A RAKKIYANA GOUNDER Vs. CHINNU GOUNDAN
LAWS(MAD)-1953-3-20
HIGH COURT OF MADRAS
Decided on March 13,1953

A. RAKKIYANA GOUNDER Appellant
VERSUS
CHINNU GOUNDAN Respondents

JUDGEMENT

- (1.) The plaintiff, who was unsuccessful in both the lower courts is the appellant in this second appeal. He sued to recover possession of the properties described in schedule A appended to the plaint for an account of the management by the first defendant of the properties specified in schedule B and of the sums received by him by sale of the properties as per schedule C. The second defendant is the father and the plaintiff is the son and they constitute members of a joint family. The first defendant is the brother-in-law i.e., the sister's husband of the. second defendant. The family of the plaintiff and the second defendant was indebted to several people by 1930. On 12-12-1930, the second defendant and the plaintiff executed in favour of a third party a trust deed for discharging the debts of the family. After the lapse of two years, it was discovered that the trust created was not very useful to achieve the object and it was consequently cancelled on the 278- 1932. On 29-8-1932 three sales were effected by the father and the son to discharge certain debts. There yet remained several debts which had to be discharged. Within three days after the cancellation of the trust deed, i.e., on 30-8-1932, what purports to be a sale deed Ex. D. 1 was executed by the plaintiff and the second defendant in favour of the first defendant for a stated consideration of Rs. 29500, & the properties conveyed under the deed are the properties specified in schedule B appended to the plaint. The deed covered the entire properties of the family then remaining. The consideration, as stated in the deed, was the obligation, which the first defendant undertook to discharge the debts of the family aggregating to Rs. 29500. After the execution of the sale deed, the first defendant sold certain properties comprised in the deed and the particulars of the sales effected by him are given in schedule C attached to the plaint. After the sale, there were still some properties left, which are described in schedule A; and by the sales effected by the first defendant, all the debts of the family were discharged and there were no more debts. The plaintiff now sues to recover the balance of the property left unsold and described in schedule A and also claims an account of the management of the properties by the first defendant and also of the sale proceeds received by the sales effected by the first defendant and particularised in schedule C. The basis on which the claim is rested is set out in paragraph 8 of the plaint. That portion of the plaint was extracted in the two judgments of the courts below and it is also printed in the pleadings in the case. In 1939, the plaintiff's sons through their mother as next friend instituted O.S. No. 61 of 1939 District Munsif's Court, Karur, in 'forma pauperis' for partition of the plaint schedule properties and for allotment of 3/8th share of the properties to the plaintiffs free of encumbrances. In that suit, the alienations made by the plaintiff and the 2nd defendant were impeached as not binding on the plaintiffs. That suit was however unsuccessful and was dismissed on 30-3-1940. The first defendant in the written statement filed by him in the present suit pleaded that the sale was an absolute sale, which was fully supported by consideration and that it was not open in law to the plaintiff and the second defendant to plead that a trust was created thereby and that they were also precluded from adducing oral evidence to contradict or vary the terms of the sale deed. He also raised, the further plea that the present suit was barred by 'res judicata' by reason of the decision in O. S. No. 61 of 1839. The trial Judge overruled the plea of 'res judicata' and it was not repeated in the lower appellate court. The main Issue in the case, which was heard as a preliminary issue by the courts below was whether the plea that the document dated 30-8-1932 is a trust is open to the plaintiff. It was ruled by both the courts that under Section 92, Evidence Act, the plaintiff was precluded from establishing a trust by oral evidence and the suit was accordingly dismissed without trial. Hence this second appeal.
(2.) On behalf of the appellant, it was contended that it was open to the plaintiff to establish a trust under Section 92, Evidence Act, and also under Section 81 of the Trusts Act. Though reference was made in paragraph 8 of the plaint that the deed was a nominal one, in substance and in effect the plea was that under the circumstances set forth in that paragraph, the first defendant was holding the property for the purpose of discharging the debts by the sale of the properties and that there was a resulting trust for the balance of the undisposed of property and for the balance of sale proceeds if any in the hands of the first defendant. A reconveyance of the A Schedule property was claimed.
(3.) The arrangement pleaded really seeks to establish that the first defendant had no beneficial interest in the property though legal title was fully to vest in him for the purpose of selling the properties and discharging the debts. Under Section 92, Evidence Act, no evidence of any oral agreement or statement is admissible as between the parties to an instrument or their representatives in interest for the purpose of contradicting, varying, adding to or subtracting from its terms. But under proviso 2, the existence of any separate oral agreement as to any matter on which a document is silent and which is not inconsistent with its terms may be proved. In considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document. The scope of this section received judicial interpretation very recently by the Privy Council in -- 'Veerasami v. Narayya', AIR 1949 PC 32 (A). In that case, the father and the son, who were in urgent need of money to save their lands from sale in execution proceedings, sold the properties to the respondents and executed a sale deed, which was registered. On the same day, the properties were leased back to the father which was subsequently renewed. A suit for specific performance of the alleged oral agreement to reconvey the properties, which was contemporaneous with the execution of the sale deed, if the vendors were to repay the purchase price within a period of five years was instituted. The respondent denied the oral agreement but it was found to be true by the Judicial Committee. The further question that was raised was whether in the face of the absolute nature of the sale, an oral agreement to reconvey could be proved and whether such evidence was excluded by Section 92, Evidence Act. Ever since the decision of the Judicial Committee in --'Balkishandas v. Legge', 23 All 149 (PC) (B), it has been consistently held that it was not open to the parties to a sale deed to seek to establish by oral evidence that the sale was in fact intended to be a mortgage, for such evidence would directly contradict the terms of the sale deed as it reduces the interest conveyed from that of an absolute sale to that of mortgage. A contemporaneous oral agreement, which has the effect of reducing a sale to a mortgage was not provable in view of Section 92, Evidence Act. The same position was reiterated by the Judicial Committee in the aforesaid recent case. If, however, the parties did not seek to establish a mortgage by oral evidence, but intend to prove an oral agreement to reconvey which is a distinct transaction, Section 92, Evidence Act, does not stand in the way. If the arrangement pleaded amounts to a single transaction of the nature of a mortgage, and if the agreement to reconvey is oral, it is hit at by Section 92, Evidence Act. If the agreement is in writing but not registered, it is excluded by the provisions of the Registration Act as held in --' Haridsandas Bhagwandas v. Bai Dhanu', AIR 1923 Bom 497 (FB) (C), which was approved by the Privy Council in the aforesaid case. On the facts of the case, their Lordships pointed out that there was an arrangement contemplated by the parties, which provided for the lease of the property and also for reconveyance as well as for the sale to the original respondents. All these were parts of the same arrangement and were contemporaneous. If they are part of a single transaction of the nature of a mortgage, the oral agreement would obviously contradict the terms of the sale deed, and therefore would be excluded by Section 92, Evidence Act. In the case before their Lordships, neither party attempted to establish a mortgage and there is no indication in the evidence that the relationship of mortgagor and mortgagee ever existed between the parties. The situation that arose in that case was therefore described by their Lordships in these words at page 34: "In their Lordships' opinion, the correct way of stating the position is to say that the agreement reached covered several matters but that, the intention was that each of these should be effected as a separate and independent transaction. There was to be an outright sale and that, upon the happening of a certain event, was to be followed by a reconveyance of what had been sold. The second transaction, by its very nature, premised the previous completion of the first. Both, it is true may be taken as arranged at the same time and agreement upon one part of the bargain may well have promoted agreement as to the rest, but such considerations do not necessarily affect the final result of the bargaining. The determining factor lies in the ultimate shape of the agreement rather than in the process by which it is reached. An oral stipulation may be purely collateral to the written agreement which it has induced and that though both touch on a common subject matter ...... Such being the character of the agreement in question their Lordships find it impossible to hold that it contradicted, varied or subtracted from the terms of the sale deed. On the contrary, it left those terms and the interests passing thereunder to the purchaser entirely unaffected." The further question raised was whether the agreement does not really add to the terms of the sale deed and therefore does not fall within the scope of Section 92, Evidence Act. The answer given by their Lordships was that in order to faring the agreement within the expression "adding to" occurring in Section 92 "it must bear in some one or more of the ways specified in the section upon the terms of the sale as contained in the instrument. To add stipulation, which is quite unconnected with the terms of sale is not in the view of their Lordships an addition of the kind struck at by the section.";


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