IN THE HIGH COURT OF JUDICATURE AT BOMBAY
APPELLATE SIDE
SECOND APPEAL NO. 338 OF 1992
Vithal Saidu Lokhande
Versus
Rama Mahadev Gund
CORAM:-RAVI K. DESHPANDE, J.
DATED : -17/07/2014
Citation; 2015(1) ALLMR324
Read original judgment here;click here
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.
JUDGE
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