Holding

The deed is a mortgage by conditional sale, and the appeal is dismissed.

Summary

Munimalaiyan had taken a simple mortgage of Rs.3,000 in 1961, securing it with three properties. Unable to repay, a deed dated 22 Oct 1970 was executed, selling one of the properties to Chennammal for Rs.3,000 while reserving Munimalaiyan's right to repurchase within three years. The dispute centered on whether this deed was a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882, or an outright sale with a repurchase condition. The trial court held it was a mortgage by conditional sale; the appellate court reversed, calling it an outright sale; the Madras High Court restored the trial court's view. The Supreme Court examined the deed's language and held that the explicit reservation of a right to redeem made it a mortgage by conditional sale, dismissing the appeal and affirming the High Court's decision.

Issues considered

Whether the deed executed on 22 Oct 1970 constitutes a mortgage by conditional sale within the meaning of Section 58(c) of the Transfer of Property Act, 1882.

Legislation cited

Transfer of Property Act, 1882s. 58(c)

Subjects

mortgage by conditional saleTransfer of Property ActSection 58(c)redeemable mortgagesale with condition of repurchasedeed interpretationproperty law

Judgment

CHENNAMMAL A
v.
MUNlMALAlYAN AND ORS.

OCTOBER 19, 2005

[ARIJIT PASAYAT AND DR. AR. LAKSHMANAN, JJ.] B

Transfer of Property Act, 1882-Section 58(c)-Mortgage by conditional
sale-Sale of one of the mortgaged properties to mortgagee-Reserving a
right to repurchase-Right to redeem property within three years reserved
specifically-Sale value much less than existing value-Held, the recitals would C
clearly show that the deed is n1Jt a sale but a mortgage by conditional sale.

Respondent executed a simple mortgage in favour of the appellant
for a sum of Rs. 3,000. For securing the due repayment, 3 items of
properties were given as security. Since he was unable to discharge the D
simple mortgage, on the intervention of Panchayatdars, a deed was
executed by Respondent in favour of the appellant whereby one of the
properties which was given as security for the simple mortgage was sold
to the appellant with a right reserved to the Respondent to repurchase
the same within a period of 3 years on payment of Rs. 3,000. Respondent
filed a suit against the appellant praying for a decree for redemption. E
Respondent contended that the deed was a mortgage by conditional sale
and that pursuant to the sale, I.he appellant was put in possession of the
suit property and that the deed is not a sale deed and that a right to redeem
the property within a period of 3 years was reserved and failing which
·the appellant herein was entitled to have the patta transferred in her own F
name, that he was paying the kist for the suit properties and that the
appellant had raised various crops and derived sufficient income every
year and that the mortgage debt has to be scaled down as per Section 8
of Act S of 1978, that since the appellant has been in possession for 8 years
Rs. 2,400 ought to be deducted and that the appellant is entitled only to
Rs. 600 as per law and that the said sum of Rs. 600 has been deposited G
into Court and that, therefore, the property has to be re-transferred and
possession handed over.

Appellant resisted the suit contending that the deed was an outright
sale, that since Respondent was unable to discharge the simple mortgage
341 H
342 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A the deed in question came to be executed, that the sale consideration under
the document was adjusted towards the amounts due under the simple
mortgage deed of the year 1961, that the said document was executed on
the advise of the Panchayatdars, that half the property is rocky and unfit
for cultivation, that the income therefrom was very meagre, that a right
to repurchase had been reserved under the document within a period of
B three years failing which the document stipulated that the appellant would
have absolute rights, that the option to repurchase was not exercised within
the stipulated period of three years, that from the date of the document
the appellant has been in possession as absolute owner and has been paying
kist, that patta has also been transferred in her name and that the
C appellant had made certain portions of the property cultivable and the
value thereof has increased and in order to get the benefit of the increase
in value the present suit has been laid wrongly alleging that the document
is a mortgage by conditional sale and that the suit is barred by time and
that the provisions of Act 40of1978 are not applicable to the facts of the
case and that the question of scaling down of the debt does not arise and
D that court fee paid is incorrect.

The District Munsiff, decreed that suit and held that the document
in question was only a mortgage by conditional sale and that it is not a
sale deed as contended by the appellant and that from the intentfon of
E the parties and the document in question, it was clear that only a mortgage
by conditional sale had been executed and that the respondent was entitled
to the benefits under Act 40 of 1978 and that, therefore, only Rs. 600 was
due and that the question of rnesne profits was to be relegated to the final
decree proceedings.

p On an interpretation of the document in question the appellate court
allowed the appeal and held that the document was only an outright sale
and not a mortgage by conditional sale. The second appeal filed by
Respondent was allowed and the judgment and decree of the trial Court
was restored. The High Court held that the document in question is only
a mortgage by conditional sale since vesting absolute rights in the property
G had been postponed under the document and that since interest had been
paid regularly there was no necessity for a sale deed to be executed by
discharging the earlier mortgage and that there was no necessity for the
appellant to agree to re-convey the property after the period of 3 years
and that the value of the property though Rs. 12,500 had been shown as
H only Rs. 3,000 and that all these factors could only lead one to conclude
CHENNAMMAL v. MUNIMALA!YAN 343
· · that the document in question is only a mortgage by conditional sale. A
Before this Court appellant contended that the recitals in the
disputed document are unambiguous and clearly refer to an absolute sale
and not a mortgage by conditional sale; that the document in question had
been executed due to the inability of the mortgag to discharge the principal
under the simple mortgage; that the High Court has overlooked the very B
fact that the document in question recites that the property would be
reconveyed if the money is paid within 3 years; that the High Court has
failed to note that the absence of stipulation as to payment of interest;
that the term "mortgage by conditional sale" referred to in Section 58(c)
of the Transfer of Property Act, 1882 could only mean that an ostensible C
sale effected with the right to redeem being reserved; and that the
respondents having lost the right to re-purchase the property by not
exercising the option as recited in the document within the period
stipulated therein.

Respondent contended that the document was a mortgage by D
conditional sale; that the appellant was put in possession of the suit
property; that though the value of the property as on 22.10.1970 was Rs.
12,500 the deed was executed for Rs. 3,000; and it is clear from the fact
that since one of the properties given as security for the simple mortgage
was sold to the appellant with a right reserved to Respondent to re-
purchase the same within a period of 3 years on payment of Rs. 3,000. E
Dismissing the Appeal, .the Court

HELD: 1. A careful perusal of the document would clearly show that
the document has been couched in a simple Tamil·language. The recitals
are clear and unambiguous. It is seen from the document that Respondent F
was unable to discharge the simple mortgage. Panchayatdars intervened
and amicably settled the matter. A deed was executed thereupon by
Respondent in favour of the appellant and in and by the said deed one of
the properties which was given as security for the simple mortgage was
sold to the appellant with a right reserved to Respondent to re-purchase G
the same within a period of 3 years on payment of Rs. 3,000. The right to
redeem the property within a period of 3 years was specifically reserved.
The recitals would only show that the deed in question is not a deed of
sale but a mortgage by conditional sale. (350-H; 351-A, Bf

H
344 SUPREME COURT REPORTS [2005) SUPP. 4 S.C.R.

A Tamboli Raman/al Motilal (dead) by LRs. v. Ghanchi Chiman/al.
Keshavlal (dead) by LRs. and Anr., AIR (1992) SC 1236; Chunchun Jha v.
Ebadat Ali and Anr., AIR (1954) SC 345; Bhaskar Waman Joshi (deceased)
and Ors. v. Shrinarayan Rambilas Agarwal {deceased) and Ors., AIR (1960)
SC 301; Umabai and Anr. v. Nilkanth Dhondiba Chavan (dead) by LRs. and
Anr., (2005) 6 SCC 243 and P.L. Bapuswami v. N. Pattay Gounder, AIR
B (1966) SC 902, relied on.

2. Considering all the attendant circumstances to cover the intention
of the Parties and the intention is explicitly expressed in the document
itself, there is no scope for looking at the attendant circumstances. There
C is no relationship of the debtor and the creditor. The Court should be
guided by the terms of the document alone without much help from the
case law. Viewed from any angle the document in question is a mortgage
by conditional sale. [355-C, DI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3861 of 1999.
D From the Judgment and Order dated 6.3.98 of the Madras High Court
in SA No. 1996 of 1984.

V. Prabhakar, Asok K. Sadhu Khan, R.S. Krishna Kumar and Mrs.
Revathy Raghavan for the Appellant.
E K.K. Mani for the Respondents.

The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. This appeal is directed against the final
F judgment ahd order dated 06.03.1998 passed by the High Court of Madras·
in Second Appeal No. 1966 of 1984 allowing the same and reversing the
judgment and order dated 15.11.1983 passed in A.S. No. 51and1982 by the
Additional Subordinate Judge, Dharmapuri at Krishnagiri and restoring the
order and judgment dated 20.11.1981 passed by the District Munsiff, Hosur
in O.S. No. 542 of 1978.
G
The short facts of the case are as follows:-

The defendant is the appellant in this civil appeal. One Munimalaiyan
(plaintiff) executed a simple mortgage in favour of the appellant for a sum
of R~.3,000. For securing the due repayment, 3 items of properties belonging
H to Munimalaiyan was given as security. Munimalaiyan was unable to discharge
CHENNAMMAL v. MUNJMALAIY AN [LAKSHMANAN, J.] 345

the simple mo1tgage and on the intervention of Panchayatdars, a deed was A
executed by Munimalaiyan in favour of the appellant herein (Chennammal).
In and by the said deed, one of the properties which was given as security
for the simple mortgage was sold to the appellant herein with a right reserved
to the said Munimalaiyan to repurchase the same within a period of 3 years
on payment ofRs.3,000. A legal notice was issued by the said Munimalaiyan B
to the appellant herein seeking redemption of the property which was the
subject-matter of the deed dated 22.10.1970. The appellant issued a reply
notice contending that the deed dated 20. l 0.1970 was a deed of sale and not
a mortgage by conditional sale as sought to be contended by the said
Munimalaiyan.

The said Munimalaiyan instituted a suit in O.S. No. 542 of 1978 on the
c
file of the District Munsiff, Hosur against the appellant herein praying for a
decree for redemption. It was contended that the deed dated 20.10.1970 was
a mortgage by conditional sale and that pursuant to the sale, the appellant
was put in possession of the suit property and that the deed is not a sale deed
and that a right to redeem the property within a period of 3 years was D
reserved and failing which the appellant herein was entitled to have the patta
transferred in her own name. As on 20. l 0.1970, the property was valued at
Rs.12,500. It was further contended that Munimalaiyan was paying the kist
for the suit properties and that the appellant had raised various crops and
derived sufficient income every year and that the mortgaged debt has to be E
scaled down as per Section 8 of Act 5 of 1978 and that since the appellant
has been in possession for 8 years Rs.2,400 ought to be deducted and that the
appellant. herein is entitled only to Rs.600 as. per law and that the said sum
of Rs.600 has been deposited into Court and that, therefore, the property has
to be re-transferred and possession hand~d over. On these allegations the said
Munimalaiyan prayed for the aforesaid relief. F
Pending the suit, the said Munimalaiyan died and his LRs were brought
on record as his legal representatives and they continued to prosecute the
suit.

The appellant herein resisted the suit contending that the deed dated G
20.10.1970 was an outright sale and that since Munimalaiyan was unable to
discharge the simple mortgage the deed in question came to be executed and
that the sale consideration under the document was adjusted towards the
amounts due under the simple mortgage deed of the year 1961 and that the
said document was executed on the advise of the Panchayatdars and that half H
346 SUPREME COURT REPORTS [2005)•SUPP. 4 S.C.R.

A the property is rocky and unfit for cultivation and that the income thererrom
was very meagre and that a right to repurchase had been reserved under the
document within a period of three years failing which the document stipulated
that the appellant would have absolute rights and that the option to repurchase
was not exercised within the stipulated period of three years and that from
B the date of the document the appellant has been in possession as absolute
owner and has been paying kist and that patta has also been transferred in her
name and that the appellant had made certain portions of the property cultivable
and the value thereof has increased and in order to get the benefit of the
increase in value the present suit has been laid wrongly alleging that the
document is a mortgage by conditional sale and that the suit is barred by time
C and that the provisions of Act 40 of 1978 are not applicable to the facts of
the case and that the question of scaling down of the debt does not arise and
that court fee paid is incorrect. On these allegations the appellant herein
prayed for the dismissal of the suit.

The District Munsiff, Hosur who tried the suit held that the document
D in question which was marked as Exhibit Al/Bl was only a mortgage by
conditional sale and that it is not a sale deed as contended by the appellant
herein and that !Tom the intention of the parties and the document in question,
it was clear that only a mortgage by conditional sale had been executed and
that Munimalaiyan was entitled to the benefits under Act 40 of 1978 and that,
E therefore, only Rs.600 was due and that the question of mesne profits was
relegated to the final decree proceedings. The trial Court thus passed a
preliminary decree for redemption.

Aggrieved by the preliminary decree, the appellant preferred an appeal
'>n the file of the Additional Subordinate Judge, Dharrnapuri. Th~ Additional
p Subordinate Judge on an interpretation of the document in question held that
the document was only an outright sale and not a mortgage by conditional
sale. In this view of the matter, the Additional Subordinate Judge allowed the
appeal and thereby set aside the judgment and decree passed by the District
Munsiff.

G The respondents herein being aggrieved by the appeal being allowed
and their suit being dismissed, preferred S.A. No. 1966 of 1984 on the file
of the High Court at Madras.

S. Jagadeesan, J. who heard the second appeal allowed the same and
restored the judgment and decree of the trial Court by setting aside the
H judgment and decree of the Appellate Court. The High Court held that the
CHENNAMMAL v. MUNIMALAIY AN [LAKSHMANAN, J.] 34 7
document in question is only a mortgage by conditional sale since vesting A
absolute rights in the property had been postponed under the document and
· that since interest had been paid regularly there was no necessity for a sale
deed to be-executed by discharging the earlier mortgage and that there was
no necessity for the appellant to agree to re-convey the property after the
period of 3 years and that the value of the property though Rs.12,500 had B
been shown as only Rs.3,000 and that all these factors could only lead one
to conclude that the document in question is only a mortgage by conditional
sale. On these findings, the second appeal was allowed.

We have carefully perused the judgment under appeal in the second
appeal and also the judgment and decree passed by the Appellate Court and C
also of the trial Court and perused the document conditional deed of sale for
Rs.3,000 dated 22.10.1970. We have also perused the certified copy of the
Tamil version of the document and the translated English version.

We heard Mr. V. Prabhakar, learned counsel for the appellant/defendant
and Mr. K.K. Mani, learned counsel for the respondents/plaintiffs. D
Mr. V. Prabhakar, learned counsel for the appellant, made the following
submissions:-

(I) the recitals in the disputed document Ex.A 118 I are unambiguous
and clearly refer to an absolute sale and not a mortgage by E
conditional sale;
(2) the document in question had been executed due to the inability
to discharge the principal under the simple mortgage and,
therefore, the High Court should have held that the document in
question is an outright sale; F
--t (3) the High Court has overlooked the very fact that the document
in question recites that the property would be reconveyed if the
money is paid within 3 years would clearly show that a right of
re-purchase alone had been reserved while the sale effected was
absolute; G
(4) the High Court has failed to note that the absence of stipulation
as to payment of interest but containing recitaJs as to payment of
taxes, handing over of possession and a right to re-purchase the
property coupled with a pointed recital that the sale is being
effected would clearly establish that the document in question is H
348 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A an outright sale;
(5) that the term "mortgage by conditional sale" referred to in Section
58(c) of the Transfer of Property Act, 1882 could only mean that
an ostensible sale effected with the right to redeem being reserved ''
vide in instant .case an outright sale has been effected with a
B right to re-purchase alone being reserved which is sufficient in
itself to indicate that the document in question is an outright sale
deed;
(6) that the High Court erred in interpreting the document in question
as one of mortgage by conditional sale despite clear recitals therein ·'

c that the sale is an absolute sale;
(7) that the respondents having lost the right to re-purchase the
property by not exercising the option as recited in the document
within the period stipulated therein cannot tum around and
contend that the document in question is a mortgage by
D conditional sale.

Mr. Prabhakar, learned counsel for the appellant, has taken us through the
pleadings, judgments and also the Ex.A I/Bl. In support of his contention, he
relied on the following judgments:-

E (1) Tamboli Raman/al Motilal (dead) by L.Rs. v. Ghanchi Chiman/al
Keshavlal (dead) by L.Rs. and Another, AIR (1992) SC 1236

(2) Chunchun Jha v. Ebadat Ali and Anr., AIR (1954) SC 345
(3) Bhaskar Waman Joshi (deceased) and Ors. v. Shrinarayan
Rambilas Agarwal (deceased) and Ors ... AIR (1960) SC 301
F
(4) Umabai and Anr. v. Nilkanth Dhondiba Chavan (dead) by LRs
and Anr., [2005] 6 SCC 243

According to Mr. K.K. Mani, learned counsel for the respondents, the
document in question was
G (a) a mortgage by conditional sale;
(b) pursuant to the sale, the appellant was put in possession of the
suit property;
(c) right to redeem the property within a period of 3 years was
H reserved failing which the appellant was entitled to have the -
patta transferred in her own name;
CHENNAMMAL v. MUNIMALAIY AN [LAKSHMANAN. J.] 349
(d) though the value of the property as on 22.10.1970 was Rs.12,500 A
but the deed was executed for Rs.3,000;
(e) ·since Munimalaiyan was unable to discharge the simple mortgage,
he executed the document in favour of the appellant herein;
(t) one of the property which was given as security for the simple B
mortgage was sold to the appellant with a right reserved to
Munimalaiyan to re-purchase the same within a period of 3 years
on payment of Rs.3,000.

He also invited our attention to the very same Ex.A J/B 1 and placed
strong reliance on the judgment of this Court in P.L. Bapuswami v. N. Pattay C
Gounder, AIR (I 966) SC 902.

In the above factual background, the only question for determination is
whether the document in question is a mortgage by conditional sale as
contended by plaintiff/respondent herein or a sale out and out with a condition
of re-purchase as alleged by the defendants. If the former, the plaintiff/ D
respondent succeeds. If the latter appellant/defendant are out of Court.
Therefore, the entire case is based on the construction of the document.

Before proceeding to consider the rival submissions, we feel it is
beneficial to reproduce the conditional deed of sale for Rs.3,000 i.e. Ex.A 1/
B1 document. E
"Conditional Deed of Sale executed on 22. I 0.1970 (Twenty Second
Day of October, Nineteen Seventy) by Munimayan, S/O Ariyan,
Harijan, Cultivation residing at No. 252, Odyanda Halli, Kuruppu,
Odayand.a Halli Village, Denkanikottai Taluk, in favour of
Chennammal, W/O Govindachami, residing at the said village, in F
respect of the properties mentioned hereunder in the presence of the
Panchayatadar mentioned hereunder is as follows:

The Punja Land described hereunder is belonging to me as self
acquired property and in my possession and enjoyment and registered G
as Document No. 4625/1961dated20.12.1961. (1Book867 Volume
Pages 63 to 70). As per the advice of the Panchayatdar I have executed
this Deed of Sale in respect of the said Punja Lands (inclusive of the
. same properties) in favour of you for consideration of Rs.3,000
(Rupees three thousand only). Since I could not pay the principle
amount of Rs.3,000 found in the document, l have handed over the H
350 SUPREME COURT REPORTS [2005) SUPP. 4 S.C.R.

A possession of the undennentioned property to you today in the presence
of the witnesses signed hereunder. Since 1 have received the sale
consideration by way of returning the document dated 20.12.1961. I
shall purchase the said property from you within the period of three
years, at my cost. Till then, you shall pay the kist to the Government
from Fasli 1380. In case of failure on my part to purchase the property
B from you within the period of three years, you and your heirs shall
hold and enjoy the property with absolute rights, from the next day
onwards. I undertake that neither my heirs nor myself and would give
any trouble by indulging in civil and criminal proceedings, in respect
of the said property. If it is so, it has no proof. My heirs and myself
c shall stand surety for the said sale consideration of Rs.3,000. You
shall apply for transfer of patta for the property on the next day of
the expiry of the three years p~riod. I shall not raise any objection,
then.' This property is situated within the limits of Kelamangalam
Panchayat Union, Rayalkottai, Panchayat.
D SCHEDULE OF PROPERTY

Dharmapuri Dist.-Rayakottai Sub-Registration-District
Denkarikottai Taluk-256 No. Oadayanda Halli Group-Thinu Halli
Village, West of the land belonging to Manthedu Gounder, East of
the land belonging to Kalan and Pathiran; South of the Onipuram
E Pathway; comprised within these limits, Punja AC.8.05 in Re-survey
No. 80/1 Kist is 9.02. The said extent of the land is the subject matter
of this conditional sale. Present value Rs.12,500.

LT.I. of Munimayan
F WITNESSES

(!) Venkatappan s/o Thayappan @ Venkatan, Oadayanda Halli
(2) M.M. Ramaiah, s/o M. Munivenkatan, Royakottai
(3) L.T.I. of Narayana Gounder, s/o Thimmu Gounder, Oadayanda
G Halli
Scribed by : R.V. Venkataraman."

A careful perusal of the document would clearly show that the document
has been couched in a simple Tamil language. The recitals are clear and
H unambiguous. It is seen from the document that Munimalaiyan was unable to
CHENNAMMAL v. MUNIMALAIY AN [LAKSHMANAN, J.] 351

discharge the simple mortgage. Panchayatdars intervene and amicably settled A
the matter. A deed was executed thereupon by Munimalaiyan in favour of the
appellant herein and in and by the said deed one of the properties which was
given as security for the simple mortgage was sold to the appellant with a
right reserved to the said Munimalaiyan to re-purchase the same within a
period of 3 years on payment of Rs.3,000. The right to redeem the property B
within a period of 3 years was specifically reserved. The recitals, in our
opinion, would only show that the deed in question is not a deed of sale but
a mortgage by conditional sale.

Section 58(c) of the Transfer of Property Act, 1882 deals with
mortgage by conditional sale. The said section reads thus: C
"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
D
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,
E
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
~ortgage, unless the condition is embodied in the document which
effects or purports to effect the sale." F
A mortgage by conditional sale takes the form of an ostensible sale of
the property with the condition superadded that it shall become an absolute
sale on default of payment on a certain date or subject to the proviso that the
sale shall be treated as void and the property re-transferred on payment being
m~. G
We shall now consider the judgments cited;

(I) Tamboli Raman/a/ Motilal (dead) by L.Rs. v. Ghanchi Chimanlal
Keshavla/ (dead) by L.Rs. and Anr., AIR (1992) SC 1236.
H
352 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.

A This Court, in this case, held as under:

"13. The attendant circumstances could be looked into only to
gather the intention. Such an intention, if explicitly hpressed in the
document itself, there is no scope for looking at the attendant
circumstances. If, therefore, there is no relationship of the debtor and
B the creditor, the question of it being a mortgage by conditional sale
does not arise.

16. Jn order to appreciate the respective contentions, it is necessary
f~r us to analyse Ex.26 dated I 1.12.1950. Before that, it is necessary
to utter a word of ca.ution. Having regard to the nice distinctions
c between a mortgage by conditional sale and a sale with an option to
repurchase, one should be guided by the terms of the document alone
without much help from the case lav.. Of course, cases could be
referred for the purposes of interpreting a particular clause to gather
the intention. Then again, it is also settled law that nomenclature of
D the document is hardly conclusive and much importance cannot be
attached to the nomenclature alone ;ince it is the real intention which
requires to be gathered. It is from this angle we propose to analyse
the document. No doubt the document is styled as a deed of conditional
sale, but as we have just now observed, that is not conclusive of the
matter."
E
(2) Chunchun Jha v. Ebadat Ali and Anr., AIR (1954) SC 345

We have perused the above judgment. The judgment explains as to
how a document has to be construed. The judgment says that the intention
must be gathered from the dccument itself and if the words are express and
F clear, effect must be given to them and any extraneous enquiry into what was
thought or intended is ruled out. The real question in such a case is not what
the parties intended or meant but what is the legal effect of the words which
they used and if there is ambiguity in the language employed, then it is
permissible to look to the surrounding circumstances to determine what was
G intended.

(3) Bhaskar Waman Joshi (deceased) and Ors. v. Shrinarayan Rambilas
Agarwal (deceased) and Ors., AIR (1960) SC 301

This Court, in this case, has explained the circumstance that the condition
H incorporated in the sale deed must undoubtedly be taken into account, but the
CHENNAMMAL v. MUNIMALAIYAN [LAKSHMANAN. J.) 353
value to be attached thereto must vary with the degree of formality attending A
upon the transaction. The definition of a mortgage by conditional sale
postulates the creation by the transfer of a relation of mortgagor and the
mortgagee, the price being charged on the property conveyed. This Court
further held that in a sale coupled with an agreement to re-convey 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 the property B
within the specified period. This Court also held that the question in each
case is one of determination of the real character of the transaction to be
ascertained from the provisions of the deed viewed in the light of surrounding
circumstances. If the words are plain and unambiguous they must in the light
of the evidence of surrounding circumstances be given their true legal effect. C
If there is ambiguity in the language employed, the intention may be
ascertained from the contents of the deed with such extrinsic evidence as may
by law be permitted to be adduced to show in what manner the language of
the deed was relating to existing facts.

(4) Umabai and Anr v. Ni/kanth Dhondiba Chavan (dead) by LRs and D
Anr.. [2005] 6 SCC 243

Paras I 9 and 2 I of the above judgment was relied on by counsel for
the appellant which reads thus:

"I 9. It may be true that level of a document is not decisive. The E
true nature of transaction must be determined having regard to the
intention of the parties as well as the circumstances attributing thereto
as also the wordings used in the document in question.

21. There exists a distinction between mortgage by conditional
sale and a sale with a condition of repurchase. In a mortgage, the debt F
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 conferli merely a personal right which
can be enforced strictly according to the terms of the deed and at the G
time agreed upon. Proviso appended to Section 58(c), however, states
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,
(1955] I SCR 174, Bhaskar Waman.Joshi v. Narayan Ramblidas
Agarwal, [1960] 2 SCR 117, K. Simrathmull v. S. Nanjalingiah H
354 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.

A Gowder, 1962 Supp 3 SCR 476, Mushir Mohammed Khan v. Sajeda
Bano, [2000] 3 sec 536 and Tamboli Raman/a/ Motilal V. Ghanchi
Chiman/al Keshavlal, [ 1993] Supp I SCC 295)."

(5) P.L. Bapuswami v. N. Pattay Gounder, AIR (1966) SC 902 (Four
Judges) was cited by Mr. K.K. Mani, learned counsel appearing for the
B respondent.

In this case, one Palani Moopan executed a document in favour of !he
defendant for a consideration of Rs.4,000 on May 28, 1946. The document
was in the form of a sale-deed but it contained a stipulation that the first
defendant should re-convey the property to Palani Moopan on his repaying
C the amount of Rs.4,000 after 5 years and before the end of the 7th year. This
Court held as under:

"that there were several Circumstances to indicate that the document
was a transaction of mortgage by conditional sale and not a sale with
a condition for retransfer. In the first place, the condition for repurchase
D was embodied in the same document. In the second place, the
consideration for the transaction was Rs.4,000 while the real value of
the property was Rs.8,000. In the third place, the patta was not
transferred to the I st defendant after the execution of the document
by Palani Moopan. The kist for the land was also continued to be
E paid by Palani Moopan and after his death, by his sons. Lastly, the
consideration for reconveyance was Rs.4,000, the same amount as
the consideration for the original transaction. The plaintiff was entitled
to preliminary decree for redemption under 0.34, R.7, Civil Procedure
Code, for taking accounts and for declaration of the amounts due to
the !st defendant under the document."
F
The above judgment, in our opinion, squarely applies to the facts and
circumstances of the case on hand. They are:

(I) the transaction in question is a mortgage by conditional sale;

G (2) the condition for re-purchase of 3 years was embodied in the
same document;
(3) the consideration for the transaction was Rs.3,000 while the real
value of the property was Rs.12,500;
(4) patta was not transferred to the defendant after the execution of
H the document;
CHENNAMMAL v. MUNIMALAIYAN [LAKSHMANAN, J.] 355
(5) as per the evidence available on record, the kist for the land was A
continued to be paid by the plaintiff-Munimalaiyan;
(6) the consideration for re-conveyance was only for Rs.3,000;

(7) the appellant was given liberty to have the patta transferred and
also to enjoy the property absolutely after the period of 3 years
expired; B
(8) the trial Court granted a preliminary decree which was reversed
by the lower Appellate court and again interfered with by the
High Court.

We have considered all the attendant circumstances to cover the intention C
of the parties. The intention is explicitly expressed in the document itself.
There is, therefore, no scope for looking at the attendant circumstances.
There is a relationship of the debtor and the creditor. This Court also in
Tamboli Raman/al Motilal (dead) by L.Rs. v. Ghanchi Chimanlal Keshavlal
(dead) by L.Rs. and Anr., AIR (1992) SC 1236 has pointed out that the Court
should be guided by the terms of the document alone without much help D
from the case law. Viewed from any angle, we are of the opinion that the
document in question is a mortgage by conditional sale.

In the result, the appeal stands dismissed and the judgment and decree
of the High Cou~ iJ affirmed. However, we order no costs.
E
V.M. Appeal dismissed.