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Sale With A Mere Condition Of Retransfer Is Not A Mortgage

IN CIVIL APPEAL NO.3506 OF 2010, Sopan vs Syed Nabi, the plaintiff had borrowed money from the defendant against which 3 documents were signed. One was an outright sale deed, another whereby the plaintiff had agreed to repay the said amount and secure reconveyance of the property and the third which declared that possession of land had been given against the loan. The plaintiff agreed if the amount is not repaid on “Velamavasya” the deed will be considered as sale deed. It is in that background the plaintiff claiming that he is prepared to repay the amount so as to secure back the property and, in that regard, construing the transaction as a mortgage, got issued a demand notice dated 10th September, 1980 through his Advocate which was disputed by the defendant. The plaintiff claimed the transaction as mortgage by conditional sale while the defendants claimed it to be outright sale.

On appeal, the Supreme Court held that Section 58 (c) of the Transfer of Property Act which defines mortgage by conditional sale clearly states that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale. This means that the sale deed should have some reference to mortgage or some such condition which according to the Supreme Court the sale deed here did not, rather the language implied an an absolute conveyance. The other documents relied upon by the plaintiff cannot alter recitals in the sale deed to treat the same as a mortgage by conditional sale. At best the said agreement can only be treated as an agreement whereby the defendant had agreed to reconvey the property subject to the repayment being made as provided thereunder. In the above background, if the entire transaction is taken note, since the amount was not repaid the defendant had acquired absolute right to the property.

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