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. Page No.2 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.3 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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. Page No.4 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.5 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.6 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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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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 Page No.8 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.9 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.10 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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) Page No.12 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 “[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 Page No.13 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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) Page No.14 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019
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 Page No.15 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.16 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.17 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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 Page No.18 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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. Page No.19 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019 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] Page No.20 of 22 https://www.mhc.tn.gov.in/judis ( Uploaded on: 11/07/2025 09:21:07 pm ) A.S.NO.232 OF 2019
(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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