Effect of defendant denying his signature in Vakalatnama and written statement

A piquant situation had developed before the trial court when the 1st defendant denied his signatures on the written statement and Vakalatnama in favour of his counsel. Trial court should have immediately probed into the matter. It should have recorded statement of the counsel for the 1st defendant to find out if Vakalatnama in his favour and written statement were not signed by the 1st defendant whom he represented. It was apparent that the 1st defendant was trying to get out of the situation when confronted with his signatures on the Vakalatnama and the written statement and his having earlier denied his signatures on Exh.P-1 and Exh.P-2 in order to defeat the claim of the plaintiff. Falsehood of the claim of the 1st defendant was writ large on the face of it. Trial court could have also compared the signatures of the 1st defendant as provided in Section 73 of the Indian Evidence Act. Dismissal of Suit by trial court on protracted trial is illegal
Supreme Court of India

K.S. Satyanarayana vs V.R. Narayana Rao on 27 July, 1999

Author: D Wadhwa

DATE OF JUDGMENT: 27/07/1999
BENCH
S.Saghir Ahmad, D.P.Wadhwa
JUDGMENT:
D.P. Wadhwa, J.
Leave granted.This is plaintiff's appeal against the judgment dated

March 3, 1998 of the Karnataka High Court dismissing his

appeal. Earlier plaintiff's suit had been dismissed by the

trial court against respondent, who was arraigned as 1st

defendant. The suit had been partly decreed against the 2nd

defendant.
Respondent - the 1st defendant - is the owner of the

property in Malleswaram, Bangalore, which consisted of

ground floor and two upper floors. 1st defendant entered

into an agreement to sell dated December 26, 1991 respecting

his said property with the 2nd defendant. Name of the 2nd


defendant is R. Sridhar. 1st defendant further authorised

in writing (Exh.P-1) R. Sridhar to enter into any sale

agreement of this property with anyone. This writing is as

under:-





"Mr. R. Sridhar, s/o Sri Rama Raju, residing at No.

17/2, 7th Temple Road, Malleswarama, Bangalore, has got

every right to enter into any Sale Agreement on my property

bearing No. 25, 4th Temple Road, Malleswarama, Bangalore,

consisting of Ground Floor, First Floor and Second Floor of

my side measuring 30'x40'."







On the strength of this writing 2nd defendant entered

into agreement with the plaintiff to sell ground floor of

the said property for a consideration of Rs.5,55,000/-. The

agreement to sell with R. Sridhar of the whole of the house

envisaged consideration of Rs.12,85,000/-. Towards sale

consideration plaintiff gave an amount of Rs.2 lakhs by

means of cheques, one lakh was given to each of the

defendants. Cheques when presented for payment were

encashed by the respective payees. Sale agreement with the

plaintiff, which was entered into by the 2nd defendant, is

dated February 22, 1992. This sale agreement fell through.

Plaintiff did not go for specific performance of agreement

to sell against both the defendants. Rather he demanded his

money back. While the 2nd defendant repaid him Rs.50,000/-

1st defendant refused to return the money alleging breach of

the agreement of sale between him and the 2nd defendant. In

the suit filed by the plaintiff for recovery of Rs.2,12,637

against both the defendants, he claimed Rs.1,36,167/- from

the 1st defendant and Rs.76,470/- from the 2nd defendant.

Both these amounts included interest at the rate of 14% per

annum. The suit of the plaintiff was decreed against the

2nd defendant for Rs.76,470/- with proportionate costs and

future interest at the rate of 10% per annum on the

principal amount of Rs.50,000/- from the date of decree till

realization. Suit against the 1st defendant was, however,

dismissed on the ground that there was no privity of

contract between the 1st defendant and the plaintiff.

Plaintiff's appeal to the High Court met the same fate.

High Court was also of the view that the suit of the

plaintiff against the 1st defendant was bad as there was no

privity of contract between them.





Facts of the case which we have set out above are not

in dispute. The issue on the basis of which the 1st

defendant succeeded was: Whether the 1st defendants proves

that he is not liable to pay the amount. There was some

dispute if the writing (Exh.P-1) was signed by the 1st

defendant. High Court noticed that the 1st defendant did

not unequivocally deny the receipt of rupees one lakh from

the plaintiff. But then the High Court proceeded even on

the assumption that 1st defendant authorised the 2nd

defendant to enter into a sale agreement in respect of his

property with any one but said that that would not advance

the case of the plaintiff any further.





Writing (Exh.P-1) was put to the 1st defendant when he

appeared as witness in the court. He denied the writing and

his signatures on it. He also denied his signatures on the

agreement to sell, which was entered into between the

plaintiff and the 2nd defendant (Exh.P-2). In fact he

denied knowledge of any such agreement. His only plea was

that he was not liable to pay any amount to the plaintiff

since there was no privity of contract between him and the

plaintiff. He said that the cheque of the plaintiff was

handed over to him by the 2nd defendant and the same was

encashed by him. He was cross-examined. He was asked if

the Vakalatnama given by him in favour of his counsel was

signed by him. He denied his signatures on the Vakalatnama

(Exh.P-6). Then he was asked if the written statement filed

by him was signed by him at two places. He denied his

signatures on the written statement as well (Exh.P-7). He

admitted that the plaintiff had come to him in 1991 but that

he said was at the instance of the 2nd defendant. Now this

very written statement (Exh.P-7) has been filed by the 1st

defendant as an annexure to his counter affidavit filed in

this Court on notice being issued to him in the Special

Leave Petition.





A piquant situation had developed before the trial

court when the 1st defendant denied his signatures on the

written statement and Vakalatnama in favour of his counsel.

Trial court should have immediately probed into the matter.

It should have recorded statement of the counsel for the 1st

defendant to find out if Vakalatnama in his favour and

written statement were not signed by the 1st defendant whom

he represented. It was apparent that the 1st defendant was

trying to get out of the situation when confronted with his

signatures on the Vakalatnama and the written statement and

his having earlier denied his signatures on Exh.P-1 and

Exh.P-2 in order to defeat the claim of the plaintiff.

Falsehood of the claim of the 1st defendant was writ large

on the face of it. Trial court could have also compared the

signatures of the 1st defendant as provided in Section 73 of

the Indian Evidence Act. Section 73 is reproduced as

under:-





"Comparison of signature, writing or seal with other

admitted or proved.





73. In order to ascertain whether a signature,

writing, or seal is that of the person by whom it purports

to have been written or made, any signature, writing, or

seal admitted or proved to the satisfaction of the Court to

have been written or made by that person may be compared

with the one which is to be proved, although that signature,

writing, or seal has not been produced or proved for any

other purpose.





The Court may direct any person present in Court to

write any words or figures for the purpose of enabling the

Court to compare the words or figures so written with any

words or figures alleged to have been written by such

person.





This section applies also, with any necessary

modifications, to finger impressions."







It was a case where instead of going into a protracted

trial, trial court could have decreed the suit of the

plaintiff against the 1st defendant as well at the stage of

Order X (Examination of Parties by the Court) of the Code of

Civil Procedure. After the 1st defendant admitted having

received rupees one lakh from the plaintiff he could not

retain that money on the spacious plea that there was no

privity of contract between him and the plaintiff. Amount

of rupees one lakh had been given to him by the plaintiff as

he wanted to purchase ground floor of his property. The

agreement to sell for the purpose was entered into through

the 2nd defendant whom the 1st defendant had authorised to

enter into any such agreement on his behalf. The plaintiff

could not have paid to the 1st defendant rupees one lakh but

for the agreement to sell in respect of ground floor of his

property. It is only on the basis of this agreement

(Exh.P-2) which is entered into by the 2nd defendant on the

strength of Exh.P-1 that the plaintiff paid rupees one lakh

each to the 1st and 2nd defendants. If we accept the

pleadings of the 1st defendant then the amount of rupees one

lakh had been given by the plaintiff under some mistake. In

any case, it was not a payment gratuitously made. Doctrine

of undue enrichment would squarely apply in the present case

and the plaintiff would be entitled to restitution. In this

connection Sections 70 and 72 of the Indian Contract Act,

1872 may be referred to, which are as under:-





"70. Obligation of person enjoying benefit of

non-gratuitous act.- Where a person lawfully does anything

for another person, or delivers anything to him, not

intending to do so gratuitously, and such other person

enjoys the benefit thereof, the latter is bound to make

compensation to the former in respect of, or to restore, the

thing so done or delivered.





72. Liability of person to whom money is paid, or

thing delivered, by mistake or under coercion.- A person to

whom money has been paid, or any thing delivered, by mistake

or under coercion, must repay or return it."







In Mulamchand vs. State of Madhya Pradesh (AIR 1968

SC 1218), the contract between the appellant and the State

Government was held to be void as it was entered into in

contravention of the provisions of the Government of India

Act, 1935. Appellant, however, sued for return of his

deposit and for the goods supplied and services rendered.

This Court said: -





"In other words if the conditions imposed by Section

70 of the Indian Contract Act are satisfied then the

provisions of that section can be invoked by the aggrieved

party to the void contract. The first condition is that a

person should lawfully do something for another person or

deliver something to him; the second condition is that in

doing the said thing or delivering the said thing he must

not intend to act gratuitously; and the third condition is

that the other person for whom something is done or to whom

something is delivered must enjoy the benefit thereof. If

these conditions are satisfied, Section 70 imposes upon the

latter person the liability to make compensation to the

former in respect of, or to restore, the thing so done or

delivered. The important point to notice is that in a case

falling under Section 70 the person doing something for

another or delivering something to another cannot sue for

the specific performance of the contract, nor ask for

damages for the breach of the contract, for the simple

reason that there is no contract between him and the other

person for whom he does something or to whom he delivers

something. So where a claim for compensation is made by one

person against another under Section 70 it is not on the

basis of any subsisting contract between the parties but on

a different kind of obligation. The juristic basis of the

obligation in such a case is not founded upon any contract

or tort but upon a third category of law, namely,

quasi-contract or restitution."







This Court quoted with approval two decisions of the

English Courts, which are quite illuminating and which we

reproduce as under:-





1. "In Bibrosa v. Fairbairn, 1943 AC 32 Lord Wright

has stated the legal position as follows:





"....any civilised system of law is bound to provide

remedies for cases of what has been called unjust enrichment

or unjust benefit, that is, to prevent a man from retaining

the money of, or some benefit derived from, another which it

is against conscience that he should keep. Such remedies in

English Law are generically different from remedies in

contract or in tort, and are now recognised to fall within a

third category of the common law which has been called

quasi-contract or restitution."





2. In Nelson v. Larholt, (1948) 1 KB 339 Lord

Denning has observed as follows:





"It is no longer appropriate to draw distinction

between law and equity. Principles have now to be stated in

the light of their combined effect. Nor is it necessary to

canvass the niceties of the old forms of action. Remedies

now depend on the substance of the right, not on whether

they can be fitted into a particular framework. The right

here is not peculiar to equity or contract or tort, but

falls naturally within the important category of cases where

the court orders restitution if the justice of the case so

requires."







It is unfortunate that the courts below were not

attentive to the procedural laws and their duty to do

substantial justice in the case. Had that been so the

plaintiff would have been spared the tribulations of

knocking at the doors of the highest court of the land.

Courts below fell into error in going into the question of

privity of contract and lost sight of the basic issue

involved in the case.





It was a case where perhaps action could have been

taken against the 1st defendant as he was apparently guilty

of perjury in not only denying his signatures on Exh.P-1 and

Exh.P-2 but also on written statement and the Vakalatnama

filed by him.





We allow the appeal, set aside the judgments of the

trial court as well as of the High Court and decree the suit

of the plaintiff for Rs.1,36,167/- against the 1st defendant

with costs throughout. Plaintiff shall also be entitled to

interest at the rate of 10% per annum on the principal

amount of rupees one lakh from the date of institution of

the suit till realisation.

Print Page