M. Sai Reddy vs L. Balaiah @ Babu Rao and Others

S.V. Maruthi, J.—These two appeals are disposed of by a common judgment as the issues are common. Second Appeal No. 235/93 has filed against A.S. No. 111/85. A.S.No.111/85 was filed against O.S.No.427/81.

Second Appeal No. 236/93 was filed against A.S.No.110/85. A.S. No. 110/85 was filed against O.S.No.1383/81.

O.S.No.427/81 was filed by one Smt. U.R. Ellamma and Sri U.K. Ranganayakulu who are wife and husband and the owners of the suit house bearing No. 12-1-1623/1, Ambedkar Nagar, North Lalaguda, Secunderabad for a declaration that D-1 is only a benamidar under the agreement to sale dated 1-6-1972 executed by D-2 and D-3 and for an injunction against the defendants restraining them from interfering with their possession pursuant to the order dated 9-3-1989 of the Special Executive Magistrate, Hyderabad in M.C.No.B-76/79. The averments of plaintiff No. 1 in principle are that Smt. U.R. Ellamma and Sri U.K. Ranganayakulu borrowed an amount of Rs. 3,000/- from D-2 and D-3 in November, 1967 mortgaging the suit house in their favour by executing a sale deed and also a deed of reconveyance on 24-10-1967 separately. Since, the first plaintiff could not repay the amount in time and since required some more money, she had borrowed a further sum of Rs. 4,000/- in or about June, 1968. D-2 and D-3 took her signatures on the two documents which she later came to know that they are agreements purporting to be registered sale deeds giving up her rights under the reconveyance dated 23-11-1967 and the other was a rental agreement. D-2 and D-3 filed a Rent Control Case in R.C.No.336/1970 for eviction. The eviction petition was allowed. However, no eviction was effected and the plaintiff was allowed to continue in possession of the plaint schedule property on the intervention of elders and, it was agreed that defendants 2 and 3 should execute an agreement of sale in favour of a third party, whom plaintiff should nominate, so that it may not be treated as a mortgage transaction. Pursuant to the said agreement, the plaintiffs nominated D-1, who is the brother of their son-in-law by name Krishna and accordingly an agreement of sale dated 1-6-1972 was executed for a consideration of Rs. 9,500/- which was due from the plaintiffs to D-2 and D-3. Thereafter, a part of the suit premises fell vacant, therefore D-1 was permitted to occupy the same as a tenant of the plaintiffs on his request. The plaintiffs paid a sum of Rs. 2,000/- in instalments and thereafter the entire balance of Rs. 7,500/- to D-2 and D-3 and D-2 and D-3 passed receipts in favour of D-1, as the agreement is in his name. In view of the conduct of D-1 claiming the plaint schedule property as his absolute property and initiating various proceedings in the Courts, the present suit was filed. An amendment was made in the plaint amending that the transaction pertaining to the suit house between D-2 and D-3 and the plaintiff is nominal but the documents were executed to avoid the execution of Hyderabad Money Lenders Act.

D-2 and D-3 did not file any written statement. D-1 filed a written statement claiming that the suit house was sold by the plaintiffs to D-2 and D-3 on 24-10-1967 and on 1-6-1972 D-2 and D-3 executed an agreement of sale in his favour pursuant to which he was in possession and enjoyment of the property. He denied the transaction between D-1, D-2 and D-3 is a mortgage and not an outright sale. He also denied that the plaintiffs paid Rs. 2,000/- under the agreement of sale and the balance in instalments and that the said agreement is executed in his favour nominally for the benefit of the plaintiffs.

After filing of the above suit, D-1 in O.S.No.427/81 filed O.S. No. 1383/81 for specific performance of the agreement of sale dated 1-6-1972 against defendants 2 and 3 in O.S.No.427/81 and the plaintiffs in O.S. No. 427/81 were impleaded. The allegations are more or less the same. In this suit D-2 and D-3 filed a written statement supporting the case of the plaintiffs in O.S.No.427/81.

The plaintiffs in support of their case examined P.Ws.1 and 2 and the first plaintiff as P.W.3 and marked Exs. A-1 and A-2. D-1 on his behalf examined D.W.I and D.W.2 and marked Exs.B-1 to B-17. The Commissioner''s report was marked as C-l and the order in I.A.No.371/81 was marked as C-2.

On the basis of the evidence, both oral and documentary, both the Courts held that the transactions between the plaintiffs in O.S.No.427/81 and D-2 and D-3 is a money transaction and it is not a out and out sale and therefore, D-2 and D-3 do not have any title and consequently they could not have passed any title to D-1. In the light of the finding that the transaction between the plaintiffs and D-2 and D-3 is a money transaction both the Courts below did not consider the question whether the sale in favour of D-1 is benami for the benefit of the plaintiffs. Thus holding, both the Courts below decreed the suit of the plaintiffs. Aggrieved by the same D-1 has filed the present appeal.

The Addl. Chief Judge, City Civil Court, Hyderabad in support of his finding that the transaction between the plaintiff and D-1 and D-2 is a money transaction relied on the following circumstances and the evidence, namely, the evidence of D.W.I who stated that Ex.B-1 dated 1-6-1972 was executed in connection with a loan transaction and that D-2 and d-3 have not purchased the suit house from the plaintiffs and that they did not have any authority to execute Ex.B-1 in favour of D-1. Referring to the Municipal taxes alleged to have been paid by D-1 under Exs.B-3 to B-7 and water charges paid under Exs.B-8 and B-9, the learned Judge held that though these documents were produced from the custody of D-1 there is no evidence to show that these amounts were paid by D-1 except his own self interested testimony. The evidence of D.W.I who stated that D.W.I and D.W.2 paid the amount covered by Exs.B-3, B-4, B-5, B-6, B-7, B-8, B-9 and B-10 and that he used to pass the receipts to D-1 as the agreement stood in the name of D-1. The evidence of P.W.3 who is an attesting witness of Ex.B-1 who stated that in 1972 it was settled that plaintiff No. 2 became debtor for a sum of Rs. 5,000/- to D-2 and D-3 and when D-2 and D-3 insisted Plaintiff No. 2 to give some third party agreement stating that they would not trust him. Plaintiffs Nos. 1 and 2 brought D-1 as a surety and then the agreement was executed with D-1 as surety and he attested the same under Ex.B-1; the evidence of P.W.3 who stated that D-2 and D-3 received Rs. 2,000/- but D-1 could not have paid the amount covered by Ex.B-5 for the half year ending with 1970 inasmuch as the agreement of sale itself was on 1-6-1972 and D-1 was not at all in the picture; that the plaintiffs are in possession of the plaint schedule property and that D-2 and D-3 were never in possession of the plaint schedule property; and that D-2 and D-3 are not claiming any ownership in the plaint schedule property and therefore, they could not have conveyed any title to D-l. Since, D-2 and D-3 themselves were not having any title, D-1 could not have purchased the suit house believing title of D-2 and D-3; the presence of the plaintiffs at the time of Ex.B-1 shows that D-1 was aware of the entire transaction and agreed to be a name lender under Ex.B-2 and he had no right to enforce the same against D-2 and D-3 and dispossess the plaintiffs from the suit house.

In other words the finding of both the Courts below is that the sale deed dated 24-11-1967 under Ex.B-16 and the rental agreement of the same date under Ex.B-17 and the sale deed under Ex.B-18 dated 29-7-1968 represent a money transaction and therefore, no title in the property passed to the defendants 2 and 3 and therefore, they could not have conveyed any title to D-1 under Ex.B-1 dated 1-6-1972. The finding of both the Courts below is that the amount of Rs. 9,500/- which was borrowed by plaintiffs 1 and 2 from the defendants 2 and 3 was repaid by the plaintiffs and not by D-1.

The argument of the learned Counsel for the appellant is that Ex.B-16 dated 24-11-1967, Ex.B-17 rental agreement and Ex.B-18 dated 29-7-1968 cannot be treated as evidence of money transaction between R-1 and R-2 and R-3 and R-4. These are out and out sales and Section 92 of the Indian Evidence Act is a bar for adducing oral evidence to prove that the transaction covered by the two documents is something different from what the contents of the documents state.

The next argument advanced by the learned Counsel is that the suit is not barred by limitation as the receipt under Ex.B-2 is dated 19-10-1978 under which the payment by the appellant was made and the suit was filed in 1981 and therefore, it is within time.

The learned Counsel for R-3 and R-4 contended that the finding arrived at by the two Courts below is a finding of fact supported by evidence and therefore, cannot be interfered under Section-100 of CPC as no substantial question of law is involved. He also pointed out that Section 92 of the Indian Evidence Act is not a bar to adduce oral evidence if the parties intend not to act upon the documents particularly in a case where the document is sham and nominal. Therefore, the learned Counsel submitted that both the Courts below are right in holding that Ex.B46 and B-17 were never intended to be acted upon as sale deeds but evidence only a money transaction.

In order to consider the argument of the learned Counsel for the appellant it is necessary to refer to the terms of the documents namely Exs.B-16 and B-17 and B-18. Ex.B-16 says that "this sale deed is made and executed on 24-11-1967 by Smt. U.R. Ellamma, wife of Shri U.K. Ranganayakulu in favovir of Sri Leila Babiah (D-2) alias L. Babu Rao, son of Pochaiar and Sri L.H. Hari Shankar Rao, (D-3). It further says that the vendor is the absolute owner of the property and she had agreed to sell the house for a sum of Rs. 3,000/- and she has received Rs. 1,000/- already and the balance of Rs. 2,000/- was paid on 15-11-1967 before the Sub-Registrar and the position is given to vendee. The document contains the other usual covenants of a sale deed. Ex.B-17 is a rental agreement under which R-3 and R-4 were allowed to continue in the house on payment of Rs. 90/- per month. Ex.B-18 is dated 20-7-1968 is again between R-3 and R-4 and R-1 and R-2. In this document a reference to the sale deed dated 24-11-1967 was made and further stated that "whereas on the same day i.e., on 24-11-1967 the vendees'' herein had agreed to reconvey the said house to the vendor on repayment of the said sum of Rs. 3,000/- within a period of two years from the date thereof and whereas the vendor herein being in further need of money for her legal private necessities offered to relinquish her right to repurchase the said house and conveyed all her right title and interest whatsoever in the said house absolutely and unreservedly, if a further sum of Rs. 4,000/- is paid by the vendees." It further says that the vendor also agrees to vacate and handover the vacant possession of the said house completely to the vendee within a period of 11 months from that day.

A reading of Exs.B-16 and B-18 makes it clear that they are out and out sales. It cannot be said that the terms of the document represents a money transaction. Further, both the Courts below relying on the evidence of D.Ws.2 and 3 held that the documents B-16 and B-18 represent a money transaction. It is now well settled that when once a document has been produced to prove its term u/s 91, the provisions of Section 92 come into operation for the purpose of excluding the evidence of any oral agreement or settlement, for the purpose of contradicting , varying, adding to or subtracting from its terms. It is also well settled that Section 92 is limited to cases as between parties to the instrument or their representative in interest (refer to Bai Hira Devi and Others Vs. The Official Assignee of Bombay, .

Similar is the view in Gangabai v. Chliububai 1982 (1) APLJ 1. It was held that

"Sub-Section (1) of Section 92 is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties."

.................

It is clear to us that the bar imposed by Sub-section (1) of Section 92 applies only when a party seeks to rely upon the document embodying the terms of the transaction. In that event, the law declares that the nature and intent of the transaction must be gathered from the terms of the document itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms. The sub-section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties."

It was held in that case that the trial Court was right in permitting the respondents to lead parol evidence in support of the sale deed dated January, 7, 1953 was a sham document and never intended to be acted upon.

From the above, it is clear that when the parties are relying on a document to prove its terms they are precluded from adducing oral evidence to prove that the intention of the parties is something different from the contents of the document itself. It is one thing to say that the document was never intended to be acted upon and it is something different to say that though the document was intended to be acted upon but the intention of the parties is something different from the contents of the document To put it differently it is like saying though the document is a sale deed but the intention of the parties is to treat it as a mortgage. In the present case the contention of R-3 and R-4 is that Exs.B-16 and B-18 are not sale deeds but mortgage deeds and evidence money transaction. In other words they are relying on the terms of the document to prove that it is a money transaction. When once R-3 and R-4 are relying on the terms of the document they are precluded from proving the terms of the document by oral evidence as something different from the document itself.

In this context the pleadings in the plaint are relevant. "Defendants 2 and 3 demanded the first plaintiff to furnish sufficient security on which she offered to mortgage the above mentioned house of hers if required, but defendants 2 and 3 in order to see that the transaction does not come within the purview of Hyderabad Money Lenders Act wanted that the document purported to be a sale deed shall be executed in their favour offering to execute a deed of reconveyance in favour of the first plaintiff in respect of the said house property "................................."Thus the above transaction was in fact and in law, a mortgage though two separate documents mentioned above were executed at the instance of defendants 2 and 3 who wanted to see that the transaction does not attract the provisions of the Hyderabad Money Lenders Act. It was thus specifically understood between the first plaintiff and defendants 2 and 3 that the transaction shall for all practical purposes be treated as a mortgage and mortgage alone." Therefore, the specific case of R-3 and R-4 is that the transaction is a mortgage and mortgage alone and their case is not that though the sale deed was executed it was only sham and nominal and never intended to be acted upon. They have also adduced oral evidence to prove that the transaction under Exs.B-16 and B-18 represents mortgage evidencing money transaction and not that documents were not intended to be acted upon.

Therefore, the learned Counsel for the appellant is right in his contention that R-2 and R-3 (sic. R-3 and R-4) cannot be permitted to adduce oral evidence to prove that the contents of the document represents a money transaction and not out and out sale.

The argument of the learned Counsel for the respondents is that there is no bar to adduce oral evidence to prove that the parties never intended to act upon the document executed, there cannot be any dispute about this proposition. But, the case of R-2 and R-3 as pointed out in the earlier paragraphs is not that Exs.B-16 and B-18 were never intended to be acted upon, but relying on the terms of the document pleaded that it is a money transaction and they have approached the Court with a specific case that in order to avoid Hyderabad Money Lenders Act a sale deed was executed though the intention of the parties is only to treat it as a mortgage, therefore, the contention of the learned Counsel that Section 92 of the Indian Evidence Act is not a bar cannot be accepted.

If once R-2 and R-3 are not entitled to adduce oral evidence to prove that the contents of Exs.B-16 and B-18 do not represent money transaction, but they are out and out sales, D-2 and D-3 gets title to the property under Exs.B-16 and B-18. If R-1 and R-2 gets title to the property they can very well convey the same to a third party.

The case of R-2 and R-3 (sic. R-1 and R-2) is that the appellant is only a benamidar and in fact the amount of Rs. 9,500/- which is due by R-3 and R-4 was paid to R-1 and R-2 by them only vide Exs.B-2 and B-3 and that the possession remained with R-3 and R-4 and the payment of tax is by R-3 and R-4 and therefore, the appellant is only a benami holder, while the appellant in his written statement denied that he is a benami holder.

Both the Courts below have not considered the issue whether the appellant is a benami holder for R-3 and R-4. It is necessary to consider this issue as both the parties approached this Court assailing that the agreement of sale under Ex.B-1 is a benami transaction while the other assailing that he is not a benami holder. Therefore, the matter is remanded to the first Additional Chief Judge to consider the issue. In the light of the above, it is not necessary to consider the issue whether the suit of the appellant for specific performance is barred by limitation.

In view of the above, these two Second Appeals are allowed and remanded to the trial Court for the purpose of framing and considering the issue whether the appellant (D-1) is a benami holder for R-3 and R-4 i.e., plaintiffs 1 and 2. The trial Court is directed to give an opportunity to both the parties to adduce evidence in support of their respective contentions. The costs will abide the result in the remand.