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Meenakshisundaram Pillai Vs. S.T. Chenchu Mudaliar and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1928Mad459
AppellantMeenakshisundaram Pillai
RespondentS.T. Chenchu Mudaliar and anr.
Cases ReferredMaung Tun v. Mating Khan A.I.R.
Excerpt:
- .....the registration act show that what purports to be a sale was really a mortgage, or that on the sale of property a contract was entered into by parol by the purchaser which had the effect of giving him (the vendor) right to redeem the property. mr. venkatarama iyer argued that if it was the latter, namely the conveyance by the purchaser to the vendor of the real right of equity of redemption, that was a contract which related admittedly to immovable property of over rs. 100 in value and could be effected only by a registered instrument in writing and as there is no such instrument no such contract could be proved.4. again, if the matter has be to looked at from the other way, a sale or a mortgage though involving conveyance or transfer of immovable property is none the less a.....
Judgment:

Srinivasa Aiyangar, J.

1. The point that arises for determination in this second appeal raises -a very nice and interesting question. The plaintiff is the appellant. He having obtained a decree against defendant 1, attached the suit property alleging that the same was defendant 1's property in which he had some right, title or interest. Defendant 2 thereupon made a claim to the executing Court and on such claim the property would appear to have been released from attachment. The plaintiff then instituted the present suit as a regular suit for having set aside the effect of that order in execution proceedings. The Court of first instance granted a decree to the plaintiff, but the lower appellate Court dismissed the plaintiff's suit, The plaintiff has thereupon filed this second appeal.

2. The manner in which this case would appear to have been presented to the lower appellate Court was that there was an oral contract by and between defendant 1 and defendant 2 to the effect that on defendant 1 paying to defendant 2 the amount which defendant 2 was owing at the time to one Venkatachala who was the defendant 2's vendor, defendant 2 should make a conveyance or effect a re-sale of the property to defendant 1. The lower appellate Court has dismissed the suit on the ground that, assuming the -contract to have been proved to be admissible in evidence it nevertheless was merely a personal contract, a contract independent altogether of the contract of sale and therefore that under the terms of such contract the period fixed by the contract having expired 'and the contract not having been performed by defendant 1, in any case he has no right, title or interest in the property which can foe made subject of the attachment at the instance of the plaintiff decree-holder. It seems to me, however, unnecessary to consider that question on which the lower appellate Court disposed of the matter. The learned vakil for the appellant put his case thus: He said:

Here is a contract between defendant 1 and defendant '1 for sale of the property. No doubt, as between them it is not open to defendant 1 to show that the contract was not what the document purported to be, a sale; but I am a stranger to the contract. I am not a party to the contract; nor am I a representative of the party to the contract and therefore I am entitled to come into Court and show that what really took place between the parties was not a sale but the contract was really one of mortgage.

3. Undoubtedly if all that there was in law in the enactments was Section 92, Evidence Act, he would have been in the right and his contention would have had to be given effect to. Undoubtedly, if we have regard only to Section 92 or Section 93, Evidence Act, which is really in the nature of a proviso to Section 92, the plaintiff, who is a third person and was not a party or privy to the contract, is not prevented from showing what really the contract between the parties was. That undoubtedly was the basis of the decision of their Lordships of the Judicial Committee in the case of Maung Kyin v. Ma Shwe La A.I.R. 1917 P.C. 207. The facts of that case seem to be uncommonly like the facts of the present case. But on a careful examination of the case it turns out that their Lordships were considering transactions in Burma which arose there long before the Transfer of Property Act was extended to that province. The contention, as put forward by Mr. Venkataram Iyer, the learned vakil for the respondent, was this: The plaintiff who is the attaching creditor must, before he can sustain any order of attachment, show that his judgment-debtor has some right, title or interest in the property itself; it will not do for him merely to show that he has some contract enforceable against the person of defendant 2, but it is necessary for him to go further and show some contract, grant or other disposition of property under the terms of which he has now vested in him some right which may be called a right in immovable property. This he could show only in one of two ways, either by showing that what purports to be a sale-deed was not an absolute sale-deed but with the reservation of certain rights, such reservation being obviously of such a character that what purports to be a sale-deed would no more be a sale-deed, or in other words, that, the vendor under the sale-deed did not effect an absolute sale but reserved in himself certain rights of immovable property, or by showing that at the time of the sale the purchaser under the contract of sale entered into an agreement by which he (the purchaser) did something by which he conveyed to the seller certain rights in immovable property. The matter might be put in other words and more simply. The contention of the appellant would amount to claiming that a vendor of property may under the terms of the Transfer of Property Act and the Registration Act show that what purports to be a sale was really a mortgage, or that on the sale of property a contract was entered into by parol by the purchaser which had the effect of giving him (the vendor) right to redeem the property. Mr. Venkatarama Iyer argued that if it was the latter, namely the conveyance by the purchaser to the vendor of the real right of equity of redemption, that was a contract which related admittedly to immovable property of over Rs. 100 in value and could be effected only by a registered instrument in writing and as there is no such instrument no such contract could be proved.

4. Again, if the matter has be to looked at from the other way, a sale or a mortgage though involving conveyance or transfer of immovable property is none the less a contract, and when two parties enter into a contract and reduce the contract to writing it is only the writing that can be looked at for the purpose of finding out the terms of the contract. Further, a contract to become operative or to vest in a person equity of redemption is a contract that under the Transfer of Property Act is required to be in writing registered and therefore having regard to the terms of Section 91, Evidence Act, apart altogether from Section 92, the plaintiff is not entitled to show that there was a contract of mortgage between the parties and that therefore defendant 1 has still in him vested the equity of redemption in respect of the property attached. It falls to be observed that, whereas in Section 92, Evidence Act the legislature has prevented oral evidence being adduced for the purpose of varying the contract as between the parties to the contract, no such limitations are imposed under Section 91, Evidence Act. Having regard to the juxtaposition from Sections 91 and 92 and the deliberate omission from Section 91 of such words of limitation, it must be taken that even a third party, if he wants to establish a particular contract between certain others either when such contract has been reduced to a document or where under the law such contract has to be in writing, can only prove such contract by the production of such writing. In the case above referred to, Maung Kyin v. Ma Shwa La A.I.R. 1917 P.C. 207. their Lordships ,of the; Judicial Committee having regard only to the terms of Section 92, Evidence Act, undoubtedly came to the conclusion that the plaintiff who was no party to the contract was entitled to show the real agreement between the parties. Their Lordships, however, had not to deal with a. case where under the law then in force the contract which was sought-to be proved by the plaintiff was a contract which was required to be in a particular form.

5. I therefore consider that though that case appears to be a case very similar to the present one and almost on all fours with the ease before me the principle of the decision in that case is not applicable to the present one. Let us see for a moment what consequences may follow if, in spite of the requirements in law that certain contracts should be carried out in a particular form, it is still open to third parties to come and set up a case of offer to show to the Court that the transaction was. entirely different. In that very case,. Maung Kyin v. Ma Shwe Lal A.I.R. 1917 P.C. 207, their Lordships refer to the decision of the Board by which it was ultimately declared that even for the purpose of avoiding fraud it would not be open to an ostensible vendor to say that the real transaction between the parties was a mortgage. No doubt such a thing has. been allowed to be done when what takes place contemporaneously is not an oral contract but is a writing registered. Numerous are cases in which it has been held that where this contemporaneous agreement, though in writing is not registered, it is not open to the party to show that what is apparently a sale was really a mortgage; see Muthavenkatachalapathi v. Pyanda Venkata Chelapathy [1904] 27 Mad. 348. If it should be open, however, to a third party to come and show what a party to such a contract could not do 'the effect would be this. A may sell the property absolutely to B and set up C to come and prove that what was obviously a sale was really a mortgage, or A may suffer a collusive decree to be passed against him and he has only to set up C come and attach the property as if A had still in respect of the property the equity of redemption in him. I refuse to believe that that was or could have been the policy of the law in enacting various provisions of the Transfer of Property Act and the Registration Act. Further, having regard to the terms of Section 91, Evidence Act, what the Court has got to do is so to find out the real contract between the parties. If there is a document by which the property is absolutely conveyed by one party to another either with the reservation of the right in the vendor to redeem the property or the grant by this purchaser to the vendor of such a right, it must undoubtedly be regarded as a transaction affecting immovable property and a contract by which such right is either reserved or transferred must according to law be by a registered instrument and there is no question in this case of such right not being over Rs. 100 in value. The learned vakil for the respondent also referred to the case of Maung Tun v. Mating Khan A.I.R. 1925 Rang. 61. That was no doubt a judgment of a single Judge of the Rangoon High Court. But I agree with the learned Judge in the reasoning set out in the judgment. At p. 988 this is what he says:

But the defendant-appellant claims to have established that the transaction was in fact a mortgage. (There was alleged to be a sale for Rs. 400 or 300 in April 1915.). Now this was, unlike the plaintiffs-respondents' allegation of a sale in 1912-13, after the Transfer of Property Act had been extended to Upper Burma and the provisions of Section 59 of that Act, requiring a registered instrument signed by the mortgagor and attested by two witnesses, therefore applied, and with it also Section 91, Evidence Act, preventing the proof of such a mortgage except by the production of the document itself, or by secondary evidence in such oases where secondary evidence is admissible. There being no registered document in this case, and no question of secondary evidence, the defendant-appellant is faced with the difficulty as to whether he can give any evidence of the alleged mortgage at all....

6. It is contended that Section 91, Evidence Act, only excludes extraneous evidence of the terms of the contract, which ought to have been reduced to writing but was not and therefore it is said that the fact of mortgage may be proved. This, it seems to me, is entirely fallacious. A mortgage is a contract. It is also a disposition of property. But it is a particular kind of contract and a particular kind of disposition of property to which certain recognized incidents of terms invariably attach. It is a ' transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced by way of loan. These are all terms of the contract, and all these terms are conveyed by the one word 'mortgage.' I may observe in passing that that case was also one which followed on a claim to attach property.

7. One other point may also be referred to, and that is that under the Transfer of Property Act a deed of sale requires no attestation at all, whereas a mortgage can be effected only by a registered instrument attested by two witnesses. When a particular transaction is required by law to be in a particular form then it follows that no one setting up such a transaction can seek to prove it except by showing that it was done in that form. In the present case, therefore, apart altogether from the question whether this contemporaneous agreement was a mere collateral agreement to reconvey property or not, I find that the plaintiff-appellant having set up that what was a sale-deed in favour of defendant 2 by some third party or, taking it for the purpose of this case, by or at the instance of defendant 1 himself, was really a deed of mortgage, is really in a dilemma in which he is either, if he relies upon the contract as set up in the contract in the sale-deed, met with the circumstances that it is a contract of sale and, therefore of absolute conveyance, or else, on the other, hand of having to prove a contract which is not in the form prescribed by law. I, therefore, hold that the lower appellate Court was right in the conclusion arrived at though not for the reasons or on the grounds it relied upon. I agree, therefore, that the suit of the plaintiff-appellant was rightly dismissed. The second appeal, therefore, fails and is dismissed with costs.


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