Holding

The deed is an absolute conveyance with a condition of repurchase, not a mortgage by conditional sale, because the condition of repurchase is expressly embodied and the parties’ intention, read from the whole document, shows a sale.

Summary

The Supreme Court examined a deed dated 27‑10‑1969 in which the vendor transferred his one‑half leasehold interest to the vendee with a stipulation that he could repurchase the property within three years. The central issue was whether the instrument constituted an absolute conveyance with a condition of repurchase (a sale) or a mortgage by conditional sale. The Court held that the deed must be read in its entirety; the condition of repurchase was expressly embodied, possession was handed over, and no creditor‑debtor relationship existed. Consequently, the instrument reflected a sale with a condition of repurchase, not a mortgage. The High Court’s finding of a mortgage was set aside and the appeal was allowed.

Issues considered

Whether the deed dated 27‑10‑1969 is a mortgage by conditional sale or an absolute conveyance with a condition of repurchase.
Whether Section 58(c) of the Transfer of Property Act, 1882 applies to the instrument.
Whether the condition of repurchase is sufficiently embodied in the document to determine its nature.
Whether the parties intended a mortgage relationship despite being relatives and the transfer of only half the share.

Legislation cited

Code of Civil Procedure, 1908s. Order 41 Rule 33
Transfer of Property Act, 1882s. 58(c)

Subjects

conveyance deedmortgageconditional salerepurchase conditiondocument interpretationTransfer of Property ActSection 58leasehold interestsale vs mortgagedocument construction

Judgment

[2008) 17 S.C.R. 1239

C. CHERIATHAN A
II.
~ P. NARAYANAN EMBRANTHIRI
(Civil Appeal No.7400 of 2008)
DECEMBER 18, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]

Deeds and Documents - Conveyance deed -
Interpretation of - Held: Intention of the parties must be
gathered from the document itself but therefor circumstances c
attending thereto would also be relevant; particularly when
relationship between the parties is in question - For said
purpose, all parts of the deed should be read in their entirety
- On facts, the deed in question was an absolute conveyance
with condition of repurchase and not a mortgage with
conditional sale - Transfer of Property Act, 1882 - s.58(c). D
The question which arose for consideration in the
present appeal was as to whether the deed in question
?
entered into between respondent vendor and appellant
vendee was an absolute conveyance with a condition of
repurchase or a mortgage with conditional sale. E
_ ....
Allowing the appeal, the Court
HELD:1. A document 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 F
., significant role. Intention of the parties must be gathered
-l 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. [Para 9) (1245-D] G
P.S. Ramakrishna Reddy v. M.K. Bhagyalakshmi & Anr.
(2007) 10 SCC 231 and State Bank of India & Anr. v. Mula
.f Sahakari Sakhar Karkhana Ltd. (2006) 6 SCC 293, relied on.
1239 H
1240 SUPREME COURT REPORTS [2008] 17 S.C.R.

A 2.1. The deed in question is said to be a deed of sale.
The source of title has been disclosed. What was sought
to be· conveyed thereby was the leasehold interest. -~
Assignment was in respect of the vendor's one half share
in the property. Possession of the properties had t>,een
B
handed over. A stipulation was made in the deed that the
vendor shall repurchase the same at his expenses within
a period of three years from the date of execution thereof.
He acknowledg.ed receipt of sale consideration of
Rs.2,000/- in cash. The vendor relinquished all his right J..
over the scheduled property. However, the 'nature of
c assignment was sought to be clarified as the words "till
the period is over" and "efflux of time and thereafter as
an absolute sale" are used. It is significant that thereby
the vendee in terms of the said instrument became
entitled to attorn to the landlord by paying stipulated rent
D evidently as a tenant and not as a mortgagee. The vendor ,
accepted that he would have no right to deal with the I-"
lj
property in any manner. The reason why the' original deed T

of sale had not been handed over was also explained. j
Declaration has been made that no encumbrances had """' t
E been created in respect of the vendor's share in the
property. [Para 11] [1245-G-H; 1246-A-C] )';

2.2. By reason of the said deed only half of the right \
of the vendor was sought to be assigned. Appellant had
already acquired the right, title and interest in respect of
F the other half of the property. As the word ·•repurchase'
has been used, the respondent was aware that he has ...
to repurchase the transferred property. What would be ,.+-
the consideration for repurchase has not been stated. ,-'
The time for repurchase, however, has been specified,
namely, three years. No evidence has been brought on
G record to show that any relationship of creditor and
borrower had come into being. As the parties were
[
related to each other, it is difficult to conceive that the
other half of the property would be subject to mortgage + \

H
and not a sale. Also, appellant had been permitted to ~
C. CHERIATHAN v. P. NARAYANAN EMBRANTHIRI 1241
'

attorn to the landlord. The intention of appellant that by A
reason of the deed in question, he would become the
•.....J
owner of the entire property was thus obvious. [Paras 12,
17] [1246-D-E; 1250-A, B]
Seth Gangadhar v. Shankar Lal & Ors. (1959) SCR 509;
Poma/ Kanji Govindji & Ors. v. Vrajlal Karsandas Purohit & B
Ors. (1989) 1 SCC 458 and Shivdev Singh & Anr. v. Sucha
Singh & Anr. (2000) 4 SCC 326, distinguished.
Bishwanath Prasad Singh v. Rajendra Prasad & Anr. ·
-.A
(2006) 4 SCC 432 and Manjabai Krishna Patil (DJ by LRs.
v. Raghunath Revaji Patil & Anr. (2007) 3 SCALE 331 - c
relied on.
Tutsi & Ors. v. Chandrika Prasad & Ors. (2006) 8 SCC
322, referred to.
Case Law Reference:
(2001) 10 sec 231 relied on Para 9 D
(2006) 6 sec 293 relied on Para 10
r: (1959) SCR 509 distinguished Para 13
(1989) 1 sec 458 distinguished Para 13
(2000) 4 sec 326 distinguished Para 13
E
(2006) 4 sec 432 relied on Para 14
(2006) a sec 322 referred to Para 15
(2007) 3 SCALE 331 relied on Para 16
CIVIL APPELLATE JURISDICTION : Civil Appeal No.7400
of 2008. F
~ From the final Judgment and Order dated 1.11.2006 of the
High Court of Kerala at Erankulam in S.A. No. 290 of 1993.
P. Krishnamoorthy, C.S. Rajani and M.T. George for the
Appellant.
S. Udaya Kumar Sagar and Bina Madhavan (for M/s
G
Lawyer's Knit & Co.) for the Respondents.
.J The Judgment of the Court was delivered by
S.B. SINHA, J.1. Leave granted.
1
•, 2. Interpretation of a deed dated 27.10.1969 as to whether H
>--
1242 - SUPREME COURT REPORTS [2008] 17 S.C.R.
,._

A the same is one of absolute conveyance with a condition of
repurchase or a mortgage with conditional sale, is the qu-estion
involved in this appeal which arises out of a judgment and order \--~

dated 1.11.2006 passed by the High Court of Kerala in Second
Appeal No.290 of 2003 setting aside a judgment and decree
dated 28.11.1988 passed by the Munsifs Court, Manjeri in
B
Original Suit No.458 of 1984.
3. Respondent herein was owner of the land in question.
He took the said land on lease with one Cheriathan jointly from
one Gopalan Nair by reason of a deed of conveyance dated ,l- '
'
~
21.12.1967. They made improvements. They constructed
c buildings thereupon. Half of the said leasehold rights was
sought to be conveyed in favour of the appellant by reason of
the said deed. Indisputably, the first respondent executed a deed
of assignment in favour of the V. Devaki Amma in respect of
his half share for a consideration to repurchase the same by a
D document dated 27.10.1969. She, by a deed of assignment
dated 2.3.1976, transferred her right, title and interest being half
of the property to the appellant and, thus, according to him, he
became the full owner thereof. ~

Indisputably again, the appellant was granted a purchase ,__
E certificate under the Kerala Land Reforms Act in respect of the
entire property in the year 1978. First Respondent did not take
any step to set aside the said certificate for a long time. Only
in the year 1984, he filed a suit for redemption of mortgage and
-partition in respect of his half share in the property alleging that
F the said deed dated 27.10.1969 represented only a loan
transaction. Appellant herein, however, took _the usual stand that
the said deed is in effect and substance a deed of sale with a +-
',___
condition to repurchase. '
~

In view of the pleadings of the parties, several issues were
G framed; issue No.4 being :
"4. Whether the transaction involved in document
No.276/1970 is a mortgage?"
3. On construction of the document in question, the learned
\.
Trial Judge opined that the transaction represented a sale. On
H
C. CHERIATHAN v. P. NARAYANAN EMBRANTHIRI 1243
[S.B. SINHA, J.]

an appeal having been preferred thereagainst by the A
respondent, the First Appellat~ Court held that the transaction
- "---f
was a mortgage by conditional sale and as the respondent did
not exercise his option to repurchase the property within a
period of three years, the said sale has become absolute.
Respondent filed a second appeal before the High Court B
which by reason of the impugned judgment has been allowed
interpreting the said document to be a deed of mortgage and
consequently holding tbat the suit for partition and redemption
J was maintainable.
4. Mr. Krishnamoorthy, learned senior counsel appearing c
on behalf of the appellant, would submit that the High Court
committed a serious error in passing the impugned judgment
in so far as it failed to construe the provisions of Section 58 of
the Transfer of Property Act in its proper perspective. It was
urged that apart from the fact that the value of the property could
D
not have been assessed at Rs.6,800/-, the High Court ignored
that only half share thereof was transferred. It furthermore failed
f'""'<
to take into consideration that no evidence had been brought
on record to establish the relationship of creditor and borrower
between the parties. Possession having been delivered,
permission to attorn having been given and no interest having E
been stipulated, it was submitted, the High Court should have
construed the document to be one of absolute sale with a
condition of repurchase.
5. Learned counsel appearing on behalf of the respondent
No.1, on the other hand, would contend that as appellant did F
-~ not prefer any appeal against the judgment and order passed
by the First Appellate Court, the contentions raised before us
should not be permitted to be raised. For the said purpose, it
was contended, even the provisions of Order 41 Rule 33 of the
Code of Civil Procedure would not be applicable. G
6. Before embarking upon the rival contentions raised
I
before us, we may notice the relevant portions of the deed in
.; question which are (as translated by the parties) as under:
"The scheduled property was outstanding (sic) on lease
H
1244 SUPREME COURT REPORTS [2008] 17 S.C.R.

..
A with Gopalan Nair from whom by Document No.2034 of
1967 myself and Cheriyathan jointly got an assignment of
~
lease hold right and are enjoying the same by effecting
improvements and buildings and I humbly (sic)
conditionally assign my one half right over the property with
B possession and with the improvements thereon with a
stipulation that within a period of 3 years from today, I shall
repurchase the same at my expense. I have received the
sale consideration of Rs.2,000/- in cash from you and I
hereby relinquish all my 1/2 right over the scheduled k
property and hence by this assignment from today till the
c period is over you are entitled to enjoy the schedule
property as a sale by efflux of time and thereafter as an
absolute sale. You will be entitled to directly attorn to the
landlord by paying rent and hereafter I will have no right to
deal with the property in any manner.
D Original sale deed is not handed over as it is a joint
document and I hereby assure you that there are no
)
encumbrances created in respect of my half share."
7. Whether a document is a mortgage by conditional sale
"'"'"'
or a sale with a condition of repurchase is a vexed question.
E
Section 58( c) of the Transfer of Property Act, 1882 reads
thus:
"Section 58 - "Mortgage", "mortgagor", "rportgagee",
"mortgage..money" and "mortgage-deed" defined -
F (a) ...
(b) ...
(c) Mortgage by conditional sale.-Where, the mortgagor
ostensibly sells the mortgaged property-
on condition that on default of payment of the mortgage-
G 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
H on condWon that on such payment being made the buyer
C. CHERIATHAN v. P. NARAYANAN EMBRANTHIRI 1245
[S.S. SINHA, J.]

shall transfer the property to ,the seller, A
the transaction is called a 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." B
8. One of the ingredients for determining the true nature
of transaction, therefore, is that the condition of repurchase
should be embodied in the document which effects or purports
to effect the sale. Indisputably, the said condition is satisfied in
the present case. C
9. 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
significant role. Intention of the parties must be gathered from
the document itself but therefor circumstances attending thereto D
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. [See P. S. Ramakrishna Reddy v. M.K.
Bhagyalakshmi & Anr. ((2007) 10 SCC 231]. E
10. In State Bank of India & Anr. v. Mula Sahakari Sakhar
Karkhana Ltd. ((2006) 6 SCC 293], it was held :
"22. A document, as is well known, must primarily be
construed on the basis of the terms and conditions
contained therein. It is also trite that while construing a F
document the court shall not supply any words which the
-~ author thereof did not use."
11. The deed in question is said to be a deed of sale. The
source of title has been disclosed. What was sought to be
conveyed thereby was the leasehold interest. Assignment was G
in respect of the vendor's one half share in the property.
Possession of the properties had been handed over. A
stipulation was made therein that the vendor shall repurchase
the same at his expenses within a period of three years from
the date of execution thereof. He acknowledged receipt of sale H
1246 SUPREME COURT REPORTS (2008] 17 S.C.R.

A consideration of Rs.2,000/- in cash. The vendor relinquished
all his right over the scheduled property. However, the nature
of assignment was sought to be clarified as the words "till the
period is over'' and "efflux of time and thereafter as an absolute
sale" are used.
B It is significant that th_ereby the vendee in terms of the said
instrument became entitled to attorn to the landlord by paying
stipulated rent evidently as a tenant and not as a mortgagee.
The vendor accepted that he would have no right to deal with
the property in any manner. The reason why the original deed
C of sale had not been handed over was also explained.
Declaration has been made that no encumbrances had been
created in respect of the vendor's share in the property.
12. The High Court in its judgment proce.eded on the basis
that the value of the property was Rs.6,800/- and, thus,
consideration of Rs.2,000/- ex facie was insufficient. What was
0
not noticed was that by reason of the said deed only half of the
right of the vendor was sought to be assigned. It is also not in
dispute that the appellant had already acquired the right, title
and interest in respect of the other half of the property. As the
word 'repurchase' has been used, the respondent was aware
E that he.has to repurchase the transferred property. What would
be the consideration for repurchase has not been stated.
Ordinarily, in a case where deed of mortgage is executed with
a condition of repurchase, the amount of consideration remains
the same.
F We would, however, assume that the intention of the
parties was that amount of consideration would remain the
)-
same. The time for repurchase, however, has been specified,
namely, three years. No evidence has been brought on record
to show that any relationship of creditor and borrower had
G come into being. As indicated hereinbefore, appellant had been
permitted to attorn to the landlord.
13. So as to enable us to determine the vexed question,
it may be profitable to notice a few decisions of this Court on
some of which the High Court relied upon.
H In Seth Gangadharv. Shankarlal & Ors. [1959 SCR 509]
C. CHERIATHAN v. P. NARAYANAN EMBRANTHIRI 1247
[S.B. SINHA, J.]

whereupon reliance has been placed by the High Court, it was A
admitted that the transaction was that of a mortgage and
'~-"
Section 60 of the Transfer of Property Act was applicable. It is
in that view of the matter, this Court held that the right of
redemption could not have been taken away. The Court held
that therein the term of mortgage was 85 years and there
B
existed no stipulation entitling the mortgagor to redeem during
that term which had not expired. The document in question was
held by this Court to be containing a stipulation creating a clog
on the equity of redemption which was found to be illegal. Such
-+ is not the case here.
c
\n Poma/ Kanji Govindji & Ors. v. Vrajlal Karsandas
Purohit &Ors. [(1989) 1 SCC 458], this Court held that whether
a clause used in a transaction of mortgage amounted to clog
on the equity of redemption is a mixed question of law and fact.
In that case, there existed a provision for payment of interest
at the rate of half per cent per annum payable on the principal D
amount at the end of the long period which led this Court to
conclude that there was a clog on equity on redemption.
f"' Furthermore, in that case, materials were brought on record to
show that the transaction was entered into by way of security
for the loan obtained E
In Shivdev Singh & Anr. v. Sucha Singh & Anr. [(2000) 4
sec 326], this Court was dealing with a case of anomalous
mortgage. Therein the mortgage was to remain operative for
a period of 99 years. It was in that situation, this Court opined
that the original owner having been in great financial difficulty, F
the mortgagees took advantage of the said fact and
-~ incorporated a 99 year's term which constituted a clog on the
equity of redemption.
In this case, the term is only for a period of three years
which is reasonable. G
We may notice that in Bishwanath Prasad Singh v.
Rajendra Prasad & Anr. [(2006) 4 SCC 432], upon taking
) notice of a large number of decisions, this Court observing that
therein no stipulation had been made that the vendee could not
transfer the property and his name was mutated, held : H
1248 SUPREME COURT REPORTS [2008] 17 S.C.R.

A "18. We have noticed hereinbefore that the nature of deed
was stated to be an agreement (ekrarnama), the nature
of the document was not stated to be "bai-ul-wafa", the
~i
relevant clause whereof reads as under:
"Because the vendor today of this date has sold the
B property of this deed to the vendee through
registered agreement on the vaibulwafa condition
and during this period the vendor and the vendee
have already agreed that this case will remain as
vaibulwafa cind as per the said sarait, the vendor
of this deed agrees that the vendee of this deed or .
c 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. up to the month of June 1978 after
harvesting of the crops i.e. paddy or rabi, then I the
D vendor or my legal heirs or my successors after
receiving the said consideration amount of Rs.3000
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."
E 19. It is of some significance to note that therein the
expressions "vendor", "vendee", "sold" and
"consideration" have been used. These expressions
together with the fact that the sale deed was to be
executed within a period of 23 months i.e. up to June 1978,
F evidently the expression "vaibulwafa" as a condition was
loosely used.
20. 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
G parties understood the same to be a deed of
reconveyance and not mortgage or a conditional sale."
15. Bishwanath Pratap Singh, it must be placed on
record, was distinguished on facts in Tulsi & Ors. v. Chandrika
Prasad & Ors. [(2006) 8 SCC 322], stating :
H
C. CHERIATHAN v. P. NARAYANAN EMBRANTHIRI 1249
[S.8. SINHA, J.]

"18. In the instant case, the scribe of the document was A
examined. His categorical statement was that he had been
asked by the parties to scribe a deed of mortgage and
,. ---f
not a deed of sale. Respondent 1, as noticed hereinbefore,
in the document itself categorically stated that he was
executing a deed of mortgage. Indisputably, the amount of
B
stamp duty was also paid by him. In a case of deed of
sale, ordinarily the transferee pays the stamp duty. Why
such a deviation from the normal practice was made has
-A not been explained by the appellant.
19. We have noticed hereinbefore that the nature of the
c
deed described that the document is ambiguous as both
the terms viz. "Kewala" and "Baibulwafa", were mentioned.
The transaction, however, categorically states that
Appellant 1 was to maintain the property in its present
condition. Of course, permission for reconstruction of the
structure was granted. But, if the intention of the parties D
was to transfer the property absolutely, no such stipulation
was required to be made at all. In a case of absolute
~......,
transfer, the vendee has an absolute right to deal with his
property in any manner he likes. It was clearly stipulated
in the deed that in the event the executant repayed the E
entire consideration by 30-12-1971, the purchaser would
'
reconvey the property and furthermore deliver possession
thereof. The sale was to become absolute only when the
transferee failed to pay the said amount within the
stipulated period. The courts below have also taken into F
consideration the contemporaneous conduct of the parties
in treating the transaction to be one of mortgage and not
~~
of sale. We are, therefore, of the opinion that the parties
intended to enter into a transaction of mortgage and not
sale."
G
16. In Manjabai Krishna Patil (D) by LRs. v. Raghunath
~· Revaji Patil & Anr. [2007 (3) SCALE 331], this Court opined
that no relationship of debtor and creditor having come into
; being and no security had been created, the instrument in
question was a deed of sale with a condition of repurchase.
H
•
1250 SUPREME COURT REPORTS [2008] 17 S.C.R.

A 17. Another important factor which must be borne in mind
in construing the instrument in question is that appellant was
already the owner in respect of half of the property. As the ~
parties were related to each other, it is difficult to conceive that
the other half of the property would be subject to mortgage and
B not a sale. The intention of appellant that by reason of the said
'-

transaction dated 27 .10.1969, he would become the owner of
the entire property was obvious.
18. Submission of the learned counsel that contentions .....
raised before us on behalf of the appellant were not available \
1~

as the finding of the learned First Appellate Court to the effect
c that the transaction evidenced on mortgage with conditional
sale does not appeal to us. Despite arriving at the said finding,
the appeal of respondent was dismissed and in that view of
the matter, it was not open to appellant to prefer an independent
appeal thereagainst. Order 41 Rule 22 of the Code of Civil
D Procedure, therefore, had no application. It is in the
aforementioned situation, it was legally permissible for the
appellant to support the decree passed in his favour by
...,
attacking the finding of the First Appellant Court which were ;;·'.i

made against him. Order 41 Rule 33 of the Code of Civil
E Procedure, therefore, was available in this case. In S. Nazeer
Ahmed v. State Bank of Mysore & Ors. ((2007 (11) SCC 75],
this Court held :
"Order 41 Rule 33 enables the appellate court to pass any
decree that ought to have been passed by the trial court
F or grant any further decree as the case may require and
the power could be exercised notwithstanding that the
appeal was only against a part of the decree and could ~-
even be exercised in favour of the respondents, though the
respondents might not have filed any appeal or objection
G against what has been decreed."
19. For the reasons aforementioned, the impugned >.
judgment cannot be sustained. It is set aside accordingly. The
appeal is allowed. In the facts and circumstances of the case, \.
however, there shall be no order as to costs.
H B.B.B.· Appeal allowed.