The question of attestation in case of making a gift of immovable property

It is well known that Section 123 of the Transfer of Property Act, which provides for the mode of making a gift of immovable property, inter alia, provides that the registered gift document by the donor must be attested by two witnesses. Section 68 of the Evidence Act, which provides for proof of execution of document, required by law to be attested, says that if a document is required by law to be attested, it shall not be used as evidence until one attesting witness at least has been called for the purpose of proving its execution. However, the proviso therein says that it shall not be necessary to call an attesting witness in proof of execution of any decument, not being a will, which has been registered in accordance with the provisions of the Indian Registration Act “unless its execution by the person by whom it purports to have been executed, is specifically denied.” There is also one other section in the Evidence Act, viz., S. 70, which says that the admission of a party to an attested document, of its execution by himself shall be sufficient proof of its execution as against him, though it be a document required by law to be attested. With reference to this S. 70, it has been however held that the admission contemplated in S. 70 is an admission of execution in the manner in which a document required by law to be attested, is to be executed. In other words, the word “execution” in S. 70 designates the whole operation, including signing by the executant and attestation by the witnesses. (Vide E.Su. Na. Sheikh Davood Rowther and Others Vs. N.R.M.N. Ramanathan Chettiar and Others,AIR 1938 Mad 43 : (1938) ILR (Mad) 523 : (1937) 46 LW 610]

In Pichai Pillai Konar Vs. Krishnaswami Konar and Others[(1984) 97 LW 190 : (1984) 2 MLJ 160], , it has also been observed that the fact that a person calls himself a scribe in a certain document does not debar him from being an attesting witness, if he has in fact witnessed the execution.

In Dhruba Sahu (dead) and after him Nalumoni Sahu and Another Vs. Paramananda Sahu[AIR 1983 Ori 24 : (1982) 54 CLT 560], also, it has been held that when a person puts his signature on the document, both as scribe and as attesting witness, the inference is that he functioned both as scribe and as attesting witness. It has been held that when a man places his signature upon a document and at the same time describes himself as writer thereof, the inference is that he signs as the writer and nothing else, but as a matter of fact it can be shown that he signed not only as the writer, but also as witness of the fact that he saw the document executed.

In Balwant Singh Vs. Chatin Sing and Others, it has been also held that where after the execution of the gift deed, thumb impression of the mother of minor donee was obtained thereon in token of acceptance of gift, the gift could be said to be accepted by the mother of the donee. Likewise, in Balwant Singh Vs. Mehar Singh, also it has been held that where a gift deed was signed by the donee, both at the time of execution and when it was presented to the Sub-Registrar for registration, the donee’s signature on the two occasions must be held to have been appended in token of acceptance of the gift.


Cases Referred

Khwaja Mazhar Uddin Vs. Rama Shankar Amist and Others, AIR 1956 All 169
Bindeshri Prasad and Others Vs. Panchayati Akhara Maha Nirbani Goshain, AIR 1936 All 169
E.Su. Na. Sheikh Davood Rowther and Others Vs. N.R.M.N. Ramanathan Chettiar and Others, AIR 1938 Mad 43 : (1938) ILR (Mad) 523 : (1937) 46 LW 610
Chennupati Venkatasubbamma Vs. Nelluri Narayanaswami, AIR 1954 Mad 215 : (1953) 66 LW 841
Pichai Pillai Konar Vs. Krishnaswami Konar and Others, (1984) 97 LW 190 : (1984) 2 MLJ 160
Balwant Singh Vs. Chatin Sing and Others, AIR 1985 P&H 74
Balwant Singh Vs. Mehar Singh, AIR 1974 P&H 130
Dhruba Sahu (dead) and after him Nalumoni Sahu and Another Vs. Paramananda Sahu, AIR 1983 Ori 24 : (1982) 54 CLT 560
Mst. Samrathi Devi Vs. Parasuram Pandey and Others, AIR 1975 Patna 140

State Bank of India & ANR. Vs. Metta Chandra Sekhar Rao & Ors [SC 2017]

KEYWORDS:- Mortgage- loan

Supreme Court-min

The issue with regard to validity of the mortgage on the strength of which the loan was sanctioned and obtained was not raised at any point of time in any of the earlier proceedings. It was so raised for the first time before the High Court. The High Court ought not to have gone into the said question at such a belated stage. The fact that the mortgage was acted upon by the parties to sanction and obtain the loan is another fact that the High Court had overlooked.

[Civil Appeal No. 17372 of 2017 arising out of Special Leave Petition (Civil) No.32885 of 2016] [Civil Appeal No. 17374 of 2017 arising out of Special Leave Petition (Civil) No.13173 of 2017]

DATE : October 30, 2017

ACT: Section 61, 65A and 67A of the Transfer of Property Act, 1882

BENCH:  (RANJAN GOGOI)  (NAVIN SINIHA)

RANJAN GOGOI, J.

[Civil Appeal @ SLP (C) No.32885/2016]

1. Leave granted.

2. We have heard the learned counsels for the parties. We have perused the impugned order of the High Court and have also considered the facts of the case.

3. The challenge in this appeal is to an order dated 24th August, 2016 passed by the High Court of Judicature at Hyderabad for the State of Telangana and the State of  Andhra Pradesh in Writ Petition (Civil) No.12879 of 2016 by which the High Court has set aside the sale proceedings held in respect of the house property of the respondent No.1 and the sale certificate dated 15th March, 2016 issued in favour of the auction purchaser.

4. The High Court took the view that though the mortgage was created by deposit of title deeds there was a letter of the mortgagor to the appellant-State Bank of India on 28th May, 2011 whereby the mortgagor had waived his rights under Section 61, 65A and 67A of the Transfer of Property Act, 1882. Relying on a decision of this Court in Veeramachineni Gangadhara Rao v. The Andhra Bank Ltd. And Ors . the High Court took the view that the waiver of the rights made by the mortgagor amounts to a contract and unless the said document is registered the mortgage will not take effect. Accordingly, the mortgage was held to be invalid and consequently the sale proceedings including the sale certificate were set aside.

5. Upon due consideration of the matter, we arrive at the conclusion that the High Court was not justified in passing the impugned order and setting aside the sale certificate.

6. The issue with regard to validity of the mortgage on the strength of which the loan was sanctioned and obtained was not raised at any point of time in any of the earlier proceedings. It was so raised for the first time before the High Court. The High Court, in our considered view, therefore, ought not to have gone into the said question at such a belated stage. The fact that the mortgage was acted upon by the parties to sanction and obtain the loan is another fact that the High Court had overlooked.

The mortgage was also in respect of certain other properties, the sale of which has attained finality. This is a vital aspect of the case that the High Court ought to have taken into account while passing the impugned order. Above all, an independent Special Leave Petition (Special Leave Petition (Civil) No.13173 of 2017) has also been filed by the auction purchaser who is also aggrieved by the order of the High Court. The auction purchaser is an innocent third party who, it is stated, has obtained a loan to pay the sale price and is presently servicing the said loan. It is also stated that the auction purchaser is in possession of the property since March 2016 and has spent considerable amount of money in renovating/repairing the premises in question.

7. For all the aforesaid reasons, we are of the view that the conclusion of the High Court is not tenable in law. We accordingly allow this appeal and set aside the order of the High Court.

[Civil Appeal @ SLP (C) No.13173 of 2017]

8. Leave granted.

9. This appeal is disposed of in terms of the order of this Court passed today in Civil Appeal arising out of Special Leave Petition (Civil) No.32885 of 2016.

NEW DELHI

OCTOBER 30, 2017

Suraj Narain Kapoor and Others Vs. Pradeep Kumar and Others[2017 SC

KEYWORDS:-Redemption of Mortgadge- Mortgadge by Conditional sale-Sale with a condition for repurchase-

Supreme Court-min

The document in question was a sale deed with an option to repurchase and not a mortgage by conditional sale.

SUPREME COURT OF INDIA

[Civil Appeal No.1300 of 2009]

ACT: Section 58(C) of the Transfer of Property Act

BENCH :  (Ranjan Gogoi)  (Navin Sinha)

NAVIN SINHA, J.

1. The plaintiff’s suit for redemption of mortgage, decreed by the trial court and affirmed in first appeal, having been reversed by the High Court, the plaintiff is in appeal. The parties shall be referred to by their respective position in the suit, for convenience.

2. Learned counsel for the appellants submits that the High Court grievously erred in reversing the concurrent findings of two courts that Exhibit-A1 was a mortgage by conditional sale, 1 and not a sale deed with an option to repurchase. The intention of the parties to create a mortgage by conditional sale only is apparent from the right to redemption being incorporated in the same document, fulfilling the statutory requirement under Section 58(C) of the Transfer of Property Act. Reservation of the right to redemption for five years only, was not relevant as the right would be co-extensive with the statutory period of 30 years.

3. Conversely the submission on behalf of the respondents is that the High Court on an examination of Exhibit-A1 has rightly held that it was a sale with a condition for repurchase, and not mortgage by conditional sale. The recitals in the document were self-explanatory and did not evidence any mortgage or loan, much less to discharge any debt, or the relationship of debtor and creditor. Merely because there may have been an option for repurchase within 5 years incorporated in the same document, would not ipso fact confer on it the nature of a mortgage by conditional sale. The suit for redemption was also not filed within five years.

4. We have considered the submissions. The question whether a document is a mortgage by conditional sale, or a sale with an option to repurchase, is a vexed question to be determined in the facts of each case. Reference may appropriately be made to Bhoju Mandal vs. Debnath Bhagat, 1963 Supp (2) SCR 82, observing as follows:-

4. There is a clear legal distinction between the two concepts, a mortgage by conditional sale and a sale with a condition of re-purchase. The former is a mortgage, the 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.

5. The true nature of the document therefore has to be determined in the facts of each case, dependent on the nature of the recitals in the document, intention of the parties, coupled with other attendant surrounding circumstances.

There can be no hard and fast rule for determining the nature of the document, devoid of these circumstances. Precedents, in abundance, will not suffice alone, as observed in Pandit Chunchun Jha vs. Sheikh Ebadat Ali and another, 1955 SCR 174, as follows:- “There are numerous decisions on the point and much industry has been expended in some of the High Courts in collating and analyzing them. We think that it is a fruitless task because two documents are seldom expressed in identical terms and when it is necessary to consider the attendant circumstances the imponderable variables which that brings in its train make it impossible to compare one case with another. Each case must be decided on its own facts.”

6. In the facts of the instant case, considering that the suit had been decreed by two courts, it was considered prudent to re-examine the deed document in its original vernacular version, rather than to rely upon the meaning assigned to the recitals according to the unofficial translators understanding.

7. A bare reading of the original document reveals that it is styled as a sale deed. The vendor specifically recites that he had purchased the property for a sum of Rs.1500/- by sale deed dated 22.6.1948, from its original owners. That he was the exclusive owner of the property, which was not encumbered in any manner and that he had absolute title and authority singularly, to deal with the same to the exclusion of his brothers, from whom he had separated long ago. He was selling the shop for a sum of Rs.4000/- because he had purchased a motor vehicle, which he wanted to run on hire.

On receipt of the consideration money he was voluntarily transferring all right, title and interest in the property to the vendee and his legal heirs for all times to come. If the property was found to be encumbered in any manner, the vendee could approach the court, for return of the sale amount, including against the immovable property of the vendor. If the amount was returned within a period of 5 years, either in installments or in lump-sum, the purchaser would execute the sale deed in his favour.

8. The recitals reveal no reference to any loan taken or mortgage created with regard to any immovable property as security for such loan, much less to discharge any debt. It does not evince the creation of a debtor and creditor relationship. On the contrary, the recitals are specific that the vendor was in need of money to run the vehicle purchased by him on hire, and was selling the shop to raise money for the purpose.

The suit for redemption was also filed beyond the period of 5 years. Significantly, the first appellate court observed that the recitals indicated that it was a sale deed, but concluded that it was a mortgage by conditional sale, only because the right to redemption was incorporated in the same document, which was but only one of the factors amongst others, to determine the true nature of the document.

9. In Tamboli Ramanlal Motilal (Dead) by Lrs. vs. Ghanchi Chimanlal Keshavlal (Dead) by Lrs. and another, 1993 Supp. (1) SCC 295, the question was similar with regard to the nature of the document, in absence of any intention expressed with regard to creation of a debtor and creditor  relationship. Holding that the document was not a mortgage by conditional sale but sale with an option to repurchase, it was held:-

“17. What does the executant do under the document? He takes a sum of Rs.5,000 in cash. The particulars are (a) Rs.2,499 i.e. Rs. 899 by mortgage of his house on January 27, 1944 and (b) Rs. 1,600 by a further mortgage on May 31, 1947 totaling to Rs. 2,499. Thereafter, an amount of Rs. 2,501 in cash was taken from the transferee. The purpose was to repay miscellaneous debts and domestic expenses and business. It has to be carefully noted that this amount of Rs.5,000 was not taken as a loan at all. As rightly observed by the High Court, by executing this document the executant discharges all the prior debts and outstandings.

Where, therefore, for a consideration of a sum of Rs.5,000 with the conditional sale is executed, we are unable to see how the relationship of debtor and creditor can be forged in. In other words, by reading the documents as a whole, we are unable to conclude that there is a debt and the relationship between the parties is that of a debtor and a creditor. This is a vital point to determine the nature of the transaction.

18. The property is sold conditionally for a period of five years and possession is handed over. At the same time, the document proceeds to state ‘Therefore, you and your heirs and legal representatives are hereafter entitled to use, enjoy and lease the said houses under the ownership right’.”

(emphasis supplied)

10. In the facts and circumstances of the present case, and for reasons discussed, we find no reason to interfere with the order impugned holding that the document in question was a sale deed with an option to repurchase and not a mortgage by conditional sale.

11. The appeal lacks merits and is dismissed.

…………………………………J. (Ranjan Gogoi)

…………………………………J. (Navin Sinha)

New Delhi,

October 24, 2017.