2018 (12) TMI 2028 - SC - Indian Laws

SC upholds registered sale deed, rejects unproved oral gift, stresses compliance with Order 34 Rules 7 and 8 CPC

SC allowed the appeal, set aside the HC and first appellate court decrees, and restored the trial court's findings. It held that the sale deed in favour ... Burden of proof placed upon the appellant to prove that the sale deed was validly executed by Wali Mohd. with his free will - appellant has not discharged that burden cast upon her - oral gifting of suit house to plaintiff or not - rejection of sale deed relied upon by the appellant-defendant - grant of alternative relief of redemption of mortgage deed, treating the suit as suit simpliciter for redemption of mortgage - sale deed was barred by time limitation or not. Mortgage deed dated 21.11.1967 and sale deed dated 21.12.1970– Whether valid and execution duly proved? - HELD THAT:- The appellant-defendant has examined Advocate Ahmad (DW-3) who has prepared the sale deed and the scribe of sale deed dated 21.12.1970. At the time of writing the sale deed, Advocate Ahmad (DW-3) was having Bar experience of nine years. In his evidence, DW-3 – Shri Ahmad has stated that on the instruction of Wali Mohd., he had prepared the sale deed and that sale deed was validly executed by Wali Mohd. out of his free will and consent. As pointed out by the trial court, DW-3 – Advocate Ahmad was personally knowing Wali Mohd. and that being the scribe of the sale deed, Ex.75 Kha. contains the signature of DW-3 – Shri Ahmad, Advocate. The trial court upon consideration and weighing the evidence of Advocate Ahmad (DW-3) and Dr. Wasim (PW-5) held that “the evidence of Shri Ahmad, Advocate is comparatively more acceptable and believable.” Upon appreciation of oral evidence, when the trial court has recorded the findings that the evidence of Advocate Ahmad (DW-3) is credible and acceptable, in our considered view, the first appellate Court and the High Court ought not to have interfered with the findings recorded by the trial court; more so, when the sale deed dated 21.12.1970 was a registered document. The first appellate Court and the High Court were not right in holding that the sale deed Ex.75 Kha. (21.12.1970) was not validly executed. Whether there was a valid oral gift in favour of the respondent-plaintiff-Shami Mohd. as claimed? - oral gift pleaded by the respondent-plaintiff satisfies the essential conditions of oral gift or not? - whether possession has been established by respondent No.1-plaintiff or not - ELD THAT:- The respondent No.1- plaintiff claims through oral gift followed by the Will dated 30.09.1970. As discussed earlier, tenants were in occupation of the suit house. Respondent-plaintiff has not proved as to how at the time of oral gift, the possession was delivered to him. Nothing is brought on record to show that respondent No.1-Shami Mohd. has taken any steps to get the property mutated in his name. Likewise, nothing is brought on record to show that pursuant to the oral gift, the respondent-plaintiff collected rent from the tenants or paid house tax, water tax, etc. The essential conditions to make a valid gift under the Mohammedan law have not been established by the respondent-plaintiff to prove the oral gift in his favour. In the absence of any proof to show that the possession of the suit property was delivered to him, the oral gift relied upon by the respondent-plaintiff ought not to have been accepted by the courts below. The sale deed also contains recitals that the appellant-Jamila Begum has a right to get the name transferred in the records of Nagarpalika, Kanpur City as owner of the property and that if there is a need, vendor Wali Mohd. will give his statement to that effect. That apart, as discussed earlier, the appellant-Jamila Begum had initiated various proceedings for eviction of the tenants and obtained possession. She had also filed eviction Suit No.2441 of 1971 against respondent-plaintiff-Shami Mohd., Niyaz Bano and Nababun which amply proves the exercise of acts of ownership by appellantJamila Begum and the possession of the appellant-Jamila Begum over the suit property. The High Court and the first appellate Court erred in not properly appreciating these circumstances and evidence brought on record. Whether sale deed is vitiated due to undue influence? - HELD THAT:- Considering the case in hand, no sufficient pleading in the plaint as to undue influence. Admittedly, Wali Mohd. had executed the mortgage deed dated 21.11.1967 in favour of Jamila Begum and Sakina. Wali Mohd. was in service in Power House till 1943 and was having full knowledge of things as to what he was doing. In this case, respondent No.1- Shami Mohd. failed to prove that Jamila Begum was in a position to dominate the Will of Wali Mohd. to obtain unfair advantage. The mortgage deed was dated 21.11.1967 and the sale deed in favour of the appellant-Jamila Begum was dated 21.12.1970. Wali Mohd. died on 17.05.1971. During his lifetime, Wali Mohd. has not challenged either the mortgage deed or the sale deed. No evidence has been adduced to prove that appellant exercised undue influence to get the documents executed. Respondent No.1-Shami Mohd. has failed to establish that the sale deed in favour of the appellant-Jamila Begum is vitiated by undue influence or fraud. Passing decree for redemption of mortgage or not - HELD THAT:- The main relief sought for in the suit was for a declaration that the mortgage deed (dated 21.11.1967) registered on 12.01.1968 and sale deed (dated 21.12.1970) are void and be cancelled. Only as an alternative prayer, respondentplaintiff sought for redemption of mortgage. But both the first appellate Court as well as the High Court proceeded on the footing as if it was a simple suit for redemption of mortgage. Whether decree for redemption of mortgage is correct? - HELD THAT:- The right of redemption can be extinguished as provided in proviso to Section 60 of the Transfer of Property Act. It can be extinguished either by the act of the parties or by decree of a court. The expression “act of parties” refers to some transaction subsequent to the mortgage, standing barred from the mortgage transaction. As discussed earlier, in this case Jamila Begum-one of the mortgagees has purchased the property by the sale deed dated 21.12.1970 and thus, she purchased the entire equity of redemption by the execution of the sale deed, the mortgage qua the appellant has merged with the sale. The High Court has not followed the provisions of Code of Civil Procedure for passing decree for redemption of mortgage. Order 34 Rule 7 CPC stipulates that in a suit for redemption of mortgage, the court shall prepare the preliminary decree in accordance with Order 34 Rule 7 CPC. The High Court has passed a decree for redemption of mortgage simpliciter without following the provisions of the Code of Civil Procedure. The High Court also erred in directing the delivery of possession of the suit property to respondent No.1-plaintiff and the same cannot be sustained. The High Court could not have passed the decree for redemption without following the procedure laid down in Order 34 Rule 7 and 8 of the Code of Civil Procedure which lays down a detailed procedure for passing a preliminary decree and final decree in a suit for redemption which was not followed by the High Court. Suit barred by time limitation or not - HELD THAT:- There is no justification for the first appellate Court to record findings based on the arguments advanced. Even in the absence of pleadings and evidence, the first appellate Court recorded finding that there was no necessity for Wali Mohd. to execute mortgage deed and within short while thereafter, sale deed as he never performed Haj Pilgrimage and never did any business as written in the documents. Likewise, the first appellate Court recorded its own findings on inadequacy of consideration for the sale deed, even though no such plea was taken by respondent No.1-Shami Mohd. 36. The first appellate Court being the final court of fact has jurisdiction to reverse or affirm the findings of the trial court. The Court of first appeal has jurisdiction to reverse or affirm the findings of the trial Court. When the Court of first appeal takes a different view, the judgment of the first appellate Court must show the conscious application of mind and record its findings based on the evidence adduced by the parties and the judgment must record the reasons as to why the first appellate Court differs from the judgment of the Trial Court - The High Court proceeded on the footing as if the suit was a simple suit for redemption of mortgage. Without appreciation of evidence adduced by the parties and sale deed dated 21.12.1970, the High Court erred in ordering the redemption of mortgage and delivery of possession. The impugned judgment of the High Court cannot be sustained and is liable to be set aside. The impugned judgment of the High Court set aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED (1) Whether the mortgage deed dated 21.11.1967 and the sale deed dated 21.12.1970 were validly executed by the executant with free will and due consideration, and whether the burden of proof regarding their invalidity was correctly placed. (2) Whether there was a valid oral gift of the suit house in favour of the plaintiff followed by a Will dated 30.09.1970 and whether these could prevail over the subsequent registered sale deed. (3) Whether the sale deed was vitiated by fraud or undue influence allegedly exercised by the purchaser over the executant. (4) Whether the High Court was justified in treating the suit as a simple suit for redemption and in granting a decree for redemption of mortgage and delivery of possession without following the procedure prescribed for redemption suits. (5) Whether the suit for declaration and cancellation of the mortgage deed and sale deed was barred by limitation under the Limitation Act, 1963. (6) Whether the judgments of the first appellate Court and the High Court, reversing the trial court, were legally sustainable in light of the scope of first appeal and the evidence on record. 2. ISSUE-WISE DETAILED ANALYSIS Issue (1): Validity and due execution of mortgage deed (21.11.1967) and sale deed (21.12.1970); burden of proof Interpretation and reasoning (a) The mortgage deed was proved through the attesting witness (DW-4), who deposed to its execution by the executant. The sale deed, a registered document, contained detailed recitals: reference to the prior mortgage, acknowledgment of receipt of Rs.11,000/- mortgage amount, breakup of the sale consideration of Rs.30,000/- (including Rs.11,000/- earlier received, Rs.11,000/- at agreement to sell, and Rs.8,000/- before the Sub-Registrar), and recitals of free and voluntary execution. (b) Registration of the sale deed raised a presumption of valid execution; as per the law cited, the onus lay on the person challenging the document to rebut this presumption. The plaintiff's case rested on alleged mental infirmity of the executant and lack of free will. (c) The plaintiff relied on evidence of a private doctor (PW-5) and a later medical certificate prepared from memory, without contemporaneous records and without examination of other treating doctors. The prescriptions produced related to a period after the sale (March-June 1971), indicating deterioration after the execution of the sale deed. (d) The defence examined the scribe, an advocate (DW-3), who personally knew the executant, had nine years' practice, drafted the sale deed on his instructions, and testified to its voluntary execution. The trial court found DW-3's evidence more credible and acceptable than that of PW-5 and held the executant mentally fit and capable at the time of execution. (e) The trial court, on proper appreciation of evidence and the presumption attached to a registered deed, held both the mortgage and sale deed to be valid and duly executed. The first appellate Court and the High Court, however, shifted the burden to the purchaser to prove genuineness and validity, largely on assertions of inadequacy of consideration and lack of necessity, without corresponding pleadings or reliable evidence. Conclusions (i) The mortgage deed dated 21.11.1967 and the sale deed dated 21.12.1970 were validly executed by the executant of his free will and for consideration. (ii) The presumption of validity of the registered sale deed stood unrebutted; the burden lay on the plaintiff to dislodge it and was not discharged. (iii) The first appellate Court and the High Court erred in placing the burden of proof upon the purchaser and in interfering with the trial court's findings on due execution. Issue (2): Alleged oral gift and Will dated 30.09.1970 Legal framework (a) Under Mohammedan law, for a valid oral gift (hiba), the essentials are: (i) clear intention to gift; (ii) acceptance by the donee; and (iii) delivery of possession (actual or constructive) to the donee. These principles were reiterated by reference to precedent, including the requirement that possession pass to or be put within the power of the donee. Interpretation and reasoning (b) The plaintiff claimed rights via an oral gift of the suit house and a Will of the same date, allegedly executed by the executant in favour of a third person, in which oral gift was mentioned. The trial court found the Will to be a fabricated document, noting, inter alia, absence of signature of the scribe, lack of registration, contradictions regarding the alleged second marriage, and inconsistency with the plaintiff's own statement that his father did not remarry. (c) The alleged oral gift and Will were claimed to have been made in 1970, but the suit asserting rights thereunder was filed in 1978. During the intervening period, the purchaser consistently asserted ownership in multiple eviction proceedings against the plaintiff, his relatives, and tenants. The plaintiff participated in those proceedings, filed written statements and impleadment applications, and admitted that the purchaser had obtained decrees and possession, and had her name mutated in municipal records. (d) In light of these circumstances, the Court found the delay and conduct of the plaintiff incompatible with his claim of earlier oral gift. There was no evidence that, pursuant to the alleged gift, the plaintiff ever mutated the property in his name, collected rent, or paid municipal or other charges. (e) As tenants were in possession, the plaintiff was required to show delivery of actual or constructive possession following the gift; no such steps were proved. No credible evidence showed that possession or control over the property was ever transferred to him as donee. Conclusions (i) The alleged Will dated 30.09.1970 was not proved and was correctly held by the trial court to be fabricated and unacceptable. (ii) The essential elements of a valid oral gift under Mohammedan law, particularly delivery of possession, were not established; the plea of oral gift in favour of the plaintiff was unproved. (iii) The first appellate Court and the High Court erred in accepting the plaintiff's case of oral gift and Will and in rejecting the registered sale deed in favour of the purchaser. Issue (3): Alleged undue influence and fraud vitiating the sale deed Legal framework (a) Under the law on undue influence (as explained by reference to Section 16 of the Indian Contract Act and judicial precedents), the Court must first examine: (i) whether relations between the parties were such that one was in a position to dominate the will of the other; and only then (ii) whether that position was used to obtain an unfair advantage. The burden of proof lies on the party alleging undue influence; an unconscionable transaction may shift the onus only after dominance is established. Mere relationship, age, or alleged weakness does not automatically raise a presumption of undue influence. Interpretation and reasoning (b) The plaintiff pleaded that the executant had illicit relations with the purchaser and was mentally infirm, and that the documents were obtained by taking undue advantage of such relationship and infirmity. The Court found the pleadings on undue influence vague and lacking specific particulars. (c) The executant had validly executed a mortgage deed in 1967 in favour of the purchaser and another, had been employed in the Power House till 1943, and was considered worldly-wise and knowledgeable. He admitted in the sale deed that he received consideration, including Rs.8,000/- before the Sub-Registrar, and declared execution in full senses and without coercion. (d) The plaintiff failed to prove that the purchaser was in a position to dominate the executant's will or that she used such dominance to secure an unfair advantage. No evidence was produced of coercion or undue influence at the time of execution of either the mortgage or sale deed. The executant, during his lifetime, never challenged the deeds and died months after the sale. Conclusions (i) The plaintiff did not discharge the burden of proving undue influence or fraud in the execution of the mortgage deed and sale deed. (ii) No presumption of undue influence arose from the alleged relationship, age, or character of the executant. (iii) The sale deed in favour of the purchaser was not vitiated by undue influence or fraud. Issue (4): Decree for redemption of mortgage and delivery of possession Legal framework (a) Section 60 of the Transfer of Property Act, 1882 confers on the mortgagor a statutory right of redemption, extinguishable only by act of parties or by decree of court (proviso). Redemption is a legal right which cannot be cut down by terms of the original mortgage, but may be extinguished by a subsequent transaction independent of the mortgage. (b) Order 34 Rules 7 and 8 of the Code of Civil Procedure prescribe the procedure in suits for redemption, requiring a preliminary decree specifying amounts and time for payment, followed by a final decree. Interpretation and reasoning (c) The suit's main relief was declaration that the mortgage and sale deeds were void and their cancellation. Redemption of mortgage was only pleaded in the alternative. Nonetheless, the first appellate Court and the High Court proceeded as though it were a simple redemption suit and granted redemption with delivery of possession. (d) One of the mortgagees (the purchaser) subsequently acquired the property by a registered sale deed dated 21.12.1970, thereby purchasing the equity of redemption. By this subsequent act of parties, the mortgage, qua the purchaser, merged with the sale and the right of redemption, as against her, stood extinguished under the proviso to Section 60. (e) The argument that the purchaser could not acquire the entire property because there were two mortgagees was rejected; the sale by the mortgagor of the entire equity of redemption to one of the mortgagees constituted an act extinguishing the mortgagor's right of redemption as against that purchaser. (f) The High Court decreed redemption and ordered delivery of possession on payment of the mortgage amount without following the mandatory procedure under Order 34 Rules 7 and 8 CPC. No preliminary decree was drawn, and the structured process for fixing amounts, time for payment, and consequences was not followed. Conclusions (i) The High Court erred in treating the suit as a simple suit for redemption and in granting redemption and possession based on an alternative plea without addressing the primary relief or the effect of the subsequent sale. (ii) By the sale of 21.12.1970 to one of the mortgagees, the equity of redemption, as against the purchaser, was extinguished by act of parties; the right of redemption could not thereafter be enforced against her. (iii) The decree for redemption and delivery of possession, passed without adherence to Order 34 Rules 7 and 8 CPC, was unsustainable. Issue (5): Limitation for suit challenging mortgage deed and sale deed Legal framework (a) Under Articles 58 and 59 of the Schedule to the Limitation Act, 1963, a suit for declaration or to cancel or set aside an instrument must be filed within three years from the date when the right to sue accrues or when the facts entitling the plaintiff to such relief first become known to him. Interpretation and reasoning (b) The plaintiff's suit sought declaration that the mortgage deed dated 21.11.1967 and the sale deed dated 21.12.1970 were void and their cancellation. The plaint specifically averred that the cause of action arose on the very dates of execution of the mortgage and sale deeds. (c) The plaintiff admitted in his evidence that he came to know of the sale deed on the third day after his father's death on 17.05.1971. Even reckoning limitation from the date of knowledge, the suit ought to have been filed within three years thereof. (d) The suit was in fact instituted on 12.07.1978, well beyond three years from both the dates of execution and the date of admitted knowledge. The plaintiff actively participated in eviction proceedings based on the sale deed in the early 1970s, further confirming his knowledge. Conclusions (i) The suit, insofar as it sought declaration and cancellation of the mortgage deed of 21.11.1967 and the sale deed of 21.12.1970, was barred by limitation under Articles 58 and 59 of the Limitation Act. (ii) The High Court and the first appellate Court erred in overlooking the bar of limitation. Issue (6): Sustainability of the first appellate Court's and High Court's judgments in light of scope of first appeal and evidence Legal framework (a) A first appeal is a valuable right; the appellate court has jurisdiction to reappreciate evidence and reverse or affirm findings, but its judgment must comply with Order 41 Rule 31 CPC. It must state points for determination, decisions thereon, and reasons, with conscious application of mind to all material issues and evidence, and explain reasons for differing from the trial court's findings. Interpretation and reasoning (b) The trial court had, on appreciation of pleadings and evidence, upheld the validity of the mortgage and sale deeds, rejected the oral gift and Will as untrue and fabricated, recognized the purchaser's acts of ownership and possession, found no undue influence, and held the suit barred by limitation. (c) The first appellate Court, while reversing the trial court, relied on assumptions about lack of necessity for mortgage and sale (e.g. that the executant did not perform Haj or business as recited), and inadequacy of consideration, despite the absence of corresponding pleadings and evidence from the plaintiff. It failed to properly address all the issues framed and the evidence bearing on them. (d) The High Court, in second appeal, proceeded substantially on the footing that the suit was one for redemption, affirmed the view that the documents were sham and void, and granted redemption without due appreciation of the registered sale deed, evidence of execution, bar of limitation, or the statutory scheme for redemption suits. Conclusions (i) The first appellate Court's judgment did not conform to the requirements governing a first appeal; it drew inferences without pleadings or evidence and did not adequately address all material issues and the trial court's reasoning. (ii) The High Court failed to properly examine the evidence, the effect of the registered sale deed, the bar of limitation, and the correct nature of the suit, and incorrectly treated it as a simple redemption suit. (iii) The judgments of the first appellate Court and the High Court were unsustainable; the trial court's decree dismissing the suit was correctly restored and affirmed.