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Md. Murtaza v. Abdul Rahman

Patna High Court
Jan 6, 1948
Smart Summary (Beta)

Structured Summary of the Opinion

Factual and Procedural Background

This is an appeal under the Letters Patent by the plaintiffs against the decision of Ray, J., which had upheld a decision of the Court of Appeal reversing the decision of the Court of first instance.

The underlying suit was brought by the plaintiffs to establish their title to property that was the subject-matter of a sale deed executed in their favour by defendants 3 and 4 on 23 January 1941. Subsequently, on 1 September 1941, the same vendors executed another sale deed in respect of the same property in favour of defendants 1 and 2.

Ray, J. construed the sale deed in favour of the plaintiffs and concluded that the parties intended that the passing of title should depend upon the payment (passing) of the consideration. Although the deed contained a recital acknowledging receipt of consideration, the courts below found as a fact that the consideration had not in fact been paid. The appeal challenges Ray, J.'s decision upholding that construction.

Legal Issues Presented

  1. Whether, in construing a written sale deed, evidence extrinsic to the document may be admitted to ascertain the intention of the parties, or whether the parties' intention must be determined solely from the language of the document.
  2. Whether evidence is admissible to contradict a recital in a deed that purports to record the receipt of consideration where the finding of fact is that no payment was in fact made.
  3. Whether the passing of title under the sale deed was conditional on the actual payment (realisation) of the consideration money.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Radhamohan (Rahamohan) Thakur v. Bipin Behari Mitra Held that section 92 of the Evidence Act does not prevent adducing evidence to show that a recital in a deed is untrue; distinguished recitals from operative contractual terms as regards admissibility. The court relied on this decision to permit evidence contradicting the recital that consideration had been paid. The majority applied and (in Meredith, J.'s view) qualified the propositions laid down in that case when considering latent versus patent ambiguity and whether recitals may be contradicted for the purpose of ascertaining contractual intention.

Court's Reasoning and Analysis

The opinion contains two complementary lines of reasoning (Agarwala, C.J., and Meredith, J.) which converge on the dismissal of the appeal.

Agarwala, C.J. — Core analysis

  • Agarwala, C.J. accepted Ray, J.'s construction of the sale deed: the language of the deed, when read as a whole, indicated that the passing of title was intended to depend on the passing (realisation) of the consideration money.
  • Although the deed contained a recital stating that the consideration had been received, the courts below found as a fact that the consideration was not paid.
  • On the question whether evidence may be admitted to contradict a recital, Agarwala, C.J. referred to the decision in Radhamohan Thakur v. Bipin Behari Mitra, which held that section 92 of the Evidence Act does not bar adducing evidence to show that a recital in a deed is untrue.
  • Given that the factual finding was non-payment and the proper construction of the deed made transfer dependent upon payment, Agarwala, C.J. concluded that Ray, J.'s decision was correct and the appeal had to be dismissed with costs.

Meredith, J. — Detailed analytical exposition

  • Meredith, J. framed the legal question as: to ascertain the parties' intention, are we confined to the document alone or may extraneous evidence be considered?
  • He analysed the relevant provisions of the Evidence Act (sections 91, 92, 93 and 95) as follows (summary of the court's statements):
    • Section 91: where terms of a contract are in a document, no evidence of those terms may be given except the document itself (or proper secondary evidence).
    • Section 92: once terms are proved under section 91, no oral evidence is admissible to contradict, vary, add to, or subtract from those terms.
    • Section 93: deals with patent ambiguities — where the language is ambiguous on its face, extraneous evidence is generally not admissible to explain the meaning.
    • Section 95: deals with latent ambiguities — where the language is clear on its face but unmeaning or incorrect in reference to existing facts; in such cases extraneous evidence may be admitted to show the peculiar sense in which words were used.
  • Meredith, J. qualified propositions from Radhamohan Thakur: while recitals can be contradicted, this is permissible only where the correctness of the recital is in issue; recitals should not be contradicted merely for the direct purpose of deriving an inference about the operative contractual intentions unless a proper basis (such as a latent ambiguity) exists.
  • He explained the distinction between patent and latent ambiguity with examples (mirroring illustrations given in the Evidence Act): a patent ambiguity appears on the face of the document and cannot be resolved by extraneous evidence; a latent ambiguity arises when terms that are clear on their face are unmeaning or incorrect when considered in relation to external facts, and only then may extraneous evidence be introduced.
  • Applying this framework to the present case, Meredith, J. agreed with Ray, J.'s construction that the deed intended transfer to be contemporaneous with realisation of the consideration (the deed stated sale "after realisation of the entire consideration money in cash").
  • Because the recital that consideration had been paid was factually incorrect (admitted non-payment), Meredith, J. considered that a latent ambiguity arose: the clear language of the document was untrue in relation to external facts, and therefore extraneous evidence could be admitted to determine what the parties really meant.
  • Meredith, J. noted additional relevant facts admitted in the record: the vendors retained the sale deed and never delivered it to the vendee; possession, though recited as delivered, was not in fact delivered; plaintiffs claimed possession and mesne profits. These circumstances supported the conclusion that transfer of title was intended to be conditional upon payment.
  • On both a pure construction of the document and on consideration of extrinsic evidence permitted by the latent ambiguity, Meredith, J. found the appeal must fail.

Holding and Implications

Holding: The appeal is DISMISSED.

The direct consequence of the decision is that the judgment of Ray, J.—that the passing of title under the sale deed depended upon the realisation/payment of the consideration, and that the factual finding that consideration was not paid defeated the plaintiffs' claim of title—was affirmed. The appeal is dismissed with costs.

The court applied existing principles drawn from the Evidence Act (sections 91, 92, 93 and 95) and relied on the decision in Radhamohan Thakur v. Bipin Behari Mitra regarding admissibility to contradict recitals. The opinion explains and qualifies how those principles operate (notably the patent/latent ambiguity distinction) but does not, within the text provided, state that a novel legal principle or binding new precedent was laid down beyond that interpretative application.

End of summary. This summary is limited to and derived exclusively from the content of the provided opinion.

Show all summary ...

Agarwala, C.J:— This is an appeal under the Letters Patent by the plaintiffs against the decision of Ray, J. upholding the decision of the Court of appeal below reversing the decision of the Court of first instance. The appeal has arisen out of a suit by the plaintiffs to establish their title to property which was the subject-matter of a sale deed executed in their favour by defendants 3 and 4 on the 23rd of January, 1941. Subsequently, on the 1st of September, 1941, the same vendors executed another sale deed with respect to the same property in favour of defendants 1 and 2. Ray, J., held, on a construction of the document, that it was the intention of the parties to the sale deed in favour of the plaintiffs that the passing of title should depend on the passing of consideration, the receipt of which was acknowledged in the recitals of the deed, but which had not in fact been paid.

The learned advocate for the appellants has referred us to a number of cases dealing with the question whether evidence other than the deed may be looked at for the purpose of ascertaining the intention of the parties. That question, however, does not arise in a case where, on the language of the document itself, the intention of the parties is clear. The relevant portions of the document we are dealing with in the present case are as follows:

“In exchange for the price of Rs. 100 settled as the consideration for the sale (the vendors) have sold and executed the deed of sale in favour of the vendees after realization of the entire consideration in cash in one lump sum for payment of miscellaneous debts to other persons………………. Nothing remains due now and in their place have made him owner and have put him in possession…………. Now the executant, regarding the subject-matter of conveyance or the realization of the consideration money, have or would have in right to lay any claim or concern whatsoever against the aforesaid vendee. From this date the title of the vendee became permanent and perfect.”

The view taken by Ray, J., with which I respectfully agree, is that, on a consideration of the entire document, the intention of the parties was that the Dassing of title should depend on the passing of consideration. The Courts below have found as a fact that, despite the recital acknowledging the receipt of the consideration money, it was not paid, and the only question that really requires consideration is whether evidence is admissible for the purpose of contradicting the recital. That question has been decided against the appellants by a decision of this Court which the advocate for the appellants himself cited—Rahamohan Thakur v. Bipin Behari Mitra. In that case it was held that there is nothing in section 92 of the Evidence Act to prevent a person from adducing evidence for the purpose of shewing that a recital in a deed is untrue. The finding of fact in this case being that the consideration was not paid, and the proper construction of the deed being that the passing of title was dependent on the passing of consideration, the decision of Ray, J. was entirely correct. The appeal must, therefore, be dismissed with costs.

Meredith, J.:— I agree. But I should like to take this opportunity to state my own views. In a case like this, where we have to determine the terms of a contract, the question we have to ask is, what was the intention of the parties? In answering this we have first to ask ourselves another question: to ascertain the intention, are we confined to the terms of the document itself, or can we look to extraneous evidence?

The relevant sections of the Evidence Act, in answering this second question, are 91, 92, 93 and 95. Broadly speaking, subject to certain exceptions with which we are not concerned, section 91 provides that, when the terms of the contract have been reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, except the document itself, or secondary evidence of its contents in proper cases. Section 92, broadly speaking, lays down that when the terms of the contract have been proved in accordance with section 91, no evidence of any oral agreement or statement shall be admitted as between the parties for the purpose of contradicting, varying, adding to, or subtracting from, its terms.

Section 93 deals with what are called ‘patent ambiguities’, and says that, when the language used in a document is, on its face, ambiguous or defective, evidence may not be given of facts which would show its meaning or supply its defects. Section 95 deals with ‘latent ambiguities’ as the phrase is, and says, when language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense. The broad effect of these provisions is that, ordinarily speaking, in ascertaining the intention of the parties to the contract, we are confined to construing the document itself. The principle is that, where the terms of an agreement are reduced to writing, the document itself, being constituted by the parties as the expository of their intentions, is the only instrument of evidence in respect of that agreement which the law will recognise, so long as it exists, for the purpose of evidence. This proposition remains true even where the language of the document is, on the face of it, ambiguous, or unmeaning, or defective. That is the result of section 93. It is only where there is a latent ambiguity within the “meaning of section 95 that extraneous evidence can be Considered.”

In Radhamohan Thakur v. Bipin Behari Mitra the late Sir Courtney Terrell laid down two propositions: first, that evidence is admissible to contradict, or vary the recitals in the document as opposed to the contractual or operative terms, thus distinguishing the recital part from the contractual part. Secondly, he says, if the terms of the document are ambiguous, we can then turn to extraneous evidence in order to ascertain the intention of the parties.

In my opinion, both these propositions a re expressed somewhat too broadly. I agree that the recitals can be contradicted, but only when the correctness of the recitals is in issue. They cannot be contradicted, in my judgment, for the direct and only purpose of deriving an inference with regard to the contractual intentions of the parties. That this is so as, I think, supported by Illustration (d), to section 91. It is,

“A contracts in writing with B for the delivery of indigo upon certain terms. The contract mentions the fact that B had paid A the price of other indigo contracted for verbally on another occasion Oral evidence is offered that no payment was made, for the other indigo. The evidence is admissible.”

There is a clear implication here that oral evidence with regard to the non-payment of the amount due upon the contract itself if the contract said it was paid would not be admissible.

With regard to the other proposition Sir Courtney Terrell did not go into the distinction between patent and latent ambiguity, and I think the proposition laid down by him has to be qualified by the addition, provided the ambiguity is latent, not patent. The distinction is not always appreciated. A patent ambiguity is one which becomes apparent from a reading of the document alone. For example, if the document says “I sell my house for 100 guineas, that is, 110 pounds”, the ambiguity is apparent on the face of the document because 100 guineas is 105 pounds and not 110. In such a case, where the terms of the document are ambiguous, other extraneous evidence, is not admissible to explain what was meant. Where the ambiguity is latent, the terms of the document are perfectly clear and unambiguous in themselves. No ambiguity can become apparent until they are considered in relation to existing facts. For example, taking that given in the Evidence Act, if the document says, “sell my house in Calcutta”, but it is shown that I have no house in Calcutta, but I have a house in Howrah, evidence is admissible to show that the house in Howrah was meant. It is clear from this that evidence to contradict or vary the recitals is admissible in such a case, because it is only by Contradicting the recital that the ambiguity can be made apparent. That is a case where the correctness of the recital is in issue; and evidence is admissible to show it is incorrect, not for the direct purpose of making an inference as to intention, but for the purpose of making the ambiguity apparent. 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.

Bearing all this in mind, let us turn to the present case. Ray, J., on a consideration of the terms of the document alone, has taken the view that the intention of the parties was that the receipt of consideration and the transfer of title should be simultaneous, or, as he says, ‘contemporaneous’. I agree with that view because it is clearly stated that the sale is made in exchange for the price, and the vendee is made owner and put in possession, as the document says, “after realisation of the entire consideration money in cash”.

I think, however, one should go further. The recital in the document that the entire consideration had been received is an incorrect statement of the state of affairs at that time. It is admitted that the consideration had not been paid and never has been paid. It is permissible, on the principles I have expressed already, to show the incorrectness of this recital, because the incorrectness of the recital shows a latent ambiguity. Once it is shown that what is stated in the document, though clear in itself, is not correct in relation to the existing circumstances, or unmeaning in reference to existing facts, then the problem arises as to what, by making these incorrect statements, the parties really meant. The statements being incorrect a latent ambiguity arises. In this view there is a latent ambiguity in the present document, and that being so, we are, in my view, entitled to turn to extraneous evidence. Once we can do that, we can take into consideration the fact that the consideration was not paid, as bearing on the intention of the parties, and we can also take into consideration two other admitted facts, that the vent for retained the sale deed all along and never made it over to the vendee, and possession, though stated to have been delivered, was never delivered. Indeed, in the present case, the plaintiffs claim not only possession but mesne profits. These facts strengthen the conclusion that the intention of the parties was that there should be no transfer of title upon registration unless and until consideration had been paid.

On a pure construction of the document itself the appeal must fail, but it must doubly fail if we consider the external circumstances in view of a latent ambiguity.

S.H
Appeal dismissed.