Case: Gangabai W/O Rambilas Gilda Vs. Chhabubai W/O Pukharajji Gandhi

The respondent filed a suit in the Court of the Second Joint Civil Judge, Amrawati alleging that the house situated near Saraf Bazar in Amrawati had been purchased by her in 1950 for Rs . 4, 000 and thereafter improvements had been affected by her to the property. Being in need of money, she entered into an agreement with the appellant for a loan of Rs. 2, 000 and it was decided that simultaneously she should execute a nominal document of sale and a rent note. These documents were executed on January 7, 1953. She alleged that the documents were never intended to be acted upon, and that the rent paid by her represented in fact interest at 18% on the loan. She continued in possession of the house property throughout and, it is said, carried on repairs from time to time. It was stated that the appellant was attempting to enforce the document as a sale deed by filing suits in the Court of Small Causes for recovery of rent. As two suits had resulted in decrees, she considered it necessary to file the present suit for a declaration that she was, and continued to be, owner of the house property. In defence, the appellant maintained that the sale deed represented a genuine, transaction, and ownership of the house property had passed to the appellant. It was pleaded that the decrees passed by the Court of Small Causes operated as res judicata barring the respondent from pleading that the sale deed was merely a nominal transaction. Reliance was also placed on s. 92 of the Indian Evidencetrial court held that the sale deed was never intended to be acted upon and decreed the suit. The appellant appealed to the District Court, Amravati, but the learned District Judge did not accept the case that a sale had taken place. He held, however, that the transaction between the parties constituted a mortgage. He modified the trial court decree to conform to that finding. The High Court of Bombay, in second appeal, did not agree with the finding of the lower appellate court that the transaction was a mortgage and affirmed the findings of the trial court that the sale deed and rent note were sham documents, that the decrees of t he Court of Small Causes did not operate as res judicata and that s. 92 of the Indian Evidence Act did not prevent the respondent from establishing the true nature of the transaction. Accordingly, the High Court set aside the decree of the lower appellate court and resorted that of the trial court.When this appeal was heard by us, it appeared that the parties may settle the dispute by negotiated compromise. It seems, however, that no compromise has been possible. Accordingly, we proceed to dispose of the appeal on its merits.

Court's reasoning:
The High Court repelled the plea of res judicata on the ground that s. 11 of theCode of Civil Procedure govern ed the case, and that as a Court of Small Causes is not competent to try a suit for a declaration of title to immovable property, the court which passed the decrees relied on by the appellant was not competent to try the present suit and therefore an imperative condition of s. 11 was notis contended before us on behalf of the appellant that the High Court erred in applying the statutory provisions of s. 11 of the Code, and should have invoke d instead the general principles of res judicata. On that, it is submitted, all that was necessary to find was whether the Court of Small Causes was competent to try the two earlier suits and decide the issues arisingwe hold that the finding rendered by the Court of Small Causes in the two suits filed by the appellant that the document executed by the respondent is a sale deed cannot operate as res judicata in the present suit.The next contention on behalf of the appellant is that sub-s.(1) of s. 92 of the Evidence Act bars the respondent from contending that there was no sale and, it is submitted, the respondent should not have been permitted to lead parole evidence in support of the contention. Section 91 of the Evidence Act provides that when the terms of 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-s. (1) of s. 92 declares that when the term s 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 first proviso to s. 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 contradicting party, want or failure of consideration, or mistake in fact or law. It is clear to us that the bar imposed by sub-s. (1) of s. 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 int ent 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 a sserts 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 theMudaliyar and another v. Vedathanni. The Trial Court was right in permitting the respondent to lead parole evidence in support of her plea that the sale deed dated January 7, 1953 was a sham document and never intended to be acted upon. It is not disputed that if the parole evidence is admissible, the finding of the court below in favour of the respondent must be accepted. The second contention on behalf of the appellant must alsohave consi dered them and we do not think that they help the appellant. In Muhammad Abdul Ghafur Khan v. Gokul Prasad and others the Allahabad High Court limited itself to observing that a Court of Small Causes possessed a discretion on whether to return the plaint under s. 23, Provincial Small Cause Courts Act on a finding that the relief claimed depended on proof of title. The same High Court in Madan Kishor and Another v. Mahabir Prasad and others merely observed that it was for the Court of Small Causes to decide under s. 23 of the Provincial Small Cause Courts Act whether a question of title was involved in the suit and on finding so it was open to it to return the plaint. That was also the view expressed by it in Ram Dayal Sonar v. Sukh Mangat Kalwat. So also in Ganga Prasad v. Nandu Ram, the Patna High Court said that the Court of Small Causes had power under s. 23 to return the plaint where it was of opinion that the question of title raised was so intricate that it should n ot be decided summarily. To the same effect was the view expressed by the Lahore High Court in Ganesh Das v. Feroze Din.