Sale with a condition of repurchase is not a lending and borrowing arrangement

Vanchalabai Raghunath Ithape v. Shankarrao Baburao Bhilare, (2013) 7 SCC 173

Ss. 58(c) and 54 - Mortgage by conditional sale or sale with option of repurchase - Determination of - Matters to be
considered - Primacy of intention of parties - Intention of parties, held, is to be gathered from terms of deed - In sale,
unlike mortgage, debtor-creditor relationship does not exist between parties - Further, merely because condition of
repurchase is embodied in same document which effects sale, transaction cannot always be presumed to be one of
mortgage by conditional sale - Document described as sale deed executed by appellant-plaintiff transferring land and
fixtures along with possession to defendant and stating that henceforth plaintiff shall not be having any right over the land
and defendant became owner thereof, but at the end of the sale deed stipulating a condition that in case of payment of
sale price within 5 yrs defendant should return land to plaintiff - After transfer of land defendant came into possession
and enjoyed it as absolute owner - But after 11 yrs of inaction, suit filed by plaintiff for redemption of land on ground that
transaction was mortgage by conditional sale and that period of 5 yrs was nominal - First appellate court recorded finding
that there was no debtor-creditor or landlord-tenant relationship between parties, that title had passed absolutely to
defendant and that shorter period in which land was to be reconveyed indicated absolute sale with concession to vendor
to get back land within that period - High Court in second appeal refused to interfere with findings of first appellate court -
Held, transaction was sale with condition of repurchase and not mortgage by conditional sale - Plaintiff, having failed to
pay sale price within stipulated period, is not entitled to get back land - Suit rightly dismissed in appeal - Findings of first
appellate court, being pure findings of fact, High Court was justified in not interfering therewith in second appeal - Hence
no interference called for, (2013) 7 SCC 173-A



S. 54 - Sale with option of repurchase - Nature of such option of repurchase - Contract for sale - Time specified for
exercise of said option in sale deed - Binding effect of terms of option - Held, a sale with a condition of repurchase is not
a lending and borrowing arrangement; no debt subsists and no right to redeem is reserved by the debtor, but only a
personal right to purchase (i.e. a contract for sale) - This personal right can only be enforced strictly according to the
terms of the deed and at the time agreed upon - In present case transaction was sale with condition of repurchase and
not mortgage by conditional sale - Plaintiff vendor who had option of repurchase, having failed to pay sale price within
stipulated period, is not entitled to get back land, (2013) 7 SCC 173-B
http://www.supremecourtcases.com
Eas

Print Page