Second Appeal No.338 of 1992

17th July, 2014

Petitioner Counsel: Mr. S.A. KUMBHAKONI
Respondent Counsel: Mr. S.D. DHARMADHIKARI, V.S. TORASKAR

Cases Cited:
S. Saktivel Vs. M. Venugopal Pilla, AIR 2000 SC 2633 [Para 5,11,14]
Gangabai Vs. Chhabubai, 1982 Mh. L.J. 1 : AIR 1982 SC 20 [Para 6,9,14]

JUDGMENT

JUDGMENT :- Regular Civil Suit No. 370 of 1977 was decreed by the trial Court for arrears of rent and for possession of some portion of the house described in para 1 of the plaint from the defendant. The defendant is directed to handover vacant possession of the portion of the house described in column 'A' of the operative part of the order. The counter claim filed by the defendant was dismissed. Civil Appeal No. 278 of 1987 filed by the defendant has been allowed on 23rd August, 1991 and a decree passed by the trial court has been set aside. The suit filed by the plaintiff has also been dismissed. The counter claim of the defendant for reconveyance of the property has also been dismissed. This second appeal is, therefore, preferred by the original plaintiff.

2. After hearing the learned counsels appearing for the parties at length, this court had passed an order on 13th of June, 2014 which is reproduced below:

"After hearing the learned counsel for the appellant and going through the judgments delivered by the Courts below, it is very clear that the agreement at "Exhibit 120" and the sale deed at "Exhibit 121" both the documents executed by defendant No. 1 in favour of the plaintiff, have been proved. The trial Court has rejected the contention of defendant No. 1 that either it was a loan transaction or there was an agreement of reconveyance. The appellate Court held that there was no agreement of reconveyance between the parties. However, the appellate Court reversed the decree passed by the trial Court on the ground that it was a loan transaction. That is the ground, hence, the following substantial questions of law are framed by this Court for final determination:

"1. Whether the finding recorded by the appellate Court that it was a loan transaction is perverse not being supported by the pleadings and proofs?

2 Whether it was permissible for the appellate Court to take into consideration the oral evidence against the contents of the registered documents at "Exhibit 120" and "Exhibit 121" in view of Section 92 of the Indian Evidence Act?

Put up this matter for hearing on the substantial questions of law on 26th June, 2014, at Serial No. 1.

The learned counsel for the appellant to give notice to the learned counsel for the respondents on the substantial questions of law framed by this Court".

The learned counsels were given time to address on the aforesaid substantial question of law.

3. Coming to the substantial question of law at serial No. 1 above, the agreement to sale dated 7/6/1971 at Exhibit-120 and the sale deed executed pursuant thereto on 5/5/1972 at Exhibit-121, are the documents which are registered and held to have been proved by both the Courts below. There is no dispute raised in this second appeal, by any of the parties, in respect of it. Normally, the plaintiff, therefore, would be entitled to a decree, as has been passed by the trial Court. The appellate Court has, however, reversed the said decree passed holding that the transaction evidenced by the document at Exhibits 120 and 121, was a loan transaction and it was never intended to be acted upon between the parties. It is on this ground the appellate Court has held that the transaction evidenced by the documents at Exhibit 120 and 121, cannot be enforced and hence, plaintiff is held not entitled to a decree for possession.

4. I have gone through the pleadings and the written statement and, I find that the findings recorded by the appellate Court, are supported by the specific pleadings of the defendants in the written statement that it was a loan transaction. The appellate Court has considered the evidence of the plaintiff as well as that of the defendants. On the basis of several instances which are considered in the judgment, it has been held that the plaintiff was engaged in the business of money lending. The appellate Court has held that it is a case made out and established that the defendant had borrowed an amount of Rs.4000/- only and the nominal document was executed under an obligation to repay an amount of Rs.7000/- to the plaintiff. The evidence of the plaintiff is supported by a witness Vithal Nagane, who was present at the time of execution of the document. The appellate Court has considered the conduct of the plaintiff in not knowing the details of the suit property and discrepancies appearing in the documents at Exhibits 120 and 121. The view taken in appeal, that it was a loan transaction, is a possible view of the matter, based upon the pleadings and evidence available on record and there is no perversity in recording such findings by the lower appellate Court. The substantial question of law at serial No. 1 is, therefore, answered accordingly.

5. Coming to the substantial question of law at serial No. 2, the learned counsel for the appellant has placed reliance upon proviso (4) below Section 92 of the Indian Evidence Act ("the said Act" for short) and has relied upon decision of the Apex Court in S. Saktivel v. M. Venugopal Pilla, AIR 2000 SC 2633, for the proposition that both the Courts have held that the Exhibits 120 and 121, are the registered documents and hence in terms of proviso (4) below Section 92 of the said Act, it is not permissible for the defendant to lead oral evidence contradicting, varying, adding to or subtracting to from the terms of these documents. He, therefore, submits that the oral evidence was not permissible and the appellate Court has committed an error in taking into consideration such evidence.

6. Per contra, the learned counsel for the respondents submits that the case is covered by proviso (1) below Section 92 of the said Act, the specific case being that the documents executed were never intended to be acted upon and it was the transaction of loan, which was orally entered into between the parties, though it is not recorded in those documents. The reliance is placed upon the decision of the apex Court in case of Gangabai vs. Chhabubai, reported in 1982 Mh. L.J. 1 = AIR 1982 SC 20.

7. Section 91 of the Indian Evidence Act deals with the terms of contracts or of grants or of any other disposition of the property, which are in fact reduced to the form of a document, though not required by law to be so reduced, and those which are required by law to be reduced in the form of documents. It mandates that no evidence shall be given in proof of the terms of any contract, grant or other disposition of property or of such matter, except the document itself, or the secondary evidence of its contents, as is admissible under the provisions of the said Act. Section 91 is thus based on the best evidence principle and it excludes extrinsic evidence of the terms.

8. The controversy in the present appeal pertains to Section 92 of the said Act and provisos (1) and (4) below it and hence, the same are reproduced below:

"92 Exclusion of evidence of oral agreement.- When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms:

Proviso (1).- Any fact may be provided which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such a fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, (want or failure) of consideration, or mistake in fact or law;

Proviso (4).- The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents:"

Once a document containing the terms of contract is proved in accordance with Section 91 of the said Act, then the provision of Section 92 therein, can be invoked. Section 92 mandates that no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to or subtracting from, its terms. Thus, the parties to any such instruments or their representatives in interest are prevented from leading parol evidence of any oral agreement or statement for the purpose of contradicting, varying, adding to or subtracting from, the terms of contract which are required by law to be reduced to a form of a document. There are, however, certain exceptions contained in proviso (1) to (6) to the aforesaid principle under Section 92 of the said Act. The present case is concerned, only with provisos (1) and (4) therein and hence the same are considered.

9. In terms of proviso (1) below Section 92 of the said Act, any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such a fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law. Thus a plea to invalidate any document proved in accordance with Section 91 is available, where a case is made out of fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law. In the case of Gangabai cited (supra), it has been held that proviso (1) to Section 92 is not attracted where the case of the party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is sham. Such question arises wherein a party asserts that there was a different transaction altogether and what is recorded in the documents was not intended to be acted upon. It has been held that for this purpose the oral evidence is admissible to show that the document was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties.

10. Proviso (4) to Section 92 of the said Act provides that where a contract or disposition not required by law to be reduced in writing has been arrived at orally, then existence of any distinct subsequent oral agreement, modifying or rescinding the said contract or disposition can be substantiated by parol evidence and such evidence is admissible. There is however, proviso to this proviso, contained in the second part of proviso (4) itself, which does not permit leading of parol evidence for proving a subsequent oral agreement modifying or rescinding the registered instrument. It means that if initial document is registered, the modification or substitution of its terms can only be by another registered document.

11. In the decision of the Apex Court, in the case of S. Saktivel cited (supra), it has been held that, if a party has entered into a contract, which is not required by law to be reduced in writing, but such a contract has been reduced in writing or it is oral, in such situations, it is always open to the parties to the contract, to modify its terms and even substitute a new by oral contract and it can be substantiated by parol evidence. In such kind of cases the oral evidence can be let in to prove that the earlier contract or agreement has been modified or substituted by a subsequent oral agreement.

12. The distinction between proviso (1) and (4) below Section 92 is required to be noticed. The proviso (1) permits leading of parol evidence of any fact which would invalidate any document, at the instance of any party to such document or their representatives in interest. The proviso illustrates such facts as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law, which induces the party to enter into the terms contained in the document. It applies to all kinds of documents, the terms of which are required by law to be reduced in writing, irrespective of the fact whether such document is required to be compulsorily, by law, registered or not. The applicability of proviso (1) does not, therefore, depend upon the fact whether the document in question is required by law to be registered.

13. Proviso (4), does not deal with the question of invalidating any document, but it relates to the existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property. Thus, it makes the parol evidence admissible to show that the prior written contract has been waived or replaced by subsequent oral agreement with a rider that, if a matter has been reduced into writing because the law requires it to be in writing for its validity, no oral evidence can be given of any subsequent agreement, rescinding or modifying it. It can only be waived, rescinded, modified or altered by another written agreement of equally solemn character. The rule applies to all registered instruments, whether or not, registration is compulsory under the law. So when writing embodying the contract has been registered, parol evidence of any subsequent agreement, modifying or rescinding the registered instrument is not admissible, unless the modification, alteration or waiver is by another registered instrument.

14. In the present case, though both the documents at Exhibits 120 and 121 are registered, the agreement at Exhibit 120 was neither required by law to be reduced into writing nor was required to be compulsorily registered. However, the sale deed at Exhibit 121, is a document which is required by law to be reduced into writing and compulsorily registered. It is not the case of any of the party about the existence of any distinct subsequent oral agreement to rescind or modify the terms of contract, contained in documents at Exhibits 120 or 121. Hence, even if the documents are required to be reduced into writing or are required to be compulsorily registered and in fact the documents are such, still proviso (4) would not apply. The matter is clearly covered by proviso (1) as the case pleaded and proved is that the documents at Exhibits 120 and 121, were never intended to be acted upon as it was a loan transaction, though it is not so recorded in the documents. The matter is, therefore, covered by the decision of Apex Court in Gangabai's case (supra) and not by the decision in S. Saktivel's case (supra). In view of this, it was permissible for the appellate Court to take into consideration the oral evidence against the contents of the registered document. The substantial question of law at serial No. 2 is, therefore, answered accordingly.

15. In the result, the second appeal is dismissed.

Appeal dismissed.