Narsingdas Takhatmal v. Radhakisan Rambakas

Bhagwati, J.:— [His Lordship stated facts and proceeded:] The main argument which appealed to the learned Judge below was that having regard to the nature and circumstances of the case, it was not open to the plaintiff under S. 92, Evidence Act to lead any evidence to show shat the sale-deeds which were executed by the plaintiff in favour of Ramnath and Rampratap as above were really mortgages and that therefore he was entitled to redeem the same. The applicability of S. 92, Evidence Act has also been the subject of an elaborate argument addressed by Mr. R.B Kotwal, who appears for the plaintiff before us. Before we proceed to discuss the applicability of S. 92, Evidence Act, we think that even though it may appear to be quite elementary, we should set out the terms of S. 92 which would fall to be construed by us in this appeal:

“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 substracting from its terms:

Proviso (1). Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud….”

2. It was urged before us that even though these documents were ostensibly executed as sale-deeds, the real agreement between the parties was that they were to be treated as deeds of mortgage and the plaintiff was to be allowed to redeem these mortgages on his paying to Ramnath and Rampratap the amounts found due by him to them on the accounts of the respective mortgages being made up by and between the parties. It was further urged that the conduct of the parties in the matter of the conveyances, reconveyances and the dealings with the several parcels of the properties comprised in S. Nos. 106, 108, 111 and 112 at Mouje Kaggod and the several parcels of land which had been carved out of the properties containd in Schs. C and D to the plaint, as also the transfer of these Bijapur lands in the name of defendant 4 only in the Revenue Records after the partition of 15-7-1929, supported the plaintiff in his case that these documents which he executed in favour of Ramnath and Rampratap were not sales but really mortgages. In the plaint itself, the plaintiff had stated that these documents had been executed by him on the understanding that the sale-deeds should be treated as securities for the amounts advanced. This was the evidence which was sought to be adduced under S. 92, Evidence Act in order to support the plaintiff's contention that the sale-deeds executed by him in favour of Ramnath and Rampratap were really mortgages.

3. When the terms of S. 92, Evidence Act were pointed out as debarring the plaintiff from proving anything of this type as between himself and defendants 1 to 4, it was urged that what was sought to be done was not to lead evidence of any oral agreement or a statement as between the parties to such instrument or their representatives in interest for the purpose of contradicting or varying its terms, Ramnath and Rampratap no doubt were parties to these documents of sale, but defendants 1 to 4 were not such parties and that therefore there was no ban under S. 92, Evidence Act operating against such evidence being led on behalf of the plaintiff. The documents had been executed between the plaintiff on the one hand and Ramnath and Rampratap on the other in the several years, 1907, 1909, 1919 and 1923. There was a partition between the members of the defendants' joint family in the year 1929, under the terms of which these properties had been transferred to defendants 1 to 4 and they had acquired absolute interest therein under the terms of the deed of partition executed by and between the parties on 15-7-1929. The plaintiff was not a party to this deed of partition and defendants 1 to 4 were not parties to the various deeds of sale and that therefore it could not be urged that the evidence which was sought to be led was between the parties to the documents or their representatives in interest so as to come within the ban of S. 92, Evidence Act.

4. Before we proceed to discuss the authorities which were cited before us, it is necessary to clear the ground by analysing what was the true position as it obtained between the parties. The plaintiff was the owner of all these properties which were the subject matter of the various deeds of sale executed by him in favour of Ramnath and Rampratap. He had sold these several properties to them for the considerations mentioned in the several deeds of sale. Ramnath and Rampratap were the members of a joint and undivided Hindu family, Ramnath and Rampratap representing one branch of it and Rambakas representing another. Ramnath and Rampratap were alleged to represent the whole of their joint family in the matter of these deeds of sale executed by the plaintiff in their favour, with the result that even though the sale-deeds were executed in the names of Ramnath and Rampratap, they were really for the benefit of the members of their joint family. In a sense all the members of the joint family could be said to have acquired an interest in these Bijapur properties by reason of the sale-deeds executed by the plaintiff in favour of Ramnath and Rampratap.

5. When the deed of partition came to be executed between the members of the defendants' joint family what was done was that whatever rights title and interest Ramnath and Rampratap had in these Bijapur properties was transferred by them in favour of defendants 1 to 4, defendants 1 to 4 in their turn releasing or relinquishing all right, title and interest which they had in the other properties belonging to the joint family which went to Ramnath and Rampratap on such partition. Partition is a transfer of immoveable property, but the partition effected here, so far as the plaintiff was concerned, did not and could not affect the nature of the transactions as they originally took place between him and Ramnath and Rampratap. The only thing which would require to be considered from this point of view would be what was the real nature of the transactions which had taken place between the plaintiff on the one hand and Ramnath and Rampratap on the other. If that was so, S. 92, Evidence Act would have a direct application, because whatever evidence was sought to be led would be between the parties to these documents of sale and no others, defendants 1 to 4 being really parties to the documents, though the documents were in fact executed in favour of Ramnath and Rampratap.

6. Even if we do not go so far as this, another aspect will have also to be considered, and that is how far could defendants 1 to 4 be treated as third parties in regard to the transactions of sale which had already been effected as between the plaintiff on the one hand and Ramnath and Rampratap on the other. Ramnath and Rampratap were the parties to these documents. Defendants 1 to 4 came to be the full owners of these Bijapur properties under the terms of the deed of partition which was executed between Ramnath and Rampratap on the one hand and themselves on the other. Whatever right, title and interest Ramnath and Rampratap had in these Bijapur properties came to be given over to defendants 1 to 4 under the deed of partition and defendants 1 to 4 themselves derived their title, if not initially, at least by virtue of the operation of the deed of partition. If they thus derived their right, title and interest in these Bijapur properties from Ramnath and Rampratap, they would certainly be the representatives in interest of Ramnath and Rampratap, and if that was so, so far as the documents of sale which were executed between the plaintiff on the one hand and Ramnath and Rampratap on the other were concerned, they would be, though not parties to the documents, the representatives in interest of the parties to the documents.

7. From this point of view also S. 92, Evidence Act would prevent the evidence being led of any oral agreement or statement on behalf of the plaintiff for the purpose of contradicting or varying the terms of these documents of sale, the evidence being sought to be led between the plaintiff on the one hand and defendants 1 to 4 on the other, who in their turn were the representatives in interest of Ramnath and Rampratap who were the parties to these documents of sale. Apart from the authorities which were cited at the bar and which we shall deal with in a moment, this appears to be the clear position on a true analysis of the facts and the circumstances of the case. The evidence which was sought to be led by the plaintiff was clearly with a view to contradict or vary the terms of these documents which had been executed between the plaintiff on the one hand and Ramnath and Rampratap on the other and could not be led even between the plaintiff and defendants 1 to 4 because defendants 1 to 4 were the representatives in interest of Ramnath and Rampratap.

8. Mr. R.B Kotwal, however, urged before us that such evidence could be led without infringing the provisions of S. 92, Evidence Act. He drew our attention to a decision of their Lordships of the Privy Council in Maung Kyin v. Ma Shwe La, 38 Ind. App. 146 (P.C). In that case one Myaing had executed an out and out conveyance of two of his properties in favour of Kyin and his wife having borrowed from them a sum of Rs. 8,500. No possession had passed, but interest had been paid by Myaing and the repayment of the loan to the extent of Rs. 3,500 had also been made. Kyin and his wife had similarly obtained by purchase at a public auction two other plots of land belonging to Myaing for a consideration of Rs. 1,155. Here also no possession had passed from Maying to Kyin. Kyin and his wife subsequently transferred, all the properties to U Shwe Pe and his wife and conveyed the same to them by an ex facie absolute conveyance. Myaing was not a party to the later transaction in favour of U Shwe Pe and his wife.

9. Myaing subsequently conveyed to Kyin and his wife his equity of redemption on the basis that notwithstanding absolute conveyance executed by Myaing in favour of Kyins, Kyins had got only the mortgages over these properties and therefore the equity of redemption had remained with Myaing which he was free to dispose off. U Shwe Pe died and his widow and children brought a suit for possession of the lands against Kyins. Kyins resisted possession being given and maintained that although the conveyance to U Shwe Pe and his wife was absolute in form, it was well-known to them that the true nature of the transaction was one of mortgage upon the securities of the properties. In particular it was maintained that U Shwe Pe and his wife knew that Kyins who purported to grant the conveyance in absolute terms were not in fact the owners of the property but were in fact lenders thereupon.

10. When the matter came earlier before their Lordships of the Privy Council in the year 1911, the question as to the applicability of S. 92, Evidence Act was mooted, and it was objected that no evidence could be led of any oral agreement between Myaing and Kyins to show that the transactions as between them were really mortgages and not out and out sales as they ostensibly were. Their Lordships were of the opinion that the case for the appellant disclosed fraud against the respondents in relation to matters antecedent to the execution of the deeds on which much of the evidence tendered would certainly be material. If that were so, S. 92, Evidence Act even if construed according to the respondents' contention would not avail them. It did not prevent proof of a fraudulent dealing with the third person's property or proof of notice that the property purporting to be absolutely conveyed in fact belonged to a third person who was not a party to the conveyance.

11. Their Lordships, therefore, ordered that the evidence which had been rejected in the Court below should be heard subject to just conditions. Such evidence was accordingly taken and the matter came before their Lordships of the Privy Council in the year 1917, and the judgment of their Lordships is reported in Maung Kyin v. Ma Shwe La, 44 Ind. App. 236 (P.C). Their Lordships were of the opinion that as between the parties to an absolute conveyance S. 92 of the Act (subject to its provisos) precludes the giving of oral evidence to prove that the transaction was intended to be a mortgage. The section, however, applied only as between the parties. Where, therefore, the grantee took knowing that a third person was the owner of the property and the grantor was only a mortgagee, and that the intention of all parties was merely to transfer the mortgage, oral evidence was admissible to prove the real nature of the transactions. The relevant portion of the judgment is to be found at p. 245:

“Upon the facts it now turns out quite plainly, and it was indeed admitted in argument, that when Shwe Pe took the conveyance from the Kyins he knew that it was a conveyance of property which belonged to Myaing, and that accordingly the grant proceeded a non demino. If S. 92 applied, proviso 1 would be seen to be in point, because it would be a fraud to insist upon a claim to property arising under such a transaction, the claimant knowing that the true owner had never parted with it. But, in the opinion of their Lordships, S. 92 does not apply, because the evidence, the admissibility of which is in question is evidence going to show what were the rights of a third person, namely, Myaing, in property; and there are concurrent findings to the effect that the property was in that owner and not in the Kyins who to the knowledge of Shwe Pe never purported to dispose of it as theirs.

If a purchaser for onerous consideration and without notice had been the grantee under a deed of absolute conveyance, a totally different set of considerations would have arisen. In the present case, however, both grantor and grantee were dealing with the property of an owner who was a third person, who was not in the language of the statute, either a party to the instrument or a representative in interest of a party to the instrument. The evidence led as to that third party's right is admissible, and if admissible, is most relevant. Their Lordships do not hold any doubt upon the subject of fact, in that respect entirely agreeing with all the Courts below. It is true that the Court of Appeal felt precluded by the terms of S. 92, Evidence Act from agreeing with the Judge of the Chief Court, but in the opinion of the Board the section is, in the important particular last dealt with, no bar to the admission of the light on the true situation of case.”

12. It is significant to observe that in their Lordships' opinion S. 92 had no application at all to the facts of the case and the matter was discussed having regard to the position as it obtained between the parties to the suit. Myaing in the case before their Lordships was taken to be the stranger or a third party. The transactions in respect of which the evidence was sought to be led were transactions between Myaing and Kyins. They were not the transactions between U Shwe Pe and Kyins and Myaing was certainly not a representative in interest of either Kyins or U Shwe Pe, with the result that there was no question of the applicability of S. 92, Evidence Act and the ban to the admissibility of evidence between the parties to the document or their representatives in interest ever coming into operation. As a matter of fact, their Lordships of the Privy Council definitely stated that in the case before them both grantor and grantee were dealing with the property of an owner who was a third person, who was not, in the language of the statute, either a party to the instrument or a representative in interest of a party to the instrument. It was in these circumstances, that their Lordships came to the conclusion that there was no ban under S. 92, Evidence Act to the admissibility of the evidence which was sought to be led in regard to the real nature of the transactions between Myaing and Kyins.

13. As the decision of their Lordships of the Privy Council in this case stands, it is very easy to understand the same. If A has executed a document containing the terms of a contract, grant or other disposition of property in favour of B, no evidence of any oral agreement or statement can be admitted as between A and B or their representatives in interest for the purpose of contradicting or varying, adding to or subtracting from its terms. If, however, A wants to prove as between himself and B that what he, A, had acquired from his predecessor in interest was not what was described in the document as between A and B, there will be no ban against A seeking to prove the same, even though the admissibility of such evidence on his behalf may amount to contradicting, varying, adding to or subtracting from the terms of a document, executed between himself and his predecessor in interest as the predecessor in interest would certainly not be a party to the document which has been executed between himself and B nor would the predecessor in interest be in the position of his representative in interest.

14. The earlier document would only be between himself and his predecessor in interest, and S. 92 would, therefore, be no bar against the admission of the evidence for the purpose of contradicting, varying, adding to or subtracting from its terms. As between A and B the document which is executed, by and between them would remain unaffected so far as its terms were concerned. If it is an absolute conveyance B would obtain thereunder the whole of the right, title and interest of A in the property which is the subject matter of that conveyance but that would be no bar to A's leading evidence before the Court to show that what A had really got from his predecessor in interest was not what it purported to be, but was something else. The leading of this evidence would not derogate from the grant. The grant would certainly be of the whole of the interest of A in the property which is the subject matter of the conveyance.

15. But A would be able to show by leading such evidence as to the real nature of the transaction between himself and his predecessor in interest that what he really had obtained from his predecessor in interest and which he was seeking to transfer under the terms of the document as between himself and B was something which was different from what it purported to be under the terms of the document actually executed between him and his predecessor in interest. The predecessor-in-interest would be a third party or a stranger so far as the document executed by and between A and B was concerned. No evidence could be led to contradict, vary, add to or subtract from the terms of the document as it was executed between A and B, the only purpose of the evidence sought to be led on behalf of A being to prove that he had acquired from his predecessor in interest something which was different from what it purported to be under the terms of the document which was executed between himself and his predecessor in interest. The leading of such oral evidence in order to contradict, vary, add to or subtract from the terms of the document between A and his predecessor in interest would thus not come within the ban of S. 92, Evidence Act.

16. If regard be had to the position as it has been thus enunciated by their Lordships of the Privy Council it would be easy to understand how the other cases which were relied upon by Mr. R.B Kotwal for the plaintiff do not affect the position. Mr. R.B Kotwal drew our attention to a decision of a Division Bench of this Court reported in Ganu v. Bhau, 20 Bom. L.R 684. The Division Bench was there constituted by Shah J. and Marten J. In the case before them, the plaintiff and his divided brother had purported to sell certain properties to S in the year 1892. Some portions of the properties were sold by S to defendant 1 on 18-8-1898, and the remaining portions were sold to the same person on 17-9-1904. The plaintiff sued in 1913 to have it declared that the transaction of 1892 was a mortgage. The trial Court held that the transaction of 1892 was a mortgage and it was so known to defendant 1 both in 1898 and 1904 and decreed that on payment the plaintiff was entitled to recover certain portions of the property from defendant 1.

17. The lower appellate Court threw out his claim on the ground that the evidence to show that the conveyance of 1898 in favour of defendant 1 was a mortgage was inadmissible. The plaintiff appealed, and on appeal it was held that S. 92, Evidence Act had no application to the transactions of 1898 and 1904, as the plaintiff was not a party to either of them. These transactions of 1898 and 1904 were as between S on the one hand and defendant 1 on the other. No evidence was sought to be led in order to contradict, vary, add to, or subtract from the terms of these documents. The only evidence which was sought to be led was in regard to the transaction of 1892, which ostensibly was a sale, but really was a mortgage. It was held by the appellate Court that there being no attempt to contradict, vary, add to or subtract from the terms of the documents of 1898 and 1904, such evidence could not be said to be an evidence as between the parties to any such instrument or their representatives in interest within the meaning of S. 92 of the Act and was, therefore, admissible.

18. The learned Judges of the appellate Court there referred to the decision of their Lordships of the Privy Council which had just then been delivered reported in Maung Kyin v. Ma Shwe, (44 Ind. App. 236) and observed that having regard to the facts and decision in that case they could not see how it could be contended that as between the plaintiff and the defendants, S. 92, Evidence Act was a bar to the admissibility of oral evidence to show that the transaction between the plaintiff and his brother on the one hand and S on the other was a mortgage and not an out and out sale. The learned Judges were apparently of the opinion that as in the case before their Lordships of the Privy Council it was open to Kyins to prove against U Shwe Pe that the real transaction between Kyins and Myaing was a mortgage and not a sale as it ostensibly purported to be, it was just still open to the plaintiff in the case before them to urge that the real transaction between him and his brother on the one hand and S on the other was also a mortgage and not a sale as it ostensibly purported to be. The same ratio was applied by them whether the party seeking to lead such evidence happened to be a defendant or a plaintiff in an action.

19. The difficulty, however, which we feel in accepting this decision as laying down the correct position in law is that as between the plaintiff on the one hand and defendant 1 on the other in the case before them, defendant 1 could be said to be the representative in interest of S in regard to the transaction, the evidence in respect of which was sought to be led before the Court for the purpose of contradicting, varying, adding to or subtracting from its terms. The plaintiff was seeking to lead evidence in order to show that the document which he had executed in favour of S was not a transaction of sale but was a transaction of mortgage. If the plaintiff and S were the only parties to the suit, such evidence could certainly not be led by virtue of the provisions of S. 92, Evidence Act and the position would certainly not be any different if instead of the suit being between the plaintiff and S it was a suit between the plaintiff and defendant 1 if defendant 1 was a representative in interest of S. Even though the suit was between the plaintiff and defendant 1, the evidence which was sought to be led would be between the plaintiff and the representative in interest of S who was the other party to the document and such evidence being evidence for the purpose of contradicting, varying, adding to or subtracting from the terms of the document would be sought to be led as between the parties or their representatives in interest within the strict terms of S. 92, Evidence Act and would certainly not be admissible.

20. This aspect of the question was either not properly addressed before the learned Judges who decided Ganu v. Bhau, or was not present to their mind when they delivered their judgment in the case, with the result that, with utmost respect to them, we are unable to accept that case as laying down any proposition of law which favours the contention of Mr. R.B Kotwal. Each case is an authority for the proposition of law which it lays down and no principle of law was laid down by the learned Judges who decided that case. They merely applied the principle which was enunciated by their Lordships of the Privy Council in Maung Kyin v. Ma Shwe to the facts of the case before them; and if in the application of that principle, they did something which does not find favour with us as indicated above, there is no question of any principle of law enunciated by them, being either not accepted by us or dissented from by us.

21. The true principle of law as we have already stated has been laid down by the Privy Council in Maung Kyin v. Ma Shwe, and this decision of the Division Bench in Ganu v. Bhau, does not affect the true position of law as laid down by their Lordships of the Privy Council.

22. Mr. R.B Kotwal next drew our attention to a decision of a Division Bench of this Court reported in Hiraji v. Vishnu, A.I.R 1923 Bom. 429. The Division Bench there was constituted by Macleod C.J and Crump J. In that case the plaintiffs' father had given his share to one Haridas Ramdas in 1885 by passing a mortgage deed in the form of a sale for Rs. 1,000. Possession had remained with the plaintiffs' father. Defendants' father had also given his share to Haridas on the same condition, retaining possession. The plaintiffs' father died a year later in 1886 and the plaintiffs' mother the defendant and Haridas came to an arrangement by which it was found that the amount due by both the branches was Rs. 5,000 and the defendants passed an instalment bond for that amount for the plaintiffs and themselves, keeping all the land in their possession and giving some properties to the plaintiffs' mother for her maintenance. The defendant liquidated the debt in 1908 and 1909 and the plaintiffs claimed back from the defendants the properties originally mortgaged by their father to Haridas.

23. The defendants denied the plaintiffs' claim setting forward an earlier partition of the family properties and also claiming that they were entitled to retain the same. The plaintiffs' reply was to the effect that an arrangement had been arrived at between their mother and the defendants whereby the defendant mortgaged the whole property to Haridas, so that when the debts were paid off, defendants being in possession all along, the plaintiffs were entitled to get back their property. The question which arose before the trial Court was whether the plaintiffs were entitled to prove that the document of 1885 was a mortgage and not a sale-deed. The trial Judge held against the admissibility of such evidence. The appellate Court, however, following the decision of their Lordships of the Privy Council in Maung Kyin v. Ma Shwe, 44 Ind. App. 236, were of the opinion that the plaintiffs were entitled to prove that the defendants purchased from Haridas knowing that he was not the owner; and the only question, therefore, which they had to consider was whether plaintiffs had succeeded in proving the arrangement they alleged was made between their mother and the defendants in 1886.

24. On the facts, however, they came to the conclusion that no such arrangement had been proved and the decision of the trial Court was thus confirmed. In the judgment delivered by Macleod C.J as also by Crump J., we do not find any discussion of the ratio decidendi of the case before their Lordships of the Privy Council and the learned Judges appear to have been particularly impressed by the fact that there was no satisfactory evidence in regard to the arrangement of 1886 having been arrived at between the parties. Crump J. appears to have been very half-hearted in applying the decision of their Lordships of the Privy Council in Maung Kyin v. Ma Shwe, and he observed (p. 430):

“…. In view of the decision of the Privy Council in Maung Kyin v. Ma Shwe La, it may be open to them to do so despite, S. 92, Indian Evidence Act, but it would require to be established by satisfactory evidence.”

25. We do not treat this case as an authority for the proposition which had been urged before us by Mr. R.B Kotwal, and even if the learned Judges there intended to lay down any such proposition, we are of the opinion that it would be a case of a wrong application of the principle enunciated in Maung Kyin v. Ma Shwe La, and we would be justified in differing from the same, particularly because the effect of the words “or their representatives in interest” used in S. 92, Indian Evidence Act was not at all brought to the notice of, nor was it considered by, the learned Judges when they arrived at the decision in Hiraji v. Vishnu.

26. When this line of argument did not avail Mr. R.B Kotwal, he urged before us that in so far as defendants 1 to 4 had taken the suit properties on the partition of 1929 knowing full well that they were held by Ramnath and Rampratap as mortgagees and also agreeing that they would hold the same as such, it would be a fraud on the part of defendants 1 to 4 to turn round and now urge before the Court that the transactions as between the plaintiff on the one hand and Ramnath and Rampratap on the other were sales and not mortgages and that the plaintiff was not entitled to lead any evidence in regard to the true nature of the transactions. Reliance was placed in support of this position on the observations of their Lordships of the Privy Council in Mauny Kyin v. Ma Shwe La, 44 Ind. App. 236, (p. 245):

“If S. 92 applied, proviso (1) would seem to be in point, because it would be a fraud to insist upon a claim to property arising under such a transaction, the claimant knowing that the true owner had never parted with it”.

27. It was therefore, urged that allowing defendants 1 to 4 to take up the contention which they now did would be tantamount to permit them to commit a fraud and that was enough to bring the case within proviso (1) to S. 92, Evidence Act. In the context in which these observations were made by their Lordships of the Privy Council, it is abundantly clear that they were obiter dicta. We are aware that the obiter dicta of their Lordships of the Privy Council are entitled to the highest consideration. But even so, we would be justified in looking to the plain terms of S. 92, Evidence Act and coming to a conclusion on our own in regard to their construction. Even in Ganu v. Bhau, (20 Bom. L.R 684), Mr. Shah J. expressed a similar opinion following these observations of their Lordships of the Privy Council. He observed (p. 688):

“As regards the earlier transaction in favour of Shankar, it seems to me that under proviso (1) to S. 92, it is open to the plaintiff to adduce evidence to prove any fact which would entitle him to a decree or order relating thereto such as fraud. His allegation in substance is one of fraud, namely, that though Bhau entered into these transactions with the full knowledge of the fact that Sbankar was really a mortgagee and not the owner of the property, be now turns round and says that he had no such knowledge”.

28. We have to offer the same remarks in regard to these observations of Shah J. as we did in regard to the observations of their Lordships of the Privy Council referred to earlier. The question whether proviso 1 to S. 92, Evidence Act is applicable is not so simple. A mere averment of fraud without any particulars would be of no avail to a party. In order to plead fraud effectively the particulars of fraud must be given by the party, and in the absence of such particulars, there cannot be any proper averment of fraud. Even so, the fraud which is alleged must be such as enters into the transaction itself and enables the party to avoid the transaction. It must be fraud within the meaning of the term as used in S. 17(3), Contract Act, and unless and until the allegations amount to that, there cannot be any valid plea of fraud which can be taken up by a party. Merely because a party knew the circumstances under which the previous transaction had been entered into and was thereby affected with the knowledge of the circumstances attendant upon the transaction when he in his turn entered into his own transaction, it does not follow that he would be guilty of fraud if he set up a title contrary to the facts and circumstances thus known to him.

29. It may be that a Court of equity would not countenance his doing so and would by all possible means thwart his move so far as it is calculated to gain an undue advantage to himself. A pleading of fraud, however, is a different proposition altogether, and in order to establish fraud, which would be sufficient to avoid a transaction, it would require much stronger evidence than mere conduct of the type which was the subject matter of the comments made by their Lordships of the Privy Council. As a matter of fact, this question of fraud came to be discussed by a division bench of this Court in a decision reported in Dagdu v. Nama, 12 Bom. L.R 972. The division bench consisted of Sir Basil Scott C.J and Batchelor J. In the case before them, a suit was filed for a declaration that an apparent sale-deed executed by the plaintiff was a mortgage and for redemption of the mortgage security. The lower Courts allowed the plaintiff to adduce evidence to prove that the defendants at the time of the execution of the sale-deed represented to the plaintiff that the sale-deed would not be enforced as such.

30. It is significant to observe that the circumstances in this case were similar to those which obtained in the present case before us where also Ramnath and Rampratap are alleged to have represented to the plaintiff at the time of the execution of the sale-deeds that the sale-deeds would not be enforced as such and that they would re-transfer the properties to the plaintiff on the payment of the moneys due by them at the foot of the accounts. It was held by the High Court that no evidence of a contemporaneous agreement, or promise or representation inconsistent with the written document could be admitted. The learned Judges held that S. 92 was a bar to the admissibility of any such evidence. They then dealt with the argument that the representation found proved amounted to fraud as defined in S. 17(3), Contract Act, 1872.

31. That contention was also overruled, because there was no finding that the defendant at the time of making the representation had no intention of performing it. He might have made the promise in good faith and changed his mind afterwards when be found the value of the property in dispute had increased and that it was more advantageous for him to rely upon the sale evidenced by the written document than upon the mortgage which the plaintiff alleged was the oral agreement between the parties. This case is an authority for the proposition that the fraud which is contemplated in proviso (1) to S. 92, Evidence Act is at the very inception a fraud which vitiates the transaction itself and not any subsequent conduct or representation on the part of a party or his representative in interest which however reprehensible it may be is not enough to vitiate the transaction. The evidence of such conduct or representation, therefore, cannot be led within the meaning of proviso (1) to S. 92, Evidence Act. What was sought to be done in the case before us also was similar.

32. Evidence was sought to be led in regard to contemporaneous oral agreements entered into by Ramnath and Rampratap to the effect that the sale-deeds were really mortgages. That evidence was certainly inadmissible under S. 92, Evidence Act. Evidence as to representations made by defendants 1 to 4 at the time of the deed of partition in 1929 was also sought to be led, but that also could not affect the true nature of the transactions. The transactions had got to be impeached as they had been entered into and no evidence of the subsequent conduct or representations made by defendants 1 to 4 would be of any avail in this behalf. As already observed by us, defendants 1 to 4 even if they did not occupy the position of being parties to the deeds of sale were certainly representatives in interest of Ramnath and Rampratap and the very words of S. 92, Evidence Act “representatives in interest” were enough to exclude the evidence of the type which was sought to be tendered in order to show that the sale-deeds were not what they purported to be; but were in reality deeds of mortgage.

33. A further line of argument was adopted by Mr. R.B Kotwal and it was based on the observations made by Marten J. in Ganu v. Bhau, (20 Bom. L.R 684) where the learned Judge observed (p. 691):

“…. Even assuming for the sake of argument that Ex. 21 must be taken to be a sale-deed see nothing to prevent evidence being given as to an agreement entered into some six years later to treat Ex. 21 thenceforth as a mortgage and to enter into Ex. 44 as a transfer of that mortgage”.

34. Relying upon these observations, it was urged by Mr. R.B Kotwal that there was nothing to prevent defendants 1 to 4 when they arrived at the partition in 1929 from agreeing to treat the sale-deeds as mortgages and thus allow the plaintiff to redeem the mortgages on payment of the amounts due at the foot thereof. It is true that there is nothing in law to prevent any such oral agreement being arrived at between the parties. The provisions of the Transfer of Property Act do not prevent any such oral agreement. Section 9, T.P Act lays down that:

“A transfer of property may be made without writing in every case in which a writing is not expressly required by law.”

35. To enable the parties to come to an agreement of this nature, namely, to treat a sale as a mortgage by a subsequent agreement, no writing need be executed by and between the parties. As a matter of fact, we find various instances of oral transfers recognised in Sir Dinshah Mulla's commentary on the Transfer of Property Act, page 89:

“Thus a partition of joint family property may be made orally, and so also a surrender of a lease. A grant of land for life in discharge of a claim for maintenance is neither a gift nor a sale and may be made orally. In Imperial Bank of India v. Bengal National Bank, 58 Cal. 136, Rankin CJ said that partition, release and surrender are all forms of transfer but that so far as the Transfer of Property Act is concerned they come under no restriction. A right to recover a share of immovable property may be relinquished orally and without an instrument in writing”.

36. It would, therefore, appear that an oral agreement arrived at between defendants 1 to 4 and the plaintiff in the year 1929 could be validly proved if and in so far as it created in the plaintiff the right to a retransfer of all these properties by defendants 1 to 4 in his favour on his paying to defendants 1 to 4 the amounts due under these deeds of sale on proper accounts being made up between the parties at the foot thereof.

37. The difficulty, however, in the way of the plaintiff here is that this agreement was arrived at, if at all, in the year 1929. And even though in the correspondence which took place between the plaintiff on the one hand and defendants 1 to 4 on the other in the year 1932, this agreement was set up by the plaintiff and denied by defendants 1 to 4, no action was taken by the plaintiff for specific, enforcement of this agreement. Even if the agreement be established by the plaintiff, his only remedy would be a suit to enforce specific performance of that agreement and to be allowed to redeem these properties on payment of the amounts found due by him to defendants 1 to 4 at the foot of the accounts between the parties. Such a suit was certainly barred after the year 1932. Even though we were inclined to treat this suit which was filed by the plaintiff in the year 1941 as a suit to enforce specific performance of such an agreement arrived at between the plaintiff and defendants 1 to 4, such a suit was hopelessly barred by time. On this ground also, therefore, the plaintiff would not be entitled to any relief against defendants 1 to 4.

38. Having regard to all the considerations which we have mentioned above, we have, therefore, come to the conclusion that the decision reached by the learned Judge below was correct and the appeal must, therefore, stand dismissed.

39. In so far, however, as there was a possibility of misconception in the minds of the parties by reason of the decisions of our Court reported in Ganu v. Bhau, (20 Bom. L.R 684) and Hiraji v. Vishnu, (A.I.R 1923 Bom. 429) we feel that the proper order for costs under the circumstances of the case should be that each party should bear and pay his own costs of this appeal.

B/V.R.B

Appeal dismissed.