Holding

The transaction is a sale with a condition of re‑transfer, not a mortgage by conditional sale, and the Section 83 order does not give rise to res judicata; consequently, the High Court’s decision is set aside.

Summary

The appellant, Bishwanath Prasad Singh, sold a piece of land to the respondents on 24 June 1977 and simultaneously executed an agreement for reconveyance, the parties agreeing that the sale would become absolute only upon payment of Rs.3000 within 23 months. The respondents claimed the transaction was a usufructuary mortgage and sought a declaration of redemption under the Bihar Money Lenders Act. The trial court and first appellate court held that the documents constituted a simple sale with a condition of re‑transfer, not a mortgage, and dismissed the suit. The Jharkhand High Court reversed that finding, holding the parties intended a mortgage, and the Supreme Court was asked to consider whether the transaction was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, whether the order allowing a deposit under Section 83 of the same Act operated as res judicata, and whether the best‑evidence rule under Sections 91‑92 of the Indian Evidence Act barred oral evidence. The Supreme Court held that the sale deed and the reconveyance agreement, being separate documents, amount to a sale with a condition of re‑transfer, not a mortgage; the Section 83 order was merely ministerial and did not give rise to res judicata; and the High Court’s judgment was set aside. The appeal was allowed.

Issues considered

Whether a deed of sale coupled with a contemporaneous agreement for reconveyance constitutes a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882.
Whether the order permitting deposit of Rs.3000 under Section 83 of the Transfer of Property Act, 1882, operates as res judicata to bar the present suit.
Whether the best‑evidence rule under Sections 91 and 92 of the Indian Evidence Act, 1872, precludes consideration of oral evidence regarding the parties' intention.
Whether the term ‘Bai‑ul‑wafa’ and the parties' intention render the transaction a mortgage.
Whether the earlier proceedings were merely ministerial and therefore not capable of creating a res judicata bar.

Legislation cited

Code of Civil Procedure, 1908s. 11, s. Explanation VIII
Indian Evidence Act, 1872s. 91, s. 92
Transfer of Property Act, 1882s. 58(c), s. 83

Subjects

Transfer of Property Actmortgage by conditional salesale deedreconveyance agreementres judicatabest evidence ruleIndian Evidence ActSection 83Section 58(c)civil procedure

Judgment

A BISHWANA TH PRASAD SfNUH
v
RAJENDRA PRASAD AND ANR.

FEBRUARY 24, 2006

B [S.B. SINHA AND P.K. BALASUBRAMANYAN. JJ.]

Tram/er of Property Act. 18112- Ss. 58(cJ and 83- -Disposition of
property---Sale or :'vfortgaf_e by Conditional Sale- Respondents· executing
C a sale deed in favour of appellant-- Appellant aecuting an agreement of
reconveyam:e on the same day· Respondents alleKing that transaction in
effect and substance constit~te a mortgage-· Held, transaction is sule and not
mortgage.

Res judicata· -('ode rfCivil Procedure section 11 Exp/. V!Jl Transfer
D al Property Act, 18('{! Seo·1ion 83- Respondems · suil jiJr declaration that
the dee,! executed hv him conslilute usufrucruarr n111ngag.: in view <f the
agreement of renmveyance of the some day ewcurcd /iv Appellc.mt -His
application u/s 83 lo dep.1sit the money allowed Held. order permitting
respondents to d<.posit an amount al Rs. 3000 wou/J nor operate as res
judicata as thereby nu issue between the panrt:s was heard and finally
E decided.

Indian Evidence A~·t, 1882- Section 91 Best Evidence Rule--
Disposition of property--Agreemenl ufreconveyanc·e executed by the vendee
un the same day the vendor exernted sale deed -Agreement executed for a ...
F fixed period and terms of the agreement clearly shows that the parties
understood the same to he a deed of reconveyance and not mortgage or a I
conditional sale Held, if 1he terms of any disposition of property is reduced
lo writing, no evidence is udmissihle in proof of the lams of such disposition
except the document itsell

G Respondent filed a suit for a declaration that the transaction dated
24.6.1977, although ostensibly expressed in the shape ofa deed of sale, was
in fact a transaction of usufructuary mortgage and the same stands redeemed
u/s 12 of the Bihar Mone)' Lenders Act, 1974. They averred that they were
•
occupancy raiyats of the suit land. Appellant allegedly gave an advance of Rs.
3000 on respondents executing a deed of usufructuary mortgage in respect
J{ 566
)·

BISHWANATH PRASAD SINGH''· RA.IENDRA PRASAD 567

r of the suit land. However, appellant allegedly asked them to execute a deed of A
sale on ground that he did not possess any money lending license. On the
same day appellant in turn executed a registered deed of agreement whereby
and whereunder he agreed to execute a deed of reconveyance on his receipt of
the said sum of Rs. 3000 within 23 months from that day. Respondents filed
an application u/s 83 of the Transfer of Property Act, 1882 seeking permission
to deposit Rs. 3000 which was allowed. Trial Court and first appellate court
B
dismissed the suit holding that deed of sale coupled with agreement of
reconveyance on the same date did not constitute a mortgage with conditional
~
sale. High Court allowing the appeal held that real intention of parties was
that the transaction was to be one of mortgage. Hence an appeal to this Court.

Allowing the appeal, the Court
c
HELD: Per SB. Sinha, J :

1.1. Section 58 (c) of the Transfer of Property Act, 1882 defines
mortgage by conditional sale. A bare perusal of the said provision clearly
D
shows that a mortgage by conditional sale must be evidenced by one document
whereas a sale with a condition of re-transfer may be evidenced by more than
one document. A sale with a condition of retransfer is not mortgage. It is not
a partial transfer. By reason of such a transfer all rights have been
transferred reserving only a personal right to the purchaser, and such a
personal right would be lost, unless the same is exercised within the E
stipulated time. In terms of section 91 of the Evidence Act, if the terms of any
disposition of property is reduced to writing, no evidence is admissible in proof
of the terms of such disposition of property except the document it~elf. "
1576-C, G-H; 575-A-B]

Ishwar Dass Jain (D) through Lrs. v. Sohan Lal (D) by Lrs., 12000] 1 F
-\ SCC 434; Roop Kumar v. Mohan Thedani, (20031 6 SCC 595; Pandit
Chunchun Jha v. Sheikh Ebadat Ali and Anr., (1955] l SCR 174; Munshir
Mohammed Khan (D) Lrs. v. Sajeda Bano (Smt.) and Ors., 120001 3 SCC 536
and Umabai and Anr. v. Nilkanth Dhondiba Chavan (Dead) by Lrs. and Anr.,

-
.\
i
(2005] 6 sec 243, refe;red to.

Indira Kaur and Ors. v. Shea Lal Kapoor, (1988] 2 SCC 488 and Ramlal
and Anr. v. Phagua and Ors., 12006] l SCC 168 and Chandramani Pradhan
G

v. Hari Pasavat, AIR (1974) Orissa 47, distinguished.

1.2 A deed as is well known must be construed, having regard to the H
568 SUPREME COURT REPORTS [2006] 2 S.C.R.

A language used therein. By reason of the said deed of sale, the right, title and I'

interest of the respondents herein was conveyed absolutely in favour of the
appellant. The sale deed does not recite any other transaction of advance of
any sum by the appellant to the respondent was entered into by and between
the parties. In fact, the recit.als made in the sale deed categorically show that
the respondents expressed their intention to convey the property to the
B appellant herein as they had incurred debts by taking loans from various other
creditors. It is of some si1:nificance to note that therein the expressions
"vendor", "vendee", "solid" and "consideration" have been used. These
expressions together with the fact that the sale deed was executed to be within
a period of 23 months, i.e., upto June, 1978, evidently the expression
C 'Vaibulwafa' as a condition was loosely used. Furthermore, the agreement was
also executed for a fixed pc~riod. The other terms and conditions of the said
agreement (Ekrarnama) al.so clearly go to show that the parties understood
the same to be a deed of reconveyance and not mortgage or a conditional sale.
In the instant case, as notic:ed hereinbefore, the transfer is complete and not
partial, no stipulation has been made that the appellant cannot transfer the
D property. Not only that the appellant was put in possession of the land, his
name was also mutated. [573-E-G; 574-E-G; 578-H; 579-AI

2. Section 83 of the Transfer of Property Act, 1882 merely permits the
mortgagor to deposit mortgage amount. Even in a case where such deposit is
E made, in the event the mortgagee refused to accept the deposit, the mortgagor
would have no option but to institute a suit for redemption relying on the
mortgage money deposited. The respondent did not file a suit for redemption.
It may be that the appellant objected to the said deposit but despite the fact
that the purported mortgage amount was allowed to be deposited, the same •
being not binding upon the mortgagee as he could not be compelled to accept
F the same, the question of applying the principles of res judicata would not
t
arise. By reason of such deposit the status of the parties is not altered. For
filing a suit for redemption by the mortgager, deposit under Section 83 is not
a precondition. 1580-D-F)

-
Chandramani Pradhan v. Hari Pasavat, AIR (1974) Orissa 47;
G Sulochana Amma v. Narayanan Nair, (1994) 2 sec 14; Rajendra Kumar v.
Kalyan (Dead) by Lrs., 12000) 8 SCC 99; Mahi/a Bajrangi (Dead) through
Lrs. and Ors. v. Badriba1 wlo Jagannath and Anr.. 120031 2 SCC 464 and ..
Union of India v. Pramod Gupta (D) by Lrs. and Ors., JT (2005) 8 SC 203,
referred to
H
),
BISHWANATH PRASAD SINGH v. RAJENDRA PRASAD 569
Per P.K. Balasubramanyan, J. (Concurring): A
l. It is clear that what was involved in this case was the sale followed by
a contemporaneous agreement for reconveyance of the property. Such an
agreement to reconvey is an option contract and the right has to be exercised
within the period oflimitation provided therefore. In such an agreement for
reconveyance, time is of the essence of the contract. The plaintiffs not having B
sued within time for reconveyance, it would not be open to them to seek a
declaration that the transaction of sale entered into by them construed in the
f light of the separate agreement for re-conveyance executed by the purchaser,
should be declared to be a mortgage. Such a suit would also be hit by Section
91 of the Evidence Act, subject to the exceptions contained in Section 92 of C
that Act. (582-B-DJ

2. If the proceedings were only ministerial it could not be argued that
anything was "heard and finally decided" in a proceeding under Section 83
of the Act, which could operate as res judicata. For, the essential requirement
of a bar by res judicata is that a matter should have been directly and D
substantially in issue in a prior litigation, and it should have been heard and
finally decided by a court of competent jurisdiction. Of course, Explanation-
VIII to Section 11 of the Code of Civil Procedure justifies a contention that
even if the court that heard and finally decided an issue between the parties
was one of limited jurisdiction, its adjudication would operate as res judicata.
It may be noticed that the deposit under Section 83 of the Act has to be made E
in a Court in which the mortgagor might have instituted a suit.for redemption.
Obviously, that is not a court oflimited jurisdiction in the sense of the term
as used in Explanation-VIII to Section 11 of the Code of Civil Procedure.
... (583-C-G]
F
,.... Pandit Chunchun Jha v. Sheikh Ebadat Ali and Anr., [1955] 1 SCR
I
174; Forbes v. Ameeroonissa Begam, 10 MIA 340 at page 350;
Ramakrishnaiah v. Krushi Vidyalaya Sangam, (1994) 2 MIJ 284;
Govindaswami v. Bakkim, (1983) 2 MLJ 207 and Chandramani Pradhan v.
Hari Pasayat. (1974) Orissa 47, referred to.
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1276 of2006.

From the Final Judgment and Order dated 11.09.2003 of the Jharkhand
High Court in Appeal from Appellate Decree No. 176 of 1998.

P.S. Mishra, Tathaghat H. Vardhan, Upendra Mishra, Dhruv Kumar Jha, H
570 SUPRr:'vlE COURT REPORTS (2006] 2 S.C.R.

A Amitesh C. Mishra. Ravi C. Prakash and C.D. Singh for the Appellant.
Vijay Hansaria and Sheetal Prasad Juneja for the Respondents.

The Judgment of the Court was delivered by

B S.B. SINHA, J. Leave granted.

This appeal is directed against the Judgment and Order dated 11th
September, 1988 passed by a learned Single Judge of the Jharkhand High
Court, Ranchi in Appeal from Appellate Decree No.176of1988 when:by and
whereunder a second appeal preferred by the respondents herein from a
C Judgment and Decree dated 18.7.1988 passed by the 6th Additional District
Judge, Palamau at Daltonganj in Title Appeal No.26 of 1987 setting aside the
Judgment and Decree dated 27.6.1987 passed by Munsif, DaltonganJ in Title
Suit No. I I of 1986, was allowed.

The respondents herein filed a suit against the appellant, inta alia, for
D a declaration that the tran,actiun dak:d 24.6. 1 CJ77. although ostensibly
expressed in the shape of a det:d of salt:. "'as ;n fact a transaction of
usufructuary mortgage and for a further declaration that the said transaction
stands redeemed under Section 12 of the Bihar Mone) I ~nders Act, 1974. The
respondents hen:in further sought for a decree directing the appellant to
E deliver vacant possession of the suit land to them, failing which they might
be put back in possession thereof through the process of Court. The
respondents averred that they were occupancy raiyats of the suit land. The
appellant herein allegedly gave an advance of Rs.3,000/- on their executing
a deed of usufructuary mortgage in respect of the suit land. However, allegedly
the appellant asked them to execute a deed of sale on the ground that he did
F not possess any money lending licence, whereupon indisputably such a deed
was executed on 24.6.1977. The appellant in turn executed a registered deed t
of agreement in his favour whereby and whereunder the respondent agreed
to execute a deed of reconveyance on his receipt of the said sum of Rs.3,000.

The appellant herein in his written statement, on the other hand,
G contended that in fact a deed of sale was executed on 24.6.1977 by the
respondents in his favour. It is, however, accepted that the appellant executed
a deed of an agreement for sale on the same day. It is furthermore not in
dispute that the respondents herein filed an application in the Court of
Munsif, Daltonganj being Miscellaneous Case No.14 of I978 purporting to be
H under Section 83 of the Transfer of Property Act seeking its permission to
,.>-~
BISHWANA TH PRASAD SINGH v. RAJENDRA PRASAD [SINHA, J] 571

deposit an amount of Rs.3,000/- By an Order dated 22.3.1979, despite an A
}
objection taken in this behalf by the appellant herein that the transaction in
question was not a mortgage, the respondents were permitted to deposit the
said amount.

It is also not in dispute that the property in question was mutated in
the name of the appellant in the Revenue Records of Rights. B

The Trial Court, in view of the pleadings of the parties, framed the
following issues :
f
"(i) Is the suit, as framed maintainable?

(ii) Have the plaintiffs got cause of action for the suit?
c
(iii) Is the sale deed dated 24.6.1977 real transaction of usufructuary
mortgage deed in view of the agreement of the same day executed
by the defendant and, if so, are the plaintiffs entitled to a decree
as prayed for?
D
(iv) To what relief or reliefs, if any, the plaintiffs are entitled?"
.-->.,
The saiv suit was dismissed holding that the deed of sale dated 24.6. I 977
coupled with the said agreement of reconveyance of the same date did not
constitute a mortgage. It was further held that the remedy available to the .
respondents was only to file a suit for specific performance of the contract E
and as such a relief had not been availed of by them within a period of three
years, no relief could be granted in their favour. The appeal preferred by the
respondents herein thereagainst was also dismissed.

The respondents thereafter filed a second appeal before the High Court
which was allowed by the impugned judgment. F
. "\
The purported substantial question of law framed by the High Court is
as under :

"Whether in view of the admission made by respondent no.2 in Ext.2
to the effect that the parties understood the document to be a deed G
of Baibulbafa, learned court committed error of law in construing
.,
,17_ Ext.A without taking into consideration the admissions made by the
../
-1 .{ parties to the aforementioned effect, in view of the decision reported
in AIR 1988 SC 1074."

The High Court in its judgment came to the conclusion that the recital H
572 SUPREME COURT REPORTS [2006) 2 S.C.R.

A of both the documents spelt out that the real intention of the parties was that
r
the transaction was to be one of mortgage holding that the said deed of
mortgage was executed by the respondents in favour of the appellant for the
purpose of securing a loan of Rs.3,000/-. It was also held that the agreement
for sale dated 24.6.1977 did not have the efficacy to control the import of the
B recitals made in the said conveyance dated 24.6.1977.

Mr. P.S. Mishra, learned Senior Counsel appearing on behalf of the
appellant raised a short question in support of this appeal. It was contended
that having regard to the provisions of Section 58(C) of the Transfer of
Property Act, the High Court committed a manifest error in holding the
C transaction to be one of mortgage as the said plea could not have been raised
having regard to the provisions of Sections 91 and 92 of the Indian Evidence
Act. It was further contended that the order dated 22.3.1979 passed by the
Civil Court in Miscellaneous Case No.14 of 1978 filed under Section 83 of the
Transfer of Property Act, did not operate as res judicata as thereby no issue
between the parties was heard and finally decided. It was further submitted
D that in view of the recitals in the said deed dated 24.6.1977, the High Court
committed an error in holding that by reason thereof the right title and interest
of the respondents did not pass on to the appellant herein. It was argued that
the High Court also committed a manifest error in interfering with the concurrent
findings of the Trial Court as also the First Appellate Court.

E Mr. Vijay Hansaria, learned Senior Counsel appearing on behalf of the
respondents, on the other hand, supported the judgment of the High Court.
It was submitted that the order dated 22.3.1979 would operate as res judicata
in view of the fact that the issue as to whether the said transaction evidenced
by the deed dated 24.6.1977 constituted a mortgage or a sale, had been
F determined thereby.
t
It is not in dispute that the deed in question was titled as a 'deed of
sale'. The respondents were described as 'vendor' and the appellant as a
'vendee'. The nature of the deed was mentioned as 'Sale Deed (Kewala)'. The
amount paid by the appellant to the respondents was treated to be the
G consideration money. In the recitals made therein the purpose of executing the
deed of sale was stated to be as for repaying the debts taken by the
respondents from several money l!mders and it was recited that they did not
have any source of income to repay the debts and rto means of liquidating
the debts except to sell out the said land. It was categorically stated:

H "Therefore, vendors on their own wishes and in good mental capacity
BISHWANATH PRASAD SINGH v. RAJENDRA PRASAD [SINHA, J] 573

7 sold the property/land mentioned in column 5 aforesaid for a A
consideration of Rs.3000/- to the aforesaid vendee Sh. Vishwanath
Prasad Singh and accordingly transferred all rights pertaining to this
land to Sh. Vishwanath Singh. From today neither Vendors nor their
successors or legal heirs have no right or title over this land."

On the same date, as noticed hereinbefore, an agreement for sale B
(Ekramama) was executed where again the parties were described as 'Vendor'
and 'Vendee'. In the said agreement for sale, the parties referred to the deed
-of sale executed on the said date by the respondents. However, it was stated
therein that the said deed of sale was executed on the Baibulbafa condition.
It was also stated that the 'vendees' agreed that the 'vendor' or his successors C
or heirs whenever would pay the consideration amount of Rs.3,000/- within
23 months from that date, i.e., upto the month of June, 1978, then he would
execute the deed of sale pertaining to the said property.

The learned Trial Court as also the learned First Appellate Court arrived
at a concurrent finding that the said transaction did not constitute a mortgage D
but thereby the respondents executed a deed of sale in favour of the appellant
and the appellant in tum executed an agreement for reconveyance in their
favour. 'Baibulwafa' was held to be a deed of conditional sale with a contract
of repurchase and not a mortgage with conditional sale. On the aforesaid
findings it was categorically held that a suit for declaration that the said
transactions in effect and substance constitute a mortgage, was not E
maintainable.

A deed as ·is well known must be construed, having .regard to the
language used therein. We have noticed hereinbefore that by reason of the
said deed of sale, the right, title and interest of the respondents herein was F
conveyed absolutely in favour of the appellant. The sale deed does not recite
any other transaction of advance of any sum by the appellant to the
respondents was entered into by and between the parties. In fact, the recitals
made in the sale deed categorically show that the respondents expressed their
intention to convey the property to the appellant herein as they had incurred
debts by taking loans from various other creditors. G
... We are not oblivious of the fact that the term 'Bai-bil-wafa' or 'Bye-bil-
wuffa/wafa' is an Arabic term which may mean a mortgage or a condition sale
but the said term is not synonymous to 'Bai-ul-wafa'. In P. Ramanatha Aiyar'.s
Advanced Law Lexicon, 3rd edition at page 442, it is stated:
H
574 SUPREME COURT REPORTS [2006] 2 S.C.R.

A 'Bai-ul-wafa. There is no unanimity of opinion among the jurisconsults f

of Islam on the point whether a transaction of Bail-ul-wafa is a valid
sale, a fasid sale or a mortgage. Hence, it was held that "the Court is
consequently, free to choose any of the opinions (of jurists) which
might be conformable to the equities of the case and may carry out
the real intention of the parties." It was further held that "in this type
B of transaction, the contract between the parties is to the effect that
the transferee sells to the transferee the property in question for either
within a fixed period or at any undefined time, the sale would to the
transferor".

We have noticed hereinbefore that the nature of deed was stated to be
c agreement (Ekramama), the nature of the document was not stated to be ·Bai-
ul-wafa', the relevant clause whereof reads as under:

"Because the vendor today of this date has sold the property of this
deed to the vendee through registered agreement on the Vaibulwafa
D condition and during this period the vendor and vendee has already
agreed that this case will remain as Vaibulwafa and as per the said
Sarait, vendor of this deed agrees that the vendee of this deed or his
successors or heirs whenever will pay the consideration amount of
this deed amount to Rs. 3000/- (three thousand) within 23 months from
today i.e. upto the month of June, 1978 after harvesting of the crops
E i.e. Paddy or Ravi, then 1the vendor or my legal heirs or my successors
after receiving the said consideration amount of Rs. 30001- will execute
the sale deed pertaining to the property mentioned in column 5 of this
deed in favour of the vendee or his legal heirs or successor."

It is of some significance to note that therein the expressions "vendor",
F "vendee", "sold" and "consideration" have been used. These expressions
t
together with the fact that the sale deed was executed to !:le within a period
of23 months, i.e., upto June, 1978, evidently the expression ·vaibulwafa' as
a condition was loosely used.

G Furthermore, the agreement was also executed for a fixed period. The
other terms and conditions of the said agreement (Ekrarnama) also clearly go
to show that the parties understood the same to be a deed of reconveyance
and not mortgage or a conditional sale.
..
The terminology 'Vaibulwafa' used in the agreement does not carry any
H meaning. It could be either' Bai-ul-wafa' or· Bai-bil-wafa'.
BISHWANA TH PRASAD SINGH v. RAJENDRA PRASAD [SINHA, J.] 575
7 It will bear repetition to state that with a view to ascertain the nature A
of a transaction the document has to be read as a whole. A sentence used
or a term used may not be determinative of the real nature of transaction.

Baibulwafa, it was held by the trial court connotes only an agreement
for sale. In terms of Section 91 of the Evidence Act, if the terms of any
disposition of property is reduced to writing, no evidence is admissible in B
proof of the terms of such disposition of property except the document itself.

In Ishwar Dass Jain (D) through Lrs. v. Sohan Lal (D) by Lrs., [2000]
I SCC 434 this Court in a case where a transaction in question was said to
be a sham transaction opined that oral evidence was not admissible when a C
party relied upon the said document.

In Roop Kumar v. Mohan Thedani, [2003] 6 SCC 595 the Court laid
down the parameters of best evidence rule in the following terms:

"Section 91 relates to evidence of terms of contract, grants and other
disposition of properties reduced to form of document. This section D
merely forbids proving the contents of a writing otherwise than by
.writing itself; it is covered by the ordinary rule of law of evidence,
applicable not merely to solemn writings of the sort named but to
others known sometimes as the "best-evidence rule". It is in reality
declaring a doctrine of the substantive law, namely, in the case of a E
written contract, that all proceedings and contemporaneous oral
expressions of the thing are merged in the writing or displaced by it.
(See Thayer's Preliminary Law on Evidence, p. 397 and p. 398;
Phipson's Evidence, 7th Edn., p. 546; Wigmore's Evidence, p. 2406.)
It has been best described by Wigmore stating that the rule is in no
·~ sense a rule of evidence but a rule of substantive law. It does not F
exclude certain data because they are for one or another reason
untrustworthy or undesirable means of evidencing some fact to be
proved. It does not concern a probative mental process the process
of believing one fact on the faith of another. What the rule does is
to declare that certain kinds of facts are legally ineffective in the G
substantive law; and this of course (like any other ruling of substantive
law) results in forbidding the fact to be proved at all. But this prohibition
of proving it is merely that dramatic aspect of the process of applying
the rule of substantive law. When a thing is not to be proved at all
the rule of prohibition does not become a rule of evidence merely
because it comes into play when the counsel offers to "prove" it or H
576 SUPREME COURT REPORTS [2006] 2 S.C.R.

A "give evidence" of it; otherwise, any rule of law whatever might be
reduced to a rule of evidence. It would become the legitimate progeny
of the law of evidence. For the purpose of specific varieties of jural
effects sale, contract etc. there are specific requirements varying
according to the subject. On the contrary there are also certain
fundamental elements common to all and capable of being generalised.
B Every jural act may have the following four elements:

(a) the enaction or creation of the act;

(b) its integration or embodiment in a single _memorial when desired;

(c) its solemnization or fulfilment of the prescribed forms, if any; and
c
(d) the interpretation or application of the act to the external objects
affected by it."

Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage
by conditional sale in the following terms:
D "(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

E 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
F mortgagee a mortgagee by conditional sale :
t
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."

G A bare perusal of the said provision clearly shows that a mortgage by
conditional sale must be evidenced by one document whereas a sale with a
condition of re-transfer may be evidenced by more than one document. A sale
with a condition of retransfer, is not mortgage. It is not a partial transfer. By
reason of such a transfer all rights have been transferred reserving only a
,. .
personal right to the purchaser, and such a personal right would be lost,
H unless the same is exercised within the stipulated time.
BJSHWANA TH PRASAD SINGH'" RAJENDRA PRASAD [SINHA, J .] 577

In Pandit Chunchun Jha v. Sheikh Ebadat Ali and Anr., [1955] l SCR A
174 this Court clearly held:

" ... We think that is a fruitless task because two documents are
seldom expressed in identical terms and when it is necessary to
consider the attendant circumstances the imponderable variables which
that brings in its train make it impossible to compare one case with B
another. Each must be decided on its own facts ... "
+ Yet again in Mushir Mohammed Khan (DJ Lrs. v. Sajeda Bano (Smt.)
& Ors., [2000] 3 SCC 536 this Court upon construing Section 58 (c) of the Act
and opined:
c
"9-The proviso to this clause was added by Act 20 of 1929 so as to
set at rest the conflict of decisions on the question whether the
conditions, specially the condition relating to reconveyance contained
in a separate document could be taken into consideration in finding
out whether a mortgage was intended to be created by the principal
deed. The legislature enacted that a transaction shall not be deemed D
to be a i:nortgage unless the condition for reconveyance is contained
in the document which purports to effect the sale."

Referring to Chunchun Jha (supra) it was held:

"14-Applying the principles laid down above, the two documents read E
together would not constitute a "mortgage" as the condition of
repurchase is not contained in the same documents by which the
· property was sold. The proviso to clause (c) of Section 58 would
operate in the instant case also and the transaction between the
parties cannot be held to be a "mortgage" by conditional sale" F
In Umabai and Anr v. Nilkanth Dhondiba Chavan (Dead) by Lrs. And
Anr., [2005] 6 SCC 243, wherein of us was a party, this Court held :

"21. There exists a distinction between mortgage by conditional sale
and a sale with a condition of repurchase. In a mortgage, the debt G
subsists and a right to redeem remains with the debtor; but a sale with
a condition of repurchase is not a lending and borrowing arrangement.
There does 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 H
578 SUPREME COURT REPORTS (20061 2 S.C.R.

A that if the condition for retransfer is not embodied in the document
which effects or purports to effect a sale, the transaction will not be
regarded as a mortgage. (See Pandit Chunchun Jha v. Sk. Ebadat Ali,
Bhaskar Waman Joshi v. Narayan Ram bi/as Agarwal, K. Simrathmull
v. S. Nanjalingiah Cowder, Mushir Mohammed Khan and Tamboli
Raman/al Motilal.)"
B
The High Court relied upon Smt. 1ndira Kuur & Ors. v. Shea Lal
Kapoor, [ 1988] 2 SCC 488 therein the court took into consideration the factors
adumbrated therein, particularly, a long stipulated period of l 0 years for
conveying the property and the vendee was prohibited from selling and
C parting with his right, title and interest for 10 years. The vendor was allowed
to occupy the property as a tenant on payment of Rs. 80/- per month. No
order of mutation was ~assed in his favour. It was held:

"6. In the present case having regard to the facts and circumstances
highlighted in the course of the discussion pertaining to the question
as to whether or not the transaction was a transaction of mortgage
D
having regard to the real intention of the parties it would be difficult
to hold that the agreement to sell executed by the defendant in favour
of the plaintiff was by way of a "'concession·'. It was a transaction
entered into by the defendant who was a hard-headed businessman
and the documents in question have been carefully framed in legal
E terminology taking into account the relevant provisions of law. The
transaction also discloses the awareness of the defendant about
Section 58(c)4 of the Transfer of Property Act as is evident from the
fact that the reconveyance clause is not embodied in the sale deed
itself. In the agreement to sell, no reference has been made to the
transaction of sale though it has been executed contemporaneously.
F t
The defendant who has permitted the plaintiff to continue in possession
on payment of rent equivalent to about 13= per cent interest and was
evidently aware of all the dimensions of the matter would not have
granted any concession or executed the agreement by way of a
concession. The agreement was executed evidently because the
G plaintiff would not have executed the sale deed unless an agreement
to sell by a contemporaneous document was also executed to enable
the plaintiff to enforce specific performance within ten years. It was
•
therefore a transaction entered into with open eyes by the defendant
and there was no question of granting any concession."

H In the instant case, as noticed hereinbefore, the transfer is complete and
BISHWANA TH PRASAD SINGH v. RAJENDRA PRASAD [SINHA, J.l 579
not partial, no stipulation has been made that the appellant cannot transfer A
the property. Not only that the appellant was put in possession of the land,
his name was also mutated.

In Ram/al and Anr v. Phagua and Ors., [2006] 1 SCC 168, this Court
having regard to the peculiar fact situation obtaining therein opined:
B
"In our opinion, agreement to reconvey the property will not ipso
facto lead to the conclusion that the sale is nominal and in view of
the stand of Defendant 8, as also of the fact that the property worth
J Rs. 700 has been purportedly sold for R~. 400, we are of the considered
opinion that the sale deed dated 1-12-1965 did not convey any title
to Defendant 8. It is well settled by a catena of decisions that the c
vendor cannot convey to the vendee better title than she herself has."

As of fact, it was held therein that the sale deed in question was not
a real sale deed but was by way of a surety. In that case, furthermore, the
defendant categorically admitted that the plaintiff had taken loan. It is in that D
situation, the transaction was held to be a mortgage. Apart from it, there were
other circumstances which led the court to arrive at the said conclusion. Th·~
said decision, therefore, cannot have any application in the instant case.

The question which now arises for consideration is as to whether the
aforementioned order dated 22.3.1979 passed in Misc. Case No. 14/78 would E
operate as res judicata. Section 83 of the Transfer of Property Act reads as
under:

"Power to deposit in Court money due on mortgage.- At any time
after the principal money payable in respect of any mortgage has
become due and before a suit for redemption of the mortgaged property F
is barred, the mortgagor, or any other person entitled to institute such
suit, may deposit, in any court in which he might have instituted such
suit, to the account of the mortgagee, the amount remaining due on
the mortgage.

G

. -"
Right to money deposited by mortgagor.- The court shall thereupon
cause written notice of the deposit to be served on the mortgagee,
....~ . and the mortgagee may, on presenting a petition (verified in manner
. prescribed by law for the verification of plaints) stating the amount
then due on the mortgage, and his willingness to accept the money
so deposited in full discharge of such amount, and on depositing in H
<'
580 SUPREME COURT REPORTS (2006] 2 S.C.R.

A the same court the mortgage-deed and all documents in his possession f
or power relating to the mortgaged property, apply for a and receive
the money, and the mortgage-deed, and all such other documents so
deposited shall be delivered to the mortgagor or such other person
as aforesaid.

B Where the mortgagee is in possession of the mortgaged property, the
court shall, before paying to him the amount so deposited, direct him
to deliver possession thereof to the mortgagor and at the cost of the
mortgagor either to re-transfer the mortgaged property to the mortgagor t
or to such third person as the mortgagor may direct or to execute and
(where the mortgage has been effected by a registered instrument)
c have registered an acknowledgement in writin£ that any right in
derogation of the mortgagor's interest transferred to the mortgagee
has been extinguished."

.r
The provision merely permits the mortgagor to deposit the mortgage
D amount. Even in a case where such deposit is made, in the event the mortgagee
refused to accept the deposit, the mortgagor wou Id have no option but to
institute a suit for redemption relying on the mortgage money deposited. The
respondent did not file a suit for redemption. It may be that the appellant
objected to the said deposit but despite the fact that the purported mortgage
amount was allowed to be deposited, the same being not binding upon the
E mortgagee as he could not be compelled to accept the same, the question of
applying the principles of res judicata would not arise. (See Chandramani
Pradhan v. Hari Pasayat, AIR (1974) Orissa 47]. By reason of such deposit
the status of the parties is not altered. For filing a suit for redemption by the
mortgager, deposit under Section 83 is not a precondition.

F It is well-known that the function of a court in terms of Section 83
Transfer of Property Act is procedural in nature.

For attracting the principles of res judicata, the submissions of Mr.
Hansaria is that the court of the Munsif was a court exercising limited
G jurisdiction while entertaining an application under Section 83 of the Transfer
Property Act and the decision of such a court of limited jurisdiction would
also operate as res judicata. Strong reliance has been placed by Mr. Hansaria
on Sulochana Amma v. Narayanan Nair, (1994] 2 SCC 14]. He submitted that
,
in that case a suit was filed before a court of limited pecuniary jurisdiction
and in view of the decision thereon, explanation VII! to Section 11 of the Code
H of Civil Procedure was held to be attracted.
I

t-
BISHWANATH PRASAD SINGH v. RAJENDRA PRASAD [P.K. BALASUBRAMANYAN, J.] 581
In Rajendra Kumar v. Kalyan (Dead) by Lrs., [2000] 8 SCC 99 this Court A
merely held that the expression 'court of limited jurisdiction' is of wide
amplitude. The Court made a distinction between a procedural statute and a
substantive statute for applicability of the principles of res judicata. In that
case the earlier suit was filed before a court of competent jurisdiction.

In Mahi/a Bajrangi (Dead) through Lrs. & Ors. v. Badribai w/o B
Jagannath & Anr., [2003] 2 SCC 464 this Court clearly held that the principles
of res judicata would be applicable only when an issue arose directly and
substantially in an earlier suit, a finding regarding an incident or collateral
-· question reached for the purpose of arriving at the final decision would not
constitute res judicata.
c
In Union of India v. Pramod Gupta (D) by Lrs. & Ors., JT (2005) 8 SC
203] this Court opined:

"28- The principle of res judicata would apply only when the !is was
inter parties and had attained finality in respect of the issues involved.
D
The said principle will, however, have no application inter alia in a
--+ case where the judgment and/or order had been passed by a court
having no jurisdiction therefore, and/or in a case involving pure
question of law. It will also have no application in a case where the
judgment is not a speaking one."
E
The question of determination of being a pure question of law, the
principles of res judicata shall have no application. Therefore, the High Court,
in our opinion committed a manifest error in interfering with the judgment and
decree passed by the trial court as also the appellate court in exercise of its
jurisdiction under Section I 00 of the Civil Procedure Code.
F
}. For the reasons aforementioned, the impugned judgment of the High
Court cannot be sustained. It is set aside accordingly. The appeal is allowed
with cost. Counsel's fee quantified at Rs. 5,000.

P.K. BALASUBRAMANYAN,J.
G
1. I respectfully agree with the reasoning and conclusion of my learned
Brother. But I feel that I ought to add a few words of my own in the light
4,.;
'\ of the contentions raised.

2. Going by Section 58 (c) of the Transfer of Property Act,_ it is clear
that for an ostensible sale deed to be construed as a mortgage by-conditional H
582 SUPREME COCRT REPORTS [2006] 2 S.C.R.

A sale, the condition that on repayment of the consideration by the seller the
buyer shall transfer the property to the seller is embodied in the document·
which effects or purports to effect the same. It has so been clarified by this
Court also in Pandit Chunchun Jha v. Sheikh Ebadat Ali and Anr., [I 955]
I SCR 174 by stating, "If the sale and agreement to repurchase are embodied
B in separate documents, then the transaction cannot be a mortgage whether
the documents are contemporaneously executed or not." Therefore, it is clear
that what was involved in this case was the sale followed by a
contemporaneous agreement for re-conveyance of the property. Such an
agreement to re-convey is an option contact and the right has to be exercised
within the period of limitation provided therefor. It has also been held that in
C such an agreement for re-conveyance, time is of the essence of the contract.
The plaintiffs not having sued within time for re-conveyance, it would not be
open to them to seek a declaration that the transaction of sale entered into
by them construed in the light of the separate agreement for re-conveyance
executed by the purchaser. should be declared to be a mortgage. Such a suit
would also be hit by Section 91 of the Evidence Act, subject to the exceptions
D contained in Section 92 of that Act.

3. Learned counsel for the respondents vehemently coniended that the
permission granted to the plaintiffs to make a deposit under Section 83 of the
Transfer of Property Act involved an adjudication that there was a subsisting
E mortgage since the permission to deposit was granted by overruling the
objections of the defendant that the transaction was not a mortgage. That
adjudication would operate as res judicata and bar the appellant from
contending now that the transaction is not a mortgage but is a sale. The
question is whether any adjudication is involved when a mortgagor in terms
of the Section makes a deposit of the amount remaining due on the mortgage
F even though he is permitted to do so after overruling the objections of the
alleged mortgagee that there was no mortgage involved or there was no t
subsisting right to redeem. The Section itself indicates that on deposit of the
money, it is open to the mortgagee either to receive the money on complying
with the obligations imposed on him by the Section or refuse to receive the
G money. In a case where the mortgagee refuses to perform what he is to
perform under Section 83 of the Act, the only remedy available to the mortgagor
is to sue for redemption in terms of Section 91 of the Transfer of Property
Act.

4. Section 83 is a survival from Bengal Regulation I of 1778 which
H enabled the mortgagor to redeem by payment into court. A corresponding
I

~-- •

BISHWANATH PRASAD SINGH v. RAJENDRA PRASAD [P.K. BALASUBRAMANYAN, J.] 583

~
right was given to the mortgagee by Bengal Regulation XVII of 1806 to make A
an application in the court if he intended to foreclose a mortgage by conditional
sale. (See Mulla's Transfer of Property Act, 9th Edn. Page 83). It was held by
the Privy Council in Forbes v. Ameeroonissa Begam (10 MIA 340 at page 350]
that under the Bengal Regulation XVII of 1806, the functions of the Judge
were purely ministerial. The same position was adopted by the various High
Courts. In Ramakrishnaiah v. Krushi Vidyalaya Sangam, (1944) 2 MLJ 284], B
it was held that the question of correctness of the amount could not be gone
into as such an enquiry was beyond the scope of Section 83 of the Transfer
::~ of Property Act. The Court was not called upon to give any findings. This
view was followed by the same Court in Govindaswami v. Bakkim (1983) 2
MLJ 207. My learned Brother has referred to Chandramani Pradhan v. Hari c
Pasayat, (1974) Orissa 47. It is not necessary to multiply authorities on the
question.

5. If the proceedings were only ministerial as held by the Privy Council
~ and the various High Courts, obviously, it could not be argued that anything
was "heard and finally decided" in a proceeding under Section 83 of the Act, D
which could operate as res judicata. For, the essential requirement of a bar
-J..
>-. by res judicata is that a matter should have been directly and substantially
in issue in a prior litigation, and it should have been heard and finally decided
by a court of competent jurisdiction. Of course, Explanation-VIII to Section
11 of the Code of Civil Procedure justifies a contention that even if the court
that heard and finally decided an issue between the parties was one of limited
E
jurisdiction, its adjudication would operate as res judicata. But, that would
not enable learned counsel for the respondents to contend either that the
court which entertained the application under Section 83 of the Act is a court
of limited jurisdiction within the meaning of that Explanation, or that any issue
was heard and finally decided in the proceeding under Section 83 of the Act. F
~
/ It may be noticed that the deposit under Section 83 of the Act has to be made
in a court in which the mortgagor might have instituted a suit for redemption.
Obviously, that is not a court of limited jurisdiction in the sense of the term
as used in Explanation-VIII to Section 11 of the Code of Civil Procedure.

6. Thus the plea of bar of res judicata has only to be rejected. G

... ·-'t KG . Appeal allowed.
'\.