1969 (2) TMI 192 - SC - Indian Laws

Supreme Court rules deed as mortgage, not sale. Adverse possession claim rejected. Trial court decree restored.

Raghunath and Ors Versus Kedar Nath

The Supreme Court affirmed the lower courts' findings that the deed dated 27th July, 1922, was a mortgage deed, not a sale deed. The subsequent document ... - Issues Involved:1. Nature of the deed dated 27th July, 1922 (whether it was a mortgage deed or a sale deed).2. Admissibility of the document Ex. A-26 dated 8th October, 1922.3. Defendants' claim of adverse possession.4. Direction by the High Court for the defendants to render accounts before claiming payment from the plaintiff at the time of redemption of the mortgage.Detailed Analysis:1. Nature of the Deed Dated 27th July, 1922:The primary issue was whether the deed executed on 27th July, 1922, was a mortgage deed or a sale deed. The plaintiff alleged that Dwarka Prasad took a loan of Rs. 1700 from Madho Ram and executed a possessory mortgage deed for the disputed house. The terms included an interest payment structure and a redemption period of twenty years. The defendants contended that the deed was actually an outright sale disguised as a mortgage to avoid the payment of Haqe-chaharum. The trial court and the lower appellate court both held that the deed was a mortgage deed, not a sale deed. The Supreme Court affirmed this finding, noting that the terms of the deed clearly indicated a mortgage, including clauses on interest payments, redemption period, and the mortgagor's obligations.2. Admissibility of Document Ex. A-26:The defendants argued that Ex. A-26, a subsequent deed of sale dated 8th October, 1922, should be considered along with the original deed to establish that the transaction was an outright sale. However, the Supreme Court held that Ex. A-26 was not a registered document and hence not admissible in evidence under Section 49 of the Registration Act. The Court emphasized that without registration, the document could not be received as evidence of any transaction affecting the property. The argument that Section 4 of the Transfer of Property Act excluded the applicability of Section 49 of the Registration Act was rejected, as subsequent legislation had clarified that documents requiring registration under the Transfer of Property Act also fell within the scope of Section 49 of the Registration Act.3. Defendants' Claim of Adverse Possession:The High Court had remanded the case to the lower appellate court to decide whether the defendants had become owners of the property by adverse possession. The lower appellate court found that the defendants failed to prove adverse possession. The Supreme Court did not find any reason to disturb this finding.4. Direction by the High Court for Defendants to Render Accounts:The High Court directed the lower appellate court to ask the defendants to render accounts before claiming any payment from the plaintiff at the time of redemption of the mortgage. The Supreme Court found merit in the defendants' argument that the High Court should not have given this direction, as the plaintiff did not file an appeal against the trial court's decree. Consequently, the Supreme Court set aside this portion of the High Court's decree but affirmed the rest of the High Court's decision, which allowed the plaintiff's appeal, set aside the judgment of the lower appellate court, and restored the trial court's decree.Conclusion:The Supreme Court dismissed the appeals, subject to the modification regarding the direction for the defendants to render accounts. The trial court's decree for redemption of the mortgage was restored, and there was no order as to costs in the Supreme Court.