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Collector of Etah Vs. Kishori Lal and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1930All721
AppellantCollector of Etah
RespondentKishori Lal and anr.
Excerpt:
.....respect, we must regard the decision as laying down bad law. 22. a number of calcutta cases have been cited to us and it seems to us that in calcutta it is clearly recognized that it is open to a debtor to plead payment and remission of the balance in order to prove satisfaction of a debt......terms of the contract have been registered, as in the present case. by proviso (4) therefore the oral evidence is entirely inadmissible. basing our opinion then on the statute alone, we have no difficulty in answering the question in the negative.11. as to the case-law: it appears that all courts are uniformly agreed on this point. no case has been cited before us in which it has ever been held that oral evidence may be adduced to vary the terms of a written and registered mortgage. indeed the learned counsel for the appellant the court of wards, had to concede that he could cite no case in which the contrary may have been held. the pull bench case of g.p. mallappa v. naga chetty [1919] 42 mad. 41 and behari lal v. abdul aziz [1929] 119 i.c. 92 and numerous other cases support our.....
Judgment:

Mukerji, J.

1. This is a reference to a Full Bench by the learned Judges of a Division Bench, the points for decision being as follows:

(1) Whether an agreement can be proved (by oral evidence) by the defendant to show that on payment of a sum of money less than what would be due on calculating the correct amount of principal and interest at the stipulated rate entered in the mortgage deed, the debt would be discharged.

(2) Whether such evidence would be admissible to prove (and accord) satisfaction of the debt.

2. (N.B. In question No. 1 the words in brackets were agreed to be added during the hearing of the case by the Full Bench, and in question No. 2 it was agreed that the words within brackets should be taken out).

3. The facts which are necessary to be considered in order to appreciate the reference are given in the order of reference and are briefly these: One Rao Maharaj Singh, whose estate is now under the management of the Court of Wards executed a mortgage deed on 21st March 1918 for a sum of Rs. 85,000 in favour of the plaintiffs' late father Lala Kishen Lal, and agreed to repay the same with interest at 12 per cent per annum compoundable every year. The Collector of Etah, as the manager of the Court of Wards of the estate of the mortgagor is the defendant. The plaintiffs' case is that when the Court of Wards took over the management of the estate of the mortgagor, the Collector, on behalf of the Court of Wards reduced the rate of interest payable by the mortgagor to 6 per cent per annum, but as the debt due to the plaintiff was not paid off within two years the plaintiffs are entitled to the stipulated rate of interest. The Court of Wards paid certain amounts of money and the balance is still due. The plaintiffs accordingly claimed recovery of Rs. 27,379-4-0.

4. The defence was that on 28th February 1922 the plaintiffs agreed with the Collector that they would remit a sum of Rs. 5,679 and take 1 lakh and 20 thousand in full satisfaction of their claim on the bond. In pursuance of that agreement the Court of Wards paid different sums of money on different dates, the total amount coming up to the stipulated amount of Rs. 1,20,000, that when the last payment of Rs. 55,631 was made on 14th February 1923 the plaintiffs were told that this payment had been made in full satisfaction of their claim, that the plaintiffs took the money without protest and after the expiry of the period of two years claimed the money in suit and that they were not entitled to anything as the mortgage had already been satisfied. The learned Subordinate Judge decreed the claim and thereupon the Court of Wards filed this appeal. It appears that the learned Subordinate Judge held that evidence was inadmissible to prove the alleged agreement of 28th February 1922.

5. The learned Judges before whom the appeal came for hearing were of opinion that there was a certain amount of conflict of rulings in this Court and felt that the case should go before a larger Bench. Hence this reference.

6. Point 1-As already pointed out there was a verbal omission in framing point No. 1 and this was supplied at the hearing of the case before the Full Bench. Apart from the decided cases it seems to be abundantly clear to us that the answer to the first question should be in the negative. The defendant's case is that some time before any payment had been made, the plaintiffs and the then Collector of Etah, Mr. Stowell agreed that the plaintiffs should have Rs. 1,20,000 instead of the full amount of mortgage money due to them under the terms of the mortgage bond. This means that, according to the defendant, by reason of an oral agreement coming into existence at a time subsequent to the execution of the registered mortgage deed, the plaintiffs were not entitled to the money to which under the terms of the written agreement they were entitled. Section 92, Evidence Act, runs as follows:

When the terms of a contract... have been proved according to the last section (Section 91 by the production of the original document) no evidence of any oral agreement... shall be admitted, as between the parties to any such instrument or their representatives-in-interest for the purpose of contradicting, varying, adding to, for subtracting from its terms.

7. The oral agreement set up on behalf of the defendant in our opinion is 'calculated to vary the terms of the written instrument, by trying to establish that although the plaintiffs were entitled to something under the terms of the mortgage they were not entitled to it by virtue of a subsequent oral agreement.

8. Section 92 therefore is a bar to the plea.

9. There are certain provisos attached to Section 92 and proviso 4 runs as follows:

The existence of any distinct subsequent oral agreement to rescind or modify any such contract... may be proved except in cases in which such contract... is by law acquired to be in writing or has been registered according to the law in force for the time being as to the registration of documents.

10. Under this proviso, in certain cases, a subsequent oral agreement to modify any previous contract! may be proved; but this is not permitted where the law requires that the terms of the contract should be reduced into writing as in the case of a mortgage or where the terms of the contract have been registered, as in the present case. By proviso (4) therefore the oral evidence is entirely inadmissible. Basing our opinion then on the statute alone, we have no difficulty in answering the question in the negative.

11. As to the case-law: it appears that all Courts are uniformly agreed on this point. No case has been cited before us in which it has ever been held that oral evidence may be adduced to vary the terms of a written and registered mortgage. Indeed the learned counsel for the appellant the Court of Wards, had to concede that he could cite no case in which the contrary may have been held. The Pull Bench case of G.P. Mallappa v. Naga Chetty [1919] 42 Mad. 41 and Behari Lal v. Abdul Aziz [1929] 119 I.C. 92 and numerous other cases support our view.

12. Point 2.-Coming to the second point: Before we discuss the law on the subject we may point out that the Hon'ble Judges who constituted the Bench referring the case to the Full Bench being parties to the Full Bench, agreed that the word 'accord' might be removed from the second question, the reason being that the word 'accord' is a term, although frequently employed in England, has not been used by the Indian legislature in the Contract Act or any other law relating to contract. Section 63, Contract Act, which speaks of dispensation on the part of the promisee of the performance of the terms by the promisor, uses the word 'satisfaction' alone and does not use the word 'accord.' In our opinion this alteration does not in any way alter the substance of the question.

13. The question that we have to answer is whether a plea of satisfaction of a debt evidenced by a registered document amounts to a plea 'contradicting, varying, adding to, or subtracting from' the terms of the contract. In our opinion it does not amount to any of these things. The satisfaction may be brought about by payment in full or by payment in part, but in the latter case the promisee must agree that he will not claim more and that he agrees to remit wholly or in part the performance of promise made to him. The substantive law on the point is contained in Section 63, Contract Act, which runs as follows:

Every promisee may dispense with or remit wholly or in part the performance of the promise made to him or may extend the time for such performance or may accept instead of it any satisfaction which he thinks fit.

14. Section 63, Contract Act, has nothing to do with the interpretation of Section 92, Evidence Act. In some cases, where the promisee exercises any of his privileges given him under Section 63, Contract Act, with the consent of the promisor, the act may amount to a variance etc., of the terms of the original contract and, in that case, unless the variance is made by a document in writing, evidence would not be admissible to prove the fact. For example, where the mortgagee agrees to extend the time for payment, if the promise is merely oral, and if the mortgage is by a registered document, the promise cannot be proved by oral evidence. But in the case of a satisfaction of the debt or remission of a part of the debt there is no contradicting, or varying, or adding to, or subtracting from the terms of the contract, and oral evidence may be adduced to prove the payment of a part of the debt and remission of the balance. For in that case it would not be the plea of the mortgagor that the mortgagee is not entitled to the whole of his money. On the other hand his plea would amount to this: that although the mortgagee was entitled to the whole of his money, he, in consideration of prompt payment of a certain amount (and for other possible considerations), agreed to accept a part in satisfaction of the full promise. This is our reading of Section 92, Evidence Act, and our answer to the question on a mere reading of the statute is in the affirmative. Coming to the case-law the decisions seem to be in the main in favour of our view.

15. We shall examine at once the single case in which a completely contrary view has been taken. It is the case of Jagannath v. Shankar [1920] 44 Bom. 55. The case was heard by Macleod, C.J., and Heaton, J. In the case before their. Lordships the plea was that instead of the sum of Rs. 2,000 due to the mortgagee on his mortgage bond, he accepted a sum of Rs. 800 in full discharge of the mortgage debt. It was held that oral evidence could not be adduced by the mortgagor to prove the alleged payment. The reason was given in the following language:

The defendant's case must be that the mortgagee agreed to receive Rs. 800 in full satisfaction of the touch greater amount which was due on the mortgage and although he might have said when receiving Rs. 800: I now discharge you from the mortgage,' there was none the less an agreement which modified the original agreement of the mortgage.

16. In our opinion this is not the right view of the law. It is open to a mortgagee to remit any portion of the debt due to him and the remission does not involve any change in the terms of the original contract. It is true that when the mortgagee accepted a sum of Rs. 800 and remitted Rs. 1,200 out of the mortgage money the parties entered into a contract. But the question is:

Did the contract in any way seek to alter the terms of the original mortgage contract

17. In our opinion it did not.

18. In the case of Sukhlal Rambakas v. Jetha Opajishet A.I.R. 1928 Bom. 522, two learned Judges of the same Court expressed grave doubts as to the correctness of the view expressed in Jagannath v. Shankar [1920] 44 Bom. 55, and the learned Judges were prepared, if necessary, to refer the matter to a larger Bench. Except for this solitary case, which has gone to the length of holding that satisfaction of a mortgage debt by payments in part and by remission of the balance cannot be proved by oral evidence, there is no case brought to our notice where this view may have been taken.

19. Coming to Madras: It seems that there the view has been uniformly taken that such satisfaction as described above may be proved. In G.P. Mallappa v. Naga Chetty [1919] 42 Mad. 41 it was held by a Full Bench of three learned Judges that it was not open to a mortgagor to plead a subsequent agreement to take less than is due on a registered mortgage in view of the provisions of Section 92, Evidence Act. The question of satisfaction did not directly arise in that case. In Balam v. Sadireddi : AIR1928Mad233 , it was held that it was open to the debtor to prove that he had discharged the debt by putting the simple mortgagee in possession over certain property. Many Madras cases have been cited, but we do not think it necessary to discuss all of them in our judgment, though of course we have considered all the cases. Coming, to our own High Court, there are two cases, namely Jhabba Singh v. Chajju : AIR1926All445 and Jwala Prasad v. Mohan Lal : AIR1926All693 . It was because of the supposed conflict of these two cases that the reference has been made.

20. In Jhabba Singh's case : AIR1926All445 a lessee was granted certain properties by a registered document and among the leased property was a grove. Later on the lessor and the lessee agreed that the lessor would cut down the grove and appropriate the timber. It was held that it was open to the lessee to prove that the lessor was not entitled to claim the entire rent. The learned Judges, after referring to a large number of cases, came to the conclusion that the transaction was 'a mode of payment or discharge or waiver of a portion of the rent' on account of the loss of the profits from the grove to the lessee. There can be no doubt that this decision should be treated as good law, because it is always open to one of the parties to a contract to prove failure of consideration with respect to the whole or a part of the transaction. Nobody could expect a lessee to pay the whole of the Tent when by an act of the lessor a part of the leased premises disappeared from the possession of the lessee. Proviso (1) expressly refers to want of failure of consideration as one of the facts provable by one of the parties to a contract.

21. Coming to the case of Jwala Prasad Mohan Lal : AIR1926All693 . In this case, there was a mortgage of a house for a sum of Rs. 200 by one Debi Das to one Durga Prasad. Durga Prasad's assignees were Mohan Lal and Salig Ram. Debi Das sold his house for Rs. 500 and left a sum of Rs. 200 with the vendee Jwala Prasad for payment to the mortgagees. Jwala Prasad paid the sum of Rs. 200 to one of the assignees viz., Salig Ram. Salig Ram granted a receipt and promised to return the mortgage deed. Mohan Lal brought a suit to recover his mortgage money and the mortgagor's representative's plea was that the mortgagees had agreed to forgo all the interest due on the mortgage and that Salig Ram had accepted Rs. 200 in full discharge of the mortgage debt and the receipt which he had granted was binding upon Mohan Lal,. his co-mortgagee, and operated to extinguish the mortgage. The Court of first instance gave a decree for the amount claimed after giving credit for Rs. 200 actually paid. The lower appellate Court upheld this decision. In second appeal it was urged that the mortgagees relinquished their right to interest. A Bench of this Court consisting of Daniels and King, JJ., held that any oral evidence to prove a relinquishment of a claim for interest was inadmissible under Section 92, Evidence Act. There was a further question as to whether the receipt which was construed as a document purporting to have been granted 'in full satisfaction of the whole mortgage debt' was admissible in evidence or not, having regard to the provision of Section 17, sub-S. 2, C1. 11, Registration Act, 1908. In this case, we are not concerned with the admissibility or otherwise into evidence of any receipt and we need not consider that point at all. On this point, we may mention, the Hon. Judges differed from a previous decision of this Court. As regards the question whether the decision as to the inadmissibility of oral evidence to prove the relinquishment of a claim as to interest, it was probably right. The plea was not, it appears, that payment of Rs. 200 was in full satisfaction of the mortgage money, but the plea was that by a subsequent agreement between the parties, the mortgagee had agreed not to claim any interest at all. In this aspect, as we have said, the judgment may be right. But we have no doubt that if the judgment was meant to be a decision that it was not open to the mortgagor to prove that the mortgagee accepted the sum of Rs. 200 in full discharge of his debt, with all respect, we must regard the decision as laying down bad law. We are of opinion, as we have explained above, that a plea of payment and discharge does not involve any plea of a subsequent contract in any way altering the original contract.

22. A number of Calcutta cases have been cited to us and it seems to us that in Calcutta it is clearly recognized that it is open to a debtor to plead payment and remission of the balance in order to prove satisfaction of a debt. In the result, our answer to question 2 is that it is open to a mortgagor to prove satisfaction of a debt by proving payment on his part and by proving remission of the balance on the part of the creditor. We need hardly mention that we have nothing to say as to the weight to be given to the oral evidence that may be produced before a Court. That would be a matter for the Court to decide, before whom the plea of payment is taken. All that we are anxious to say is that the mere fact that we are deciding that oral evidence is admissible must not be taken as an authority that any evidence however worthless it may be to prove satisfaction, is to be accepted simply because oral evidence is admissible. We direct that the record be returned to the Bench making the reference with our answers as recorded above.


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