NATURE OF TRANSACTION DECIDING FACTOR - WHETHER MORTGAGE OR SALE – CAL. HC

In a recent judgment, the Calcutta High Court, presided by the Hon'ble Justice Siddhartha Roy Chowdhury, ruled in favor of the defendant, affirming that the disputed transaction was a sale and not a mortgage. The case, S.A. 132 of 2018, involved a dispute over a property located within Mouza Mouligram, wherein the plaintiff claimed the property was mortgaged, while the defendant asserted that it was sold to him through a registered deed.

The court examined the evidence and legal provisions to determine the nature of the transaction. The plaintiffs' counsel argued that the transaction was a loan despite the presence of a registered deed of sale, relying on Section 40(6) of the Bengal Money Lenders Act, which allows oral evidence in certain loan transactions. However, the court invoked Section 92 of the Indian Evidence Act, which bars admission of oral evidence to contradict the contents of a registered deed of sale, emphasizing that this provision does not apply to sale transactions.

Justice Siddhartha Roy Chowdhury, while delivering the judgment, stated, "The bar under Section 92 would apply when a party to the instrument, relying on the instrument, seeks to prove that the terms of the transaction covered by the instrument are different from what is contained in the instrument. It will not apply where anyone, including a party to the instrument, seeks to establish that the transaction itself is different from what it purports to be."

Furthermore, the court considered the issue of limitation, pointing out that the plaintiff had previously filed a similar case under the Bengal Money Lenders Act, which was withdrawn. Consequently, the court held that the plaintiff could not maintain the current suit, as it sought identical relief in a roundabout manner.

High Court dismissed the appeal and upheld the judgments of the Trial Court and the First Appellate Court, confirming the transaction as a sale and not a mortgage. The ruling emphasizes the importance of clearly documenting transactions to avoid disputes and the significance of adhering to the prescribed legal procedures.

Date of Decision: 19th July, 2023

RANJANA MONDAL & ORS.  vs KISHORI MOHAN SAMANTA