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Prakash (Dead) By LR. vs G. Aradhya & Ors.

Civil Appeal · 2023 INSC 743Decided 18 Aug 2023
Civil Appeal No. 706 of 2015
Hima Kohli · Rajesh Bindal

Background

In 1973, the appellant's father, as guardian, sold a plot of land owned in the minor appellant's name to one Rudramma via a registered Sale Deed, and on the same day, a separate unregistered "Reconveyance Agreement" was signed giving the vendor five years to repurchase the property for the same price. After that window lapsed without repurchase, the land changed hands again, and in 1987 the appellant sued claiming the original transaction was really a mortgage (not an outright sale) and sought to redeem it. Both the trial court and the Karnataka High Court rejected this, holding it was a genuine sale with only a personal right of repurchase (not a mortgage), and also found the suit barred by limitation.

Decision Breakdown

The Supreme Court examined Section 58(c) of the Transfer of Property Act, 1882, which requires that a "mortgage by conditional sale" be evidenced in the same document that effects the sale. If the buy-back condition is in a separate document, as it was here, the law presumes it is not a mortgage but a sale with a right of repurchase. Reviewing the actual wording of both documents (the Sale Deed used clear sale language ("sold," "absolute owner") with possession transferred immediately, while the Reconveyance Agreement only gave a personal right to repurchase within five years), the Court agreed this was an outright sale, not a mortgage, and that the right to repurchase had simply lapsed after five years. The appeal was dismissed, upholding the High Court.

Lesson Learnt

When a sale and a promise to buy back the same property are recorded in two separate documents, the law treats it as an ordinary sale with a personal (and time-limited) right of repurchase, not a mortgage giving an indefinite right of redemption, so anyone relying on such an arrangement must exercise the repurchase right strictly within its stated time limit.

Official source (sci.gov.in)View Judgment (PDF)

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