# SUPREME COURT REPORTS[1963] SUPP BHOJU MANDAL v. DEBNATH BHAGAT

- **Citation:** [1963] Supp. 2 S.C.R. 82
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 204of1960
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-reports-1963-supp-bhoju-mandal-v-debnath-bhagat-2850
- **Pages:** 11

## Headnote

1!162
Nt111d,,, Jf,
82
SUPREME COURT REPORTS[1963] SUPP
BHOJU MANDAL
v.
DEBNATH BHAGAT
(S. J. IMAM, K. SuBBA RAo and J. R.
MuDHOLKAR, .U.)
Construction of Document-Mot1gage by cmulitional Bilk--
Sale with a condition of repurclia~e-Disti'.nction-lmenti1»1 of
partieB-Relevant circum'!/an~.
The High Court in dismissing the suit for redemption
brought by the appell,.nt in reversal of the decisions of the
courts below held that the document on which the suit was
based was one of sale and not a mortgage by conditional sale.
It was executed to meet pressing demands and not merely to
discharge a previous mortgage in favour of the respondent. It
provided that in case of defect of title and consequent dispossession of the . vendecs, the executants would remain bound to
refund the consideration with interest which would be a charge
on the property and that the executant would pay the rent
for a short period after the execution. The document described
itself.as "tamashuk sarti kebala". The total area of the land
mortgaged to the respondent in the previous year was 13.17
acres and the amount a(lvanced was Rs. I ,600/·· Only a year
thereafter 12.6 acres out of the aforesaid area were transferred
for Rs. 2,800/- to the respondents who were put in posoession.
There was no 'dispute \hat the latt~r amount represented the
real value of the land.
Held, that there is a clear distinction between a mortgagee
by conditional sale and a sale with a condition of repurchase.
The former is a mortg'gee and the right to redeem remains
with the debtor. Th< latter is ar.. out and out sale by which
by the owner divest air his rights to the property, reserving a
right of repurchase.
The question to which category a document belongs can be decided only by ascertaining the intention
of the parties on a consideration of the document and other
relevant circumstances.
Decided cases are only illustrative
and not exhaustive.
In the instant case, the cumulative efi'ect of the terms of
the document and the surrounding circumstances left no manner
of doubt that the document in ')Ucstion was not a mortgage but
,,
I
1
I
'
2 S.C.R.
SUPREME COURT REPORTS
83
a sale with the condition of repurchase. Whatever ambiguity
there might be in the document, the crucial circumstance that
smaller area of the ,land was sold for a higher amount in
discharge of an earlier mortgage of a large area for a smaller
amount, left no doubt as to ihe real character of the document.
Pandit Chunchun .Iha v. Sheikh Ebada/. Ali [1955] I S.C.R.
174, distinguished.
A decision on the construction of a document can hardly
afford any guidance for ascertaining the intention of the
parties in another unless the terms used are exactly similar.
ClvIL APPELLATE juRtSDIOTION : Civil Appeal
No. 204of1960.
Appeal by special leave from the judgment and
decree dated March 31, 1958 of the Patna High
Court in Appeal from Appellate Decree No. 582 of
1954.
Jagadish Chandra Sinha and R. R.' Biswas,
for the Appellants.
Bhawani Lal and P. C. Agarwala, for Respondents Nos. l to 16.
1962. November 14. The Judgment of the
Court was delivered by
SuBBA RAO, J.-The only question in this
appeal is whether the suit document is a mortgage
by conditional sale or a sale·with a condition of repurchase.
The fa<:ts that gave rise to this appeal may be
briefly stated : On February 2, 1924, the appellants
1 & 2, their father late Matooki Manda) and their
uncle late Lila l\fandal executed a deed purporting
to ccinvey a property of the extent of 12.6 acres in
favour of respondents 1 & 2 for a consideration of
Rs. 2,800/- and pat them in ~on
of the same.
In 1950 the appellants institu~ tide suit No. 73 of
}91/Z
BJr.J• M0.'41
. •.
DtbMth Bh•.(• I
Subbo RGo, J.
lff2
llAojw M-1
v.
/M,..tllU1•1
&.hl• llM, J.
84SUPREME COURT REPORTS [1963] SUPP.
1950 in the Court of the Munsif, 1st Court, Bhagalpur, Bihar for redemption on the ground that the said
document was a mortgage by conditional sale. The
contesting defendants i. c., respondents l & 2 plea

## Text

1!162
Nt111d,,, Jf,
82
SUPREME COURT REPORTS[1963] SUPP
BHOJU MANDAL
v.
DEBNATH BHAGAT
(S. J. IMAM, K. SuBBA RAo and J. R.
MuDHOLKAR, .U.)
Construction of Document-Mot1gage by cmulitional Bilk--
Sale with a condition of repurclia~e-Disti'.nction-lmenti1»1 of
partieB-Relevant circum'!/an~.
The High Court in dismissing the suit for redemption
brought by the appell,.nt in reversal of the decisions of the
courts below held that the document on which the suit was
based was one of sale and not a mortgage by conditional sale.
It was executed to meet pressing demands and not merely to
discharge a previous mortgage in favour of the respondent. It
provided that in case of defect of title and consequent dispossession of the . vendecs, the executants would remain bound to
refund the consideration with interest which would be a charge
on the property and that the executant would pay the rent
for a short period after the execution. The document described
itself.as "tamashuk sarti kebala". The total area of the land
mortgaged to the respondent in the previous year was 13.17
acres and the amount a(lvanced was Rs. I ,600/·· Only a year
thereafter 12.6 acres out of the aforesaid area were transferred
for Rs. 2,800/- to the respondents who were put in posoession.
There was no 'dispute \hat the latt~r amount represented the
real value of the land.
Held, that there is a clear distinction between a mortgagee
by conditional sale and a sale with a condition of repurchase.
The former is a mortg'gee and the right to redeem remains
with the debtor. Th< latter is ar.. out and out sale by which
by the owner divest air his rights to the property, reserving a
right of repurchase.
The question to which category a document belongs can be decided only by ascertaining the intention
of the parties on a consideration of the document and other
relevant circumstances.
Decided cases are only illustrative
and not exhaustive.
In the instant case, the cumulative efi'ect of the terms of
the document and the surrounding circumstances left no manner
of doubt that the document in ')Ucstion was not a mortgage but
,,
I
1
I
'
2 S.C.R.
SUPREME COURT REPORTS
83
a sale with the condition of repurchase. Whatever ambiguity
there might be in the document, the crucial circumstance that
smaller area of the ,land was sold for a higher amount in
discharge of an earlier mortgage of a large area for a smaller
amount, left no doubt as to ihe real character of the document.
Pandit Chunchun .Iha v. Sheikh Ebada/. Ali [1955] I S.C.R.
174, distinguished.
A decision on the construction of a document can hardly
afford any guidance for ascertaining the intention of the
parties in another unless the terms used are exactly similar.
ClvIL APPELLATE juRtSDIOTION : Civil Appeal
No. 204of1960.
Appeal by special leave from the judgment and
decree dated March 31, 1958 of the Patna High
Court in Appeal from Appellate Decree No. 582 of
1954.
Jagadish Chandra Sinha and R. R.' Biswas,
for the Appellants.
Bhawani Lal and P. C. Agarwala, for Respondents Nos. l to 16.
1962. November 14. The Judgment of the
Court was delivered by
SuBBA RAO, J.-The only question in this
appeal is whether the suit document is a mortgage
by conditional sale or a sale·with a condition of repurchase.
The fa<:ts that gave rise to this appeal may be
briefly stated : On February 2, 1924, the appellants
1 & 2, their father late Matooki Manda) and their
uncle late Lila l\fandal executed a deed purporting
to ccinvey a property of the extent of 12.6 acres in
favour of respondents 1 & 2 for a consideration of
Rs. 2,800/- and pat them in ~on
of the same.
In 1950 the appellants institu~ tide suit No. 73 of
}91/Z
BJr.J• M0.'41
. •.
DtbMth Bh•.(• I
Subbo RGo, J.
lff2
llAojw M-1
v.
/M,..tllU1•1
&.hl• llM, J.
84SUPREME COURT REPORTS [1963] SUPP.
1950 in the Court of the Munsif, 1st Court, Bhagalpur, Bihar for redemption on the ground that the said
document was a mortgage by conditional sale. The
contesting defendants i. c., respondents l & 2 pleaded
that the said document was not a mortgage but an out
and out sale and therefore the suit for redeemption was
not maintainable. The Munsif and on appeal the Sub·
ordinate .Judge, Bhagalpur, accepted the contention
of the appellant and decreed the suit but on second
appeal the High Court held that the document was
a sale and on that finding the appeal was allowed
and the suit was dismissed with costs throughout.
The appellants by Special leave preferred the present
appeal against the decree and judgment of the High
Court.
The only question in this appeal is whether
the said document is a mortgage or sale.
Ali the
question turns upon the construction of the provisions
of the sale deed, it would be convenient to read the
document as the High Court did omitting the unnecessary words :-
" l. We, the executants, executed a registered
Sudbharna bond, dated 1·3·1923, in favour of
Deonath Bhagat and Raghunath Bhagat and
received the entire consideration money.
2. We, the executants, are badly in need of
some money in cash for repayment of debt of
Sumeri Kapri and are in great need of some
more money in cash for meeting the expenseS of
cultivation, purchasing bullocks and also for
meeting the household expenses and repayment
of petty debts to creditors.
·
3. We, the executants, cannot arrange the
aforesaid money in cash without selling some
property.
4. Deonath Bhagat and Raghunath Bhagat
aforesaid have not up till now entered into
2 S.C.R.
SUPREME COURT REPORTS
85
possession of the Sudbhama property and they
are making a demand for the money and it is
absolutely necessary to repay the money to the
said creditors.
5. Hence on negotiation for sale of the some
property with the said Bhagats by way of con·
ditional sale the said Bhagats agreed to pur·
chase dur property and to· pay money in cash
for repayment of the debts of Sumeri Kapri
and for meeting other expenses.
6.
Hence we, the executants, have sold and
vended 12.6 acres of Nakdi jot land for
Rs. 2,800/- to Deonath Bhagat and Raghunath
Bhagat~
7. We declare that in the month of Baisakh
1334 Fasli we shall on repayment of the said
amount in full and in one lump sum to the
said Bl~agats, take back the vended property from
the said Bhagats and that in case of failure of
repayment of the consideration money of this
deed of sale in full within the stipulated time,
this deed of sale will remain in force and we
the executants, or our heirs, shall not be compe·
tent to demand the return of the vended
property.
8. Out of the consideration money of this sale
deed Rs. l,600/- due to the said Bhagats under
the bond dated 1·3-1923 was paid up in full
and on receipt of the remaining consideration
money the dues ofSumeri Kapri amounting to
Rs. 500/- was paid up and with the balance of
Rs. 700/· we met the above expenses.
9. We, the executants, put the said vendees in
possession of l he vended property and authorise
lffZ
llMi• M.llHI
••
Dr'-ll Bltqol
lio6Nll•, i.
1162
BlwjuMo ..
I
v.
D•lmath Bff41•t
S•bboR .. ,l.
86
SUPREME COURT REPORTS f}963J SUPP.
them to remain in possession
thereof and
appropriate the
produce thereof in
such
manner as they like and the payment of the
rent of the vended land from 1332 fasli re·
mained the concern of the said vendecs.
10. If due to a defect in the title the said
vendees are dispossessed of the vended property
or any portion thereof, we shall be liable to
,.
refund the consideration money of the sale deed
with interest at the rate. of Rs. 3/2/- per
hundred rupees per month.
11. Whatever rights and interests the said
vendees had under the bond dated 1·3·1923
remained intact under the sale deed.
12. Hence we have put into writing these few
words by way of a deed of absolute sale con·
ditional sale, so that it may be of use when
required."
·
·
There is a clear legal distinctirin between the two,
concepts-a, mortgage by conditional sale and a sale
with a condition of repurchase. The former is a
mortgage, ihe relationship of debtor and creditor
subsists and the right to redeem remains with the
debtor.
The latter is an out and out sale whereby
the owner transfers all his rights in the property to
the purchaser reserving a personal right of re-purchase. The question to which category a document
belongs presents a real difficulty which can only be
solved by ascertaining the intention of the parties on
a consideration of the contents of a document and
other relevant circumstances. Decided cases have
laid down many tests to ascertain the. intentions of
the parties but they are only illustrative and not
exhaustive. ' Let us therefore look at the terms of
'·
the document extracted above.
.
The learned counsel for the appellants relied
2,,s.c.R. .. SUPREM COURT REPORTS
87
upon the following circumstances:-
1. The consideration of the document went
mainly in the d;gcharge of a registered sudbharna bond dated March 1, · 1923, given in
favour of the respondents 1 & 2. It indicates
that relationship of creditor and debtor was
continued under the document.
2. There are no words of conveyance in the
document.
3. There are no words of re-conveyance after
the stipulated date.
·
4. There is a term that if there was a defect in
the title and the vendees were dispossessed the
executants would be liable to the refund of the
consideration with interest with a charge on the
property covered by the document.
The term creating a charge on the property transferred it is said indicates that the
executants continued to be the owners of the
la:nd despite the document.
5. The executants took upon themselves the
liability of the entire rent for 1331 fasli though
the document was executed in the Magh of
1331 fasli. The fact that the executants continued to · be liable to p~y for a period after
the execution of the sale deed, it is suggested
indicates that the docum..,nt was not an out
and out sale ·but one in which the appellants
continued to have an interest in the land.
6. In the execution portion of the document
it is described as 'tamashuk sarti kcbala' and
the appellants' counsel says that the said. expression means 1ortgage
y conditional sale.
1962
~iaiMMMI
••
l>tn•th BA•pl
1962
JJh-oja Mandal
v.
Debnath BliagiJt
Yubb.J Rao .• J.
88
SUPREME COURT REPORTS [1963) SUP~.
If there was any ambiguity in the rest of the
document the argument proceeds that
the
parties clearly expressed their intention by so
describing the nature of the document.
It is not accurate to say that the suit document
was executed only to discharge the mortgage bond
dated March 1, 1923. The document itself narrates
that the executants were badly in need of money noi
only for repaying the debt under the said bond but
also for repaying the debts of one Sumeri Kapri and
for meeting the expenses in connection with cultivation, purchase of bullocks and household. It is,
therefore, not a document executed in renewal of an
earlier mortgage bond but was brought into existence
to meet the pressing demands on the appellants. It
is also not correct that the document does not contain words of conveyance or re-conveyance. The
document says in express terms that the property 'was
sold and vended', which arc certainly words of conveyance, and that after the prescribed period and
after the amount was paid the appellants would 'take
back the vended property' from the respondents'
which are again words of reconveyance. Though
the words of 'conveyance' and 'reconveyance' are not
expressed in phraseology found in documents prepared by trained draftsmen, they are expressed in
words usually adopted by village document writers.
The taking over of the liability to pay the rent by the
executant for a short period subsequent to the execu•
.
tion of the document may be due to the fact that
the rent had become due before the execution of
the document or for some other circumstance which
is not clear from the document. This is at best a
neutral circumstance. The fact that in case of any
defect in title the vendees were dispossessed, the consideration amount with interest wa1 charged on the
prope~ty is nothing 1:iiore than an indic~tion of the
intention to keep ah ve the mortgagee's ·rights under
2 S.C.ll.
SUPREME COURT REPORTS
STJ
the earlier document. The said clause only makes
explicit what the r~spoudcnts would be entitled t~
in Jaw.
The translat10n of the words 'tamashuk sartl
kebala' as mortgage by conditional sale does not
appear to be correct. The learned
Subordinate
Judge observes that if those words were literally
translated, they would mean 'a bond by way of conditional sale'. If that was the meaning the said
expression would be consistent both with a mortgage
by conditional sale as well as a sale with a right of
re-purchase.
In law Lexicon, P. Ramanatha Iyer
gives the following meanings to the word 'kebala';
'Any deed of conveyance or transfer of right or property, any contract of bargain or sale, a bond, a
bill sale, title-deeds, and the like'. Even accepting
the widest meaning given to that word, the expression can only mean a bond or a contract by
way of conditional sale. So
translated the expression is consistent with a mortgage, as well as
with a sale and therefore that is a neutral circumstance. On the other hand the executant describes
the transaction as a sale and respondents as vendees.
The amount paid is described as consideration for the
sale. Usual covenant of title is given and there is a
provision of re-conveyance in case of payment of the
prescribed amount within the time agreed upon. No
doubt these recitals would be found in a document
which purports to be an ostensible sale and they do
not in themselves are decisive of the question raised
but there is one factor which dispels· any doubt in
regard to the construction of the document. The
total area of the land mortgage in the
year
1923 was 13.17 acres and the amount advanced
thereunder was
Rs 1,600/-.
Only
one year
thereafter out of the said extent 12.6 acres was
transferred by the document in question for a sum
of Rs. 2,800/-, that is if the contention of the
appellant was correct, a smaller extent of land was
mortgaged for higher amount. It is
improbable
1.962
Bhoj•M .. d.t
v.
D1bnalh B"4pt
Subha RO., J.
1962
BhojuMandal
v.
DlbMlhBhog•I
Suhba llMJ, J,
90
SUPREME COURT REPORTS [1963]SUPP.
that a mortgagee would advance an additional
amount and take a mortgage of a smaller extent
in discharge of an earlier mortgage whereunder a
larger extent of land was given as security. Unless
there are extraordinary reasons for this conduct, this
would be a clinching circumstance in favour of holding that a document was a sale. The learned
counsel for the appellant realizing the importance of
this circumstance attempted to explain it away by a
suggestion that under the earlier document the respondents were not put in possession of the land and
that the reduction of the extent of the mortgaged
property under the subsequent document was due to
the fact that they secured possession of the lands
mortgaged thereunder. This was not put either to
the witnesses or suggested in any of the three courts
below. We cannot therefore accept this argument
advanced for the first time before us, for there may
have been many explanations for the respondeμts in
respect of this suggestion. What is more, it is not
disputed that the sum of Rs. 2,800/- represents the
real value of the land sold to the respondents and it
is highly improbable to say the least that a person
would advance the amount equivalent to the value of
the land mortgaged without keeping a reasonable
margin for realizing his amount. This is sought to
be explained by throwing a suggestion that as the
respondents were. put in possession, they would be
getting the interest and therefore there was no chance
of the debt exceeding the value of the property. Even
so a mortgagee in lending monies would insist upon a
reasonable margin in the value of the property to
provide against the possible contingency of the properties g?ing down in value and the amount due to
him swelling by the addition of cost, damages etc.,
in the event of his filing a suit to recover the same.
In our view whatever ambiguity there may be in the
document, the fact that only a portion of the land
already mortgaged was sold for a proper and adequate
2 S.C.R.
SUPREME COURT REPORTS
91
consideration is a circumstance which stamps the
document as an out and out sale.
Reliance is placed by the learned counsel for
the appellants on a judgment of this court in 'Pandit
Ghunchun Jha v. Sheikh Ebadat Ali' ('). It may be
stated at the outset that for ascertaining the intention
of the parties under one document a decision on a
construction of the terms of another document cannot
ordinarily afford any guidance unless the terms are
exactly similar to each other. It is true that some of the
terms of the document in that case may be approximated to some of the terms in· the present document
but the judgment of this Court really turned upon a
crucial circumstance. There is one important recital
found in the document in that case which does not
appear in the document in question and there is
another important recital found here which is not
present there. There the document under scrutiny
was executed on April 15, 1930. Before the execution
of the document the executants initiated commutation
proceedings under s. 40 of the Bihar Tenancy Act.
Those proceedings continued till February 18, 1931
i.e., for some ten months after the deed. The executants borrowed Rs. 65/6/- to enable them to carry on
the commutation proceedings even after they executed the document. Bose, J., speaking for the court
adverting to the said circumstance observed at page
183: "This, we think, is crucial. Persons who are .
selling their property would hardly take the trouble
to borrow money in order to continue revenue proceedings which could no longer benefit them and
could only ensure for the good of their transferees."
It is, therefore, obvious that this circumstance
clinched the case in favour of the executants. The
crucial circumstance in the present case, namely that
a smaller extent was sold for a higher amount in discharge of an earlier mortgage of a larger extent for a
smaller amount was not present in that case. The said
(1(1955) 1.S,C.R; 17 ..
1962
Bhoju Mondol
...
D1bnalh Bhag•I
Subba Rao, J.
1962
Bhoju Mantlal
v.
Dlbnath Bhagat
Subba f?a1J J.
1962
92
SUPREME COURT REPORTS [i963] SUPP.
crucial circumstances make the two cases entirely dissimilar and therefore the said judgment of this court
is not of any help in construing the document in
question. On a consideration of the cumulative
effect of the terms of the document in the context
of the surrounding circumstances we hold that the
document in question is not a mortgage but a sale
with the condition of repurchase. The conclusion
arrived at by the High Court is correct.
The appeal fails and as the advocate for the respondent is not present in Court it is dismissed without costs.
Appeal dismissed.
THE AHMEDABAD MFG. & CALICO
PRINTING CO., LTD.
v.
S. C. MEHTA, INCOME-TAX OFFICER
AND ANOTHER
(S. K. DAS, J. L. KAPUR, A. K. SARKAR,
M. HIDAYATULLAH and RAGHUBAR DAYAL, lJ.)
Income Tax-Rectification-Retrospective
operation of
atatule-Rebate granted on undistributed
profiM-Subaequent
declaration of dividend8 on such profits-Recall of rebate and recomputation of aaaeaament-Finance Act, 1966 (18 of 1966),
ss. 19,
28-lndian Income-ta:t Act, 1922
(11 of 1922),
8. 36 (10).
Sub-section (10) of s. 35 of the Indian Income-tax Act,
1922, which was brought into force on April I, 1956, provided
that where in any of the assessment years 1948-49 to 1955-56,
a rebate of income-tax was allowed to a company "and sub-