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Hara Bewa And Ors. v. Banchanidhi Barik And Ors.

Orissa High Court

Apr 26, 1957

Judgment

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Factual and Procedural Background

This is a second appeal by defendants No. 1, 6 and 7 against the confirming judgment of the Subordinate Judge of Balasore in a suit brought by the plaintiffs for declaration of title and for possession in respect of lands described in three schedules in the plaint. The basic factual matrix in the opinion is:

Defendant No. 1, Kara Bewa, inherited the properties on the death of her husband Ranka Barik.
Plaintiffs relied on a registered sale-deed (Ex. A) dated 19-5-1949 conveying the properties to them for a stated consideration of Rs. 200/-, and sought declaration of title and possession on that basis.
On 8-7-1949 the vendor (Kara Bewa) executed a registered cancellation deed (Ex. B) stating that the consideration money was not paid by the vendees as agreed.
On 19-9-1949 the vendor executed another registered sale-deed (Ex. C) in favour of defendants 6 and 7.
The courts below found (concurrently) that Ex. A recorded a consideration of Rs. 200/-, not Rs. 480/- as alleged by defendant No. 1, and that the consideration money had not been paid.

Legal Issues Presented

Whether title to the properties passed to the plaintiffs on execution and registration of Ex. A, or whether passing of title was dependent upon payment of the consideration.
When the terms of a sale-deed are ambiguous on the question of the time of passing title, to what extent may extraneous (evidence aliunde) circumstances be admitted and relied upon to ascertain the intention of the parties?

Arguments of the Parties

Plaintiffs' Arguments

The plaintiffs based their claim to title and possession on the registered sale-deed Ex. A dated 19-5-1949 which conveyed the entire properties for a consideration stated as Rs. 200/-. They relied on Ex. A as the foundation of their title.

Defendant No. 1's Arguments

Contended that title had not passed to the plaintiffs because the parties intended that title would pass only upon payment of consideration.
Asserted that although Ex. A recorded Rs. 200/-, the plaintiffs had in fact contracted to pay Rs. 480/-, implying the recital in Ex. A did not accurately reflect the agreement or payment obligation.
Pointed to her subsequent cancellation deed (Ex. B) stating non-payment of consideration and the later sale (Ex. C) to defendants 6 and 7 as showing that title had not passed to the plaintiffs.

Defendants 6 and 7's Arguments

Claimed title on the basis of the later sale-deed Ex. C executed in their favour, relying on the fact (as they asserted) that title had not passed to the plaintiffs because consideration had not been paid under Ex. A.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Radhamohan v. Bipin Behari, AIR 1938 Pat 505	Statement (Courtney-Terrell C.J.) that the question when property passes is contractual; if contract terms as to passing of property are ambiguous, external evidence may be used; if unambiguous, the document controls.	Quoted to state the primary principle that the sale-deed is the primary guide and extraneous evidence is admissible only when the document is indecisive or ambiguous.
Pitaram Singh v. Jagannath Sarawgi, AIR 1947 Pat 1	Reiteration of the view that if the terms of the contract are clear, those terms alone determine when title passes.	Referred to as a supporting authority for the proposition that an unambiguous deed controls and extraneous evidence is unnecessary and inadmissible to change that.
Chandrashekhar v. Pitambari, ILR (1953) Cut 343; AIR 1953 Orissa 318	Observed that courts must look to the terms of the contract to gather the parties' intention and should not admit evidence aliunde if the instrument's language is unambiguous.	Relied upon to reinforce the rule that intention is to be gathered from the sale-deed itself, and to illustrate application of that rule by the Orissa High Court (Panigrahi, C.J.).
Murtaza Hussain Md. v. Abdul Rahaman, AIR 1949 Pat 364	Contains two separate judgments: Agarwala C.J. (admitting evidence on fact of payment) and Meredith J. (a broader view allowing external evidence where ambiguity appears due to dispute over passing of consideration).	Discussed and treated as a case where Meredith J.'s broader dictum is viewed as a departure from prior authority; the court rejects Meredith J.'s expansive approach and prefers the Courtney-Terrell distinction.
Panchu Salm v. Janki Mandar, AIR 1952 Pat 263	Held that intention is to be gathered from the deed itself; cited as a recent Patna decision supporting that approach.	Identified as a decision followed by Panigrahi C.J. and relied on as part of the line of authority that the court endorses.
Balabhadra v. Nirmala, AIR 1954 Orissa 23	Demonstrated an instance where the conveyancing clause stood independently of the consideration clause and title was held to pass immediately; the court there also considered surrounding circumstances to reinforce the conclusion.	Distinguished from the present facts: the court notes the clause of conveyance in Balabhadra was independent (unlike in the present case), so that case did not control the present result.

Court's Reasoning and Analysis

The court proceeded in the following analytical steps, applying legal principles to the facts as found by the courts below:

Primary reliance on the documentary recitals: The court acknowledged the established rule that the sale-deed itself is the primary guide to determine when title passes. If the deed's language is clear and unambiguous as to the time of passing of title, that language alone governs.
Examination of Ex. A's recitals: The court examined the relevant passage from Ex. A (translated in the record). It found the recitals and clauses relating to passing of title, passing of consideration, and the vendees' ownership were so intermingled and involved that the document did not present a definite, unambiguous statement that title passed independent of payment of consideration.
Admissibility of extraneous circumstances: Because the deed's terms were indecisive and ambiguous on the core question, the court held that it was necessary and permissible to look to extraneous circumstances to determine the parties' intention. The court adopted the established distinction (attributed to Courtney-Terrell C.J.) that extraneous evidence is admissible only where the document is ambiguous on the question of the time of passing title.
Consideration of surrounding circumstances: The court considered specific external facts: (a) the document (Ex. A) remained in the custody of the vendor; (b) the vendor executed a cancellation deed (Ex. B) on 8-7-1949 stating that consideration had not been paid; and (c) subsequently the vendor executed a sale (Ex. C) in favour of defendants 6 and 7. The trial court had rejected the plaintiffs' explanation for custody of the document and the present court accepted that rejection.
Evaluation of conflicting authorities: The court reviewed prior decisions and made explicit that it did not accept Meredith J.'s broader view in Murtaza Hussain Md. v. Abdul Rahaman that could permit wider admission of extraneous evidence notwithstanding clear contractual terms. Instead the court preferred the traditional distinction: clear contractual terms are conclusive; ambiguity permits external evidence.
Conclusion on the facts: Applying the admitted factual findings (that the consideration was not paid and that Ex. A's recitals were ambiguous) together with the extraneous circumstances, the court concluded that the parties intended title to pass only on payment of the stated consideration; because payment was not proved, title did not pass to the plaintiffs.

Holding and Implications

Core Holding: The appeal is allowed. The judgments and decrees of the courts below are set aside, and the plaintiffs' suit is dismissed with costs, throughout.

Direct consequences for the parties:

The plaintiffs' claim for declaration of title and possession based on Ex. A is rejected because the consideration was not paid and the parties' intention, ascertained by reference to the ambiguous deed together with extraneous circumstances, was that title would not pass without payment.
The earlier judgments in favour of the plaintiffs (as confirmed below) are overturned; the defendants (including defendants 6 and 7) prevail as a result of the appeal.

Broader legal implication articulated by the court:

The court reaffirmed the established principle that the intention as to the time of passing of title is to be gathered primarily from the sale-deed itself; extraneous evidence is admissible only where the deed is indecisive or ambiguous on that point. The opinion explicitly declines to follow a broader dictum (attributed to Meredith, J.) that would allow wider admission of external evidence despite clear terms of the document.

The opinion does not purport to lay down a novel legal doctrine but applies and clarifies existing authorities on the limited question of when extraneous evidence may be considered in resolving whether title passes on execution of a sale-deed.

Judgment delivered by Narasimham, C.J.; another judge recorded agreement.

Show all summary ...

1. This second appeal is by defendants 1, 6 and 7 against the confirming Judgment of Sri I. C. Misra Subordinate Judge of Balasore, arising out of a suit brought by the plaintiffs for declaration of title and for possession in respect of three schedules, of lands described in the plaint. It is the case of both parties that defendant No. 1 Kara Bewa inherited the properties on the death of Her husband Ranka Barik. The plaintiffs base their title on a registered sale-deed (Ext. A) dated 19-5-1949, conveying the entire properties for a consideration of Rs. 200/-. On 8-7-1949 she cancelled the document (Ext. A) by a registered cancellation deed (Ext. b) stating therein that the consideration money was not paid by the vendees as agreed. On 19-9-1049 she sold these properties by another registered sale-deed (Ext. C) in favour or defendants 6 and 7.

2. The defence is that title had not passed in favour of the plaintiffs on the basis of the earlier document as the intention of the parties to the document was to the effect that title would not, pass unless consideration is paid. It was further urged by defendant No. 1 that the plaintiffs had contracted to pay a sum of Rs. 480/- as consideration money even though a consideration of Rs. 200/- was only mentioned in the sale deed in favour of the plaintiffs. Defendants 6 and 7 claim title on the basis of the sale-deed (Ext. C) executed in their favour relying on the position that title had not passed in favour of the plaintiffs on account of non-payment of the consideration money.

3. The Courts below concurrently found that Ex. A the sale-deed in favour of the plaintiffs dated 19-5-1949 was only for Rs. 200/- and not for Rs. 480/- as stated by defendant No. 1. They have concurrently found that the consideration money had not been paid.

4. The lower appellate Court has indeed approached the case from the right point of view that in cases of this nature where the question arises whether title passes on the registration of the document of sale, or that passing of the title depends upon the passing of consideration, the primary criterion is the recitals in the document. It requires no reiteration that only if the recitals in the document are indecisive or ambiguous the sorrounding circumstances in the conduct of the parties would be relevant. The relevant passage from the sale-deed (Ext. A) is as follows as translated:

"I today having duly sold to you (the Vendees) A. 2-19 1/2 decimals of land, as scheduled below at the present prevailing rate for the aforesaid consideration of Rs. 200/- and having received the entire consideration money in cash from you today, hereby stipulate as follows:

"That you the vendees with your lineal descendants will enjoy the properties under sale with all sorts of rights appertaining thereto till the sun and moon endure. You will get your name mutated in the zamindari sherista according to notice under Section 31. You will alienate the property according to your necessity."

I have gone through the original document carefully. To me it appears, the rentals are not clearly decisive. If really the recitals were to the effect that on receipt of the consideration money I sell the property to you and make you the full owner thereof, it would have been clear enough to show that the passing of title would depend upon the passing of consideration. On the contrary if there is a clear conveyance that the executant conveys title in favour of the vendee from the date of the execution of the document and the recital regarding consideration comes later independently of the clause regarding title, then only it is clear that title passes independent of the question of consideration.

But here the sentence is so involved and the terms regarding passing of title, passing of consideration and the vendees being the owners in respect of the properties sold are so intermingled that it is very difficult to make out from the recitals a definite position that in fact the parties intended that title would pass independent of the question of consideration. It is not possible to take a contrary view also on a plain reading of the document. I have therefore to take into consideration the extraneous circumstances, such as, the custody of the document, the conduct of the parties, etc.

5. The Courts below have gone wrong in confining themselves to the recitals in this case and in not discussing the surrounding circumstances to gather the intention of the parties. It is always held by high authorities that the custody of the document is a very strong piece of circumstance to throw light in the matter. The document is with the vendor and the plaintiffs explanation has been rightly discarded by the trial Court. The lower appellate Court did not discuss this position; but on a perusal of the judgment of the trial Court I am convinced that the plaintiff's explanation is to be rejected.

It is significant also to note that the widow, defendant No. 1, executed a deed of cancellation. (Ex. B) on 8-7-1949 on the ground that the consideration for Ex. A was not paid, and thereafter the widow has executed a sale-deed (Ex. C) in favour of defendants 6 and 7. On a consideration of these two important pieces of circumstances I feel convinced to find that it was the intention of the parties that the plaintiffs would not be getting title on the basis of the sale-deed (Ex. A) unless the consideration of Rs. 200/. must be paid and the consideration not having been paid, as found by the Courts below and accepted by us, the suit must fail.

6. I will, however, avail of this occasion to make some observation on the question how far and under what circumstances, extraneous evidence is admissible to gather intention of the parties. As I have indicated above, it has been uniformly held that in such case the document itself is the primary guide. I may refer to a few decisions only on the subject. In the case of Radhamohan v. Bipin Behari AIR 1938 Pat 505(A), their Lordships, after reviewing several decisions on the subject laid down the position, as would be found from the judgment of Courtney-Terrell C. J. :

"The question when the property is be pass is a matter of contract. In that respect it differs from the recital of fact, that is to say, the passing of the consideration which is not a matter of contract but matter of fact. If the terms of the contract as to when the property is to pass are ambiguous, then recourse may be had to external evidence with a view to determining what the Intention of the parties was; but if the intention of the parties has been stated in unambiguous terms, those terms must remain the sole criterion of the intention of the parties."

Indeed in all cases of this nature when the parsing of consideration is denied, it is permissible for parties to adduce evidence. But that stands entirely on a different footing. When the question covers what exactly was the intention of the par-- ties as to the time of passing of title, there if the document is unambiguous, it remains as the sole criterion. The same view was reiterated in the case of Pitaram Singh v. Jagannath Sarawgi AIR 1947 Pat 1 (B).

7. I will now take up a Bench decision of our High Court in the case of Chandrashekhar v. Pitambari ILR (1953) Cut 343: (AIR 1953 Orissa 318) (C). Panigrahi, C. J. observes as follows:

"To gather the intention of the parties the Court is bound to look to the terms of the contract and not to speculate as to the intention from evidence de hors the instrument. The only evidence that the Court will look into is that afforded by what the parties have said, and evidence aliunde is not admissible to prove their intention if the language employed is unambiguous."

In paragraph 45 appearing at p. 397 (of ILR Cut) : (at p. 324 of AIR) of the report, on a consideration of the terms of the sale-deeds, his Lordship observed:

"The covenants in both the sale deeds will thus appear to be that payment of consideration is made a condition precedent to the passing of title. Thereafter his Lordship reviews various decisions cited before us. He has also referred to a decision of the Patna High Court reported in Murtaza Hussain Md. v. Abdul Rahaman AIR 1949 Pat 364 (D) and particularly the judgment of Meredith. J. in that decision. I will come to that decision later. It appears from the judgment of Panigrahi, C. J. at page 399 (of ILR Cut) : (at p. 325 of AIR) that his Lordship particularly followed the latest decision of the Patna High Court reported in Panchu Salm v. Janki Mandar AIR 1952 Pat 263 (E) where it was held"

This question has been considered by this Court in various cases and it is now well settled that the intention is to be gathered from the sale-deed itself.

After discussing this latest decision, Panigrahi C. J. observed "I am in entire agreement with the view taken in this case, if I may respectfully say so". On a reading of this decision delivered by Panigrahi C. J., it cannot be said that we have followed the dictum laid down by Meredith, J. in AIR 1949 Pat 364 (D).

In Balabhadra v. Nirmala AIR 1954 Orissa 23 (F) such a question also arose. Narasimham, J. (as he then was) categorically expressed his views in following the decision in AIR 1947 Pat 1 (B), and on a consideration if the terms of the deed his Lordship came to the conclusion that the terms were explicit enough to show that the vendees should be entitled to all the rights in the property from the date of the execution. But nevertheless we also considered the other circumstances to strengthen this conclusion that the title passed immediately.

8. It has been contended by the learned advocate, appearing on behalf of the respondents, that the terms in the sale-deed in the instant case are parallel to those in the sale deed In the case of Balabhadra v. Nirmala (F).

In my opinion, it is not so. The striking distinction is that the clause conveyancing the title stands, by itself, independently of the clause of passing of consideration. This was the main reason why we held in that case that title passed independent of the passing of consideration.

9. I will now take up the case of Murtaza Hussain Md. v. Abdul Rahaman (D), where some observations of Meredith, J. appear to me to be a departure from the long series of decisions on account of which I am not prepared to accept. In this case two separate judgments were delivered, one by Agarwala, C. J. and the other by Meredith, J. Agarwala, C. J. observed that evidence was admissible to prove the fact whether consideration had been paid or not. But nevertheless he confirmed the judgment of Ray J. which was in appeal under Letters Patent, on the ground that on a proper construction of the document the intention of the parties was that the passing of title was dependent on the passing of consideration. But Meredith, J. In a separate judgment while discussing the previous judgment of Courtney-Terrell C. J. observed that the position had been nut rather too broadly. In cases where there is a recital that consideration has passed, but the passing of consideration is disputed, in order to clarify the latent ambiguity, extraneous evidence is admissible. He goes further on to observe:

"Once the ambiguity has been made apparent in this way, then external evidence can be let in and considered to clear up the ambiguity and show what was the intention of the parties."

In the conclusion of course his Lordship observes that on a pure construction of the document itself, the appeal must be dismissed but it must be doubly dismissed if external circumstances are considered in view of the ambiguity. If Meredith, J. meant, by his judgment that in all cases where passing of consideration is disputed in spite of the recital to the contrary, external evidence being admissible, other extraneous evidence is also admissible for the purpose of ascertaining the intention of the parties, it is a distinct departure from all the decisions on the point as I have discussed above. It is to be noted, such casts will come only when there is a dispute regarding the passing of consideration which has been recited In the document; find to accept the dictum laid down by Meredith, J. is to accept the proposition that in all such cases extraneous evidence is admissible in spite of the clearest terms of the document itself showing the intention of the parties as to whether title will pass on the execution of the document and independent of passing of consideration, or whether the passing of title will depend upon the passing of consideration. In my view, the distinction made by Courtney Terrell, C. J. is the correct distinction. The factum of passing of consideration may be disputed and extraneous evidence may be admissible for determining that issue but the terms of the contract as to the passing of title will be proved from the document alone if the terms are clear and unambiguous. If the terms are indecisive and ambiguous, then only the Courts will take into consideration other extraneous circumstances.

10. But as I have already found that the terms are indecisive and ambiguous in consideration of the extraneous circumstances and the conduct of the parties, the plaintiffs' suit must fail. Accordingly the appeal is allowed. The judgments and decrees of the Courts below are set aside. The plaintiff's suit is dismissed with costs, throughout.

Narasimham, C.J.

11. I agree.