Full Judgment Text
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PETITIONER:
GANGABAI W/O RAMBILAS GILDA
Vs.
RESPONDENT:
CHHABUBAI W/O PUKHARAJJI GANDHI
DATE OF JUDGMENT06/11/1981
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
DESAI, D.A.
CITATION:
1982 AIR 20 1982 SCR (1)1176
1982 SCC (1) 4 1981 SCALE (3)1753
CITATOR INFO :
RF 1991 SC 672 (20)
ACT:
Res judicata, bar of-Question of title in Small Cause
Suit can be regarded as incidental only to the substantial
issue in the suit and cannot operate as res judicata-Section
11 of the Code of Civil Procedure.
Evidence Act-Admissibility of oral evidence-Bar imposed
by sub-section (1) of section 92 of the Act-Scope of.
HEADNOTE:
Being in need of money, respondent 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 rent note, of her house situated near
Sarafa Bazar in Amravati. These documents were executed on
January 7, 1953. The respondent continued in the possession
of the house property throughout and carried on repairs from
time to time. Since 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 and the said suits had
resulted in a decree, the respondent filed a suit for
declaration that she was and continued to be owner of the
house property. The documents executed on January 7, 1953,
it was said, were never intended to be acted upon. In
defence, the appellant maintained that the sale deed
represented a genuine transaction, and ownership of the
house property had passed to her. It was further 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 section 92 of the
Indian Evidence Act.
Dismissing the appeal by special leave, the Court
^
HELD: 1:1. When a finding as to title to immovable
property is rendered by a Court of Small Causes res judicata
cannot be pleaded as a bar in a subsequent regular civil
suit for the determination or enforcement of any right or
interest in immovable property. In order to operate as res
judicata the finding must be one disposing of a matter
directly and substantially in issue in the former suit and
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the issue should have been heard and finally decided by the
court trying such suit. A matter which is collaterally or
incidentally in issue for the purpose of deciding the matter
which is directly in issue in the case cannot be made the
basis of a plea of res judicata. A question of title in a
Small Cause suit can be regarded as incidental only to the
substantial issue in the suit and cannot operate as res
judicata in a subsequent suit in which the question of title
is directly raised. [H81 G-1182A-C]
1177
1:2. Explanation VIII to section 11 of the Code of
Civil Procedure operates only where an issue has been heard
and finally decided in the earlier suit.
[1182 D-E]
1:3. In the instant case, 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. [1182 E]
Poholi Mullick v. Fukeer Chunder Patnaik, (1874) 22
Suth W.R. 349; Chet Ram and Others v. Ganga, 1886 Allahabad
Weekly Notes; Anwar Ali v. Nur-Ul-Haq and Another, (1907) 4
Allahabad Law Journal 517; Khandu Valad Keru v. Tatia valad
Vithoba, (1871) 8 Bombay H.C.R.A.C. 23(24) (DB); Mohd. Yusuf
and another v. Abul Wahid, A.I.R. 1948 All. 296 and S.A.A.
Annamalai Chettiar v. Molaiyan and others, A.I.R. 1970 Mad.
396, approved.
Muhammad Abdul Ghafur Khan v. Gokul Prasad and others,
A.I.R. 1914 All. 527; Gulabchand Chhotalal Parikh v. State
of Bombay, [1965] 2 S.C.R. 574; Madan Kishor and Another v.
Mahabir Prasad and others, A.I.R. 1929 All. 816; Ram Dayal
Sonar v. Sukh Mangal Kalwar, A.I.R. 1937 All. 676; Ganga
Prasad v. Nandu Ram, A.I.R. 1916 Patna 75; Ganesh Das v.
Feroze Din, A.I.R. 1934 Lahore 355, Puttangowda Mallangowda
Patil v. Nikanth Kalo Deshpande, XV Bombay Law Reporter 773;
Asgarali Roshanalli and another v. Kayumalli Ibrahimji,
A.I.R. 1956 Bombay 236: Lala Jageshwar Prasad v. Shyam
Behari Lal, A.I.R. 1967 All. 125; Shyam Behari Lal v. Lala
Jogeshwar Prasad, [1970] 3 S.C.C. 591; Manzural Haq and
another v. Hakim Mohsin Ali, A.I.R. 1970 All. 604;
Pateshwari Parshad Singh v. A. S. Gilani, A.I.R. 1959 Punjab
420, referred to and dissented from.
2. 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. [1183 C-F]
Tyagaraja Mudaliyar and another v. Vedathanni, A.I.R.
1936 Privy Council 70, followed.
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1537 of
1970.
Appeal by special leave from the judgment and order
dated the 10/30th June, 1969 of the Bombay High Court,
Nagpur Bench, Nagpur in Appeal No. 90 of 1962.
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U. R. Lalit and A. G. Ratnaparkhi, for the Appellant.
S. S. Khanduja for the Respondent.
The Judgment of the Court was delivered by
PATHAK, J: This appeal by special leave arises out of a
declaratory suit in respect of title to a house property.
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 Evidence Act.
The trial 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 the
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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.
Two points have been raised before us. The appellant
urges that the Small Causes Court decrees, in view of the
general principles of res judicata, precluded the trial of
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the question whether the sale transaction was a genuine
transaction. The other point concerns the operation of
section 92 of the Evidence Act.
The successive suits were filed by the appellant
against the respondent in the Court of Small Causes for
recovery of arrears of rent. In each suit the appellant
contended that she was owner of the property and the
respondent was her tenant. The tenancy was alleged on the
basis of the document dated January 7, 1953 which on its
terms purported to be a sale deed by the respondent in
favour of the appellant. The respondent resisted the suits.
The court decreed the suits on the finding that the document
was a sale deed, and therefore the respondent was not the
owner of the property but merely a tenant of the appellant.
The question is whether this finding operates as res
judicata in the instant suit. The High Court repelled the
plea of res judicata on the ground that s. 11 of the Code of
Civil Procedure governed 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 not satisfied.
It is 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 invoked
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 arising therein. We have been
referred to Gulabchand Chhotalal Parikh v, State of Bombay
where
1180
this Court has taken the view that the provisions of s. 11
of the Code are not exhaustive with respect to an earlier
decision operating as res judicata between the same parties
on the same matter in controversy in a subsequent regular
suit, and that on the general principles of res judicata,
any previous decision on a matter in controversy, decided
after full contest or after affording fair opportunity to
the parties to prove their case by a Court competent to
decide it, will operate as res judicata in a subsequent
regular suit. It is not necessary, it was said, "that the
Court deciding the matter formerly be competent to decide
the subsequent suit or that the former proceeding and the
subsequent suit have the same subject matter". The
observations were made in considering the question whether
decisions on matters in controversy in writ petitions under
Article 32 or Article 226 of the Constitution could operate
as res judicata in subsequent regular suits on the same
matters in controversy between the same parties.
A number of other cases have been cited on behalf of
the appellant in support of the plea of res judicata. We
have considered 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
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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 not
be decided summarily. To the same effect was the view
expressed by the Lahore High Court in Ganesh Das v. Feroze
Din.
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In Puttangowda Mallangowda Patil v. Nikanth Kalo Deshpande,
the Bombay High Court declared that a Court of Small Causes
could render a finding on an issue as to title to immovable
property but only in a suit which did not ask for that
relief and merely for payment of a sum of money. Our
attention was drawn to Asgarali Roshanalli and another v.
Kayumalli Ibrahimji, but we find nothing there of assistance
to the appellant. Reliance was placed on the decision of the
Allahabad High Court in Lala Jageshwar v. Shyam Behari Lal.
There a learned Single Judge took the view that as a Court
of Small Causes is a Court of exclusive jurisdiction the
restrictive conditions imposed by s 11 of the Code of Civil
Procedure requiring "two-fold competency" of the Court whose
decision is to operate as res judicata cannot be invoked. It
was sufficient, he observed, that the decision had been
rendered by a court of competent jurisdiction and it was not
necessary that that court should also be competent to decide
the subsequent suit. The judgment was brought in appeal to
this Court but while disposing of the appeal, Shyam Behari
Lal v. Lala Jageshwar Prasad, this Court declined to decide
whether a Court of Small Causes could be regarded as a Court
of exclusive jurisdiction. We find, however, that the view
taken by the High Court in Lala Jageshwar Prasad (supra) was
expressly overruled by a Full Bench of the High Court in
Manzurul Haq and another v. Hakim Mohsin Ali and it was laid
down that a Court of Small Causes could be described as a
court of "preferential jurisdiction" but not as court of
"exclusive jurisdiction". It was also held by the Full Bench
that a decision rendered by a Court of Small Causes in a
suit for arrears of rent would not operate as res judicata
in a subsequent suit filed in the Court of the Munsif for
recovery of arrears of rent for a different period and for
ejectment. That the principle of res judicata could not be
availed of where a decision given by a Court of Small Causes
was relied on in a subsequent regular civil suit was the
view also taken by the Punjab High Court in Pateshwar
Parshad Singh v. A. S. Gilani.
It seems to us that when a finding as to title to
immovable property is rendered by a Court of Small Causes
res judicata cannot
1182
be pleaded as a bar in a subsequent regular civil suit for
the determination or enforcement of any right or interest in
immovable property. In order to operate as res judicata the
finding must be one disposing of a matter directly and
substantially in issue in the former suit and the issue
should have been heard and finally decided by the court
trying such suit. A matter which is collaterally or
incidentally in issue for the purposes of deciding the
matter which is directly in issue in the case cannot be made
the basis of a plea of res judicata. It has long been held
that a question of title in a Small Cause suit can be
regarded as incidental only to the substantial issue in the
suit and cannot operate as res judicata in a subsequent suit
in which the question of title is directly raised. Poholi
Mullick v. Fukeer Chunder Patnaik, Chet Ram and others v.
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Ganga, Anwar Ali v. Nur-Ul-Haq and Another, Khandu valad
Keru v. Tatia valad Vithoba. See also Mohd. Yusuf and
another v. Abdul Wahid and S.A.A. Annamallai Chettiar v.
Molaiyan and others. Our attention has been drawn to
Explanation VIII to s. 11 in the Code of Civil Procedure
recently inserted by the Code of Civil Procedure (Amendment)
Act, 1976. Section 97(3) of the Amendment Act declares that
the new provision applies to pending suits, proceedings,
appeals and applications. In our opinion the Explanation can
be of no assistance, because it operates only where an issue
has been heard and finally decided in the earlier suit.
Accordingly, we 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
1183
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 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 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 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. Tyagaraja Mudaliyar 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
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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 also fail.
In the result, the appeal is dismissed with costs.
S.R. Appeal dismissed.
1184