Skip to content


Laxmibai and anr. Vs. Keshav Annaji Pokharkar and anr. - Court Judgment

LegalCrystal Citation
CourtMumbai
Decided On
Judge
Reported inAIR1916Bom239; 33Ind.Cas.396
AppellantLaxmibai and anr.
RespondentKeshav Annaji Pokharkar and anr.
Excerpt:
evidence act (i of 1872), section 92 - written contract--evidence to substitute real for merely nominal contracting party, if admissible--fraud--benami transaction, nature of--parol evidence, admissibility of--contract act (ix of 1872), section 233. - section 3: [s.b. mhase, d.s. bhosale & a.s. oka, jj] offences of atrocities - complaint under held, merely because the caste of the accused is not mentioned in the fir stating whether he belongs to scheduled caste or scheduled tribe, it cannot be a ground for quashing the complaint. after ascertaining the facts during he course of investigation it is always open to the investigating officer to record tht the accused either belongs to or does not belongs to schedule caste or scheduled tribe. after final opinion is formed, it is open to the.....beaman, j.1. the plaintiffs, laxmibai and anandrao, sue the defendants, keshav and punamchand, for specific performance of a contract to buy certain immoveable property made on the 4th of march 1914, and in form made and executed by keshav alone. there is an alternative, prayer for damages, and at the conclusion of the case the plaintiffs expressed a desire, in view of certain anticipated difficulties, to abandon their claim for specific performance and confine it to damages.2. the case has occupied a considerable time in hearing owing to the difficulties which i felt from the beginning in drawing the line between what was, and what was not, open, first, to the plaintiffs, and, secondly, to the first defendant to prove in explanation or variation of the written contract.3. the.....
Judgment:

Beaman, J.

1. The plaintiffs, Laxmibai and Anandrao, sue the defendants, Keshav and Punamchand, for specific performance of a contract to buy certain immoveable property made on the 4th of March 1914, and in form made and executed by Keshav alone. There is an alternative, prayer for damages, and at the conclusion of the case the plaintiffs expressed a desire, in view of certain anticipated difficulties, to abandon their claim for specific performance and confine it to damages.

2. The case has occupied a considerable time in hearing owing to the difficulties which I felt from the beginning in drawing the line between what was, and what was not, open, first, to the plaintiffs, and, secondly, to the first defendant to prove in explanation or variation of the written contract.

3. The difficulties created by Section 92 of our Evidence Act appear to me to be obvious. In the English Courts, in somewhat analogous if not exactly similar cases, they have been surmounted by processes of reasoning which, with great respect to the very eminent and learned Judges using them, do not appear to me to be adequate. Nothing could well be plainer than the provisions of Section 92 of the Indian Evidence Act. Where Courts have to deal with a written contract, the law of this country absolutely prohibits parol evidence being given except within the limits very carefully laid down in Section 92 itself. Although, no doubt, the law of England was intended to be in substance the same as the law to which expression has thus hem given in Section 92,; the Judges had no definitely worded Statute to interpret and by which to be bound as the Courts in India have. Speaking generally, the rule laid down in England and considered to be settled by the decision in the leading case of biggins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884 was that where there was a written agreement or contract not under seal, the obligor might not give parol evidence to evade his liability even though the facts upon which he relied were within the plaintiff's knowledge: while, on the other hand, the plaintiff might pass over the actual obligor of the contract if he chose to do so and seek the real maker behind him. In other words, if A contracted as an agent in such a form as to make himself personally liable, his principal being B, the plaintiff might, at his option, show by parol, notwithstanding what appeared on the face of the document, that his contract was really with B, A, however, could not by way of defence prove by parol that he was not, as he appeared to be on the face of the document, liable under it. So far the distinction is perfectly intelligible, though I think it would be extremely difficult to reconcile it with the strict language of Section 92 of the Indian Evidence Act. In the long and elaborate argument on behalf of Mr. William Senior, the learned and eminent Counsel engaged repeatedly admitted that the substitution of the real for the merely nominal contracting party was a variation of the written contract. Indeed it is more than a variation. It amounts to making a new contract totally different from that which has been expressed in the writing. And it appears to me, looking at this matter logically, that this must inevitably be so. The attempts of the learned Judges concerned to distinguish upon the ground, that the addition of a party not appearing on the face of the document as a party liable, along with the party expressed in the document to be so liable, in no variation but merely an addition, seems to me to be a super refinement of reasoning which could not be consistently sustained. It must be a very different thing for a person contracting that A shall pay him certain money, afterwards to insist that not A but B shall pay him that money. And to say that it is not a term of the contract that the promisor contracts to pay the stipulated price or supply the stipulated goods so long as somebody else is put into his shoes can easily be exhibited as a glaring fallacy, if we once subtract from the cases that have come before the Courts the knowledge of the plaintiff himself.' Where the plaintiff knew that a person appearing on the face of the document as the contracting party was not so but was acting for a principal, then it is easy enough to argue, though the argument reveals, in my opinion, some laxity of thought, that proving the truth is proving no more than what the plaintiff knew to be the real as distinct from the apparent agreement and, therefore, that the substitution of the unnamed but real for the named but nominal contracting party appearing on the document is in no sense a variation of any of the terms of the contract. But suppose that the plaintiff knows of no one but the person with whom he contracts and who signs the writing as principal; then I do not believe that any Court or any one of the Judges who have so frequently subscribed to and approved of something like the reasoning I have just outlined, would hear of such a person being allowed to prove that notwithstanding the plaintiff's ignorance he was really acting for some third party of whose existence the plaintiff had no knowledge. Still less could it then be said that if the plaintiff contracted with A, and A alone, being allowed to prove that he in turn was acting for X, and, therefore, X ought to be made liable to the plaintiff, was not a variation of the only contract which the plaintiff intended to enter into and of the existence of which he was aware, namely, the contract between himself and A.

4. On a careful and critical examination of most of the leading cases, to which I have been referred, it becomes very easy to trace the confluence of these lines of thought and the consequent confusion drawn into the reasoning. As I have pointed out, the rule laid down in Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884 is perfectly precise and intelligible, whether well or ill grounded in reason. But as soon as we turn to such cases as Wake v. Harrop (1861) 6 H. & N. 768 : 30 L.J. Ex. 273 : 7 Jur. (N.S.) 710 : 4 L.T. (N.S.) 655 : 9 W.R. 788 : 123 R.R. 816 and Cowie v. Witt (1874) 23 W.R. 76 which profess concurrence with Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884, we shall find that the ratio of the decision is totally different from, and diametrically opposed to, that adopted by Baron Parke in Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884. So too in the first case of Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884 Baron Parke felt some difficulty over the very plainly worded; and, therefore, limitative decision in Jones v. Littledale (1837) 6 Ad. & E. 486 : 1 N. & P. 677 : 6 L.J. (N.S.) K.B. 169 : 45 R.R. 542 : 112 E.R. 186 and wished to put it upon a slightly different ground. But I think it may fairly be said that the result of the judgment in Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884 was to put the law in England on a clear basis as to the rights of parties, and their obligations and liabilities in respect of amplifying the terms of or being strictly bound by the terms of written contracts. Now, observe what happened in the later cases of Wake v. Harrop (1861) 6 H. & N. 768 : 30 L.J. Ex. 273 : 7 Jur. (N.S.) 710 : 4 L.T. (N.S.) 655 : 9 W.R. 788 : 123 R.R. 816 and Cowie v. Witt (1874) 23 W.R. 76. Here the contract was made by an agent in his own name and in form directly binding him as principal. No dispute was made of this at the trial, but it was alleged that there was a contemporary understanding between the plaintiff and the agent that the real contract was to be with the principal in Messina. So that when the case came on for trial the plaintiff here not suing the undisclosed principal but the agent, who, on the face of that writing, was primarily and individually bound, the Court seemingly without difficulty or hesitation held that the defendant might evade the responsibility he had undertaken in the writing by parol evidence, proving a contrary understanding which existed at the time the agreement was made. And the language of Baron Bramwell is so liberal that if it really expresses the law in England and were to be transferred to this country,' it would entirely abrogate Section 92 of the Indian Evidence Act. The learned Judge points out that a writing not under seal in England is not a contract but only evidence of the contract. He goes on to say that being in writing, it is conclusive evidence of the contract and the law of England forbids parol evidence to be given of any variation in its terms. So far he keeps to the principle and very nearly the language of Section 92 of our Evidence Act; but immediately thereafter he lays it down that parol evidence may nevertheless Be given to show what was the real contract between the parties: and if this language has any meaning at all, it must mean the real, as contradistinguished from, and opposed to, the apparent contract exhibited in the writing as a whole and its terms in particular. That would mean nothing more nor less than that a party to the writing might give parol evidence to show that it did not express the agreement really entered into between himself and the plaintiff but that there was another and different agreement, and that alone bound them. I say without the slightest hesitation that, notwithstanding the attempts made to put this decision upon a quite different basis, that is the real effect of the language used by Lord Bramwell. The illustrations he gives before coming to that part of his judgment appear to me to lie quite outside the scope of the question he had to answer. It is one thing to say that a man, who intended to sign an agreement to purchase a horse but by accident signed an agreement to purchase another horse or landed estate, might not prove the actual fact, and quite another thing to say that a man, who has deliberately and with his eyes open signed an agreement, with every term of which he was familiar, could introduce parol evidence later on to prove that the agreement was not in substance as it was made to appear in form in the writing. A like distinction is clearly to be drawn between the other illustrations suggested by Lord Bramwell. In every case of the kind 1 am considering, and the Courts were considering in such cases as Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884; Wake v. Harrop (1861) 6 H. & N. 768 : 30 L.J. Ex. 273 : 7 Jur. (N.S.) 710 : 4 L.T. (N.S.) 655 : 9 W.R. 788 : 123 R.R. 816 and Cowie v. Witt (1874) 23 W.R. 76, there is no question of a party appearing as a signatory upon the paper as principal having been trapped by any mistake of fact at the time into signing that which he did not mean to sign. The question to be answered is of a totally different character and the principles governing the cases in which that question arises really appear to me to be restricted to principles of proof and not of equity. In the cases of Wake v. Harrop (1861) 6 H. & N. 768 : 30 L.J. Ex. 273 : 7 Jur. (N.S.) 710 : 4 L.T. (N.S.) 655 : 9 W.R. 788 : 123 R.R. 816 and Cowie v. Witt (1874) 23 W.R. 76 the Courts, neglecting the rules of proof altogether, as it seems to me, held that it was an equitable defence which was open to the defendant because the plaintiff knew of the contemporary oral agreement and, therefore, it was inequitable on his part to hold the defendant to the terms of the writing. Now, that may very well be so, but it obviously gives the go-bye to all that is important in principle in the law of evidence. So when we turn to our carefully and exactly drawn Section 92 of the Evidence Act, it is clear that cases of that kind were within the contemplation of the Legislature; for any contemporary oral agreement may be proved, provided that it be not inconsistent with the terms of the writing. But if it be inconsistent, as it was certainly, in my opinion, in all the English cases I have cited, then parol evidence is expressly excluded; and if parol evidence be excluded, the Court would never be in a position to know of the inequitable conduct of the plaintiff and thereupon to give effect to an equitable defence which never ought to have been heard.

5. Such are some at least of the introductory difficulties with which I had to deal when the case opened, in my desire to keep the procedure within the strict principles of this somewhat difficult branch of the law of evidence. If we are to apply the doctrine of Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884, then I do not doubt that it would have been open to the plaintiff to go behind the written instrument and prove that the agreement of which he seeks specific performance was really made between himself and defendant No. 2. It may, however, be doubted whether in England, if he had elected to follow that course, he would not have been obliged to release the first defendant as merely the nominal maker of the writing and in law the mere hand of defendant No. 2. I have not yet found, and I have not been referred to, any case under this head decided in the English Courts in which, as here, the plaintiff has sued the party nominally bound by the writing as well as some one behind Mm alleged to be really bound to the plaintiff by the actual existing contract between them. The converse was the case in Wake v. Harrop (1861) 6 H. & N. 768 : 30 L.J. Ex. 273 : 7 Jur. (N.S.) 710 : 4 L.T. (N.S.) 655 : 9 W.R. 788 : 123 R.R. 816 and Cowie v. Witt (1874) 23 W.R. 76. There the agent was directly sued and no attempt was made to sue the known principal, and the agent was allowed to evade responsibility. So in Calder v. Dobell (1871) 6 C.P. 486 : 40 L.J.C.P. 224 : 25 L.T. 129 : 19 W.R. 978 which strictly follows, instead of contradicting as the latter cases do, the principle of Higgins v. Senior (1841) 8 M. & W. 831 : 11 L.J. Ex. 199 : 58 R.R. 884, the plaintiff sued the undisclosed principal, Dobell, allowing the nominal executant of the writing, Cherry, to go free, I confess that I still feel the very greatest difficulty in reconciling the procedure thus laid down in England logically with the language of Section 92. In order to do so we must adopt the view of the Madras High Court in the case of Venkatasubbiah Chetty v. Govindarajulu Naidu 31 M. 45 : 3 M.L.T. 259 : 18 M.L.J. 1, where the Bench laid down in sweeping terms that a substitution of one party for another is no variation of any of the terms of the contract. If that be so, then no difficulty would occur; but I think I have conclusively shown that such a wide generalisation ignores the logic of the principle, while it is an easy way out of the difficulties that otherwise might obstruct the course of enquiries into transactions such as those I am investigating. And here the position is greatly complicated by the obvious uncertainty in which the plaintiff was as to the form he had better give to his action. He has brought both the defendants on the record together, evidently relying on Section 233 of the Indian Contract Act. In the commentaries upon that section will be found several of the English cases which I have been discussing, but the commentators appear to overlook the difficulty which is one not of contractual relations, but of evidence. Doubtless were the contract oral, no difficulty would arise under Section 233 of the Indian Contract Act. There would then be nothing to hinder the plaintiff from suing the agent who made the contract and proving at the same time that he was acting for the principal, disclosed or undisclosed, and so thereafter making one or the other or both liable. But Section 233 of the Indian Contract Act has nothing to do with and cannot override the general law of evidence. But if there be any writing according to which A, and A alone, is answerable to the plaintiff, I think it must always be a matter of great difficulty to say that either the plaintiff or A may bring parol evidence to show that some one, else, say X, is really liable to the plaintiff in A's place. That difficulty has been considerably heightened in the present case by the introduction of Clause 10 in the agreement Exhibit D. Here we find the defendant No. 2 described as a broker to whom both the plaintiff and the defendant No. 1 agree and bind themselves to pay brokerage. Now can it be said that, where on the face of an agreement a man is described as a broker and it is a term of that agreement that the buyer and seller who are both named should pay him brokerage, it is not inconsistent with that statement in the writing to prove by parol that the person called a broker was not a broker but a principal? Is it not a variation of that term in the agreement to prove by parol that so far from being entitled to brokerage at the hands of the alleged purchaser, he is himself the purchaser and mast, therefore, to that extent, pay himself his own brokerage? On behalf both of the plaintiff and the defendant No. 1 desperate efforts were made to bring the case under some other provision of Section 92 of the Indian Evidence Act. The defendant No. 1 said that he was entitled to prove by parol that he was induced to sign upon the false representations both of the plaintiff and the defendant No. 2 that he was to incur no liability whatsoever and that his name was to be used merely to conceal the identity of the real purchaser. I cannot see under what part or provision of Section 92, parol evidence to that effect could be given. In my opinion it is not a fraud upon a man to explain to him that his name is intended to be used for a certain limited purpose, unless it can also be proved that at the time that representation was made it was not the intention of the person making it to keep it. I add that reservation, because Section 16 of the Indian Contract Act includes under the head of 'fraud' the making of promises without the intention of keeping them. That appears to me, and always has appeared to me, to introduce a very uncertain and dangerous element into the doctrine of fraud as usually understood in the English Courts. I say 'dangerous', because it is practically impossible to decide whether at the time of making the promise, the person making it intended to keep it or not. I much prefer to adhere to the old English rule that it is not a fraud merely to break promises or fail to perform obligations in futuro Frauds, in my opinion, ought to be restricted to misrepresentations, and dishonest misrepresentations, of existing facts. Bat in the present case it could not seriously be contended that at the time of making the agreement, assuming that the case now set up by the plaintiff and defendant No. 1 is in all respects true, the defendant No. 2 did not then intend to keep the promises he made to the defendant No. 1. It is indeed the allegation of the plaintiff that the defendant No. 2 really intended and wished to become the purchaser of this property to sell it shortly afterwards at a profit. It cannot then be upon the ground of fraud that the defendant No. 1 or the plaintiff could be allowed to lead parol evidence and to set aside the written terms of the agreement. And, in my opinion, there is nothing in the language of Section 92 of the Indian Evidence Act, nor in the principles to which that language is meant to and does give fairly accurate expression, which would justify the giving of parol evidence either by the plaintiff or the defendant No. 1, had the contest been confined to them, to vary any of the terms of the writing of the 4th of March 1914.

6. But it is said that this is a benami transaction and that in this country the law of benami is a special law in itself, in administering which the Courts need not look very strictly to the general rules of evidence or in fact to any other general principles of law, which may be taken to be suspended wherever necessary and to be in abeyance as soon as the province of benami is entered. 1 must own that it has always been a source of wonder and regret to me that the Courts of this country should have shown themselves so uniformly indulgent to what is called the system of benami. Doubtless, this was due to the very liberal, probably because uninformed, views which prevailed at the time when the foundation of that small corner of the structure of our Indian legal system was being laid down by Lord Campbell. It is obvious from a perusal of the report of the proceedings in the case of Dhurm Das Pandey v. Musammat Shama Soondri Dibidh 3 M.I.A. 229 : 6 W.R. 43 : 1 Suth. P.C.J. 147 : 1 Sar. P.C.J. 271 : 18 E.R. 484 tried by Lord Campbell in the year 1843, that the supreme authority in England had but a very hazy notion of the conditions prevailing in India, under which this system, doubtless peculiarly dear to the Oriental heart and disposition, had grown up, and that the learned Lord Chancellor had no hesitation in seeking further light from gentlemen who do not appear to have been engaged in the case but were doubtless credited with much legal Indian experience. And if we trace the history of the law of benami throughout the judgments of the Privy Council and the Superior Courts in India, it will easily be seen that very great favour has been shown to this peculiar form of transaction on the assumption that it is closely connected with part of the English Law of resultant trusts, Over and over again I find in the judgments of the most eminent Judges expressions of favour in which we are told that the benami system is common over the whole of India and that there is nothing whatever objectionable in it. Something to that effect will be found in the very latest decision of the Privy Council, which I happened to read the day before yesterday, in the case of Musammat Bilas Kunwar v. Desraj Ranjit Singh 30 Ind. Cas. 299 : 19 C.W.N. 1207 : 29 M.L.J. 335 : 2 L.W. 830 : 18 M.L.T. 248 : (1915) M.W.N. 757 : 42 I.A. 202 : 37 A. 557 : 22 C.L.J. 516 : 17 Bom. L.R. 1006 : 13 A.L.J. 991 from the Allahabad High Court, the judgment being delivered by Sir George Farwell on the 13th of July 1915. And yet I have no hesitation in saying that any Judge with a large experience of legal work in this country and the manners and customs and morals of the litigants involved in cases directly bearing on the question would agree with me in saying that at least 80 per cent, of so called benami transactions contain a very large ingredient of fraudulent intent. There may be a very small percentage of cases in which this form is adopted out of feelings of superstition, as where a father buys a property in the name of a favourite son: but with That single exception and even with respect to that 1 feel grave doubt), I do not believe that there is a single benami transaction, put through over the whole of this great country of India, in which a sufficiently rigorous analysis would not discover fraudulent intent either in esse or in posse. 1 cannot conceive why a practice of this kind should have flourished so long and been so popular if it had really been no more than a vehicle of honest dealing. I cannot conceive why those whose conduct and purposes are all honest should wish to conceal themselves and mask their transactions working cunningly and in the dark instead of, as might be expected of honest men in the open light of day. Be that how it may, there does appear to be a magic in the mere word 'benami' which predisposes all our highest judicial authorities in favour of any transaction offered to them under that label. But surely there must be some discrimination between what is a truly benami and what is not a benami transaction at all. And it would be no bad thing if the ground were cleared to that extent before very eminent Judges expressed their views on this branch of the law. I should doubt myself whether it would be possible to find any real benami transaction which was not strictly triangular. I do not understand how there can be a true benami transaction between two persons. The simple meaning of benami is that a purchaser desires to buy property but does not desire to buy in his own name and, therefore, buys it in the name of some one else. It is obvious that in every such transaction there must be three actors. There is the vendor; there is the real purchaser; and there is the nominal purchaser. Similarly, on an analysis of such cases they break up into different classes in many of which but for the special doctrine of benami one would suppose that the relations of parties were governed simply and solely by the ordinary rules of agency. In other cases there is nothing reasonabling agency in the matter, as for example, where a father buys a property in the name of his infant child. It is clear here that the child is the benamidar but could hardly be regarded as the agent of the father.

7. Now, in the present case, if the plaintiff's story be true, or I should say if the story originally put forth by the plaintiff and supported by defendant No. 1 be true, this should be an ordinary and typical case of benami in contemplation. Defendant No. 2 desires to buy the property and does not desire to buy it openly and in his own name, for the very obvious reasons which I shall presently mention. He, therefore, puts up the defendant No. 1, who is a person of no importance, as the nominal purchaser, and the contract is entered into between the defendant No. 1 and the plaintiff. As this transaction never got beyond the stage of an agreement to buy, it becomes impassible to apply the test which has always been recognised by the highest, judicial authority, namely, whence came the, purchase money. But in a case of this kind' suppose we adopt the test and ask, whence was the purchase money to come? Now, if that test yields the result that the defendant No. 1 was not to pay the purchase money but that the defendant No. 2 was, then I suppose we might take it that this was a benami agreement to purchase and that the defendant No. 1 was acting in it really as an agent for the defendant No. 2; but I altogether fail to see why because we give the transaction as a whole the name of benami, the proof of it is not to be regulated by the general principles of evidence. It is quite true that in a great many benami cases the attention of the Courts never seems to have been drawn to the difficulties thrown in the way of proving the real character of the transaction by the provisions of Section 92 of the Indian Evidence Act. It is also quite true that in a majority of such disputes, which come before the Courts, Section 92 is not applicable. Where a transaction is truly benami, that is to say, where the purchase has been effected in the name of the nominal purchaser, the contract would be between the nominal purchaser and the vendor, and the dispute which the Court would have to settle would (sic) to the nominal and the real purchaser, between them there would be no writing, and, therefore, no difficulty arising under Section 92. Put there are cases, which, in my opinion, are not benami at all, in which the writing is made between the actual owner or purchaser and somebody else, who in this transaction is supposed to be his benamidar; as for example, where a person with the object of shielding his property from his creditors purports to sell it to some one named by himself and the sale-deed is accordingly made out in that person's name as the purchaser. Now it is perfectly obvious that under Section 92 of the Indian Evidence Act it would not be open to parties to such a contract to give parol evidence of the true nature of the transaction underlying it; nor would this difficulty be surmounted or in any way touched by calling the transaction a benami transaction. But it is also clear, as soon as the contents of the whole transaction are examined, that it is a case in which parol evidence might be given under Section 92 to serve a different purpose. For where the owner of property purports to transfer for consideration, his real purpose being to conceal or protect his property, it necessarily follows that the nominal purchaser has paid no consideration, and a party may always show that the transaction is bad for failure of consideration. Why I say that in these circumstances the transaction can never be correctly described as benami, is because a man cannot sell to or buy from himself and it is an essential of real benami transactions that they should involve three persons. In the latter class of cases, which I suppose were indirectly flitting through the minds of Counsel who wished the Court to neglect Section 92 altogether, on the ground that the transaction was benami and anything and everything might therefore be proved, in the latter class of cases, I say, it is very clear that the ground upon which parol evidence may be given is the common ground open to everybody and not depending upon the rather hypnotising effect of the word benami, namely, that the nominal purchaser is not the real put chaser because he paid no consideration. Thus after having given my most careful attention to the arguments addressed I to me by the learned Counsel both for the plaintiff and for the defendant No. 1 in support of their contention that parol evidence might be allowed, notwithstanding the terms of Section 92 of the Indian Evidence Act, to show that while the agreement of the 4th of March 1914 has been executed by defendant No. 1 as principal, and by him alone, it was really an agreement between the plaintiff and defendant No. 2, I am still in very grave doubt to what extent such parol evidence would be admissible.

8. The position is further complicated by the plaintiff having joined the defendant No. 2 with the defendant No. I in the suit. That having been done, the defendant No. 1 at once attacked the defendant No. 2 as upon proceedings against third parties, although some technical formalities were dispensed with in view of the fact that defendant No. 2 was already on the record. Now, as between these two, I cannot see any difficulty at all in allowing the defendant No. 1 to prove, if he can, the true nature of any agreement which subsisted between defendants Nos. 1 and 2. But that is obviously a very different thing from allowing the plaintiff to prove that there was an oral agreement between himself and the defendant No. 2. It is a different thing in itself and might have very different legal consequences. On the principle of the English cases such as Higgins v. Senior (1841) M. & W. 834 : 11 L.J. Ex. 199 : 58 R.R. 884; Calder v. Dobell (1871) 6 C.P. 486 : 40 L.J.C.P. 224 : 25 L.T. 129 : 19 W.R. 978, etc., I think I might safely have allowed the plaintiff, notwithstanding the provisions of Section 92 and the very grave doubts I entertain myself upon the correctness of the English doctrine, to give the go-bye to the agent, that is to say, the defendant No. 1, and prove, overriding the section, that his agreement was really made with the defendant No. 2. My second difficulty has been to decide whether the same position can be reached by allowing the plaintiff to proceed against both defendant No. 1 and defendant No. 2 together, and here he himself has ill advisedly much complicated the matter by swearing, and refusing to be shaken out of it by any suggestions of his Counsel, that he believed that the defendant No. 1 and the defendant No. 2 were literally partners in this transaction. I have no doubt that fill that part of his evidence is absolutely untrue. He adopted that line after the Court recess at a point in the case where the Court had suggested several difficulties in his way if the course originally indicated in the plaint were to be followed. But if the evidence as to the true nature of the agreement as a whole is admissible between the defendant No. 1 and the defendant No. 2 and if that evidence shows that the defendant No. 2's part was something more than that of a mere guarantor of defendant No. 1, or rather the reverse that the defendant No. 1 was a mere puppet and instrument of the defendant No. 2, then how can I neglect the effect of that evidence in adjusting the legal rights and liabilities of the three parties to the suit? Even were the technical difficulties created by the plaintiff having sued the defendants Nos. 1 and 2 jointly insurmountable, still having regard to the rights which I think have been exercised, and rightly exercised, by the defendant No. 1 in protecting himself against defendant No. 2 and the evidence thereby collected and laid before the Court, I should think that my duty as a Judge was to treat this now as evidence between all the parties and endeavour in the light of it to discover what the real facts of this transaction were and what are the legal rights and liabilities of the parties arising out of, and to be adjusted in relation to, those facts so found. If I am right so far, and have not been in error in admitting evidence to prove what the nature of this transaction was, then the case, in my opinion, would present no difficulty at all.

9. The agreement, as I have said, was made on the 4th of March 1914 and its term was six months, that is to say, the sale was to be carried through on or before the 4th September 1914. The agreement recites that a sum of Rs. 500 earnest money was paid there and then in the presence of the attesting witness Dayaram to the vendor Anandrao. This is not true, but the fact is that on the, following day Rs. 400, and not Rs. 500, was paid as earnest money either by Keshav, the defendant No. 1, or by Punamchand, the defendant No. 2, to the plaintiff, or on his behalf to his attorneys Messrs. Smetham, Byrne & Noble: see Exhibits Nos. 8 and 9 relating to this transaction. Now, within a very short time of the making of this agreement, in the course of a suit brought by one Ramchandra Kondaji Kaduskar against the plaintiff, a consent order was made on the 9th of April 1914 by which, inter alia, the plaintiff Anandrao agreed not to deal with the property in any way. That consent order was in force when negotiations for the second mortgage for Rs. 4,000 were entered into with the defendant No. 2 Punamchand in the present case. It will be observed that the consent order of the 9th of April 1914 was modified on the 8th of May 1914, although the undertaking not to deal with the property was maintained. Immediately after this the plaintiff began negotiations with the defendant No. 2 to raise the sum of Rs. 4,000 on this property, and the defendant No. 2's contention is that whether there had or had not been the agreement between the plaintiff and Keshav on the 4th of March 1914, that agreement was cancelled by the plaintiff with the consent of Keshav before the 9th of May 1914, and presently, according to the defendant No. 2, the plaintiff and Keshav, the defendant No. 1, both returned their counterpart agreements of the 4th of -March 1914 to him (Punamchand). The negotiations for this mortgage fell through owing to a demand made by Punamchand that out of the consideration money, Rs. 4,000, Rs. 500 should be repaid to Keshav and Rs. 100 should be paid to himself. It was upon this matter that the attorneys of the parties at an interview of the 13th June finally split and the negotiations for the mortgage were broken off and the letter of the 13th of June was written to Punamchand, the defendant No. 2, by the plaintiff's attorneys, In consequence of that letter the agreement of the 4th of March, which Punamchand had obtained--whether in the way he describes or whether in the way the plaintiff describes is a matter of evidence--was duly returned to the plaintiff. And in the same letter a demand for specific performance of the contract was made. Now the moment the demand for specific performance was made upon the defendant No. 2, Punamchand, he did not repudiate it on the ground that the plaintiff had disabled himself from the performance by his undertaking not to deal with the property, but he point blank denied that as far as he was concerned any such agreement to buy was ever made. Now, as I have said, the term of the agreement of the 4th of March ended on the 4th September, and it was not until the 27th of November that the undertaking of the 9th of April 1914 was released under the consent decree disposing of the suit; and one of the defendant No. 2's main contentions throughout has been that even if the Court were to hold that he had been a party to the agreement of the 4th of March 1914 and directly liable thereunder, that agreement had been cancelled by the plaintiff himself and the defendant No. 2 was otherwise absolved from any liability thereunder within the meaning of Section 39 of the Indian Contract Act. At one time I thought that there was great force in that contention and had some hope of disposing of the suit upon that simple ground. Further reflection, however, and the consideration of such cases as Ellis v. Rogers (1885) 29 Ch. D. 60 : 53 L.T. 377 and Devenish v. Brown (1885) 26 L.J. Ch. 23 : 2 Jur. (N. s.) 1043 : 4 W.R. 783 has convinced me that this line of defence will not avail the defendant No. 2. In the first place, I do not think that time was of the essence of this contract and I do not think that in any strict sense it could have been said on the 13th of June or about that period that the plaintiff had disabled himself by this undertaking from carrying out his part of the contract. If, for example, the defendant No. 2 instead of altogether repudiating the contract had expressed his willingness to perform, provided the plaintiff could do so, within the stipulated period, I do not think that there was anything either in the suit in which the undertaking of the 9th of April was given or in the mortgage suit of Chichgar against the plaintiff, which need have disabled him on his representations properly made to the Court from carrying out the agreement of the 4th of March; but since the defendant No. 2 unconditionally and without reservation repudiated the entire agreement, there was, I think, a complete breach on his part and it became unnecessary for the plaintiff to do anything more on his side to attempt to carry out his part of the agreement. In view of the attitude taken up by the defendant No. 2, and it was really only against him that the plaintiff thought he had any remedy, it would have been foolish on the plaintiff's part to make any further advances. I think, therefore, that defendant No. 2's contention that even assuming he had been a party to this contract, he is absolved from performance under Section 39 of the Indian Contract Act, on the facts I have just stated, fails.

10. Neither is there any ether evidence, and this was virtually admitted by the defendant No. 2's Counsel, to prove directly the cancellation of the contract by the plaintiff. It is perfectly clear that defendant No. 1 throughout the months of March, April and May was not seriously regarded by either the plaintiff or the defendant No. 2 as interested substantially in the performance of the contract of the 4th of March, and I cannot find anything in the oral evidence which would warrant me in holding that the defendant No. 2 had proved that the plaintiff had cancelled this contract some time before the 13th of June 1914. It is only, as I understand, first upon grounds of law and Section 39 of the Indian Contract Act, and next as urgent if -not necessary inference from the admitted facts in connection with the mortgage for Rs. 4,000, that the defendant No. 2 now asks the Court to hold it proved that there must have been a cancellation of this contract. I have disposed of the purely legal point under Section 39. As to the other, I do not think that there is anything necessarily inconsistent with the continuance of the proposed contract for sale in September between the plaintiff and the defendant No. 2 in what occurred between them relative to the raising of the small loan of Rs. 4,000 upon this property by way of a second mortgage in the meantime. And it is certainly surprising to find defendant No 2, if one word of his general story were true, suddenly in possession of both the agreements of the 4th of March. Now, according to him, he was no more than a broker in that transaction and one of the original agreements was given to the plaintiff and the other to Keshav, the intending purchaser. But according to the defendant No. 2, as soon as the parties, that is to say, the plaintiff and the defendant No. 1, had agreed to cancel the contract on account of the consent order of the 9th of April, both came to him with their agreements and made them over to him, saying that they were afraid that if they did not do so, he would suspect them of having cheated him out of his brokerage. Now this is perfectly ridiculous and is false on its face, and is of a piece with a very great portion of the evidence given by defendant No. 2. Indeed, his learned Counsel, with the utmost candour at the close of the case, admitted that in view of the quality and transparent falsehood of a great part of that evidence he could not reasonably ask the Court to rely upon any statement made by his client; and that is an admission which, liberal enough coming as it does from the mouth of his own Counsel, does not go in my opinion one inch beyond propriety or what the evidence actually given by defendant No. 2 in this case required. I do not wish to repeat the observations which I made during the addresses of Counsel upon the evidence of the principal parties in this case. Suffice it to say that neither the plaintiff nor the defendant No. 2 has hesitated, wherever they thought desirable in their own interests to do so, to lie and lip unblushingly, after the manner of their kind. I am not at all sure that defendant No. 1 was really much better than the plaintiff and the defendant No. 2, but he had not so difficult a part to play, and I am bound to say that, on the whole, he was not quite such a transparent perjurer as the other two. Now, reverting to the point which I was noticing, there is a conflict of testimony between all three of these witnesses. The defendant No. 1 swears that he never had the agreement in his possession at all. The plaintiff swears that the defendant No. 2 came to him a short time after the agreement of the 4th of March had been executed and said that as he had a purchaser negotiating with him, he would be glad to have the agreement from the plaintiff. HE gave as his reason that his own house, where the other counterpart lay, was at Mazagon, a long way off; and so the plaintiff handed him over his copy of the agreement of the 4th of March. The defendant No. 2, as I have said, says that the defendant No. 1 and the plaintiff came to him of their own accord and handed him back each, his copy of the agreement of the 4th of March. Of these three stories, I have no doubt that that of the defendant No. 1 is true, that is to say, that he at least never had a copy of this agreement at all. The agreement, I have not the slightest doubt, was entered info between the plaintiff and defendant No. 2 as alleged both by the plaintiff up to a certain point and before he took to lying under a mistaken notion of his legal position, and the defendant No. 1 who was merely introduced as a figurehead to conceal the identity of defendant No. 2, That being so it is natural that the two agreements prepared by Dayaram would remain with the two real principals, that is to say, one with the plaintiff and one with the defendant No. 2. And I; have no doubt, or but little doubt, that the manner in which the defendant No. 2 became possessed of the plaintiff's copy of the agreement has been correctly told by the plaintiff. I entertain very little doubt, as I said a short time ago about the truth of the whole matter. I must allow myself a certain amount of conjecture, but it is a conjecture founded upon facts which appear to me to be indisputable and virtually to give conclusively the outline of the whole scheme. In my view the object of the transaction was simply this. The defendant No 2, who is a member of a Marwari money-lending firm (about the constitution of which he lied and lied with his usual hardihood), thought he had a purchaser for this property at a figure of Rs. 36,000. He agreed to buy it from the plaintiff for Rs. 34,000. But it is obvious that if he did this openly in his own name with the firm's moneys, any profits that the sale might yield would be divisible between him and his partners. Hence the introduction of the defendant No. 1, who is a coolie or muccadum and, I think, a man of no substance. He had been habitually borrowing from the defendant No. 2, and the defendant No. 2 could very easily put pressure upon him. The service he, was asked to render to his powerful creditor appeared to be of the slightest. It was merely to lend him his name in a transaction, which I do not doubt Punamchand expected to bring to a satisfactory conclusion within a very short time. Now, if I am right, Punamchand's idea was to advance from his firm the purchase money to Keshav at the usual rate of interest. Then to sell the property to the purchaser at a profit of Rs. 2,000, let us say. Then to make Keshav repay the firm with interest, and he, Punamchand, to pocket the balance, say Rs. 2,000 or thereabouts, pl>>s brokerage in the two transactions. That is a scheme which would be almost irresistibly attractive to any Marwari. It would not only be thoroughly dishonest as well as profitable but would have the piquant relish of being dishonest at the expense of those to whom he was bound by fiduciary relations.

11. Now, having so far prepared the way, we find in the evidence a picture of the pecuniary status of the defendants Nos. 1 and 2, which, in my opinion, points very directly to the defendant No. 2 having been the intending purchaser of this property. Indeed everything in the case appears to me to point the same way. I do not see why the defendant No. 1 should have embarked of a sudden on such a large enterprise as the purchase of a house worth Rs. 34,000. That would be an immense sum to him, though a mere fleabite to the defendant No. 2. Then, we have the evidence regarding the payment of the earnest money; and here, again, it is as clear as daylight that it was really the defendant No. 2 who paid that money in the usual Marwari fashion, cutting out just one-fifth of it upon one pretext or other and later on demanding one sixth extra; and again, Marwari fashion, as soon as the matter became of importance and the subject of litigation in this Court he endeavours to support his untrustworthy story, that it was the defendant No. 1 and not himself who paid the earnest money on the 5th of March, by a deliberate forgery. The story he has laid before the Court relating to this advance of Rs. 500 to Keshav in order to enable him to pay the earnest money on the 6th of March, supported by the receipt which he undoubtedly endeavoured to have made out in that way by Messrs. Smethan, Byrne and Noble, is in my opinion a tissue of deliberate lies. He had the effrontery to tell the Court that he habitually destroys his nondhs or rough memos from which the fair cash book is written. I am quite certain that no Marwari does and thing of the kind. By way of giving a realistic touch he adds that these nondhs and other books of his firm are used to wrap up bundles of small silver change. The truth of the matter is that he has got an entry in his fair cash book find in the ledger the entry has been doctored. Without the nondhs it would be quite impossible for this Court to attach any importance whatever to the entry in the fair cash book. It is as certain as anything can be that that nondh was in the defendant No. 2's possession at the time this suit was filed and probably still is. It is also certain, humanly speaking, that its production would not have assisted this part of defendant No. 2's case. On the contrary, the manifest alteration of the figure of 187 into 687 indicates clearly enough the quality of defendant No. 2's evidence on this point. I am not going further into the details of the evidence touching the making of the agreement of the 4th of March and the part played in it by Dayaram, the managing clerk, and the numerous features of the transaction as a whole, which leave no doubt in my mind, and I am sure would leave so doubt in the mind of any person who heard the evidence given, as to the real nature of this transaction. It was quite clearly Punamchand's transaction throughout and it is equally clear that the plaintiff knew that it was so. Keshav was appearing as Punamchand's catspaw or benamidar with the sole object of cheating Punamnhand's partners. For some time I pressed the witnesses with questions in order to see whether I could not lay a foundation for deciding that inasmuch as the whole transaction was tainted with immorality, the Court ought to refuse relief within the spirit and meaning of Section 23 of the Indian Contract Act. But although I have no doubt that from Punamchand's point of view the transaction was as thoroughly immoral as any need be to come within the prohibition of that section, I cannot see that from the plaintiff's point of view there was anything improper in his desire to sell his house for a given price, Or that it need be presumed that he was concerned with Punamchand's motives for buying under this benami cloak. As to the defendant No. 1 it is quite as likely that the neither knew nor cared, why the defendant No. 2 wished to make use of his name. It may be argued that if this was the object of defendant No. 2 in March, why was he so anxious to be out of the agreement in May. It is very clear that for some reason, probably on account of Chichgur's mortgage or the suit of Ramchandra Kondaji Kaduskar, or possibly upon better information regarding the value of the property, the defendant No. 2 wished to have the agreement of the 4th of March cancelled. This is only too evident from the insistence with which he demanded the repayment of Rs. 500 to Keshav out of the Rs. 4,000 he agreed to advance to the plaintiff on a second mortgage. He wanted thus to make evidence of the rescission of the contract of the 4th of March. Otherwise upon his own showing there is no conceivable reason why he should have been so solicitous for the repayment of the money to Keshav. In my opinion the defendant No. 2 had sufficient reason for wishing to be quit of the agreement of the 4th of March and did all in his power to get it cancelled and indirectly to procure evidence of the rescission. He was foiled in the latter attempt by the vigilance of the plaintiff's attorneys. There are many conjectural reasons which suggest themselves why the defendant No. 2 should not have desired to carry out the agreement of the 4th of March; but if the plaintiff had really cancelled it as alleged by defendant No. 2, it is strange to find him insisting on the 17th June upon its due performance by the defendants Nos. 1 and 2.

12. I have no hesitation whatever in holding upon the facts (though I have very great hesitation in holding that I am entitled to look at all the evidence as I have done in this connection) that the real agreement of the 4th of March 1914 was made between the plaintiff and the defendant Mo. 2, and that the defendant No. 1 was merely a benamidar, acting within the knowledge of the plaintiff and the defendant No. 2 as the agent of the latter for the purpose of signing and executing an agreement to buy.

13. That being so, and the parties being arrayed, as they are here, the question remains to be answered, how should damages be assessed. It will be observed that at a late stage in the case the plaintiff abandoned his claim for specific performance; No evidence whatever has been given here of damages, although Mr. Davar on behalf of the plaintiff indicated the simple basis upon which he thought a fair calculation could easily be made. Before awarding damages, therefore, against one or both the defendants, it will be necessary to take formal evidence along the lines indicated by Mr. Davar.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //