RAJIV GANDHI NATIONAL UNIVERSITY OF LAW CURRICULUM MOOT COURT, 2014

GROUP NO:

ROLL NO: 471

RAJIV GANDHI NATIONAL UNIVERSITY OF LAW CURRICULUM MOOT

COURT,2014

In The XYZ HIGH COURT

APPEAL. NO. …/2014

[UNDER SEC. 100 OF CIVIL PROCEDURE CODE, 1908]

MR.A…………………………………………………………………………...APPELLANT

V.

MR.B…..….……………………………………………………………………. RESPONDENT

MOST RESPECTFULLY SUBMITTED TO THE HON’BLE JUSTICE THE MEMORIAL DRAWN

ON BEHALF OF THE RESPONDENT

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TABLE OF CONTENTS

LIST OF ABREVATIONS............................................................................................................I

INDEX OF AUTHOURITIRES..................................................................................................II

STATEMENT OF JURISDICTION.........................................................................................III

STATEMENT OF FACTS.........................................................................................................IV

ISSUES RAISED...........................................................................................................................V

SUMMARY OF ARGUMENTS................................................................................................VI

BODY OF ARGUMENTS............................................................................................................1

1. WHETHER THE TRANSACTION BETWEEN MR. A AND MR. B IS OF THE NATURE OF

MORTGAGE OR NOT?....................................................................................................................1

1.1 Transaction between the A and B is not a Mortgage...................................................1

1.1.1 Ingredients of Mortgage are not fulfilled.....................................................................2

1.1.2 No Relation of Mortgagor and Mortgagee exists.........................................................3

1.2 Transaction is not covered under Section 58(c) of the Act..............................................4

1.2.1 It is not mortgage by conditional sale...........................................................................6

2. WHETHER THE TRANSACTION BETWEEN A AND B IS SALE WITH CONDITION OF

REPURCHASE OR NOT?..................................................................................................................7

2.1 That from the contents of the deed executed by A in favour of B is prima facie
evident that there exists no relationship of Debtor and Creditor.........................................8

PRAYER.....................................................................................................................................VII

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LIST OF ABREVATIONS

1. ¶ Paragraph

2. AIR All India Reporter

3. All Allahabad

4. HC High Court

5. Hon’ble Honorable

6. MP Madhya Pradesh

7. para Paragraph

8. Pg. Page

9. SC Supreme Court

10. SCC Supreme Court Cases

11. SCR Supreme Court Reporter

12. Sec. Section

13. v. Versus

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STATEMENT OF JURISDICTION

APPELLANT HAS APPROACHED THE HON’BLE COURT UNDER SECTION 100 OF THE CIVIL
PROCEDURE CODE, 1908, AND HEREBY RESPONDENT HUMBLY SUBMITTED TO THE

JURISDICTION APPROACHED BY THE APPELLANT.

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INDEX OF AUTHOURITIES

Cases Referred:

 Alderson v. White (1858) 2 De G and J 97........................................................................15

 Alderson v. White (1858) 2 De G and J 97;.......................................................................15
 Ali Hussan v. Nilla Kanden (1864) 1 Mad HC 356...........................................................10
 Bhagwan Sahai v. Bhagwan Din (1890) ILR 12 All 387.................................................15
 Bhaskar Waman Joshi and Ors. v. Shrinarayan Rambilas Agarwal and Ors., AIR 1960
SC 301...............................................................................................................................15
 Bidha Ram v. Chhidda, AIR 1950 All 430; Koteswara Rao v Sambiah, AIR 1966 AP
252.....................................................................................................................................15
 Darbar Jadubhai Nanbha v. Patel Uka Duda (1998) 1 GLR 633....................................14
 Darbar Jadubhai Nanbha v. Patel Uka Duda AIR (1998) 1 Guj LR 633 (Guj.).............11
 Debi Singh v. Jagdtsh Saran ILR(1952) 2 All 200............................................................10
 Ganga Parsad v. Itwar Singh¸ AIR 1939 Nag 287...........................................................12
 Hans Raj v Mat Ram, AIR 1952 Punj 181........................................................................15
 Mahabir Singh v. Bigan AIR 1949 Pat 508.......................................................................13
 Manik Chand v. Baldeo AIR 1951 Pat 327......................................................................10
 Mumtaz Begam v. Lachhmi¸ AIR 1929 All 174................................................................12
 Ram Kinkar v. Satya Charan LR 66 IA(50)......................................................................11
 Sajedo Bano v. Mushir Md. Khan 1993 MPLJ 684(MP)..................................................10
 Satyadeo v. Ram Sarup, AIR 1964 Pat. 193......................................................................11
 Tamboli Ramanlal Motilal (Dead) by LRs. v. Ghanchi Chimanlal Keshavlal (Dead)
by LRs. & Another, AIR 1992 SC 1236...........................................................................17
 Vanchalabai Raghunath Ithape v. Shankarrao Babburao Bhilare Civil Appeal No. 4833
of 2013...............................................................................................................................18
 Vasudeo Bhikaji Joshi v. Bhau Lakshman Ravut & Others ILR 1897 XXI 528.............16
 Venkish v. Donga AIR 1921 Mad 12.................................................................................12
 Williams v. Owen, 1840, 5 English Reports 41 (Chancery) 386..................................16

Books Referred:

1. Banarjee, A.K., Commentary on the Code of Civil Proceduree, Diwedi and Company,

Allahabad, 2009.
2. G.C Venkatasubba Rao, Commentary on the Transfer of Property Act, C. Subbiah Shetty
and Sons, Madras, 1990.

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3. Jain, M.P., The Code of Civil Procedure, Wadhwa Publishers, Nagpur, 2007.

4. Mulla, Transfer of Property Act, 1882, Butterworths, New Delhi, 2000.
5. Singh Avtar, Transfer of Property Act,Universal Law Publishing, New Delhi, 2007.
6. Sinha R.K., Transfer of Property Act, Central Law Agency, Allahabad, 2010.
7. Sorabjee Soli, Transfer of Property Act, Wadhwa & Co., New Delhi, 2004

Websites Referred:

1. http://www.altavista.com
2. http://www.helplinelaw.com/bareact/index.php?dsp
3. http://www.Indialawinfo.com/bareacts/company/html
4. http://www.Indiancourts.nic.in/codemore.htm
5. http://www.indlaw.com
6. http://www.judis.nic.in
7. http://www.lexsite.com
8. http://www.lfhri.org
9. http://www.manupatra.com/lgsearch/htm

STATEMENT OF FACTS

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-I-

Plaintiff A’s case is that a deed was executed in favour of Defendant B on 12.7.1999 for a
consideration of Rs. 1,50,000 by which land measuring one acre along with 25% share in the
mango trees was transferred to defendant B.

-II-

The possession of the same was handed over, with a specific stipulation to the effect that the land
was sold on the condition that after receiving Rs. 1,50,000/- in lump sum within 5 years before
the end of july month by B, the land was to be returned to A.

-III-

A argues that it was a mortgage transaction and the land was to be returned by B after receiving
the said consideration of Rs.1,50,000/- within 5 years.

-IV-

A further alleged that the period of 5 years was nominal as there was no condition that after 5
years the sale would become final. According to A, B was agreeing to redeem the property upto
2007, but thereafter he started avoiding to do it.

-V-

On 20.7.2008, A issued a notice calling upon B to reconvey the suit property after accepting the
amount.

-VI-

The trial court after considering the pleas of both the parties, and after considering the provisions
of Section 58(c) of the Transfer of Property Act, 1882, held it to be a mortgage by conditional
sale. The court held that time was not the essence of the transaction and decreed the suit in
favour of A.

ISSUES RAISED

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1. WHETHER THE TRANSACTION BETWEEN MR. A AND MR. B IS OF THE NATURE OF

MORTGAGE OR NOT

2. WHETHER THE TRANSACTION BETWEEN A AND B IS SALE WITH CONDITION OF

REPURCHASE OR NOT

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SUMMARY OF ARGUMENTS

ISSUE 1: WHETHER THE TRANSACTION BETWEEN MR. A AND MR. B IS OF THE NATURE OF
MORTGAGE OR NOT?

A deed was executed by Mr. A in favor of B is not of the nature of mortgage with conditional
sale under section 58(c) of the Transfer of the Property Act, 1882 but it is of the nature of Sale
with the condition of repurchase. To prove that it is sale with condition of repurchase we have to
prove first that it is not the mortgage under section 58(a) of the Transfer of Property Act, 1882
and it is also not covered under section 58(c) of the Act.

ISSUE 2: WHETHER THE TRANSACTION BETWEEN A AND B IS SALE WITH CONDITION OF

REPURCHASE OR NOT?

After proving that the transaction does not fall under any of the category of section 58 of the act,
now it is important to prove that the agreement is nature of sale with condition of repurchase and
there exist no relation of mortgagor and mortgage and the transaction is proper sale by the buyer
and seller and there is no relation of debtor and creditor.

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BODY OF ARGUMENTS

1. WHETHER THE TRANSACTION BETWEEN MR. A AND MR. B IS OF THE NATURE OF

MORTGAGE OR NOT?

It is submitted that the, deed which was signed by the Mr. A in favor of B is not of the nature of
mortgage with conditional sale under section 58(c) of the Transfer of the Property Act, 1882 but
it is of the nature of Sale with the condition of repurchase. To prove that it is not covered under
the section of 58(c), it is important to first discuss that, it is not the type of any mortgage1.

1.1 Transaction between the A and B is not a Mortgage.

Section 58 of the Transfer of Property Act, 1882 talks about the Mortgage and its different types.
A transaction has to come within clause (a) before it can come under any of the clause(b) to (g) 2.
So it is important to prove it does not fall under Section 58(a) of the Act.

1.1.1 Ingredients of Mortgage are not fulfilled.

Mortgage is the transfer of an interest in specific immoveable property for the purpose of
securing the payment of money advanced or to be advanced by way of loan, an existing or future
debt, or the performance of an engagement which may give rise to a pecuniary liability3.

If we look into the ingredients of mortgage they are:-

a. Existence of Loan and,

b. Existence of Debt

As decreed by the Hon’ble High Court4 that, A mortgage is a transfer of an interest in specific
immovable property as a security for the payment of a debt or performance of debt 5, By the term
existence of loan means that one party has taken money from the other party and transferred land
in exchange of that money with the condition such as it can be condition of sale on failure of re-

1
Sajedo Bano v. Mushir Md. Khan 1993 MPLJ 684(MP).
2
Debi Singh v. Jagdtsh Saran ILR(1952) 2 All 200.
3
Sectoin 58 of the Transfer of Property Act, 1882.
4
Ali Hussan v. Nilla Kanden (1864) 1 Mad HC 356.
5
Manik Chand v. Baldeo AIR 1951 Pat 327.

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payment or it can be usufructuary mortgage or any of the mortgage. Main reason is that loan is
taken by the party and it is re-paid according to the agreement. But in present case there is
existence of loan but the nature of transaction is not covered by any of the types of mortgage not
even covered under ‘clause c’ and the concept of debtor and creditor will be explained in next
part of the contention while explaining that the transaction is sale with condition to repurchase.

1.1.2 No Relation of Mortgagor and Mortgagee exists.

As proved above that the deed signed between the parties is not the mortgage, so it is very clear
now to infer that there exists no relation of mortgagor and mortgage between the parties. The
very pertinent point of the mortgage is that before the date of the repayment of the mortgage-
money, the mortgagor retains a legal interest in the property mortgaged 6. Here in the present case
it is clearly mentioned that the property is sold to the B with condition. It means that here A has
no control over his property and he has not retained his legal relationship. Moreover in this case
of mortgage there is never absolute transfer except in the case when transferor defaults in the
payment7. In the present case there is already transfer of property because it has been clearly
mentioned that sold with the condition. So no relation of mortgagor and mortgage exists. Further
it has been held by the Hon’ble high court that in the mortgage by conditional sale vesting of the
title is postponed8 as it is governed by the clause c9, but in the present case title was immediately
transferred by the transferor to transfree so therefore no such relation exists between A and B.

1.2 Transaction is not covered under Section 58(c) of the Act.

To prove that the transaction which took place between A and B is Sale with the condition of
repurchase it is important to prove that it is not Mortgage within the meaning of section 58(c) of
the Act.

1.2.1 It is not mortgage by conditional sale.

In the case of Mumtaz Begam v. Lacihhmi10 before a transaction can be said to be mortgaged by
conditional sale, the following conditions are to be fulfilled:-
6
Ram Kinkar v. Satya Charan LR 66 IA(50).
7
Satyadeo v. Ram Sarup, AIR 1964 Pat. 193.
8
Darbar Jadubhai Nanbha v. Patel Uka Duda AIR (1998) 1 Guj LR 633 (Guj.)
9
Section 58 (c) of Transfer of Property Act, 1882
10
AIR 1929 All 174.

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a. The mortgagor has not ostensible sold the mortgaged property.

The phrase ‘ostensible sells’ consititute one of the essential ingridents of mortgage by
conditional sale. The instrument of mortgage on the face of it, must appear to be a sale. If it
purports to be mortgaged only, but provides that on default of payment, the mortgaged property
is to be regarded as sold it is not a mortgaged by conditional sale. 11

In the instant case also there is deed written by the A in favor of B and it has been clearly
mentioned in the fact sheet that on payment of Rs.1,50,000 in lump sum within 5 years before
the end of july the land was to be returned to B, which means that on the default of the payment
by A12, B has the right to keep the land and therefore the it not the mortgage by conditional
sale13.

Moreover the main ingredient of Section 58(c)14 is that the sale must be ostensible. By the term
ostensible means that not in real and it only appears to be the sale but in actual it is not the sale 15.
In the present case there is proper sale by A to B as it is written in facts that the property is sold
with the condition. By the term sold means giving of the possession by the person to another for
some consideration. So therefore it can be clearly inferred that the sale dose not only appears to
be sale or ostensible but it is actual sale because it is settled principle that the for a mortgage by
conditional sale there must be ostensible sale16 and such ingredient is not pertinent in this case
and there for the first ingredient of the Section 58 (c) is not fulfilled.

b. The mortgagor has sold the property on condition that:-

i. on condition that on default of payment of the mortgage-money on a certain

date the sale shall become absolute, or
ii. on condition that on such payment being made the sale shall become void, or
iii. on condition that on such payment being made the buyer shall transfer the
property to the seller.

11
Mumtaz Begam v. Lachhmi¸ AIR 1929 All 174.
12
Moot Prop 1
13
Fact Sheet
14
Transfer of Property Act, 1882
15
Ganga Parsad v. Itwar Singh¸ AIR 1939 Nag 287
16
Venkish v. Donga AIR 1921 Mad 12

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In order to constitute transaction a mortgage by conditional sale the mortgagor must ostensible
sell the property in question on any of the above mentioned three condition, in other words there
must be an ostensible and not an out and out sale and it must comply with any of the mentioned
three condition17. Main principle on which section 58(c) is based is that there must be ostensible
sale only with compilation of these three conditions, as we have proved above that the sale is not
of the ostensible nature and therefore the above conditions has no standing because it must have
nexus with the point of ostensible sale and no such nexus can be drawn here. Moreover the
applicability of these conditions arises only after when the transferor fails to pay the money in
decided stipulated time where as nothing such type of conditions is mentioned in the fact sheet..

So therefore it can concluded that transaction between A and B is not of the nature of Mortgage
and do not fall in the ambit of the Section 58(a) and Section 58(c) of the Act.

2. WHETHER THE TRANSACTION BETWEEN A AND B IS SALE WITH CONDITION OF

REPURCHASE OR NOT?

It is humbly submitted that, as it is proved above that the transaction which took place between
both the parties is not under the umbrella of the section 58 and hence it is not mortgage and it is

17
Mahabir Singh v. Bigan AIR 1949 Pat 508

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therefore covered under the concept of Sale with the Condition of Repurchase. This will be
proved in this contention.

In order to understand that it is sale with the condition of repurchase nice distinction between
mortgage by conditional sale and sale with condition of repurchase has to be kept in mind
Hon’ble high court in one of the case held that, “whether a given transaction is mortgage by
conditional sale or an outright sale with a condition of repurchase must be decided on its own
facts. In every such case the question is what upon a fair construction is the meaning of the
document. If the words of the document are express and clear, effect must be given to them and
any extraneous inquiry into what the parties to it thought or intended is ruled out”18.  

In view of Section 58 of the Transfer of Property Act, mortgage by conditional sale is a

transaction which presupposes existence of a debt and relationship of debtor and creditor
between the parties.

2.1 That from the contents of the deed executed by A in favour of B is prima facie
evident that there exists no relationship of Debtor and Creditor.

It is submitted that in the instant case, it is crystal clear from the terms of the deed that the
relationship between the parties is that of buyer and seller and neither that of mortgagee and
mortgagor nor that of debtor and creditor. The case involves the selling of the property by A in
favour of B, with a condition of repurchase within a period of five years on the repayment of
Rs.1,50,000.

It is submitted that a sale with a condition of retransfer is not a mortgage, for the relationship of
debtor and creditor does not subsist, and there is no debt for which the transfer is a security. It is
not a partial transfer, but a transfer of all rights in the property reserving only a personal right of
repurchase or pre-emption, which is lost if not exercised within the stipulated time. This
distinction was made in the case of Alderson v. White,19 and it was accepted by the Privy Council
in Bhagwan Sahai v. Bhagwan Din.20 Their Lordships quoted with approval the following
passage from Alderson v. White21:
18
Darbar Jadubhai Nanbha v. Patel Uka Duda (1998) 1 GLR 633
19
Alderson v. White (1858) 2 De G and J 97; Hans Raj v Mat Ram, AIR 1952 Punj 181.
20
Bhagwan Sahai v. Bhagwan Din (1890) ILR 12 All 387.
21
Alderson v. White (1858) 2 De G and J 97

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“The rule of law on this subject is one dictated by common sense that prima facie
an absolute conveyance containing nothing to show that the relation of debtor
and creditor is to exist between the parties do not cease to be an absolute
conveyance and become a mortgage merely because the vendor stipulates that he
shall have a right to repurchase.”

If the words are plain and unambiguous they must in the light of the evidence of surrounding
circumstances be given their true legal effect. It there is ambiguity in the language employed, the
intention may be ascertained from the contents of the deed with such extrinsic evidence as may
by law be permitted to be adduced to show in what manner the language of the deed was related
to existing facts. 22

The intention of both the parties is clear from the facts, i.e. transaction was that of sale and not
that of mortgage. Hence, the relationship of the parties is not that of mortgagor and mortgagee
and of debtor and creditor

It is further submitted that the distinction is purely one of intention, i.e., whether it was intended
that the relation of debtor and creditor should subsist.23

The court will ascertain the intention by looking at the substance and essence of the transaction,
and not the mere form of deeds. The name given in the document is not conclusive. The question
has to be decided with reference to the predominant intention of the parties as gathered from the
recitals and the terms of the documents, and the surrounding circumstances including the conduct
of the parties.24

From a perusal of the aforesaid provisions especially, Section 58(c), it is evidently clear that for
the purpose of bringing a transaction within the meaning of mortgage by conditional sale’, the
first condition is that the mortgagor ostensibly sells the mortgaged property on the condition that
on such payment being made, the buyer shall transfer the property to the seller. But it is proved
above that the sale is not ostensible sale so its not covered under section 58(c). Moreover in case
of Willams v. Owen25

22
Bhaskar Waman Joshi and Ors. v. Shrinarayan Rambilas Agarwal and Ors., AIR 1960 SC 301.
23
Bidha Ram v. Chhidda, AIR 1950 All 430; Koteswara Rao v Sambiah, AIR 1966 AP 252.
24
Kaveripatnam Subbaraya Setty Anniah Setty Charities Trust v SK Viswanatha Setty, AIR 2004 SC 3289.
25
Williams v. Owen, 1840, 5 English Reports 41 (Chancery) 386.

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“A similar question arose for consideration as to whether a conveyance by the

plaintiff’s father to the defendant was to be considered as having been a
mortgage as contended by the plaintiff, or as having been a sale, with a right of
repurchase at a given date. It was held that in a mortgage the debt subsists and a
right to redeem remains with the debtor, but 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.
This personal right can only be enforced strictly according to the terms of the deed
and at the time agreed upon.”

Further in another case Bombay High Court26 at Bombay considered a similar question in
which the fact was that the plaintiffs sued to redeem an alleged mortgage made in 1823
by their ancestor to the ancestor of the defendant. The alleged mortgage recited a
previous mortgage under which the mortgagee Gopal Gokhale was in possession, and it
stated that a sale had been contemplated, but the parties could not agree as to price, but
that they had now settled it at Rs.125/- and the amount due on the mortgage at Rs. 200/-,
and that it was agreed that if within four years the mortgagor paid Rs. 125/- with
interest, he should get back the land; if not, that the land should be the absolute
property of Gokhale and Bombay High Court held that,

This was not a mortgage but a sale. It was an agreement which put an
end to the previously existing mortgage. A mere stipulation for
repurchase does not make a transaction a mortgage. To make a
mortgage there must be a debt, and here there was no debt, nor was the
property here conveyed as security.”

In the case of Tamboli Ramanlal Motilal (Dead) by LRs. v. Ghanchi Chimanlal Keshavlal
(Dead) by LRs. & Another, AIR 1992 SC 1236, the facts of the case were similar to this
case. In that case, a document of transfer was executed and the property was handed over. At
the same time, the document proceeded to state that the property is sold conditionally for a
period of five years and possession is handed over. The document stated: “Therefore, you
and your heirs and legal representatives are hereafter entitled to use, enjoy and lease the said
houses under the ownership right.” The further clause in the document was to the effect
that the executants shall repay the amount within a period of five years and in case he fails to
repay neither he nor his heirs or legal representatives would have any right to take back the
26
Vasudeo Bhikaji Joshi v. Bhau Lakshman Ravut & Others ILR 1897 XXI 528.

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said properties. The last important clause was that after the period of five years the
transferee would have a right to get the municipal records mutated in his name and pay tax.
On these facts, this Court held that,

“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.”27

Further in another similar case with almost the same facts Supreme Court of India held,

“the alleged sale document was executed in the year 1967

transferring the suit property by way of sale subject to one
stipulation/condition that on receiving the sale amount of Rs. 3,000/-
within five years the land was to be returned to the plaintiff-vendor.
It is also not in dispute that after transfer of the land the
defendant respondent No. 1 came in possession and used & enjoyed
the suit property as an absolute owner. It was only after 11 years
that the plaintiff-appellant filed the suit alleging that the suit
property was mortgaged in favour of the defendant/respondent No.1
herein with a condition to reconvey the land”28.

So therefore it can be concluded and proved that the transaction between Mr. A and Mr. B is not
mortgage but the sale with the condition of repurchase.

PRAYER

Wherefore in the light of facts stated, issues raised, arguments advanced and authorities cited,
it is most humbly prayed before this Hon’ble High Court, that it may graciously be pleased
to :

27
Tamboli Ramanlal Motilal (Dead) by LRs. v. Ghanchi Chimanlal Keshavlal (Dead) by LRs. & Another,
AIR 1992 SC 1236
28
Vanchalabai Raghunath Ithape v. Shankarrao Babburao Bhilare Civil Appeal No. 4833 of 2013

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1. UPHOLD THE DECISION PASSED BY THE FIRST APPELLATE COURT.

2. HOLD THAT THE TRANSACTION IN QUESTION IS THAT OF A SALE WITH A
CONDITION OF REPURCHASE AND NOT THAT OF THE MORTGAGE BY
CONDITIONAL SALE.

And pass any other order in favour of the Respondent which this Court may deem fit and
proper in the circumstances of the case.

Counsels for the Respondent

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