2019 (4) TMI 793 - SC - Indian Laws

Mortgage by way of Conditional Sale - condition of agreement to sell - Section 58(c) of the Transfer of Property Act - Held that - Keeping Section 58(c) side by side with Section 37(a) of the State Act, the conclusion is inevitable that the State legislature has intended to override the effect of proviso to Section 58(c) of the Transfer of Property Act by enacting Section 37(a) in the State Act. Section 37(a) was incorporated by way of an amendment in the State Act. Reading of Section 37(a) brings out the Legislative intent with unambiguous clarity and therefore the High court was right in relying upon Section 37(a) of the State Act to find that though it was by agreement dated 07.12.1959 which is a separate document that condition to make it a mortgage was incorporated it would not make any difference. Reliability on Section 37A of the Bengal Money-Lenders Act, 1940 - contention is that suit filed by Bhattacharya was not under the State Act - Held that - A Suit for redemption is mentioned as suit to which Section 36 applies. Section 38 undoubtedly enables the borrowers to seek a direction for taking accounts - there is no reason to non-suit, the Bhattacharyas on this ground which is taken for the reasons which we have given. Last contention of appellant is that Section 37(A) contained under the State Act is repugnant to Central Law namely Section 58(c) of the Transfer of Property Act - Held that - Money lending falls as entry (30) in the State List. Transfer of Property other than agricultural land falls in Entry 6 in the concurrent list. The State legislature in enacting Section 37(a) of the State Act, a law relating to money lending has made a law which is inconsistent and therefore, repugnant to the law made by the Parliament in Section 58(c) of the Transfer of Property Act - In this case proceeding on the basis that there is an inconsistency between Section 58(c) of the Transfer of Property Act and Section 37(A) of the State Act, in view of the assent given by the President, the matter falls under Article 254(2). Therefore, despite the inconsistency, Section 37(A) of the State Act will prevail in the State. Appeal dismissed.

Summary

Issues Involved:

1. Nature of the transaction dated 28.11.1959 – whether it was a sale or a mortgage by conditional sale.
2. Applicability of Section 37A of the Bengal Money-Lenders Act, 1940.
3. Repugnancy between Section 37A of the Bengal Money-Lenders Act and Section 58(c) of the Transfer of Property Act.
4. Validity of the decree for specific performance obtained by Atul Chandra Das.

Issue-wise Detailed Analysis:

1. Nature of the Transaction:
The primary issue was to determine whether the transaction dated 28.11.1959 was a sale or a mortgage by conditional sale. The appellants argued that the transaction was a sale, while the respondents contended it was a mortgage by conditional sale. The trial court and the High Court found the transaction to be a mortgage by conditional sale. The Supreme Court noted that the proviso to Section 58(c) of the Transfer of Property Act mandates that the condition for reconveying the property must be incorporated in one document. However, in this case, the Bhattacharyas relied on a separate document, an agreement to sell dated 07.12.1959. Despite this, the Supreme Court upheld the findings of the lower courts, relying on Section 37A of the Bengal Money-Lenders Act, which overrides the proviso to Section 58(c) and deems such transactions as mortgages by conditional sale.

2. Applicability of Section 37A of the Bengal Money-Lenders Act:
The appellants contended that the suit filed by the Bhattacharyas was not under the Bengal Money-Lenders Act and that there was no account demanded within the meaning of the Act. The Supreme Court referred to Section 2(22) of the State Act, which defines a "suit to which this Act applies" and includes suits for the redemption of any security given in respect of any loan. The Court observed that the reliefs sought by the Bhattacharyas included redemption, thus falling within the scope of the State Act. The Court also distinguished the present case from the Swarnalata Tat case, where the suit was not considered under the State Act.

3. Repugnancy between Section 37A of the Bengal Money-Lenders Act and Section 58(c) of the Transfer of Property Act:
The appellants argued that Section 37A of the State Act was repugnant to Section 58(c) of the Transfer of Property Act. The Supreme Court noted that money lending falls under the State List, while transfer of property other than agricultural land falls under the Concurrent List. The Court held that Section 37A is traceable to the entry "Transfer of Property" in the Concurrent List and that Article 254(2) of the Constitution saves the provision. Since the State Act had received the President's assent, it prevailed in the State despite any inconsistency with the Central Act.

4. Validity of the Decree for Specific Performance:
The respondents claimed that the decree for specific performance obtained by Atul Chandra Das was collusive and fraudulent. The Supreme Court did not find merit in this argument, as the lower courts had already examined the evidence and found no merit in the case set up by Atul Chandra Das. The Court upheld the findings of the lower courts, confirming that the suit for specific performance was not obtained by practicing fraud.

Conclusion:
The Supreme Court dismissed the appeals, upholding the concurrent findings of the lower courts that the transaction dated 28.11.1959 was a mortgage by conditional sale and that the provisions of Section 37A of the Bengal Money-Lenders Act applied. The Court also held that Section 37A of the State Act prevailed over Section 58(c) of the Transfer of Property Act due to the President's assent, and the decree for specific performance obtained by Atul Chandra Das was valid.