A Dhoddiah Chettiar vs Madukkarai (Niligiris) Estates Tea Factory and Another

G. Ramanujam, J.—The plaintiff is the appellant. He filed a suit for recovery of a sum of Rs. 5,000 due under a dishonoured cheque Exhibit

A-1 dated 10th October, 1961 issued in his favour by the second defendant as the managing partner of the first defendant firm. It is alleged by the

plaintiff that 12-64 acres of tea garden belonging to him were conveyed to one T. K. Mani the nominee of the second defendant by a sale deed

dated 7th July, 1961 for Rs. 15,000 that the second defendant paid Rs. 10,000 in cash and issued a post-dated cheque for Rs. 5,000 in the name

of the plaintiff and that when the cheque was presented for payment to the State Bank of India, Coonoor on 11th October, 1961 it returned it with

an endorsement ""payment stopped by the drawer"". The defendants admitted the issue of a cheque for Rs. 5,000 in favour of the plaintiff but

contended that it is not supported by consideration. Their case was that the second defendant was proposing to purchase certain properties from

the plaintiff''s friend, one T. K. Mani who had nominally conveyed them to various persons in July, 1961, that pending finalisation of the transaction

between the second defendant and the said T. K. Mani a post-dated cheque was issued in the name of the plaintiff in the first week of July, 1961

and that payment for the cheque was stopped because the said Mani did not complete the transaction as agreed by the first week of October,

1961.

The trial Court went into the question as to whether the cheque was issued towards part-payment of the consideration for the sale under Exhibit

A-3 as alleged by the plaintiff or whether it was given as a security for performance of certain obligations undertaken by the said T. K. Mani as

alleged by the defendants. After considering the evidence on record, both oral and documentary, it came to the conclusion that the cheque Exhibit

A-1 was given by the second defendant for the sale of the plaintiff''s properties to T. K. Mani and that therefore, it was fully supported by

consideration. In that view it decreed the plaintiff''s suit as prayed for.

On appeal, the lower appellate Court, however, took a different view. It held that the cheque Exhibit A-1 was not supported by consideration

but that it was issued as security for the due performance of the terms of the agreement entered into between the second defendant and the said T.

K. Mani regarding the sale of certain properties. The lower appellate Court has taken the view that the cheque was not issued towards part of the

consideration for the sale in Exhibit A-3 from the mere fact that the sale deed refers only to a consideration of Rs. 4,500 and that it is inconsistent

with the plaintiff''s case that the actual sale consideration was Rs. 15,000. It felt that it is not open to the plaintiff to contend that the sale

consideration for sale under Exhibit A-3 was Rs. 15,000 in view of the specific recital in the document that the sale consideration was Rs. 4,500. It

has relied on the decision in Motilal Singh and Others Vs. Mt. Fulia and Others, . for holding that no oral evidence can be adduced regarding the

consideration for a sale which is at variance with the recitals in the sale deed, and that in view of the said legal bar the plaintiff cannot contend that

the consideration for the transaction under Exhibit A-3 was really Rs. 15,000 and not Rs. 4,500. It is mainly on this basis the lower appellate

Court has held that the cheque Exhibit A-1 is not supported by consideration. On this part of the case the question to be considered is whether it is

open to the plaintiff to prove and establish that the consideration for the sale under Exhibit A-3 was really Rs. 15,000 and not Rs. 4,500 as recited

in the document.

Before proceeding to consider the said legal aspect it is necessary to analyse the evidence relating to the quantum of consideration for the sale

under Exhibit A-3. The plaintiff as P.W. 1 has stated that the consideration was only Rs. 15,000 though a low value of Rs. 4,500 was shown in the

document for the purpose of avoiding a higher stamp duty. He would further say that the second defendant paid him cash consideration of Rs.

10,000 and the balance of Rs. 5,000 by means of a cheque, Exhibit A-1. He would also say that the cheque was given on the pretext that the

second defendant did not have sufficient cash with him to pay the entire consideration of Rs. 15,000. P.W. 2 is T. K. Mani the vendee under

Exhibit A-3 who later on sold the property covered by Exhibit A-3 along with his other properties to the second defendant under Exhibit A-4. He

has deposed that the sale consideration under Exhibit A-3 was Rs. 15,000 and that the second defendant paid a sum of Rs. 10,000 by cash and

the balance of the sale consideration was paid by the cheque, Exhibit A-1. Explaining the circumstances under which the second defendant came

to pay the sale consideration, he has stated that as there was a prior understanding between him and the second defendant for his purchase of the

suit property along with others, the second defendant came to pay the sale consideration. It appears from the evidence of P.W. 2 that the

properties covered under Exhibit A-3 is part of an estate called ""Knoll Estate"" in Coonoor consisting of 90-58 acres in extent. The estate was

jointly purchased by T. K. Mani''s granduncle Narayanaswami and one Rose Mary Dias on 25th June, 1920. After the death of Narayanaswami,

T. K. Mani succeeded to the half share in the estate. Subsequently T. K. Mani sold some portion of the estate in small bits in favour of various

parties, including the plaintiff. Exhibit A-2 dated 17th August, 1960 is the sale of 5 acres of land by the said T. K. Mani in favour of the plaintiff.

Subsequently the second defendant seems to have approached T. K. Mani to repurchase the various items of properties sold by him and convey

the entirety to him for a sum of Rs. 63,000. In pursuance of this arrangement, T. K. Mani not only got back the 5 acres sold by him under Exhibit

A-2, but also another 7 access and odd from the plaintiff under Exhibit A-3. As a matter of fact the second defendant had purchased all the items

of properties of T. K. Mani under Exhibit A-4 on nth September, 1961 in pursuance of the said arrangement. P.W. 2 has deposed that he sold the

entire 45 acres to the second defendant for a sum of Rs. 63,000 but only a lesser consideration of Rs. 30,000 was mentioned in Exhibit A-4 for

the purpose of reducing the stamp duty. He specifically refers to the understanding between him and the second defendant that the latter should

give Rs. 15,000 to the plaintiff for repurchasing the property from him and it was in pursuance of that understanding the second defendant paid a

sum of Rs. 10,000 in cash and Exhibit A-1 a cheque for the balance of Rs. 5,000. According to him even in respect of the persons, from whom he

purchased the other extents, it is the second defendant who paid the consideration. He has specifically denied that the cheque was given as a

security to ensure his carrying out the terms of the understanding. A perusal of his oral evidence shows that no motive has been attributed against

him. His evidence has not been challenged as interested. Therefore, there is no reason to doubt that the real sale consideration was only Rs.

15,000 and not Rs. 4,500 as recited in the document. As already stated, both the plaintiff and P.W. 2 the vendor and the purchaser, respectively

had stated that the consideration agreed was only Rs. 15,000 and not Rs. 4,500. Their evidence has been specifically referred to and accepted by

the trial Court. Even otherwise, the extent said to have been sold under Exhibit A-3 being 12--64 acres of tea garden it is quite possible that the

real consideration was Rs. 15,000. The lower appellate Court has chosen to reject their evidence in this regard mainly on the ground that it is not

open to them to go behind the recital in the sale deed. The question therefore, is whether the plaintiff is entitled to plead and establish that the

consideration for the sale under Exhibit A-3 was Rs. 15,000 as against the sale consideration of Rs. 4,500 recited in the document.

As already stated, the lower appellate Court has relied on the decision in Motilal Singh and Others Vs. Mt. Fulia and Others, . In that case it

was held that a statement in a document of sale that a consideration has been paid is really a recital and does not constitute one of the terms of the

sale deed but that the amount of consideration is obviously a term of the sale deed and that therefore, it is not open to a party to set up and prove a

variation in the amount of consideration. The decision in that case was based on Section 92 of the Evidence Act which provides that when the

terms of any contract, grant or, any other disposition of property, or any matter required by law to be reduced to the form of a document have

been proved according; to Section 91, 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, adding to or subtracting from its terms. In that case the dispute as to

the terms was between the parties to the instrument, and therefore, Section 92 came to to be applied. It is well established that the principle of

Section 92 cannot be made applicable to cases where the dispute is between a party to the document and a third party. In Bai Hira Devi and

Others Vs. The Official Assignee of Bombay, . the Official Assignee moved the insolvency Court : u/s 55 of the Presidency Towns Insolvency Act

for a declaration that a deed of gift executed by the insolvent in favour of his wife and sons was void. He let in oral evidence to show that the

transaction evidenced by the deed of gift was in reality a transfer for consideration. The question arose whether Section 92 of the Evidence Act

would stand in the way. The Supreme Court on those facts expressed the view that the application of the Rule contained in Section 92 of the

Evidence Act is limited to cases as between parties to the instrument or their representatives-in-interest that persons other than those who are

parties to the document are not precluded from giving extrinsic evidence to contradict, vary, add or subtract from the terms of the document and

that this position has been made absolutely clear by the provisions of Section 99. According to the Supreme Court there can be no doubt that u/s

99 a third party has got a right to lead evidence not only to vary the terms of the document but to contradict the said terms or to add to or subtract

from them. The relevant observations in that case are these :

As a matter of fact, from the terms of Section 52 itself, it is clear that strangers to the document are outside the scope of Section 92; but Section

99 has presumably been enacted to clarify the same position. It would be unreasonable, we think to hold that Section 99 was intended not only to

clarify the position with regard to the strangers to the document, but also to lay down a rule of exclusion of oral evidence by implication in respect

of the parties to the document or their representatives in interest. In our opinion, the true position is that, if the terms of any transfer reduced to

writing are in dispute between a stranger to a document and a party to it or his representative-in-interest, the restriction imposed by Section 92 in

regard to the exclusion of evidence of oral agreement is inapplicable; and both the stranger to the document and the party to the document or his

representative-in-interest are at liberty to lead evidence of oral agreement notwithstanding the fact that such evidence, if believed, may contradict,

vary, add to or subtract from its terms. The rule of exclusion enunciated by Section 92 applies to both parties to the document and is based on the

doctrine of mutuality. It would be inequitable and unfair to enforce that rule against a party to a document or his representative-in-interest in the

case of a dispute between the said party or his representative-in-interest on the one hand and the stranger on the other.

The same view has been earlier expressed by this Court in Samayamanthula Parvata Vardhanamma Vs. Villa Subba Rao and Others, where

Satyanarayana Rao, (sic) held that u/s 92 the prohibition with reference to the proof of an oral agreement applies only as between the parties to the

instrument or their representatives-in-interest and not between one of the parties to the instrument and a third party.

In Roddam Bhagyalakshmamma and Another Vs. Sriram Kamalamma and Another, . here was an agreement for sale of a house for Rs. 2,625

and a sum of Rs. 350 was paid as advance on the date of the agreement. Subsequently the sale deed was executed with a recital that the sale

consideration was only Rs. 1,000. The vendor filed a suit for recovery of Rs. 1,275 the balance of the agreed sale consideration. The suit was

resisted by the vendee on the ground that he had paid the said sum of Rs. 1,275 also as further advance before the execution of the sale deed. He

also raised a plea that it is not open to the vendor to contend that the sale consideration under the sale deed was different. It was held in that case

that Section 92 of the Evidence Act would not bar the plaintiff from proving that the consideration was Rs. 2,525 especially when there was

evidence of a prior written agreement for sale, and that even public policy cannot be invoked to defeat a suit like the one in that case.

Reference is made by the learned Counsel for the respondent to the decision of a Bench of this Court in K.S. Narasimhachari Vs. The Indo

Commercial Bank Ltd., G.T. Madras and Another, . where it has been held that under the terms of the proviso to Section 92 of the Evidence Act

while it will be competent to the party to a contract to adduce evidence to prove want of consideration or failure of consideration or a difference in

kind of consideration specified in the document, it will not be competent for him to prove a variation of the quantum of consideration recited in the

document and that to permit such a plea will plainly be against the specific terms of Section 92. In that case Section 92 was invoked against a party

to the document. But as already stated, Section 92 is inapplicable in cases where the dispute arises between a party to the document and a third

party as in this case. Even as between parties to the document, it has been held in Kasturi Bai v. Ramlal (1962) 66 C.W.N. 8. that when there is

one consideration stated in the document evidence of any other consideration not in contradiction to that instrument is admissible, that it is not in

contradiction to the consideration in the instrument to prove a consideration larger than that which is mentioned, and that Section 92 of the

Evidence Act cannot bar oral evidence to prove further or additional consideration.

In view of the principles laid down in the above decisions it cannot be said that the plaintiff cannot establish that the real sale consideration was

Rs. 15,000 as against the stated consideration of Rs. 4,500.

The learned Counsel for the respondents would further contend that permitting the plaintiff to adduce oral evidence to establish a different

consideration than the one mentioned in the sale deed would defeat the provisions of the Stamp Act. Reference is made to Sections 27 and 64 of

the Stamp Act. Section 27 enjoins that the consideration and all other facts and circumstances affecting the chargeability of any instrument with

duty, shall be fully and truly set forth therein, and Section 64 makes the omission to comply with the provisions of Section 27 penal and punishable.

According to the respondents'' learned Counsel the plaintiff being a party to a document which does not set forth full and true consideration is

punishable u/s 64, and therefore, he should not be permitted to take the plea that the real consideration is different from the stated consideration.

But it has to be borne in mind that even if the parties understate the value of the property and pay a lesser stamp duty the instrument will not

become void or inadmissible in evidence for that reason. The parties may be liable for punishment u/s 64 for attempting to defraud the Revenue.

Section 23 of the Contract Act has also been referred to in support of the contention that by allowing the plaintiff to adduce parole evidence to

prove a different consideration than the one stated in the document would defeat the provisions of the Stamp Act Section 23 provides as to what

consideration and objects are lawful and what are not. It states that if the consideration is of such a nature that if permitted, it would defeat the

provisions of any law then it is not a lawful consideration. As already stated the sale deed as such cannot be said to be invalid for it recites a valid

consideration though not the real consideration. I am, therefore of the view that Section 23 of the. Contract Act will not stand in the way of the

plaintiff establishing the real consideration for the sale.

The respondents'' learned Counsel has drawn my attention to the decision in Vilayat Hussain v. Misran ILR (1923) All. 396. in support of his

plea that the plaintiff cannot set up his own fraud against the statute. In that case it was held that in all cases where the plaintiff is relying upon a

deed, the defendant is entitled as of course to give evidence of the circumstances under which the document came into existence; that when those

circumstances include an allegation of a joint fraud both by the plaintiff and defendant, the particulars of that fraud must be pleaded; and that if the

Court comes to the conclusion that the parties were acting together with a view to perpetrate a fraud, and did in fact perpetrate that fraud, the duty

of the Court is not to assist either party in enforcing the transaction. But in this case it cannot be said that by understating the amount of

consideration in the document that transaction of sale is illegal and unenforceable. (Vide Reference under Stamp Act, Section 46 ILR (1897) Mad.

and The Joint Secretary, Board of Revenue Vs. K.R. Venkatarama Ayyar, . Reference is also made to the decision in Scott v. Brown Deoring

Wo. Nab. & Co., Slaughter and May v. Brown Doering Wo. Nab & Co. (1892) 2 E.R. 724. In that case Lindley, L.J., expressed :

Ex turpi causa non oritur action. This old and well-known legal maxim is founded in good sense, and expresses a clear and well-recognised legal

principle, which is not confined to indictable offences. No Court ought to enforce an illegal contract or allow itself to be made the instrument of

enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the Court and if

the person invoking the aid of the Court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or

whether he has not. If the evidence adduced by the plaintiff proves the illegality the Court ought not to assist him.

But the above observations indicate that that decision rested mainly on the fact that the contract sought to be enforced was tainted by illegality. But

by no stretch of imagination the transaction of sale under Exhibit A-3 can be said to be illegal.

In Pamulapati Bhushayya Vs. Kommareddy Chinnapareddi and Another, . while dealing with the question whether non-showing of the full

consideration in a sale deed will amount to ""opposed to public policy"" it was held that where the statute merely imposes a penalty without declaring

a contract to be illegal or void, the imposition of penalty by itself does not have the effect of making the contract made in contravention of a specific

provision of the statute illegal or void unless it is further shown that the statute was designed as a whole to further a public policy and that where the

words of a statute leave room for doubt as to its intention, it is material to ask whether the object of the Act in imposing the penalty is merely to

protect the revenue or whether its object is to protect the general public or some class of the general public. The above decision was followed in

V. Basavayya Vs. N. Kottayya, . In Devachand v. Hirachand Kamaraj ILR (1889) 13 Bom. 449. it was held that the Indian Stamp Act being a

fiscal enactment, its object is only to collect revenue and its provisions must be construed only in that light.

In this case if the cheque is held to have been given towards the balance of the real consideration, then it cannot be said that it is without

consideration. In Mohideen Bi and Others Vs. Khatoon Bi and Others, . it was held that issuing a cheque is as good as payment in cash. In

Kirloskar Bros. Ltd. Vs. Commissioner of Income Tax, Bombay, . Chagla, C.J. observed that :

It is also well-settled in commercial practice, as I shall presently point out, that a cheque is looked upon as a payment if a creditor accepts a

cheque in place of the country''s currency.

Benjamin on ""Sale of personal property"" at page 189 of the 8th edition states as follows :

...a man who prefers a cheque on a banker to payment in money is not considered as electing to take security instead of cash, for a cheque is

accepted as a particular form of cash payment, and if dishonoured, the seller may resort to this original claim on the ground that there has been a

defeasance of the condition on which it was taken.

Byles on ""Bills of Exchange"" at page 23 of the 20th edition enunciates the position of law that ""a cheque, unless dishonoured, is payment"". In Felix

Haeley & Co. v. Hadley (1898) 2 Ch. 680. it was expressed :

therefore the position in law seems to be that even when a cheque is accepted by a creditor as a conditional payment, the preference by the

creditor of accepting a cheque rather than cash-operates as a payment to the creditor when the cheque is given although the liability of the debtor

may revive in the event of the cheque not being ultimately, cashed.

The view of the lower appellate Court in this case that the cheque is not supported by consideration based on its view that the plaintiff cannot

establish the real consideration as against the stated consideration cannot be, therefore, supported. In the face of the evidence of the vendor and

the vendee that the real consideration agreed between them was Rs. 15,000, it is not open to the second defendant to rely merely on the : term of

the sale deed reciting a lesser consideration and defeat the plaintiff on that ground. I am also inclined to accept the view taken by the trial Court

that the cheque has been given by the second defendant only towards part payment of the sale consideration and not by way of security in respect

of another transaction as alleged by the second defendant. As a matter of fact, there is absolutely no evidence to show, except the ipse dixit of the

second defendant, that the cheque was given only as a security. The plaintiff had nothing to do with the arrangement between the second defendant

and T. K. Mani, and it is not clear as to why the second defendant issued a cheque in favour of the plaintiff, who according to the evidence of the

second defendant, is an utter stranger. I have to, therefore, set aside the finding of the lower appellate Court that the cheque is not supported by

consideration.

The result is the second appeal is allowed and the decree and judgment of the lower appellate Court are set aside and those of the trial Court

are restored. There will, however, be no order as to costs.

No leave.