IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE TUESDAY, THE 14TH OCTOBER 2008 / 22ND ASWINA 1930 AS.No. 282 of 2000(B) --------------------- OS.128/1995 of SUB COURT, MUVATTUPUZHA .................... APPELLANT(S)/DEFENDANTS 1 AND 2 IN O.S.NO.128/95 ------------------------------------------------- 1. THOMAS, AGED 53, SON OF MATHAI PALAKKADAN HOUSE, THANGALOM KARA THRIKKARIYOOR VILLAGE 2. JOHNY, AGED 46, S/O MATHAI DO... DO.... DO..... BY ADV. SRI.C.T.JOSEPH RESPONDENT(S)/PLAINTIFF AND DEFENDANT NO.3 IN O.S.NO.128/95 ------------------------------------------------- 1. DR.MATHAI, AGED 62 S/O MATHAI, PALAKKADAN HOUSE THANGALOM KARA THRIKKARIYOOR VILLAGE NOW RESIDING AT PALAKKADAN HOUSE, CHENGAL KARA KANJOOR, VADAKKUMBHAGOM VILLAGE, ALUVA 2. JOHNY, AGED 67 S/O MATHAI EDAKKATTUKUDIYIL RAMALLOOR KARA KOTHAMANGALAM VILLAGE ADV. SRI.S.SANTHOSH KUMAR FOR R1TO4 SRI.K.P.DANDAPANI (SR.) FOR R1 THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 14/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON C.M.P.NO.2341/2000 IN A.S.NO.282/2000 DISMISSED 14-10-2008 Sd/-, PIUS.C.KURIAKOSE, JUDGE /True Copy/ As regards Ext.B2 receipt, she submitted that the same had not been proved. Testimony of DW-2 Markose was rightly not relied on by the court below. DW-2 had his own axe to grind against the plaintiff, they having been pitted against each other in another legal battle, which is pending in second appeal before this court even now. Copy of the judgment of the lower appellate court in that case (As. 50/07 of District Court, Ernakulam) was placed before me by Mrs.Dandapani in this context. Mr.C.T. Joseph would in his reply submit that the dispute involved in the litigation which is pending in second appeal is essentially a dispute between the plaintiff and the second defendant therein (appellant No.2 herein) and that DW-2 Markose did not claim any subsisting interest over the property involved in that case. That suit was dismissed with cost by the trial court. It is reversing that decree that the appellate court allowed the appeal, but the issue has not attained finality. 12. I have considered the rival submissions. I have gone through the pleadings and I have scanned the evidence. The question which first arises seriously is whether the finding of the trial court that Ext. A1 rental agreement dated 16-11-1985 amounts to novation of Ext.B1 agreement dated 16-9-1985 as contemplated by section 62 of the Indian Contract Act is sustainable in law. According to the learned AS. N0. 282/2000 -2- Sub Judge the binding force of Ext.B1 has come to an end and the said document has been substituted by Ext.A1 both in fact and also by operation of section 62. To enter these findings the learned Sub judge has relied on the judgment of the Bombay High Court in Andheri Bridge View Co-op. Hsg. Society Ltd., v. Krishnakant Anandrao Deo and others, AIR 1991 Bombay 129. It is true that a proposition has been laid down by a learned single Judge of the Bombay High Court in that decision that where there are material or substantial changes which go to the root of an earlier agreement, the subsequent agreement entered into between the parties can be regarded as novation of the earlier agreement for the purposes of section 62 of the Contract Act. But unlike the case on hand, in the case decided by the Bombay High Court, both the earlier agreement and the subsequent agreement were agreements for sale in respect of the very same property. The dispute before the Bombay High Court was whether the subsequent agreement can be treated as the first agreement itself with slight modification or whether it should be treated as a new agreement in substitution of the first agreement. The Supreme Court had occasion to pronounce on the principle of novation statutorily recognised by section 62 of the Indian Contract Act in Lata AS. N0. 282/2000 -3- Construction v. Rameshchandra Ramniklal Shah, AIR 2000 SC 380 at paragraph 11 of the judgment. The court held that one of the essential requirements of `novation' as contemplated by section 62 is that there should be complete substitution of a new contract in place of the old. It is in that situation that the original contract does not require not be performed. Substitution of a new contract in place of the old contract which would have the effect of rescinding or completely altering the terms of the original contract, has to be by agreement between the parties. The substituted contract should rescind or alter or extinguish the previous contract. The facts of the case were that there was an original contract between the parties that possession of a constructed flat will be given to the respondents by the appellants subject to certain terms and conditions within a stipulated time. Subsequently it was agreed between the parties that if a sum of Rs.9,51,000/- is paid by the appellants to the respondents within a stipulated time the first agreement would come to an end. The contention of the appellants before the Supreme Court was that the second agreement amounted to novation of the first agreement and hence the first agreement was no longer enforceable. The Supreme Court noticed that the first agreement was for delivery of a flat and the AS. N0. 282/2000 -4- second agreement was for payment of cash and the terms of these two agreements were so inconsistent and could not stand together. Therefore the second agreement cannot be said to be in substitution of the earlier agreement. Accordingly the plea of novation was turned down and it was held that the first agreement continues to operate. Here in the present case Ext.B1 dated 16-9-85 is an agreement for sale of the plaintiffs' one-third undivided interest in the plaint schedule property to defendants 1 and 2 for total consideration of Rs. 4 lakhs subject to the other terms and conditions incorporated in that agreement. The period stipulated for complete performance of this agreement is one year, i.e., by 15-9-1986. Ext.A1 is dated 16-11- 1985, obviously before the expiry of the period stipulated for performance of Ext.B1. Ext.A1 is a rent chit executed by Johny, appellant No.2, the second defendant in favour of his brothers the respondent plaintiff and appellant No.1, the first defendant. On the terms of Ext.A1, the two storied building which stands on the plaint schedule property is let out to appellant No.2 by his brothers on a monthly rental of Rs.3000/- for conduct of lodge business. The lease is not only of the building but also of the equipments, fittings and implements which were already available in the building already under AS. N0. 282/2000 -5- user for conduct of lodge by appellant No.2. There is no reference in Ext.A1 to Ext.B1 and much less any reference to revocation of Ext.A1. Ext.A1 certainly amounts to admission by parties regarding their co- ownership over the properties covered by Ext.A1. But then, so long as deed of transfer or release is not executed by the plaintiff pursuant to B1, the property will continue to be under co-ownership. I am however, unable to accept the conclusion of the learned Subordinate Judge that Ext.A1 has been executed in substitution of Ext.B1. Obviously these two agreements are different in character and are for different purposes. The partial identity of the subject matter of these agreements alone will not justify a conclusion that B1 agreement for sale has been substituted by Ext.A1 agreement for lease of the building etc. situated upon the property agreed to be sold. The first question is therefore answered in favour of the appellants. 13. The next serious question which arises for consideration is whether the contention of the appellants that the balance sale consideration of Rs.2 lakhs was paid to the plaintiff against Ext.B2 is acceptable. It is true that there is no express reference to Ext.B2 in Ext.A3 reply notice dated 15-6-1989 which was sent on behalf of the defendants. But it is certainly claimed in Ext.A3 that the balance sale AS. N0. 282/2000 -6- consideration of Rs.2 lakhs was also paid through mediators. Ext.A3 is referred to in the plaint and apart from a general statement that the statements in Ext.A3 are untrue I do not find any specific denial of the claim of the defendants in Ext.A3 that they have paid the balance sale consideration also through mediators. In paragraph 5 of the written statement it is contended that Ext.A1 rent chit was executed by appellant No.2 in favour of the plaintiff and appellant No.1 so as to assure the plaintiff that he will get his due share of income from the property and to strengthen the possessory rights of the appellants over the lodge business being conducted in the building. It is contended in this paragraph that on 13-9-1986 the balance sale consideration of Rs.2 lakhs was paid to the plaintiff at the house of appellant No.2 in the presence of late Varghese and Sri.Markose, brothers of the parties and mother of the parties. It is also contended that till 13-9-1986 rent pursuant to Ext.A1 was being paid and that after that date rent was not paid since the plaintiff ceased to have any interest over the property with effect from that date. Apart from contending so, the originals of Ext.B1 agreement as well as Ext.B2 receipt were produced along with the written statement itself. It is true that no counter claim has been raised by the appellants for AS. N0. 282/2000 -7- recovery of the sum of Rs.4 lakhs which they claim to have paid to the plaintiff towards balance sale consideration. In paragraph 14 a claim is made to the effect that in the event of the court finding the suit to be maintainable the defendants 1 and 2 are entitled for refund of the amount with interest and right to sue for the amount is expressly reserved as per that paragraph. Thus technically it was not necessary for the plaintiff to have raised any additional pleadings by way of replication. At the same time I feel that in the light of the specific production of Ext.B2 and the contentions raised in the written statement the plaintiff could have raised additional pleadings under Order 8 Rule 9 with leave of the court since the contention that the entire sale consideration had been paid had been raised with all seriousness and document relied on had been produced. The non- raising of additional pleadings to answer the contention based on Ext.B2 I feel is of some consequence. B2 is sought to be proved by examining DW-2. DW-2's name is mentioned in the written statement as one of the brothers in whose presence the balance sale consideration of Rs.2 lakhs was paid. He is a professor in the Engineering College at Kothamangalam, the native place of the parties and he has clearly deposed in chief examination that in his presence AS. N0. 282/2000 -8- and in the presence of other family members including mother, the balance amount was paid to the plaintiff at the Tarwad house which is occupied by appellant No.2. It was suggested to him in cross examination that his version that he witnessed the payment of the balance sale consideration is false. The above suggestion was denied by him. He stated that the amount was paid at noon time. He stated also that the amount was not counted by him. Having appreciated the testimony of PW-1 I do not think that anything has been brought out for discrediting DW-1's testimony at least in so far as it relates to his witnessing the payment of consideration of Rs. 2 lakhs. On reading through the judgment of the learned Sub Judge it is seen that he also has not concluded that DW-2 is not a credible witness. Instead, he becomes inclined not to rely on Ext.B2 in view of four circumstances. (1) PW-1 in cross examination denied his signature on Ext.B2. (2) DW-2 has made a crucial “admission” during cross examination that he had not seen the plaintiff issuing Ext.B2 acknowledgment at the time when the balance sale consideration was said to be paid. (3) Had the balance consideration been paid on 13-9-86, Ext.A1 rent chit would have been cancelled or necessary endorsement about the payment would have been obtained on Ext.B1. (4) After 13-9-86 despite AS. N0. 282/2000 -9- payment of the full consideration the appellants defendants have not taken any steps for enforcement of Ext.B1 agreement. They set up Ext.B2 only in Ext.A3 reply to Ext.A2 lawyer notice. I shall deal with the so-called crucial admission in the evidence of DW-2 relied on by the learned Subordinate Judge to hold that Ext.B2 has not been issued and that payment has not been made as stated in Ext.B2. What was stated by DW-2 was as follows: “It was during noon time that money was paid for the second time. At that time no exchange of documents was seen”. The evidence of DW-1 as noted was only that he did not notice any exchange of documents at the time when the balance consideration was paid. The learned Subordinate Judge was not correct in reading that evidence as admission to the effect that Ext.B2 acknowledgment was not issued by the plaintiff. Obviously the evidence that DW-2 did not notice any exchange of documents was given as answer to a question in cross examination, whether he had witnessed any exchange of documents. Though for the purpose of evidence Ext.B2 receipt will also come within the ambit of “documents” in common parlance laymen concerned with disputes over agreement for sale of immovable property will contemplate only documents in relation to the property when they are asked about exchange of AS. N0. 282/2000 -10- documents. Significantly, despite being aware of the existence of Ext.B2 and the reliance placed by the defendants on B2, plaintiff's chief examination is silent regarding Ext.B2. During cross examination PW-1 is confronted with Ext. B2 and what he states is that his purported signature on Ext.B2 has not been subscribed by him. His definite case regarding Ext.B2 is that his signature on Ext.B2 is not a genuine one but is a forged one. In cross examination of DW-1 also it is suggested to him that the plaintiff's apparent signature on B2 was not put by the plaintiff and that B2 was created fraudulently for defeating the plaintiff's interest over the property. Thus the contention raised specifically regarding Ext.B2 is that the signature is not genuine and therefore the document is not genuine. Ext.B2 as already stated was produced along with the written statement and it is not even suggested in evidence that B2 has been fabricated by making use of any blank paper containing the plaintiff's signature which came to the hands of the appellants. I have already found that the court below was not right in thinking that DW-2's testimony contained an admission which was fatal to the appellants' case regarding Ext.B2. Moreover, it is fundamental that the admissions to be acted upon even when they are made by parties to the litigation should be clear AS. N0. 282/2000 -11- and conclusive and there should not be any doubt or ambiguity – (see C.Koteswara Rao v. C.Subbarao, AIR 1971 SC 1542). In the enquiry which I conducted under Order 32A I drew the attention of the plaintiff to the striking similarity between the plaintiff's admitted signatures and the disputed signature on Ext.B2. Later when I.A. 131/05 was taken up for consideration it was conceded by the learned senior counsel in the presence of the plaintiff himself that the signature on Ext.B2 is plaintiff's own signature. In the absence of any pleading or evidence to suggest that a blank paper signed by the plaintiff had reached the defendants' hand in some other connection and B2 had been fabricated by misusing such blank paper the only conclusion possible is that B2 was issued by the plaintiff against receipt of the balance consideration of Rs.2 lakhs. 14. The other circumstance pointed out by the learned Subordinate Judge to hold that the defendants' claim of having paid the entire consideration is wrong is that the defendants did not take any action for specific enforcement of the agreement. The defendants have an answer that they did not insist on getting the agreement specifically enforced in view of the close relationship between the parties and more in view of the circumstance that the defendants were AS. N0. 282/2000 -12- in absolute physical control and enjoyment of the plaint schedule property and the double storied building thereon and were able to collect the income from the lodge business conducted by them without being called upon to pay any share in the income to their brother the plaintiff. The above answer in my opinion is somewhat convincing. Yet another reason pointed out by the learned Sub Judge to repel the defendants' case regarding Ext.B is that even in Ext.A3 the existence of B2 is not referred to. True, existence is not specifically referred to in Ext.A3, but it is certainly claimed in Ext.A3 that the balance sale consideration was paid on the date of Ext.B2 by cash. Thus reversing the finding of the learned Subordinate Judge regarding Ext.B2 I hold that B2 was issued against payment of entire balance consideration of Rs.2 lakhs by the appellants. 15. But just because the entire sale consideration which was payable as per Ext.B1 has been paid off by the appellants as per Ext.B2 the plaintiff's co-ownership over the plaint schedule property does not come to an end. Similarly even if the claim of the appellants that with effect from the date of Ext.B2 they alone are being physical possession over the plaint schedule property and have been enjoying the plaint schedule property exclusively without paying any share in AS. N0. 282/2000 -13- the income from the plaint schedule property to the plaintiff is assumed to be correct, then also the plaintiff's one-third share in the plaint schedule property as a co-sharer will not come to an end nor will that share become vested upon the appellants. When a co-sharer is found to be in possession of a property owned by him in common with his co-sharers the presumption which is raised that he holds possession in trust for the other co-sharers also. A presumption can never be drawn that a co-owner's possession is adverse to the interest of the other co-owners and is in denial of the title of the other co- owners. In order that the other co-owners lose their title to the possessing co-owners possession must be hostile to the interest of the other co-owners and should be in open denial of the title of the other co-owners during the whole length of the statutory period. Coming to this case it is seen from the written statement statement that apart from the contention that upon payment of the full consideration as per Ext.B2 the plaintiff's interest of the plaint schedule properties came to an end, there is no plea raised that plaintiff's rights have been lost to him by by adverse possession and much less by ouster. This must be why the appellants did not even attempt to adduce any cogent evidence in support of plea of adverse possession or ouster. Under the AS. N0. 282/2000 -14- above circumstances I do not find any reason for interfering with the preliminary decree for partition passed by the trial court. 16. Similarly I do not find any infirmity about the decision of the court below fixing a sum of Rs.1,500/- as the plaintiff's due share from the income of the plaint schedule property every month. It is on the basis of the contract rent provided in Ext.A1 rental agreement that the court below came to such a decision. Ext,.A1 is a registered rental agreement. The appellants themselves concede that Ext.A1 was in operation till the date of Ext.B2. I therefore confirm the decision of the court below that the appellants are liable to pay a sum of Rs.1,500/- to the plaintiff as the plaintiff's share in the income from the properties. 17. It was submitted before me that the mortgage of the plaint schedule property in favour of the third defendant was terminated and that the third defendant has already vacated that part of the building situated on the plaint schedule property which was covered by the mortgage. At the same time in the absence of any document supporting the above submission I do not propose to interfere with the direction issued by the court below that as far as possible the building portion covered by the mortgage should be allotted under the final AS. N0. 282/2000 -15- decree towards the share of the appellants/defendants 1 and 2. 18. The only question which survives for consideration is as to what if any is the modification necessary to the decree of the trial court in the light of the findings entered herein before that the entire sale consideration of Rs.4 lakhs was paid by the appellants to the plaintiff. The argument of Mr.C.T.Joseph was that the above amount with interest at the rate of 18% per annum should be made payable as charge over the plaintiff's share over the property to the appellants. Mr.Joseph submitted that it was most inequitable on the part of the plaintiff to have sued for partition after having received the entire sale consideration for his due share in the plaint schedule property. He submitted that though not in law at least in equity the appellants have absolute title and possession over the plaint schedule property in view of payment of the full consideration to the plaintiff. According to him if the sum of Rs.4 lakhs paid by the appellants to the plaintiff had been invested at that time in another item of immovable property which was available at that time in Kothamangalam Town itself the present value of that property will be far more than the amount with interest at the rate of 18% per annum. Unless interest is allowed at that rate the amount to be received back by the appellant will be nominal since the AS. N0. 282/2000 -16- appellants have been made liable to pay income share to the plaintiff at the rate of Rs.1500/- p.m. Even though the submissions of Mr.C.T.Joseph in the above context were stiffly resisted by the senior counsel Mrs. Dandapani I am of the view that there is justification for allowing a reasonable rate of interest. The judgment of the Supreme Court in Ghaziabad Development Authority v. Union of India and another, (2000) 6 SCC 113 and in ..................... to a certain extent give support to the above view. Therefore even as I confirm the decrees passed by the court below that I am inclined to find that the appellants are entitled to recover the sum of Rs.4 lakhs paid by the them to the plaintiff with interest at the rate of 9% per annum from the date of suit charged on the share to be allotted to plaintiff in final decree proceedings. The amounts due from the appellants to the plaintiff towards share of income can be adjusted towards the above amount. 19. The result of the appeal therefore is as follows: (1) The preliminary decree for partition passed by the trial court is confirmed. (2) The decision of the trial court fixing the plaintiff's share of the income from the plaint schedule building at Rs.1,500/- p.m. from the AS. N0. 282/2000 -17- date of suit is also confirmed. (3) The direction of the court below that as far as possible the portion of the property mortgaged to defendant No.3 shall be included in the share of defendants 1 and 2 and the further direction that if a physical division of the property is not practicable plaintiff shall be awarded ovalty the quantum to be fixed in final decree proceedings is also confirmed. (4) Reversing the finding of the court below regarding Ext.B2 it is found that the entire consideration of Rs.4 lakhs as per Ext.B1 was paid by the appellants to the first respondent plaintiff by 13-9-1996 and that the appellants are entitled to recover the above mentioned amount with interest