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MANU/UP/1696/2012
Equivalent Citation: 2012(8)ADJ55, 2012(8)ADJ755, 2013(3) ALJ 711, 2012 (94) ALR 463, 2012 6 AWC 5649All
IN THE HIGH COURT OF ALLAHABAD

First Appeal No. 392 of 2007
Decided On: 07.08.2012
Appellants: Digvijay Singh
Vs.
Respondent: Ram Avtar and Ors.
Hon'ble Judges/Coram:
Prakash Krishna and Arvind Kumar Tripathi-II, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: H.R. Mishra and M.P. Yadav
For Respondents/Defendant: Some Narain Mishra and Pankaj Agarwal
Case Note:
Contract - Specific performance - Section 20(2)(a), (b) or (c) of Specific
Relief Act, 1963 - Present Appeal filed against decree of suit for specific
performance of contract to sell - Held, registered agreement was agreement
for sale of property in dispute - It recited payment of sum as advance
money - Terms and condition as mentioned in agreement fixes time limit
for execution of sale deed - Agreement in question was a registered
document and presumption about its due execution was attached to such
documents - A heavy burden to prove that it was executed in lieu of loan
lay on Appellant, which he failed to discharge - Evidence led by Appellant in
support of his plea of loan transaction was scanty, untrustworthy - Findings
recorded by trial Court were disbelieving version of Appellant which were
justified- No material was placed before Court to show that case of
Appellant falls in Section 20(2)(a), (b) or (c) of Act - Appellant entered into
contract with wide open eyes and contract had been witnessed and
attested by his son - In absence of any material, it would be inequitable to
refuse specific performance of contract to sell, having found that there was
nothing on record to show that price of house in question had been
increased manifold- Theory of loan amount had not been found to be proved
- Court opined that Appellant was not entitled to get any discretionary
relief - Appeal dismissed
JUDGMENT
Hon'ble Prakash Krishna, J.
1. Questioning the legality, validity and propriety of the judgment and decree dated
10th October, 2007 passed by the Additional Civil Judge (Senior Division), Ghaziabad
in Original Suit No. 1213 of 2004, the present appeal is at the instance of the
defendant. Three storied house measuring 200.67 square meter situate at R-86 Pratap
Vihar, Ghaziabad is the property in dispute. The defendant who is appellant herein
(hereinafter referred to as the defendant') is the owner and in possession thereof. He,
on 24th July, 2002 entered into a registered agreement to sell in favour of two
plaintiffs, namely, Ram Avtar and Jogendra Singh, respondents herein (hereinafter
referred to as the plaintiffs') for a sum of Rs. 7,50,000/- out of which a sum of Rs.
19-11-2019 (Page 1 of 11) www.manupatra.com Varadachari Lakshmi Kumaran

5,00,000/- was given before Sub Registrar at the time of registration of the
agreement in question as advance money. It was agreed upon that the plaintiffs will
get the sale-deed executed after paying the balance sale consideration amounting to
Rs. 2,50,000/- on or before 21st July, 2004.
2. The suit giving rise to the present appeal was instituted for specific performance
of the aforesaid contract to sell. Also an alternative relief for refund of the advance
money together with interest as may deem, fit and proper by the Court was claimed.
3 . The suit was instituted on the allegations that the plaintiffs gave a notice dated
3rd February, 2004 to the defendant to execute the sale-deed and be present for the
said purpose before Sub Registrar on 24th February, 2004 for execution of sale-deed
and receipt of balance amount. The defendant replied the notice on 9th February,
2004 with incorrect and wrong allegations that amount of Rs. 5,00,000/- was taken
by him as loan amount. The plaintiffs were present on aforesaid date before Sub
Registrar from morning till evening but the defendant failed to appear to execute the
sale-deed. The plaintiffs have always been ready and willing to perform their part of
contract and are still ready and willing for the same.
4. The defendant contested the suit by filing written statement on the pleas inter alia
that he took Rs. 5,00,000/- as loan and lieu thereof the agreement to sell in question
was executed. He took the amount for the purposes of treatment of his daughter Km.
Ritu, who is polio patient. It was agreed upon that the defendant will pay interest at
the rate of 1% per month. He has paid Rs. 15,000/- per month from August, 2002 to
July, 2004, total sum of Rs. 3,60,000/- and had handed over three cheques of Rs.
40,000/- each to the plaintiffs. They refused to accept the cheques, cheque amount
was paid in cash. The market value of property in dispute is Rs. 50,00,000/- and that
is the reason, the plaintiffs have become dishonest and want to grab it. It was also
pleaded that the defendant was present in the office of Sub Registrar on 21st July,
2004, the date fixed in the agreement for the purpose of re-payment of loan amount
but the plaintiffs failed to appear. Other pleas such as Court fee paid is not sufficient
etc. were also raised.
In replication, the plaintiffs denied theory of loan as was set out by the defendant in
written statement.
On the basis of pleadings of the parties, the following issues were struck by the trial
Court :
(1) Whether the defendant executed an agreement to sell in respect of three
storied house measuring 200.57 square meter situate at R-86 Pratap Bihar,
Ghaziabad with the plaintiffs, for a sum of Rs. 7,50,000/- ?
(2) Whether the suit has been under valued and the Court fee paid is
insufficient?
(3) Whether the Court has jurisdiction to hear and decide the suit?
(4) Whether the agreement to sell dated 24th July, 2002 in respect of
property in dispute was executed and registered and a sum of Rs. 5,00,000/-
was given by the plaintiffs to the defendant as advance money?
(5) Whether the defendant failed to execute sale-deed in respect of the
property in dispute in favour of the plaintiffs within stipulated period?
(6) Whether the plaintiffs are ready and willing and are still ready and willing

to get the sale-deed executed?
(7) Whether the defendant received a sum of Rs. 5,00,000/- from the
plaintiffs as loan amount and the agreement in question was executed as a
security and no agreement to sell was executed in favour of the plaintiffs?
(8) Whether the defendant has made part payment of the loan amount of Rs.
5,00,000/- and is ready to pay balance amount?
(9) To what relief, the plaintiffs are entitled to?
The parties led evidence, oral and documentary in support of their respective cases
as find mention in the judgment. The trial court has decided issues no. 1, 4, 5, 6, 7 &
8 together. It reached to the conclusion that the defendant has failed to prove the
oral agreement that the amount of Rs. 5,00,000/- was given as loan amount. The
execution of the agreement in question and payment of Rs. 5,00,000/- thereunder is
admitted to the defendant. The plaintiffs have always been ready and willing to
perform their part of contract and are still ready and willing. The defendant has failed
to prove any re-payment of the loan amount. The other issues were decided in favour
of the plaintiffs holding that the court fee paid is sufficient as it is paid on the value
of the sale-agreement and there is no material to show that the house in dispute is
valued as Rs. 50,00,000/-. The trial court discarded and disbelieved oral evidence led
by the defendant. The defendant besides examining himself as DW-1, examined one
Ranjeet Srivastava as DW-2. The suit for specific performance of contract to sell
having been decreed, the present appeal under Section 96 of the C.P.C. is before us.
Heard Shri H.R. Mishra, learned Senior Counsel along with Shri M.P. Yadav, learned
counsel for the defendant-appellant and Shri Some Narain Mishra, learned counsel for
the plaintiffs-respondents.
It may be placed on record that in the memo of appeal as many as ten grounds have
been set out but learned counsel for the appellant has confined his arguments only to
the following points.
- There being discrepancies in the plaintiff's deposition (namely Ram Avtar
PW-1), his testimony is not reliable and is liable to be rejected.
- The return of part of loan amount is established from testimonies of
defendant DW-1 and Ranjeet Srivastava DW-2.
- The present market value of house in dispute is Rs. 50,00,000/- and in this
view of the matter, the court should exercise its discretion under Section 20
of the Specific Relief Act not to grant a decree for specific performance of
contract to sell.
In reply, learned counsel for the plaintiffs submits that the defendant is an advocate
by profession and he willingly executed the contract of sale dated 24th July, 2002.
One of the attesting witnesses namely, Abhay Singh happens to be son of defendant.
The execution of agreement in question is not denied nor in issue in the suit. This
being position even if, there is some minor contradiction in statement of plaintiffs, it
is of no avail to the defendant. The defendant has utterly failed to establish that the
transaction in question in substance was a loan transaction or he received a sum of
Rs. 5,00,000/- as loan instead of advance money in pursuance of registered
agreement dated 24th July, 2002. He further submits that there is voluminous
evidence on record to show that the defendant has not re-paid even a single shell
and is taking undue advantage of the situation being a practicing advocate at

Ghaziabad.
Considered the respective submissions of the learned counsel for the parties.
The registered agreement dated 24th July, 2002, on its face is an agreement for sale
of the property in dispute for a sum of Rs. 7,50,000/-. It recites payment of Rs.
5,00,000/- as advance money. It is also not in dispute that Shri Abhay Singh
attesting witness no. 1 happens to be son of the defendant. The terms and condition
as mentioned in the agreement fixes time limit for execution of the sale-deed as 21st
July, 2004, has also not been disputed. On these admitted facts, the question arises
as to whether the discrepancies, if any, in the statement of the plaintiffs are sufficient
to discard the said agreement which is otherwise a registered document and its
execution is not in question.
In the case of Vimal Chand Ghevarchand Jain and others v. Ramakant Eknath Jajoo,
MANU/SC/0441/2009 : JT 2009 (6) SC 570, the Apex Court has laid down in para-19,
as follows:
19. A document, as is well known, must be construed in its entirety. Reading
the said in its entirety, there cannot be any doubt whatsoever that it was a
deed of sale. It satisfies all the requirements of a conveyance of sale as
envisaged under Section 54 of the Transfer of Property Act.
In Bishwanath Prasad Singh v. Rejendra Prasad & Anr. MANU/SC/8062/2006 : JT
2006 (2) SC 221 : 2006 (4) SCC 432, the Apex Court has held as follows:
16. A deed as is well known must be construed having regard to the
language used therein. We have noticed hereinbefore that by reason of the
said deed of sale, the right, title and interest of the respondents herein was
conveyed absolutely in favour of the appellant. The sale deed does not recite
any other transaction of advance of any sum by the appellant to the
respondents which was entered into by and between the parties, In fact, the
recitals made in the sale-deed categorically show that the respondents
expressed their intention to convey-the property to the appellant herein as
they had incurred debts by taking loans from various other creditors.
In the document in question, the parties have been described as vendor and vendee
and the sale consideration. These terms have definite legal connotation and the
defendant being an advocate supposed to understand their Implications. Viewed as
above, now we proceed to consider the matter in issue.
Learned counsel for the appellant invited attention of the Court towards that part of
the cross-examination of Ram Avtar PW-1 wherein he could not state the name of
stamp vendor or whether the stamp papers were purchased from one vendor or more
than one. The stamp papers were purchased for the purpose of scribing the
agreement in question. This witness has stated that stamp papers were purchased by
Jogendra Singh along with him. He has denied suggestion that all the stamp papers
were purchased in the name of Jogendra Singh. We do not find any contradiction or
discrepancy in the said portion of statement of PW-1. And even if, there is any such
supposed discrepancy it is of inconsequential nature. A man of ordinary prudence is
not supposed to remember after four years, whether the stamp papers were
purchased from one vendor or more than one. The stamp papers are generally
purchased in the name of party by clerk or the person of the scribe in the
name/names of the persons concerned. The agreement in question being an admitted
document, no benefit, if any, can be derived by the defendant from the said part of
statement of PW-1. Learned counsel for the appellant could not point out any other

discrepancy or defect in other portion of deposition of PW-1. We therefore find that
the defendant cannot make any capital out of the cross-examination of PW-1 and
point no. 1 is decided accordingly.
Basic point urged by the learned counsel for the appellant is that the defendant had
taken a sum of Rs. 5,00,000/- by way of loan and agreement in question was
executed as a security for re-payment of loan amount and as such the plaintiffs
cannot claim decree for specific performance of contract to sell. Plea of loan has been
set out by the defendant and burden lay upon him to establish it. He came out with
the case that his daughter Km. Ritu is a polio patient and the money was urgently
needed for her operation. To prove the said fact, it may be stated at the very outset
that no documentary evidence whatsoever has been placed on record to show either
Km. Ritu was a polio patient or any amount was spent out of the amount for her
treatment, if any. The defendant being an advocate understands the importance of
documentary evidence. The plaintiffs in their deposition have stated that they were
never told that the defendant is in need of money for medical treatment of his
daughter.
The defendant has been grilled on the question of medical treatment of his daughter
in cross-examination. He has deposed that his daughter Km. Ritu is polio patient
since 1987 and when he took loan she was being provided treatment in a charitable
hospital at Visakhapatnam and was getting treatment since February/March, 2001 and
she is still under treatment. He used to make the payment against receipts. He further
states that he has not filed any such receipt. In further cross-examination, he states
that he has given only Rs. 10,000/- to Rs. 15,000/- against receipt and has made
payment to the doctor without obtaining any receipt. According to him, all these
payment were made to the doctor and the medical expenses were incurred in the
month of February/March, 2001 i.e. before the execution of agreement in question
which is dated 24th July, 2002. This is all what he could state in his deposition. The
defendant has failed to produce any reliable or cogent evidence to show that his
daughter was suffering at the material time with polio and he badly needed the
financial assistance for her treatment in the year 2002 when agreement in question
was admittedly executed. Noticeably, there is no reliable evidence on record to prove
the alleged illness of daughter and in any case, dire need of money for her treatment.
On analysis of evidence, the court below has rightly reached to the conclusion on the
above issue that the theory as propounded by the defendant that he needed money
for medical treatment is not established. We ourselves scrutinized the evidence and
find no reason to differ with the finding of the trial court on the above point.
The agreement in question is a registered document and a presumption about its due
execution is attached to such documents. A heavy burden to prove that it was
executed in lieu of loan lay on the defendant, which he failed to discharge.
No oral evidence to contradict the terms of any such contract, or of a grant, or of any
other disposition of property have been reduced to the form of a document under
Section 91 of the Evidence Act could be given in view of Section 92 thereof. Section
92 of the Evidence Act provides specifically exclusion of evidence of oral agreement
for the purposes of contradicting, varying, adding to, or subtracting from, its terms.
It contains as many as six proviso. Learned counsel for the defendant could not point
out that under which proviso his case falls. However, he placed reliance on the
following two judgments of the Hon'ble Apex Court :-
1. Ishwar Dass Jain v. Sohan Lal, MANU/SC/0747/1999 : (2000) 1 SCC 434;
and

2 . Smt. Gangabai v. Smt. Chhabubai, MANU/SC/0385/1981 : AIR 1982 SC
20.
In the case of Ishwar Dass Jain v. Sohan Lal (supra), it was pleaded by the defendant
in written statement that the mortgage deed though true was a sham document not
intended to be acted upon. The mortgage deed was executed to circumvent the law
and the plaintiff was a rich man and there was no occasion for him to mortgage his
property. It was held that inspite of Section 92(1) of the Evidence Act; it is
permissible for a party to a deed to contend that the deed was not intended to be
acted upon but was only a sham document. The bar arises only when the document is
relied upon and its terms are sought to be varied and contradicted.
The another relied upon case is, Smt. Gangabai v. Smt. Chhabubai (supra) wherein it
has been laid down that the bar of, as to adducing of oral evidence is attracted 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 purposes 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 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. (See: Tyagaraja Mudaliyar and another v. Vedathanni,
MANU/PR/0014/1935 : AIR 1936 PC 70).
Viewed as above, even if, we take oral evidence, the defendant has utterly failed to
prove that it was a loan transaction between the parties. The defendant is an
advocate and he very well understands the niceties of law and is supposed to know
the importance of execution of a registered document vis. a vis, an oral agreement.
He could not lead any cogent and reliable evidence to prove the alleged loan
transaction. As stated herein above, the theory of medical treatment propounded by
him in the absence of any convincing evidence, has been negated by us. He has taken
oscillating stand, in his reply to the notice, in the written statement and in the
evidence with regard to the repayment of the loan amount. In the reply dated 9th
February 2004 (paper no. 39-ka), there is no mention for what purpose he needed
the loan. He states that presently there is an increase in the value of house in dispute
to Rs. 50,00,000/- and therefore, it is not possible to transfer it. He further states
that it was agreed upon that if at the time of return of money i.e. 21st July 2004 if
any of his family member has any objection for the sale of house then the plaintiffs
will not compel him to execute the sale-deed and will accept a sum of Rs. 5,00,000/-
only. For the sake of convenience, the said portion of the reply is reproduced below:
He further recites that there is still time to return money upto 21st July, 2004 and he

has given three cheques each of Rs. 40,000/- and these cheques should not be
encashed by the plaintiffs failing which if they are dishonoured, he will not be liable
in any manner. In the written statement, the defendant became wiser took a plea for
the first time that he has been re-paying partial payments monthly amounting to Rs.
15,000/- per month since August, 2002 to July, 2004 and thus, has paid a sum of Rs.
3,60,000/-. With regard to three cheques, he pleads that the said cheques were
returned by the plaintiffs and lieu thereof he gave Rs. 1,20,000/- in cash but without
obtaining any receipt. The evidence of defendant suffers with inherent discrepancies
and cannot be relied upon.
Ranjeet Srivastava DW-2 states that he was present when talk in between the
plaintiffs and defendant took place in the year 2002. It was in the month of May/June
the defendant handed over document of title in his presence to the plaintiffs on 24th
July, 2002 and a sum of Rs. 5,00,000/- was given to the defendant. He further states
that the document of title, sanctioned map by the Ghaziabad Development Authority
along with other documents were given as mortgage (Girvi). The relevant portion
from his cross-examination is reproduced below:-
The above statement of the witness would show that he is a got up witness and has
gone a step further to support the defendant. He has gone to the extent of saying that
loan agreement was arrived between the parties in his presence and document of title
etc. were given by the defendant as mortgage, a case not even pleaded by the
defendant. This shows that he is procured witness being friend of the defendant, a
fact which has been admitted by him. Besides the above statements of DW-1 and
DW-2, there is no evidence worth the name to show that the defendant took loan and
the sale agreement was not intended to be acted upon.
It is interesting to note that DW-2 in his examination-in-chief states that on 24th
July, 2002 a loan agreement was executed in writing wherein it was agreed upon that
the defendant will return the loan amount in installments along with interest and get
the writing cancelled, a case not even set out by the defendant. It has not even
pleaded that on 24th July, 2002, any such loan agreement was executed in writing.
This is indicative of the interested testimony of defendant no. 2 in favour of the
defendant.
The statements of DW-1 and DW-2 are untrustworthy and cannot be relied upon
specially when the defendant is an advocate and fully understands the implications of
execution of a registered document. The evidence led by the defendant in support of
his plea of loan transaction is scanty, untrustworthy. The ultimate finding recorded by
the trial court disbelieving the version of defendant on the above issue is perfectly
justified and we endorse the same. The stand taken by the defendant is incredible
and implausible.
Lastly, it was urged that this Court should exercise its discretion as available under
Section 20 of the Specific Relief Act by setting aside the decree for specific

performance of contract to sell and lieu thereof grant a decree for refund of the
amount to the plaintiffs. There has been manifold increase in prices of immovable
properties and presently the property in dispute is around Rs. 50,00,000/- submits
the defendant. Repeatedly, we asked the counsel to show evidence, if any, to
establish that the house in dispute can or could fetch at Rs. 50,00,000/- but he
failed. Except making a bald statement that the house was valued at Rs. 50,00,000/-,
there is no evidence to support the above plea. The defendant could have placed very
easily some material in support of his plea but he failed to discharge the burden. The
plea that the house is valued at Rs. 50,00,000/- deserves rejection and we do so.
Much was argued with the help of Section 20 of the Specific Relief Act. It was rightly
pointed out by the learned counsel for the respondents that no such plea was ever
forwarded before the trial court either in the pleadings or in issue or in evidence. He
submits that grant of any such relief to the defendant would amount premium to a
person who wants to wriggle out of a registered agreement and will promote
dishonesty in the society. He further submits that a bare perusal of the agreement in
question would show that the defendant has at least two houses. Besides the house
in question, he has got one house situate at K.M.-96, Kavi Nagar, Ghaziabad. This
finds mention against his particulars in the agreement itself. In short, the defendant
does not deserve any sympathy of the Court. Had this issue been raised before the
trial court, the plaintiffs would have given evidence in this regard. He relied upon
recent decision of Apex Court in Prakash Chandra v. Narayan, 2012 (2) ARC 213.
Paragraph-15 of the said judgment is reproduced below:
15. The question as to whether the grant of relief for specific performance
will cause hardship to the defendant within the meaning of Clause (b) of
sub-section (2) of Section 20 of the Specific Relief Act, 1963, being a
question of fact, the first appellate court without framing such an issue ought
not to have reversed the finding of the trial court while concurring with it on
all other issues with regard to the appellant's entitlement to relief for specific
performance of contract. The High Court in the second appeal failed to notice
that the respondent had not taken any defence of hardship and no such issue
was framed and in absence of any such evidence on record, the first
appellate court held that he would be landless should the decree for specific
performance be granted.
In the above case, the Apex Court reversed the judgment of High Court and it
decreed the suit and granted the relief for specific performance of contract to sell, as
was decreed by the trial court.
As against above, the appellant has relied upon K. Narendra v. Riviera Apartments (P)
Ltd. MANU/SC/0392/1999 : (1999) 5 SCC 77 and Lourdu Mari David and others v.
Louis Chinnaya Arogiaswamy and others, MANU/SC/0726/1996 : AIR 1996 SC 2814.
It was also submitted that in the plaint, an alternative relief for return of earnest
money along with interest and damages as may be determined by the Court, has
been claimed and the same has been asserted in deposition by the plaintiffs in cross-
examination also.
It is an acknowledged legal proposition that a plaintiff can claim more than one relief
on the same cause of action. He must claim all; he will otherwise entitle to bring a
new suit for omitted relief, unless the omission is for the first time was with leave of
the Court. The claim of alternative relief of refund of earnest money along with
interest etc. is a usual relief claimed in such suits. The defendant cannot compel a
plaintiff to be satisfied by the alternative relief, relief for specific performance of
contract to sell instead. It will be travesty of justice if relief for contract to sell is

denied on this ground. It is true that discretion has been given to the Court under
Section 20 of the Specific Relief Act but the specific performance relief should not be
refused arbitrarily. The discretion should be exercised on sound principles of law
capable of correction by an appellate court, as laid down by the Apex Court in the
case of Lourdu Mari David (supra). It is settled law that the party who seeks to avail
of the equitable jurisdiction of a Court and specific performance being equitable
relief, must come to the Court with clean hands. Here is a case where it was neither
found by the trial court nor any material was placed before us by the defendant to
show that the plaintiffs has not come to the court with clean hands or they have
based their claim on some falsehood. As a matter of fact, the position is otherwise.
The defendant has not come to the court with clean hands and has come forward with
untrue facts. Refusal of decree for specific performance of contract to sell in such
situation would not promote honesty in society.
In the first relied upon the case by the defendant i.e. K. Narendra v. Riviera
Apartments (P) Ltd. (supra), the decree for specific performance of contract to sell
was refused on account of peculiar facts of that case. The vendee was a building
contractor who proposed to purchase the land for the purpose of raising multistoried
building. There the suit for specific performance was filed after about eight years
which was not treated a reasonable period and part of land was declared surplus
within meaning of Urban Land Ceiling & Regulation Act, 1976. The agreement
contemplated several sanctions and clearances which were certainly not within the
power of the parties. Both the parties knew it well that the vendor was depended on
such clearance. Part of the land was acquired by the State and to that extent the
agreement was rendered incapable of performance. Having it found that the builder
shall not be able to raise construction as desired and will not be able to give the
delivery of possession of the agreed constructed portion to the vendor, the decree for
specific performance of contract to sell was refused. The said case was decided on
peculiar facts of that case. It should be read and understood in the factual scenario
as existed therein. It has not been laid down as a rule of universal application that
the discretion should be exercised to refuse the decree for specific performance of
contract to sell whenever the defendant pleads so.
In another case i.e. Lourdu Mari David (supra), the case of the plaintiff was belied
with regard to taking of possession on the date of agreement. The court also found
that in paras-7 & 9 of the plaint of that suit, the plea set out therein is false. The
third circumstance with regard to payment made by the plaintiff was also found to be
incorrect. These were circumstances which were taken cumulatively to deny the
relief. Here, on the case on hand, not even a single circumstance could be pointed
out by the defendant to disentitle the plaintiff to get a decree for specific performance
of contract to sell. The decree for specific performance of contract to sell cannot be
denied when execution of deed is proved, on whims of a court. On the facts of the
case, there is no rational not to confirm the decree for specific performance of
contract to sell. Besides the fact that no such plea was put forward before the court
below, we find that even in the memo of appeal no circumstance has been mentioned
which may tilt the fulcrum of balance in favour of the defendant. On the contrary, if a
party has to be blamed, then it would be the defendant who has come with untrue
and wrong allegations. He has come forward with frivolous defence and frivolous
litigation.
No material was placed before us to show that the case of the defendants falls in any
of clauses (a), (b) or (c) of Section 20(2) of the Specific Relief Act. The defendant
entered into the contract with wide open eyes and the contract has been witnessed
and attested by his son. In the absence of any material, it would be inequitable to
refuse specific performance of contract to sell dated 24th July, 2002, having found

that there is nothing on record to show that price of the house in question has been
increased manifold and the theory of loan amount having not been found to be
proved. We are of the view that the defendant is not entitled to get any discretionary
relief, envisaged under Section 20 of the Specific Relief Act.
In Laxman Tatyaba Kankate & another v. Taramati Harishchandra Dhatrak, 2010 (3)
ARC 189, a case relied upon by the plaintiffs it has been held that discretion of court
has to be exercised as per the settled judicial principles. In that case, a sum of Rs.
10,000/- was given as earnest money. The Court while confirming the decree for
specific performance took note of the fact that there is no circumstance not to grant
specific performance of contract which is discretionary. Role of the plaintiff is one of
the most important factors is to be taken into consideration. The Court is expected to
take care to see that the process of the Court is not used as an instrument of
oppression giving an unfair advantage to the plaintiff as opposed to the defendant in
the suit. There being no circumstance, the defendant enjoyed the earnest money of
Rs. 10,000/- as also the possession. It is not only lawful but even equity and facts of
the case demand that a decree for specific performance should be granted in favour
of the respondent therein. The ratio laid down in the above case is fully applicable to
the facts of the present case.
At this juncture, we may re-produce some observations of the Supreme Court made
in respect of such kinds of litigation. In the case of Indian Council for Enviro-Legal
Action v. Union of India & others MANU/SC/0837/2011 : JT 2011 (8) SC 375. the
Apex Court has observed as follows:-
197. In Padmawati vs Harijan Sewak Sangh - CM (Main) No. 449 of 2002
decided by the Delhi high Court on 6.11.2008, the court held as under:-
The case at hand shows that frivolous defences and frivolous
litigation is a calculated venture involving no risks situation. You
have only to engage professionals to prolong the litigation so as to
deprive the rights of a person and enjoy the fruits of illegalities. I
consider that in such cases where Court finds that using the Courts
as a tool, a litigant has perpetuated illegalities or has perpetuated an
illegal possession, the Court must impose costs on such litigants
which should be equal to the benefits derived by the litigant and
harm and deprivation suffered by the rightful person so as to check
the frivolous litigation and prevent the people from reaping a rich
harvest of illegal acts through the Court. One of the aims of every
judicial system has to be to discourage unjust enrichment using
Courts as a tool. The costs imposed by the Courts must in all cases
should be the real costs equal to deprivation suffered by the rightful
person.
1 9 8 . We approve the findings of the High Court of Delhi in the
aforementioned case.
199. The Court also stated: "Before parting with this case, we consider it
necessary to observe that one of the main reasons for over-flowing of court
dockets is the frivolous litigation in which the Courts are engaged by the
litigants and which is dragged as long as possible. Even if these litigants
ultimately loose the lis, they become the real victors and have the last laugh.
This class of people who perpetuate illegal acts by obtaining stays and
injunctions from the Courts must be made to pay the sufferer not only the
entire illegal gains made by them as costs to the person deprived of his right

and also must be burdened with exemplary costs. Faith of people in judiciary
can only be sustained if the persons on the right side of the law do not feel
that even if they keep fighting for justice in the Court and ultimately win,
they would turn out to be a fool since winning a case after 20 or 30 years
would make wrongdoer as real gainer, who had reaped the benefits for all
those years. Thus, it becomes the duty of the Courts to see that such
wrongdoers are discouraged at every step and even if they succeed in
prolonging the litigation due to their money power, ultimately they must
suffer the costs of all these years long litigation. Despite settled legal
positions, the obvious wrong doers, use one after another tier of judicial
review mechanism as a gamble, knowing fully well that dice is always loaded
in their favour, since even if they lose, the time gained is the real gain. This
situation must be redeemed by the Courts.
Against this judgment, Special Leave to Appeal (Civil) No. 29197/2008 was
preferred to the this Court. The Court passed the following order:
We have heard learned counsel appearing for the parties. We find no
ground to interfere with the well-considered judgment passed by the
High Court. The Special Leave Petition is, accordingly, dismissed.
More or less, similar observations have been reiterated in Maria Margarida Sequeria
Fernandes and others v. Erasmo Jack de Sequeria, JT 2012 (3) SC 451.
Any other point was not pressed.
The appeal merits dismissal.
We find no merit in the appeal. Judgment and decree of the court below is on terra
firma and needs no interference. The appeal is dismissed with costs.
© Manupatra Information Solutions Pvt. Ltd.

MANU/DE/2204/2012
IN THE HIGH COURT OF DELHI
RFA (OS) 26/2008
Appellants: Beharilal Madanlal Jaipuria
Vs.
Respondent: Star Papers Mills Ltd. and Ors.
Hon'ble Mr. Justice Pradeep Nandrajog and Mr. Justice Siddharth Mridul
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. J.P. Sengh, Sr. Advocate and Mr. Pradeep Dewan
Sr. Advocate instructed by Mr. Sumeet Batra and Ms. Ankita Gupta, Advocates
For Respondents/Defendant: None
JUDGMENT
Siddharth Mridul, J.
1 . The present first appeal assails the decree and judgment dated March 20, 2007
whereby the learned Single Judge has decreed suit filed by respondent No. 1 in sum
o f ' 96,41,765.31 along with simple interest @15% per annum from the date of
institution of the suit till the date of payment. The respondent No. 1 had filed a suit
for recovery of money towards the price of goods allegedly sold by it to the
appellant. It was the claim of respondent No. 1 that it was a manufacturer of various
types of papers and that the appellant was a whole sale dealer of paper and as a
dealer was purchasing paper from the respondent No. 1 and for which, respondent
No. 2, the Managing Director of the appellant personally approached the respondent
No. 1 in October, 1985 at the Saharanpur Mills for what was claimed to be a bulk
order in the hands of the appellant for its customers. It was pleaded that respondent
No. 2 assured the respondent No. 1 about prompt payment. It was further alleged
that in the month of November and December, 1985 and January 1986 huge stocks
were lifted by the appellant from the respondent No. 1. The total value of the goods
supplied was stated to be worth ' 72,27,079/- vide 189 consignments against the
terms of direct payment. It was alleged that goods under the 189 consignments were
duly delivered from the Delhi office of the respondent No. 1.
2 . The respondent No. 1 therefore alleged that a sum of ' 72,27,079/- is due and
payable by the appellant. The statement of amount outstanding from the appellant
was annexed to the plaint as Annexure-A. Statement of amount due for the goods
supplied against hundi documents showing liability of ' 2,99,480/- was annexed to
the plaint as Annexure-B. The statement of incidental charges claimed on bills was
Annexure-C to the plaint. Annexure-D and D1 to the plaint respectively were the
statement of interest against the outstanding bills upto July 1987 and from August
08, 1987 to September 15, 1987. Statement of interest on amount due for goods
supplied against hundi upto July 31, 1987 was Annexure-E and thereafter up to
September 15, 1987 was Ex.E-1 to the plaint. Annexure-F was statement of interest
due for delayed payment. Annexure-G to the plaint was a statement of amount due
with interest against oldest outstanding 12 bills after adjusting the on account
payment of ' 2.27 lakhs. It was pleaded by the respondent No. 1 that the said

respondent was retaining certain amount of trade discount to which the appellant was
entitled. Annexure-H to the plaint was the statement of amount due after adjusting
the trade discount portion against the interest debit notes. Annexure-I to the plaint
was the statement of interest waived by the respondent No. 1. Annexure-J to the
plaint was the summary of the amount due to the respondent No. 1 from the
appellant.
3. The appellant contested the suit by taking various pleas of law and of fact. In sum
and substance, it was pleaded by the appellant that the suit of the respondent No. 1
was based on fictitious and fraudulent transactions entered into between the parties.
The appellant pleaded that the alleged bills in respect whereof suit had been filed
were on the basis of fictitious transactions which were tainted with fraud, deceit and
on circumvention of law. It was alleged that the transactions were against the public
policy and void ab-initio. On facts it was stated that in reality no actual deliveries
were made to the appellant against the bills which were the subject matter of the
suit. The appellant stated that in or about 1972-73 Shri B.P. Bajoria, the then
Managing Director of the respondent No. 1 approached Shri Nagarmal Jaipuria and
suggested that the appellant and respondent No. 2 and 3 should receive certain bills
drawn on them inasmuch as the respondent No. 1 intended to sell certain quantities
of papers in the open market at prices higher than the mill rates. It was represented
on behalf of the respondent No. 1 that unless and until the bills were accepted by a
wholesaler, the goods could not be taken out of the mills. As per the scheme of the
respondent No. 1, the goods were to be ostensibly sold to the appellant while
factually they were sold by the respondent No. 1 in the open market at a premium. It
was thus stated by the appellant that since the price of paper was commanding good
premium in the market it was lucrative business for the respondent No. 1 to sell the
goods in the open market by ostensibly showing them to be sold to the appellant as
the respondent No. 1 would also save sales tax @ 4% on direct sales from
Saharanpur Mill to the appellant, as a wholesaler, which saving could not be made in
case of sale from Saharanpur Mill directly to the customers. It was stated by the
appellant that the respondent No. 1 in addition to make the profit by sale in open
market also wanted to pocket the sales tax. It was stated by the appellant that on
behalf of the respondent No. 1 it was threatened that if the said arrangement was not
accepted, the wholesale distributorship agreement with the appellant would be
terminated. The appellant states that under the said pressure and threat it succumbed
to the illegal demands of the respondent No. 1 and agreed to the arrangement in
which goods would directly be sold in the open market and the appellant would be
used as a conduit for the said illegal transaction. It is further stated by the appellant
that the respondent No. 1 compelled them to allow the bills to be raised in its name
and to undergo formalities in its name so that the fraudulent scheme and device
could not be caught by the authorities. It was pleaded by the appellant that the
respondent No. 1 had no godown or sales depot at Delhi from which the alleged
supplies were made and that the challans, etc. were forged and fabricated
documents. In this manner the appellant claims that no liability against fictitious bills
can be foisted upon it.
4. In a nutshell, the case of the appellant was that Shri Nagarmal Jaipuria just lent a
helping hand to the respondent at the asking of its Director Shri B.P. Bajoria and to
bring home the point urged that the gain to the respondent No. 1 was to remove the
goods from Saharanpur and show the same to have been brought to its godown at
Delhi and thereby avoid going Central Sales Tax since respondent No. 1 was moving
the goods from Saharanpur to Delhi i.e. inter-city without there being a sale and then
effecting sales, intra-city, in Delhi, but which required respondent No. 1 to be
registered as a dealer with the Sales Tax Authorities in Delhi, a fact which did not
exist i.e. respondent No. 1 was not registered as a dealer with the Sales Tax

Authorities at Delhi.
5. On the pleadings of the parties the following preliminary issues were settled:-
A) Whether the plaintiff has paid proper court fees on the plaint?
B) Whether there is a counter claim raised in written statement?
C) Whether the defendant is liable to pay Court Fees thereon?
D) Whether the suit is not maintainable and is liable to be dismissed as
barred under Order 2 Rule 2 of the Code of Civil Procedure?
E) Whether the plaint is liable to be rejected/amended in terms of the
judgment in IA No. 3250/89 where the plaintiffs have undertaken not to rely
upon and claim any relief against the defendants on the basis of averments
of the dishonest intention, manipulation and fraud etc. made in para 18 of
the plaint?
7. On facts, following issues were settled:-
) Whether the plaint has been signed, verified and instituted by a person
competent to do so?
) Whether the defendant nos. 2 & 3 are personally liable for the claims
against the defendant no. 1?
) Whether the alleged bills forming the claim in the suits have been raised on
the basis of the fictitious and fraudulent transactions?
) Whether the defendant no. 1 accepted the bills without actual delivery of
goods to it?
) Whether there was any sales office or sales depot of the plaintiff at Delhi,
from which the plaintiff has made alleged sales to the defendant no. 1?
) Whether the defendant no. 1 was purchasing paper from the Delhi Office of
the plaintiff?
) Whether on a representation made by the defendant no. 2 in the month of
October, 1985, personally at Saharanpur Mills, the defendant no. 1 lifted
huge stock of paper in the months of November, December, 1985 and
January, 1986 from the plaintiffs?
) Whether the defendants no. 2 and 3 gave assurances to the plaintiff and
acting on them the plaintiff supplied goods to the defendant no. 1?
) Whether the defendant no. 1 is under undue influence, coercion and threats
as detailed in written statement?
) Whether the defendant no. 1 accepted the hundi as detailed in Annexure 'B'
of the plaint?
) Whether the plaintiff is entitled to recover any incidental charges as
detailed in Annexure 'C' of the plaint?
) Whether the plaintiff could not have adjusted the credit due to the
defendant against the outstanding amounts as alleged in the plaint?

) Whether the suit for interest alone is not maintainable as principal amount
has been received and accepted by the plaintiff unconditionally?
) Whether the plaintiff is entitled to and can claim interest at the rates
claimed in the suit?
) Whether the interest claimed is hit by the provisions of Usurious Loans Act?
) Whether the claim of the plaintiff in respect of certain bills allegedly
accepted by the defendant is barred by time?
) Whether the plaintiff has not given due and proper credit to the amounts
paid by the defendant amounting to Rs. 2,72,08,308.29/- from May, 1985 till
the date of filing of the written statement?
) Whether the plaintiff is liable to render true and proper accounts to the
defendants from the inception of the wholesale dealership up to date
between the parties?
) To what amount, interest and relief the plaintiff and/or the defendant are
entitled to claim from each other?
7 . The respondent No. 1 examined Shri A.S. Bhargava as its only witness. The
appellant examined its Director Shri R.C. Jaipuria as its witness.
8. Vide the impugned judgment and decree dated March 20, 2007 the learned Single
Judge passed a decree as aforesaid.
9 . On behalf of the appellant the following submissions were urged before the
learned Single Judge :-(i) That the suit had not been validly instituted.(ii) The suit
transactions have not been proved. (iii) The delivery of the subject goods was not
proved. (iv) The Respondent did not have any godown at Delhi. (v) Key witness not
produced on behalf of the respondent No. 1. (vi) The best evidence was not
produced. (vii) The books of accounts were not produced. (viii) The appropriation of
trade discount buttresses the defence of fictitious transaction. (xi) None of the hundis
of the alleged nine hundi transactions signed by the appellant. (x) The parties were
in pari delicto potior est conditio. (xi) Rate of interest not proved. No other issue was
urged before us by the appellant.
1 0 . The learned Single Judge has held against the appellant in view of the 189
consignments as per bills raised in the name of the appellant, holding that on the
same being established, the liability to pay must follow.
1 1 . The same 11 submissions which were urged before the learned Single Judge
were urged at the hearing of the appeal and suffice would it be to state that from the
aforesaid arguments raised on behalf of the appellant only the following questions
arise for consideration in the present appeal:-
1. Whether the suit has been validly instituted?
2. Whether the alleged bills forming the claim in the suit have been raised on
the basis of the fictitious and fraudulent transactions?
3. Whether the appellant accepted the bills without actual delivery of goods
to it?
4. Whether there was any sales office or sales depot of the respondent No. 1

at Delhi, from which the respondent No. 1 has made alleged sales to the
appellant?
5 . Whether the respondent No. 1 could have adjusted the credit due to the
appellant against the outstanding amounts as alleged?
6. Whether the appellant accepted the hundis as detailed in Annexure 'B' of
the plaint?
12. The questions aforesaid as well as the submissions and contentions made on
behalf of counsel for the appellant and the judicial decisions relied upon by them are
discussed herein below in seriatim.
1 3 . The respondent No. 1 had produced a copy of the Board Resolution dated
September 10, 1987 (Ex.P-909) authorizing Shri L.K. Poddar to institute the suit. Shri
L.K. Poddar is stated to have left the employment of the respondent No. 1 prior to the
commencement of evidence and his whereabouts were not known. It was submitted
on behalf of the appellant that PW-1 Shri A.S. Bhargava has in his cross-examination
admitted that to his knowledge, the respondent No. 1 Company did not pass any
resolution before filing the suit and that he had no knowledge of this aspect. Also
that DW-1 Shri R.C. Jaipuria has stated in his affidavit that even Shri Lalit Poddar has
no personal knowledge of the alleged suit transaction as the latter had joined the
respondent No. 1 only after the alleged suit transactions were over. In this behalf the
appellant referred to the following judgments: Nibro Ltd. v. National Insurance Co.
Ltd., MANU/DE/0138/1991 : AIR 1991 Delhi 25 and State of Haryana v. Bharat Steel
Tubes Ltd., MANU/DE/0040/1996 : AIR 1996 Delhi 198. According to the appellant
these judgments emphasize that the respondent No. 1 could not succeed in the suit
unless authorization in favour of person instituting the suit is proved. It was thus
urged on behalf of the appellant that PW-1 had been unable to prove that any
resolution or authority in accordance with law was accepted by the respondent No. 1
Company in favour of Shri L.K.Poddar who had allegedly signed and verified the
plaint and instituted the suit since PW-1 had in his cross-examination stated that to
his knowledge the respondent No. 1 Company did not pass any resolution. However,
it is seen that the PW-1 actually proved the said resolution and being familiar with
the signature of Shri L.K.Poddar were able to identify the same. This said question is
thus decided against the appellant.
14. With respect to question No. 2 aforesaid, the claim of the respondent No. 1 was
that the suit transactions were bona-fide and genuine and that it has actually
delivered and sold the goods to the appellant at Delhi in the month of November,
1985 and thereafter. In support of their claim the respondent No. 1 relied on ST-I
forms issued by the Sales Tax Department in lieu of the invoices raised by it on the
appellant. Per contra, the appellant claims that there was no actual delivery of goods
or their sale in favour of the appellant and the said transactions were fictitious,
tainted with fraud and are against the public policy. The appellant buttressed his
claim with following reasons:- (i) Documents of alleged transactions were not proved
by the respondent No. 1 by leading evidence admissible under Section 62 of the
Indian Evidence Act. (ii) The burden to prove that the transactions were bonafide was
on the respondent No. 1 under Section 101 of Indian Evidence Act. (iii) The best
available evidence was not produced in as much as the persons who dealt with the
terms of sale settled by the Directors were not produced and the books of accounts
were also not produced. (iv) No witness from the sales department or the transporter
was produced.
15. In this behalf it is urged on behalf of the appellant that various documents (Ex.P-

1 to Ex. P-976) relating to the alleged transactions cannot be held to be proved
merely by way of the affidavit of PW-1. The respondent No. 1 was required to
produce the person who had allegedly drawn/written the documents or in whose
presence they had been executed. The appellant stated that the testimony of PW-1
was of no avail since the said witness had admitted that he was posted at Saharanpur
till the year 2004 while the alleged transactions took place in Delhi. The appellant
has thus claimed that the burden of proving the transaction to be bonafide and
genuine was on the respondent No. 1 under Section 101 of the Evidence Act, 1872
and that it was only after the respondent No. 1 had discharged the onus would the
appellant be required to dislodge the proof that the appellant would be required to
establish that the transaction was sham and fictitious. In this behalf the appellant
relies on Subhra Mukherjee & Anr. v. Bharat Coking Coal Ltd. &
Ors.,MANU/SC/0162/2000 : (2000) 3 SCC 312; Sait Tarajee Khimchand and Ors. v.
Yelamarti Satyam alias Satteyya and Ors., AIR 1991 SC 1865; and Sudir Engineering
Company v. Nitco Roadways Ltd., 1995 II AD (Delhi) 189.
16. In Subhra Mukherjee(Supra) the Supreme Court observed:-
13. There can be no dispute that a person who attacks a transaction as sham,
bogus and fictitious must prove the same. But a plain reading of question
No. 1 discloses that it is in two parts; the first part says, 'whether the
transaction, in question, is bona fide and genuine one' which has to be
proved by the appellants. It is only when this has been done that the
respondent has to dislodge it by proving that it is a sham fictitious
transaction. When circumstances of the case and the intrinsic evidence on
record clearly point out that the transaction is not bona fide and genuine, it
is unnecessary for the court to find out whether the respondent has led any
evidence to show that the transaction is sham, bogus or fictitious.
17. From the above it is apparent that before the appellant was required to dislodge
the onus of establishing that the entire transaction was sham and fraudulent it would
be incumbent on the respondent No. 1 to prove that the transaction in question did
take place and was a bona-fide and genuine one. In this respect it is, therefore,
noted that the learned Single Judge fell into error in requiring the appellant to
discharge the onus of proving that the claim in the suit had been raised on the basis
of fictitious and fraudulent transactions.
18. In Sait Tarajee Khimchand(Supra) it was held that mere marking of an exhibit
does not dispense with the proof of documents and that the proof of documents is
distinct from the marking of documents as exhibit.
19. In Sudir Engineering Company(Supra) it has been held that mere admission of a
document in evidence does not amount to its proof.
20. It is urged by the appellant and in our opinion justifiably that the best available
evidence was not produced by the respondent No. 1. The persons who were in direct
dealing with respect to the alleged transactions were not examined. The gate passes,
stock registers, day book ledgers, balance sheet, proof of registration of godown with
Excise Department and Sales Tax authorities were not produced. Further the
respondent No. 1 by not producing the original books of accounts failed to prove
their case. Annexure-A to J appended to the plaint were only statements and excerpts
of the entries allegedly contained in the books of accounts and not the reproduction
of the relevant pages of the books of accounts themselves.
2 1 . In Rajappa Hanamantha Ranoji v. Sri Mahadev Channabasappa & Ors,
MANU/SC/0404/2000 : (2000) 6 SCC 120, the Court observed that an adverse

inference was rightly drawn on account of non-examination of a key witness by the
appellant. On the facts and circumstances of the case it was vital for the concerned
witness to be examined and was rather the heart of the entire matter going to the
root of the whole case. There was no explanation for non-examination of the witness.
The Court therefore held that the decree of the First Appellate Court is based on no
evidence and is perverse.
22. In Ishwar Das Jain v. Sohan Lal, MANU/SC/0747/1999 : AIR 2000 SC 426, the
Supreme Court observed as follows:-
It will be noticed that sanctity is attached in the law of evidence to books of
account if the books are indeed "account books i.e. in original and if they
show, on their face, that they are kept in the "regular course of business",
Such sanctity, in our opinion, cannot attach to private extracts of alleged
account books where the original accounts are not filed into Court. This is
because, from the extracts, it cannot be discovered whether the accounts are
kept in the regular course of business or if there are any interpolations or
whether the interpolations are in a different ink or whether the accounts are
in the form of a book with continuous page-numbering. Hence, if the original
books have not been produced, it is not possible to know whether the entries
relating to payment of rent are entries made in the regular course of
business.
2 3 . In Janki Narayan Bhoir v. Narayan Namdeo Kadam, MANU/SC/1155/2002 :
(2003) 2 SCC 91, the Court has reiterated the rule of best evidence.
24. From the above, our opinion is that the respondent No. 1 failed to produce the
best available evidence and further failed to examine key witnesses to prove their
case. This would result in our drawing an adverse inference against the respondent
No. 1.
25. Coming to the issue of ST-I forms relied upon by the learned Single Judge to
conclude that the occasion of issuance of these sales tax forms would only arise if
goods had been supplied, it is observed that the mere exhibiting of these documents
does not dispense with the onus of proof. In our view it was incumbent upon the
respondent No. 1 to have led direct evidence required under Section 61 and 64 of the
Evidence Act to prove the alleged 976 documents. Failure to produce the documents
itself would enure to the benefit of the appellant. In fact in this behalf it is also
noticed that PW-1 in his deposition feigned ignorance with respect to the place where
the sales tax returns were filed.
26. With respect to question No. 3 above, the appellant submitted that no delivery of
goods was made to it by the respondent No. 1 from Delhi. In this behalf it is
observed that PW1 has in his cross-examination admitted that none of the invoices
cum challans filed by the respondent No. 1 bears the acknowledgement receipt of
goods even though they were obtained in the usual course of business. PW-1 further
admitted that the respondent No. 1 did not file any "Goods Receipt" issued by the
transport company and that no gate passes were prepared while delivering the goods
from the Delhi godown to the appellant. This casts a serious doubt on the
genuineness of the alleged transaction. The respondents have not advanced sufficient
evidence that can be relied upon to prove the delivery of goods in the instant case.
27. With respect to question No. 4 it is observed that the respondent No. 1 failed to
prove the existence of any of its godowns at Delhi. PW-1 in his deposition stated that
the respondent No. 1 had a godown in Delhi. However he did not remember the
locality where it is situated and he had never visited it. PW-1 also admitted that the

goods were of such a nature which could be taken only through transport and that he
had never seen the godown from where suit transactions allegedly took place.
Furthermore, the respondent No. 1 failed to produce any registration certificate for
the said godown as required under the Excise Law or the Sales Tax Act. In view of
the fact that the respondents statedly supplied goods from Delhi, failure to produce
registration certificate has fortified appellant's claim of fictitious nature of the
transactions.
28. The appellant, with regard to the question No. 5, has vehemently urged that the
fictitious nature of the suit transactions was demonstrated from the fact that the
respondent No. 1 had appropriated the trade discount entitled to the appellant. The
respondent No. 1 has submitted that since the payment of interest debit notes as well
as bills were not received in time, the respondent No. 2 kept a portion of the trade
discount in deposit and raised the debit notes for such amounts along with the bills
with an understanding that the same would be adjusted against the overdue interest
debit notes. It is stated that both parties were in agreement of this arrangement. PW-
1 has deposed that the reason why a debit note for the trade account was raised was
that it could be shown against the outstanding of the appellant as receivables. The
appellant vehemently denies any such arrangement and contends that since the
respondent No. 2 has sold the goods in the open market the same was routed in the
name of the appellant and the bills were prepared after discounting the trade
discount. Thereafter, the respondent has subsequently raised the alleged debit notes
for trade discount. It is admitted by the respondents that the appellant being a
wholesaler was entitled to trade discount. The appellants have denied any
arrangement to this effect. It is observed that in the absence of evidence to prove the
existence of such arrangement the respondents were not justified in adjusting the
credit due to the appellant against the outstanding amounts.
29. With regard to question No. 6 above the respondent No. 1 had urged that apart
from the 189 consignments, goods worth ' 2,99,480/- vide nine consignments had
been supplied through hundi documents and that these hundis were dishonoured due
to non payment. In this behalf the appellant has urged that PW-1 in his deposition
was unable to name or identify the person who allegedly accepted the hundis on
behalf of the appellant and that in the normal course of business if hundi documents
were to be accepted the same would have been signed and accepted by named
persons. As a consequence the appellant submits that the argument in favour of the
documents being forged stands fortified.
3 0 . We may summarize. The respondent No. 1 has failed to prove that it was
registered as a dealer with the Sales Tax Authorities in Delhi. It failed to prove
having any godown at Delhi. As per the laws applicable to Sales Tax, unless
respondent No. 1 proved being a dealer registered at Delhi, it could not effect any
sale of paper at Delhi without paying Central Sales Tax. It is obvious that respondent
No. 1 surreptitiously removed its goods from its mill at Saharanpur not under the
cover of the invoices raised in favour of the appellant, for the reason these invoices
show an intra-city sale and not an inter-city sale. The respondent No. 1 has not led
any evidence with respect to goods receipts pertaining to movement of goods from
its mill at Saharanpur to Delhi and much less shown delivery by any transporter to
the appellant. The aforesaid has been totally ignored by the learned Single Judge and
therefrom it is apparent that the sales were fictitious i.e. appellant was shown as a
name-lender. Respondent No. 1 managed to cheat the revenue.
31. From the aforesaid discussion it emerges that the respondent No. 1 had been
unable to prove its case and consequently the suit filed by the respondent No. 1
deserves to be dismissed. In the circumstances we allow the present appeal and set

aside the impugned judgment and decree dated March 20, 2007 passed by the
learned Single Judge in CS(OS) No. 2248/1987 entitled Star Paper Mills Ltd. v.
Beharilal Madanlal Jaipuria Ltd. and Ors.
32. The Registry is directed to refund the amounts deposited by the appellant along
with interest thereon, if any, but after four months from today. The security furnished
by the appellant with regard to the deposit of interest stands discharged.
33. A copy of this decision is directed to be sent by the Registry to the Commissioner
of Sales Tax, Delhi, who is directed to look into the issue with respect to evasion of
sales tax by the respondent No. 1 and what action needs to be taken even against the
Director of the appellant to have connived. This is our reason for directing refund to
be made after four months, for the reason if the Registry were to receive any
communication from the Commissioner of Sales Tax within said time attaching the
amount deposited by the appellant, the Registry would act in compliance therewith.
No costs.

MANU/MH/0110/2019
Equivalent Citation: 2019(2)ABR531
IN THE HIGH COURT OF BOMBAY

Arbitration Petition No. 1077 of 2014 and Notice of Motion No. 1743 of 2017 in
Arbitration Petition No. 1077 of 2014
Appellants: Unimex
Vs.
Respondent: Savers Impex
S.C. Gupte, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Kevic Setalvad, Senior Advocate, Awais Ahmedji i/b.
Krupali Rajani
For Respondents/Defendant: Atul Damle, Senior Advocate i/b. Rupesh Lanjekar
Case Note:
Arbitration - Validity of award - Petition filed impugning arbitral award -
Whether arbitrator passed just and reasonable award - Held, arbitrator's
conclusion that correct documents evidencing particular high seas sales
were C-Series invoices and price reflected in those invoices alone was
correct price, was based on evidence - It was not a conclusion based on no
evidence - There was nothing in it to shock conscience of Court - Petition
dismissed. [13]
JUDGMENT
S.C. Gupte, J.
1 . This petition challenges an award passed by a sole arbitrator. The disputes
between the parties arise out of High Seas Sales Agreements. Both parties had earlier
filed their respective suits. The Respondent, who was the vendor, had filed a
summary suit for recovery of amounts due to it on dishonoured cheques, whilst the
Petitioner, who was the purchaser, had filed a suit for recovery of dues on account of
defective goods. At the hearing of the summons for judgment in the Respondent's
summary suit, the parties agreed to take their disputes before an arbitrator. The
Respondent's summary suit was treated as a statement of claim, whilst the
Petitioner's affidavit-in-reply to the summons for judgment and plaint in its own
recovery suit were, respectively, treated as a written statement and counter-claim.
Learned arbitrator, by his impugned award, allowed the Respondent's claims, whilst
rejecting the Petitioner's counter-claims.
2. The Respondent had imported several raw materials/pharmaceutical drugs under a
world bank project. The Petitioner herein, by its e-mail dated 16 August 2007, agreed
to buy some of these materials on high seas sale basis. The materials included
Riboflavin and Folic Acid along with some other materials. Various documents, such
as high seas sale agreements and warehouse sale agreements, were executed by the
parties. There were in all seven sales. The Respondent claims to have issued invoices
towards these sales. Two sets of invoices appear to have been issued in this behalf.

One set of invoices formed part of Exhibit R-5 collectively before the arbitrator
(referred to hereinafter as 'R-Series invoices'), whilst the other set was invoices in
Exhibits C-2 to C-8 (hereinafter referred to as 'C-Series invoices'). Whilst values of
goods reflected in these two sets were the same in case of four invoices, in case of
three (two for Riboflavin and one for Folic Acid), values reflected in the two sets
were different. The aggregate invoice value of R-Series invoices was Rs. 86,19,570/-,
whereas that of C-Series was Rs. 1,93,19,829/-. It appears that the Petitioner had
handed over to the Respondent several cheques aggregating to about Rs. 1.93 crores,
out of which, cheques of an aggregate value of Rs. 33,64,000/- were cleared, whilst
17 cheques of an aggregate value of Rs. 1,59,00,400/- were dishonoured. It was the
Respondent's case that these cheques were issued towards the purchase price of the
goods in accordance with C-Series invoices. The Respondent had sued the Petitioner
for the value of dishonoured cheques. The Petitioner inter alia pleaded the bar of
limitation to oppose the claim. On merits, the Petitioner denied having agreed to
purchase the material (namely, Riboflavin and Folic Acid) at the rates mentioned in
C-Series invoices. According to it, the correct invoices were the R-Series invoices,
which were received along with covering letters of the Respondent. Based on the
Respondent's statement that R-Series invoices were issued at the instance of the
Petitioner so as to understate the value of the imported goods for the purposes of
customs duty, it was alternatively submitted by the Petitioner that having been party
to deception of the revenue by means of issuance of R-Series invoices so as to
understate the import value for customs duty, the Respondent ought not to be
permitted to assert any right or claim arising out of such transaction, since such
transaction was based upon an illegal and fraudulent act. The Petitioner, in other
words, set up a plea of ex turpi causa non oritur actio/in pari delicto portior est
conditio possidentis, based on which it prayed for rejection of the Respondent's
claim. In his impugned award, the arbitrator held that the Petitioner could not evade
its liability under the principle of ex turpi causa non oritur actio. The arbitrator held
that the analysis of the plaint and the case pleaded and proved before him showed
that the Respondent's claim was based on dishonoured cheques, and not on
documents, including the R-Series invoices, which were said to be fraudulent. The
arbitrator held that the price recorded in R-Series invoices for Riboflavin and Folic
Acid did not reflect the true price agreed between the parties; the true price was
reflected in the C-Series invoices and the Petitioner was liable to make payment
accordingly. The arbitrator held the Respondent's claim to be within limitation, since
the accrual of cause of action had occurred on the date of dishonour of cheques; save
and except one cheque for Rs. 10 lakhs, which anyway did not form part of the
Respondent's claim in the arbitration reference, the claims on all other dishonoured
cheques were within time. The arbitrator also considered the Petitioner's case under
Sections 91 and 92 of the Indian Evidence Act as also on estoppel and held against
the Petitioner on both issues. The arbitrator, in the premises, awarded a principal
amount of Rs. 1,38,38,878/- along with interest at the rate of 18% p.a., respectively,
from the dates of dishonour of cheques till the date of the award and further interest
at the same rate from the date of the award and till payment or realisation.
3 . It is submitted by Mr. Setalvad, learned Senior Counsel appearing for the
Petitioner, that the impugned award is in breach of public policy of India and also
vitiated by a patent illegality appearing on the face of the award, since it grants a
claim despite the claimant being party to a fraud on his own admission. Learned
Counsel submits that the award is against binding judgments of Courts including the
Supreme Court. Learned Counsel submits that these judgments mandate that no court
should help a plaintiff on a fraudulent claim. Learned Counsel submits that this would
be so even though in proving the fraudulent nature of the plaintiff's claim it is
necessary for the defendant to rely on his own guilt in such fraud. Learned Counsel
relies on the judgment of the Supreme Court in the case of Waman Shriniwas Kini vs.

Ratilal Bhagwandas and Co. MANU/SC/0171/1959 : AIR 1959 Supreme Court 689 (V
46 C 92), a Full Bench decision of our Court in the case of Guddappa Chikkappa
Kurbar vs. Balaji Ramji Dange MANU/MH/0020/1941 : (28) A.I.R. 1941 Bombay 274
and a decision of Full Bench of Lahore High Court in Qadir Bukhsh vs. Hakam
MANU/LA/0125/1932 : A.I.R. 1932 Lahore 503, in this behalf. Learned Counsel,
secondly, submits that the high seas sale agreements/warehouse sale agreements are
written contracts and the price recorded in those contracts can alone be said to be
the agreed price. As a second limb to this submission, learned Counsel, relying on
Sections 91 and 92 of the Evidence Act, submits that no evidence for contradicting or
varying the terms of these written contracts is admissible. Learned Counsel submits
that the arbitrator's view on both these aspects discloses a clear error of law
rendering the award to be contrary to public policy of India and vitiated by a patent
illegality.
4. The principle of ex turpi causa non oritur actio/in pari delicto portior est conditio
possidentis is based on a sound policy of law. The equitable principle underlying this
maxim is that where each party is equally in fault, the law favours him who is
actually in possession, thereby not assisting either party to the fraud. That is on the
footing that no court will allow a fraud being practiced on it by either party. The
raison d'etre of this rule was described by Broom in his "Legal Maxims" (Edn. 9),
Page 466, in the following words:
"The maxim, in pari delicto portior est conditio possidentis is as thoroughly
settled as any proposition of law can be. It is a maxim of law, established,
not for the benefit of plaintiffs or defendants, but is founded on the
principles of public policy, which will not assist a plaintiff who had paid over
money, or handed over property, in pursuance of an illegal or immoral
contract, to recover it back; for the Courts will not assist an illegal
transaction in any respect."
The result of this maxim in practice is, as is famously said, the estate must lie where
it falls.
5. Based on this maxim, it is contended by learned Counsel for the Petitioner that on
the Respondent's own showing the agreements of high seas/warehouse sales and R-
Series invoices based thereon were acts of fraud, designed to mislead the exchequer
and evade tax. Learned Counsel submits that no claim founded on a fraud can be
countenanced by a court of law or an arbitral tribunal. There is a fundamental fallacy
in the Petitioner's submission. The case of fraud or execution of fraudulent
documents is not being set up by the Respondent (Claimant) in support of its case.
The Respondent's case is based on dishonoured cheques. Section 118 of Negotiable
Instruments Act, which contains rules of evidence concerning negotiable instruments
including cheques, presumes that until the contrary is proved, every negotiable
instrument was made or drawn for consideration and, when accepted, indorsed,
negotiated or transferred, was accepted, indorsed, negotiated or transferred, as the
case may be, for consideration In other words, when a plaintiff comes to a court with
a claim on a negotiable instrument, there is a statutory presumption in his favour that
the instrument was for a lawful consideration. It is, of course, rebuttable. The
defendant may well show the contrary; he may prove that the particular negotiable
instrument sued on is not in fact supported by any lawful consideration; its
consideration is unlawful. In the present case, it is the defendant, who is seeking to
displace or rebut the presumption and that he is seeking to do by pleading a case of
fraud. The principle of ex turpi causa non oritur actio/in pari delicto portior est
conditio possidentis, if at all, will apply to, and undermine, the defendant's defence
rather than the plaintiff's claim in the present case. It was indeed so applied by the

learned arbitrator relying upon decided cases including the decision of the Supreme
Court in the case of B.O.I. Finance Ltd. vs. Custodian MANU/SC/1570/1997 : .
6 . Learned Counsel for the Petitioner submits that the arbitrator has wrongly relied
on the decision in B.O.I. Finance Ltd. Learned Counsel submits that that was a case
of a ready-forward contract. The ready leg of the contract, which was for sale of
securities on spot delivery basis was legal. Only the forward leg, which envisaged
sale of securities at a future date for a fixed price, being prohibited under Section 16
of Securities Contract Regulation Act ('SCRA'), was disallowed, whilst affirming the
transaction contained in the ready leg. Learned Counsel submits that the ratio of the
Supreme Court decision in B.O.I. Finance Ltd., rendered in its own peculiar facts,
does not apply to the facts of our case. I am afraid, that is not quite correct. The
relevant contract in the case of B.O.I. Finance Ltd. was what was regarded in the
market as a ready-forward contract, partly a contract for spot delivery upon sale of
securities and partly for sale of securities on a future date at a fixed price. The ready
leg of the contract had been fully accomplished. Before the forward leg could be
completed, an ordinance known as 'Special Court (Trial of offences relating to
transactions in securities) Ordinance, 1992' was promulgated. It was followed and
replaced by the Special Courts Act, 1992. The custodian appointed under this
Ordinance and Act, who had the authority to cancel contracts relating to properties of
notified persons and deal with them, applied to the Special Court to take charge of
the securities dealt with under the subject ready-forward contract by a notified party,
on the ground that the transaction was void under Section 16 of SCRA for both the
ready and the forward parts. The Supreme Court held that the two parts of the
contract were severable; sale of securities by spot delivery, which, in that case, was
represented by the ready leg, being permissible and only the sale at a future date for
a fixed price, which was the forward leg of the contract, being impermissible under
Section 16 of SCRA, such illegal part of the agreement could not affect the transfer of
title, which had already taken place under the ready leg at the time of its execution.
That being so, the securities, which had been purchased by the appellants from the
notified persons, could not be attached. There learned Counsel is right; this was truly
the distinguishing feature of the case of B.O.I. Finance Ltd. But then this was one of
the reasons why the Court did not interfere with the sale of securities on spot
delivery forming part of the contract. The Court, at the same time, considered the
position in law even if the transactions were to be treated as inseverable. The
discussion on this point, which begins with an assumption that the agreements were
not severable but were composite, concludes that even in such a case the ready leg
could well be performed. The question considered by the Court in this context was,
whether illegality of the agreement, in respect of the composite forward leg of the
contract, would affect the transfer, which had already taken place. It is in that
connection that the Supreme Court referred to the principle of ex turpi causa non
oritur actio, or its attendant maxim, which provides that the estate may lie where it
falls when both parties are equally in fault.
7. The Supreme Court, in this context, referred to the decision of the House of Lords
in the case of Tinsley vs. Milligan MANU/UKHL/0003/1993 : (1993) 3 All ER 65. The
parties, Tinsley and Milligan, who were living together, had jointly purchased a
house, which was registered in the name of Tinsley as the sole legal owner. Though
both accepted that the house was jointly owned, the registration was taken in the
sole name of Tinsley so as to enable Milligan, with knowledge and assent of Tinsley,
to make false claims to the Department of Social Security for benefits. The money
obtained thereby from the Department was shared between the two. Subsequently,
the parties fell apart and Tinsley moved out of the house, which continued to be in
occupation of Milligan. Tinsley then brought an action claiming possession of the
house asserting her ownership. Milligan counter-claimed for an order for sale and a

declaration that the house was held by Tinsley on trust for the parties in equal
shares. Relying on the maxim ex turpi causa non oritur actio, Tinsley contended that
Milligan was barred from denying Tinsley's ownership because the purpose of the
arrangement, whereby the house had been registered in the sole name of Tinsley,
was to facilitate a fraud on the Department of Social Security and, thus, Milligan's
claim to joint ownership was tainted by illegality. It was contended that Milligan
came to the Court on an equitable principle and he who claimed equity had to come
with clean hands; else the court ought to leave the estate to lie where it fell. Tinsley's
claim was dismissed and counter-claim of Milligan was upheld by trial judge. The
appeal by Tinsley was dismissed by the court of appeal, and the House of Lords
upheld the court of appeal. In his speech, Lord Jauncey made it clear at the outset
that it was important to distinguish between enforcement of executory provisions
arising under an illegal contract or other transaction on the one hand and
enforcement of rights already acquired under completed provisions of such contract
or transaction. One of the three propositions of law enunciated in this behalf by Lord
Jauncey was said to be the following:
"It is well established that a party is not entitled to rely on his own fraud or
illegality in order to assist a claim or rebut a presumption. Thus when money
or property has been transferred by a man to his wife or children for the
purpose of defrauding creditors and the transferee resists his claim for
recovery he cannot be heard to rely on his illegal purpose in order to rebut
the presumption of advancement (see Gascoigne v. Gascoine (1981) 1 KB
223. Chettiar v. Chettiar (1962) 1 All ER 494 (1962) AC 294 and Tinker v.
Tinker MANU/UKWA/0027/1969 : (1970) 1 All ER 540, (1970) p. 136 per
Salmon U)."
8 . What was considered by the House of Lords in that case was whether the
respondent, in claiming existence of a resultant trust in his favour, was seeking to
enforce unperformed provisions of an unlawful transaction or he was simply relying
on an equitable proprietary interest that he had already acquired under the
transaction. The court said that the transaction, under which the trust was claimed,
was an agreement between the parties that although funds were to be provided by
both of them, nevertheless the title to the house was to be in the sole name of the
appellant for the unlawful purpose of defrauding the Department of Social Security.
So long as that agreement remained unperformed neither party could have enforced
it against the other. However, as soon as the agreement was implemented by sale in
the name of the appellant alone, she became a trustee for the respondent who could
then rely upon the equitable proprietary interest presumed to have been created in
his favour; there was no need for him to rely on the illegal transaction which led to
its creation. In other words, it was not a case where the respondent Milligan wanted
the appellant Tinsley to perform an executory contract under which the parties had
proposed to buy property in the sole name of Tinsley to defraud the Department;
what he wanted was that the court should recognize the equitable estate already
created in his favour by the tainted transaction. As Lord Browne Wilkinson observed
in that matter, "at law (as opposed to in equity) property in goods or land can pass
under, or pursuant to, such contract". If so, the rights already acquired could be
enforced in court. The court's assistance was sought for recognition and enforcement
of existing rights, and not for creation of rights under a yet unperformed agreement.
That is how the property was allowed to lie where it fell, no matter such property was
acquired as a result of title passing under an illegal contract; and appellant Tinsley's
defence to respondent Milligan's counter-claim that the property acquired under a
tainted contract ought not to be recognized, was rejected by the House of Lords.
9 . The decision of the Supreme Court in B.O.I. Finance Ltd., and in particular, the

reference therein to the House of Lord's decision in Tinsley vs. Milligan, is very
apposite in the context of our case. The principle of ex turpi causa non oritur actio/in
pari delicto portior est conditio possidentis does not imply that it is merely a
restriction for the plaintiff, who applies to the court for a relief based on a tainted
transaction, as claimed by learned Counsel for the Petitioner, it equally applies to a
defence based on a tainted contract or transaction. The principle implies that a party
is not entitled to rely on his own fraud or illegality not only in order to assist his
claim, but even to rebut a presumption in favour of the counter-party. The Petitioner
in the present case had issued cheques for purchasing goods from the Respondent.
The goods were purchased and the cheques were handed over in payment of price.
After that, the liability owed to the vendor was under the cheques and not under the
underlying sale agreement. The cheques were presented for payment and
dishonoured. The Respondent sued on the dishonoured cheques. The Respondent
relied on a presumption in law that the cheques were supported by consideration. It
is the Petitioner, who wants to rebut that presumption and for rebutting it, he relies
on a fraud or illegality, to which he was admittedly a party. That obviously cannot be
permitted. The law cannot assist a party in setting up a case of fraud to which he
himself was a party. That is the meaning of the principle of ex turpi causa non oritur
actio/in pari delicto portior est conditio possidentis. As we have noted above, the
learned arbitrator has correctly applied this principle and rejected the defence based
on it.
10. In any event, even if it is possible to hold that the arbitrator's conclusion in this
behalf is not correct, it is certainly a reasonable and possible conclusion and not a
conclusion, which no fair or judiciously minded person might have arrived at, or
which would shock the conscience of the Court. In that case, there is no reason for
this Court to interfere with it under the provisions of Section 34 of the Act. There is,
thus, no infirmity in the impugned award.
11. Learned Counsel for the Petitioner, alternatively, submits that the price shown in
the high seas sale agreements/warehouse sale agreements correctly reflects the
agreed price. In support of his contention, learned Counsel contends that Section 14
of the Customs Act enjoins upon the parties to a transaction of import of goods to
state the correct price actually paid or payable for the goods imported, which must be
an arms length price, in their import documents. Learned Counsel submits that the
parties having submitted documents of contract to the customs authorities evidencing
the import sales, including R-Series invoices in support of the contract price, the
price reflected in these documents must be treated as the correct price. The
submission has no substance whatsoever. Firstly, it starts with a major premise
which has no justification. The conclusion suggested by learned Counsel would be
right only in a case, where all contracts submitted by the parties to the customs are
invariably correct and actual contracts. Far from such being the case, here it is the
specific case of the parties, or, at any rate, of one of them, that the contract
submitted to the customs authorities for assessment of customs duty was deliberately
shown at an undervalue. If that is so, merely because the contract reflected a
particular price, that price could not be said to be correct because it was so reflected.
That would be a circular argument.
12. Alternatively, learned Counsel submits that what the Respondent seeks to do in
the present case is setting up a case for contradicting or varying the terms of a
written contract, namely, the high seas sale agreements/warehouse sale agreements,
and that is prohibited under Sections 91 and 92 of the Evidence Act; no evidence for
contradicting or varying terms of the high seas sale agreements/warehouse sale
agreements is admissible. That is not quite correct for more than one reasons.
Sections 91 and 92 of the Evidence Act, in the first place, do not exclude

documentary evidence for the purpose of contradicting, varying, adding to or
subtracting from, the terms of a written contract. Section 91 provides that when
terms of a contract have been reduced to the form of a document, no evidence in
proof of the terms of such contract may be given except the document itself or the
secondary evidence of its contents in cases where such evidence is admissible.
Section 92, on the other hand, excludes evidence of a contemporaneous oral
agreement for the purpose of varying, adding to or subtracting from, the terms of a
written contract. Even here, the existence of any fact, which would invalidate any
document or which would entitle any person to any decree or order relating thereto,
such as fraud, intimidation, want of due execution, want of capacity in any
contracting party, want or failure of consideration, or mistake in fact or law, can
always be pleaded and proved. In the present case, evidence sought to be produced
to contradict the terms of written contracts or documents was of another set of
documents, namely, C-Series invoices. These latter invoices suggest illegality or
falseness of the other set of invoices and documents forming part of Exhibit R-5. As
rightly observed by the arbitrator, there is no bar under Sections 91 and 92 to lead
such documentary evidence. The arbitrator also considered the decision of the
Supreme Court in the case of Ishwar Dass Jain (Dead) through LRS vs. Sohan Lal
(dead) by LRS. MANU/SC/0747/1999 : (2000) 1 SCC 434 in this behalf. In Ishwar
Dass Jain's case, the Supreme Court held that it was permissible to lead oral
evidence to contend that the agreement was not intended to be acted upon or that it
was a sham document. That is precisely what the case set up and evidence produced
in the present case attempt to do. Thus, there is no infirmity in the impugned award
even on this score.
13. Learned Counsel next attempts to take me through the oral evidence including
the cross-examination of the Respondent's witness in support of his case on true
contract price. Assessment of oral and documentary evidence is strictly within the
province of the arbitrator. It is for the arbitrator to decide the question of sufficiency
of evidence. As the Supreme Court has held in Associate Builders vs. Delhi
Development Authority MANU/SC/1076/2014 : 2015 (3) SCC 49, the only mandate of
the challenge court under Section 34 of the Arbitration and Conciliation Act, 1996, is
to see if the arbitrator's conclusion is a possible conclusion, that is to say, a
conclusion, which is supported by some evidence, and not a conclusion based on no
evidence or a conclusion which no fair or judiciously minded person would have
arrived at or a conclusion that would shock the conscience of the court. The
arbitrator's conclusion that the correct documents evidencing the particular high seas
sales were the C-Series invoices and the price reflected in those invoices alone was
the correct price, is based on some evidence. It is not a conclusion based on no
evidence. It is a conclusion, which a fair or judiciously minded person may well have
arrived at, and there is nothing in it to shock the conscience of the Court. In other
words, it brooks no interference under Section 34 of the Act.
14. In the premises, there is no merit in the petition. The petition is dismissed. The
Petitioner shall pay costs of the arbitration petition quantified at Rs. 1 lakh.
15. In view of the dismissal of the petition, the notice of motion (Notice of Motion
No. 1743 of 2017) does not survive and the same is also dismissed.
16. Learned Counsel for the Petitioner seeks stay of this order. The Petitioner has
lost before the arbitral tribunal. Its petition, in challenge of the award, having now
been comprehensively heard and decided against it, there is no question of any stay.
It is, however, ordered that the Respondent shall not seek execution of the order of
costs for a period of four weeks from today.


MANU/SC/0747/1999
Equivalent Citation: AIR2000SC 426, 2000 (39) ALR 756, 2000(1)C TC 359, JT1999(9)SC 305, 2000-1-LW425, (2000)125(2)PLR56,
2000(1)RC R(C ivil)188, RLW2000(1)SC 80, 1999(7)SC ALE277, (2000)1SC C 434, [1999]Supp5SC R24, 2000(1)UJ666
IN THE SUPREME COURT OF INDIA

C.A. No. 14987 of 1996
Appellants:Ishwar Dass Jain (Dead) Thr. Lrs.
Vs.
Respondent: Sohan Lal (Dead) By Lrs.
M. Jagannadha Rao and M.B. Shah, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Shashi Jain, Adv. and Party-in-Perso
For Respondents/Defendant: D. Mahesh Babu, Adv.
Case Note:
Civil - admissibility of evidence - Section 92 (1) of Indian Evidence Act,
1872 - dispute regarding admissibility of oral agreement in evidence in suit
for redemption of mortgage - Lower Court dismissed suit accepting oral
agreement in evidence - decision of Lower Court challenged - defendant
could not prove genuineness of oral agreement - Lower Court did not
appreciate facts properly - decision of Lower Court set aside.
JUDGMENT
M. Jagannadha Rao, J.
1. The appellants are the legal representatives of the mortgagor, the original plaintiff
in suit No. 388 of 19F81 on the file of the Sub-Judge, 1st Class, Panipat, who sued
for redemption of the usufructuary mortgage dated 15.4.1969 and for possession.
The suit was dismissed by the Trial Court on 12.2.85, by the first appellate Court
(appeal 47/13 of 1985) on 2.11.85 and by the second appellate Court (RSA. NO. 797
of 1986) on 6.10.86 on the ground that notwithstanding the fact that the defendants
executed the registered mortgage deed on 15.4.1969, the real relationship between
the parties was as landlord and tenant and that the defendant could not be evicted
except under the Rent Control law.
2 . The plaintiffs case was that he mortgaged the entire shop and his 5/6th share
therein and gave possession of the whole shop to the defendant for Rs. 1,000.
Plaintiff sued for redemption and recovery of possession from the defendant on the
above said registered usufructuary mortgage. Interest payable by the mortgagor was
to be set off towards the profits arising from use of property by the mortgagee. The
mortgage deed stated that on Q redemption possession had to be delivered back to
the mortgagor. On 1.2.1981 the plaintiff demanded production of the deed and
possession on redemption. The defendant did not comply. Therefore, the present suit
was filed.
3 . The defence was that there was no relationship of mortgagor and mortgagee

between the parties but that the relationship was as landlord and tenant. Defendant,
however, admitted that the shop was in exclusive management of plaintiff at the time
possession was given to him. The plaintiff allegedly leased to the defendant at Rs. 80
P.M. and plaintiff had been receiving at that rate. These payments, it was said, were
proved by the accounts of the defendant. The motive for executing the deed was
stated as follows:
The plaintiff, further demanded that the defendant will have to execute the
mortgage deed by way of collateral security in order to guarantee that the
shop will be vacated by the defendant whenever demanded by the plaintiff.
In fact, the said mortgage deed was to circumvent and to bye pass the
provisions of the Rent Control Legislation. The alleged transaction of
mortgage was only a sham transaction executed only with the aforesaid
object. The consideration of Rs. 1000 was only in nature of collateral security
or pagri.
It was also alleged that the plaintiff was a man of substance and very rich and there
was indeed no occasion for him to mortgage the same for a petty sum. The plaintiff
is alleged to have "demanded Rs. 1000 by way of security and asked the defendant to
thumb mark some writing to arm the plaintiff with a right to get the shop vacated
according to his sweet will". The defendant was in dire necessity of the shop and had
to agree on the said condition. The defendant, therefore, paid Rs. 1000 and incurred
Rs. 80 towards expenses. The alleged mortgage was not the real transaction but it
was a clever device to bye-pass the provisions of the Rent Act". The suit of the
plaintiff was liable to be dismissed.
4 . The trial Court considered the question whether the mortgage was proved. It
initially observed that the "plea of the learned Counsel for the defendant that the
plaintiff was a rich man and there is no need to mortgage the shop... cannot be
accepted. Even if the plaintiff is rich person, he can mortgage the suit property". The
plaintiff was not bound to plead that he was suffering losses but he could lead
evidence. Having so observed, the trial Court stated that the defendant "produced his
books of account" to show that he was paying various amounts to the plaintiff every
month, ranging from Rs. 20 to Rs. 80, "though it is not mentioned as to why the
defendant is paying the said amount to the plaintiff. On these accounts, the plea of
payment of rent was founded. The trial Court then made an observation contrary to
what it said earlier, as follows:
the learned Counsel for the defendant contended that the plaintiff is a well to
do man and no person would mortgage his shop with the defendant for petty
amount of Rs. 1000.1 find force in this contention, and plaintiff is not a poor
man.
The Court then concluded that the defendant was paying to plaintiff some E amount
every month, towards "rent" at the rate of Rs. 80 and that the mortgage was a sham
transaction. The suit was, therefore, dismissed.
5 . On appeal, the appellate Court proceeded on the basis that the mortgage was
proved. It confirmed the decree of the trial Court and observed that the plaintiff had
only a half share and could not have mortgaged the share of his wife though plaintiff
might have been in management, that the defendant's "accounts" showed he had
been paying Rs. 80 P.M. to plaintiff though no receipt was issued or obtained. This
was for the period 16.4.69 to 12.3.81. The first entry showed defendant paid Rs.
1000 to plaintiff in cash and Rs. 80 as rent in advance and Rs. 80 as miscellaneous
expenditure. The Court observed that the plaintiff "got the mortgage deed executed

from defendant so that he could get the disputed shop vacated at his sweet will". The
Court also observed: "Needless to say that the disputed shop was mortgaged for a
petty sum of Rs. 1,000 whereas the rent of the disputed property was Rs. 80 per
month". The property was very valuable and could not have been mortgaged for Rs.
1000. The Municipal Register showed respondent was occupying the property. Rental
value was assessed at Rs. 824. On the above reasoning, it was held that the
mortgage was a sham document and that the defendant was in reality a tenant. The
appeal was dismissed.
6 . The High Court dismissed the Second Appeal without reasons. It is these
judgments that are questioned in this appeal.
7 . We have heard the appellants in person and the learned Counsel for the
respondents.
8 . The following points arise for consideration: (1) Whether the High Court can
interfere under Section 100 CPC (as mentioned in 1976) with the findings of fact
arrived at by the lower appellate Court if vital evidence which could have led to a
different conclusion was omitted or if inadmissible evidence was relied upon which if
omitted, could have led to a different conclusion?
(2) Whether on the facts of the case, the mortgage was proved by the
plaintiff by production of a certified copy of the deed?
(3) Whether Section 92(1) of the Evidence Act could be a bar for proving a
document to be a sham document?
(4) Whether the Exs. D2 to D5 were only extracts from accounts books and
could not be treated as account books for purposes of Section 34 of the
Evidence Act and were not admissible?
(5) Whether the lower Courts had omitted vital evidence from consideration?
(6) Whether the mortgagee who got possession of the entire property under
the deed of mortgage could be permitted to deny the title of the mortgagor
either wholly or partly?
(7) What relief?
POINT 1:
9. Ordinarily, this Court does not go into findings of fact in exercise of its jurisdiction
under Article 136 of the Constitution of India, particularly in appeals against
judgment in Second Appeals decided by the High Courts under Section 100 of the
CPC. But, in certain exceptional cases, this Court will not hesitate to interfere, if
interference is called for and if the High court has failed to interfere under Section
100. After hearing the appellants in person and the learned Counsel for the
respondent, we are of the view that this is one of those exceptional cases in which
interference is called for even within the narrow parameters of Section 100 CPC.
10. Now under Section 100 CPC, after the 1976 amendment, it is essential for the
High Court to formulate a substantial question of law and it is not permissible to
reverse the judgment of the first appellate Court without doing B so.<mpara>
1 1 . There are two situations in which interference with findings of fact is
permissible. The first one is when material or relevant evidence is not considered
which, if considered would have led to an opposite conclusion. This principle has

been laid down in a series of judgments of this Court in relation to Section 100 CPC
after the 1976 amendment. In Dilbagrai Punjabi v. Sharad Chandra
MANU/SC/0131/1988 : AIR1988SC1858 , while dealing with a Second Appeal of 1978
decided by the Madhya Pradesh High Court on 20.8.81, L.M. Sharma, J. (as he then
was) observed that
The Court (the first appellate Court) is under a duty to examine the entire
relevant evidence on record and if it refuses to consider important evidence
having direct bearing on the disputed issue and the error which arises as of a
magnitude that it gives birth to a substantial question of law, the High Court
is fully authorised to set aside the finding. This is the situation in the present
case.
12. In that case, an admission by the defendant-tenant in the reply notice in regard
to the plaintiffs title and the description of the plaintiff as 'owner' of the property
signed by the defendant were not considered by the first appellate Court while
holding that the plaintiff had not proved his title. The High Court interfered with the
finding on the ground of non-consideration of vital evidence and this Court affirmed
the said decision. That was upheld. In Jagdish Singh v. Nathu Singh
MANU/SC/0313/1992 : AIR1992SC1604 , with reference to a Second Appeal of 1978
disposed of on 5.4.1991. Venkatachaliah, J. (as he then was) held:
where the findings by the Court of facts is vitiated by non- consideration of
relevant evidence or by an essentially erroneous approach to the matter, the
High Court is not precluded from recording proper findings.
Again in Sundra Naicka Vadiyar v. Ramaswami Ayyar MANU/SC/0710/1992 :
AIR1994SC532 , it was held that where certain vital documents for deciding the
question of possession were ignored-such as a compromise, an order of the revenue
Court-reliance on oral evidence was unjustified. In yet another case in Mehnmissa
Visham Kumari MANU/SC/0922/1998 : (1998)2SCC295 arising out of Second Appeal
1 of 1988 decided on 15.1.1996, it was held by Venkataswami, J. that a finding
arrived at by ignoring the second notice issued by the landlady and without noticing
that the suit was not based on earlier notices, was vitiated and the High Court could
interfere with such a finding. This was in Second-Appeal of 1988 decided on
15.1.1996.
13. The second situation in which interference with findings of fact is permissible is
where a finding has been arrived at by the appellate Court by placing reliance on
inadmissible evidence which if it was omitted, an opposite conclusion was possible.
In Sri Chand Gupta v. Gulzar Singh MANU/SC/0022/1992 : AIR1992SC123 , it was
held that the High Court was right in interfering in Second Appeal where the lower
appellate Court relied upon an admission of a third party treating it as binding on the
defendant. The admission was inadmissible as against the defendant. This was also a
Second Appeal of 1981 disposed of on 24.9.1985.
14. In either of the above situations, a substantial question of law can arise. The
substantial question of law that arises for consideration in this appeal is: "whether
the courts below had failed to consider vital pieces of evidence and whether the
Courts relied upon inadmissible evidence while arriving at the conclusion that the
mortgage was sham and that there was no relationship between the plaintiff and the
defendant as mortgagor and mortgagee but the real relationship was as landlord and
tenant? Point 1 is decided accordingly.
POINT 2:

15. We shall first deal with the proof of the certified copy of the deed of mortgage.
So far as the mortgage deed is concerned, the plaintiff filed a certified copy and
called upon the defendant to file the original. The defendant refused to do so. The
plaintiff, therefore, proceeded to file the certified copy as secondary evidence under
Sub-clause (a) of Section 65 of the Evidence Act. This was certainly permissible. The
mortgage is a document required to be attested by two attestors under Section 59 of
the Transfer of Property Act and in this case it is attested by two attestors. The mode
of proof of documents required to be attested is contained in Sections 68 to 71 of the
Evidence Act. Under Section 68, if the execution of a document required to be
attested is to be proved, it will be necessary to call an attesting witness, if alive and
subject to the process of Court and is capable of giving evidence. But in case the
document is registered-then except in the case of a will-it is not necessary to call an
attesting witness, unless the execution has been specifically denied by the person by
whom it purports to have been executed. This is clear from Section 68 of the
Evidence Act. It reads as follows:
Section 68: If a document is required by law to be attested, it shall not be
used as evidence until one attesting witness atleast has been called for the
purpose of proving its execution, if there be an attesting witness alive, and
subject to the process of the Court and capable of giving evidence:
Provided that it shall not be necessary to call an attesting witness in
proof of the execution of any document, not being a will, which has
been registered in accordance with the provisions of the Indian
Registration Act, 1908, unless its execution by the person by whom
it purports to have been executed is specifically denied.
In the present case, though it was stated in the written statement that there was no
relationship between the parties as mortgagor and mortgagee, the defendant
admitted in his additional pleas in the same written statement that the mortgage deed
was executed but he contended that it was executed to circumvent the Rent Control
legislation. In fact, in his evidence as DW2 the defendant admitted the execution of
the mortgage. It must therefore be taken that there was no specific denial of
execution. Hence it was not necessary for the plaintiff to call the attestor into the
witness box, this not being a will. The plaintiff could therefore not be faulted for not
examining any of the attestors. Hence the mortgage stood proved by the certified
copy. The Courts below were right in accepting that the deed was proved. Point 2 is
decided in favour of plaintiffs-appellants.
POINTS 3:
16. The point here is whether oral evidence is admissible under Section 92(1) of the
Evidence Act to prove that a document though executed was a sham document and
whether that would amount to varying or contradicting the terms of the document.
The plea of the defendant in the written statement was that mortgage deed though
true was a sham document not intended to be acted upon and that it was executed
only as a collateral security. It was pleaded that the plaintiff demanded that a
mortgage deed be executed by defendant as "collateral security in order to guarantee
that the shop will be vacated by the defendant whenever demanded by the plaintiff
and that this was done to circumvent the rent control law. It was said that the alleged
transaction of mortgage was a sham transaction, executed only with aforesaid object.
The consideration of Rs. 1000 "was only in the nature of a collateral security or
'pagri'." The plaintiff was and is a rich man and there was no occasion for him to
mortgage his property. It was further pleaded.

The plaintiff thus demanded Rs. 1000 from the defendant by way of security
and asked the defendant to thumb mark some writing to arm the plaintiff
with a right to get the shop vacated according to his sweet will. The
defendant who was in dire necessity of the shop, had to agree on the said
condition put forward by the plaintiff.
1 7 . This Court has held in Gangabai v. Chhabubai MANU/SC/0385/1981 :
[1982]1SCR1176 that in spite of Section 92(1) of the Evidence Act, it is permissible
for a party to a deed to contend that the deed was not intended to be acted upon but
was only a sham document. The bar arises only when the document is relied upon
and its terms are sought to be varied and contradicted. In the above case, it was
observed by D.A. Desai, J as follows:
the bar imposed by Section 92(1) applies only when a party seeks to rely
upon the document embodying the terms of the transaction and not 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.
18. But the question is whether on the facts of this case, the reason given by the
defendant in his evidence for treating the mortgage as a sham document, can be
accepted.
1 9 . The reason given by the defendant appears to us rather curious. One can
understand a debtor incurring a debt and executing a deed as collateral security.
There is no such situation here. Further, if it is a deed of collateral security by
defendant, then the defendant would have had to execute a deed in favour of the
plaintiff and not vice-versa. Here the plaintiff-owner has mortgaged his shop to the
defendant, as security. The plea and evidence of collateral security offered by the
defendant appears to us not to fit into a situation where the plaintiff has executed the
mortgage. Obviously, if the plaintiff wanted to secure something by way of an
additional security from the defendant, the normal course would have been to ask the
defendant to give such a security and not for the plaintiff to execute a mortgage.
Thus the reason mentioned and evidence given by the defendant as to why a sham
document was executed falls to the ground.
2 0 . Under Point 3 we therefore hold that though evidence is admissible under
Section 92(1) to prove that the mortgage is a sham document, such evidence is
lacking in this case. Point 3 is decided against the defendant.
Points 4 & 5:
21. To accept the plea of lease set up by the defendant, the trial court and the first
appellate Court, relied upon the entries Ex. D2 and Exs. D3 to D5 relating to the
payment of "rents" by defendant as recorded in the 'account books' allegedly
maintained by the defendant in the regular course of business.
22. The Courts below, in our view, failed to notice that no account book or books
were ever produced by the defendant in the Court. Exs. D2 to D5 filed into Court
were only 'extracts' of the defendants' account books. The extracts were filed two
years after the filing of the written statement and one and a half year after the

settlement of issues, without any explanation for the delay. The genuineness of the
extracts was challenged seriously in the cross- examination of the defendant who was
examined as DW 2. It was specifically contended by the plaintiff (see p. 13 of the
appellant's notes of arguments in the appellate court) that the "account books were
never produced". The plaintiffs plea against the admissibility of Ex. D2 and Exs. D3
to D5 in the trial Court was rejected by the said Court and a revision under Section
115 CPC was filed by plaintiff in the High Court. That was dismissed by the High
Court saying that there was no "case" decided within the meaning of the word 'case
decided' in Section 115 CPC. The plaintiff therefore questioned the admissibility of
Exs.D2 to D5 in the first Appeal. In our opinion, it was permissible for him to raise
the said question in the first appeal in view of Section 105 C.P.C. In the light of what
was stated by the plaintiff in the memo of first appeal in the appellate Court, it
cannot be said that the 'accounts" produced by defendant were not objected to by the
plaintiff.
23. Ex. D2 is an extract of accounts. So are Exs. D3 to D5. This is clear from para 21
of the judgment of the trial Court. That para reads as follows:
The plaintiff made the contention that the defendant relied upon his account
books to prove that he is a tenant of the shop in dispute under the plaintiff.
He made the statement that the payment of the rent to the plaintiff is entered
in his regular kept account book but strange enough, he had not produced at
any stage of the proceedings an extract of account books which are Ex. D3 to
D5 and this is wrong to state that the defendant has not produced the
account books to show that he has 'not' been paying the rent to the plaintiff.
The plaintiff also contended that Ex.D2 extract of the account books has been
produced and which could not be liable to be accepted. Whatsoever, the
document has been admitted without objection. It is liable to be considered
while deciding issues.
Unfortunately, in a latter passage, the trial Court referred to these extracts as
'account books' and applied Section 34 of the Evidence Act. The Court forgot that
these were extracts of alleged accounts.
24. Now under Section 34 of the Evidence Act, entries in "account books" regularly
kept in the course of business are admissible though they by themselves cannot
create any liability. Section 34 reads as follows:
Section 34: Entries in books of account when relevant-Entries in books of
account, regularly kept in the course of business, are relevant whenever they
refer to a matter into which the Court has to inquire, but such statements
shall not alone be sufficient evidence to charge any person with liability.
It will be noticed that sanctity is attached in the law of evidence to books of account
if the books are indeed "account books i.e. in original and if they show, on their face,
that they are kept in the "regular course of business", Such sanctity, in our opinion,
cannot attach to private extracts of alleged account books where the original accounts
are not filed into Court. This is because, from the extracts, it cannot be discovered
whether the accounts are kept in the regular course of business or if there are any
interpolations or whether the interpolations are in a different ink or whether the
accounts are in the form of a book with continuous page-numbering. Hence, if the
original books have not been produced, it is not possible to know whether the entries
relating to payment of rent are entries made in the regular course of business.
25. It is only in the case of Bankers' Books Evidence Act, 1891 that certified copies
are allowed or the case must come under Section 65(f) or (g) of the Evidence Act.

Private extracts of accounts in other cases can only be secondary evidence and unless
a proper foundation is laid for adducing such secondary evidence under Section 65 or
other provisions of the Evidence Act, the privately handwritten copies of alleged
account books cannot by themselves be treated as secondary evidence.
26. In the recent judgment of this Court in Central Bureau of Investigation v. V.C.
Shukla MANU/SC/0168/1998 : 1998CriL J1905 , it has been laid down that for
purposes of Section 34, 'Book' ordinarily means a collection of sheets of paper or
other material, blank, written or printed, fastened or bound together so as to form a
material whole. Loose sheets of paper or scraps of paper cannot be termed as 'book'
for they can be easily detached and replaced. It has also been held that the rationale
behind admissibility of parties' books of account as evidence is that the regularity of
habit, the difficulty of falsification and the fair certainty of ultimate detection give
them in a sufficient degree, a probability of trustworthiness." When that is the legal
position, extracts of alleged account books, in our view, were wrongly treated as
admissible by the courts below though the original books were not produced for
comparison nor their non- production was explained nor the person who had
prepared the extracts was examined.
27. Therefore, the private extracts of alleged account books like Exs.D2 to D5 are not
admissible. The principal evidence relating to the alleged payment of rent disappears
and the foundation for the alternative plea of tenancy crumbles. This is one reason
why the finding relating to tenancy is vitiated being based on inadmissible evidence.
28. We shall next refer to the vital evidence or facts relating to the mortgage which
have not been considered by the Courts below. The defendant admitted in his
evidence as DW2 that the mortgage deed was executed by him. The endorsement of
the Sub-Registrar shows that the money of Rs. 1000 was paid as mortgage money.
There is a presumption of the correctness of the endorsement made by the Sub-
Registrar under Section 58 of the Registration Act (vide Baidyanath Singh v. Jamal
Bros. MANU/PR/0038/1923 : AIR (1924) PC 48, it can be rebutted only by strong
evidence to the contrary.
29. Another important aspect is that in the copy of the Municipal House Tax Register
Ex.D1, the defendant, Sohan Lal was shown as 'occupier' of a shop just as certain
others like Ganpat, Omprakash Niranjan were also shown as occupiers. Description
as occupiers does not necessarily imply occupation only as tenants. According to DW
3, the rent paid by Om Prakash was Rs. 40 p.m. and by Niranjan was Rs. 22.50. The
plaintiff submitted in the first appellate Court that the annual value of both thus
comes to Rs. 40 + Rs. 22.50 = (Rs. 62,50) x 12=Rs. 750. The total annual value of
the shop having been fixed at Rs. 824 in Ex. D1, that leaves only a balance of Rs. 74
(i.e. Rs. 824-Rs. 750). The plaintiff submitted in his memo of arguments before the
appellate Court that the balance of annual rental value of Rs. 74 could not relate to
the occupation of Sohanlal as tenant in this shop, for according to the defendant, the
monthly rent was Rs. 80. The plaintiff submitted that the balance of Rs. 74 could be
attributed only to the occupation of Ganpat. The above aspect was also not kept in
view by the lower Courts.
3 0 . One other important point is that the term of the mortgage deed is that the
defendant is to be in possession and the interest payable by the plaintiff as
mortgagor is to be set off against the 'profit' realised by the mortgagor's occupation
of the shop. There is no recital that it is to be set off against any "rent" payable by
the defendant.
3 1 . We have already pointed out that in regard to whether the plaintiff was rich

enough so as not to be in need to go in for a mortgage, there are conflicting findings
by the trial Court. The plaintiffs acute need for money is proved by the fact that he
incurred losses in regard to his partnership with the Haryana Woollen Mills. This
aspect, according to the plaintiff (as stated in his written submissions) is borne out
by the reported judgment of this Court in Iswar Dass. The Haryana and General
Woollen Mills Ltd MANU/SC/0028/1973 : AIR1974SC592 to which plaintiff was a
party. The said judgment was referred to as evidence of the plaintiffs losses. This
aspect was also not considered by the lower Courts.
32. In the result, we hold that the extracts from accounts are not "account books"
falling within Section 34 of the Evidence Act and are inadmissible. We also hold that
vital material was omitted from consideration by the Courts. Thus, the finding in
regard to tenancy is liable to be set aside. Points 4 and 5 are held in favour of the
plaintiff.
POINT 6:
33. The appellate Court, in our view, went wrong in thinking that the plaintiff had
only a half share in the property. The defendant's title was a derivative title as
mortgagee. Having came into possession of the whole property as a mortgagee from
the plaintiff, treating plaintiff as full owner it was not open to the defendant to
question the title of the plaintiff. In Tasker v. Mall, (3 My. 8 Cr. 63 (5 L.J. Ch 321),
Lord Cottenham said: "To him (mortgagee) it is immaterial, upon repayment of the
money, whether the mortgagor's title was good or bad. He is not at liberty to dispute
it any more than a tenant is at liberty to dispute his landlord's title". A usufructuary
mortgagee cannot deny the title of his mortgagor. Nor can he set up adverse
possession unless he actually leaves the holding and re-enters under a different
status (Jainandan v. Umrao AIR (1929) A11.305 and (Sriram v. Thakur
MANU/UP/0066/1965 : AIR1965All223 )
POINT 7:
34. The judgments of all the three courts therefore are set aside. The suit is decreed
for redemption as follows. The appellants are entitled to redeem the usufructuary
mortgage and get possession of the suit shop from the defendant, if the appellants
deposit in the trial Court, within three months from today, the sum of Rs. 1000.
There is no need to deposit any interest inasmuch as according to the deed, the
defendant was to be in possession and interest was to be set off against the
occupation of the shop. We direct that on such deposit of Rs. 1000, the defendant
will produce the mortgage deed into Court for cancellation. In case he does not
produce the deed, within the said period, it will be deemed that the mortgage is
cancelled. On such deposit of Rs. 1000 as aforesaid, the defendant shall restore
possession to the appellants. On such restoration of possession, defendant shall be
entitled to withdraw the sum of Rs. 1000. In case the defendant does not surrender
possession as aforesaid, it will be open to the appellants to seek possession by way
of execution.
35. The appeal is allowed. Costs of appellants are quantified at Rs. 5,000.

MANU/MP/1793/2014
Equivalent Citation: 2015(4)MPLJ188
IN THE HIGH COURT OF MADHYA PRADESH (JABALPUR BENCH)

First Appeal No. 267/2009
Appellants: Ashok Kumar Barman
Vs.
Respondent: Kanti Gupta
M.K. Mudgal, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Amit Barman and Party-in-Person
For Respondents/Defendant: A. Choubey, Advocate
JUDGMENT
M.K. Mudgal, J.
1. The appellant/plaintiff has filed this appeal under Section 96 of the Code of Civil
Procedure being aggrieved by the judgment and decree dated 31-07-06 passed by the
Court of VIth Additional District Judge, Jabalpur in Civil Suit No. 161-A/14 filed by
the appellant/plaintiff for specific performance of the contract dated 09-10-02 (Ex.P-
1) and permanent injunction dismissed by the Court. In this appeal the appellant
referred to as the plaintiff and respondent as the defendant.
2 . Admitted facts of the case are that the plaintiff had contracted to purchase the
disputed land from the defendant vide agreement to sale dated 09-10-02 (Ex.P-1) for
consideration of Rs. 77,500/- and possession of the land was given to him. The
plaintiff got issued a notice dated 22-09-03 (Ex.P-3) by postal receipt (Ex.P-4) for
performance of the contract. The said notice was received by the defendant through
acknowledgment (Ex.P-5). The said notice was replied by the defendant on 13-10-03
vide Ex.P-6 in which the execution of an agreement dated 21-02-1994 as well as
dated 09-10-02 (Ex.P-2) has been specifically denied by the defendant. The witness
Parvati Bai (PW-2) is sister in law i.e. elder sister of the wife of the plaintiff.
3 . Facts of the plaint in brief are that the plaintiff and defendant both jointly
purchased a Survey No. 159/5 total area 1700 Square Feet from Hubbe Lal Kachi vide
registered sale deed dated 09-1-1986 and the said land was mutated in the name of
both the parties. Thereafter, the said property was divided between them. The
defendant contracted to sale the disputed land i.e. area 850 Square Feet vide
agreement dated 09-10-2002 for consideration of Rs. 77,500/- and a sum of Rs.
1,000/- was paid by the plaintiff to the defendant when the said document was
executed. As per agreement Rs. 1,000/- was to be paid every month by the plaintiff
to the defendant. In this regard Rs. 2,000/- was paid by the plaintiff to Parvati Bai
vide consent agreement dated 09-10-02 at the behest of the defendant as the
defendant had contracted to sale the said land to Smt. Parvati Bai and received Rs.
2,000/- on 21-02-1994, the said agreement was not performed between them.
However, the amount of Rs. 2,000/- was to be returned by the defendant to Smt.
Parvati Bai. Apart from the said payment, the plaintiff paid the defendant Rs. 1,000/-

every month and in this regard the defendant made entry on the original document of
agreement dated 09-10-2002 which was in possession of the defendant. The plaintiff
had been ready and willing to perform the contract but the defendant did not do so
as a result the plaintiff got issued the notice (Ex.P-3) to the defendant for getting the
sale deed executed in favour of the plaintiff. However, the defendant did not execute
the sale deed and falsely replied the notice vide Ex.P-6. Consequently, the suit was
filed for the aforesaid relief as stated earlier.
4 . The defendant except admitted facts has denied all the allegations and pleaded
that the plaintiff did not pay any amount to him. The document (Ex.P-2) is a fake and
forged document which has been prepared by the plaintiff with the connivance of his
Sister-in-law Smt. Parvati Bai elder sister of his wife, the said document was not
executed by the defendant. As per agreement the plaintiff had to pay Rs. 1,000/- per
month to the defendant nonetheless he did not comply the terms and conditions of
the agreement (Ex.P-1) as the plaintiff had no money to get the sale deed executed in
his favour. The defendant also denied the contents of the notice (Ex.P-3). The
plaintiff had not been ready and willing to perform the contract on the basis of the
aforesaid facts. The defendant submitting written statement has prayed for dismissing
the suit.
5 . Learned trial Court framing issues and after recording the evidence of both the
parties has dismissed the suit as stated earlier.
6. The following questions arises for consideration in this appeal :--
(i) Whether the plaintiff had paid any amount to the defendant as pleaded by
him in the plaint ?
(ii) Whether the plaintiff had been ready and willing to perform the contract
(Ex.P-1) as per Section 16 of the Specific Relief Act for getting the sale deed
executed in his favour ?
Issue No. 1
7. The appellant/plaintiff himself arguing his case has submitted that the learned trial
Court has committed an error in disbelieving the evidence tendered by him as he paid
Rs. 2,000/- to Smt. Parvati Bai (PW- 2) at the behest of the defendant vide Ex.P-2,
which was proved by Smt. Parvati Bai (PW-2) deposing in her statement that she
made a contract for purchasing the disputed land from the defendant on 21-02-1990
and gave him Rs. 2,000/- as advance but the agreement was not performed and so
the said earnest money Rs. 2,000/- was returned by the plaintiff to her at the behest
of the defendant and Ex.P-2 dated 09-10-02 was executed by her. However, the
statement of Parvati Bai (PW-2) and the document Ex.P- 2 were not properly
considered by the trial Court. The appellant has further pleaded that he paid Rs.
1,000/- every month to the defendant and in this regard an endorsement was made
for ten months in the original document of Ex.P-1, which was in his possession and
the said original document was not produced by him in spite of having been directed
by the Court to do so. Thus, according to the appellant/plaintiff the Court has
committed mistake in dismissing the suit.
8 . Counsel for the respondent controverting the submissions made by the appellant
has argued that the plaintiff had no money to perform the contract Ex.P-1 and he did
not pay any amount to the defendant. The Ex.P-2 is a fake and forged document
which was prepared by the plaintiff with the connivance of his relative Parvati Bai
(PW-2). No document for the alleged payment of money to the defendant has been
produced on record. The execution of Ex.P-2 has not been proved by any

independent witness. The plaintiff had never been ready and willing to get the sale
deed executed in his favour owing to which the trial Court having considered the
evidence on record meticulously has rightly dismissed the suit. The findings recorded
by the trial Court are based on proper marshalling of the evidence and its proper
appreciation and so no interference is required in them.
9. The Arguments were considered and the record was perused.
10. In order to prove his case, the plaintiff got examined himself as PW-1, Parvati
Bai (PW-2) and his wife Smt. Uma (PW-3).
11. As per pleadings the plaintiff has deposed in his statement at great length. The
execution of Ex.P-1 between the parties is not disputed. Though, the plaintiff has
averred that he paid Rs. 1,000/- to the defendant when the Ex.P-1 was executed but
no endorsement to this effect has been made in the document. The said payment was
not made by cheque and if it was made in cash, no receipt was obtained by the
plaintiff that could have proved the alleged fact of payment. On the contrary, the
defendant Smt. Kanti Gupta (DW-1) and her husband Hari Narayan Gupta (DW-2)
both have specifically denied having received any payment. In view of the above, the
trial Court has not made any mistake in disbelieving the averment of the plaintiff
about the said payment.
12. The plaintiff's witness PW-1, PW-2 and PW-3 have tried to say in their statement
that Rs. 2,000/- was paid to Parvati Bai (PW-2) by the plaintiff at the behest of the
defendant vide Ex.P-2 dated 09-10-02 which was earlier allegedly entered into on 21-
02-1994 between the defendant and Parvati Bai (PW-2). However, there is no
averment in the Ex.P-1 to the effect that a contract for the sale of land in question
was made between the defendant and Parvati Bai (PW-2) on 20-02-1994 and the
defendant would have to pay the said amount to the Parvati Bai (PW-2). The above
circumstances indicate that the Ex.P-2 was not in existence when the Ex.P- 1 was
executed on 09-10-02.
13. The Ex.P-2 does not carry the name of typist, place of typing and the name and
signature of witness and in order to prove it there is only one witness i.e. Parvati Bai
(PW-2), who happens to be the Sister-in- law of the plaintiff. No other independent
witness has produced to prove the veracity of the alleged document i.e. Ex.P-2,
whereas Smt. Kanti Gupta (DW-1) and her husband Hari Narayan Gupta (DW-2) have
empathetically denied the signature as well as the contents of the document Ex.P-2.
It is also a strange feature in this document that when the alleged document of Rs.
2,000/- was made on 09-10-02 by the plaintiff to his Sister-in-law Parvati Bai (PW-
2), the signature of the defendant was not obtained for giving her consent in this
regard. This fact also leads to a conclusion that Ex.P-2 is a suspicious document and
no payment was made by the plaintiff to his Sister-in-law as pleaded by him in the
plaint. It appears that the said document has been forged by the plaintiff acting in
collusion with her Sister-in-law to establish that the alleged fact of the payment of
Rs. 2,000/- having been made by the plaintiff to Parvati Bai (PW-2) on behalf of the
defendant.
14. So far as the payment of Rs. 10,000/- at the rate of Rs. 1,000/- is concerned the
plaintiff (PW-1) and his wife Smt. Uma (PW-3) have made statement in this regard
saying that the defendant used to make entry of the monthly payment on the original
document of Ex.P-1, which was in the possession of the defendant. It is made clear
that the plaintiff does not have any receipt of any of the payment that he alleges to
have made to the defendant. This story put forth by the plaintiff does not find any
place in the notice Ex.P-3 dated 22-09-03. In view of the above, the said story of

having paid Rs. 10,000/- at the rate of Rs. 1,000/- per month is concocted and is a
product of an after thought. Moreover, it is quite unnatural that whenever a payment
is made by a person to another he would not receive a receipt for the payment made
and would be satisfied with an entry to the effect of having made payment being
noted in a document, which is in the possession of the payee. Nonetheless, if original
document is in the possession of the defendant how could that he has been able to
produce a photocopy of Ex.P-1 of the original document as the Ex.P-1 was not
certified by the defendant to a photocopy of the original agreement, the plaintiff
alleges to have been in the possession of the defendant. In view of the above, it is
obvious that the original of Ex.P-1 was in the plaintiff's possession owing to which he
has been able to produce a photocopy of the same (Ex.P-1). The story of the original
document of Ex.P-1 being in possession of the defendant has been concocted to
bolster his claim of having paid Rs. 10,000/- to the defendant. The learned trial Court
having considered the evidence referred to Para-16 to 21 of its judgment has rightly
concluded that the plaintiff had failed to prove that any payment was made by him to
the defendant as per agreement (Ex.P-1)
Issue No. 2
15. For seeking relief of specific performance of the contract it is mandatory for a
plaintiff to plead and prove compliance of Sec. 16(1)(c) of the Specific Relief Act
otherwise the decree in order to specific performance cannot be granted to a plaintiff.
16. The provision of Section 16 (c) of the Specific Relief Act, 1963 (in short "the Act"
) are as follows:
"16 Personal bars to relief - Specific performance of a contract cannot be
enforced in favour of a person -
(a)-(b)
(c) who fails to aver and prove that he has performed or has always been
ready and willing to perform the essential terms of the contract which are to
be performed by him, other than terms of the performance of which has been
prevented or waived by the defendant"
The basic principle behind Section 16(c) read with Explanation (ii) is that
any person seeking benefit of the specific performance of contract must
manifest that his conduct has been blemishless throughout entitling him to
the specific relief. The provision imposes a personal bar. The Court is to
grant relief on the basis of the conduct of the person seeking relief. If the
pleadings manifest that the conduct of the plaintiff entitles him to get the
relief on perusal of the plaint he should not be denied the relief.
Section 16(c) of the Act mandates the plaintiff to aver in the plaint and
establish as the fact by evidence aliunde that he has always been ready and
willing to perform his part of the contract.
These aspect were highlighted in Sugani Vs. Rameshwar Das
MANU/SC/8106/2006 : (2006)11 SCC 587.
17. See also on this point Kamrun Nisha Vs. Pramod Kumar ILR 1996 MP 393.
18. In the instant case the terms and conditions of the contract which were to be
performed by the parties have been mentioned in Para-4 of Ex.P-1 which reads as
follows :-

19. As discussed earlier it has already concluded that the plaintiff has not made any
payment according to Para-4 of the contract quoted above. Apart from this, the
plaintiff does not have clean hands because he has sought the support of his
fabricated document Ex.P-2 to prove his case. Moreover, when the notice (Ex.P-3)
got issued by the plaintiff it was replied by the defendant vide Ex.P-6 stating that he
was ready and willing to execute the sale deed as per terms and conditions of Ex.P-1,
if the plaintiff was ready to pay the entire amount of consideration. The plaintiff did
not reply of Ex.P-6 to show his willingness for getting sale deed executed after
paying the consideration. The said circumstances also leads to the conclusion that the
plaintiff himself was not willing to perform the contract as possibly he had no money
for the same.
20. In view of the above circumstances, As per Sec. 16 of the Specific Relief Act, the
plaintiff is not entitled to get the relief sought in the plaint. Therefore, the learned
trial Court has not committed any error in dismissing the suit. Having taken into
account the recorded evidence, this Court comes to the conclusion that findings given
by the learned trial Court for rejection of the suit for relief of specific performance of
the contract being just and proper are hereby affirmed and no interference is required
in them as a result the appeal is hereby dismissed. Cost of this appeal shall be borne
by the appellant himself as well as respondent.
21. Decree be drawn accordingly.

MANU/UC/0380/2013
Equivalent Citation: AIR2014Utr11, 2014(3)UC 1693
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

Second Appeal No. 1335 of 2001
Appellants: Mahendra Singh
Vs.
Respondent: Rahul Dev Shekhavat
Prafulla C. Pant, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Lok Pal Singh and Nikhil Singhal
For Respondents/Defendant: Jitendra Chaudhary
JUDGMENT
Prafulla C. Pant, J.
1 . This second appeal, preferred under S. 100 of Code of Civil Procedure, 1908, is
directed against the judgment and decree dated 18-6-2001, passed by District Judge,
Nainital, in Civil Appeal No. 30 of 2000, whereby said Court has dismissed the
appeal, and affirmed the judgment and decree for specific performance of contract
passed by the trial Court (Addl. Civil Judge (Sr. Div.) Nainital) in Suit No. 86 of
1998. Heard learned counsel for the parties, and perused the lower Court record.
2. Brief facts of the case are that plaintiff filed Suit No. 86 of 1998 with the pleading
that defendant (present appellant) is Bhumidhar of plot/khasra No. 91m, measuring
0.809 Hct. (approximately 29 acres) situated in village Kalyanpur of Tehsil Kashipur.
It is further pleaded by the plaintiff that the defendant agreed to sell the aforesaid
land for ' 1,20,000/- out of which ' 1,00,000/- was paid in advance as part of
consideration, and ' 20,000/- were required to be paid at the time of the execution of
the sale deed. It is further pleaded in the plaint that a registered agreement dated 3-
6-1996 was executed between the parties, and the sale deed was to be executed by
25-5-1998. It is also averred by the plaintiff in the plaint that he was ready to get the
sale deed executed by making payment of ' 20,000/-. It is further pleaded that the
plaintiff requested the defendant several times to execute the sale deed but he
(defendant) avoided the execution. On this, the plaintiff got served the notice on the
defendant to appear on 25-5-1998 before the Sub-Registrar to execute the sale deed
but he (defendant) did not turn up. It is alleged that the plaintiff remained present in
the office of the Sub-Registrar from 10:00 a.m. to 5:00 p.m., to get executed the
sale deed. With these pleadings plaintiff sought relief of specific performance of
contract.
3 . The defendant contested the suit, and filed his written statement. He denied
having executed any agreement of sale. The defendant alleged that actually he took
loan of ' 60,000/- on interest @ 2% per month on 3-6-1996 from the plaintiff, and
returned amount of ' 65,000/- to him. The defendant denied that plaintiff was ready
and willing to perform his part of contract.

4. On the basis of the pleadings of the parties following issues were framed by the
trial Court:--
(i) Whether the defendant executed the registered agreement dated 3-6-1996
in favour of the plaintiff as alleged in para 1 of the plaint for sale of his land?
If so, its effect?
(ii) Whether the plaintiff had and always willing and ready to perform his
part of contract?
(iii) Whether the transaction between the plaintiff and defendant was that of
a loan taken by the defendant from the plaintiff?
(iv) To what relief, if any, the plaintiff is entitled?
5 . Plaintiff adduced documentary evidence e.g. agreement, notice served on
defendant, and receipt of presence in the office of the Sub-Registrar. He also got
examined himself as RW. 1 and in support of his case got examined P.W. 2 Jaswant
Singh and RW. 3 Vinay Kumar (scribe of the deed). On behalf of the defendant
Mahendra Singh, got himself examined as D.W. 1 and in his support he got examined
D.W. 2 Wajir Singh.
6 . The trial Court after hearing the parties decided all the issues in favour of the
plaintiff, and decreed the suit for specific performance of contract. Aggrieved by said
judgment and decree dated 13-8-2000, passed by Civil Judge (Sr. Div.), Nainital, in
Suit No. 86 of 1998, the defendant filed Civil Appeal No. 30 of 2000, before District
Judge. Nainital. (Earlier Tehsil Kashipur was part of District Nainital) District Judge,
Nainital, after hearing the parties concurred with the view taken by the trial Court and
dismissed the appeal. Hence this second appeal.
7 . This second appeal was admitted by this Court on 29-4-2004, on following
substantial question of law mentioned in the memorandum of appeal:--
Whether oral evidence could be led to exclude the provisions of S. 92 of
Indian Evidence Act, 1872, especially when the execution of the disputed
agreement was challenged to be not intended and not to be acted upon and
the agreement being sham?
An additional substantial question of law was formulated by this Court on 15-
5-2013, which reads as under:--
Whether the Courts below have erred in law in decreeing the suit in
absence of pleading of willingness in suit of specific performance of
contract?
Answer to substantial questions of law
8 . There is concurrent finding of fact recorded by the two Courts below that the
defendant agreed to sale the land of Khasra No. 91 measuring 0.809 hct., situated in
Kalyanpur to the plaintiff for an amount ' 1,20,000/- out of which ' 1,00,000/- was
paid to the defendant as part of consideration, and agreement dated 3-6-1996 was
executed and registered. As such it cannot be said that the agreement in question
was sham. There is nothing on the record which shows that the plaintiff had given
any oral evidence against the contents of the written agreement. As such, there is no
violation of provision of S. 92 of Indian Evidence Act, 1872, in the present case.
9 . Learned counsel for the defendant/appellant mainly argued the appeal on the

additional substantial question of law which pertains to the willingness on the part of
the plaintiff to get executed the sale deed. In this connection attention of this Court is
drawn to S. 16(c) of Specific Relief Act, 1963, and Form Nos. 47 and 48 mentioned
in Appendix 'A' of Code of Civil Procedure, 1908. Clause (c) of S. 16 of Specific Relief
Act, 1963, requires that a person who seeks specific performance of contract must
aver and prove that he has performed or has always been ready and willing to
perform the essential terms of the contract which are to be performed by him. Forms
47 and 48 of the Appendix 'A' of Code of Civil Procedure, contain a para stating that
the plaintiff had been and still ready and willing to perform his part of contract.
10. Referring the cases of Pukhraj D. Jain v. G Gopalkrishna MANU/SC/0364/2004 :
(2004) 7 SCC 251 : (AIR 2004 SC 3504); N.P. Thirugnanam v. Dr. R. Jagan Mohan
Rao MANU/SC/0025/1996 : (1995) 5 SCC 115 : (AIR 1996 SC 116) and Maan Kaur v.
Hartar Singh Sangha MANU/SC/0789/2010 : (2010) 10 SCC 512 : (2010 AIR SCW
6198) it is argued on behalf of the appellant that since the plaintiff has failed to aver
the willingness to perform his part of contract as such the Courts below have erred in
law in decreeing the suit for specific performance of contract.
1 1 . On the other hand, learned counsel for the plaintiff/respondent relied in the
cases of Aniglase Yohannan v. Ramlatha MANU/SC/0653/2005 : (2005) 7 SCC 534 :
(AIR 2005 SC 3503); Sugani v. Rameshwar Das MANU/SC/8106/2006 : (2006) 11
SCC page 587 : (AIR 2006 SC 2172); J.P. Builders v. A. Ramadas Rao
MANU/SC/0977/2010 : (2011) 1 SCC 429 : (AIR 2011 SC (Civ) 230) and Gurdial
Kaur v. Piara Singh, MANU/SC/7407/2008 : AIR 2008 SC 2019 and submitted that it
is the conduct of the party from which it has to be gathered as to whether it was
willing to perform his part of contract or not. It is also contended that there is no
straight-jacket wordings which constitute willingness.
12. To appreciate the rival contentions of the parties, this Court went through the
copy of the plaint on the record. In paragraph 3 of the plaint it has been stated by
the plaintiff that in terms of agreement dated 3-6-1996 the plaintiff was always ready
to pay remaining ' 20,000/- and from time to time requested the defendant to execute
the sale deed. In para 4 of the plaint it has been stated by the plaintiff that when the
defendant continued to avoid to execute the sale deed he (plaintiff) got sent a
registered notice to the defendant asking him to appear on 25-5-1998 before the
Sub-Registrar, Kashpur, to execute the sale deed but he (defendant) did not turn up,
and plaintiff remained there and obtained a receipt from the office of the Sub-
Registrar regarding his attendance.
13. No doubt 'readiness' and 'willingness' are two different expressions. 'Readiness'
generally refers to the capacity of the plaintiff (as a purchaser) to pay consideration
for specific performance of contract, and 'willingness' refers to his conduct in getting
executed the sale deed. In the present case, word 'willingness' is not mentioned in
the plaint but it is pleaded as well as proved that the plaintiff from time to time
continued to request the defendant to execute the sale deed after accepting remaining
' 20,000/-. Also it is proved that when defendant did not pay any heed, the plaintiff
gave notice to the defendant and remained present in the office of the Sub-Registrar
on the date for which the written notice was also sent to the defendant. Both the
Courts below after discussing the evidence found that from the oral and documentary
evidence it is proved on the record that the plaintiff had always been ready and
willing and still ready and willing to perform his part of contract. Said concurrent
finding of fact is neither perverse nor against the weight of the evidence on record.
14. Therefore, this Court is of the view that the compliance of Cl. (c) of S. 16 of
Specific Relief Act, 1963, and the language required in the plaint is substantially

complied with, as such the Courts below have not erred in law in decreeing the suit
for specific performance of the contract. Accordingly, both the substantial questions
of law stand answered.
15. Learned counsel for the plaintiff/respondent during argument stated that during
the pendency of this appeal the defendant has already executed the sale deed on 8-4-
2004, which was said to have been registered on 12-4-2004. Learned counsel for the
respondent (plaintiff) further told the Court orally that possession has also been
given to the plaintiff and mutation has also taken place in his favour. (But learned
counsel for the appellant pressed that the appeal be heard and decided on merits.
Accordingly the appeal was heard on merits).
16. For the reasons as discussed in an answer to substantial questions of law, this
appeal is liable to be dismissed. Accordingly, the Second Appeal No. 1335 of 2001 is
hereby dismissed. However, no order as to costs.

MANU/WB/0056/1909
Equivalent Citation: (1909)ILR 36C al874, 4Ind. C as.334
IN THE HIGH COURT OF CALCUTTA

Appellants: Bowen
Vs.
Respondent: Bowen
Richard Harington, J.
Case Note:
Divorce - Collusion--Husband's petition--Agreement between the Parties,
not acted on, whether constitutes Collusion.
JUDGMENT
Richard Harington, J.
1. This is a petition by the husband for dissolution of his marriage by reason of his
wife's adultery with one George Evance.
2. The respondent denies the adultery, makes a countercharge of adultery against her
husband and alleges he is by reason of this misconduct disentitled to the relief he
claims.
3. The co-respondent does not defend the suit.
4 . The marriage took place in April 1903, the respondent being at that time fifteen
years of age while the petitioner was thirty-two. There was issue of the marriage one
child born in June 1904.
5 . According to the petitioner the respondent refused him his marital rights as far
back as 1904. The wife denies this and says they lived together until 1907, but the
question is of small importance as it is common ground that after the wife's return
from Mussorie in that year, though residing together, they were not living as man and
wife.
6 . Their differences came to ahead in February 1908: the wife left her husband's
protection and remained away until October in that year when there was a
reconciliation. At this time the parties were residing at No. 9, Dents Mission Road--a
house kept by a Mrs. Barnes in which the co-respondent was a lodger. The petitioner
having, as he says, suspicions as to his wife's conduct with Evance moved to Garden
Reach taking the respondent with him. They appear to have been unable to get on
together; they went accordingly early in December to Messrs. Ghose and Kar, the
attorneys, to consult them as to getting a divorce. At this interview the wife proposed
that her husband should go to a house of ill-fame, and that she should have him
watched, so that the evidence she considered necessary for a divorce might be
obtained. It is common ground that the proposal was made and that the husband
refused to accede to the proposition. The wife asserts and the husband denies that it
was in consequence of a suggestion of his that she made this proposal.
7. Later in December the husband became suspicious, and on the 16th of that month

at 8-30 or 9 P.M. he followed his wife who went from their house in Garden Reach to
9, Dents Mission Road. There he discovered that his wife was in the room occupied
by Evance. He was afraid to go in; but retreated to the next house which was
occupied by a friend of his, named Jarratt, whence he could see into the room in
which his wife was. He followed her again on the following night taking a detective
with him again seeing her in the co-respondent's room. He then went home packed
up his things and left the house. On the 19th he followed her again, and again saw
her in the same room.
8. The respondent's account is that she went with her husband and a Parsee as far as
the gate of No. 9, and that she went into it to see Mrs. Barnes. She says she went
three or four times altogether, and she did go into Evance's room. The hall was being
white-washed, and she and Mrs. Barnes and Mr. Cleaver and Mr. Outhwaite who
resided in the house were all there, as well as Mr. Evance. She denies that she ever
was alone with Evance or was guilty of misconduct with him.
9. After her husband left the house in Garden Reach the respondent had an interview
with him at the Docks, at which he told her he had put the matter in his solicitor's
hands.
10. The petition was filed on January 7th and then follows a correspondence between
the petitioner and respondent, which forms a very singular feature in the case. It
begins with a letter from Mrs. Bowen, dated 19th January, which contains the pharse:
"I hope whatever you have against me is nothing but the truth, and not by what you
have heard. What you might gain now by lies, you will be punished for hereafter."
1 1 . Then follows another letter from her, dated the 26th January, asking for an
interview about the child, which is answered by the husband on the 27th suggesting
she should call and bring the boy with her.
12. Next comes a very remarkable letter dated the 31st January from Mrs. Bowen.
She begins by saying that she has not sent the letter she promised, because she
hears Evance is not going to defend. She expresses a wish to see Mr. Bowen, but
fears being watched by Evance. Then she says "don't be afraid of me. I won't play
you a double game if you will only keep your word," and the letter ends with a
paragraph. "I will give you something else which will settle the swine properly should
he defend. I don't think he will as he has not a brass farthing. Ta Ta for the present.
Yours, Winnie."
13. Then there is an undated letter from Mrs. Bowen stating that she is trying to get
the co-respondent's solicitors not to defend the suit.
1 4 . When questioned about these letters and about the promise referred to, Mrs.
Bowen says that, in consideration of being allowed the custody of the child and being
paid a sum of Rs. 5,000 by her husband, she agreed to write a letter to her husband
admitting her guilt and the "something to settle the swine" was an incriminatory
letter which she would write, and "put a back date on it" (to use her own
expression), and arrange for it to fall into her husband's hands to be used against
Evance.
15. She says that suspecting her husband's bond fides she got her sister to ask him
to deposit the money with her until the case should be over. When he refused to
make this deposit, she knew he would not keep his promise and the agreement went
off.
16. Mr. Bowen when cross-examined on these letters gives a very halting explanation

about the promise being to keep the case out of the papers.
17. Nothing transpired after January 31st until the 9th of February when Mrs. Bowen
filed her answer.
18. The case has been fought with vigour by the petitioner and with great bitterness
by the respondent.
19. The first question is, has the adultery been proved ?
20. [His Lordship then dealt with the evidence, and came to the conclusion that the
respondent had committed adultery with the co-respondent.]
21. The next question is, do the facts disclosed at the hearing establish a case of
connivance or collusion so as to debar the petitioner from the relief he claims ?
22. The circumstance that the wife's adultery took place so shortly after her proposal
in the attorney's office might raise a suspicion of connivance, but I do not think there
was connivance, because if there was, there was no reason why the respondent
should not have asserted it. The admission about the letter she was prepared to write
makes it impossible to believe she could have been deterred by any regard for her
own character.
2 3 . On the question of collusion I have no doubt there was an agreement made
sometime after January 19th, by which, in consideration of a pecuniary payment, the
respondent was prepared not only not to defend the suit, but to furnish the petitioner
with evidence, which she believed would be conclusive against herself and against
the co-respondent.
24. But this agreement fell through, probably because the petitioner did not pay.
25. Had the agreement been acted on, it would have clearly constituted a case of
collusion.
26. But the agreement not acted on, though extremely disgraceful to the petitioner
and to the respondent, does not constitute collusion, because it in no way affects the
decision of the Court. If parties agree that a matrimonial offence shall be committed,
or if they conspire to bring about a state of circumstances from which the Court
would infer that a matrimonial offence had been committed, such conduct would be a
fraud on the Court and would constitute collusion, or if the parties conspire to lay a
false case before the Court or to conceal from the Court facts material for the
decision of the case, this would be collusion as it would affect the decision of the
case. Further, as is pointed out in Churchward v. Churchward [1895] P. 7, there may
be a case of collusion where there is an agreement not to defend and where the
parties are acting in complete concert in the prosecution of the suit, and the Court is
thus deprived of the security for eliciting the whole truth afforded by a contest of
opposing interests and is rendered unable to pronounce a decree for dissolution of
marriage, with sufficient confidence in its justice. In all these cases the petitioner is
disentitled to relief, because he has done something to affect the decision of the
case. There has been either suppressio veri or suggestio falsi, or at the lowest a
concert between the parties to bring about a divorce which raises a suspicion that
any facts likely to defeat the object of the agreement will not be placed before the
Court.
27. But when parties enter into an agreement to effect a fraud on the Court, and then
before anything is done to carry out the agreement, they change their minds, and

whether from good or bad motive decline to carry out the fraud they had
contemplated, then I do not think their rights are affected. In the present case the
agreement in no way affects the decision of the Court, because it was not carried out.
The case has been defended and defended with great vigour. No admissions of any
sort have been made, and there is no reason to suppose from the attitude of the
parties that the Court has been deprived of any safeguard.
28. I hold, therefore, that the petitioner is not disentitled to relief in consequence of
the arrangement which he and the respondent were at one time prepared to carry
out.
2 9 . There is no evidence at all in support of the recriminatory charges. The
respondent has charged her husband with adultery....
30. The evidence of adultery against the husband consists solely of confessions of
misconduct which he is alleged to have made to the wife. Even if the wife could be
believed as to this, the confessions would not under the canon law have been
sufficient, but the husband contradicts her and, for reasons I have stated, I do not
consider her a person whose word is to be relied on.
31. In the result I hold that the wife has committed adultery, that no act has been
done by agreement between the parties which has affected the inception, prosecution
or decision of the suit; and the recriminatory charges have wholly failed.
32. There must be a decree nisi with costs against the co-respondent. I make no
order with respect to the wife's costs.

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IN THE SUPREME COURT OF INDIA

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IN THE HIGH COURT OF MADHYA PRADESH (JABALPUR BENCH)

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IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

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IN THE HIGH COURT OF CALCUTTA

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