Holding

The Supreme Court held that the sale deed was valid, the "Kararkharedi" was a mortgage by conditional sale, and the High Court erred in overturning the lower courts' factual findings.

Summary

Vidyadhar, the plaintiff, bought land from Defendant No.2 who had earlier executed a document styled "Kararkharedi" in favour of Defendant No.1, claiming it to be a mortgage by conditional sale. The plaintiff sued for redemption of that mortgage or specific performance, while Defendant No.1 contended that the document was an outright sale and that the sale deed to the plaintiff was invalid because full consideration had not been paid. The trial court and the lower appellate court held that the "Kararkharedi" was indeed a mortgage by conditional sale, that the sale deed was valid and that full consideration had been received, granting the plaintiff redemption. The Bombay High Court reversed, finding only Rs.500 of consideration paid and treating the deed as a sham, thereby restoring the land to Defendant No.2. On appeal, the Supreme Court held that a defendant, even a stranger to a sale deed, may raise any legitimate plea but in the present case the sale deed was valid, the mortgage remained a mortgage, and the High Court erred in overturning the factual findings. The Court also clarified the permissibility of producing witnesses without summons under Order 16 CPC and affirmed the applicability of Sections 54, 55(4)(b) and 58(c) of the Transfer of Property Act. Consequently, the appeal was allowed and the trial court decree was restored.

Issues considered

Whether a stranger to a sale deed can challenge the adequacy or payment of consideration.
Whether the document titled "Kararkharedi" constitutes a mortgage by conditional sale or an outright sale.
Whether a sale deed remains valid when full consideration is not paid at the time of execution under Section 54 of the Transfer of Property Act.
Whether the High Court can set aside findings of fact on a second appeal under Section 100 of the CPC.
Whether a party may produce a witness without a court summons under Order 16 of the CPC.

Legislation cited

Code of Civil Procedure, 1908s. Order 16 Rule 1(3), s. Order 16 Rule 1A, s. Order 8, s. Section 100
Indian Evidence Act, 1872s. Section 114
Transfer of Property Act, 1882s. Section 54, s. Section 55(4)(b), s. Section 58(c)

Subjects

sale deedconsiderationmortgage by conditional saleTransfer of Property ActSection 54Section 55(4)(b)equitable lienCPC Section 100Order 16 CPCwitness productionstranger to deedvalidity of sale

Judgment

-
A 1- VIDYADHAR
v.
"'
MANIKRAO AND ANR.
l
MARCH 17, 1999

B [S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]
cl
Civil Procedure Code, 1908 :

Order 8--Defendant can raise any legi.timate plea available to him
under the law to defeat the suit of the plaintiff.
c
Order 16 Rules 1(3) & I-A-Rule 1-A not in derogation of Rule
1(3 )-Witnesses-A party may bring witnesses even without applying for court
summons-But leave of the court has to be procured before proceeding to
examine such witnesses.
r
D
Section 100--:-Second appeal-Scope of power of the High Court under.

Transfer of Property Act, 1882:
. -,.-

Section 54:
E •,.._
Sale of immovable property-Non payment or part-payment of sale
'
consideration-Plea that sale deed was fictitious, collusive, void, not intended
to be acted upon-Held, can be raised also by a defendant who was a
stranger to the sale deed-It would depend upon the pleadings of the parties
to the suit, nature of the deed, evidence led by the parties and other cir-
F cumstances.
~

Consideration--"Price paid or promised or part paid and part-
promised"-Held, actual payment of full price at the time of execution of sale
deed is not a sine qua non for completion of sale-Real test is the intention
G of parties.
Section 55(4)(b)-Doctrine of Equitable lien-If ownership of the
property is transfe"ed to the buyer before the payment of the entire sale -J
price-Held, vendor is entitled to a charge on that property for the amount of
sale price as also interest thereon-Such charge provides the vendor the right
H to enforce the charge by way of filing a suit but does not entitle the seller to
1168
VIDYADHAR v. MANIKRAO 1169

retain the property as against the buyer. A
Section 58(c), proviso-Mmtgage by conditional sale-Detemiination
of whether the transaction is an out and out sale or morlgage-Docwnent
styled as 'Kararkharedi' executed by Defendant No. 2 infavour of defendant
No. 1 for a sum of Rs. 1500 with the stipulation that if the entire amount is
B
retumed to Defendant No. 1 before a specified date, the property to be
reconveyed to Defendant 2-Held, deed must be treated as a 11101tgage by
conditional sale.

Evidence Act, 1872-Section 114 Explanation (g)-Presumption of
adverse inference-lf a pwty to the suit abstains from ente1ing the witness box, C
an adverse inference would wise agai11St him.

Deeds and docwnent~Inte1pretatio11 of-The real test is the intention
of the parlies under the deed or document~The intention is to be gathered
from the recital in the sale deed, conduct of the parlies and the evidence 011 D
record.

Words and phrase~Words ''p1ice paid or promised or pan paid and
pwt-promised''--Mem1ing of-In the context of Section 54 of the Act.

Defendant No. 2, owner of a plot of land, executed a document styled E
as "Kararkharidi" in favour of defendant No. 1 for a sum of Rs. 1500 and
handed over possession to him. There was a stipulation in the document
that ifthe entire amount of Rs. 1500 was returned to defendant No.1 before
15.3.1973, the property would be given back to defendant No. 2. This land
,.
was subsequently transferred by defendant No. 2 in favour of the. plaintiff F
. for a sum of Rs. 5000 by a registered sale dated 19.6.1973. After having
obtained the sale deed, the plaintiff filed a suit in which it was given out that
defendant No. 2 had offered the entire amount to defendant No. 1 but he
latter did not accept the amount and, therefore, defendant No. 2 had to send
it by money order on 7.6.1973 which was refused by defendant No. 1. A notice
dated 5.6.1973 had also been sent by defendant No. 2 to defendant No. 1 G
pleading that since the document executed by defendant No. 2 in favour of
defendant No.1, was a mortgage by conditional sale, the property was liable
to be redeemed. In the alternative, it was also pleaded that if it was held by
the Court that the document did not create a mortgage but was an out and
?ut sale, the plaintiff as transferee of defendant No. 2, \\'.as entitled to a H
I

1170 SUPREME COURT REPORTS (1999] 1 S.C.R.

A decree for reconveyance of the property as defendant No. 2 had already
offered the entire amount of sale consideration to defendant No. 1 which "
was refused by defendant No. 1 and which amount the plaintiff was still
prepared to offer to defendant No. 1 and also otherwise ready and willing to
perform his part of the contract. defendant No. 2 admitted the whole claim
of the Plaintiff, whereas defendant No. 1 contested the suit on the ground
B that the document in his favour was not a mortgage by conditional sale but
was an out and out sale and since the amount of consideration had not been ...
paid within the time stipulated therein, the plaintiff could not claim recon·
veyance of the property in question. Before the Trial Court, when plaintiff
entered the witness box, defendant No. 2 did nor cross-examine him. llow-
c ever, defendant No.1 did not enter the witness-box and deputed his brother
to appear as a witness in the court, who could not prove that the sale
consideration was not paid to defendant No. 2. The Trial Court recorded a
positive finding that defendant No. 2 had mortgaged the land in question to
defendant No. 1 and that defendant No. 2 had transferred the property in

D
favour of the plaintiff for a sum of Rs. 5000 by a registered sale deed and,
therefore, the plaintiff was entitled to redeem the mortgage executed by
...
defendant No. 2 in favour of defendant No. 1. This finding was affirmed by
;.
the lower appellant court. However, on second appeal, the High Court
recorded the finding that the plaintiff had not paid the entire sale con·
sideration to defendant No. 2. The High Court disposed of the suit by
E directing that the land in question to be restored to defendant No. 2. Hence
this appeal.

It was contended by the appellant-plaintiff that the sale deed as executed
by defendant No. 2 in favour of the plaintiff, was not challenged by defendant
F No. 2, who, on the contrary, had admitted the entire claim set out by the plaintiff ...
in his plaint and, therefore, the High Court was in error in setting aside the sale
deed. It was also contended that defendant No. 1 who had challenged the sale .•
deed as fictitious had not appeared as a witness in the case and had avoided the
witness box in order to avoid cross-examination and, therefore, an adverse
inference should have been drawn against him. It was also contended that the
G findings of fact could not legally set aside in second appeal. On the other hand
it was contended by defendant No. 1 that findings recorded by the courts were
not borne out by the evidence on record and were perverse which was rightly set
1
aside by the High Court in second appeal. It was further contended that the
document of title in favour of defendant No.1 was misread as a mortgage deed
H although it constituted out and out sale.
;
\
VIDYADHAR v. MANIKRAO ~ 1171

Allowing the appeal, this Court A
HELD : 1.1. A,s regards right of defendant 1-to raise pleas, it is not
possible to subscribe to the view expressed in broad terms in Lal Achal
Ram* case by Privy Council that a stranger to a sale deed cannot dispute
payment of consideration or its adequacy. A distinction has to be drawn
between a deed, which was intended to be real or operative between the B
parties and a deed which is fictitious in character and was never designed
as a genuine document to effect transfer of title. In such a situation, it
would be open even to a stranger to impeach the deed as void and invalid
on all possible grounds. A person in his capacity as a defendant can raise
any legitimate plea available to him under law to defeat the suit of the c
plaintiff. This would also include the plea that the sale deed by which the
title to the property was intended to be conveyed to the plaintiff was void
or fictitious or, for that matter, collusive and not intended to be acted
upon. Thus, the whole question would depend upon the pleadings of the
parties, the nature of the suit, the nature of the deed, the evidence led by
the parties in the suit and other attending circumstances.; [1183-E-G] D
1.2. In the instant case, the property which was mortgaged in favour
of defendant 1 was transferred by defendant 2, who was the owner of the
property, to the plaintiff. This transfer does not, in any way, affect the
rights of defendant 1 who was the mortgagee and the mortgage in his E
favour, in spite of the transfer, subsisted. [1184-B]

Kamini Kumar Deb v. Durga Charan Nag, AIR (1923) Cal. 521;
Saradindu Mukheljee v. Kunja Kamini Roy & Ors., AIR. (1942) Cal. 514;
fugal Kishore Tewmi & Anr. v. Umesh Chandra Tewari & Ors., AIR (1973)
Pat. 352; Sa11ata11 Mahapatra & Ors. v. Hakim Mohammad Kazim Maham- F
~ mad & Ors., AIR (1977) Ori. 194, approved.

*Lal Achal Ram v. Raja Kazim Husain Khan, (1905) 32 IA 113,
dissented from.

2. Defendant 1 himself was not a party to the transaction of sale G
between defendant 2 and the plaintiff. He himself had no personal
knowledge of the terms settled between the defendant No. 2 and the
plaintiff. The transaction was not settled in his presence nor any payment
made in his presence. Nor, for that matter, was he a scribe or marginal
witness of that sale deed. Defendant 1 could not have raised a plea as to H
r,

1172 SUPREME COURT REPORTS [1999] 1 S,CR.
A the validity of the sale deed on the ground of inadequacy of the considera- 1'
tion or part-payment thereof defendant 2 alone, who was the executant of
the sale deed, could have raised an objection as to the validity of the sale
deed on the ground that it was without consideration or that the considera-
tion paid to him was highly inadequate. But he admitted the claim of the
B plaintiff whose claim in the suit was based on the sale deed, executed by
defendant 2 in his favour. The property having been transferred to him,
the plaintiff became entitled to all the relief which could have been claimed
by defendant 2 against defendant 1 including redemption of the mortgaged
property. [1182-D-F]

C 3. The findings of fact concurrently recorded by the Trial Court as
also by the lower appellate court could not have been legally upset by the
High Court in a second appeal under Section 100 CPC unless it was shown
that the findings were perverse, being based on no evidence on record or
that on the evidence on record, no reasonable person could have come to
D that conclusion. In the face of the findings recorded by the Trial Court as
also by the lower appellate court on the question of execution of sale deed
by defendant 2 in favour of the plaintiff with the further finding that it was
a valid sale deed which properly conveyed the title of the property in
question to the plaintiff, the High Court could not set aside those findings
merely on the ground that the circumstances which had already been
E considered by the lower courts appeared to suggest some other conclusion
from proved facts. [1184-H; 1195-A; 1187-A-B]

4.1. The High Court erred in commenting upon the production of
defendant 2 as a' witness. EYen though the name of defendant 2 was not
F mentioned in the list of witnesses furnished by the plaintiff, he was
properly examined as a witness and his testimony was not open to any
criticism on the ground that he was produced as a witness without being
summoned throngh the Court and without his name being mentioned in
the list of witnesses. [1184-E]

G 4.2. Rules 1 and lA of Order 16 CPC when read together clearly
indicate that it is open to a party to summon the witness to the court or
may, without applying for summons, bring the witnesses to give evidence
or to produce documents. Since Rule lA is subject to the provisions of
sub-rule (3) of Rule 1, all that can be contended is that before proceeding
H to examine any witness who might have been brought by a party for that
VIDYADHAR v. MANIKRAO 1173

purpose, the leave of th~ court may be necessary but this by itself will not A
mean that Rule 1A was in derogation of sub-rule (3) of Rule 1. [1188-F-G]

Mange Ram v. Blij Mohan, [1983) 3 SCR 525 : AIR (1983) SC 925 :
[1983) 4 sec 36, relied on.

B
5.1. The •ecital in the registered sale deed that out of the amount of
Rs. 5,000 which was the sale price, a sum of Rs. 4,500 had been paid earlier
while Rs. 500 was paid before the Sub-Registrar, read in the light of admis-
sion made by defendant 2 in his written statement and, therefore, in his
statement on oath as a witness clearly establishes the fact that defendant 2
had executed a sale deed in favour of the plaintiff or a price which was paid c
by defendant 2. Even if the findings recorded by the High Court that the
plaintiff had paid only Rs. 500 to defendant 2 as sale consideration and the
remaining amount of Rs. 4,500 which was shown to have been paid before
the execution of the deed was, in fact, not paid, the sale deed would not, for
that reason, become invalid on the ground of the provisions contained in D
Section 54 of the Transfer of Property Act. The definition of sale contained
in Section 54 indicates that in order to constitute a sale, there must be
transfer of ownership from one person to another, i.e., transfer of all dghts
and interests in the properties, which are possessed by that person are
transferred by him to another person. The transferor cannot retain any
part of his interest or right in that property or else it would not be a sale. E
Price constitutes an essential ingredients of the transaction of sale. But the
words "price paid or promised or part-paid or part- promised" indicate that
actual payment of the whole of the price at the time of the execution of the
sale deed is not a sine qua 11011 to the completion of the sale. Even if the
whole if the price is not paid but the document is executed and thereafter F
registered, if the property is of the value of more than Rs. 100, the sale
would be complete, the transaction of sale will take effect and the title would
pass under that transaction. The real test is the intention of the parties. In
order to constitute a "sale", the parties must intend to transfer the owner-
ship of the property and they must also intend that the price would be paid
either in presenti or in future. The intention is to be gathered from the G
recital in the sale deed, the conduct of the parties and the evidence on
record. [1190-C•H; 1191-A-C]

Gayatri Prasad v. Buard of Revenue, (1973) All W 412; Sukaluo & Ors.
v. Pwiau, AIR (1961) MP 176: ILR (1960) MP 614, approved. H
r•

1174 SUPREME COURT REPORTS [1999] 1 S.C.K
A 5.2. In the present case, the facts already establish that a complete and
formidable sale deed was executed by defendant 2 in favour of the plaintiff
and the title in the property passed to the plaintiff. The findings recorded by
the High Court on this question cannot, therefore, be upheld. [1192-B]

5.3. The High Court totally ignored the provisions contained in
B Section 55 (4)(b), TPA. This Section applies to a situation where the
ownership in the property has passed to the buyer before the whole of the
purchase money was pai.d to the seller or the vendor. What is contained in
this clause is based on the English doctrine of equitable lien as
propounded in Goode v. Bwto11**. This clause confers statut.ory recogni-
C tion on the English doctrine of equitable lien. The statutory charge under
this p;;ragraph is inflexible. The charge does not entitle the seller to retain
possession of the property as against the buyer but it positively gives him
a right to enforce the charge by suit. [1192-C-F]

Ve11katapentmal Naidu v. M. Rath11asabhapathi Chettiar, AIR (1953)
D Mad. 821; Shobhalal Shyamlal Kunni v. Sidhelal lfalkelal Ba11ia, AIR (1939)
Nag. 210; Balalingaya Reva11shiddappa v. Chin11ava Karibasappa, AIR
(1932) Born. 247, approved.

**Goode v. Buno11, [1847) 74 RR 633 : 1 Ex 189; ·webb & Anr. v.
E Macpherso11, 30 IA 238, referred to.
5.4. The High Court was wholly in error in coming to the conclusion
that there was no sale as only a sum of Rs. 500 was paid to defendant 2
and the balance amount of Rs. 4,500 was not paid. Since the title in the
property had already passed, even if the balance amount of sale price was
F not paid, the sale would not become invalid. The property sold would stand
transferred to the buyer subject to the statutory charge for the unpaid part
of the sale price. [1193-G-H]

6. It is not possible to accept the contention of defendant 1 that the
G deed dated 24.3.1971 was not mortgage deed but an out and out sale with
the result that the property having been transferred to defendant 1 was not
available for being sold to the plaintiff. The contents of the document
indicate that defendant 2 had executed a mortgage by conditional sale in
..... favour .of defendant.1, He had promised to pay back Rs. 1,500 by a par-
ticular date failing which the document was to be treated as sale deed. The
H intention of the parties are reflected in the contents of the documents which
~
VIDYADHAR v. MANIKRAO 1175

y is described as a mortgage by r.onditional sale. In the body of the document, A
the mortgage money has also been specified. Having regard to the cir-
cumstances of this case as also the fact that the _condition of purchase is
contained in the same document by which the mortgage was created in
favour of defendant 1, the deed in question cannot but be treated as a
mortgage by conditional sale. Mortgage by conditional sale is defined under
Section 58(c). The proviso was introduced in this clause only to set at rest B
the controversy about the nature of the document, whether the transaction
>-
would be a sale or a mortgage. If has been specifically provided by the
amendment that the document would not be treated as a mortgage unless
the condition of repurchase was contained in the same document. The basic
principle is that the form of transaction is not the final test and the true c
test is the intention of the parties in entering into the transaction. If the
intention of the parties was that the transfer was byway of security, it would
be a mortgage. As between the parties to the document, the intention to
treat the transaction as an out and out sale or as a mortgage has to be
found out on a consideration of the contents of the document in the light
of surrounding circumstances. [1195-G-H; C; D; E] D

Bhaskar Waman Joshi v. Sluinarayan Rambilas Agarwal, AIR (1960)
SC 301 : [1960) 2 SCR 117; P.L. Bapuswami v. V.N. Pattay Gounder, AIR
(1966) SC = (1966) 2 SCR 918, relied on.
E
Balkishen Das & Ors. v. Legge, 27 IA 58, referred to.

7. So far the contention of defendant 1 that the mortgage money was
not paid within the time stipulated in the document and, therefore, the
transaction, even if _it was a mortgage, became an absQlute sale is con-
cerned, the finding of the courts below is that this money was tendered to F
Defendant 1 who refused to accept it. defendant 2 had thus performed his
...
part of the agreement and had offered the amount to defendant 1 so that
the property may be reconveyed to him but defendant 1 refused to to accept_
the money. He, therefore cannot complain of any default in not paying the
amount in question within the time stipulated in the deed. Since there was
no default on the part of defendant 2, the document would not convert itself G
into a sale deed and would remain a mortgage deed. The suit for redemp-
tion was, therefore, properly tiled by the plaintiff who was the assignee of
)
defendant 2. [1196-B-C]

8. Where a party to the suit does not appear in the witness-box and H
I ,

1176 SUPREME COURT REPORTS [1999] 1 S.C.R.

A states his own case on oath and does not offer himself to be cross-examined
by the other side, a presumption would arise that the case set up by him
is not correct. [1181-G]

Sardar Gurbakhsh Singh v. Gurdial Singh, AIR (1927) PC 230; Kirpa
Singh v. Ajaipal Singh, AIR (1930) Lah. 1; Ma1tand Pandh1inath Chaudha1i
B v. Radhabai !Vislmarao Deshmukh, AIR (1931) Born. 97; Gulla-Kharagjit
Ca1pe11ter v. Narsingh Nandkishore Rawat, AIR (1970) MP 225; Arjun Singh
v. Virendra Nath, AIR (1971) All. 29; Bhagwan Dass v. Bhishan Chand &
Ors., AIR (1974) P & H 7, approved.

C . CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1534 of
1999.

From the Judgment and Order dated 3.5.91 of the Bombay High
Court in S.A. No. 352 of 1976.

D S.K. Gambhir for the Appellant.

Markand D. Adkar, S.D. Singh and Vishwajit Singh for the Respon-
dents.

The Judgment of the Court was delivered by

E S. SAGHIR AHMAD, J. Leave granted.

Vidhyadhar, the appellant before us, who shall hereinafter be
referred to as plaintiff, had instituted a suit against the respondents, who
shall hereinafter be referred to as defendant Nos. 1 and 2 respectively, for
F redemption of the mortgage by conditional sale or in the alternative for a
decree for specific performance of the contract for repurchase which was
decreed by the Trial Court on 29.4.1975. The decree was upheld by the
Lower Appellate Court by its judgment dated 28.9.1976 but the High
Court, by the impugned judgment dated 3.5.1991, set aside both the judg-
ments and passed a unique order to which a reference shall be made
G presently in this judgment. The plaintiff is in appeal before us.

The property in dispute is 4.04 acres of land of survey plot No. 15 of
Kasba Amdapur, District Buldana. The whole area of survey plot No.15 is
16.09 acres and except the land in dispute, namely, an area of 4.04 acres,
the entire land is in possession of the plaintiff. Defendant No.2 was the
H owner of the whole Plot No.15. On 24th of March, 1971, he executed a

0
,I

VIDYADHAR v. MANIKRAO (S.SAGHIRAHMAD,J,] 1177

y document styled as "Kararkharedi" in favour of defendant No.1 for a sum A
of Rs. 1500 and delivered possession thereof to the latter. There was a
~
stipulation in the document that if the entire amount of Rs.1500 was
returned to defendant No.1 before 15th of March, 1973, the property would
be given back to defendant No.2.

This land was subsequently transferred by defendant No.2 in favour B
of the plaintiff for a sum of Rs.5,000 by a registered sale deed dated
19.6.1973. After having obtained the sale deed, the plaintiff filed the
aforesaid suit in which it was given out that defendant No.2 had offered
the entire amount to defendant No.1 but the latter did not accept the
amount and, therefore, defendant No.2 had to send it by money order on c
7.6.1973 which was refused by defendant No.l. A notice, dated 5.6.1973,
had also been sent by defendant No.2 to defendant No.l. It was pleaded
that since the document, executed by defendant No.2 in favour of defen-
dant No.1, was a mortgage by conditional sale, the property was liable to
be'redeemed. It was also pleaded in the alternative that if it was held by ,
D
the Court that the document did not create a mortgage but was an out and
out sale, the plaintiff as transferee of defendant No.2, was entitled to a
i<
decree for reconveyance of the property as defendant No.2 had already
offered the entire amount of sale consideration to defendant No.1 which,
the latter, had refused and which amount the plaintiff was still pr;:pared to
offer to defendant No.1 and was also otherwise ready and willing to E
perform his part of the contract.

Defendant No.2 admitted the whole claim of the plaintiff by filing a
one-line written statement in the trial court. But defendant No.1 contested
the suit and pleaded that the document in his favour was not a mortgage F
_,, by conditional sale but was an out and out sale and since the amount of
consideration had not been tendered within the time stipulated therein, the
plaintiff could not claim reconveyance of the property in question. The
Trial Court framed the following issues:-
G
"l. Does the plaintiff prove that the defendant No.2 mortgaged the
suit field with the defendant No.1 for Rs.1500 on 24.3.71?
• 2. Does the plaintiff prove that the suit field was purchased by him
from the defendant No.2 for Rs.5,000 on 19.6.73? H
' '

1178 SUPREME COURT REPORTS [1999) 1 S.C.R.

A 3. Is the plaintiff entitled to redeem the mortgage executed by the y
defendant No.2 in favour of defendant No.1?

4. Was the defendant No. 2 ready and willing to repurchase the
suit field prior to 15.3.71?

B 5. Is the plaintiff entitledlto claim retransfer of the suit field from
the defendant No.l?

6. Relief and costs?"

c the landTheinfinding on issue No.l was that defendant No.2 had mortgaged
question to defendant No.l for Rs.1500 on 24.3.1971. On issue
no.2, it was found that defendant No.2 had transferred the property in
favour of the plaintiff for a sum of Rs.5,000 on 19.6.1973 by a registered
sale deed and, therefore, the plaintiff was entitled to redeem the mortgage
executed by defendant No.2 in favour of defendant no.1. Issue Nos. 4 and
D 5 were decided in the negative as the Trial Court had held the document
in question to be a mortgage deed. In view of these findings, the suit was
~
decreed and the Trial Court passed the following order:- );

"It is hereby declared that the amount due to the defendant-1
on the mortgage mentioned in the plaint dated 24-3-71 is Rs.1500/-.
E It is further ordered and decreed that the plaintiff to pay into court
on or before 29-10-75 or any later date into which time for payment
may be extended by the Court the said sum of Rs.1500.

That on such payment and on payment thereafter before such
F date as the Court may fix of such amount as the Court may adjudge
due interest as may be payable under rule 10, together with such
;.
subsequent interest as may be payable under rule 11 of the order
34 of the first schedule to the Code of Civil Procedure 1908, the
defendant-1 shall bring into Court all documents in his possession
...
or power relating to the mortgage property in the plaint mentioned
G and all such documents shall be delivered over to the plaintiff or
to such person as he appoints, and the defendant-1 shall, if so
required, reconvey or retransfer the said property from the said
mortgage and clear of and from all encumbrances created by the
defendant-1 or any person claiming under him or any person under
'
H who he claims, and free from all liability whatsoever arising from
VIDYADHAR v. MANIKRAO (S.SAGHIRAHMAD,J.) 1179

the mortgage or this suit and shall, deliver up the plaintiff quiet A
and peaceful possession of the said property. And it is further
ordered and decreed - that, in default of payment as aforesaid, the
defendant-1 may apply to the Court for a final decree that the
plaintiff be debarred from all right to redeem the property."

This decree was confirmed in appeal but, as pointed out above, was B
reversed by the High Court in the second appeal.

The High Court was of the opinion that the plaintiff had not paid
the entire amount of sale consideration to defendant No.2. Out of a sum
of Rs.5,000, for which sale deed was executed, a sum of Rs.500 alone had
been paid to defendant No.2 before the Sub- Registrar and the rest of the
c
amount was not paid. The High Court further held that the document
"Kararkharedi" which purports to have been executed for a sum of Rs.1500
by defendant No.2 in favour of ddendant No.1 was, in fact, executed for a
sum of Rs.800 which was paid before the Sub-Registrar. The High Court,
then, disposed of the suit by directing that the land in question shall be D
restored to defendant No.2 who shall pay back a sum of Rs.800 (in
instalments) to defendant No.1 and a sum of Rs.500 (in instalments) to the
plaintiff.

Learned counsel for the appellant has contended that the sale deed,
executed by defendant No.2 in favour of the plaintiff, was not challenged
E
by defendant No.2 who, on the contrary, had admitted the entire claim set
out by the plaintiff in his plaint and, therefore, the High Court was in error
in setting aside the sale deed. It is also contended that defendant No.1 who
had challenged the sale deed as fictitious had not appeared as a witness in
the case and had avoided the witness box in order to avoid cross-examina- F
tion and, therefore, an adverse inference should have been drawn against
him and this plea ought to have been rejected by the High Court which, it
is also contended, could not have legally set aside the findings of fact in
second appeal. It is also contended that defendant No.1 being a stranger
to the sale deed should not have been allowed to raise the plea relating to G
inadequacy or non-payment of consideration money.

Learned counsel for defendant No.l, on the contrary, has tried to
justify the interference by the High Court at the stage of second appeal by
contending that the findings recorded by the Courts were not borne out by
the evidence on record and were perverse which could be set aside under H
r·

1180 SUPREME COURT REPORTS [1999] 1 S.C.R.

A Section 100 C.P. C. He also contended that the document of title in favour
of defendant No.I was misread as a mortgage deed although it constituted
an out and out sale. Moreover, on the commission of default, as con-
templated by the document in question, the whole transaction, even if it
was a mortgage, converted itself into an absolute sale as agreed upon
B between the parties. The sale having thus become absolute in favour of
defendant No.1, no title was left in defendant Nc..2 to convey it to the
plaintiff through the sale deed in question.

Let us examine the respective contentions. Beginning with the plead-
ings, defendant No.2 in his written statement filed before the Trial Court,
C admitted the claim of the plaintiff.

Annexure P-III to the Special Leave Petition is the true translation
of the copy of written statement filed by defendant No.2 in the suit. It reads
as under:-

D "IN THE COURT OF HON'BLE CIVIL JUDGE SENIOR
DWISION BULDANA:-

R.C. S.No.195173 F.F. _ _ __

Plaintiff: Vidhyadhar Vishnupant Ratnaparkhi
E
- Versus -

Defendant : (1) Manikrao Babarao Deshmukh

(2) Pandu Ganu Bhalerao
F
WRITTEN STATEMENT OF DEFENDANT N0.2 PANDU
GANU BHALERAO

(1) The suit filed by Plaintiff is admitted. Hence this written
G statement.

Buldana
Dt. 20.12.73

Sd/-
H (Pandu Ganu Bhalerao)
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.] 1181

I, defendant No. 2 state on oath that the contents of para 1 of A
the written statement ar:: true as per my personal knowledge.

Hence this affidavit is signed and executed at Buldana on this
20.12.73.

Sd/- B
(Pandu Ganu Bhalerao)"

The Lower Appellate Court has noticed this and observed in its
judgment as under:-

"Defendant No.2 filed his written statement at Ex.15 which is c
extremely brief comprising only a sentence, stating that the suit
filed by the plaintiff is admitted by him."

Even while plaintiff was in the witness box, defendant No.2 declined
to cross examine the plaintiff which shows that defendant No.2 after D
admitting the case of the plaintiff, had no interest in the litigation par-
ticularly as he had already transferred the property in favour of the
plaintiff.

It was defendant No.1 who contended that the sale deed, executed
by defendant No.2 in favour of the plaintiff, was fictitious and the whole E
transaction was a bogus transaction as only Rs.500 were paid as sale
consideration to defendant No.2. He further claimed that payment of
Rs.4,500 to defendant No.2 at his home before the registration of the deed
was wholly incorrect. This plea was not supported by defendant No.I as he
did not enter into the witness box. He did not state the facts pleaded in F
the written statement on oath in the Trial Court and avoided the witness
box so that he may not be cross examined. This, by itself, is enough to reject
the claim that the transaction of sale between defendant No.2 and the
plaintiff was a bogus transaction.

Where a party to the suit does not appear into the witness box and G
states his own case on oath and does not offer himself to be cross examined
)
by the other side, a presumption would arise that the case set up by him
is not correct as has been held in a series of decisions passed by various
High Courts and the Privy Council beginning from the decision in Sardar
Gurbakhsh Singh v. Gurdial Singh and Another, AIR (1927) Privy Council H
r

1182 SUPREME COURT REPORTS (1999] 1 S.C.R.

A 230. This was followed by the Lahore High Court in Kirpa Singh v. Ajaipal -..·
Singh and Others, AIR (1930) Lahore 1 and the Bombay High Court in
Ma1tand Pandharinath Chaudhari v. Radhabai Krishnarao Deshmukh, AIR
(1931) Bombay 97. The Madhya Pradesh High Court in Gulla Klzaragjit
Carpenter v. Narsingh Nandkishore Rawat, AIR (1970) Madhya Pradesh 225
also followed the Privy Council decision in Sardar Gurbakhsh Singh's case
B (supra). The Allahabad High Court in A1jw1 Singh v. Virender Nath and
Another, AIR (1971) Allahabad 29 held that if a party abstains from ..
entering the witness box, it would give rise to an inference adverse against·
him. Similarly, a Division Bench of the Punjab & Haryana High Court in
Bhagwan Dass v. Bhishan Chand and Others, AIR (1974) Punjab &
c Haryana 7, drew a presumption under Section 114 of the Evidence Act
against a party who did not enter into the witness box.

Defendant No.1 himself was not a party to the transaction of sale
between defendant No.2 .and the plaintiff. He himself had no personal
knowledge of the terms settled between defendant No.2 and the plaintiff.
-< D The transaction was not settled in his presence nor was any payment made
J in his presence. Nor, for that matter, was he a scribe or marginal witness
of that sale deed. Could, in this situation, defendant No.1 have raised a
~

plea as to the validity of the sale deed on the ground of inadequacy of
consideration or part-payment thereof? Defendant No.2 alone, who was
E the executant of the sale deed, could have raised an objection as to the .
validity of the sale deed on the ground that it was without consideration or
that the consideration paid to him was highly inadequate. But he, as
pointed out earlier, admitted the claim of the plaintiff whose claim in the
suit was based on the sale deed, executed by defendant No.2 in his favour.
The property having been transferred to him, the plaintiff became entitled
F
to all the reliefs which could have 'been claimed by defendant No.2 against
defendant No.l including redemption of the mortgaged property.

Learned counsel for defendant No.1 confended that since the plain-
tiff had filed the suit on the basis of sale deed, executed by defendant No.2
G in his favour and had sought possession over that property from defendant
No.1, it was open to the latter to show that plaintiff had no title to the
property in suit and, therefore, the suit was liable to be dismissed. It was ~
contended that in his capacity as a defendant in the suit, it was open to
defendant No.1 to raise all the pleas on the basis of which the suit could
H be defeated.
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.] 1183

In Lal Achal Ram v. Raja Kazim Hussain Khan, (1905) 32 Indian A
Appeals 113, the Privy Council laid down the principle that a stranger to
a sale deed cannot dispute payment of consideration or its adequacy. This
decision has since been considered by various High Courts and a distinc-
tion has been drawn between a deed which was intencfed to be real or
operative between the parties and a deed which is fictitious in character
and was never designed as a genuine document to effect transfer of title.
B
In such a situation, it would be open even to a stranger to impeach the
deed as void and invalid on all possible grounds. This was also laid down
in Kamini Kumar Deb v. Durga Charan Nag & Ors., AIR (1923) Calcutta
521 and again in Saradindu Mukhe1jee v. S.M. Kwija Kamini Roy & Ors.,
AIR (1942) Calcutta 514. The Patna High Court in fugal Kishore Tiwari & c
Anr. v. Umesh Chandra Tiwari & Ors., AIR (1973) Patna 352 and the Orissa
High Court in Sanatan Mahapatra and Others v. Hakim Mohammad Kazim
Mohammad and Others, AIR (1977) Orissa 194 have also taken the same
VIew.

D
The above decisions appear to be based on the principle that a
person in his capacity as a defendant can raise any legitimate plea available
to him under law to defeat the suit of the plaintiff. This would also include
the plea that the sale deed by which title to the property was intended to ' ·
be conveyed to plaintiff was void or fictitious or, for that matter, collusive
E
and not intended to be acted upon. Thus, the whole question would depend
upon the pleadings of the parties, the nature of the suit, the nature of the
deed, the evidence led by the parties in the suit and other attending
circumstances. For example, in a landlord-tenant matter where the
landlord is possessed of many properties alid cannot possibly seek eviction
of his tenant for bona fide need from one of the properties, the landlord F
may ostensibly transfer that property to a person who is not possessed of
any other property so that that person, namely, the transferee, may institute
eviction proceedings on the ground of his genuine need and thus evict the
tenant who could not have been otherwise evicted. In this situation, the ·
deed by which the property was intended to be transferred, would be a G
collusive deed representing a sham transaction which was never intended
to be acted upon. It would be open to the tenant in his capacity as
)
defendant to assert, plead and prove that the deed was fictitious and
collusive in nature. We, therefore, cannot subscribe to the view expressed
by the Privy Council in the case of Lal Achal Ram (supra) in the broad H
1184 SUPREME COURT REPORTS [1999] 1 S.C.R.
A terms in which it is expressed but do approve the law laid down by the
Calcutta, Patna and Orissa High Courts as pointed out above.

In the instant case, the property which was mortgaged in favour of
defendant Ncl.l was transferred by defendant No.2, who was the owner of
B the property, to plaintiff. This transfer does not, in any way, affect the rights
of defendant No.1 who was the mortgagee and the mortgage in his favour,
in spite of the transfer, subsisted. When the present suit for redemption
was filed by the plaintiff, defendant No.2, as pointed out above, admitted
the claim of the plaintiff by filing a one-sentence written statement that the
claim of the plaintiff was admitted. When the plaintiff entered into the
C witness box, defendant No.2 did not cross examine him. He did not put it
to the plaintiff that the entire amount of consideration had not been paid
by him. defendant No.1 alone raised the question of validity of the sale
deed in favour of the plaintiff by pleading that it was a fictitious transaction
as the sale consideration had not been paid to defendant No.2 in its
D entirety. Having pleaded these facts and having raised the question relating·
to the validity of the sale deed on the ground that the amount of considera-
tion had not been paid, defendant No.2 did not, in support of his case,
enter into the witness box. Instead, he deputed his brother to appear as a
witness in the case. He did enter into the witness box but could not prove
E that the sale consideration had not been paid to defendant No.2. On a
consideration of the entire evidence on record, the Trial Court recorded a
positive finding of fact that the sale deed, executed by defendant No.2 in
favour of the plaintiff, was a genuine document and the entire amount of
sale consideration had been paid. This finding was affirmed by the Lower
F Appellate Court but the High Court intervened and recorded a finding that
although the property which was mentioned to have been sold for a sum
of Rs.5,000/-, the plaintiff had; in fact, paid only Rs. 500 to defendant No.2.
The amount of Rs.4,500 which was indicated in the sale deed to have been
paid to defendant No.2, prior to registration, was not correct. It was for
this reason that the High Court while redeeming the property directed that
G the amount of sale consideration which was paid by the plaintiff to defen-
dant No.2 shall be returned by defendant No.2 and the property would
revert back to him.

The findings of fact concurrently recorded by the Trial Court as also
H by the Lower Appellate Court could not have been legally upset by the
VIDYADHAR v. MANIKRAO [S. SAGHIR AHMAD, J.] 1185
)·
High Court in a second appeal under Section 100 C.P.C. unless it was A
shown that the findings were perverse, being based on no evidence or that
on the evidence on record, no reasonable person could have come to that
conclusion.

The findings of fact concurrently recorded by the lower Courts on B
the question of title of the plaintiff on the basis of sale deed, executed in
his favour by defendant No.2, have been upset by the High Court on the
ground that full amount of consideration does not appear to have been
paid by plaintiff to defendant No.2. It will be worthwhile to reproduce the
findings recorded by the High Court on this question. The High Court
observed:-
c

"l4. As already stated above, the plaintiff had paid a nominal
amount of Rs.500 before the Sub-Registrar and got the document
executed considering the plight of the defendant No.2 that his D
seven acres of land was already mortgaged with the plaintiff and,
in fact, no further consideration of Rs.4,500, as alleged, had been
paid to the defendant No.2. This conclusion is supported by the
conduct of the defendant No.2, who had served the plaintiff with
a notice alleging that the sale deed executed in his favour was a
sham and bogus one and without any consideration. Even a com- E
plaint came to be made before the police apout the said bogus
transaction, which was subsequently withdrawn in view of the fact
that the defendant No.2's lands to the extent of 7 acres were
already mortgaged with the plaintiff. All these would show that the
plaintiff was pursuing the defendant No.2 to transfer his property F
in his favour to the extent of 4 acres 4 gunthas and under pressure
the defendant No.2 admitted to have received the sum of Rs.4,500.
As stated above, this admission was made by the. defendant No.2
in one sentence. Therefore, considering all these aspects, the
learned lower appellate Court has held that no consideration has
passed in favour of the 9efendant No.2 except the sum of Rs.500 G
only alleged to have been paid before the Sub- Registrar. It is
apparent that the plaintiff might have purchased the property only
for Rs.2,000 i.e. Rs.1,500 which were to be paid to the defendant
No.1 for redemption of mortgage and Rs.500 paid to the defendant
No.2 before the Sub-Registrar. H
1186 SUPREME COURT REPORTS [1999] 1 S.C.R.

A 15. Considering all the above facts and circumstances, I am of the
view that the conclusion arrived at by the learned lower appellate
Court directing the defendant No.1 to receive the amount of
redemption and to deliver the possession of the suit field to the
plaintiff is not correct. It is pertinent to note that the transaction
between the defendant No.1 and 2 itself was a money-lending
B transaction an) that the sale-deed was a mortgage sale. Therefore,
the defendant No.1 cannot become the owner of the property.
Even, as held by the learned Trial Court, that nothing has been
placed on record by the defendant No.1 to support his contention
that he had paid Rs.700 at home, and the consideration of Rs.800
c had been paid before the Sub-Registrar to defendant No.2, the
learned Trial Court observed that it is doubtful whether this
amount of Rs.700 has also been paid to the defendant No2 by the
defendant No.1. This shows that the said mortgage was only for Rs.800
and that the amount of Rs.700 has not passed tu the defendant No.2
from defendant No.l. It is clear that except Rs.500 nothing has been
D
paid by the plaintiff to defendant No.2 as the amount of Rs.4,500
alleged to have been paid at home to the defendant No.2 h<tS not
been established. Therefore, the view taken by both the Courts below
under no circumstances, can be sustained."

E The circumstances relied upon by the High Court had already been
considered by the Courts below and ultimately the Lower Appellate Court
proceeded to say as under:-

"But it would appear as though that all this discussion is
F worthless in view of the fact that deft. No.2 himself admitted in his
deposition that he executed the sale deed in favour of the plaintiff
and accepted the price. His written statement and deposition is
quite eloquent on that point. On the fact of these admission, there
cannot be any other circumstance which would assist the Court to
hold that the document executed in favour of 'the plaintiff by
G defendant No.2 as bogus, sham and without consideration, not-
withstanding the fact that the circumstances and the facts of the
case infallibly point that the document of sale does not convey the
real transaction that had taken place between plaintiff and defen-
dant No.2. As such although with reluctance, it has to be held that
H the plaintiff had purchased the property from defendant No.2."
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.) 1187

In the face of the findings recorded by the Trial Court as also by the A
Lower Appellate Court on the question of execution of sale deed by
defendant No.2 in favour of the plaintiff with the further finding that it was
a valid sale deed which properly conveyed the title of the property in
question to the plaintiff, it was not expected of the High Court to set aside
those findings merely on the ground that the circumstances which had
already been considered by the lower Courts, appeared to suggest some
B
other conclusion from proved facts.

Let us scrutinise the circumstances relied upon by the High Court.

In order to prove his case, the plaintiff had examined defendant No.2
as a witness who admitted to have executed the sale deed in favour of the
c
plaintiff and further admitted to have received the entire amount of sale
consideration. The High Court has adversely commented upon the produc-
tion of defendant No.2 as a witness by saying as under:-

'Next witness examined by the, plaintiff was defendant No.2. D
The plaintiff, while examining this witness, has not incorporated
the name of this witness in the list of witness nor any application
was made for the examir!ation of defendant No.2. The willingness
of the defendant No.2 was also not placed on record, to appear as
a witness for the plaintiff."
E
This is wholly an erroneous view.

Summoning and attendance of witnesses has been provided for in
Order 16 of the Code of Civil Procedure. Order 16 Rule 1 which speaks
of list of witnesses and summons to witnesses provides as under:-
F
"R. 1. List of witnesses and summons to witnesses.

(1) On or before such date as the Court may appoint, and not later
than fifteen days after the date on which the issues are settled, the
parties shall present in Court a list of witnesses whom they propose G
to call either to give evidence or to produce documents and obtain
summons to such persons for their attendance in Court..

(2) A party desirous of obtaining any summons for the attendance
of any person shall file in Court an application stating therein the
purpose for which the witness is proposed to be summoned. H
1188 SUPREME COURT REPORTS (1999) 1 S.C.R.
A (3) The Court may, for reasons to be recorded, permit a party to
call, whether by summoning through Court or otherwise, any
Witness, other than those whose names appear in the list referred
to in sub-rule (1), if such party shows sufficient cause for the
omission to mention the name of such witness in the said list.

B
(4) Subject to the provisions of sub-rule (2), summons referred to
in this rule may be obtained by parties on an application to the
~ourt or to such officer as may be appointed by the Court in this
behalf."

c Rule 1A which allows production of witnesses without summons
provides as under:-

"R. lA. Production of witnesses without summons.

D Subject to the provisions of sub-rule (3) of Rule 1, any party
to the suit may, without applying for summons under rule (1), bring
any witness to give evidence or to produce documents."

These two Rules read together clearly indicate that it is open to a
party to summon the witnesses to the Court or may, without applying for
E summons, bring the witnesses to give evidence or to produce documents.
Sub-Rule (3) of Rule 1 provides that although the name of a witness may
not find place in the list of witnesses filed by a party in the Court, it may
allow the party to produce a witness though he may not have been sumc
moned through the Court. Rule 1A which was introduced by the Code of
F Civil Procedure (Amendment) Act, 1976 with effect from 1.2.1977 has
placed the matter beyond doubt by providing in clear and specific terms
that any party to the suit may bring any witness to give evidence or to
produce documents. Since this Rule is subject to the provisions of Sub-
Rule (3) of Rule 1, all that can be contenc;!_ed is that before proceeding to
examine any witness who might have been brought by a party for that
G purpose, the leave of the Court may be necessary but this by itself will not
mean that Rule 1A was in derogation of Sub-Rule (3) of Rule 1. The whole
position was explained by this Court in Mange Ram v. Brij Mohan & Ors.,
AIR (1983) SC 925 = (1983) 4 sec 36 = (1983] 3 SCR 525, in which it
was held that Sub-Rule (3) of Rule 1 and Rule 1A operate in two different
H areas and cater to two different situations. It was held:-
VIDYADHARv.MANIKRAO [S.SAGHIRAHMAD,J.] 1189

"There is no inner contradiction between sub"rule (1) of Rule A
1 and Rule lA of Order XVI. Sub-rule (3) of Rule 1 of Order
XVI confers a wider jurisdiction on the Court to cater to a si,uation
where the party has failed to name the witness in the list and yet
the party is unable to produce him or her on his own under Rule
lA and i!i such a situation the party of necessity has to seek the
assistance of the Court under sub-rule (3) to procure the presence
B
of the witness and the Court may if it is satisfied that the party has
sufficient cause for the omission to mention the name of such
witness in the list filed under sub-rule (1) of Rule 1, the Court may
still extend its assistance for procuring the presence of such a
witness by issuing a summons through the Court or otherwise which c
ordinarily the Court would not extend for procuring the attendance
of a witness whose name is not shown in the list. Therefore,
sub-rule (3) of Rule 1 and Rule IA operate in two different areas
and cater to two different situations."
D
In view of the above, even though the name of defendant No.2 was
not mentioned in the list of witnesses furnished by the plaintiff, he was
1 properly examined as a witness and his testimony was not open to any
criticism on the ground that he was produced as a witness without being
summoned through the Court and without his name being mentioned in
the list of witnesses. E

The next circumstance relied upon by the High Court in discarding
the sale deed is that defendant No.2 himself had given a notice to the
plaintiff in which it was set out that the sale deed was a sham transaction
for which the consideration was not paid. In relying upon this circumstance, p
the High Court overlooked the fact that defendant No.2, in his capacity as
a witness for the plaintiff, had stated in clear terms that this notice was
issued to the plaintiff at the instance of dofendant No.1. Defendant No.2
also stated that the complaint made by him to the police in that regard was
withdrawn by him. This circumstance, therefore, also could not have been
legally relied upon by the High Court in holding that full amount of G
consideration was not paid.

It could not be igriored that the plaintiff's case had been admitted in
unequivocal terms by def~ndant No.2 in his written statement. It could also
not be ignored that when plaintiff examined himself as a witness in the suit, H
1190 SUPREME COURT REPORTS (1999] 1 S.C.R.
A defendant No.2 refused to cross-examine him. The circumstance, which,
however, clinches the matter is the statement of defendant No.2 on oath in
which he admitted that he had executed a sale deed in favour of the
plaintiff and had obtained full amount of consideration. The sale deed is a
registered document which recites that out of the amount of Rs.5,000/-,
B which was the sale price, a sum of Rs. 4,500 had been paid earlier while
Rs.500 was paid before the Sub-Registrar. This recital read in the light of
the admission made by defendant No.2 in his written statement and,
thereafter, in his statment on oath as a witness clearly .establishes the fact
that defendant No.2 had executed a sale deed in favour of plaintiff for a
price which was paid to defendant No.2.
c Even if the findings recorded by the High Court that the plaintiff had
paid only Rs.500 to defendant No.2 as sale consideration and the remaining
amount of .Rs.4,500 which was shown to have been paid before the execu-
tion of the deed was, in fact, not paid, the sale deed would not, for that
reason, become invalid on account of the provisions contained in Section
D 54 of the Transfer of Property Act which provide as under:-

"54. "Sale" is a transfer of ownership in exchange for a price paid
or promised or part- paid and part-promised.

Such a transfer, in the case of tangible immoveable property of
E the value of one hundred rupees and upwards, or in the case of a
reversion or other intangible thing, can be made only by a
registered instrument.

In the case of tangible immoveable property, of a value less
than one hundred rupees, such transfer may be made either by a
F
registered instrument or by delivery of the property. ·

Delivery of tangible immoveable property takes place when the
seller places the buyer, or such person as he directs; in possession
of the property.
G
A contract for the sale of immoveable, property is a contract
that a sale of such property shall take place on terms settled
between the parties.

It does not, of itself, create any interest in or charge on such.
H property."
VIDYADHAR v. MANIKRAO [S.SAGHIRAHMAD,J.) 1191

The definition illdicates that in order to constitute a sale, there must A
be a transfer of ownership from one person to another, i.e., transfer of all
rights and interests in the properties which are possessed by that person
are transferred by him to another person. The transferor canrot retain any
part of his interest or right in that property or else it would not be a sale.
The definition further says that the transfer of ownership has to be for a
"price paid or promised or part-paid and part-promised". Price thus con-
B
stitutes an essential ingredient of the transaction of sale. The words "price
paid or promised or part-paid and part-promised" indicate that actual
payment of whole of the price at the time of the execution of sale deed is
not sine qua non to the completion of the sale. Even if the whole of the
price is not paid but the document is executed and thereafter registered, c
if the property is of the value of more than Rs.100/- , the sale would be
complete.

There is a catena of decisions of various High Courts in which it has
been held that even if the whole of the price is not paid, the transaction of D
sale will take effect and the title would pass under that transaction. To cite
only a few, in Gyatri Prasad v. Board of Revenue & Ors., (1973) Allahabad
Law Journal 412, it was held that non-payment of a portion of the sale
price would not effect validity of sale. It was observed that part payment
of consideration by vendee itself proved the intention to pay the remaining
amount of sale price. To the same effect is the decision of the Madhya E
Pradesh High Court in Sukaloo & Anr. v. Punau, AIR (1961) M.P. 176 =
ILR (1960) M.P. 614.

The real test is the intention of the parties. In order to constitute a
"sale", the parties must intend to transfer the ownership of the property F
and they must also intend that the price would be paid either in presenti
or in future. The intention is to be gathered from the recital in the sale
deed, conduct of the parties and the evidence on record.

Applying these principles to the instant case, it will. be seen that
defendant No.2 executed a sale deed in favour of the plaintiff, presented G
it for registration, admitted its execution before the Sub-Registrar before
whom remaining part of the sale consideration was paid and, tnereafter,
1 the document was registered. The additional circumstances are that when /
the plaintiff instituted a suit on the basis of his title based on the aforesaid
sale deed, defendant No.2, who was the vendor, admitted in his written H
/'

1192 SUPREME COURT REPORTS [1999) 1 S.C.R.
A statement, the whole case set out by the plaintiff and further admitted in
the witness box that he had executed a sale deed in favour of the plaintiff
and had also received full amount of consideration. These facts clearly
establish t!iat a complete and formidable sale deed was executed by defen-
dant No.2 in favour of the plaintiff and the title in the property passed to
B plaintiff. The findings recorded by the High Court on this question cannot,
therefore, be upheld.

The judgment of the High Court on this point is also erroneous for -'-
the reason that it totally ignored the provisions contained in Section
55(4)(b) of the Transfer of Property Act which are set out below:-
c "55. In the absence of a contract to the contrary the buyer and
seller of immoveable property respectively are subject to the
liabilities, and have the rights, mentioned in the rules next follow-
ing, or such of them as are applicable to the property sold:

D (1) ·········································
(2) ..'..................................... .

(3) ....................................... .

(4) The seller is entitled-
E
(a)

(b) Where the ownership of the property has passed to the
buyer before payment of the whole of the purchase-
money, to a charge upon the property in the hands of
F
the buyer, any transferee without consideration or any
transferee with notice of non- payment, for the amount
of the purchase-money, or any part thereof remaining '
unpaid, and for interest on such· amount or part from
the date on which possession has been delivered.
G
(5) ·········································
(6) ........................................."

Clause (b) extracted above provides that where the ownership of the
H property is transferred to the buyer before payment of the whole of the
VIDYADHAR v. MANIKRAO [S. SAGHIR AHMAD, J.] 1193

sale price, the vendor is entitled to a chargE on that property for the A
•· amount of the sale price as also for inferest thereon from the date of
delivery of possession. Originally, there was no provision with regard to the
date from . which interest would be payable on the amount of unpaid
purchase money. The Special Committee which suggested an amendment
in this Section gave the following reason:-
B
"This elapse is also silent as to the date from which the interest on
the unpaid purchase money should run. It seems fair that it should
run from the date when the buyer is put in possession."

It was on the recommendation of the Special Committee that the words C
"from the date on which possession has been delivered" were inserted into
this clause by Section 17 of the Transfer of Property (Amendment) Act,
1929 (XX of 1929).

This clause obviously applies to a situation where the ownership in D
the property has passed to the buyer before the whole of the purchase
money was paid to the seller or the vendor. What is contained in this clause
t is based on the English Doctrine of Equitable Lien as propounded by
Baron Rolfe in Goode & Anr. v. Button, (1847) 74 RR 633 = 1 Ex. 189.
This clause confers statutory recognition on the English Doctrine of Equi-
table Lien. As pointed out by the Privy Council in Webb & Anr. v. Mac-
E
pherson, 30 Indian Appeals 238, the statutory charge under this paragraph
is inflexible. The charge does not entitle the seller to retain possession of
the property as against the buyer but it positively gives him a right to
enforce the charge by suit. (See: Venkatapernmal Naidu v. Rathnasab-
hapathi Chettiar, AIR (1953) Madras 821; Shobhalal Shyamlal Kunni v. F
Sidhelal Halkelal Bania, AIR (1939) Nagpur 210 and Basalingaya Revan-
• shiddappa v. Chinnaya Karibasappa, AIR (1932) Bombay 247.

In view of the above, the High Court was wholly in error in coming
to the conclusion that there was no sale as only a sum of Rs.500 was paid G
to defendant No. 2 and the balance amount of Rs.4,500 was not paid. Since
the title in the property had already passed, even if the balance amount of
sale price was not paid, the sale would not become invalid. The property
sold would stand transferred to the buyer subject to the statutory charge
for the unpaid part of the sale price. H
(

1194 -SUPREME COURT REPORTS (1999] 1 S.C.R.
A Learned counsel for defendant No.l thereafter contended that the
deed dated 24th of March, 1971•was not a mortgage deed but an out and ·•
out sale with the result that the property having b~en transferred to
defendant No.1 was not available for being sold to plaintiff. This contention
must meet the same fate as it met in the Courts below.

B The document is headed as MORTGAGE BY CONDITIONAL
SALE (KARARKHAREDI). It is mentioned in thi> deed that the immov-
able property which was described in areas and boundaries was being ...
mortgaged by conditional sale in favour of defendant No.l for a sum of
Rs.1500 out of which Rs.700 were paid at home while Rs.800 were paid
C before the Sub-Registrar. The further stipulation in the deed is that the
aforesaid amount of Rs.1500 would be returned to defendant No.1 on or
before 15th March, 1973 and the property would be reconveyed to defen-
dant No.2. If it was not done then defendant No. 1 would become the
owner of the property.

D Mortgage by conditional sale is defined under Section 58(c) as
under:-

"58. (a) ..................................... .

(b) ..................................... .
E
(c) 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
F
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
G transfer the property to the seller,

the transaction is called a mortgage by conditional sale and the
mortgage a mortgagee by conditional sale:

Provided that no such transaction shall be deemed to be a
H mortgage, unless the condition is embodied in the document which
VIDYADHAR v. MANIKRAO (S.SAGHIRAHMAD,J.] 1195

effects or purports to effect the sale. A
(d) .....................................

(e) .................................... .

(±) .................................... . B
(g) ....................................."

The Proviso to this clause was added by Section 19 of the Transfer
of Property (Amendment) Act, 1929 (XX of 1929). The Proviso was
introduced in this clause only to set at rest the controversy about the nature C
of the document; whether the transaction would be a sale or a mortgage.
It has been specifically provided by the Amendment that the document
would not be treated as a mortgage unless the condition of repurchase was
contained in the same document.

The basic principle is that the form of transaction is not the final test D
and the true test is the intention of the parties in entering into the
transaction. If the intention of the parties was that the transfer was by way
of security, it would be a mortgage. The Privy Council as early as in
Balkishen Das & Ors. v. Legge, 27 Indian Appeals 58, had laid down that,
as between the parties to the document, the intention to treat the transac- E
tion as an out and out sale or as a mortgage has to be found out on a
consideration of the contents of document in the light of surrounding
circumstances. The decision of this Court in Bhaskar Waman Joshi v.
Shrinarayan Rambilas Agarwal, AIR (1960) SC 301 = [1960] 2 SCR 117
and P.L. Bapuswami v. N. Pattay Gounder, AIR (1966) SC 902 = [1966] 2
SCR 918 are also to the same effect. F
The contents of the document have already been considered above
which indicate that defendant No. 2 had executed a mortgage by condition-
al sale in favour of defendant No.1. He had promised to pay back Rs.1500
to him by a particular date failing which the document was to be treated
as a sale deed. The intention of the parties is reflected in the contents of G
the document which is described as a mortgage by conditional sale. In the
body of the document, the mortgage money has also been specified. Having
regard to the circumstances of this case as also the fact that the condition
of repurchase is contained in the same document by which the mortgage
was created in favour of defendant No.1, the deed in question cannot but H
1196 SUPREME COURT REPORTS [1999] 1 S.C.R.
A be treated as a mortgage by conditional sale. This is also the finding of the
Courts below.

So far as the contention of the learned counsel for defendant No.l
that the mortgage money was not paid within the time stipulated in the
document and, therefore, the transaction, even if it was a mortgage, became
B an absolute sale, is concerned, the finding of the Courts below is that this
money was tendered to defendant No.1 who refused to accept it. Defen- ·
dant No.2 had thus performed his part of the agreement and had offered
the amount to defendant No.1 so that the property may be reconveyed to
him but defendant No.1 refused to accept the money. He, therefore, cannot
C complain of any default in not paying the amount in question within the
time stipulated "in the deed. Since there was no default on the part of
defendant No.2, the document would not convert itself into a sale deed and
would remain a mortgage deed. The suit for redemption was, therefore,
properly filed by the plaintiff who was the assignee of defendant No.2.

D For the reasons stated above, the appeal is allowed and the impugned
judgment passed by the High Court is set aside. The judgment and decree
passed by the Trial Court as upheld by the Lower Appellate Court are
restored but without any order as to costs.

R.K.S. Appeal allowed.
E