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Sait Bolumal Dharmdas Firm, Bankers Represented by Partner Bolumal Dharmdas Vijayawada Vs. Gollapudi Venkatachelapathi Rao and anr. - Court Judgment

LegalCrystal Citation
CourtAndhra Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 218 of 1954
Reported inAIR1959AP612
ActsEvidence Act, 1872 - Sections 92, 94 and 95; Transfer of Property Act, 1882 - Sections 8; Code of Civil Procedure (CPC) , 1908
AppellantSait Bolumal Dharmdas Firm, Bankers Represented by Partner Bolumal Dharmdas Vijayawada
RespondentGollapudi Venkatachelapathi Rao and anr.
Appellant AdvocateT. Krishna Rao, ;M.C. Kamath, ;M.S. Ramachandra Rao and ; M. Krishna Rao, Advs.
Respondent AdvocateK.B. Krishna Murthy, Adv.
DispositionAppeal allowed
.....- section 92 of evidence act, 1872 - case remanded to trial court to decide admissibility of oral evidence or extrinsic evidence in construing instrument as out sale or security bond - whether extrinsic evidence can be let in to know intention of parties for construing an instrument violative of section 92 - legal character of instrument can be judged from surrounding circumstances - section 92 only aids in cases where terms are ambiguous - held, letting in of extrinsic evidence proving intention of parties violates section 92. - all india services act, 1951.sections 8 & 11 & a.p. buildings (lease, rent and eviction) control rules, 1961, rule 5: [v.v.s. rao, g. yethirajulu & g. bhavani prasad, jj] refusal by landlord to receive rent - deposit of rent in court - held, a tenant..........unenforceable. 3. the trial court overruled the objection and decreed the suit in the view that oral evidence to ascertain the intention of the parties was inadmissible. in the result, the suit was decreed as prayed for. on appeal, the subordinate judge of vijayawada disagreed with the opinion of the district munsiff in regard to the admissibility of oral evidence and remanded the suit to the trial court to decide the point relating to the agreement pleaded by the defendants. 4. as against the said order of remand, the plaintiff filed a civil miscellaneous appeal in the high court. the order of remand was set aside by raghava rao j., who held that evidence surrounding the execution of the document was admissible. accordingly the matter was remitted to the subordinate judge for.....

Chandra Reddy, C.J.

1. This Letters Patent Appeal filed against the judgment of Krishnaswami Nayudu J., involves the construction of Section 92 of the Evidence Act.

2. The appellant laid an action on the foot of a promissory note executed by the defendants for Rs. 1400/- on 24-7-1942 The suit was resisted on the following defence, The 2nd defendant obtained a charge decree for Rs. 2,000/- against a third party. This decree was transferred to the Plaintiff under a document which recited a consideration of Rs. 600/-, the understanding being that it should serve as security for monies to he advanced by the plaintiff from time to time. It was also part of the arrangement that the 2nd defendant should look after the execution of the decree and recover the amount.

Pursuant to this, execution proceedings were started by the 2nd defendant in the name of the plaintiff. The properties were brought to sale and purchased by the 2nd defendant. The latter was paid a sum of Rs. 1400/- by the plaintiff for depositing the same into court towards the sale price and the suit promissory note was taken by way of security. Since the sale was confirmed and the plaintiff had withdrawn the sum of Rs. 1400/- from Court, the promissory note was unenforceable.

3. The trial Court overruled the objection and decreed the suit in the view that oral evidence to ascertain the intention of the parties was inadmissible. In the result, the suit was decreed as prayed for. On appeal, the Subordinate Judge of Vijayawada disagreed with the opinion of the District Munsiff in regard to the admissibility of oral evidence and remanded the suit to the trial court to decide the point relating to the agreement pleaded by the defendants.

4. As against the said order of remand, the plaintiff filed a Civil Miscellaneous Appeal in the High Court. The order of remand was set aside by Raghava Rao J., who held that evidence surrounding the execution of the document was admissible. Accordingly the matter was remitted to the Subordinate Judge for disposal in the light of his judgment. After remand, the Subordinate Judge, on an examination of the oral evidence bearing on the surrounding circumstances, found that the deed in question was not an absolute sale but was executed as and by way of security. In that opinion, he allowed the appeal and dismissed the suit.

5. The Second Appeal carried by the plaintiff was not successful Krishnaswami Nayudu J., who heard it agreed with the lower appellate court with regard to the applicability of Section 92 and dismissed the Second Appeal but granted leave.

6. Since the controversy here centers round Section 92 of the Evidence Act, it is convenient to extract it.

'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:'

This is subject to six exceptions. The first five are not relevant for the purpose of this enquiry and may, therefore, be omitted. Proviso 6 declares that any fact may be proved which shows in what manner the language of a document is related to existing facts. It is the scone of this proviso that has to be determined in this appeal.

7. It is clear from the terms of Section 92 that evidence of any oral agreement or statement is excluded for any of the purposes indicated therein unless it falls under any of the provisos. The question is whether the instant case attracts proviso 6. In our judgment, this proviso could be called in aid only in cases where the terms of a document are ambiguous. If the language of an instrument does not yield clear meaning and is open to two interpretations, extrinsic evidence of surrounding circumstances could be adduced. But if the meaning of the words is clear and unequivocal and the intention of the parries is easily deducible therefrom it is not permissible to lead parole evidence to show that the document was not really what it purported to be.

In other words, when a document creates a doubt as to the meaning and the intention of parties, oral evidence bearing on the surrounding circumstances could be looked into but extrinsic evidence is inadmissible to alter the legal character of an instrument. If a document on the face of it amounts to a sale deed, a party to it cannot be permitted to seek to establish that it was intended to operate only as a mortgage. It may be said that a construction of this proviso presents some difficulty. In the words of Macleod C. J. in Ganpathrao Appaji v. Bapu Tukaram, ILR 44 Bom 710: (AIR 1920 Bom 148) this is one of the provisos which is the despair of Judges and the joy of lawyers.

8. The intendment of the proviso could be gathered to some extent from Sections 94 and 95 of the Evidence Act. Section 94 declares that

'When language used in a document is plain in itself and when it applies accurately to existing facts, evidence may not be given to show that it was not meant to apply to such facts.'


'A sells to B by deed, 'my estate at Rampur containing 100 bighas'. A has an estate at Rampur containing 100 bighas. Evidence may not be given of the fact that the estate meant to be sold was one situated at a different place and of a different size.'

Section 95 says:--

'When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense.'


A sells to B, by deed 'my house in Calcutta'. A had no house in Calcutta, but it appears that be had a house at Howrah, of which B bad been in possession since the execution of the deed.'

These facts may be proved to show that the deed related to the house at Howrah.'

It is manifest from these two sections that it is only in cases where the terms of the document leave the question in doubt, that resort could be bad to the proviso. But when a document is a straightforward one and presents no difficulty in construing it, the proviso does not apply. We think that the two sections define the sphere of operation of proviso 6.

9. If the contrary view is adopted as correct it would be rendering Section 92 of the Evidence Act, otiose and also unduly enlarging the ambit of proviso 6 to Section 92. Section 92 specifically prohibits evidence of any oral agreement or statement which would contradict, vary, add to or subtract from its terms. If, as stated by the learned Judge, oral evidence could be received to show that the terms of the document were really different from those expressed therein, it would amount to according permission to give evidence to contradict or vary those terms and as Such it comes within the inhibitions of Section 92. It could not be postulated that the legislature intended to nullify the object of Section 92 by enacting exceptions to that section. Exceptions or provisos to a Section are not meant to render the section itself nugatory. We are reinforced in this opinion of ours by clear authority.

10. We may begin with Martand Trimbak v. Amritrao Raghojirao, ILR 49 Bom 662: (AIR 1925 Rom 501), since it was the only case cited to the learned Judge by the Counsel for the appellant in support of his case. The learned Judge declined to follow it as he felt that it was opposed to the doc-trine of Balkishan Das v. W. F. Legge, ILR 22 All 149 (PC) and Narsingerji v. Parthasaradbi Caru, ILR 47 Mad 729: (AIR 1924 PC 226). It is also stated by him that if the two decisions of the Privy Council were noticed by the learned Judges who decided ILR 49 Born 662: (AIR 1925 Bom 501) they would not have taken a strict and narrow view of the proviso in question. This assumption is not justified since Macleod C. J., who delivered the opinion of the Bench in the case under citation, was a party to an earlier case in which the applicability of the principle of ILR 22 All 149 (FC) was discussed.

11. In ILR 49 Bombay 662: (AIR 1925 Born 501), a problem identical to the one before its presented itself. One of the questions raised was whether evidence of circumstances surrounding an instrument, which was expressed to be a sale deed and which was in fact intended to operate and not to take effect as a sale could be looked into. The Bench consisting of Macleod C. J., and Coyajee J. answered it in the negative. In so doing, Macleod C, J., said:--

'It is true that evidence of the circumstances surrounding a document is admissible; but it is admissible only for the purpose of throwing light on its meaning. It would, we think, not be permissible to consider the surrounding circumstances with a view to holding that a document which on the fact of it is a sale deed was intended to operate as a mortgage. There must be some limit to the suggestion that the surrounding circumstances can always be scrutinised so as to enable the Court to alter or change the nature of a document to something different from that it appears to be. Otherwise, there could be no certainty as to the proper construction to be placed on a document which to all appearance is unambiguous.'

12. This is only a restatement of the principle enunciated by the same Judge as a member of the Bench in ILR 44 Bombay 710: (AIR 1920 Bom 143), already adverted to.

13. In a later ruling of the same Court in Afsher M. M. Tacki v. Dharamsey Tricamdas AIR 1947 Bom 98, a single Judge has adopted the same construction of the Section Bagden J., said that a party cannot adduce evidence to prove that, when he wrote one thing, he meant quite a different thing.

14. This rule is in consonance with the pronouncement of the Judicial Committee of the Privy Council in Feroj Shah v. Sobhat Khan, AIR 1933 P.C. 178. What happened there was this. A possessory mortgage was executed for a period of ten years but possession was not in fact taken by the mortgagees. On the same date, the mortgaged land was leased to the mortgagor at a rent which could be taken to represent the yearly interest on the mortgage debt.

Mutation was effected in Government records in the names of the mortgagees, Negativing the contention of the mortgagor that the deed was in reality a simple mortgage according to the intention of the parties, their Lordships remarked that there was no reason to interpret the mortgage other than as a mortgage with possession. It is significant that ILR 22 All 149 (PC) was referred to in support of this conclusion,

15. To a like effect is the statement of law contained in Tsang Chuen v. Li Po Kwai AIR 1932 P.C. 255. The situation in which the exception contemplated by proviso 6 could be invoked is described thus:

'The cases in which parole evidence when objected to is, apart from fraud or mistake, receivable to correct written instruments are cases where, for example, the evidence supplements but does not contradict the terms of the deed; or where the provisions of the deed leave the question doubtful whether merely a mortgage and not an out and out sale was intended; or where the language sought to be explained in evidence is language in an ordinary conveyancing form not exhaustively accurate but without an actual misstatement of fact'.

16. We may recall here the words of Tindal C. J. in Shore v. Wilson, (1842) 9 Clause and Fin. 355 which was quoted with approval by their Lordships in the Judgment in this case:

'The general rule' he says, 'I take to be that where words of any written instrument are free from ambiguity in themselves and where external circumstances do not create any doubt or difficulty as to the proper application of those words to claimants under the instrument or the subject-matter to which the instrument relates, such instrument is always to be construed according to the strict, plain, common meaning of the words themselves and that in such case evidence dchors the instrument for the purpose of explaining it according to the surmised or alleged intention of the parties to the instrument is utterly inadmissible.

If it were otherwise, no lawyer could be safe in advising upon the construction of a written instrument nor any party in taking under it for the ablest advice might be controlled and the clearest title undermined if, at some future period, parole evidence of the particular meaning which the party affixed to his words or of his secret intention in making the instrument or of the objects he meant to take benefit under it might be set up to contradict or vary the plain language of the instrument itself'.

17. We will now turn to ILR 22 All 149 (P. C.) and ILR 47 Mad 729: (AIR 1924 P.C. 226). In ILR 22 All 149 (P.C.) there was a deed of sale of land accompanied by an agreement for re-purchase, The question between the parties in the appeal before their Lordships was whether the two deeds together constituted a mortgage of the subject matter thereof or an out and out sale with a contract for repurchase. It was decided by their Lordships that the case must be decided on a reading of the documents themselves with such extrinsic evidence of the surrounding circumstances as will be required to show in what manner the language of the document was related to existing facts and that there were indications in the two documents that the parties intended to effect a mortgage by conditional sale. It was specifically laid down there that oral evidence of intention was inadmissible to con-strue the instrument or to ascertain the intention of the parties. It is therefore difficult to read that judgment as establishing the proposition that extraneous evidence could be received to change the effect of a document. As we have said earlier, the Privy Council on another occasion utilised this case to over-rule the contention that evidence could he given to show that what appeared to be a usufructuary mortgage was really a simple mortgage.

18. ILR 47 Mad 729: (AIR 1924 PC 226) is of the same category. The question arose there as to the reception of oral evidence to show that the two documents, a sale deed and an agreement of re-purchase brought out contemporaneously constituted a mortgage by conditional sale. Lord Blanesburgh, who gave the opinion of the Judicial Committee applied the dictum of Lord Davey in ILR 22 All 149 (PC) and held that the transaction was a mortgage by conditional sale.

This conclusion was arrived at without reference to the oral evidence but on the basis of the surrounding circumstances enumerated by their Lord-ships therein. Their Lordships remarked that although the transaction as phrased in the documents was ostensibly a sale with a right of repurchase in the vendor, a clear examination of the documents discloses their real character. Here also, the Privy Council arrived at the decision only on construing the two deeds which came into existence at about the same time. These two rulings cannot lend any countenance to the theory that parole evidence can be adduced irrespective of the prohibitions underlying section 92 of the Evidence Act.

19. The opinion expressed by some other High Courts also is in consonance with our view.

20. In Vithoba Udebhanji v. Narayan Sonaji, AIR 1942 Nag 115, the question was whether a document was a mortgage or a sale with a condition to repurchase. Bose J. concurred with the view of the courts below that a statement made by a transferor in an application of the same date as the document in question that the transferor had promised to purchase land and pay the price and the evidence of the transferor could be taken into account and construed the document to be an absolute sale with a condition of re-purchase. In reversing this, the Bench consisting of Stone C. J. and Niyogi J., observed thus:--

'It is a well-recognised rule of construction of deeds that the object of all interpretations is to discover the intention of the parties and that intention must he gathered from the written instrument itself in other words, the Court has to ascertain what the parties meant by the words they have used and to give effect to the intention which is expressed by the words used by the parties themselves.'

To a similar effect is the judgment of Gulam Hasan and Agarwal JJ. in Punjab National Bank Ltd. v. S.B. Chaudhary, AIR 1943 Oudh 392 which contains as exhaustive review of the case law on the subject. We have not come across a single case laying down a proposition in conflict with this.

21. Sri K.B. Krishnamurthi drew our attention to Rakkivana Gounder v. Chinnu Goundan : AIR1954Mad84 as a case embodying the theory that the words of proviso 6 do not warrant such a restriction as was read by us into it and as contrary to that of ILR 44 Bom 710: (AIR 1920 Bom 143) and ILR 49 Bom 662: (AIR 1925 Bom 501). This argument is based on a misconception of the principle of : AIR1954Mad84 . There, an instrument purporting to be a sale deed was executed for a stated consideration for the purpose of discharging the debts due by the transferor. After a portion of the properties, the subject matter of the document, was sold and the debts were discharged, a suit was instituted for recovery of the property left unsold on the basis that the document was in truth a trust deed. The defendant contested the claim on the defence that it was an absolute sale and that it was not open in law to the plaintiff to plead that a trust was created, as he was precluded from adducing oral evidence to contradict or vary the terms of the sale deed. The learned Judges accepted the plea of the plaintiff that he could establish by other evidence that the plaintiff had no beneficial interest in the property, taking the view that the proviso 2 to Section 92 was applicable to it. There is nothing in that report to indicate that they intended to depart from the principle adumbrated in ILR 44 Bom 710: (AIR 1920 Bom 143). On the other hand, they recognised the principle enunciated by us above. Say the learned Judges at p. 452 (of Mad LJ): (at p. 85 of AIR):

''Ever since the decision of the Judicial Committee in ILR 22 All 149 (PC), 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 sale deed as it reduces the interest conveyed from that of an absolute sale to that of a mortgage. A contemporaneous oral agreement which has the effect of reducing a sale to a mortgage was not provable in view of Section 92 of the Evidence Act.'

22. Thus, the case under the citation far from rendering any assistance to the respondents destroys the proposition propounded by them.

23. Nor is Rowland Ady v. Administrator General of Burma, AIR 1938 P.C. 198 helpful to the respondents. That was a case which clearly fell under the proviso to Section 92. In a suit on the foot of a promissory note, the defendant pleaded a collateral oral agreement not to make demands until a certain specified condition was fulfilled, Their Lordships expressed the opinion that the defendant was entitled to prove such, an agreement as it constituted a condition precedent to the attaching of the obligation. They pointed out the distinction between a collateral agreement which, altered the legal effect and an agreement that it should not be effective until some condition was fulfilled, Hence that case does not lay down any principle inconsistent with the one enunciated above.

24. The above discussion shows that any at-tempt to let in extrinsic evidence to prove the intention of the parties for construing an instrument will violate Section 92 of the Evidence Act which could he read only subject to the exceptions contained in several of the provisos. That being so, it is not competent for a court to look into the evidence of surrounding circumstances to find out whether a document, which purported to be an out and out sale, was intended to take effect only as a security bond. Hence, the judgment under appeal is not sustainable and has to be reversed.

25. In the result, the Letters Patent Appeal is allowed with costs throughout.

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