Madras High Court
P.Mannathan vs B.Baskaran on 9 July, 2025
2025:MHC:1636
A.S.NO.232 OF 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 09.07.2025
CORAM :
THE HONOURABLE MR. JUSTICE R.SAKTHIVEL
APPEAL SUIT NO.232 OF 2019
AND CMP NO.8833 OF 2019
P.Mannathan ... Appellant / Defendant
Vs.
B.Baskaran ... Respondent / Plaintiff
PRAYER: First Appeal filed under Section 96 read with Order XLI Rule
1 of the Code of Civil Procedure, 1908 praying to set aside the Judgment
and Decree dated July 16, 2018 passed in O.S.No.128 of 2015 by the
learned Principal District Judge, Erode.
For Appellant : Mr.S.Kaithamalai Kumaran
For Respondent : Mr.P.Saravana Sowmiyan
JUDGMENT
Feeling aggrieved by the Judgment and Decree dated July 16,
2018 passed in O.S. No.128 of 2015 by the 'Principal District Court,
Erode' ['Trial Court' for brevity], the defendant therein has filed this
Appeal Suit under Section 96 read with Order XLI Rule 1 of 'the Code of
Civil Procedure, 1908' ['CPC' for short].
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2. For the sake of convenience, hereinafter, the parties will be
referred to as per their array in the Original Suit.
PLAINTIFF'S CASE
3. The Suit Property belonged to the defendant vide
Registered Sale Deed dated December 1, 2006. The plaintiff and the
defendant entered into a Sale Agreement on June 28, 2011. The sale price
was fixed at Rs.7,25,000/-. On the date of execution of Sale Agreement
itself, a sum of Rs.7,00,000/- was paid to the defendant as advance. The
period of performance of contract was fixed as two years i.e., on or before
June 28, 2013. On June 26, 2013, the plaintiff and the defendant executed
a Deed of Extension, thereby extending the period of performance further
by two years, i.e., until June 26, 2015. According to the plaintiff, he was
ready and willing to perform his part of the contract. However, the
defendant refused to execute the Sale Deed. Consequently, after exchange
of notices, the plaintiff filed a Suit for specific performance and
alternatively, sought return of the advance amount.
DEFENDANT'S CASE
4. The defendant filed a written statement contending that the
defendant never intended, nor agreed to purchase the Suit Property.
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According to the defendant, he had borrowed a sum of Rs. 7,00,000/-
from the plaintiff, and the Sale Agreement was executed merely as
security for the said loan. Further, on the same day, i.e., June 28, 2011, at
the instance of the plaintiff, the defendant executed a Registered General
Power of Attorney Deed in favour of the plaintiff's wife. The market value
of the Suit Property is Rs.40,00,000/- and the need to sell the Suit
Property at Rs.7,25,000/- has never arose to the defendant. In addition to
the Sale Agreement, the defendant also gave an unfilled signed
promissory note and cheques to the plaintiff as security. The defendant
attempted to mortgage the Suit Property with the bank in order to clear his
debt with the plaintiff and for that purpose requested the plaintiff to
cancel the Sale Agreement and the General Power of Attorney as well as
return the original Title Deeds. However, the plaintiff refused to cancel
the documents and retained the original Sale Deed. Accordingly, he
prayed to dismiss the Suit.
TRIAL COURT
5. Based on the above pleadings, the Trial Court framed the
following issues:
“1) Whether the sale agreement dated 28.06.2011 was executed as
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security to the loan amount alleged to have been borrowed from
the plaintiff and not intended to operate as sale agreement?
2) Whether the plaintiff is entitled to the decree of Specific
Performance?
3) Whether the plaintiff is entitled to refund of advance amount?
4) To what relief the plaintiff is entitled, if any?”
6. At trial, on the side of the plaintiff, the plaintiff was
examined as P.W.1 and Ex-A.1 to Ex-A.10 were marked. On the side of
the defendant, defendant was examined as D.W.1 and two other witnesses
viz., Seetharaman and Thangamani were examined as D.W.2 and D.W.3,
and Ex-B.1 to Ex-B.7 were marked.
7. After full-fledged trial, the Trial Court came to the
conclusion that the Suit Sale Agreement dated June 28, 2011 is true and
valid, and not executed as security to the loan transaction as alleged by
the defendant. Accordingly, the Trial Court decreed the Suit.
8. Feeling aggrieved, the defendant has preferred this First
Appeal under Section 96 read with Order XLI Rule 1 of the CPC.
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ARGUMENTS
9. Mr.S.Kaithamalai Kumaran, learned Counsel for the
appellant / defendant argues that the market value of the Suit Property as
on the date of execution of Ex-A.1 - Sale Agreement is Rs.40,00,000/-.
The defendant had no intention of selling the Suit Property to the plaintiff.
He borrowed a sum of Rs. 7,00,000/- from the plaintiff and executed Ex-
A1 - Sale Agreement, solely as security for the loan transaction. Further,
at the instance of the plaintiff, the defendant, on the same date, executed a
registered Power of Attorney Deed in favour of the plaintiff’s wife and
handed over the original Title Deed in respect of the Suit Property to the
plaintiff. When the defendant attempted to settle the loan amount by
borrowing loan from the Bank and requested the plaintiff to cancel the
Sale Agreement and return the original Title Deeds, to which the plaintiff
refused. He further submits that, even if Ex-A.1 - Sale Agreement, had
truly been executed with the intention to sell the Suit Property, and if the
plaintiff had genuinely intended to purchase it, he would have paid the
balance amount of Rs. 25,000/- within a month or two, and got the Sale
Deed executed. The two year period prescribed in Ex-A.1 - Sale
Agreement, along with the subsequent extension of an additional two
years, indicates that Ex-A.1 was executed only with the intention to serve
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as security, rather to sell the Suit Property. He further argues that vide Ex-
B.2 to Ex-B.7 - Bank Challans, the defendant had paid interest to the
plaintiff, totally to the tune of Rs.1,21,500/-.The Trial Court failed to
appreciate the aforementioned facts correctly. Therefore, the Judgment
and Decree of the Trial Court are liable to be set aside. Accordingly, he
prays to allow the appeal.
9.1. He would rely on the following Judgments:
(i) Judgment of this Court in P.Selvaraj Vs. R.Gopal,
reported in (2019) 3 CTC 679
(ii) Judgment of this Court in K.M.Raju Vs. Javed Sait,
reported in 2017-3-LW 92
(iii) Judgment of the Hon'ble Supreme Court in
Bhagirath Vs. Ram Ratan, reported in 2017 (6)
MLJ 237 SC
(iv) Judgment of the Hon'ble Supreme Court in
Sukhwinder Singh Vs. Jagroop Singh, reported in
(2021) 20 SCC 245
(v) Judgment of the Hon'ble Supreme Court in
U.N.Krishnamurthy Vs. A.M.Krishnamurthy,
reported in (2023) 11 SCC 775
(vi) Judgment of the Hon'ble Supreme Court in
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Alagammal and Others Vs. Ganesan and Another,
reported in (2024) 3 SCC 232
(vii) Judgment of the Hon'ble Supreme Court in Pydi
Ramana Alias Ramulu Vs. Davarasety Manmadha
Rao, reported in (2024) 7 SCC 515
10. In response to the above arguments, Mr.P.Saravana
Sowmiyan, learned Counsel for the respondent / plaintiff argues that Ex-
A.1 is a registered Sale Agreement. Ex-A.3 is the Extension Deed, which
is also a registered one. There is no legal bar against the parties agreeing
upon a longer period for the performance of the contract. Further, the
defendant cannot lead oral evidence contrary to the terms of the written
document as per Sections 91 and 92 of the Indian Evidence Act, 1872. He
further argues that Ex-B.2 to Ex-B.7 - Bank Challans, are not related to
the plaintiff. Hence, the defendant failed to prove the existence of loan
transaction and the repayments. The Trial Court, after considering the
facts and circumstances of the case, rightly decreed the Suit and there is
no reason to interfere with the same. Accordingly, he prayed to dismiss
the appeal.
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DISCUSSION
11. Heard on either side. Perused the entire evidence
available on record. The points that arise for consideration in this Appeal
Suit are as follows:
(i) Whether Ex-A.1 - Sale Agreement dated June 28,
2011 is true and valid and executed with an intention
to sell the Suit Property?
(ii) Whether Ex-A.1 - Sale Agreement was intended to be
a security for loan transaction as alleged by the
defendant?
(iii) Whether the plaintiff has proved his readiness and
willingness to perform his part of contract?
(iv) Whether the plaintiff is entitled to the relief of
specific performance?
POINT NOS.(I) & (II)
12. The defendant has admitted the execution of Ex-A.1 -
Sale Agreement and Ex-A.3 – Extension Deed. The defendant’s case is
that he borrowed a sum of Rs.7,00,000/- from the plaintiff, and as security
for the loan transaction, executed Ex-A.1 - Sale Agreement, handed over
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Ex-A.2 - Original Sale Deed and further at the instance of the plaintiff,
executed Ex-B.1 - General Power of Attorney Deed in favour of the
plaintiff's wife. In contra, the plaintiff on the other hand denies that Ex-
A.1 was executed as security for loan transaction.
13. Ex-A.1 is a registered Sale Agreement. On the date of
execution of Sale Agreement itself, a sum of Rs.7,00,000/- was paid as
advance and the remaining balance is only Rs.25,000/-. There is no need
to fix two years as period for performance of the contract, when major
portion of the sale consideration has been paid upfront as advance and
the balance amount is only Rs.25,000/- (Rupees Twenty Five Thousand
Only).
14. It is to be noted that Ex-B.1 - General Power of Attorney,
was marked through the plaintiff. The plaintiff admitted Ex-B.1 and
deposed that at the time of executing Ex-A.1 - Sale Agreement, he did not
measure the Suit Property. Furthermore, he was unaware of the door
numbers and did not even know the number of floors or the number of
portions in the Suit Property, which is a house property. If Ex-A1 was
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truly intended for the sale of the Suit Property, the purchaser would
certainly have been aware of the property details, at least the number of
floor it has. No ordinary prudent person would enter into a Sale
Agreement without inspecting the house and without being aware of the
basic details about the property including the number of floors it has.
Furthermore, no prudent person would fix a two-year period for
performance when the balance consideration is only Rs.25,000/-, nor
would any prudent person agree to extend the period by another two
years, especially when there is a General Power of Attorney in favour of
his wife for the Suit Property. He could simply execute a Sale Deed
without the defendant in aid of the power agent / wife.
15. The plaintiff would contend that his mother is unwell and
that is the reason for Ex-A.3 – Extension Deed. However, the same is not
pleaded and further there is no recital to that effect in Ex-A.3.
16. Further, the defendant marked Ex-B.2 to Ex-B.7 – Bank
Challans and contends that he was paying interest to the plaintiff. During
cross-examination, when the defendant deposed that Ex-B.2 and Ex-B.3
stand in favour of plaintiff’s son, the plaintiff’s side did not put any
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suggestion against it. If really Ex-B.2 and Ex-B.3 was not in favour of the
plaintiff’s son, the plaintiff’s side would have certainly put to a suggestion
to that effect. Nevertheless, the defendant failed to connect Ex-B.2 and
Ex-B.3 with the alleged loan transaction.
17. As regards Ex-B.4 to Ex-B.7, D.W.2 / Bank Manager has
deposed that Ex-B.4 to Ex-B.7 stand in the name of Bhuvaneshwari
Agarbathi, Perundurai. The contention of the defendant is that the said
business belongs to the plaintiff, however, the same has not been
established through satisfactory evidence. The defendant has failed to
prove that Ex-B.4 to Ex-B.7 are ultimately in favour of the plaintiff.
18. Further, the fact that Ex-B.1 - General Power of Attorney
in favour of plaintiff’s wife was executed by the defendant on the same
date of executing Ex-A.1, when taken cumulatively, indicates that Ex-A.1
- Sale Agreement and Ex-A.3 - Extension Deed were executed as security
for the loan transaction. The defendant has admitted borrowing a sum of
Rs.7,00,000/-. Accordingly, this Court concludes that Ex-A.1 - Sale
Agreement was intended solely to serve as security and not with the
intention to sell the Suit Property.
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19. As regards the bar under Section 91 read with 92 of the
Indian Evidence Act, 1872, it does not operate as a bar to the oral
evidence of D.W.1 that Ex-A.1 - Sale Agreement and Ex-A.3 - Extension
Deed were executed for the purpose of security to loan transaction. In R.
Janakiraman -vs- State, reported in (2006) 1 SCC 697, Hon'ble Supreme
Court after an elaborate discussion has held that the bar under Section 92
of Indian Evidence Act, 1872 would operate only against the terms of the
contract and not the contract itself. It is apposite to extract the relevant
portion of the Judgment hereunder:
“18. The contention that the evidence of PW 11 and PW
15 is contrary to the documentary evidence (Exts. P-64 to P-
81) and therefore, should be excluded under Section 92 of the
Evidence Act, 1872 is not tenable.
19. In Tyagaraja Mudaliyar v. Vedathanni [AIR 1936 PC
70 : 63 IA 126] the Privy Council observed that oral evidence
is admissible to show that a document executed by a person
was never intended to operate as an agreement, but was
brought into existence solely for the purpose of creating
evidence about some other matter.
20. In Krishnabai Bhritar Ganpatrao Deshmukh v.
Appasaheb Tuljaramarao Nimbalkar [(1979) 4 SCC 60 : AIR
1979 SC 1880] this Court observed: (SCC p. 72, para 27)
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“[W]hen there is a dispute in regard to the true
character of a writing, evidence dehors the
document can be led to show that the writing was
not the real nature of the transaction, but was only
an illusory, fictitious and colourable device which
cloaked something else, and that the apparent state
of affairs was not the real state of affairs.”
21. We may next refer to the following observations in
Gangabai v. Chhabubai [(1982) 1 SCC 4] interpreting Section
92: (SCC pp. 9-10, para 11)
“11. … Section 91 of the Evidence Act provides that
when the terms of a contract, or of a grant, or of any
other disposition of property, have been reduced to
the form of a document, and in all cases in which
any matter is required by law to be reduced to the
form of a document, no evidence shall be given in
proof of the terms of such contract, grant or other
disposition of property, or of such matter, except the
document itself. Sub-section (1) of Section 92
declares that when the terms of any contract, grant
or other disposition of property, or any matter
required by law to be reduced to the form of a
document, have been proved according to the last
section, no evidence of any oral agreement or
statement shall be admitted, as between the parties
to any such instrument or their representatives-in-
interest, for the purpose of contradicting, varying,
adding to, or subtracting from, its terms. And the
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first proviso to Section 92 says that any fact may be
proved which would invalidate any document, or
which would entitle any person to any decree or
order relating thereto; such as fraud, intimidation,
illegality, want of due execution, want of capacity in
any contracting party, want or failure of
consideration, or mistake in fact or law. It is clear to
us that the bar imposed by sub-section (1) of Section
92 applies only when a party seeks to rely upon the
document embodying the terms of the transaction. In
that event, the law declares that the nature and
intent of the transaction must be gathered from the
terms of the document itself and no evidence of any
oral agreement or statement can be admitted as
between the parties to such document for the
purpose of contradicting or modifying its terms. The
sub-section is not attracted when the case of a party
is that the transaction recorded in the document was
never intended to be acted upon at all between the
parties and that the document is a sham. Such a
question arises when the party asserts that there
was a different transaction altogether and what is
recorded in the document was intended to be of no
consequence whatever. For that purpose oral
evidence is admissible to show that the document
executed was never intended to operate as an
agreement but that some other agreement altogether,
not recorded in the document, was entered into
between the parties.”
(emphasis supplied)
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22. The above view was reiterated in Ishwar Dass Jain v.
Sohan Lal [(2000) 1 SCC 434] and it was held that the bar
under Section 92(1) would arise only when the document is
relied upon, but, at the same time, its terms are sought to be
varied and contradicted.
23. In Parvinder Singh v. Renu Gautam [(2004) 4 SCC
794] this Court observed: (SCC p. 800, para 9)
“The rule as to exclusion of oral by documentary
evidence governs the parties to the deed in writing.
A stranger to the document is not bound by the
terms of the document and is, therefore, not
excluded from demonstrating the untrue or collusive
nature of the document or the fraudulent or illegal
purpose for which it was brought into being. An
enquiry into reality of transaction is not excluded
merely by availability of writing reciting the
transaction.”
24. We may cull out the principles relating to Section 92
of the Evidence Act, thus:
(i) Section 92 is supplementary to Section 91 and
corollary to the rule contained in Section 91.
(ii) The rule contained in Section 92 will apply only to
the parties to the instrument or their successors-in-interest.
Strangers to the contract (which would include the prosecution
in a criminal proceeding) are not barred from establishing a
contemporaneous oral agreement contradicting or varying the
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terms of the instrument. On the other hand, Section 91 may
apply to strangers also.
(iii) The bar under Section 92 would apply when a
party to the instrument, relying on the instrument, seeks to
prove that the terms of the transaction covered by the
instrument are different from what is contained in the
instrument. It will not apply where anyone, including a party
to the instrument, seeks to establish that the transaction itself
is different from what it purports to be. To put it differently,
the bar is to oral evidence to disprove the terms of a contract,
and not to disprove the contract itself, or to prove that the
document was not intended to be acted upon and that
intention was totally different.
Applying the aforesaid principles, it is clear that the bar
with Section 92 will apply to a proceeding inter partes to a
document and not to a criminal proceeding, where the
prosecution is trying to prove that a particular document or set
of documents are fictitious documents created to offer an
explanation for disproportionate wealth. Oral evidence can
always be led to show that a transaction under a particular
document or set of documents is sham or fictitious or nominal,
not intended to be acted upon.”
(emphasis supplied by this Court)
20. Relying on R. Janakiraman’s Case, the Hon'ble Apex
Court in Vimal Chand Ghevarchand Jain -vs- Ramakant Eknath Jadoo,
reported in (2009) 5 SCC 713 held that Section 91 read with Section 92
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does not act as a bar to oral evidence as to true nature of a document.
Relevant extract is hereunder:
“31. Indisputably when the true character of a document
is questioned, extrinsic evidence by way of oral evidence is
admissible. (See R. Janakiraman v. State [(2006) 1 SCC 697 :
(2006) 1 SCC (Cri) 442] , SCC para 24; Roop Kumar v.
Mohan Thedani [Roop Kumar v. Mohan Thedani, (2003) 6
SCC 595] , SCC para 19 and SBI v. Mula Sahakari Sakhar
Karkhana Ltd. [(2006) 6 SCC 293] , SCC paras 23 to 32.) We
would, therefore, proceed on the premise that it was open to
the respondent to adduce oral evidence in regard to the nature
of the document.
… … … … …”
21. Hence, this Court is of the view that the Trial Court erred
in concluding that Ex-A.1 was intended for the sale of the Suit Property.
Accordingly, Point Nos. (i) and (ii) are answered in favour of the
defendant and against the plaintiff.
POINT NO.(III)
22. As answered in Point Nos.(i) and (ii), the Suit Sale
Agreement was executed as security for the loan transaction. Therefore,
the question of readiness and willingness does not arise in this case. Even
while assuming that Ex-A.1 is a Sale Agreement with a contract period of
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two years, the plaintiff was not ready and willing to perform his part of
the contract after the expiry of that period. Had he genuinely been ready
and willing, he would not have entered into Ex-A.3 - Extension Deed.
Leaving aside the question as to whether the Specific Performance
(Amendment) Act, 2018, is retrospective or prospective, the plaintiff has
to prove his readiness and willingness to perform his part of contract, as
the said amendment disposes of only with the burden to plead readiness
and willingness, and not the burden to prove it. The plaintiff has not let in
any satisfactory evidence to prove his readiness and willingness. On the
other hand, the defendant has marked Ex-B.1 – General Power of
Attorney executed in favour of plaintiff’s wife in respect of Suit Property.
If really the plaintiff was ready and willing, there was no need for him to
wait for the defendant to come up and execute the Sale Deed. He could
have simply executed the Sale Deed through his wife, who is the power
agent under Ex-B.1. Cumulative consideration of the above facts would
show that, in any case, the plaintiff was not ready and willing to perform
his part of the contract. The rulings submitted by the learned Counsel for
the appellant / defendant relates to 'readiness and willingness' and there is
no quarrel with the same. Accordingly, Point No.(iii) is answered in
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favour of the defendant and against the plaintiff.
POINT NO.(IV)
23. Under the Specific Relief Act, 1963, the relief of specific
performance is an equitable and discretionary relief. As stated supra, the
transaction under Ex-A.1 – Sale Agreement was intended as security for a
loan amount and hence, the relief of specific performance of contract viz.,
Ex-A.1 cannot be granted to the plaintiff.
24. However, the defendant himself admitted that he
borrowed a sum of Rs.7,00,000/- from the plaintiff and executed Ex-A.1,
Ex-A.3 and Ex-B.1 registered documents. Hence, the defendant is liable
to return the same to the plaintiff. The plaintiff has also sought for the
alternative relief of return of money in his plaint. Hence, the plaintiff is
entitled to the alternative relief of return of money. Considering the facts
and circumstances of the case, this Court is of the view that the defendant
shall pay subsequent interest at the rate of 12% per annum from the date
of plaint till realisation. Point No.(iv) is answered accordingly.
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RESULT
25. Resultantly, the Appeal Suit is allowed in the following
terms:
(i) The Judgment and Decree dated July 16, 2018
passed in O.S.No.128 of 2015 by the Principal
District Judge, Erode is set aside;
(ii) The defendant shall pay the plaintiff a sum of
Rs.7,00,000/- along with subsequent interest at the
rate of 12% per annum from the date of plaint till
realisation;
(iii) The defendant shall pay the above said amount and
interest within a period of three months from the date
of receipt of a copy of this Judgment;
(iv) Upon such payment, the plaintiff shall forthwith
return Ex-A.2 – Original Sale Deed [Document
No.4840 of 2006 on the file of Sub Registrar Office,
Perundurai]
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(v) Charge is created over the Suit Property to enable the
plaintiff to realise the aforesaid amount and interest;
(vi) Keeping in mind the facts and circumstances of the
case, the defendant shall pay the cost incurred by the
plaintiff during the Trial Court proceedings, and there
shall be no order as to costs in this Appeal Suit;
25.1.Consequently, connected Civil Miscellaneous Petition
shall be closed.
09.07.2025
Index : Yes
Speaking Order : Yes
Neutral Citation : Yes
TK
To
The Principal District Judge
Erode.
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A.S.NO.232 OF 2019
R. SAKTHIVEL, J.
TK
APPEAL SUIT NO.232 OF 2019
09.07.2025
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