V. Anantha Raju Vs T.M. Narasimhan (Supreme Court of India)
Section 91/92 Evidence Act- Written instruments are entitled to a much higher degree of credit than parol evidence
Recently, Judgement dated 26th October, 2021 [in the matter of V ANANTHA RAJU & ANR V T.M. NARASIMHAN & ORS. (Civil Appeal No. 6469 of 2021)] has examined the contentions of the Plaintiff and Defendants in light of Section 91 and Section 92 of the Indian Evidence Act, 1872 (hereinafter referred to as ‘the Evidence Act’). A Bench of Justices L Nageswara Rao, Sanjiv Khanna and B.R. Gavai, made the following observations while dealing with a case involving the validity of the term of a Partnership Deed.
“It has been held that when parties deliberately put their agreement into writing, it is conclusively presumed, between themselves and their privies, that they intended the writing to form a full and final statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith and treacherous memory”
Fact of the case-
The Petitioners and Defendants were partners in a partnership firm vide partnership dated 30.10.1992. As per this Deed, the Plaintiff No.1 was entitled to have 50% share in profits and losses, subject to him furnishing a capital contribution of Rs. 50 lakhs within one year, failing which his share would only be to the extent of 10%. Vide a Deed dated 18.08.1995, some other persons were inducted as partners and the share of Plaintiff 1 and Plaintiff 2 (P1’s son) were reduced to 25% each. By a 2004 Deed, Plaintiffs were removed from the partnership Deed.
It appears that in the year 2004, differences arose between the plaintiffs and the defendants with regard to the affairs of the partnership firm. On 8.5.2004, the plaintiffs issued a legal notice to the defendants/partners, demanding accounts right from the inception of the partnership firm and their share of profits.
Defendant No.1 replied to the plaintiffs’ notice dated 8.5.2004 by communication dated 12.5.2004. It was stated in the said reply that the plaintiffs together were entitled only to 10% share in the profits and losses of the partnership firm and that mentioning of 25% share each in the 1995 Deed was only a mistake of record.
Thereafter, again, there was exchange of communication between the plaintiffs and the defendants. According to the plaintiffs, in the meeting of the partners, held on 18.6.2004, it was resolved to expel the defendant No.1 from the partnership firm. However, as per the defendants, a resolution was passed on the same day, i.e., 18.6.2004, resolving expulsion of the plaintiffs from the partnership firm.
In this background, the said suit came to be filed by the plaintiffs for rendition of accounts with effect from 30.10.1992 and for releasing a sum of Rs.5,48,06,729/- being their 50% share in the profits of the partnership firm.
The High Court, in the impugned judgement and order, upheld the Trial Court’s holding that the plaintiffs together were entitled to 10% share in the profits. In appeal from the impugned judgement, the plaintiff reached the Supreme Court.
The Apex Court modified the finding of the High Court in the impugned judgement that the plaintiffs together have only 10% share in profits and losses and declared that the plaintiff together are entitled to 50% share in profits and losses.
Court’s reasoning
The Apex Court held that at this stage, it will be relevant to refer to Sections 17, 91 and 92 of the Evidence Act:
“17. Admission defined.— An admission is a statement, oral or documentary or contained in electronic form, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons, and under the circumstances, hereinafter mentioned.
91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document.—When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.
Exception 1.—When a public officer is required by law to be appointed in writing, and when it is shown that any particular person has acted as such officer, the writing by which he is appointed need not be proved.
Exception 2.—Wills admitted to probate in India may be proved by the probate.
Explanation 1.—This section applies equally to cases in which the contracts, grants or dispositions of property referred to are contained in one document, and to cases in which they are contained in more documents than one.
Explanation 2.—Where there are more originals than one, one original only need be proved.
Explanation 3.—The statement, in any document whatever, of a fact other than the facts referred to in this section, shall not preclude the admission of oral evidence as to the same fact.
Illustrations
(a) If a contract be contained in several letters, all the letters in which it is contained must be proved.
(b) If a contract is contained in a bill of exchange, the bill of exchange must be proved.
(c) If a bill of exchange is drawn in a set of three, one only need be proved.
(d) 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.
(e) A gives B a receipt for money paid by B. Oral evidence is offered of the payment. The evidence is admissible.
92. Exclusion of evidence of oral agreement.—When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, 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, varying, adding to, or subtracting from, its terms:
Proviso (1).—Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law.
Proviso (2).—The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this proviso applies, the Court shall have regard to the degree of formality of the document.
Proviso (3).—The existence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved.
Proviso (4).—The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been
registered according to the law in force for the time being as to the registration of documents.
Proviso (5).—Any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved:
Provided that the annexing of such incident would not be repugnant to, or inconsistent with, the express terms of the contract.
Proviso (6).—Any fact may be proved which shows in what manner the language of a document is related to existing facts.
Illustrations
(a) A policy of insurance is effected on goods “in ships from Calcutta to London”. The goods are shipped in a particular ship which is lost. The fact that that particular ship was orally excepted from the policy, cannot be proved.
(b) A agrees absolutely in writing to pay B Rs 1000 on the 1st March, 1873. The fact that, at the same time, an oral agreement was made that the money should not be paid till the thirty first March, cannot be proved.
(c) An estate called “the Rampur tea estate” is sold by a deed which contains a map of the property sold. The fact that land not included in the map had always been regarded as part of the estate and was meant to pass by the deed, cannot be proved.
(d) A enters into a written contract with B to work certain mines, the property of B, upon certain terms. A was induced to do so by a misrepresentation of B’s as to their value. This fact may be proved.
(e) A institutes a suit against B for the specific performance of a contract, and also prays that the contract may be reformed as to one of its provisions, as that provision was inserted in it by mistake. A may prove that such a mistake was made as would by law entitle him to have the contract reformed.
(f) A orders goods of B by a letter in which nothing is said as to the time of payment, and accepts the goods on delivery. B sues A for the price. A may show that the goods were supplied on credit for a term still unexpired.
(g) A sells B a horse and verbally warrants him sound. A gives B a paper in these words “Bought of A a horse for Rs 500”. B may prove the verbal warranty.
(h) A hires lodgings of B, and gives B a card on which is written—“Rooms, Rs 200 a month”. A may prove a verbal agreement that these terms were to include partial board.
A hires lodgings of B for a year, and a regularly stamped agreement, drawn up by an attorney, is made between them. It is silent on the subject of board. A may not prove that board was included in the terms verbally.
(i) A applies to B for a debt due to A by sending a receipt for the money. B keeps the receipt and does not send the money. In a suit for the amount, A may prove this.
(j) A and B make a contract in writing to take effect upon the happening of a certain contingency. The writing is left with B, who sues A upon it. A may show the circumstances under which it was delivered.”
The Apex Court noted that it can be seen from the admission given by Defendant No.1 in his written statement as well as in his affidavit in lieu of examination-in-chief, that the partners have executed the 1995 Deed, is unambiguous and clear.
Relying on Roop Kumar v Mohan Thedani which had elaborately explained the import of Section 91 and Section 92 of the Evidence Act, the Court noted that:
“When persons express their agreements in writing, it is for the express purpose of getting rid of any indefinite-ness and to put their ideas in such shape that there can be no misunderstanding, which so often occurs when reliance is placed upon oral statements. ” (Para 22)
The Apex Court held that if a document has been produced to prove its terms under Section 91, the provisions of Section 92 come into operation for the purpose of excluding evidence of any oral agreement or statement for the purpose of contradicting, varying, adding or subtracting from its terms.
It holds: “It has been held that when parties deliberately put their agreement into writing, it is conclusively presumed, between themselves and their privies, that they intended the writing to form a full and final statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith and treacherous memory” (Para 23)
The Apex Court held that in view of Section 91 of the Evidence Act, the evidentiary value of the 1995 Deed would stand on a much higher pedestal, as against the oral testimony of the parties.
The Apex Court also distinguishes the cases relied upon by the petitioners- Gangabai w/o Rambilas Gilda v Chhabubai w/o Pukharajji Gandhi and Ishwar Dass Jain (Dead) through Lrs v Sohan Lal (Dead) by Lrs- where it was held that it is permissible for the party to a deed to contend that the deed was not intended to be acted upon, but was only a sham document. The judgements notes:
“It would be necessary to lead oral evidence 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” (Para 24)
The judgement observed that if it was the case of the defendants that the terms mentioned in the 1995 Deed were inadvertent or a mistake in fact, then the burden to prove the same shifted upon the defendants to prove that the Deed did not reflect the mutual intention of the parties.
In view of Section 91 of the Evidence Act, the evidentiary value of the 1995 Deed would stand on a much higher pedestal, as against the oral testimony of the parties. The 1995 Deed clearly shows that it is executed after due deliberations, negotiations and mutual consensus on the terms and conditions to be incorporated therein. Therefore, contention that the share is mentioned as 25% by mistake “does not sound logical or reasoned.” If it was by mistake or inadvertence, nothing precluded the defendants from rectifying the same between 1995 and 2004.
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FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
