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Delhi High Court
Chander Mohan Khandelwal vs Hemant Wadhwa on 19 May, 2025
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on:19.05.2025
+ C.R.P. 90/2019 & CM APPL. 17773/2019
CHANDER MOHAN KHANDELWAL ..... Petitioner
versus
HEMANT WADHWA ..... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr. Rajeev Kumar & Ms. Nimmi Sinha,
Advs.
For the Respondent : Mr. Subhash Sharma, Adv.
CORAM
HON'BLE MR JUSTICE AMIT MAHAJAN
JUDGMENT
1. The present petition is filed challenging the order dated
07.03.2019 (hereafter ‘impugned order”), passed by the learned Trial
Court in CS No. 555/2017 (suit).
2. By the impugned order, the learned Trial Court dismissed the
application filed by the petitioner under Order VII Rule 11 of the Code
of Civil Procedure, 1908 (‘CPC‘).
3. The brief facts of the case are as follows:
a. The suit was filed by the respondent, inter alia, seeking
cancellation of Sale Deed dated 13.01.2016 (hereafter ‘the SaleSignature Not Verified
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Deed’), which was registered on 28.01.2016, in respect of the suit
property, that is, third floor of the property bearing no. C-126/B, Moti
Nagar, New Delhi. By Sale Deed, the respondent had sold the suit
property with roof rights to the petitioner for a sale consideration of
₹21,75,000/-.
b. It is the case of the respondent that his father was the owner of
the entire property bearing no. C-126/B, Moti Nagar, New Delhi. It is
claimed that due to being deserted by his other family members after
losing some investments, the petitioner started living with his father
on the ground floor of the property. In July, 2014, the respondent
came into contact with the petitioner, who has a business of fabrics,
when he had gone to the petitioner’s shop. It is alleged that the
petitioner lured the respondent to make certain investments in the
share market. After a few days of conversation, the respondent
invested ₹50,000/- on the basis of assurances of the petitioner that he
will be able to recover his old losses by getting profitable returns. The
respondent was allegedly lured by the petitioner to make regular
investments. In November, 2014, after the death of the respondent’s
father, the respondent was induced to invest an amount of ₹3 lakhs in
cash in the respondent’s business on the assurance of good returns.
Within two months, the petitioner informed the respondent that the
amount had been lost due to ups and downs in the market. Thereafter,
the respondent invested more amount, which also did not bear any
profitable returns.
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c. It is claimed that the respondent was assured that the petitioner
will construct a third floor of the property for a nominal cost of ₹10
lakhs, whereafter, the ground floor could be sold at a higher price to
make big investments. The petitioner also started the construction
work with his own funds in the month of October, 2015. Due to
coercion of the petitioner, the respondent sold the ground floor of the
property for ₹23 lakhs and invested a sum of ₹10 lakhs with the
petitioner to construct a third floor. It is alleged that the petitioner
approached the respondent by saying that the amount had been lost in
the market and asked the respondent to give him the third floor of the
property as a collateral security to help recover the losses.
d. It is claimed that it was due to this, the respondent assented to
registration of the subject property in the name of the petitioner,
against which, a payment of ₹21,75,000/- was made to the respondent
by way of different cheques to artificially give the garb to the
transaction of a genuine sale. After the cheques were deposited, the
whole money was withdrawn within two months to be invested with
the petitioner. As the respondent had already lost a huge amount with
the petitioner, he had no other alternative.
e. It is further claimed that there was a verbal agreement between
the parties and the possession of the subject property was not handed
over to the petitioner as per the Sale Deed, which makes it clear that
the transaction between the parties was to treat the subject property as
a collateral security and not the actual sale.
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f. The petitioner sought rejection of the suit on the ground that the
respondent had admittedly executed the Sale Deed and he had no
cause of action to challenge the same. By the impugned order, the
application was dismissed. The relevant portion of the impugned order
is reproduced hereunder:
“The defendant has sought rejection of the plaint on the ground
that the plaintiff has executed the registered sale deed dated
28.01.2016, in his favour, therefore, in view of registered sale
deed, the plaintiff has no cause of action to challenge the same. It
is settled law that for deciding the applications u/O 7 Rule 11 CPC,
only the plaint and its averments are considered. Perusal of the
plaint clearly shows the cause of action in favour of the plaintiff
and against the defendant since as per the case of the plaintiff, he
executed the sale deed dated 28.01.2016, in favour of the defendant
as a collateral security for the investment made by him with the
defendant, it is a matter of trial whether the sale deed executed by
the plaintiff in favour of the defendant was executed as a collateral
security or by way of said sale deed, the suit property was actually
sold by him to the defendant. The plaintiff cannot be non-suited at
this stage of the matter. The plaint clearly shows the cause of
action, hence, the application u/O 7 Rule 11 CPC of the defendant
is hereby dismissed.”
g. Aggrieved by the impugned order, the petitioner preferred the
present petition.
4. The learned counsel for the petitioner submitted that the learned
Trial Court failed to take into consideration the fact that the
respondent himself categorically admitted the execution of the Sale
Deed. He submitted that the learned Trial Court did not take into
account that the Sale Deed is a registered document, and that the
parties cannot be permitted to contradict the contents of the registered
document.
5. He submitted that the respondent, in the pleadings, had admitted
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the execution of the Sale Deed, and that in the Sale Deed itself it has
been admitted that the entire agreed sale consideration had been
received and the vacant possession of the suit property had been given.
He further submitted that the learned Trial Court failed to appreciate
that the respondent had not denied in the pleadings that he had
received the entire sale consideration under the Sale Deed which had
been endorsed by the Sub-Registrar.
6. He submitted that thereafter, the suit property had been given on
rent to the respondent by way of an oral agreement and the present suit
was filed by the respondent to only harass the petitioner. He submitted
that the respondent did not pay the rent and the cheque issued by him
for liability towards rent liability was dishonored, for which the
petitioner had initiated proceedings under the Negotiable Instruments
Act, 1881.
7. He submitted that the petitioner had availed a home loan from
India Bulls Pvt. Ltd. by mortgaging the suit property and he has since
repaid the entire loan amount.
8. He submitted that since the respondent had admitted the
execution of the registered Sale Deed, he cannot be permitted to harass
the petitioner on false grounds of fraud in view of Sections 91 and 92
of the Indian Evidence Act, 1872. He submitted that it is not the case
of the respondent that the he did not know the nature of the documents
being executed or registered by him or that the respondent failed to
understand the contents of the Sale Deed.
9. He further submitted that the Sale Deed had also been witnessed
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by one independent witness, namely, Rajkumar. He submitted that
except for the bald averment of fraud, the respondent has failed to
point towards any material to corroborate the same. He submitted that
merely alleging fraud or coercion in the pleadings is not sufficient, and
it is upon the plaintiff to give the particulars of fraud in accordance
with Order VI Rule 4 of the CPC.
10. He further submitted that the petitioner had also preferred a suit,
bearing, no. 662/2018 for recovery of possession and arrears of rent
against the respondent. He submitted that the petitioner had filed an
application under Order XII Rule 6 of the CPC for passing a decree on
admission in that suit, however, the learned Trial Court has disposed
of the same by noting that the issues in both suits are substantially
similar.
11. He relied upon the judgments in the cases of Karan Madaan v.
Nageshwar Pandey : 2014 SCC OnLine Del 1277 and Rohit Rajpal
v. Ankita Suri : 2018 SCC OnLine Del 9244 to endorse his
submissions.
12. Per contra, the learned counsel for the respondent submitted
that the learned Trial Court had rightly rejected the application filed
by the petitioner under Order VII Rule 11 of the CPC.
13. He submitted that the respondent never sold the said property to
the petitioner but had only given the same to the petitioner as a
collateral security.
14. He submitted that the peaceful and vacant possession of the
property was never given to the petitioner. He further submitted that
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since no vacant and peaceful possession of suit property had ever been
delivered to the petitioner, the provisions under Sections 91 and 92 of
the Indian Evidence Act, 1872 are not attracted.
ANALYSIS
15. At the outset, it is relevant to note that the petitioner has
challenged the impugned order by invoking the revisional jurisdiction
of this Court. It is trite law that the scope of revision under Section
115 of the CPC is very limited and is to be exercised only if the
subordinate Court appears to have exceeded its jurisdiction or to have
failed to exercise its jurisdiction, or if the subordinate Court has
exercised its jurisdiction illegally or with material irregularity.
16. This Court also considers it apposite to appreciate the law in
relation to Order VII Rule 11 of the CPC. The said Rule provides for
summary dismissal of a suit at the threshold, before the parties have
led their evidence, if one of the grounds stipulated therein is made out.
The purpose of the said provision is to stifle sham civil actions and
quell bogus and meaningless suits at the outset when the said suits ex
facie appears to be an abuse of the process of law, without further
wasting judicial time.
17. Considering that the power to terminate the action without even
allowing the plaintiff to lead evidence and establish its case is a drastic
one, the Court is required to limit itself to discerning whether the
plaint prima facie discloses a cause of action by perusing the
substance of the averments, without paying any heed to the pleas taken
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in the written statement. While the Court is not precluded from
intervening when the litigation is manifestly vexatious, at the same
time, if a prima facie case is made out, it is not open to the Court to
conduct an enquiry into the merit or trustworthiness of the allegations.
The Hon’ble Apex Court in the case of Dahiben Vs. Arvinbhai
Kalyanji Bhansai : (2020) 7 SCC 366 has succinctly discussed the
law in relation to Order VII Rule 11 of the CPC. The relevant portion
of the same is reproduced hereunder:
“23.2. The remedy under Order 7 Rule 11 is an independent and
special remedy, wherein the court is empowered to summarily
dismiss a suit at the threshold, without proceeding to record
evidence, and conducting a trial, on the basis of the evidence
adduced, if it is satisfied that the action should be terminated on
any of the grounds contained in this provision.
23.3. The underlying object of Order 7 Rule 11(a) is that if in a
suit, no cause of action is disclosed, or the suit is barred by
limitation under Rule 11(d), the court would not permit the plaintiff
to unnecessarily protract the proceedings in the suit. In such a
case, it would be necessary to put an end to the sham litigation, so
that further judicial time is not wasted.
23.4. In Azhar Hussain v. Rajiv Gandhi, 1986 Supp SCC 315, this
Court held that the whole purpose of conferment of powers under
this provision is to ensure that a litigation which is meaningless,
and bound to prove abortive, should not be permitted to waste
judicial time of the court….
23.5. The power conferred on the court to terminate a civil action
is, however, a drastic one, and the conditions enumerated in
Order 7 Rule 11 are required to be strictly adhered to.
23.6. Under Order 7 Rule 11, a duty is cast on the court to
determine whether the plaint discloses a cause of action by
scrutinising the averments in the plaint [Liverpool & London S.P.
& I Assn. Ltd. v. M.V. Sea Success I, (2004) 9 SCC 512], read in
conjunction with the documents relied upon, or whether the suit is
barred by any law.
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23.9. In exercise of power under this provision, the court would
determine if the assertions made in the plaint are contrary to
statutory law, or judicial dicta, for deciding whether a case for
rejecting the plaint at the threshold is made out.
23.10. At this stage, the pleas taken by the defendant in the written
statement and application for rejection of the plaint on the merits,
would be irrelevant, and cannot be adverted to, or taken into
consideration. [Sopan Sukhdeo Sable v. Charity Commr., (2004) 3
SCC 137]
23.11. The test for exercising the power under Order 7 Rule 11 is
that if the averments made in the plaint are taken in entirety, in
conjunction with the documents relied upon, would the same
result in a decree being passed…
23.12. In Hardesh Ores (P) Ltd. v. Hede & Co. [Hardesh Ores (P)
Ltd. v. Hede & Co., (2007) 5 SCC 614] the Court further held that
it is not permissible to cull out a sentence or a passage, and to read
it in isolation. It is the substance, and not merely the form, which
has to be looked into. The plaint has to be construed as it stands,
without addition or subtraction of words. If the allegations in the
plaint prima facie show a cause of action, the court cannot
embark upon an enquiry whether the allegations are true in
fact. D. Ramachandran v. R.V. Janakiraman, (1999) 3 SCC 267;
See also Vijay Pratap Singh v. Dukh Haran Nath Singh, AIR 1962
SC 941].
23.13. If on a meaningful reading of the plaint, it is found that
the suit is manifestly vexatious and without any merit, and does
not disclose a right to sue, the court would be justified in
exercising the power under Order 7 Rule 11 CPC.
23.14. The power under Order 7 Rule 11 CPC may be exercised by
the court at any stage of the suit, either before registering the
plaint, or after issuing summons to the defendant, or before
conclusion of the trial, as held by this Court in the judgment
of Saleem Bhai v. State of Maharashtra, (2003) 1 SCC 557. The
plea that once issues are framed, the matter must necessarily go to
trial was repelled by this Court in Azhar Hussain v. Rajiv
Gandhi, 1986 Supp SCC 315. Followed in Manvendrasinhji
Ranjitsinhji Jadeja v. Vijaykunverba, 1998 SCC OnLine Guj
281 : (1998) 2 GLH 823.
23.15. The provision of Order 7 Rule 11 is mandatory in nature. It
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specified in clauses (a) to (e) are made out. If the court finds that
the plaint does not disclose a cause of action, or that the suit is
barred by any law, the court has no option, but to reject the
plaint.”
(emphasis supplied)
18. It is essentially the case of the petitioner that the subject plaint
is not maintainable as it is hit by Sections 91 and 92 of the Indian
Evidence Act, 1872. It is argued that the respondent had willingly
executed the Sale Deed and he cannot be allowed to take a ground
contrary to the terms of the registered Sale Deed, especially
considering that he admittedly received the sale consideration. It is
further argued that the plaint does not disclose any cause of action and
the same is bereft of any cogent particulars of the alleged fraud.
19. The short question before this Court is whether the cause of
action asserted by the respondent in the plaint is tenable in law or
whether the plaint ought to be rejected as it discloses no cogent cause
of action. Before proceeding further, this Court considers it apposite to
refer to the relevant portion of the plaint, which is as under:
“16. That since an advance of Rs.10 Lacs had already been paid to
the defendant by the plaintiff for the construction of the third floor
of the suit property there was no other alternative with the plaintiff,
but to approach him again and gain to complete the construction
work for which he has already been paid, and during this period
again with hypnotized and clever talk and schemes the defendant
that now the commodity market is in green, made the plaintiff to
trust the defendant that if he gives in writing the third floor of the
suit property as a collateral security to the defendant, which was
under construction, the defendant will make sure that this time
the whole amount invested by the plaintiff shall be recovered with
profits.
17. That the plaintiff had to get the documents of the third floor
of the suit property registered in the name of the defendant,
against which the defendant made the payment of Rs.21,75,000/-
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to the plaintiff by way of different cheques to make artificially sure
that the transaction is a genuine sale, which otherwise had never
been the thought of the plaintiff.
18. That after cheques of the defendant had been deposited by the
plaintiff in his bank account, the whole money was got withdrawn
within two months to be invested with the defendant. Since the
plaintiff had lost a huge amount in the investments through the
defendant, there was no other alternative with him, but to trust him.
19. That by the verbal agreement between the plaintiff and the
defendant the possession of the third floor of the suit property was
not handed over to the defendant by the plaintiff as per the Sale
Deed, which makes it more clear that the verbal agreement
between the parties was that of a collateral security and not of
sale.”
(emphasis supplied)
20. Essentially, the respondent has admitted to the execution of the
Sale Deed but pleaded that the same was done pursuant to “clever
talk” of the petitioner that the respondent will be able to recover all the
investment amount. It is the case of the respondent that there was a
verbal agreement between the parties that the transaction was one of
transfer of property as a collateral security and not one of sale. It is
also admitted that the sale consideration was received by the
respondent, however, it is claimed that the same was withdrawn for
the purpose of investment.
21. The learned Trial Court has dismissed the application filed by
the petitioner by observing that perusal of the plaint shows cause of
action in favour of the respondent since as per the case of the
respondent, the Sale Deed was executed in favour of the petitioner as a
collateral security for the investment made by him with the petitioner.
It was noted that it is a matter of trial as to whether the Sale Deed was
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executed as a collateral security or if the suit property was actually
sold by way of the same.
22. While the learned Trial Court has rightly appreciated that the
defence of a defendant is not required to be taken into account while
deciding an application under Order VII Rule 11 of the CPC and only
the plaint is to be considered, it is pertinent to note that no deference
has been paid to the arguments raised by the petitioner in relation to
the plaint being hit by Sections 91 and 92 of the Indian Evidence Act,
1872 as well as the argument that there was no fraud or coercion. Even
though the said grounds have been agitated in the application filed
under Order VII Rule 11 of the CPC, however, the impugned order is
abysmally silent on this aspect.
23. Section 91 and 92 of the Indian Evidence Act, 1871 read as
under:
“91. Evidence of terms of contracts, grants and other dispositions
of property reduced to form of document. — 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, or secondary evidence of its contents in
cases in which secondary evidence is admissible under the
provisions hereinbefore contained.
Exception 1.–When a public officer is required by law to be
appointed in writing, and when it is shown that any particular
person has acted as such officer, the writing by which he is
appointed need not be proved.
Exception 2.– Wills admitted to probate in India may be proved
by the probate.
Explanation 1.–This section applies equally to cases in which the
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contained in more documents than one.
Explanation 2.– Where there are more originals than one, one
original only need be proved.
Explanation 3.– The statement, in any document whatever, of a
fact other than the facts referred to in this section, shall not
preclude the admission of oral evidence as to the same fact.
92. Exclusion of evidence of oral agreement. — When the terms
of any such 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:
Proviso (1). — 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.
Proviso (2). –The existence of any separate oral agreement as to
any matter on which a document is silent, and which is not
inconsistent with its terms, may be proved. In considering whether
or not this proviso applies, the Court shall have regard to the
degree of formality of the document.
Proviso (3). –The existence of any separate oral agreement,
constituting a condition precedent to the attaching of any
obligation under any such contract, grant or disposition of
property, may be proved.
Proviso (4). –The existence of any distinct subsequent oral
agreement to rescind or modify any such contract, grant or
disposition of property, may be proved, except in cases in which
such contract, grant or disposition of property is by law required to
be in writing, or has been registered according to the law in force
for the time being as to the registration of documents.
Proviso (5). — Any usage or custom by which incidents not
expressly mentioned in any contract are usually annexed to
contracts of that description, may be proved: Provided that the
annexing of such incident would not be repugnant to, or
inconsistent with, the express terms of the contract.
Proviso (6). — Any fact may be proved which shows in what
manner the language of a document is related to existing facts.”
24. The law in relation to the aforementioned provisions is well
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settled. Section 91 of the Indian Evidence Act, 1972 provides that
once the terms of a contract, or of a grant, or of any disposition of
property, have been reduced in the form of a document, no evidence
except the document or secondary evidence of its contents is
admissible to prove the terms thereof. In cases where the terms have
been proved as per Section 91 of the Indian Evidence Act, 1872,
Section 92 of the Indian Evidence Act, 1872 excludes evidence of any
oral agreement or statement between the parties to the concerned
instrument for the purpose of contradicting, varying, adding to, or
subtracting from the same. There are six provisos to Section 92 of the
Indian Evidence Act, 1872 which contain the exceptions to the same.
25. It is relevant to note the judgments referred by the petitioner. In
the case of Karan Madaan v. Nageshwar Pandey (supra), a Bench of
this Court was dealing with a similar issue where the defendant had
filed a counter claim averring that the intention of the parties was not
to transfer the suit property and the registered sale deed had been
executed to create a surety for repayment for loan, due to which, the
possession was not handed over. It was also claimed that the registered
Sale Deed was hit by fraud. The plaintiffs had filed an application
under Order VII Rule 11 of the CPC raising a similar argument that
the counter claim was hit by Sections 91 and 92 of the Indian
Evidence Act, 1872. Allowing the said application and rejecting the
counter claim after adverting to a catena of judgments, the Court
found that mere mention of “fraud” in pleadings is insufficient. It was
noted that it is not open to the defendant to claim that the deed was hit
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by fraud after having executed the same. The intention of the parties
should have been spelt out in the deed. It was further noted that a party
cannot be permitted to plead contrary to the terms of the Sale Deed as
once the same is reduced to writing, it cannot be open to the parties to
re-write the terms. The relevant portion of the said judgment is
reproduced hereunder:
“24. Therefore, the terms of the sale deed clearly show that the
nature of the transaction that the said instrument records is an
absolute conveyance of property i.e. the sale of the suit property.
By no stretch of reasoning it can be described as a transaction of
loan, coupled with a transaction to create a security for repayment
of loan with interest and costs and subsequent retransfer of the suit
property by the plaintiffs to the defendant.
25. The terms on which the suit property was conveyed by the
defendant to the plaintiffs having been set out in the sale deed
itself, in view of the bar contained in Section 91, it is not open to
the defendant to claim that the conveyance was made only by way
of security. The terms of the instrument of sale completely rule
out the so-called understanding between the parties, that the suit
property was to remain a security for the repayment of the so-
called loan, and was to be re-conveyed to the defendant upon
repayment of the so-called loan of Rs. 1.65 Crores with interest
and other charges…
xxx
31. The defence/case set up by learned counsel for the defendant
in his arguments is of ‘fraud’, on the premise, that the plaintiffs
are seeking to exploit the instrument of sale, contrary to the
understanding of the parties that the sale deed was only to be used
as a security for repayment of loan, interest and other charges.
Pertinently, the written statement or the counter claim do not
whisper about a “fraud”, though the defendant repeatedly states
that the plaintiffs are greedy, have turned dishonest, and are of a
criminal mind. A mere mention of “fraud” in a pleading is not
sufficient. A party pleading fraud is obliged, under Order VI Rule
4 CPC, to give particulars of the pleaded fraud-with dates and
items, in the pleading. The pleadings of the defendant, in the
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fraud…
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36. In the present case, the only reason pleaded by the defendant
(whose evidence cannot go beyond the pleadings) is the oral
understanding between the parties as already set out above.
However, the so-called oral understanding is completely
contradicted by the terms of the registered instrument itself, and
the defendant has not pleaded any other fact or circumstance to
show that the parties did not intend to act upon the instrument of
sale.
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54. The non delivery of possession by the defendant to the plaintiffs
does not by itself, or cumulatively with the other factors pointed out
by the defendant, lead to the conclusion that the transaction
between the parties was not a sale of the suit property, but was a
mere loan transaction. So also the fact that the plaintiffs waited for
about five months to claim possession of the suit property from the
defendant has no bearing on the plaintiffs’ title to the suit property,
or their right to claim possession.
55. In Sanjay Gupta v. Cottage Industries Exposition Ltd., 2008
(102) DRJ 304, I had the occasion to deal with sections 91 and 92
of the Evidence Act. The parties had entered into a registered lease
deed. The plaintiff claimed that the lease was for residential
purpose and that the defendant misused the leased premises for
commercial purpose. The defendant claimed that the lease was
for commercial purpose. This led to disputes between the parties.
The defendant stopped payment of rent on the ground that the
plaintiff had obstructed the use of the leased premises for
commercial and office purpose. To determine the purpose of
letting, the relevant clauses of the lease were examined. Section 91
and 92 of the Evidence Act were pressed into service to deny the
aforesaid defence set up by the defendant. The relevant extract
from the said decision reads as follows:
“20. The defence set up by the defendant that the plaintiff
had agreed to get the user of the premises changed to
commercial is in the teeth of Sections 91 and 92 of the
Evidence Act since the defendant is seeking to contradict,
vary, add to the terms of the registered lease deed. The
Bombay High Court in Dinkarrai Lalit
Kumar v. Sukhdayal Rambilas AIR 1947 BOMBAY 293
held that the terms of a contract reduced to writing cannotSignature Not Verified
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be ascertained by allowing parole evidence as to what
transpired antecedent to the contract or what the parties
did subsequent to the contract. Once the contract between
the parties is reduced to writing, the court can only look
at the writing alone in order to construe what the terms of
the contract were”.
21. … … …
22. In S. Saktivel (dead) by LRs v. M. Venugopal
Pillai (2000) 7 SCC 104 the Supreme Court held that
where under the law a contract or disposition is required
by law to be in writing, its terms cannot be modified,
altered or substituted by an oral contract, or disposition.
Under Section 92(4) of the Evidence Act no parol
evidence is admissible to substantiate such oral contract
or disposition. Where a document for its validity or
effectiveness is required by law to be given in writing, no
modification or alteration or substitution of such written
document is permissible by parol evidence and it is only
by another written document that the terms of the earlier
document can be altered, rescinded or substituted. The
Supreme Court also held that parol evidence cannot be
permitted to substantiate the subsequent oral agreement
where the original agreement is contained in a registered
document. This is not permitted by Section 92(4) of the
Evidence Act. The terms of a registered document can be
altered, rescinded or varied only by subsequent registered
document and not otherwise. If the oral arrangement is
allowed to be substantiated by parol evidence it would
mean re-writing of the registered document which is not
permissible”.
73. So far as the plaintiff’s application under Order 7 Rule 11 is
concerned, the logical consequence of the defence/case of the
defendant/counter claimant being held as untenable in law,
would be that the said counter claim would be liable to rejected
under Order 7 Rule 11 CPC for want of cause of action. The
cause of action pleaded by the defendant in the counter claim is the
so-called oral agreement and understanding that the plaintiffs shall
re-transfer the suit property to the defendant in terms and
conditions pleaded by the defendant. The defendant is precluded
from pleading such an agreement, arrangement or understanding.
As already noticed above, no other cause of action or basis for the
reliefs sought in the counter claim has been disclosed. ”
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26. The aforesaid judgment was upheld by the Hon’ble Division
Bench of this Court and the appeal was dismissed with cost in
Nageshwar Pandey v. Karan Madaan : 2016 SCC OnLine Del 816.
27. In the present case, the Sale Deed unambiguously makes out a
case of sale of the suit property. There is no whisper of the intention of
the parties to treat the transaction as one of security instead. There is
no term which makes any mention of the transaction being for the
purpose of securing funds for investments either. The Sale Deed
records that the petitioner is entitled to get the suit property mutated
and transferred in his name, and also provides that the expenses of the
stamp paper as well as the registration fee are to be borne by the
petitioner. It is also mentioned in the Sale Deed that the entire sale
consideration stands paid to the respondent by the petitioner by way of
cheques. The acknowledgment of the receipt of the sale consideration
is also noted therein. From the same, it is apparent that the nature of
transaction is of sale of the suit property. Considering that the Sale
Deed leaves no ambiguity in relation to the terms of the conveyance, it
is not open to either of the parties to shy away from the terms
prescribed in the registered Sale Deed. Thus, the respondent cannot
claim that the conveyance was in the nature of only securing a
collateral security. Any attempt to establish a cause of action by
casting doubt over the character of the Sale Deed, after having
admittedly executed the same, will be in teeth of Section 92 of the
Indian Evidence Act, 1872.
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28. Insofar as the allegations of fraud are concerned, apart from
making vague assertions in the plaint in some paragraphs regarding
the prior dealings between the parties, the only relevant paragraphs in
relation to alleged fraudulent intention of the petitioner in reference to
the Sale Deed are paragraphs 14 and 22. A bare perusal of the plaint
makes it clear that no particulars are pleaded so as to make out a case
for fraud. No attending circumstances have been pleaded either which
would render the Sale Deed voidable. As provided under Order VI
Rule 4 of the CPC, as also noted in the aforesaid case, in cases a party
pleading fraud, particulars are required to be stated in the pleading.
The present plaint is found to be wanting in regard to any details.
29. In the aforesaid judgment, the Court dealt with the explanations
to Section 91 of the Indian Evidence Act, 1871 as well as the provisos
to Section 92 of the Indian Evidence Act, 1871. The observations in
this regard are relevant as the respondent has built a case on similar
lines as the defendant therein. The relevant portion is as under:
“26. Explanations 1 and 2 of Section 91 have no relevance for the
present case. Explanation 3 only states that the statement of a fact
in a document, “other than the facts referred to in this
Section” may be proved by leading oral evidence. The “fact
referred to in this Section” are the “terms of a contract, or a grant,
or of any other disposition of property” which have been reduced
to the form of the document. For instance, if the age or address, or
paternity of a party is recorded in an instrument, it shall be open to
the parties to lead evidence to establish that the same is not
correctly recorded, or that the same is, in fact, different from what
the instrument records. However, this explanation cannot be
invoked to disprove the “terms of a contract, or of a grant, or of
any other disposition of property”.
27. Section 92 of the Evidence Act, inter alia, provides that where
the terms of a grant or other disposition of property have been
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proved according to Section 91-and in this case the execution and
registration of the instrument of sale is not disputed by the
defendant, no evidence of any oral agreement, or statement shall
be admitted, as between the parties to such instrument, for the
purpose of contracting, varying, adding to or subtracting from its
terms.
28. By setting up the defence as noticed hereinabove, the
defendant is seeking to do precisely this. The defendant is setting
up a defence/case which clearly contradicts and varies the terms
of the duly executed and registered instrument of sale. The
defendant is seeking to urge that the amount of Rs. 1.65 Crores
received by him was by way of loan, and not by way of
consideration for the sale of the suit property to the plaintiffs. This
is completely contradictory to, and at variance with the above
extracted recitals and clauses of the sale deed.
29. The defendant is also seeking to urge that the transaction
between the parties was the loan transaction, which is completely
at variance with and contradicted by the sale deed which,
absolutely and forever, conveys the suit property to the plaintiffs.
The defendant is seeking to foist an obligation on the plaintiffs to
reconvey the suit property to him upon the repayment of the so-
called loan with interest and other charges-an obligation not borne
out by the instrument of sale and contrary to the express covenant
that “The vendees shall hereinafter hold, use, enjoy as they like
and to sell, mortgage, lien, let-out or make
additions/alterations/re-construct with all construction for
construction of further floors in the same as their own property
without any hindrance, claim or demand whatsoever from the
Vendor”. Thus, the defendant is seeking to contradict and add to
terms of the registered sale deed.
xxx
30… In any event, the fraud, intimidation, illegality, etc referred to
in proviso 1 to Section 92 relates to the execution of the
instrument/document. It is not the defendant’s case that when he
executed the sale deed, he did not know that it is a sale deed that
he was executing. It is not the defendant’s case that he is
unlettered or illiterate or that he did not read, or could not read
the instrument in question. He does not claim that the sale deed
was executed in an intoxicated or unsound state, or under duress
or coercion exercised by the plaintiffs, or anyone else. The
defendant knew the fact that he was executing an instrument of
sale. When he has executed the sale deed in question, it is not
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open to the defendant to claim that the instrument of sale is hit by
fraud, because, according to the defendant, the intention or
understanding of the parties was to create a security in favour of
the plaintiffs for the alleged loan granted to the defendant. The
spirit and purpose of enacting Section 91 and 92 of the Indian
Evidence Act, 1872 is to render the written contract, grant or other
disposition the sole repository of the terms contained therein. If the
intention of the parties was, as is claimed by the defendant, then
that intention/objective/purpose should have been so spelled out in
the instrument. Unfortunately for the defendant, that is not the
case.
xxx
38. The court also dealt with the issue whether a party can give
oral evidence concerning the intention of the parties at the time of
the execution of a document, which is not reflected in such a
document. In this context, Roop Kumar (supra) was relied upon.
The court rejected the defence set up by the defendant which was
contrary to the terms of the registered instruments. In the light of
the above discussion, I reject the reliance placed by the defendant
on the Ist proviso to Section 92 of the Evidence Act.
39. Proviso 2 to Section 92 permits the proof of execution of a
separate oral agreement “as to any matter on which the document
is silent”, and which is not inconsistent with its terms. The
defence/case of the defendant-that there was a separate oral
agreement of loan with security; of payment of interest in cash
without receipt; of reconveyance of the suit property by the
plaintiffs to the defendant-on the terms narrated by the defendant,
cannot be set up, since the said case/defence relates to matters on
which the document is not silent. Rather, it is “speaking”, and
such defence is inconsistent with the terms of the instrument of
sale. The instrument of sale contradicts each of the claims of the
defendant. I have already dealt with the terms of the instrument of
sale in paras 22 to 25 above.
40. Proviso 3 to Section 92 permits the proof of existence of a
separate oral agreement, constituting a condition precedent to the
attaching of any obligation under any such contract, grant or
disposition of property. Pertinently, the defendant has not set up a
defence/case that any obligation under the sale deed was
dependent upon fulfillment of any condition precedent. The
defendant is seeking to set up a defence/case that post the
execution of the instrument of sale, the plaintiff was obliged to
reconvey the suit property to the defendant. Such a defence is not
tenable by resort to proviso 3 to Section 92. As noticed above, the
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terms of the instrument of sale convey the suit property to the
plaintiffs in presenti, absolutely and forever. Therefore, there is no
question of the defendant setting up an oral agreement as a
“condition precedent” for performance of any obligation.
41. Proviso 4 to Section 92 permits the establishment of the
existence of any “distinct, subsequent oral agreement to rescind
or modify” the contract, grant or disposition of property, except in
cases in which such contract, grant or disposition of property is
required, by law, to be in writing, or has been registered as per the
law for the time being as to registration of documents.
42. In the present case, the disposition of the suit property was
required by law to be in writing and by a registered instrument,
and it has been so executed in writing and registered. Proviso 4,
therefore, cannot be invoked by the defendant, in any case.
Moreover, the defendant is not claiming a “subsequent” oral
agreement. He is claiming an oral agreement/understanding
which, according to him, existed at the time of execution of the sale
deed. Consequently, Proviso 4 has no application to the
defence/case set up by the defendant. Provisos 5 & 6 have no
application to the facts of the present case, as the defendant does
not plead any custom, or any issue with regard to the language
used.”
(emphasis supplied)
30. Although, no arguments have been raised on behalf of the
respondent regarding non-applicability of the mandate of Sections 91
and 92 of the Indian Evidence Act, 1872 by virtue of the
circumstances of the case following under one of the exceptions,
however, this Court deems it apposite to satisfy itself in this regard. As
noted by the Court, while Explanation 3 of Section 91 of the Indian
Evidence Act, 1872 provides for limited admissibility of oral
evidence, however, the same cannot be invoked to disprove the terms
of a contract.
31. As far as the provisos to Section 92 of the Indian Evidence Act,
1872 are concerned, provisos 5 and 6 will not be applicable to the
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facts of the present case.
32. Insofar as the first proviso is concerned, the same provides that
any fact, such as fraud, may be proved which would invalidate any
document or would entitle any person to a decree. The fraud in the
said provision relates to execution of the instrument and the said
exception will not be available to the respondent as it is not his case
that he did not understand the nature of the documents being executed.
It is apparent that the respondent executed the Sale Deed while being
fully cognizant of the nature of the Deed and the respondent cannot
claim fraud on part of the petitioner after executing the instrument
Any intention of the parties to the contrary ought to have been
captured in the Sale Deed itself. In the absence of the same, nothing
turns on the oral agreement between the parties.
33. Since the case of the respondent is fulcrumed on the averment
that the arrangement between the parties was to create a collateral
security and not for sale of the suit property, which is inconsistent
with the terms of the registered Sale Deed, Proviso 2 to Section 92 of
the Indian Evidence Act, 1872 is also not applicable as the same only
provides for proof of an oral agreement which is not inconsistent with
the terms of contract.
34. There is no condition precedent to the obligations under the
Sale Deed as per the averments made in the plaint, whereby, the third
proviso is also not applicable to the facts of the present case.
35. Lastly, Proviso 4 which provides for existence of any distinct
subsequent oral agreement to rescind or modify any contract, grant or
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disposition of property, is also not applicable to the facts of the present
case as the plaintiff has not made any averments in this regard. The
alleged oral arrangement is not subsequent to the execution of the Sale
Deed.
36. It is argued on behalf of the respondent that the intention of the
parties is evident from the fact that the vacant possession of the suit
property was never handed over to the petitioner. Considering the
totality of the facts of the case, this Court finds no merit in the said
argument, especially considering that the Sale Deed in question
records that the actual physical vacant possession of the suit property
had been delivered to the petitioner on the spot. The relevant portion
of the Sale Deed, as relied upon in the plaint, is as under:
“2. That the actual physical vacant possession of the said property
has been delivered to the vendee, on the spot.”
37. It is relevant to note that in the case of Karan Madaan v.
Nageshwar Pandey (supra) as well, the possession had not been
handed over, despite which, the Court found no reason to doubt the
intention behind the Sale Deed and allowed the application under
Order VII Rule 11 of the CPC.
38. Although it is stated in the plaint that the arrangement between
the parties was verbal in nature, the respondent has relied upon a
collateral agreement dated 27.01.2016 which records that the
petitioner will provide an interest free credit facility to the respondent
for making investments and for this purpose, the suit property will be
put as collateral in name of the petitioner. It also records that the suit
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property will never be sold and the amounts will be paid back by the
respondent in full or parts or in installments. It is also recorded that the
respondent will stay in the suit property with full possession. The said
agreement is not registered.
39. Evidently, the assertions made by the respondent in relation to
the transaction being for collateral security rather than sale are in
contravention of the terms of the registered Sale Deed, as per which
the suit property was sold to the petitioner. As discussed above, the
respondent is precluded from establishing the said plea in view of
Sections 91 and 92 of the Indian Evidence Act, 1872, especially in
absence of particulars of fraud, in which case, there is no question of
the respondent being entitled to a decree in his favour. Thus, the suit is
untenable in law and not maintainable.
40. This view of the Court finds support in a number of judgments.
In the case of Rohit Rajpal v. Ankita Suri (supra) [mentioned in para
11], another Bench of this Court upheld the order of the learned Trial
Court whereby the suit was dismissed as being non-maintainable. In
the said case, it was contested by the plaintiffs that the registered Sale
Deed was in fact a mortgage deed. The Court rejected the contention
and held as under:
“28. In the present suit, the same issue is sought to be re-agitated
again by Sh. Rohit Rajpal and Sh. Rahul Rajpal. The two
documents, namely, the sale deed and the lease deed being
registered there is a presumption of validity that applies to them as
held in the Supreme Court judgement Prem Singh v. Birbal, (2006)
5 SCC 353“There is a presumption that a registered document is
validly executed. A registered document, therefore,Signature Not Verified
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prima facie would be valid in law. The onus of proof,
thus would be a person who leads evidence to rebut the
presumption…”
29. Any evidence to the contrary as to the effect and purport of
these two documents is not admissible in law. To contend that the
sale deed was in fact a mortgage deed is completely implausible
especially when the document speaks for itself. The sale deed
records categorically that it was drafted by Sh. Rohit Rajpal who
admitted in court as being a documents draftsman. The stand of
the Plaitiffs that it was in fact a mortgage deed is thus liable to be
rejected. It has been repeatedly rejected on two occasions by the
Trial Court and on two occasions by Ld. Single Judge as part of
the execution proceedings. The same is binding on the Plaintiffs
and is not liable to be re-agitated.”
(emphasis supplied)
41. In view of the aforesaid discussion, the impugned order is set
aside. Consequently, the plaint of the respondent is rejected under
Order VII Rule 11 of the CPC.
42. The present petition is allowed. Pending application also stands
disposed of.
AMIT MAHAJAN, J
MAY 19, 2025
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