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Petitioner: MUHAMMAD SHAM AND OTHERS VS Respondent: ALLAH DAD KHAN
Court Name: Supreme Court of Pakistan Judge(s): Nasim Hasan Shah, Muhammad Haleem, Shafi-ur-Rehman Title: MUHAMMAD SHAM AND OTHERS vs ALLAH DAD KHAN Case No.: Civil Appeal No, 11 of 1983 R. F. A. No, 1/1982 Date of Judgment:1986-05-25 Reported As: PLD 1986 Supreme Court 519 Result: Appeal dismissed
JUDGMENT
JUDGMENT ' MUHAMMAD HALEEM, C. J.-This is a direct appeal under Article 185(2) of the Constitution of the Islamic Republic of Pakistan, 1973, and is directed against the judgment, dated 29-1-1982 of the Lahore High Court, Rawalpindi Bench, Rawalpindi, in R. F. A. No, 1 of 1982, by which it was accepted and the suit of the appellants was dismissed with costs throughout. ' These are the facts : ' The respondent is owner of property bearing No: A/93 situate at City Saddar Road, Rawalpindi. It comprises five shops and a vacant site. By a sale-deed executed on 19-7-1968, the respondent transferred 4/5th share in the property to the appellants who are related inter se in equal shares for a sale consideration of Rs, 60,000 and retained 1/5th share for himself in the property. There is also a recital in the sale-deed of the receipt of sale consideration. This sale-deed was presented for registration on the next day and the respondent appeared in person and admitted its execution and receipt of Rs, 60,000 as its sale consideration. It was duly attested by two witnesses. The Registrar of documents recorded his statement on the sale-decd. About a month and fourteen days thereafter the parties entered into a deed of partnership on 1-9-1968 and agreed to jointly carry on hotel business as partners in the name and style of 'Hotel Jav-e-Dan". Paras. 4 and 9 of this deed are relevant and are reproduced as under : "Para. 4 : ' That the capital of the firm shall be contributed by the partners as under : Partners Nos. 1, 2 and 4 Rs, 40,000 each 3 ... Rs, 50,000 5 Rs, 20,000
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Rs, 60,000 which amount may be invested gradually according to the needs and requirements of the business of construction of the building. ' Further provided that any more capital required may be invested in the above ratio proportion or by any one of the partners mutually agreed or the amount may be borrowed from a third party or from any Bank or Government's organization who may give loan for this purpose, by the mutual consent of all the partners and the interest payable on any such loan shall be deemed to be the business expense and the loan will have priority for repayment. Para. 9: ' That the construction of the hotel will be stated after the building plan is approved by the Improvement Trust, Rawalpindi, the building plan, at present, is under preparation, and will be submitted to the Improvement Trust, Rawalpindi for approval, as when it is prepared and as and when the hotel building is completed and is fully equipped the business shall start and the first accounts shall be closed after one year from that day provided that minor changes may be made on this account by the mutual consent of all the partners, thereafter the accounts shall be closed every year to determine the profit and loss, which shall be divided and apportioned as under ' Partners Nos. 1, 2, 4 and 5 ... 15 per cent, each 3 and 6 ... 20 per cent. Each." ' It was further provided in this document that the firm shall come into existence on the 1st of September, 1968, i. e., on the date of the execution of this document. ' It appears that some dispute arose over the contribution of the capital for raising the hotel between the parties and the appellants thereupon filed a suit in the Court of the Administrative Civil Judge, Rawalpindi, on 21st of July, 1972, for possession by partition of 4/5th share in the property, for rendition of account of rents, earnings and income of the said property realised by the respondent and for awarding the amount found due. ' The reliefs in the suit turned on the averments in the plaint that the appellants wanted to have their separate shares for the better enjoyment of the property as regards its mesne profits qua their shares as till then the possession was joint under the sale-deed, dated 19th of July, 1968. The respondent resisted the suit on the ground that the appellants were not in possession of the property nor did they pay the sale consideration, and for that matter they had by practising fraud and misrepresentation on him succeeded in getting the sale-deed executed which was a "nullity in the eye of law". ' The further facts alleged by the respondent were that the appellants approached him and gave out a proposal to build a huge hotel on his property on the terms that the entire construction would be carried out by them at their own cost which was estimated at Rs, 20,00,000. Thereafter they again approached the respondent and represented that as the entire amount on the construction would be spent by them, therefore, he should transfer 4/5th share in the property to them. And as for the consideration for the property it would be paid to him "in the shape of amount" which should be spent by them on construction of the hotel and that after the hotel was constructed, they would be the owners in the property to the extent of 1/5th share each, i. e., one share each of the respondent and the appellants. The respondent acted on their representation and executed the sale-deed transferring 4/5th share to the appellants against a sale consideration of Rs, 60,000 for the purpose of giving to it a legal colour, although this amount was neither paid before the Registrar nor at any time earlier. As a security for the due performance of their undertaking the appellants had also handed over the original sale-deed to the respondent who continued to remain in possession of the property and realised rents from the tenants. In the meantime they also submitted plane for the proposed construction of the hotel to the Improvement Trust. On these averments, the respondent resisted the sale, partition of the property and rendition of accounts as the appellants had failed to perform their part of the transaction.
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' In the replication filed by the appellants, they denied having practised fraud or misrepresentation on the respondent and claimed that the respondent being the co-sharer held the property for himself and on behalf of all the co-sharers namely, the appellants who were the vendees under the sale-deed. Further, while admitting that the hotel building was proposed to be constructed, they contended that the respondent had to contribute his share in the construction of the building just as other co-sharers had to do. The appellants also relied on the deed of partnership and stated that the respondent had also signed the building plan which was submitted to the Rawalpindi Improvement Trust for approval, but later resiled from his earlier commitment to do joint business and refused to abide by the terms agreed upon. As to the non-payment of the sate consideration, the appellants re-affirmed that the sum of Rs 60,000 was duly paid to him, and that as the sale was unconditional the respondent had obtained a clearance certificate from the Income-tax Department and also paid Capital Gains Tax. Lastly, the appellants admitted that the respondent had been collecting rents from the tenants of the shops. ' On the pleadings of the parties, the trial Court framed the following issues : (1) Whether the suit has been correctly valued for the purposes of court-fee and jurisdiction ? O. P. P. (2) If issue No, 1 is not proved in the affirmative, what is the correct valuation ? O. P. P. (3) Whether the suit property has been properly described ? O. P. P. (4) Whether the plaintiffs own 4/5th share in the suit property ? O. P. P. (5) Whether the sale-deed, dated 19-7-1968 and registered on 20-7-1968 is without consideration and a result of fraud and misrepresentation and a nullity in the eye of law? 0. P. D. On issues 4 and 5 which involve the main controversy, the Trial Court after reviewing the evidence held that the sale-deed was not a nullity in the eye of law as no fraud or misrepresentation was practised on the respondent nor that it was without consideration. Necessarily, therefore, under the sale-deed, dated 20th of July, 1968, the appellants became the owners of 4/5th share in the property. The findings on other issues are not of any particular value at this stage of the litigation. As a result therefor, the suit was decreed by the Trial Court in favour of the appellants on 6th of January, 1982. ' The respondent thereupon went in first appeal to the High Court and succeeded as the decision of the trial Court on these issues was reversed. ' In the context of the arguments raised, the High Court examined, in detail, the evidence on record, and reached the conclusions firstly, that the sale-deed was not an independent transaction, but was linked with the partnership deed ; secondly, that there was no evidence to show that the sale consideration of Rs, 60,000 was paid to the respondent as acknowledged by him in the sale-deed ; thirdly, that after the execution of the sale-deed he continued to remain in possession of the property and as his name still figured as the exclusive owner of the property, he continued to pay the taxes till the suit was filed and enjoyed its rents and profits fourthly, that the consideration for the sale of the disputed property was his 1/5th share in the hotel building which was to be constructed and as none was constructed, the consideration for the transfer of the 4/5th share in the property failed ; and, lastly, that the respondent was duped to execute the sale-deed as a result of the misrepresentation and fraud practised on him. ' Mr. A. R. Sheikh, learned counsel for the appellants contended : firstly, that the sale-deed was an independent transaction and no oral evidence can be led to contradict its terms by reason of the embargo placed by section 92 of the Evidence Act; and, secondly, that payment of sale consideration is not a sine qua non of the sale transaction and for this reason the sale-deed does not become invalid as it can be paid or promised or part paid or part promised. For this he relied on the definition of the word "sale" in section 54 of the Transfer of Property Act, and further
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contended that the remedy in such an event for the vendor is to sue for the recovery of the sale consideration if not paid. ' Mr. S. M. 'Zafar, learned counsel for the respondent, in reply, contended that parol evidence is admissible to show the invalidity of the document either by reason of fraud or misrepresentation or failure of consideration, and such other grounds as are mentioned in the provisos to section 92 of the Evidence Act. He asserted that in such a case the extrinsic evidence is not led to contradict, vary, add to, or subtract from its terms but to prove that the document itself was invalid. He next contended that as the sale-deed was fictitious, therefore, there was no conveyance of any interest in the disputed property. Consequently, section 54 of the Transfer of Property Act had no application. ' Before I advert to the factual aspect of the case it would be proper to resolve the legal controversy. In support of his first contention as to the inadmissibility of the oral evidence Mr. A. R. Sheikh, relied on a passage in the Principles and Digest of the Law of Evidence by M. Monir at page 887 which runs as under "The Privy Council has distinctly ruled that in construing a document oral evidence of the intention of the parties to the document is inadmissible and that the express terms of a document cannot be contradicted by any oral evidence of the intention of the parties." (Balkishen Das v. Legge 22 A 149 (P C) and K. S. Mian Feroz Shah v. Sohbat Khan etc. AIR 1933 P C 178). ' The general rule," says Chief Justice Tindal in Shore v. Wilson "I take to be, that where words of any written instrument are free from ambiguity in themselves and where external circumstances do not create any doubt or difficulty as to the proper application of those words to claimants under the instrument or the subject-matter to which the instrument relates, such instrument is always to be construed according to the strict plain common meaning of the words themselves, and that in such case evidence dehors the instrument for the purpose of explaining it according to the surmised or alleged intention of the parties to the instrument is utterly inadmissible. If it were otherwise, no lawyer would be sale in advising upon the construction of a written instrument nor any party in taking under it, for the ablest advice would be controlled and t e clearest title undermined if, at some future period, parol evidence of the particular meaning which the party affixed to his words, or of his secret intention in making the instrument, or of the objects he meant to take benefit under it, might be set up to contradict or vary the plain language of the instrument itself." It may here be said that the principle cited is applicable only where both the parties rely on the document in which case there is prohibition to admit oral evidence qua the intention of the parties to the document. ' The learned counsel next relied on Balkishen Das and others v. W. F. Legge (1), a case decided by the Privy Council in which the facts were that alongwith the sale-deed there was an agreement between the parties to enable the vendor to purchase back the property on payment of consideration to the vendee on a fixed future date. There was transfer of possession of the property to the vendees who appropriated the profits. The vendor did not exercise his right of repurchase and after many years gave notice of his intention to redeem the property and brought a suit against the vendee to enforce his right of redemption as upon a mortgage by conditional sale. The dispute between the parties on these facts was whether the two deeds together constituted a mortgage of the land or an out and out sale with a contract of repurchase. The evidence of the respondent and of another person was admitted by the Trial Court for the purpose of proving the real intention of the parties and such evidence was relied on to some extent by the Courts below. In regard to the admissibility of this evidence their Lordships held that by reason of section 92 of the Evidence Act, no oral evidence of intention was admissible for the purpose of construing the deeds
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or ascertaining the intention of the parties, and the case had to be decided on a consideration of the contents of the documents themselves with such extrinsic evidence of surrounding circumstances as may be required to show in what manner the language of the document is related to existing facts. ' There cannot be any cavil with this principle. But in Ralkishen Das and others (supra), the Privy Council while construing section 92 of the Evidence Act nevertheless said that this was subject to the provisos. In effect, therefore, where the case is one where the validity of the sale-deed itself is in question either because of misrepresentation, fraud, mistake, or failure of consideration, the evidence led is not intended to alter the terms of the document but to prove its invalidity. (1) I L R 22 All. 149 ' Mr. S. M. Zafar, learned counsel for the respondent, relied on a plethora of case-law to support his contention. He first cited Laxmibai and another v. Keshav Annaji Pokharkar and another (1). In this case the plaintiffs sued B and C for specific performance of the contract, executed by B alone while was described as a broker. Parol evidence was led to establish that the real parties were the plaintiffs and C and that B was only a Benamidar. The question arose as to whether such evidence could be admissible under section 92 of the Evidence Act. In this connection the following observations were made in regard to the applicability of the section at page 246 : "Now it is perfectly obvious that under section 92, Evidence Act, it would not be open to parties to such a contract to give parol evidence of the true nature of the transaction underlying it ; nor would this difficulty be surmounted or in any way touched by calling the transaction a Benami transaction. ' But it is also clear, as soon as the contents of the whole transaction are examined, that it is a case in which parol evidence might be given under section 92 to serve a different purpose. For where the owner of property purports to transfer for consideration, his real purpose being to conceal or protect his property. It necessarily follows that the nominal purchaser has paid no consideration, and a party may always show that the transaction is bad for failure of consideration." ' Here what is laid down is that if the transaction itself is invalid then parol evidence can be led to establish its real nature which will not be hit by section 92 of the Evidence Act, but covered by the first proviso which is an exception to the rule. So far as the Benami transaction was concerned, the learned Judge was in grave doubt to what extent parol evidence would be admissible to establish the real parties to the agreement. ' He next relied heavily on Tyagaraja Mudaliyar and another v. Veaathanni (2). In this case a document was executed on 28th of December, 1912, affirming undivided status of the family and purporting to make provision for the widow's maintenance, but it was not given effect to as it was distinctly understood not to be the final contract for the plaintiff's maintenance, but solely intended as a voucher establishing the joint undivided nature of the family. It, however, being agreed that the widow's claim for the maintenance on a scale commensurate with the position and status of the family was to be left over for future settlement at leisure. But this was not done as her brother- in-law failed to make due provision for her maintenance which he had repeatedly promised to do so and died. It also appears that on the demise of her husband a settlement deed was drawn three days thereafter by her brother-in-law whereunder she was to have the jewels in her possession with full powers of alienation; and as soon as she decided to live apart from him, she was to enjoy for her life the income of the lands and to live in the house mentioned in the settlement deed. In consideration of this provision she relinquished her claim for maintenance. She was unwilling to sign this document, but on the representation made that this was not to he acted upon an r only intended to provide evidence of the undivided status of the family that she consented to sign it. (1) AIR 1916 Born, 239 (2) AIR 1936 P C 70
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' The widow filed a suit for the recovery of arrears of maintenance. The Courts below upon a consideration of the material held in regard to this document that there was no agreement, and, therefore, no contract. The question which arose for consideration before the Board was whether oral evidence was admissible under the provisions of sections 91 and 92 of the Evidence Act to establish that it had been agreed that the provisions for the widow's maintenance were not to be acted on, as the document was only intended to create evidence for the undivided status of the family. In deciding the question, their Lordships also referred to their own judgment published in 16 I A 233 and said: "Clearly under that section a defendant sued, as in the present case, upon a written contract purporting to be signed by him could not be precluded in disproof of such agreement from giving oral evidence that his signature was a forgery. In their Lordships' opinion oral evidence in disproof of the agreement (1), that as in 6 E & B 370(2) the signed document was not to operate as an agreement until a specified condition was fulfilled, or (2) that as in the present case, the document was never intended to operate as an agreement but was brought into existence solely for the purpose of creating evidence of some other matter stands exactly on the same footing as evidence that the defendant's signature was forged." ' Again while commenting on the case reported in 38 Mad. 226, their Lordships expressed: "In 38 Mad. 226(3) Benson and Sundara Ayyar, JJ., have expressed the opinion that oral evidence to show that a document was never intended to operate according to its terms, but was brought into existence, as in the present case, solely for the purpose of creating evidence about some other matter, is admissible under proviso 1 to section 92, 'any fact may be proved which would invalidate any document'. This may well be so, but in their Lordships' opinion, even if there were no provisos to either section, the result in the present case would be the same, because there is nothing in either section to exclude oral evidence that there was no agreement between the parties and, therefore, no contract." ' And finally, their Lordships held that the document was not the real agreement between the parties and the widow could not sue upon it. This judgment goes further in laying down that even if there were no provisos still evidence could be led to prove the invalidity of the document. Such being the case, proviso (1) to section 92 of the Evidence Act, opens the door for the Court to inquire into the real nature of the transaction between the parties. This principle is again declared in Baijnath Singh v. Hajee Vally Mahomed Hajee Abba (1), in the following words:- "The preamble to the Evidence Act, recites that 'it is expedient to consolidate, define and amend the Law of Evidence,' and section 92 merely prescribes a rule of evidence; it does not fetter the Court's power to arrive at the true meaning and effect of a transaction in the light of all the surrounding circumstances." ' In Nasir Ahmad Khan v. Asmat Jehan Begum (2), it was held that where the document itself is to be adjudged as fictitious and having been executed with no intention to enforce it, parol evidence was admissible (1) AIR 1925 P C 75 (2) PLD 1967 Pesh. 328 under sections 91 and 92 of the Evidence Act. In Muhammad Azim Khan and others v. Raja Saiyid Muhammad Saadat Ali khan and others (1), the donor admitted that he had executed the gift, but alleged that he had no intention of gifting away his property, that is, he had no animus contra hendi when he executed the document, it was held: "And evidence to prove such a defence is admissible and does not violate the provisions of section 92, Evidence Act. Pym v. Campbell 25 L J Q B 277 has been reported in 119 E R 908. In Halsbury's Laws of England, Vol. 13, p. 567, para. 775, are collected a large number of instances where the rule as to the exclusion of extrinsic evidence does not apply, and one of these is that where the document
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was neither intended by the parties to be an agreement at all, evidence to show the true nature of the transaction was held admissible." ' The case of Baijnath Singh v. Mohammad Abba (supra) was also noted and the dictum laid down therein was taken in support of the conclusion. ' In Ramnandan Prasad v. Chandradip Narain (2), the question arose for consideration whether evidence is admissible to show that the property ostensibly mortgaged was not, in fact, intended to be mortgaged, and it was held that there was nothing in section 92 to render such evidence inadmissible as it was not a case where it purported to vary the terms of a written document as between the parties, and that such evidence which tends to render the document invalid is admissible under the first proviso to section 92 of the Evidence Act. ' In Smt. Gangabai v. Smt: Chhabubai (3), it was held that where the document is not relied upon and alleged to be fictitious on the ground of existence of a different transaction, oral evidence could be led to establish the plea and in such a case the bar imposed by section 92(1) will not apply as that only covers the case where the parties seek to rely on the document embodying the terms of the transaction. ' In Mst. Sultan Begum v. Saraj-ud-Din (4), the facts were that in the deed of marriage the dower was fixed at Rs, 1# lacs, but the defendant, a brother of the deceased, in repudiation to the claim of the widow led evidence to prove that it was never intended to be paid or received in full, and that she was only entitled to the customary dower, that is, Rs, 10,000. The trial Court altered one of its terms although the document was accepted as a repository of the contract of marriage and a written record of the amount of dower fixed by the parties. Agha Haider, J., while considering the admissibility of this evidence held that the trial Court could not subtract anything from this term of the contract as it was hit by section 9 of the Evidence Act. However, Tek Chand, J., differed from him and held that the evidence led was not for any of the purposes laid down in section 92 but it was an attempt of the defendant to prove that there…
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