000 after seven years, upon which the defendant would reconvey possession. The trial court dismissed the suit, but the first appellate court reversed and ordered reconveyance, treating the deed as a mortgage by conditional sale. The second appeal raised two legal questions: whether the appellate court should have considered the plaintiff’s readiness to pay and whether it was justified in granting specific performance. The High Court held that the deed is indeed a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, affirmed the trial court’s view, and dismissed the second appeal, vacating the interim relief.

Issues considered

Whether the appellate court was justified in not considering the plaintiff's readiness and willingness to pay when it held the transaction was not a mortgage by conditional sale but an independent right to repurchase.
Whether the appellate court was justified in granting a decree of specific performance in favour of the plaintiff.

Legislation cited

Code of Civil Procedure, 1908s. 100, s. 96
Specific Relief Act, 1963s. 19, s. 20
Transfer of Property Act, 1882s. 58(c), s. 60

Subjects

mortgage by conditional salespecific performancedeed interpretationSection 58(c) Transfer of Property ActSpecific Relief Actconditional saleredemptionsecond appealCPC Section 100

Judgment

C/SA/93/2006 CAV JUDGMENT DATED: 18/02/2026

Reserved On : 11/02/2026
Pronounced On : 18/02/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SECOND APPEAL NO. 93 of 2006

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE J. C. DOSHI

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Approved for Reporting Yes No

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PATEL HASANBHAI ALIBHAI AADAMBHAI
Versus
PATEL JAYESHKUMAR ISHWARBHAI & ORS.
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Appearance:
MR HRIDAY BUCH(2372) for the Appellant(s) No. 1
MR RAHUL K DAVE(3978) for the Respondent(s) No. 1
PETITION/APPEAL WITHDRAWN/DISMISSED for the Respondent(s) No. 3
RULE SERVED for the Respondent(s) No. 2
==========================================================

CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI

CAV JUDGMENT

1. This Second Appeal is preferred under Section 100

of the Code of Civil Procedure 1908 (“the Code” for short)

challenging the judgment and decree dated 6.8.2005 passed

by the learned Presiding O)icer, Fast Track Court No.8,

Bharuch in Regular Civil Appeal No.17 of 1998 whereby the

learned 2rst Appellate Court reversed the judgment and

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decree dated 31.12.1997 passed by learned Civil Judge (Junior

Division), Jambusar in Regular Civil Suit No.103 of 1989 and

the decreed the suit in favour of the plainti)s directing them

to deposit Rs.14610/- being the mortgage money and directed

the defendant No.1 to hand over peaceful possession of the

suit premises to the plainti)s by executing the sale deed

thereof.

2. The facts, in nutshall, borne out from the impugned

judgment are that the the shop bearing City Survey

No.2581/A admeasuring 456 square meters paiki situated on

the ground ;oor of the plainti)s’ premises in Kava Bhagol

area of Jambusar (“the suit premises” for short) was

mortgaged to defendants through conditional sale deed dated

24.9.1979 with the conditions stipulated therein that on

completion of 7 years, possession shall be handed over back

to the plainti)s on receiving sale consideration of Rs.13,000/-

and also the sale deed will be executed in favour of the

plainti)s.

3. The plainti)s, on completion of 7 years, were ready

and willing to pay Rs.13,000/- to the defendants. However, the

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defendants denied to accept the said amount and further

denied to reconvey the suit premises to the plainti)s so also

the possession. The plainti)s, thus, 2led the suit for

redumption of mortgage and also prayed to direct the

defendants to execute the sale deed and to hand over peaceful

possession of the suit premises. The defendants, having been

served, came out with a defence that the defendant No.2 has

relinquished his share from the suit premises and as such, the

defendant No.1 has become absloute owner. It is further

contended that the sale deed executed on 24.9.1979 is

absolute sale in favour of the defendant No.1 who was initially

tenant at monthly rent of Rs.300/- and in addition thereto, it is

also contended that the defendant No.2 has paid Rs.25,000/-

to the plainti)s but failed to get any document / receipt

thereof. The limitation was also pleaded as one of the defence

so also the defence of jurisdiction. The learned trial Court,

permitting the parties to lead the evidence, after framing the

issues, was pleased to dismiss the suit of the plainti)s.

4. Being aggrieved and dissatis2ed, the plainti)s

preferred Regular Civil Appeal No.17 of 1998 before the

learned 2rst Appellate Court under Section 96 of the Code.

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As noted (supra), learned Presiding O)icer, Fast Track Court

No.8, being the 2rst Appellate Court, was pleased to allow the

appeal and decreed the suit in favour of the plainti)s. Being

aggrieved, the defendant No.1 is before this Court by way of

the present Second Appeal. The Second Appeal is admitted

vide order dated 20.7.2006 framing the following questions of

law as substantial questions of law.

“(i) Whether on the facts and in the circmstances of
the case, the appellate court, after observing that
present one was not a case of mortgage by
conditional sale but was a case of independent
right to repurchase, was justi2ed in not considering
the question relating to readiness and willingness
on the part of the plainti) ?

(ii) Whether on the facts and in the circmstances of
the case, the appellate court was justi2ed in
granting the decree of speci2c performance in
favour of the plainti) ?”

5. Heard learned advocate Mr.Hriday Buch appearing

for the appellant and learned advocate Mr.Rahul K.Dave

appearing for the respondent No.1. Though served, none

remained present for respondent No.2. The appeal was

withdrawn for respondent No.3.

6. In the background of the aforesaid facts, learned

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advocate Mr.Hriday Buch appearing for the appellant mainly

argued that learned Appellate Court has committed serious

mistake and error of law on the ground that after pleading

that the deed in question is not mortgate by conditional sale,

but the case of an independent right to repurchase was

absolutely unjusti2ed in not considering the question of

readiness and willingness on the part of the plainti)s.

6.1 He further submits that since the transaction

between the parties was sale with condition to repurchase,

the plainti)s were required to plead and prove readiness and

willingness as being an essential requirement for seeking a

relief in the suit for speci2c performance under Sections 19 of

20 of the Speci2c Relief Act 1963.

6.2 It is further argued by learned advocate Mr.Hriday

Buch that learned Appellate Court is unjusti2ed in granting

the decree of speci2c performance in favour of the plainti)s.

6.3 Learned advocate Mr.Hriday Buch, in realm of the

aforesaid arguments, supports the judgment and decree of

learned trial Court and submits that the issue has been vividly

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and widely discussed by learned trial Court being the

document, on the documentary as well as oral evidence where

the plainti)s were hopelessly failed to prove the deed in

question was mortgage by conditional sale.

6.4 It is further argued by learned advocate Mr.Hriday

Buch that learned Appellate Court continued to hold that the

deed in question is not mortgage by conditional sale, but still

learned Appellate Court passed the order for executing re-

conveyance deed and thereby committed serious mistake.

6.5 Mainly, upon the above submissions, learned

advocate Mr.Hriday Buch submitted to allow this Second

Appeal and to quash and set aside the judgment and decree

delivered by the learned 2rst Appellate Court and to restore

the judgment and decree passed by learned trial Court.

7. In contrast, learned advocate Mr.Rahul Dave

appearing for the respondent No.1 has supported the

judgment and decree passed by learned Appellate Court and

further submitted that learned Appellate Court has thoroughly

assessed the issue after referring to Section 58(c) of the

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Transfer of Property Act as well as Sections 10, 19 and 20 of

the Speci2c Relief Act 1963 and believed that it is a deed

where the plainti)s have been given right to reconvey the suit

property. As such, the 2ndings of the learned Appellate Court

are correct, just and reasonable.

7.1 Learned advocate Mr.Dave further submitted that

learned trial Court was incorrect in saying that the defendants

have failed to prove the case.

7.2 Learned advocate Mr.Dave also submitted that no

substantial questions of law arise in the matter. It is

submitted that the questions of law framed in the matter, at

the time of admission of the Second Appeal, failed to meet the

standard of substantial questions of law not decided by the

higher Court rather these questions, according to him, are

questions on facts. Thus, he submitted that the Second Appeal

should not be entertained and be dismissed.

8. Heard learned advocates for both the sides and

also perused the impugned judgments along with the Record

and Proceedings of the suit.

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9. The seminal issue to decide the dispute between

the parties is whether the deed dated 24.9.1979 produced at

Exh.26 before the learned trial Court proves to be mortgage

by conditional sale or it is a sale with condition to repurchase

or it is outright sale.

10. It is settled principle of law that the document has

to be interpreted as it appears on its face with its literal

meaning. The document must be interpreted as a whole.

Focusing on the plaint, nature and ordinary meaning of its

language with clear and unambigous, the primary goal is to

ascertain true intention of the parties by reading the

document in its entirety rather than focusing on another part.

Applying the principle of “literal rule”, the words have to be

given their natural ordinary meaning espeacially when the

language is unambigous. The words take their colar from the

context and the document should be understood based on text

and context if the language is clear. On reading the document

as a whole, the Court should not attempt to interpret it

di)erently, rather the Court should give substantive intent

and to read the document what it re;ects and what has been

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understood between the parties. In Kamal Kishore Sehgal

(D) thr. Lrs and others Vs Murti Devi (Dead) thr Lrs,

reported in 2024 SCC OnLine SC 2582, the Honourable

Supreme Court referred to the cardinal principles of

interpretation of the deed. Paragraph 18 of the judgment

being relevant is taken assistance as under.

“It is a cardinal principle of interpretation that
where the language employed in the instrument is
clear and unambiguous, the common literary
meaning ought to be assigned in interpreting the
same and one should not fall back on any other
inference. Only the expression in clear words
contained in the instrument/document must be
considered and not the surrounding circumstances.
In short, literal construction must be considered
2rst, rather than going into the intention behind
what is said in the instrument / document if the
language of the instrument is clear and
unambigous.”

11. The execution of Exh.26 document being registered

document is not in dispute, but its interpretation. If we read

Exh.26, it is executed between the parties to the dispute on

24.9.1979 in regard to the suit premises whereby the plainti)s

had received Rs.13,000/- as they were in need of household

and agricultural expenses from the defendants. It was

conditional sale with handing over possession of the suit

premises. The further condition stipulates that the defendant

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shall close one window and one door which is opening in the

common wall. Further, the purchaser was restrained from

putting one another door in the common area. It stipulates

further condition that this condition shall be for a period of 7

years and at the end of 7 years, the plainti)s or their heirs will

pay Rs.13,000/- within 7 years to the defendant and the

defendant upon accepting such amount was required to

reconvey the possession to the plainti)s by executing the

deed. The simple and literal meaning of the deed indicates

that at relevant point of time, the plainti)s had conveyed the

title of the suit premises to the defendant. The plainti)s,

though mentioned that it was “Avej” / (consideration) of

Rs.13,000/-, have been accepted however the deed further

stipulates that Rs.13,000/- was taken from the defendant to

meet household and agricultural expenses gives impression of

creation of debtor and creditor relationship. Further terms

and conditions of deed stipulates that restricts right of

enjoyment of the property and did not conven title in favour of

the defendant. Thus, this document creates impression of

mortgage by conditional sale as de2ned under section 58(c) of

the Transfer of Property Act.

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12. On examining the judgment and decree passed by

the learned trial Court, it appears that learned trial Court

swung its pendulum from one end to another end in the same

breath. The learned trial Court believed that it is a mortgage

by conditional sale and also referred Section 58(c) of the

Transfer of Property Act. The learned trial Court also referred

to Sections 19 and 20 of the Speci2c Relief Act 1963,

discussed it but then on minor inconsistencies in the oral

evidence, dismissed the suit. The learned trial Court tried its

best to understand the dispute between the parties but

ultimately, the learned trial Court, having found itself in

confusing position, dismissed the suit.

13. The learned 2rst Appellate Court again ran from

North to South but ultimately reached to the rightful

conclusion that the plainti)s are entitled to the decree as it is

not outright sale, but the learned Appellate Court failed to

understand distinction between “mortgage by conditional

sale” and “sale with condition to repurchase”. The learned

Appellate Court passed the decree in favour of the plainti)s to

reconvey the deed as also the possession thereby impliedly

held that it was mortgage by conditional sale but could not

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understand the provisions of law as well as the evidence laid

by the parties or failed to notice true purport of Exh.26. The

judgment and order passed by the learned Appellate Court is

found as badlam but anyhow the learned Appellate Court

reached to the correct conclusion.

14. Coming back to the facts on hand, it is not

disputable that the plainti)s received Rs.13,000/-. They have

executed Exh.26. The defendant No.2 relinquished his share

in favour of defendant No.1. The plainti)s were ready and

willing to pay back Rs.13,000/- within time limit as stated in

Exh.26 deed. Both the Courts below did not consider the

defence of defendant No.1 being the tenant and has

purchased the suit premises with outright sale. Exh.26 deed

does not contain any clause which transfers the title of the

suit premises in favour of the defendant. Taking of

Rs.13,000/-, thus, found to be borrowing by the plainti)s from

the defendant creating relationship of debtor and creditor

between them which is being essential condition establishing

mortgage by conditional sale.

15. Restricting enjoyment of the property is another

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stark aspect decides that Exh.26 deed is not sale with

condition to repurchase but it is mortgage with conditional

sale. In Bhoju Mandal and others Vs Debnath Bhagat and

others, reported in AIR 1963 SC 1906, the Honourable

Supreme Court explained the legal distinction between two

concepts, namely, “mortgage by conditional sale” and “sale on

condition to repurchase”. Paragraph 4 is extracted as under.

“4. There is a clear legal distinction between the
two concepts, a mortgage by conditional sale and a
sale with a condition of repurchase. The former is
a mortgage, the relationship of debtor and creditor
subsists and the right to redeem remains with the
debtor. The latter is an out and out sale whereby
the owner transfers all his rights in the property to
the purchaser reserving a personal right of
repurchase. The question to which category a
document belongs presents a real di)iculty which
can only be solved by ascertaining the intention of
the parties on a consideration of the contents of a
document and other relevant circumstances.
Decided cases have laid down many tests to
ascertain the intentions of the parties but they are
only illustrative and not exhaustive. Let us
therefore look at the terms of the document
extracted above.”

16. In yet another judgment in the case of Patel

Ravjibhai Bhulabhai (D) Thr.LRS. Vs Rahemanbhai

M.Shaikh (D) Thr. LRS. & Ors., reported in (2016 ) 12

SCC 216, the Honourable Supreme Court again referred to

the distinguishing features beween “mortgage by conditional

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sale” and “sale with an option to repurchase” as enumerated

in Sir Mulla’s Transfer of Property Act. After reproducing

Section 58(c) of the Transfer of Property Act, the Honourable

Supreme Court has held as under.

“7. Section 58 (c) of The Transfer of Property Act,
1882 de2nes “mortgage by conditional sale”, and
reads as under:-

“58.(c) 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
e)ects or purports to e)ect the sale."

Section 60 of The Transfer of Property Act, 1882
provides right of mortgagor to redeem the
property.

8. Distinguishing features between “mortgage
by conditional sale” and “sale with an option to

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repurchase” are enumerated in Mulla's Transfer of
Property Act (11th Edition) as under:-

"(i) In a mortgage with conditional sale, the relation
of a debtor and a creditor subsists while in a sale
with an option of re-purchase, there is no such
relationship and the parties stand on an equal
footing.

(ii) A mortgage by conditional sale is e)ected by a
single document, while a sale with an option of
repurchase is generally e)ected with the help of
two independent documents.

(iii) In a mortgage with conditional sale the debt
subsists as it is a borrowing arrangement, while in
a sale with an option of repurchase, there is no
debt but a consideration for sale.

(iv) In a mortgage with conditional sale, the amount
of consideration is far below the value of the
property in the market but in a sale with an option
of repurchase the amount of consideration is
generally equal to or very near to the value of the
property.

(v) In a mortgage with conditional sale, since this is
a mortgage transaction, the right of redemption
subsists in favour of the mortgagor despite the
expiry of the time stipulated in the contract for its
payment. The mortgagor has the option to redeem
the mortgage and take back the property on the
payment of the mortgage money, after the specied
time, but in a sale with an option of re-purchase,
the original seller must re- purchase the property
within the stipulated time period. If he commits a
default the option of re-purchase is lost."

9. In Tulsi and Others vs. Chandrika Prasad and
Others, (2006) 8 SCC 322 this Court explaining
di)erence between mortgage by conditional sale or
sale with condition to repurchase has observed as
under: (SCC pp.327-28, para 15)

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"15. A distinction exists between a mortgage
by way of conditional sale and a sale with
condition of purchase. In the former the debt
subsists and a right to redeem remains with
the debtor but in case of the latter the
transaction does not evidence an arrangement
of lending and borrowing and, thus, right to
redeem is not reserved thereby".

10. In P.L. Bapuswami vs. N. Pattay Gounder, AIR
1966 SC 902 it is held that: (AIR p.903, para 5)

"5.....The de2nition of a mortgage by
conditional sale postulates the creation by the
transfer of a relation of mortgagor and
mortgagee, the price being charged on the
property conveyed. In a sale coupled with an
agreement to reconvey there is no relation of
debtor and creditor nor is the price charged
upon the property conveyed, but the sale is
subject to an obligation to retransfer property
within the period speci2ed. The distinction
between the two transactions is the
relationship of debtor and creditor and the
transfer being a security for the debt. The
form in which the deed is clothed is not
decisive. The question in each case is one of
determination of the real character of the
transaction to be ascertained from the
provisions of the document viewed, in the
light of surrounding circumstances. If the
language is plain and unambiguous it must in
the light of the evidence of surrounding
circumstances, be given its true legal e)ect".

11. In Vishwanath Dadoba Karale vs. Parisa
Shantappa Upadhya, (2008) 11 SCC 504 the facts
of the case were somewhat similar to the present
case, and as is evident from paragraph 2 in said
case, the Court held the deed was a mortgage by

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conditional sale, and upheld the decree of
redemption for mortgage.

12. In C.Cheriathan vs. P. Narayanan
Embranthiri, (2009) 2 SCC 673, the principle
relating to interpreting of document as to whether
the sale is mortgage by conditional sale or sale with
a condition to repurchase
was discussed, and this Court held as under:

"12. A document, as is well known, must be
read in its entirety. When character of a
document is in question, although the heading
thereof would not be conclusive, it plays a
signi2cant role. Intention of the parties must
be gathered from the document itself but
therefor circumstances attending thereto
would also be relevant; particularly when the
relationship between the parties is in
question. For the said purpose, it is essential
that all parts of the deed should be read in
their entirety".

17. Recently, this Court has also examined, whether

the document is mortgage by conditional sale or sale with

condition to repurchase in Second Appeal No.186 of 2018

between Vohra Ahmedbhai Ibrahimbhai Vs Augustine

Alias Anilkumar anandbhai Khristi & another.

18. Applying the aforesaid dictum of law to the facts of

the present case, since it is a clear case of mortgage by

conditional sale, passing of decree by the learned trial Court

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to reconvey the title after accepting the money being

mortgage money is just and rightous decision and does not

call for any interference, more particularly, in view of the

scope of Section 100 of the Code well explained by the

Honourable Supreme Court in the case of Jaichand (dead)

through LRs v. Sahanulal, reported in 2024 INSC 996.

19. In view of the aforesaid reasons, the substantial

questions of law raised at the time of admission stage has

been successfully rebutted by learned advocate appearing for

the other side as they are not the substantial questions of law.

20. For the foregoing reasons, the Second Appeal sans

merits and deserves rejection and accordingly, it is rejected.

Interim relief, if any, granted earlier stands vacated. R & P be

sent back to the learned trial Court forthwith.

(J. C. DOSHI,J)
H.M. PATHAN

Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: HABIBULLAKHAN MOHAMMADKHAN PATHAN(HC00167), GOV, at High Court of Gujarat on 18/02/2026 14:09:11

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