At the outset before raising points for determination, we may mention that several contentions were urged on behalf of defendants 3 to 6 that the property was not the absolute property of defendant No. 1 and that it was the ancestral property and as such, it was the joint family property of defendants 1 to 6; that the several debts incurred by defendant No. 1 were not for legal necessity, but, at the end of the arguments defendants 3 to 6 filed a Memo dated 1.4.1992 reads thus:
" MEMO Defendants/Respondents 3 to 6 do not press the plea taken in the written statement recording legal necessity of the transactions done by the 1st defendant and also do not press the defence as to whether the suit schedule property is the joint family property or not."
I n view of this Memo, it becomes unnecessary for us to consider the question as to whether the suit schedule property was the joint family property and whether the several debts incurred by defendant No. 1 were for legal necessity. Accordingly, we do not raise any point having a bearing on the aforesaid pleas.
13. We may also point out that the learned Trial Judge without framing an issue as to whether defendants 3 to 6 prove that the suit schedule property was a joint family property, was not justified in raising an issue as to whether the plaintiff proves that loan was for legal necessity or for family benefit?'. This would have arisen it only the defendants had pleaded and proved that the suit schedule property was a joint family property. Now that question will not arise in the light of the Memo filed by defendants 1 to 6 withdrawing the defences, as to the schedule property being the joint family property and the debts incurred were not for legal necessity.
Karnataka High Court
B.R. Mulani vs Dr. A.B. Aswathanarayana on 1 April, 1992
Equivalent citations: ILR 1992 KAR 2224,AIR1993 karnat257
Bench: K Swami, C Shivappa
This Appeal by the plaintiff is preferred against the Judgment and decree dated 31st October, 1979 passed by the learned Additional Civil Judge, Bangalore City, in O.S. No. 435 of 1973.
2. Respondents 1 to 6 were defendants 1 to 6 in the suit. In this Judgment, the appellant will be referred to as the plaintiff and respondents 1 to 6 will be referred to as defendants 1 to 6. We may also point out here itself that defendants 1 and 2 are the husband and wife and defendants 3 to 6 are their children.
3. The Trial Court has dismissed the suit for specific performance of an Agreement dated 7.5.1990 executed by the defendants and also for payment of Rs. 10,000/- which according to the plaintiff was over-paid and current interest on the said sum and also for permanent injunction sought for by the plaintiff.
4. The case of the plaintiff was that the suit schedule property belonged to the first defendant; that he was the tenant in occupation of the suit schedule property; that defendants had incurred several debts for the purpose of development of their property viz., for putting up the first and second floor on the property adjoining to the suit schedule property; that for the purpose of discharging the debts incurred under several mortgages and also for the purpose of getting over the Agreement of Sale dated 2.6.1969 executed by the defendants in favour of one Sri Lakshmi Narayana agreeing to sell the suit schedule property along with the adjoining property for a sum of Rupees One Lakh, the defendants entered into an Agreement of Sale with the plaintiff to sell the suit schedule property for a sum of Rs. 1,10,000/- in order to save the remaining properties; that under the Agreement, the plaintiff paid a sum of Rs. 20,000/- to the defendants, in that he paid a cash of Rs. 5,000/- before the Sub-Registrar and a sum of Rs. 15,000/- to Lakshmi Narayana which was to be paid under the terms of the Agreement dated 2.6.1969. The further case of the plaintiff was that as per the terms of the Agreement dated 7.5.1970, the balance amount was to be paid to the defendants who were to get the liability of Lakshmi Narayana discharged; that in the event the defendants failed to have the liability of Lakshmi Narayana discharged it was the plaintiff who was to discharge that liability and have the sale deed executed; that in the event the balance of Rs. 90,000/- was found to be insufficient, to recover excess amount from the defendants. The further case of the plaintiff was that pursuant to that he paid a sum of Rupees One Lakh to Lakshmi Narayana on 8.4.1971 and got assigned the mortgages under a Deed of Assignment dated 8.4.1971; that he also got assigned rights of Lakshmi Narayana under the Agreement dated 2.6.1969 therefore, he further pleaded that in all, he had paid a sum of Rs. 1,20,000/- towards the Agreement in order to get the liabilities of Lakshmi Narayana discharged and to make the suit property freed for conveyance for him. He further pleaded that inspite of the notice issued to the defendants on 16.11.1973, the defendants did not execute the sale deed even though the plaintiff was always ready and willing to have the sale deed executed. Hence, the plaintiff prayed for the reliefs as stated above.
5. The defendants resisted the suit. Defendants 1 and 2 together filed the written statement and were represented by separate Counsels and defendants 3 to 6 together filed the separate Written Statement and were represented by different Counsel.
6. Defendants 1 and 2 contended that the plaintiff obtained Agreement of Sale dated 7.5.1970 taking undue advantage of the weakness of the first defendant and exercised undue influence over the defendants and also on misrepresentation; that the transaction evidenced by the Agreement dated 7.5.1970 was not intended to be acted upon; that the amount of Rs. 20,000/- as recited in the Agreement dated 7.5.1970 was not paid to the defendants; that the plaintiff persuaded the first defendant to take up the new construction for the remaining house property facing Balepet Main Road and Makkan Road and introduced him to his friend Lakshmi Narayana, a businessman and a money-lender, assuring defendant No. 1 that he would make huge profits and that Lakshmi Narayana would be financing the construction for the petitioner; that he was assured by the plaintiff that the entire cost of construction would be in the order of Rs. 50,000/- but subsequently it was disclosed that it was a fraudulent and deliberate misrepresentation; that the work was started and progressed, therefore, the first defendant had no option but to execute the several documents in favour of Lakshmi Narayana; that defendant No. 1 never realised or understood the fraudulent and collusive design of plaintiff and his friends; that the defendants were persuaded to execute an exchange deed dated 14.4.1969; that the plaintiff occupied the rear portion which was in possession of the defendants but did not deliver to defendants the portion in the first floor on the shops as provided in the document; that defendants suffered heavy loss and damages, that the passage leading from Balepet Road of 4 feet width on the southern side of the building which had not been leased, licensed or alienated in favour of plaintiff has been in unlawful and forcible occupation of the plaintiff, without consideration and contrary to all Agreements and that has prevented access to the other property of defendants and has disabled them from realising rents or raising money on mortgage of other property and to clear the plaintiff's loans which lessened the utility and market value of the other property; that many people came forward to purchase the property to enable the defendants to clear the loans due to the plaintiff, but the plaintiff deliberately and with fraudulent intention prevented them by acts and omissions from lending money to defendants; that plaintiff was requested time and again to furnish accounts to enable other persons to clear off his loan, but the plaintiff failed to comply and refused to comply with the request and thus prevented liquidation of the amount due to him; that the course of dealings of the plaintiff with the defendants were fraudulent and the conduct of plaintiff in respect of impugned transactions, and in the circumstances of the case, inadequacy of consideration and peculiar relationship between the parties, the plaintiff took unfair advantage, and caused hardships to the defendants; that the plaintiff always dominated and was having defendants under his control and dependence, and also pleaded other circumstances of the case. Therefore, defendants 1 and 2 pleaded that the plaintiff was not entitled to specific performance. In para-13 of the Statement defendants 1 and 2 specifically pleaded that the Agreement of Sale dated 7.5.1970 was not intended to be acted upon by parties; that it was represented that in order to avoid high rate of income-tax it was necessary to have the form of an agreement to sell; that it was with that object the agreement to sell was taken; that it did not represent the real intention of the parties; that it was not agreed in the sense it purports to be.
7. Defendants 3 to 6 apart from adopting the several defences raised by defendants 1 to 2, further contended that the suit schedule property was not the absolute property of defendant No. 1; that it was the joint family property of the defendants; that the family was in affluent circumstances and there was no need to incur debts; that the first defendant without any legal necessity went on incurring several debts by raising monies through mortgages and did not apply the money for proper purposes i.e., for the development of the property, therefore, several transactions of mortgages and the Agreement of Sale entered into with Lakshmi Narayana and with the plaintiff were not all for legal necessity. Therefore, they contended that the plaintiff was not entitled to a decree sought for.
8. On the basis of the pleadings of the parties, the Trial Court framed the following issues;
"1. Whether the plaintiff has paid Rs. 1,00,000/- to B.N. Lakshmi Narayana?
2. Whether the plaintiff proves that he has paid Rs. 20,000/-to defendants 1 and 2 as advance?
3. Whether defendants 1 and 2 prove that suit agreement was obtained by playing fraud and exercising undue influence?
4. Whether the suit agreement is unjust and inequitable?
5. Whether the plaintiff proves that the loan is for legal necessity or family benefit?
6. Whether the defendants 3 to 6 prove that the antecedents debts, if any, at defendants 1 and 2 were taken for illegal and immoral purpose?
7. Whether the agreement to sell binding on defendants 3 to 6?
8. Whether the plaintiff is entitled to the permanent injunction sought for?
9. Whether the plaintiff is entitled to the sums of Rs. 10,000/-if so, from whom?
10. Whether the plaintiff is entitled to the specific performance sought for?
11. What order?"
9. In support of his case, the plaintiff examined himself as P.W.1 also examined Lakshmi Narayana as P.W.2. Plaintiff produced as many as 14 documents which were marked as Exs.P 1 to P.14. At this stage itself, we may mention that during the course of hearing of the Appeal two more documents were produced by the plaintiff. The defendants did not object for production of the same and they admitted that the documents produced as additional evidence are true and genuine documents. In other words, they admitted the execution of the documents. Accordingly, by a separate order passed on 26th March 1992, we allowed those two documents to be produced as additional evidence and marked them as Exs.P.15 and P.16.
10. Defendants in support of their defence examined defendant No. 1 as D.W.1 and also another witness by name Narayana Swamy as D.W. 2. They produced 21 documents which were marked as Exs.D.1 to D.21.
11. The Trial Court in the light of the arguments advanced before it and also on appreciation of the evidence on record, answered Issues 1 and 9 in the Negative. On Issue No. 1 it held that the plaintiff had proved that he had paid only Rs. 5,000/- as advance consideration under Ex.P.3 - Agreement of Sale Issue Nos. 3, 4 and 6 were also answered in the affirmative. Issues 5, 7 and 10 were answered in the negative. Consequently, it dismissed the suit.
12. At the outset before raising points for determination, we may mention that several contentions were urged on behalf of defendants 3 to 6 that the property was not the absolute property of defendant No. 1 and that it was the ancestral property and as such, it was the joint family property of defendants 1 to 6; that the several debts incurred by defendant No. 1 were not for legal necessity, but, at the end of the arguments defendants 3 to 6 filed a Memo dated 1.4.1992 reads thus:
" MEMO Defendants/Respondents 3 to 6 do not press the plea taken in the written statement recording legal necessity of the transactions done by the 1st defendant and also do not press the defence as to whether the suit schedule property is the joint family property or not."
I n view of this Memo, it becomes unnecessary for us to consider the question as to whether the suit schedule property was the joint family property and whether the several debts incurred by defendant No. 1 were for legal necessity. Accordingly, we do not raise any point having a bearing on the aforesaid pleas.
13. We may also point out that the learned Trial Judge without framing an issue as to whether defendants 3 to 6 prove that the suit schedule property was a joint family property, was not justified in raising an issue as to whether the plaintiff proves that loan was for legal necessity or for family benefit?'. This would have arisen it only the defendants had pleaded and proved that the suit schedule property was a joint family property. Now that question will not arise in the light of the Memo filed by defendants 1 to 6 withdrawing the defences, as to the schedule property being the joint family property and the debts incurred were not for legal necessity. Therefore, in the light of the contentions urged on both sides, the points that arise for consideration are as follows:
1. What is the true purport of Agreement of Sale dated 7.5.1970 marked as Ex.P.3?
2. What actually is the property that has been agreed to be sold under Ex.P.3?
3. Whether in the facts and circumstances of the case, the plaintiff is entitled to a decree for specific performance?
4. Whether the plaintiff in addition to a decree for specific performance is entitled to a decree for a sum of Rs. 10,000/- as prayed for in the plaint?
5. If the point No. 3 is answered in the negative, what is the nature of the decree that has to be passed?
14. Point No. 1: Ex.P.3 is an Agreement entered into between the plaintiff and the defendants. Defendant No. 1 has executed the document on his behalf and also on behalf of his minor children -defendants 3 to 6 as they were minors on the date of the execution of the Agreement. The Agreement recites in great detail the debts that had been incurred by the defendants for the purpose of improving their property as also for other purposes of the family. After detailing the several debts incurred, the Agreement states thus:
"And whereas Sri Lakshminaryana pressed for repayment of the amount due under the mortgage deed of Sri. K.R. Jadappa of which he is the assignee and whereas the construction of the schedule premises being incomplete and required a further sum of Rs. 20,000/- for completion and Sri Lakshminarayana advanced a further sum of Rs. 20,000/- (Rupees twenty thousand) to the member of the First Party and in all the members of the First Party having become due to the said Lakshminarayana in a sum of Rs. 1,00,000/- (Rs. One lakh only) and being not in a position to repay the same at once and have been making attempts to repay the loans and retain the property and whereas the members of the First party entered into an agreement of the sale dated 2.6.69 of the schedule property in favour of the said Lakshminarayana or his nominee under a deed of agreement for a sum of Rupees one lakh (Rs. 1,00,000/-) And whereas the time limit either for repayment of the loan or execution of the sale deed was fixed at six months and the same expired on 2.12.1969 and whereas at the instance of the members of the First party the said Lakshminarayana extended the time for the performance of the condition mentioned in the agreement till 2.4.1971 and has also received rents or damages for the schedule premises for use and occupation from the members of the First party through the Second Party on 26.4.1970 since the members of the First party could neither pay the rents nor damages nor discharge the loan and approached the Second party who was responsible for the renovation and reconditioning of the schedule premises and who has established his business concern therein and has heavy stakes of his business which has been localised therein and agreed to help the members of the First party to pay off the arrears of rents or damages to Sri Lakshminarayana and also to help the members of the First party to improve the poultry farm and Dairy farm which they are running at present to bring them to a remunerative stage so that from the income that they have been realising from various sources they will be in a position to discharge the mortgage loan of Rupees One Lakh and pay off the rents or damages as stated above and retain the property or in the alternative to sell the schedule property to the Second party for a consideration Rs. 1,10,000/- (Rupees One Lakh and ten thousand only) which is an attractive one, subject to the following terms and conditions:
The members of the First party hereby acknowledge receipt of a sum of Rs. 20,000/- (Rupees twenty thousand) as part consideration of the sale price (Rs. 15,000/- paid to Lakshminarayana on 26.4.1970 as stated above and Rs. 5,000/-paid in the presence of the Sub-Registrar at the time of the registration of this deed) and agree to receive the balance of Rs. 90,000/- (Rupees Ninety Thousand only) within a period of about eleven months i.e., on or before 2.4.1971 and execute a deed of sale of the schedule immovable property in favour of the Second Party free from all encumbrances.
If the First party fails to discharge the loans stated and fails to pay the rents or damages due to Sri Lakshminarayana that shall be paid by the Second Party and to that extent the consideration will have been deemed to have been received by the members of the first party and after adjusting the advance of Rs. 20,000/- and a sum of Rs. 15,000/- due under a mortgage deed dated 25.4.1968 executed in favour of the Second Party by the First Party and any other amount due in this behalf the members of the First Party shall be entitled to receive only the balance out of the sale consideration. But if the amount due to the Second Party being adjusted and the balance is not sufficient to pay off the debt due to Lakshminarayana, the First Party shall arrange for the balance amount out of their own resources and pay off the same.
The members of the First Party hereby specifically agree that they will not in any circumstances enter into any agreement of sale of the schedule property or further encumber the same, contrary to the terms mentioned therein.
If the members of the First Party failed to execute the sale deed in favour of the Second party within the time stipulated above and as per the terms mentioned therein the Second party shall proceed against the First Party for specific performance of this agreement that is for getting the sale deed executed in his favour which will be at the cost of the members of the First Party.
If the members of the First Party are ready and the Second Party fails to get the sale deed executed in his favour being unable to pay the balance of consideration within the time stipulated above, the advance of Rs. 20,000/- paid stands forfeited and the members of the First Party shall be at liberty to deal with the schedule property after the period stipulated expires.
The expenses relating to the purchase of stamp paper for sale deed, registration etc., shall be borne by the parties in equal proportions.
It is agreed and expressly stipulated that the sale of the schedule property in favour of the Second Party is for the benefit of the family, namely, liquidation of the liability existing on the entire property and saving the other property which will be a sufficient source of income for the maintenance of the members of the First Party and which will be free from encumbrances.
In the event of the execution of the sale deed the passage running from east to west in the schedule premises and the rear portion of the schedule premises in the occupation of the members of the First Party and leased out to various tenants shall remain common without which the second party cannot make use of the schedule property."
14.1. The case of the plaintiff as pleaded in the plaint is that the defendants executed the sale deed because B.N. Lakshmi Narayana was pressing for repayment of the loan amount or in the alternative was pressing for execution of the sale deed in terms of the Agreement in his favour; that the said Lakshmi Narayana had got issued notices in that behalf, therefore the defendants wanted to retain the property bearing No. 185 for themselves and pay off the amount due to the said Lakshmi Narayana; that defendants 1 and 2 approached the plaintiff and offered to sell the schedule property which is a part of the property agreed to be sold to the said Lakshmi Narayana for a sum of Rs. 1,10,000/- to the plaintiff; that as the plaintiff had established his business in the schedule premises he agreed to purchase the same for the said amount; that accordingly plaintiff and the defendants entered into a registered Agreement of Sale dated 7th May 1990 and paid a sum of Rs. 15,000/-on 26.5.1970 and again at the time of registration a sum of Rs. 5000/-. Thus, in all, he paid a sum of Rs. 20,000/-:
14.2. According to the defendants, the Agreement was not intended to be an Agreement of Sale but, it was only taken as security for the amount advanced in order to ensure payment of the loan; that the parties never intended to treat it as an Agreement of Sale. In para-13 of the Written Statement they specifically pleaded that the Agreement of Sale was not intended to be acted upon by the parties; that it was represented to them that in order to avoid high rate of income-tax it was necessary to have the form of an agreement to sell and it was with that object the agreement to sell was taken and it does not represent the real intention of the parties, and it was not agreed in the sense it purports to be.
15. In the evidence P.W.1 has stated that it was an Agreement of Sale agreeing to sell the suit schedule property whereas, D.W.1 in his evidence at para-7 has stated that before he executed Ex.P.3 in favour of plaintiff, P.W.2 had asked him to refund money due to him, that he told that fact to the plaintiff, that he told him that he will help him but to avoid income tax he would need an agreement of sale executed by him in his favour, that he also told him that he had no wish to purchase his properties. He further deposed that plaintiff told him that agreement of sale would be a nominal document. Of course, in the cross examination of D.W.1 it was elicited that he and his wife read the document - Ex.P.3 before they executed it; that they did not show to the Lawyer and consult him; that Ex. D.3 did not contain any terms which was contrary to his wishes and agreement.
16. In the light of this evidence, it is contended by Sri Sundaraswamy, learned Senior Counsel for the plaintiff that Ex.P.3 in categorical terms provides that the parties have agreed for sale of the suit schedule property for a sum of Rs. 1,10,000/- and out of that the plaintiff had paid a sum of Rs. 20,000/- at the time of registration of the document Ex.P.3 and the remaining amount was to be paid either at the time of registration of the document or in the event the defendants had failed to have the liabilities incurred by them with Lakshmi Narayana discharged and the plaintiff would have them adjusted and in that event the amount paid to Lakshmi Narayana be deemed to have been received by the members of the first party towards the balance of the consideration; that accordingly the plaintiff paid a sum of Rs. One Lakh to Lakshmi Narayana on 8.4.1971 and got the mortgages assigned under Ex.P.4 on 8.4.1971 under a registered deed; that he also got the agreement assigned therefore, the entire liability of the defendants to Lakshmi Narayana stood discharged; thus, the plaintiff performed his part of the obligation in terms of the agreement, therefore, as understood by the parties the agreement was not a loan transaction but, it was a transaction of sale of the property. Hence, it was contended that the plaintiff was entitled to the relief sought for. It was also contended that as Ex.P.3 is a registered document no other parole or other evidence is admissible to alter the terms of document in the light of the provisions contained in proviso 4 to Section 92 of the Evidence Act.
17. On the contrary, it is contended by the defendants that the very clause contained in the agreement that: "they have been realising from various sources, they will be in a position to discharge the mortgage loan of rupees one lakh and pay off the rents or damages as stated above and retain the property or in the alternative to sell the schedule property to the second party for a consideration of Rs. 1,10,000/- (Rupees one lakh and ten thousand only) which is an attractive one subject to the following terms and conditions" would go to show that in substance it is not an agreement of sale. It is further submitted that the recitals are fair enough to suggest that the parties never intended that the agreement should be pure and simple agreement of sale of the suit schedule property as an option was left to the defendants either to pay the mortgage loan of Rs. One Lakh in the alternative to sell the suit schedule property to the plaintiff. They further contended that the parties understood this document to be the one obtained for security for the loan and the option was left to the defendants either to discharge the loan or to sell the suit schedule property to the plaintiff, and this was so understood by the parties, is also clear by their conduct as disclosed by the letters exchanged between them and also another Agreement entered into between them on the very day i.e., 7-5-1970 on which date the Agreement of Sale was entered into, The learned Counsel for the defendants drew our attention to the contents of Ex.P.15, D.15 and Ex.D.5.
18. Before we refer to these documents and consider the correctness of the respective contentions advanced on both the sides, we will first deal with the question as to whether parole or other evidence is permissible to determine true purport of a written and registered document. Section 92 of the Evidence Act provides - "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". Provisos 1 to 6 contained therein liberalise the Rule of exclusion of oral evidence contained in the first portion of the Section and provide for admission of oral evidence in the circumstances stated in those Provisos. In the instant case reliance was placed on 4th Proviso to the Section which reads thus:
"Proviso (4). - The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents."
A reading of the aforesaid Proviso makes it clear that it is open to adduce oral evidence to prove the subsequent oral agreement to rescind or modify the written contract, grant or disposition of property in cases where the contract though is in writing but in law is not required to be in writing. Therefore, even though an agreement is in writing but, if in law it is not required to be in writing in such cases, it would be open to the parties to adduce oral evidence to prove that the parties have varied or rescinded the contract. This is based on the principle that when the agreement need not be in writing and it can be made orally, subsequent oral agreement can modify or rescind altogether, as such, merely because the agreement is in writing though by law is not required to be in writing cannot take away the right of the party to prove subsequent oral agreement. SARKAR ON EVIDENCE, 13TH EDITION, 857 has summarised this position as follows:
"PROVISO (4): "Distinct Subsequent Oral Agreement to Rescind or Modify any such Contract, Grant etc." This proviso deals with three situations, viz.,:-
(1) Where a transaction has been reduced into writing not because the law requires it to be so done, but by agreement for the convenience of the parties, parole evidence of any distinct subsequent oral agreement modifying or rescinding it altogether is admissible. The reason is obvious. After having entered into a contract, (which the law allowed to be made orally or in writing) the parties are free to make a new contract waiving, annuling, modifying or altering it. Such distinct and subsequent agreement creates a separate transaction. It is a sort of novation. Thus, parole evidence is admissible to show that the prior written contract has been waived or replaced by a new parole agreement, or the time and place of performance has been changed. For instance, a CIF contract is not required by law to be in writing and if it is not registered (see post. Clause 3) it can be varied by oral agreement. The parole agreement must be subsequent in time. Agreements or negotiations prior to or contemporaneous with the written instrument, are excluded."
In the instant case we are concerned with the Agreement which is not only in writing but also registered, though by law it is not required to be either in writing or registered. It is true that an agreement of sale is neither required to be in writing nor registered. But the contention is that as the agreement of sale is reduced to writing and registered, the later portion of the Proviso viz., 'or has been registered according to the law in force for the time being, as to the registration of the documents' is attracted.
19. Sri Sundaraswamy, learned Counsel contends that whether the document is required to be registered by law or not as it has been registered according to law for the time being in force as to registration of documents, no oral evidence is admissible to vary the terms of the document. This proposition finds support from the statement of law as summarised by Sarkar on Evidence in the 12th Edition, at page 820 which is as follows:-
"The rule applies to all registered documents whether or not registration is compulsory under the law'. Expression "or has been registered" refers to the fact of registration and not to the requirement of law. So, when a writing embodying a contract or grant has been registered although registration is not compulsory parole evidence of any subsequent agreement, modifying or rescinding the registered instrument is not admissible. It must be modified, altered or waived by another registered instrument. The word 'or' in this Proviso is not to be read as "and". So the contention that the oral evidence is admissible when the document though registered as a matter of fact is not required by law to be registered was negatived (Nokoor v. Asutosh, 9 CWN 214)."
20. Sri Sundaraswamy, learned Senior Counsel also placed reliance on the Decisions of the Supreme Court in CHUNCHUN JHA v. EBADAT ALI AND ANR., RAVAL & CO. v. K.G. RAMACHANDRAN AND ORS., SMT. GANGABAI v. SMT. CHHABUBAI & RAJ KUMAR RAJINDRA SINGH v. STATE OF HIMACHAL PRADESH AND ORS. On the contrary, Sri Vijaya Shankar, learned Counsel placed reliance on the Decision of the Supreme Court in NIRANJAN KUMAR AND ORS. v. DHYAN SINGH AND ANR., 20.1. In Chunchun Jha's case, the Supreme Court was concerned with the registered deed of mortgage and was called upon to decide the question as to whether it was a mortgage by conditional sale or sale with condition of repurchase. It was held that 'where a document has to be construed, the intention must be gathered, in the first place, from the document itself. If the words are express and clear, effect must be given to them and any extraneous enquiry into what was thought or intended is ruled out. The real question in such a case is not what the parties intended or meant but what is the legal effect of the words which they used. If however, there is ambiguity in the language employed, then it is permissible to look to the surrounding circumstances to determine what was intended. Therefore, in the aforesaid Decision the oral evidence was not excluded in its entirety even in the case of registered document. What was held was that such oral evidence would be permissible only if the terms contained in the document were ambiguous. In M/s. Raval and Company's case it was specifically held that Variation of the terms of registered deed was not permissible by parole evidence, as Section 92 of the Evidence Act clearly barred it'. The contention to the contrary was rejected. That was a case in which the oral evidence was tried to be adduced for varying rate of rent agreed upon under the deed. It was held that it was not permissible. The relevant portion of the Judgment read thus:
"We have then to deal with Civil Appeal No. 1201 of 1970. The learned Single Judge considering that as the total amount payable annually in respect of these premises was Rs. 5,032/-, which makes the rent payable to exceed Rs. 400/- a month, the building was outside the scope of the Act and therefore the petition for fixation of fair rent does not lie. (This provision was removed by an Amending Act of 1964). The learned Judges of the Division Bench on the other hand held that the agreement of the year 1949 between the landlord and the tenant by which the rent was increased was one in variation of a writing contract and therefore evidence of it is barred under Section 92 of the Evidence Act. Clearly any variation of rent reserved by a registered lease deed must be made by another registered instrument. We are not able to accept the argument of Sri K.S. Ramamurthy on behalf of the tenants that the agreement of 1949 was one by the landlord to give up his right to apply for fixation of fair rent in consideration of the additional rent agreed to be paid by the tenant and is, therefore, not covered by Section 92 of the Evidence Act. The correspondence between the parties makes it clear beyond doubt that the agreement was to pay increased rent. If this agreement is left out of account the rent payable is below Rs. 400/- a month, and therefore, the decision of the Division Bench is correct."
Therefore, in that case the clear and unambiguous terms of the registered lease deed were tried to be altered by parole evidence which was held to be inadmissible. In Smt. Gangabai's case it is held that Section 92 applies only when a party seeks to rely upon the document embodying the terms of the transaction. In that event the law declares that the nature and the intent of the transaction must be gathered from the terms of the documents itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms, The sub-section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document was entered into between the parties'. Thus, in Gangabai's case the question that has been raised in the instant case, has not been considered.
21. In Raj Kumar Rajindra Singh's case at para-17 the scope of Section 92, Proviso (6) is considered. It has been specifically stated thus:
"To put it differently, if the terms of the document are clear and unambiguous, extrinsic evidence to ascertain the true intention of the parties is inadmissible because Section 92 mandates that in such a case the intention must be gathered from the language employed in the document. But if the language employed is ambiguous and admits of a variety of meanings, it is settled law that the 6th proviso to the section can be invoked which permits tendering of extrinsic evidence as to acts, conduct and surrounding circumstances to enable the Court to ascertain the real intention of the parties. In such a case such oral evidence may guide the Court in unraveling the true intention of the parties. The object of admissibility of such evidence in such circumstances under the 6th proviso is to assist the Court to get to the real intention of the parties and thereby overcome the difficulty caused by the ambiguity. In such a case the subsequent conduct of the parties furnishes evidence to clear the blurred area and to ascertain the true intention of the author of the document, if any authority is needed in support of this proposition reference may be made to the case to Abdulla Ahmed v. Animendra Kissen, we find the following passage;
"The evidence of conduct of the parties in this situation as to how they understood the words to mean can be considered in determining the true effect of the contract made between the parties. Extrinsic evidence to determine the effect of an instrument is permissible where, there remains a doubt as to its true meaning. Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of instrument (Vide para 343 of Hailsham Edn. of Halsbury, Vol. 10 p.274)".
Therefore the Decision in Ra] Kumar Rajindra Singh's case, approving the Decision of the very Court in ABDULLA AHMED'S CASE, lays down in clear terms that in case of ambiguity in the terms contained in the written document, it is open to the parties to clear that ambiguity to unravel the true intention of the parties to the agreement by adducing parole evidence as to the conduct of the parties and how the document was understood by them, 21.1. In Niranjan Kumar's case, while considering Proviso (4) to Section 92 of the Evidence Act it was held that under Proviso (4) to Section 92, the existence of any distinct subsequent oral agreement to modify any such contract or grant may be proved except when the contract or the grant is by law required to be in writing or has been registered according to the law in force for the time being as to the registration of documents. In view of Proviso (4), it was open to the parties to lead evidence to show that there was apart from the rent note, a distinct subsequent oral agreement under which the terms of the original contract or grant were modified and that the partners of the firm, both before and after its re-composition, were the real tenants of the shop.
It may be pointed out that in Niranjan Kumar's case the lease involved was for a period of 11 months. It was not a registered deed and was not required to be registered. It is also brought to the notice of the Court by both the sides, that the Decision in THE GODHRA ELECTRICITY CO. LTD AND ANR. v. THE STATE OF GUJARAT AND ANR., In that case the Court was concerned with the written document. The Court was called upon to find out the true effect of the document. While considering the case in the light of the provisions contained in Section 92 of the Evidence Act and also the law laid down by the very Court in Abudulla Ahmed v. Animendra Kissen Mitter,it was observed thus:
"It is enough to say that there is nothing in that decision which would prevent a Court from looking into the subsequent conduct or actings of parties to find out the meaning of the terms of a document when there is latent ambiguity.
In these circumstances, we do not think we will be justified in not following the decision of this Court in Abdulla Ahmed v. Animendra Kissen Mitter, , where this Court said that extrinsic evidence to determine the effect of an instrument is permissible, where there remains a doubt as to its true meaning and that evidence of the acts done under it is a guide to the intention of the parties, particularly, when acts are done shortly after the date of the instrument."
22. The aforesaid Decisions lead to a conclusion that, in the case of a document registered, oral evidence is permissible if the terms contained in the document are ambiguous and are not clear in order to determine the true intention of the parties, and the correct nature of the document. In the instant case, according to the learned Counsel for the plaintiff there is no option whatsoever left to the defendants to pay the amount or to sell the property. According to the terms of the Agreement, it is contended for the plaintiff, the defendants have no option but to execute the sale deed in terms of the Agreement Ex.P.3. We have already extracted the relevant portion of the Agreement. But, for the sake of convenience and immediate reference we again refer to the relevant portion of it which reads thus:
"And whereas the time limit either for repayment of the loan or execution of the sale deed was fixed at six months and the same expired on 2.12.1969 and whereas at the instance of the members of the First party the said Lakshminarayana extended the time for the performance of the condition mentioned in the agreement till 2.4.1971 & has also received rents or damages for the schedule premises for use and occupation from the members of the First party through the Second Party on 26.4.1970 since the members of the First Party could neither pay the rents nor discharge the loan and approached the Second Party who was responsible for the renovation and reconditioning of the schedule premises and who has established his business concern therein and has heavy stakes of his business which has been localised therein and agreed to help the members of the First Party to pay off the arrears of rents or damages to Sri Lakshminarayana and also to help the members of the First Party to improve the poultry farm and dairy farm which they are running at present to bring them to a remunerative stage to that from the income that they have been realising from various sources they will be in a position to discharge the mortgage loan of Rupees One Lakh and pay off the rents or damages as stated above and retain the property or in the alternative to sell the schedule property to the Second Party for a consideration of Rs. 1,10,000/- (Rupees One Lakh and ten thousand only) which is an attractive one subject to the following terms and conditions:"
22.1. The contention of the defendants is that the words "pay off the rents or damages as stated above and retain the property or in the alternative to sell the suit schedule property to the second party for consideration of Rs. 1,10,000/-" give an option to the defendants to pay off the amount paid under the agreement by the plaintiff, or, if it is not possible, to execute the sale deed conveying the title of the suit schedule property. Whereas, on the contrary, it is contended by Sri Sundaraswamy, learned Senior Counsel that the option mentioned in the aforesaid clause is relatable to the liability of B.N. Lakshmi Narayana and not the liability under the agreement in question. According to learned Counsel, the clause does not give any such, options to the defendants either to pay the amount and retain the property or to execute the sale deed. Thus each side is trying to put its own interpretation. To our mind the clause is in clear terms, and it gives an option to the defendants either to pay the amount and retain the property or to self the suit property to the plaintiff for a consideration of Rs. 1,10,000/-. Even assuming for a moment that the clause is ambiguous and leads to two interpretations as contended by the parties, the other evidence parole or documentary, is admissible to determine the true purport of the clause and as to how it has been understood by the parties. Therefore, we shall now advert to the other evidence on record having a bearing on this question.
22.2. Our reading of the clause is that it gives option to the defendants either to pay the amount or to execute the sale deed. It is supported by the contemporaneous conduct of the parties and the other contemporaneous documentary evidence that has come into existence relating to the terms of the document. Ex.P.15 is an Agreement dated 7.5.1970 entered into between defendant No. 1 and the plaintiff in relation to Ex.P.3 only. It has come into existence on 7.5.1970 immediately after the execution of the Agreement Ex.P.3. It states thus:
"This Deed of agreement entered into this Seventh Day of May, 1970 between Sri A.B. Aswath Narayana, son of late Balayya, aged 39 years, residing at No. 184, Srinivasa Mandiram Road, Balepet, Bangalore - 2A hereinafter referred to as the "First Party" and Sri B.R. Mulani, son of Ratilal Hariji, residing at 56/1, 1st Main Road, Madhavanagar, Bangalore-9, hereinafter referred to as the 'Second Party'.
Whereas the First Party along with his wife and children has entered into an agreement of sale of premises bearing No. 173(Old). New 184/1 and 184/2 situate in Srinivasa Mandiram Road, Balepet, Bangalore-2A with the Second Party under a deed dated 7.5.1970 and has received a sum of Rs. 20,000/-(Rs. Twenty thousand) as part consideration.
And whereas the First Party has agreed to pay interest on the said amount and other amounts due to the Second Party, the First Party hereby agrees and has authorised the Second Party to collect the rents due from the various tenants as mentioned hereunder in respect of the premises bearing No. 185 Balepet, Bangalore-2A and appropriate the same towards interest. This Agreement and authority is irrevocable till the condition of the agreement of sale referred to above are completed.
(underlined by us).
Ground Floor Rent
1. Rukmasa Rs.75/-
2. Lakshmansa 40/-
3. B.N.Ramaswamy 30/-
4. Channaraju 35/-
First Floor
1. Ramanickla! 200/-
2. Veerasetty 80/-
Second Floor
1. Ramachandra 55/-
2. M.
Krishna 30/-
3. Janardhan 30/-
4. Venkataraju 30/-
Total 605/-
In witness whereof the First Party and the Second Party have hereunto affixed their signatures to this Agreement on the day, month and year first above written.
sd/-
FIRST PARTY Witnesses:
Sd/-
SECOND PARTY.
Thereafter the Agreement gives the names of the tenants who are in occupation of the ground floor, first floor and the second floor of the premises belonging to the defendants adjoining to the suit schedule property known as Makhan lane property. It also gives the rent payable by each of the tenants. It is signed by defendants 1 and 2 and the plaintiff.
23. It may be relevant to notice that if Ex.P.3 did not give any option to the defendants to pay off the amount paid by the plaintiff including the amount of Rs. 20,000/- paid by the plaintiff as advance, and this amount of Rs. 20,000/- was intended to be an advance towards the Agreement of Sale there was no necessity for the Defendant No. 1 to agree under Ex.P. 15 to pay interest on this sum of Rs. 20,000/-. The next document is Ex.D-21 - the letter dated 30th March 1971 written by the plaintiff to defendants 1 and 2 in relation to the agreement Ex.P.3. It is necessary to reproduce the entire letter because on the certain portions of this letter the plaintiff has placed reliance and on the other portions the defendants have placed reliance. Therefore, we reproduce the entire letter, Bangalore 30.3.1971.
To
1. Sri A.B. Aswathanarayana, son of Balaiah.
2. Smt. Sunandamma, No. 184, Srinivasa Mandiram Road, Bangalore - 2A.
From:
B.R. Mulani, Madhavanagar, Bangalore-1.
Dear Sir/Madam, This is to inform you that you entered into an agreement of sate dated 7th May 1970 agreeing to sell the premises No. 173 (Old) New No. 184/1 and 184/2 for a sum of Rs. 1,10,000/-.
You also agreed, among other things, to clear the loan due by you to Sri B.N. Lakshminarayana on or before 2.4.1971 free from encumbrances. You also received a sum of Rs. 20,000/- as per the terms of the said agreement.
On the same day you executed an agreement in my favour authorising me to collect the rents from your tenants. However at your request I allowed you to collect the rents for yourself on your assurance, that you would pay off my money instead of selling the premises. However you have neither repaid my money nor executed the Sale Deed in my favour.
However, I am ready to perform the contract on my part and reciprocally call upon you to do the same, failing which I may be compelled to take legal steps to enforce the terms of the agreement.
Yours faithfully, Sd/-B.R. Mulani."
Para-3 of the aforesaid letter is relied upon by the defendants, whereas the last para is called upon by the plaintiff. In para-3 the plaintiff has stated that on the date Ex.P.3 was entered into there was Agreement executed by defendants 1 and 2 in favour of the plaintiff authorising him to collect the rents from the tenants. This has a reference to Ex.P.15 to which we have made a reference already. It is further stated by the plaintiff in the very paragraph that at the request of defendants 1 and 2 he allowed the. defendants 1 and 2 to collect the rent from the tenants on the assurance of defendants 1 and 2 that they would pay off the money instead of selling the premises. The letter further states that defendants 1 and 2 had neither repaid any money nor executed the sale deed in favour of the plaintiff. If under Ex.P.3 parties intended only to sell the suit schedule property for a sum of Rs. 1,10,000/- it was not at all necessary for the plaintiff to state that defendants had neither paid off the money due under the agreement nor did they execute the sale deed. He would have straight away called upon them to execute the sale deed. Of course, in the last paragraph he has stated that he is ready to perform his part of the contract and has called upon the defendants to perform their part of the contract as otherwise, he would take legal steps. This letter comes into existence immediately on the expiry of 10 months from the date of Ex.P.3 and P.15. Further there is also another letter dated 10.4.1971 written by the plaintiff to defendants 1 and 2. This letter is marked as Ex.P.5. This also relates to the suit agreement Ex.P.3. It may also be pointed out that Ex.P.5 is written in continuation of the letter Ex.D.21 to which we have already made a reference. In the very first paragraph of Ex.P.5 the plaintiff has stated thus:
"In continuation of my letter dated 30th March 1971 regarding the repayment of loan or sale of the property thereof, under the Agreement dated 7th May 1970 executed in my favour you had agreed to sell the property free from encumbrances."
The underlined words in the aforesaid extract of Ex.P.5 clearly indicate that under Ex.P.3 the defendants had an option either to repay the loan or to sell the suit property to the plaintiff. In the very same letter, the plaintiff has further stated thus;
"When I insisted for getting the document of Sale Registered you pleaded for six months' time to make arrangements. I have no objection for granting six months time to make your own arrangements.
Of course, in respect of this portion of the letter it is contended by Sri Sundaraswamy, learned Senior Counsel for the plaintiff that the expression "arrangements" referred to in this letter was only to enable the defendants to get ready to execute the sale deed by obtaining income tax clearance and also by vacating the portion in their occupation. In respect of this portion as to what was the arrangement intended by the parties, none of the parties have adverted their attention to it. Of course, the defendants ought to have drawn the attention of the plaintiff in respect of this portion of the letter. Therefore, we do not consider it necessary to depend upon this portion. For the purpose of the present point, the first para of Ex.P.5 is more than sufficient. Therefore, a reading of Exs.P.3, P.15, D.21 and P.5 which relate to the agreement evidenced by Ex.P.3, we are left with no doubt that what was agreed to, under Ex.P.3 by the parties was either to pay the amount advanced by the plaintiff as per the terms of the Agreement - Ex.P.3 or in the event they were not able to pay the amount to execute the sale deed. This was the real intention of the parties, and it was the real purport of the clause contained in the aforesaid para of the Agreement which has already been reproduced,
24. We may also point out one more aspect relating to the conduct of the plaintiff, which is also consistent with the intention of the parties that Ex.P.3 was not intended to be pure and simple agreement of sale, but it also gave an option to the defendants to pay off the amount and have the Agreement cancelled. This conduct of the plaintiff is evidenced in his act of getting the mortgages assigned in his favour as per Ex.P.4. It may be pointed out here that under the terms of the agreement Ex.P.3 in the event the defendants failed to pay the rents or debts due to Lakshmi Narayana, the same were required to be paid by the plaintiff, and to that extent the consideration amount shall be deemed to have been received by the defendants after adjusting the advance of Rs. 20,000/- and a sum of Rs. 15,000/- due under the Mortgage Deed dated 25.4.1968. Therefore, as per this term of Ex.P.3 if the defendants failed to have the mortgages executed by them in favour of Laxmi Narayana and also in favour of various other persons which were also assigned to Lakshmi Narayana, discharged on or before 2.4.1971, the plaintiff was required to have them discharged and adjust the amount so paid by him towards consideration payable under the agreement -Ex.P.3. But the plaintiff did not get the mortgages discharged. He got them assigned in his favour on 8.4.1971 under Ex.P.4. The result was that liability of the defendants under those mortgages remained undischarged. The debt was not wiped out. Instead of becoming liable to Lakshmi Narayana they became liable to the plaintiff. But, in law and in fact those mortgages remained in force. Therefore, the liability subsisted. This conduct of the plaintiff was quite in conformity with the aforesaid clause of the Agreement and the true intention of parties that under Ex.P.3 they had agreed that it would be open to the defendants either to pay the amount paid by the plaintiff under the agreement or to sell the suit property, as otherwise the plaintiff would have got the mortgages discharged or redeemed.
25. Sri Sundaraswamy, learned Senior Counsel contended that as the plaintiff was to obtain the sale deed and adjust that amount the question of enforcing those mortgages did not arise because the mortgagee would become the owner of the property on execution of the sale deed and thereby the mortgages would be extinguished and juridical relationship of mortgagor and mortgagee would be merged into the plaintiff on his becoming the owner of the property. It may be so after the sale deed is executed. But what we are concerned here is, about the conduct of the plaintiff as to how he treated the Agreement and as to how the parties understood the Agreement. If the Agreement was understood by the parties to be one of Agreement of Sale only, the plaintiff would have paid off all those mortgaged debts paid and got the mortgages discharged, and would not have got them assigned. This circumstance also goes to support our view that what was intended by the parties under Ex.P.3 was that it was open to the defendants to pay off the amount, or, in the alternative if they were not in a position to pay to sell the suit schedule property to the plaintiff for a sum of Rs. 1,10,000/-.
26. It is also the case of the defendants, as disclosed from the defence and the evidence of D.W.1, that on the date of the agreement the property was worth about 7 lakhs. In the cross examination of D.W.1 it has been suggested that the properly was not worth more than 5 lakhs. Defendants have also examined D.W.2 who has deposed that the property was worth Rs. 4 lakhs; that he wanted to purchase the property and contacted the first defendant in 1970, that he wanted to purchase front side shops, that he had offered to purchase for Rupees four lakhs; that the 1st defendant did not agree to sell it.
27. It may be mentioned that the front side shops referred to in the evidence of D.W.2 are part of the property agreed to be sold under Ex.P.3 in which the plaintiff is a tenant. It is because of the fact that the property is worth several lakhs, the parties had agreed to keep open to the defendants either to pay off the amount or to sell the suit schedule property. Otherwise, there was no need for such a recital in Ex.P.3 and there was no need to demand, payment of the money paid under Ex.P.3 as revealed from Exs.D.21 and P.5. Therefore, Point No. 1 is answered as follows:-
Under Ex.P.-3 the plaintiff and the defendants had agreed that the defendants should either pay the amount advanced by the plaintiff under Ex.P.3 or to sell the suit schedule property for the amount agreed. It was not an agreement of sale without an option to the defendants to pay off the amount advanced thereunder by the plaintiff.
28. Point No. 2:- It is contended on behalf of the defendants that the schedule to the Agreement Ex.P.3 describing the property agreed to be sold is vague therefore, the Agreement cannot also be enforced. On the contrary, it is contended by Sri Sundaraswamy, learned Senior Counsel that no such issue was raised in the Trial Court even though defendants 3 to 6 tried to contend in the Written Statement but they did not have any issue raised in this regard and the attention of the parties was not at all drawn to this aspect; that the Trial Court proceeded on the basis that there was no dispute with regard to the identity of the properties.
29. As far as defendants 1 and 2 are concerned they have not raised any such contention in their Written Statement. However, defendants 3 to 6 have tried to contend in para-1 of their Written Statement thus:
"The description of the property in the schedule is confusing and misleading. No sketch is produced. Plaintiff should be called upon to file a sketch indicating the subject matter of the suit and amend the Western boundary. The Western boundary given in the Schedule is indefinite and incorrect. Dimensions are not mentioned. The Western boundary should be portion of No. 173, Srinivasa Mandiram Road, Bangalore City, belonging to the defendants. This is clear from the opening sentence of para-3 of the plaint. This is how these defendants have understood the plaint."
It appears that they did not pursue this aspect any more after filing the Written Statement because they did not have any issue raised in this regard. Whenever a party raises a plea and does not have the issue raised in that regard and goes to trial and have the matter decided without having an issue raised on the plea, the party must be deemed to have given up such a plea. In the instant case it has happened so. However, we will consider this contention on its merits without applying the aforesaid proposition. It may be pointed out here that the boundaries mentioned in the schedule on the North, South and East are not at all in dispute. It is only the Western boundary which is in dispute. Western boundary is mentioned as the Premises bearing No. 185. There is a premises bearing No. 185 as is evident from Exs.P.13, P.14 and other evidence. In para-6 of the plaint the plaintiff has specifically referred to premises bearing No. 185 and has stated that in order to save this property the defendants entered into an Agreement of Sale as per Ex.P.3 to sell the suit schedule property. In para-15 of the Written Statement of defendants 1 and 2, they have admitted the averments made in para-6 of the plaint as true. In para-6 of the plaint the plaintiff has specifically stated that in order to save the property bearing No. 185 they have entered into an Agreement of Sale with the plaintiff agreeing to sell the suit schedule property for a sum of Rs. 1,10,000/-. Earlier to this under the Deed 2.6.1969 - Ex.P.7, the defendants had agreed to sell to B.N. Lakshmi Narayana not only the suit schedule property but also the premises bearing No. 185 for a sum of Rs. One Lakh. In the written statement of defendants 3 to 6 in para-9 they have stated thus:
"These defendants do not accept and deny that the house premises bearing Makhan lane had the number as 185 or has it now as is made to appear in the plaint."
But, they have not, as already pointed out, cared to have an issue raised in this regard and have not produced any evidence. It may also be pointed out that in Ex. P. 15 executed by defendants 1 and 2 in favour of the plaintiff on the date on which Ex.P.3 was executed they have also given the names of the tenants of the first and second floor of the property adjoining to the suit schedule property which according to the plaintiff is the property bearing No. 185.
30. P.W.1 in his evidence has stated that in order to save the other portion in his possession defendant No. 1 entered into an agreement with him for sale. The other portion is the Western boundary of the suit schedule property agreed to be sold under Ex.P.3. From Ex.D.1 which is the sketch of the entire property owned by defendants including the suit schedule property, the portion found in between the letters 'ground floor plan after modification second phase' and 'ground floor plan first phase' from Balepet till the end noted in the sketch is the area that has been agreed to be sold according to the Plaintiff as per the schedule to the Agreement Ex.P.3. Thereafter there is a property of defendants which, according to the Plaintiff as per the schedule to the agreement Ex.P.3 is a Makhan lane property and it consists of several tenements. In Ex.P.3 apart from giving the boundaries, the dimensions are also given. East to West 76 feet and North to South 23 feet with the common passage on the South and running from East to West. This is also noticeable from Ex.D.1. Therefore, we do not find any substance in the contention of the defendants that the property agreed to be sold under Ex.P.3 is not clearly described in the schedule to Ex.P.3 and that there is ambiguity or it is not possible to identify the same. Hence, the contention is rejected. Point No. 2 is answered accordingly.
31. Point No. 3 : The trial Court no doubt on consideration of the grounds which are now given up by the parties viz., that the liabilities were not incurred for legal necessity and the suit property was the joint family property, held that the plaintiff had obtained the Agreement Ex.P.3 by exercising undue influence and on taking unfair advantage, therefore, he was not entitled to specific performance. It also found that the plaintiff had not paid a sum of Rs. 20,000/- under the Agreement Ex.P.3 but, he had paid only a sum of Rs. 5,000/-. The Trial Court also rejected the contention of the plaintiff that there was no specific plea of undue influence or coercion pleaded by the parties.
32. We may at once point out that the findings recorded by the Trial Court on these points are unsustainable from the evidence on record. As far as the property being the joint family property and the liabilities incurred were not for legal necessity, are concerned the defendants themselves have given them up. But, undue influence and unfair advantage as found by the Trial Court cannot be sustained from the evidence on record. It may be pointed out that in the Written Statement of the defendants the plea of undue influence or coercion was not raised as required by Order 6 Rule 4 of the C.P.C. No particulars as required by Rule 4 of Order 6 C.P.C. were furnished.
33. The learned Judge has also held that the loans raised and the construction put up did not go to the benefit of the family, but it went to the benefit of the plaintiff, and that there was no construction of the second floor. We may point out that the learned Judge has not correctly appreciated the evidence on record. The evidence on record, as disclosed from the deposition of P.W.1 and the contents of Ex.P.15 and so also the recitals in the several Mortgage Deeds which are produced as Exts. D.4 to D.8, D.11 to D.14, it is established that the defendants raised loans from time to time for the purpose of putting up construction on the other portion of the property adjoining to the suit schedule property and accordingly they put up first floor and the second floor and let out the same to the tenants. Therefore, the conclusion of the learned Trial Judge that no benefit derived by the defendants from the several liabilities incurred by defendant No. 1 is not correct. Even assuming that the plaintiff advised or persuaded the first defendant to take up construction of the first floor and the second floor to enable them to have more income and thereby benefit the family, such advice cannot be held to be either self interested or misleading. Further, the first defendant was not a simpleton, and he was a practicing Ayurvedic doctor and, as such, it is not possible to hold that he could come under the influence of the plaintiff muchless an undue influence. After all the plaintiff was the tenant of a portion of the premises just as any other tenants who had occupied the other portions of the property of the defendants. The Trial Court was not justified in holding that it was the plaintiff and Laxminarayana and his brother who were responsible for the liability incurred by the defendants to the tune of Rs. 80,000/-. The trial Court failed to take into consideration of the fact that whatever amount was raised by way of mortgages, was utilised for the purpose of putting up construction. This has been admitted by D.W.1 himself in his evidence. Therefore, we are of the view that the trial Court is not justified in holding that the plaintiff obtained the suit agreement Ex.P.3 by placing the defendants in such a situation from which they could not return and thereby compelled them to execute the agreement of sale. There was no question of exercising any undue influence or coercion. Even proceeding on the basis that the agreement was obtained by the plaintiff without exercising undue influence and/or subjecting him to coercion; the point for consideration is whether on the facts and circumstances of the case the plaintiff can be granted a decree for specific performance.
34. While dealing with Point No. 1, we have pointed out that the Agreement Ex.P.3 itself is not a pure and simple agreement for sale. It is coupled with the option to the defendants to either pay the amount or to sell the suit schedule property. The facts proved in the case also further establish that the property as on the date of the agreement was worth several lakhs of rupees. The consideration mentioned is only Rs. 1,10,000/-. We may point out that a mere inadequacy of consideration is not a factor or a circumstance to be taken into account while considering the case as to whether the agreement gives to the plaintiff an unfair advantage over the defendants, or hardship would be caused to the defendants by directing them to perform the agreement. However, in a case, where the agreement itself gives an option, in other words when the parties themselves agree to the effect that it would be open to the defendants - vendors either to repay the money advanced under the Agreement or to sell the suit property, and the parties have understood the Agreement in that manner and conducted themselves in conformity with such option, as expressed through Exs. P.15, D.21 and P.5, whether it would be just and proper for the Court to exercise its equity jurisdiction in favour of the Plaintiff and direct the defendants to execute a sale deed. In our view in such a case it would not be just and appropriate to grant a decree for specific performance as it would be contrary to the terms of the agreement and it would take away the right of the prospective vendor to exercise his option and pay off the amount and thereby save the property. The Supreme Court in M.L. DEVENDER SINGH AND ORS. v. SYED KHAJA, quoted with approval the statement of law in SIREDWARD FRY'S "Treatise on the Specific Performance of Contracts" (Sixth Edn. at Page 65). The learned author stated thus:
"The question always is: what is the contract? Is it that one certain act shall be done, with a sum annexed, whether by way of penalty or damages, to secure the performance of this very act? or, is it that one of the two things shall be done at the election of the party who has to perform the contract, namely, the performance of the act or the payment of the sum of money? If the former, the fact of the penal or other like sum being annexed will not prevent the Court's enforcing performance of the very act, and thus carrying into execution the intention of the parties; if the latter, the contract is satisfied by the payment of a sum of money, and there is no ground for proceeding against the party having the election to compel the performance of the other alternative.
From what has been said it will be gathered that contracts of the kind now under discussion are divisible into three classes:
(i) Where the sum mentioned is strictly a penalty -- a sum named by way of securing the performance of the contract, as the penalty is a bond:
(ii) Where the sum named is to be paid as liquidated damages for a breach of the contract;
(iii) Where the sum named is an amount the payment of which may be substituted for the performance of the act at the election of the persons by whom the money is to be paid or the act done.
Where the stipulated payment comes under either of the two first mentioned heads, the Court will enforce the contract, if in other respects it can and ought to be enforced, just in the same way as a contract not to do a particular act, with a penalty added to secure its performance or a sum named as liquidated damages, may be specifically enforced by means of an injunction against breaking it. On the other hand, where the contract comes under the third head, it is satisfied by the payment of the money, and there is no ground for the Court to compel the specific performance of the other alternative of the contract".
Thus, our view is fortified by the aforesaid Decision of the Supreme Court. Apart from the aforesaid proposition, the other established facts of this case also do not persuade us to exercise the equity jurisdiction in favour of the plaintiff. Those circumstance are: the Plaintiff has not discharged the mortgage liabilities as per the terms of the agreement. There is a world of difference between discharging of the mortgage liabilities and getting them assigned. In the instant case before the agreement of sale was entered into, the suit schedule property along with the adjoining property was mortgaged with possession to S.R. Nanjundaraju and some portion to Savitramma; these mortgage debts were discharged. Two mortgages in favour of Jadappa on 6.12.1965 and 24.8.1966 under Exts. D.7 & D.8 and four mortgages in favour of B.N. Laxminarayana on 9.8.67 under Ext. D.10, on 27.11.67 under Ext.D.12, on 20.2.68 under Ext.D.13 and on 9.10.68 under Ext.D.14 were created. The mortgages in favour of Jadappa came to be assigned to Laxminarayana under Exts. D.9 and D.10 dated 9.8.1967. Thus, with the aforesaid assignment B.N. Laxminaryana became the mortgagee under Exts.D.7 & D.8 and he was also the mortgagee under the other mortgages executed in his favour as per Ext.D.11 to D.14. Thus on the date of execution of the Agreement of Sale the suit schedule property along with the other property was mortgaged with possession to B.N. Laxminarayana, There was also an Agreement of Sale executed in his favour under Ext.P.7 dated 2.6.1969 to sell the suit schedule property along with other properties for a sum of Rs. 1,00,000/-. That Agreement as per the evidence adduced in the case and as admitted by the parties was intended to be security and not an Agreement of Sale. P.W.2 Laxminarayana has admitted in his evidence that he had obtained an Agreement of Sale, Ext.P.7, only for security. He also gave up his right under Ex.P.7 in favour of the plaintiff as per Ext.P.7(a), an endorsement dated 8.4.1971 made on Ext.P.7. On 8.4.71 itself he also assigned under Ext.P.4 all the mortgages to the plaintiff. As per the terms of Ext.P.3, the defendants were required to get all the mortgages discharged by 2.4.1971. In the event they failed to have them discharged, it was for the plaintiff to have them discharged. However the plaintiff instead of getting those mortgages discharged got them assigned to himself. The result was that the liability of the defendants as mortgagors continued to exist and it did not wipe out. The contention is that by reason of getting those mortgages assigned, the plaintiff's liability towards Laxminarayana was wiped out. Therefore the act of getting the mortgages assigned in his favour by the Plaintiff must be deemed to be an act pursuant to or in performance of the Agreement of Sale Ext.P.3. It appears to us that it is not possible to accept this contention. As long as the mortgages subsist, the liability under the mortgages subsists and it can come to an end only on discharging those mortgages as the assignment does not result in the discharge of the mortgages. Therefore, the plaintiff on getting those mortgages assigned to himself, can be held to have obtained the securities only and not discharged the liabilities of the defendants. The position is that even if the plaintiff fails in the suit, he can recover the amount by enforcing the mortgages. Therefore, the payment to Laxminarayana was not for discharging the mortgage debts of the defendants pursuant to the agreement Ex.P.3; but to have an alternate security for the amount paid by the plaintiff to Laxminarayana. Therefore, the Plaintiff cannot be held to have performed his part of the agreement of sale in obtaining the mortgages assigned to himself. Therefore, the condition that was required to be fulfilled by the Plaintiff was not fulfilled.
35. Another circumstance is that under the Agreement of Sale the plaintiff was not put in possession of the suit schedule property. It is an established position of law that an agreement of sale does not confer title. The vendor continues to be the owner of the property agreed to be sold until the sale deed is executed. As long as the title continues to be with the owner, he is entitled to the profits from the property agreed to be sold. It is an undisputed fact and at any rate it was not disputed before us that the Plaintiff has not paid or accounted for the rent payable by him to the defendants, in respect of the suit schedule property from the date of the suit till to-day. The rent payable by the plaintiff in respect of the portion in his possession, it is submitted that it is Rs. 270/- per month inclusive of the rent payable under the lease deed Ext.D.2 and P.2. In addition to this he has also not vacated the portion he was required to vacate pursuant to Exs.D.2 & P.2. He has not adjusted the rent payable by him towards the mortgages. Thus, the plaintiff taking undue advantage of the agreement of sale, has not only accounted or paid the rent payable, he has also not vacated a portion of the suit schedule property which he was required to vacate under Exs.D.2 & P.2 by way of exchange of the leased premises.
35.1. However, it is contended that Section 55(4)(a) of the Transfer of Property Act is not attracted because it is a case in which the plaintiff had paid the entire amount of consideration before filing the suit and as such equity demanded that he should be entitled to continue in possession without paying rent as otherwise the payment of consideration by the plaintiff would have gone without any benefit or interest. In this regard a Decision of this Court in MALIKAJAPPA BHIMAPPA BENNUR v. BHIMAPPA KASHAPPA, PARASANNAVAR AND ORS. AIR 1966 Mysore 86, was relied upon. We may point out here that Section 55(4)(a) of the Transfer of Property Act is clear in its terms. It specifically provides that:
"In the absence of a contract to the contrary the buyer and seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold:
XXX XXX XXX
(4) The seller is entitled....
(a) to the rents and profits of the property till the ownership there of passes to the buyer....."
As far as the terms of the document Ext.P.3 are concerned, it does not state that the plaintiff has been put in possession of the suit schedule property pursuant to the Agreement. It also does not state anything as to the rents and the profits accruing from the suit schedule property subsequent to the sale agreement. It is silent in this regard. Therefore, there is no agreement or contract between the parties in respect of this aspect of the matter. Hence Section 55(4) (a) of the T.P. Act is directly attracted to the case. Section 55(4)(a) is based upon a established Rule of Law that it is the part of the right of the owner of the property to receive rent and profits of the property owned and that right continues until the title or ownership is lost. As the Agreement of Sale does not confer any title or transfer any title in the suit schedule property agreed to be sold, and the title continues to vest with the owner/vendor of the property agreed to be sold, even after the agreement of sale, it is governed by Section 55(4)(a) of the T.P. Act. This question is not considered in Malikajappa's case. In that case an agreement of sale was entered into for a sum of Rs. 1,800/-. Pursuant to the agreement the prospective vendee was put in possession of the suit schedule property. Under the agreement a sum of Rs. 400/- was paid. The prospective vendee did not perform his part of the agreement and failed to obtain sale deed; therefore the prospective vendor went to Court seeking possession of the property. One of the contentions raised was that as the prospective vendee was put in possession of the property and as he had not paid the entire consideration, atleast the interest should be directed to be paid on the balance of the consideration amount from the date, the prospective vendee was put in possession of the suit schedule property till the execution of the sale deed. In that case this Court exercised the discretion in favour of the prospective vendee and held that he was entitled to have the sale deed executed and it also upheld the contention of the prospective vendor that as the prospective vendee was put in possession of the suit schedule property pursuant to the agreement and as he had not paid the entire consideration he was liable to pay interest on the balance of the sale consideration from the date he was put in possession till the date the sale deed was to be executed. Thus, that was not a case in which the prospective vendor continued to remain in possession of the property agreed to be sold through the prospective vendee put in possession of the property agreed to be sold as a lessee prior to the date of agreement of sale. We may point out that the principle of law laid down in that Decision has not been approved by W.W. CHITALEY in his book "The Transfer of Property Act", 5th Edn. At page 257 it is stated thus:"Where before the ownership has passed to the buyer, the seller has delivered the property but the buyer has not paid the purchase-money the seller would, as stated in the beginning of this Note, be entitled to the rents and profits of the property until the date of conveyance. It has, however, been held in the undermentioned cases (24) that in such cases the seller would be entitled to interest on the purchase-money. It is submitted that this view is not correct. The seller is not entitled to the purchase-money until the date of the conveyance and cannot, therefore, get any interest on it."
The aforesaid statement of law made by CHITALEY is also supported by the provisions contained in the T.P. Act itself. In the case of sale of property without payment of consideration or postponment of payment of consideration, the consideration amount shall become a charge on the property sold and recoverable from that property. Therefore such a question will arise only after the title is passed. Therefore, it is not possible to apply the aforesaid Decision to the facts of the present case, and it is not possible to approve it. We accordingly over-rule it. Thus, we are of the view that the plaintiff has also taken unfair advantage of the agreement and has kept the rental amount with himself at the rate of Rs. 270/- per month from the date of suit till now which itself would come to several thousands. Hence we are of the view that the plaintiff is not entitled to a decree for specific performance. In the instant case if the equity jurisdiction is exercised in favour of the plaintiff it will result in great hardship to the defendants and it would also be highly inequitable to pass a decree for specific performance in case like this. Accordingly Point No. 3 is answered in the negative.
36. Point No. 4: The plaintiff in addition to seeking specific performance has also sought for a decree for a sum of Rs. 10,000/- on the ground that he has paid Rs. 10,000/- over and above a sum of Rs. 1,10,000/- as agreed under Ext.P.3 as consideration for the sale of the suit schedule property in his favour by the defendants. This amount of Rs. 10,000/- admittedly has been paid to Laxminaryana. But according to the plaintiff it is paid in pursuance of and in discharge of his obligation under the Agreement - Ext.P.3 to Laxminarayana towards discharging of the rent due to Laxminarayana which was collected by the defendants in respect of the properties mortgaged to him and simultaneously leased in favour of the defendants. The point for consideration is as to whether this sum of Rs. 10,000/- has been paid in discharge of his obligation under Ext.P.3 or towards assignment of the mortgages. As already pointed out, Agreement Ext.P.3 enables the plaintiff to discharge the mortgage debts due to Laxminarayana in the event the defendants failed to have them discharged. The defendants as per the evidence on record failed to have the mortgage debts due to Laxminarayana discharged. But the question is whether the plaintiff, by getting the mortgages assigned to himself can be held to have discharged those mortgages. The assignment of mortgages, we have already pointed out in the earlier portion of this Judgment does not result in discharge of the mortgages. When the mortgage debts subsist the liability of the mortgagor continues. If that be so, he cannot be held to have paid the amount in pursuance of and in performance of his obligation under Ext.P.3. It must be held to be an act of obtaining the assignment of the mortgage debts to himself thereby enabling himself to enforce those mortgages and to step into the shoes of a mortgagee. As such we find it difficult to accept the contention of Sri. Sundaraswamy learned Counsel for the plaintiff-appellant that the sum of Rs. 10,000/- paid to Laxminarayana by the plaintiff must be held to have been paid under the agreement. There is no doubt that he has paid this sum to Laxminarayana. But that payment cannot be held to be under the Agreement of Sale Ext.P.3, It is also open to him to recover this amount while enforcing the mortgages. It is not as though he has no remedy in respect of this amount. Therefore, we are of the view that in a suit for specific performance filed by the Plaintiff for directing the defendants to perform their part of the Agreement under Ext.P.3 dated 7.5.1970, by executing a sale deed, the Plaintiff cannot be awarded a decree for recovery of the sum of Rs. 10,000/- said to have been paid to Laxminaryana for obtaining the mortgages assigned to him. Hence we are of the view that the decree for Rs. 10,000/- prayed for by the plaintiff as part of the consideration amount paid under Ext.P.3 in addition to the sum of Rs. 1,10,000/- cannot be granted. Therefore, point No. 4 is answered in the negative.
37. Point No. 5: We have answered Point No. 3 in the negative. Therefore under Point No. 5 we have to consider the nature of the decree we are required to pass. No doubt, it is contended that a sum of Rs. 20,000/- was not paid by the plaintiff pursuant to the agreement, but it is proved by the evidence on record that the plaintiff had paid a sum of Rs. 5,000/- in cash before the Sub Registrar at the time of registration of the Agreement Ex.P.3 and he had also paid Rs. 15,000/- to Laxminarayana under Ext.D.16 towards rent in respect of premises bearing No. 173(18471 & 18472), Balepet, Bangalore as per the Agreement dated 2.6.1969 and defendant-1 consented to it. Therefore, it was factually not correct on the part of the defendants to contend that they did not receive a sum of Rs. 20,000/- under the Agreement Ext.P.3 and their stand in this regard cannot at all be appreciated. Therefore it is established that the plaintiff has paid Rs. 20,000/- to the defendants under Ext.P.3. As far as payment of Rs. 1,00,000/- to Laxminarayana on 8.4.71 under Ext.P.4 for obtaining the mortgages executed by the defendants in favour of Jadappa and Laxminarayana assigned to himself is concerned, the right of the plaintiff to realise that amount in terms of the mortgage deeds is not lost and he is entitled to recover the same. Therefore that sum cannot at all be included in the present decree. Hence, we are of the view that the plaintiff is entitled to a decree for Rs. 20,000/-.
38. The next question for consideration is whether the plaintiff is entitled to any amount in addition to the sum of Rs. 20,000/-. The evidence on record discloses that the entire property agreed to be sold, excluding a portion of it, has been in the possession of the plaintiff, He has not paid the rent. Therefore, we will disallow interest upto 31.3.1989 because from 1st of April 1989 the rent agreed can be recovered by the plaintiff as that would be within 3 years as on today. As the rent for the previous period having become time barred the defendants have lost it. Therefore, if the defendants are directed to pay interest on Rs. 20,000/- from the date of the Agreement, it would be inequitous and unjust. Accordingly we hold that the plaintiff is entitled to a decree for a sum of Rs. 20,000/- with interest from 1.4.1989 at 12 per cent per annum. His liability to pay rent from April 1989 will continue. It also follows that the tenancy rights of the plaintiff are not in any way affected by reason of the findings recorded herein and the decree passed.
39. For the reasons stated above this Appeal is allowed in part. The judgment and decree of the trial Court are set aside. The suit of the plaintiff for specific performance of the Agreement Ext.P.3 dated 7.5.1970 is dismissed. However, there shall be a decree in favour of the plaintiff for a sum of Rs. 20,000/- with interest from 1.4.1989 at 12% per annum. The right of the plaintiff to continue as a tenant is not affected and his liability to pay rent prior to 1.4.1989 is adjusted towards the rent payable by him upto 31.3.1989. However, his liability to pay rent from 1.4.1989 continues. It is also made clear that he is entitled to recover the amount due under the mortgages as assigned to him under Ext.P.4. In the facts and circumstances of the case, there will be no order as to costs.
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