Ramachandran vs Mathew V. Philip

A. Badharudeen, J

The defendant in O.S.No.21/2015 on the files of the Munsiff Court, Kanjirappally, who is aggrieved by the decree and judgment in A.S.No.4/2021 dated 14.02.2023 on the files of the Sub Court, Pala, arose out of decree and judgment in O.S.No.21/2015, assails the same in this appeal filed under Order XLII Rule 1 read with Section 100 of the Code of Civil Procedure. The respondent is the sole plaintiff in this case.

I shall refer the parties in this appeal with reference to their status before the trial court, as `plaintiff’ and `defendant’ hereafter for convenience.

Heard the learned counsel for the appellant/plaintiff on admission.

Perused the judgments and copy of relevant records placed by the learned counsel for the appellant/defendant.

In this matter, the plaintiff instituted Suit for realisation of an amount of Rs.3 lakh, alleged to be paid by him to the defendant, as advance sale consideration on 25.07.2014 when the plaintiff and defendant agreed to exchange their properties covered by the agreement. Consideration shown in the agreement was Rs.15,00,000/-, to be paid by the plaintiff to the defendant for effecting exchange of their properties. According to the plaintiff, Rs.3,00,000/- was given as advance sale consideration, out of Rs.15 lakh agreed upon. But later execution of the agreement failed. Therefore, the plaintiff sued for Rs.3 lakh with interest @ 9% per annum from 25.07.2014 till date, paid by him to the defendant.

The defendant entered appearance and denied the allegations in the plaint. The defendant denied execution of the agreement between the plaintiff and him in toto, while admitting that the defendant borrowed an amount of Rs.2 lakh from the plaintiff on 25.07.2024 and towards security for the said transaction, he had issued a signed blank stamp paper and signed blank white papers to the plaintiff. Further the defendant had been paying Rs.20,000/- per month as interest. The further case of the defendant was that when he approached the plaintiff to settle the entire liability to the tune of Rs.2 lakh, then also the plaintiff demanded Rs.20,000/- more as interest. When the said demand was not heeded, using the blank stamp paper and blank signed papers, Ext.A1 agreement was created by the plaintiff.

The learned Munsiff ventured the matter after raising appropriate issues. PW1 and PW2 were examined and Ext.A1 was marked on the side of the plaintiff. No oral or documentary evidence let in by the defendant.

On appreciation of evidence, the trial court found that execution of the agreement was not proved and thereby the suit was dismissed. When the matter was taken in appeal before the learned Sub Judge, as per the judgment in A.S.No.4/2021, the learned Sub Judge reversed the finding of the trial court and decreed the suit allowing realisation of Rs.3,11,250/- with interest @ 6% per annum for the principal amount of Rs.3 lakh from the date of original suit till date of realisation, from the defendant and his assets.

While impeaching the verdict of the appellate court against the verdict of the trial court, the learned counsel for the defendant submitted that the appellate court went wrong in reversing the finding of the trial court in this case where the plaintiff miserably failed to prove execution of Ext.A1 agreement. He also argued that Ext.A1 agreement would require mandatory registration, as provided under Section 17 of the Registration Act and, therefore, acting on Ext.A1 agreement, if at all its execution is found to be proved, no relief could be granted for want of registration. It is also submitted by the learned counsel for the defendant that Ext.A1 could not be given emphasis under Section 49 of the Registration Act also, since payment of consideration is not a collateral transaction or purpose.

It is argued by the learned counsel for the defendant further that none of the attesting witnesses to the document also was examined and, therefore, the appellate court went wrong in finding that the plaintiff succeeded in proving Ext.A1 agreement.

First of all, the question to be considered is, whether Ext.A1 sale agreement would require mandatory registration? On perusal of Ext.A1, copy of the agreement placed by the learned counsel for the defendant, the same would show that the agreement is dated 25.07.2014 (after 24.09.2001), executed in between the plaintiff and the defendant to exchange their properties and the plaintiff agreed to give Rs.15 lakh more as sale consideration to adjust the value. No doubt, as per Section 17(1A), an agreement for sale also is a document requires mandatory registration w.e.f 24.09.2001. But for the operation of Section 49 of the Registration Act, non registration of an agreement for sale will be of no consequence since as per the proviso to Section 49, it has been provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.

It is in this context, admissibility of an unregistered agreement was considered by this Court in the decision reported in [2023 (6) KhC 309 : 2023 (5) KLT 588 : 2023 LiveLaw (Ker) 4096[,Ratheesh v. V.S.Mary. in paragraph 14 and observed as under:

“14. In this context, it is relevant to refer another decision of the Apex court on this point, in S.Kaladevi Vs.Somasundaram, reported in (2010) 5 SCC 401 and the Apex Court held as under:

"12. The main provision in Section 49 provides that any document which is required to be registered, if not registered, shall not affect any immovable property comprised therein nor such document shall be received as evidence of any transaction affecting such property. The proviso, however, would show that an unregistered document affecting immovable property and required by the 1908 Act or the Transfer of Property Act, 1882 to be registered may be received as an evidence to the contract in a suit for specific performance or as evidence of any collateral transaction not required to be affected by registered instrument. By virtue of the proviso, therefore, an unregistered sale deed of an immovable property of the value of Rs.100 and more could be admitted in evidence as evidence of a contract in a suit for specific performance of the contract. Such an unregistered sale deed can also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908, Act.”

When a person sues for return of advance sale consideration, his right to get back the advance consideration is statutorily protected under Section 55(6)(b) of the Transfer of Property Act, 1882, unless that person improperly declined to accept delivery of the property. Therefore, the challenge raised against Ext.A1 mainly on the ground that Ext.A1 could not be used for the purpose of getting the advance money paid shall not sustain and accordingly, the said contention stands repelled.

Coming to the second challenge regarding proof of Ext.A1 agreement, the evidence relied on by the first appellate court to find execution of Ext.A1 in between the plaintiff and the defendant, is confined to that of PW1 and PW2. PW1 is none other than the plaintiff. During chief examination, PW1 supported the agreement and also he had given sufficient explanation to prove that he had given Rs.3 lakh to the defendant as advance at the time of execution of Ext.A1. During cross examination, he had also given evidence that he obtained the said money by selling his rubber trees for slaughter tapping to one Mr.Tony. When he was re-examined, the plaintiff given evidence that Ext.A1 agreement was written by one A.K.Shailaja in her own handwriting. PW2 examined in this case is none other than A.K.Shailaja and she fully supported the execution of Ext.A1 agreement and admitted that the agreement was written in her own handwriting. In fact, though PW1 and PW2 were cross examined at length, nothing elicited to shake their versions in any manner. On analysis of the available materials, this Court is of the view that the trial court, on a misunderstanding of the facts and evidence available, held that execution of Ext.A1 was not proved. On perusal of the available materials along with the judgment rendered by the appellate court, it has to be held that the plaintiff successfully proved Ext.A1 agreement by his evidence and by the evidence of PW2, the scribe, who prepared it. Therefore, the decree and judgment of the appellate court is found to be justified. In fact, no substantial question of law raised by the learned counsel for the defendant/appellant to admit and maintain the Second Appeal.

In order to admit and maintain the Second Appeal, substantial question of law necessarily to be formulated by the High Court within the mandate of Order XLII Rule 2 Read with Section 100 of C.P.C.

In this case, the learned counsel for the defendant failed to raise any substantial question of law warranting admission of the Second Appeal. Order XLII Rule 2 provides thus:

“2. Power of Court to direct that the appeal be heard on the question formulated by it.-At the time of making an order under rule 11 of Order XLI for the hearing of a second appeal, the Court shall formulate the substantial question of law as required by section 100, and in doing so, the Court may direct that the second appeal be heard on the question so formulated and it shall not be open to the defendant to urge any other ground in the appeal without the leave of the Court, given in accordance with the provision of section 100.”

Section 100 of the C.P.C. provides that, (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. (2) An Appeal may lie under this section from an appellate decree passed ex parte. (3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal. (4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question. Proviso says that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question.

In the decision in [2020 KHC 6507 : AIR 2020 SC 4321 : 2020 (10) SCALE 168], Nazir Mohamed v. J. Kamala and Others reported in the Apex Court held that:

The condition precedent for entertaining and deciding a second appeal being the existence of a substantial question of law, whenever a question is framed by the High Court, the High Court will have to show that the question is one of law and not just a question of facts, it also has to show that the question is a substantial question of law. In Kondiba Dagadu Kadam v. Savitribai Sopan Gujar, [(1999) 3 SCC 722], the Apex Court held that:

"After the amendment a second appeal can be filed only if a substantial question of law is involved in the case. The memorandum of appeal must precisely state the substantial question of law involved and the High Court is obliged to satisfy itself regarding the existence of such a question. If satisfied, the High Court has to formulate the substantial question of law involved in the case. The appeal is required to be heard on the question so formulated. However, the respondent at the time of the hearing of the appeal has a right to argue that the case in the court did not involve any substantial question of law. The proviso to the section acknowledges the powers of the High Court to hear the appeal on a substantial point of law, though not formulated by it with the object of ensuring that no injustice is done to the litigant where such a question was not formulated at the time of admission either by mistake or by inadvertence."

"It has been noticed time and again that without insisting for the statement of such a substantial question of law in the memorandum of appeal and formulating the same at the time of admission, the High Courts have been issuing notices and generally deciding the second appeals without adhering to the procedure prescribed under S.100 of the Code of Civil Procedure. It has further been found in a number of cases that no efforts are made to distinguish between a question of law and a substantial question of law. In exercise of the powers under this section the findings of fact of the first appellate court are found to have been disturbed. It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigation. Being a substantive statutory right, it has to be regulated in accordance with law in force at the relevant time. The conditions mentioned in the section must be strictly fulfilled before a second appeal can be maintained and no court has the power to add to or enlarge those grounds. The second appeal cannot be decided on merely equitable grounds. The concurrent findings of facts howsoever erroneous cannot be disturbed by the High Court in exercise of the powers under this section. The substantial question of law has to be distinguished from a substantial question of fact."

"If the question of law termed as a substantial question stands already decided by a larger Bench of the High Court concerned or by the Privy Council or by the Federal Court or by the Supreme Court, its merely wrong application on the facts of the case would not be termed to be a substantial question of law. Where a point of law has not been pleaded or is found to be arising between the parties in the absence of any factual format, a litigant should not be allowed to raise that question as a substantial question of law in second appeal. The mere appreciation of the facts, the documentary evidence or the meaning of entries and the contents of the document cannot be held to be raising a substantial question of law. But where it is found that the first appellate court has assumed jurisdiction which did not vest in it, the same can be adjudicated in the second appeal, treating it as a substantial question of law. Where the first appellate court is shown to have exercised its discretion in a judicial manner, it cannot be termed to be an error either of law or of procedure requiring interference in second appeal."

When no substantial question of law is formulated, but a Second Appeal is decided by the High Court, the judgment of the High Court is vitiated in law, as held by this Court in Biswanath Ghosh v. Gobinda Ghose, AIR 2014 SC 152. Formulation of substantial question of law is mandatory and the mere reference to the ground mentioned in Memorandum of Second Appeal can not satisfy the mandate of S. 100 of the CPC.

In a latest decision of the Apex Court reported in [2023 (5) KHC 264 : 2023 (5) KLT 74 SC], Government of Kerala v. Joseph, it was held as under:

For an appeal to be maintainable under Section 100,Code of Civil Procedure ('CPC', for brevity) it must fulfill certain well – established requirements. The primary and most important of them all is that the appeal should pose a substantial question of law. The sort of question that qualifies this criterion has been time and again reiterated by this Court. We may only refer to Santosh Hazari v. Purushottam Tiwari, [2001 (3) SCC 179] (three – Judge Bench) wherein this Court observed as follows:

The phrase “substantial question of law”, as occurring in the amended S.100 is not defined in the Code. The word substantial, as qualifying “question of law”, means – of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with – technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of “substantial question of law” by suffixing the words “of general importance” as has been done in many other provisions such as S.109 of the Code or Art.133(1)(a) of the Constitution. The substantial question of law on which a second appeal shall be heard need not necessarily be a substantial question of law of general importance.

The legal position is no more res-integra on the point that in order to admit and maintain a second appeal under Section 100 of the C.P.C, the Court shall formulate substantial question/s of law, and the said procedure is mandatory. Although the phrase 'substantial question of law' is not defined in the Code, 'substantial question of law' means; of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with – technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of “substantial question of law” by suffixing the words “of general importance” as has been done in many other provisions such as S.109 of the Code or Art.133(1)(a) of the Constitution. The substantial question of law on which a second appeal shall be heard need not necessarily be a substantial question of law of general importance. As such, second appeal cannot be decided on equitable grounds and the conditions mentioned in Section 100 read with Order XLII Rule 2 of the C.P.C. must be complied to admit and maintain a second appeal.

In view of the above fact, no substantial question of law arises in this matter to be decided by admitting this appeal.

In the result, this appeal is found to be meritless and the same is dismissed without being admitted.