2006 (2) TMI 669 - SC - Indian Laws

Supreme Court reinstates lower court decisions, ruling 1977 transaction as sale with reconveyance, not usufructuary mortgage.

Bishwanath Prasad Singh Versus Rajendra Prasad

The SC set aside the HC's judgment, reinstating the decisions of the Trial Court and the First Appellate Court, concluding that the transaction dated ... Suit for a declaration - res judicata - Whether in view of the admission made by respondent No.2 in Ext.2 to the effect that the parties understood the document to be a deed of Baibulbafa, learned court committed error of law in construing Ext. A without taking into consideration the admissions made by the parties - HELD THAT:- We have noticed hereinbefore that by reason of the said deed of sale, the right, title and interest of the respondents herein was conveyed absolutely in favour of the appellant. The sale deed does not recite any other transaction of advance of any sum by the appellant to the respondents was entered into by and between the parties. In fact, the recitals made in the sale deed categorically show that the respondents expressed their intention to convey the property to the appellant herein as they had incurred debts by taking loans from various other creditors. We are not oblivious of the fact that the term 'Bai-bil-wafa' or 'Bye- bil-wuffa/wafa' is an Arabic term which may mean a mortgage or a condition sale but the said term is not synonymous to 'Bai-ul-wafa'. In the instant case, as noticed hereinbefore, the transfer is complete and not partial, no stipulation has been made that the appellant cannot transfer the property. Not only that the appellant was put in possession of the land, his name was also mutated. The question of determination of being a pure question of law, the principles of res judicata shall have no application. Therefore, the High Court, in our opinion committed a manifest error in interfering with the judgment and decree passed by the trial court as also the appellate court in exercise of its jurisdiction u/s 100 of the Civil Procedure Code. Thus, the impugned judgment of the High Court cannot be sustained. It is set aside accordingly. The appeal is allowed with cost. Counsel's fee quantified at ₹ 5,000/. Issues Involved:1. Nature of the transaction dated 24.6.1977 - whether it was a sale or a usufructuary mortgage.2. Applicability of the Bihar Money Lenders Act, 1974.3. Whether the High Court erred in its interpretation of the transaction.4. Applicability of Sections 91 and 92 of the Indian Evidence Act.5. Whether the order dated 22.3.1979 operates as res judicata.Issue-wise Detailed Analysis:1. Nature of the Transaction:The respondents filed a suit for a declaration that the transaction dated 24.6.1977, although expressed as a deed of sale, was in fact a usufructuary mortgage. The Trial Court dismissed the suit, holding that the deed of sale dated 24.6.1977, coupled with the agreement of reconveyance executed on the same date, did not constitute a mortgage. The First Appellate Court upheld this decision. However, the High Court, in a second appeal, concluded that the transaction was indeed a mortgage. The Supreme Court, upon review, emphasized that a deed must be construed based on its language. The sale deed categorically conveyed all rights to the appellant, and the agreement for sale was understood to be a deed of reconveyance, not a mortgage.2. Applicability of the Bihar Money Lenders Act, 1974:The respondents claimed that the transaction stood redeemed under Section 12 of the Bihar Money Lenders Act, 1974. However, the Supreme Court did not find sufficient grounds to treat the transaction as falling under this Act, given the clear language of the sale deed and the agreement for reconveyance.3. High Court's Interpretation:The High Court held that the transaction was a mortgage based on the recital of both documents. The Supreme Court, however, found that the High Court erred in its interpretation. The Supreme Court noted that the terms used in the documents, such as 'vendor,' 'vendee,' 'sold,' and 'consideration,' indicated a sale rather than a mortgage. The Court reiterated that the transaction must be read as a whole, and the sale deed conveyed absolute rights to the appellant.4. Applicability of Sections 91 and 92 of the Indian Evidence Act:The appellant argued that the High Court erred by not considering Sections 91 and 92 of the Indian Evidence Act, which prohibit proving the terms of a written contract through oral evidence. The Supreme Court agreed, stating that the terms of the sale deed and the agreement for reconveyance were clear and unambiguous, thus oral evidence could not be admitted to alter the nature of the transaction.5. Res Judicata:The respondents contended that the order dated 22.3.1979, which allowed them to deposit the mortgage amount, operated as res judicata. The Supreme Court disagreed, stating that the order did not involve a final adjudication of the issue. The Court explained that Section 83 of the Transfer of Property Act is procedural and does not alter the status of the parties. Therefore, the principles of res judicata did not apply.Conclusion:The Supreme Court set aside the High Court's judgment, reinstating the decisions of the Trial Court and the First Appellate Court. The Court concluded that the transaction was a sale with an agreement for reconveyance and not a mortgage. The appeal was allowed with costs, and the High Court's interpretation was found to be erroneous.