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1946 Supreme(SC) 23
Privy Council At Bombay
Sir Madhavan Nair, M. R. Jayakar, Du Pardq, Simonds, Justice Lords Macmillan, JJ.
Ramdhandas Jhajtiaria -Appellant
Versus
Ramkisondas Damla and other -Resopndent
Privy Council Appeal No. 2 of 1945; Bombay Appeal Nos. 10 and 15 of 1942
Decided On : 30-06-1946
Hy. S.L. Polak and Co., Barrow Rogers Nevill, T.L. Wilson and Co., S. Hyam, J. M. Pringle, B. Sen, S.P. Khambatta, Sir Thomas Strongman, T.BW. Ramsay, W.W.K. Page , Sir Herbert Cunliffe
When oral evidence is unreliable and contradictory, the court must rely on documentary evidence to determine the nature of a transaction, as the written record provides the safest basis for determining the substance of the agreement over improbable oral testimony.
Headnote:(A) Evidence - Reliability of oral testimony versus documentary evidence - Where oral testimony is of an unreliable and untrustworthy character, the court should let the documents speak for themselves - While the court must generally find the substance behind the form in determining whether a transaction is a sale or a mortgage, it cannot safely depart from written evidence when oral evidence is contradictory. (Para 9)
(B) Transfer of Property - Sale vs. Mortgage - Determination of the nature of a transaction based on bank records and correspondence - If documentary evidence from the transferor indicates a sale and credit of proceeds to the owner, such evidence prevails over improbable oral claims of mortgage. (Para 10)
Facts of the case:
Shares of a company owned by a joint Hindu family were pledged to banks to secure overdrafts. The company claimed a lien on these shares. The banks subsequently transferred the shares to a third party. The appellant contended that the shares were mortgaged and then sub-mortgaged, whereas the respondents maintained that the shares were sold. At the time of the transfer, the appellant had provided an undertaking to a court in insolvency proceedings not to alienate or dispose of any assets.
Findings of Court:
The court found that the bank books, formal documents, and correspondence overwhelmingly indicated that the banks acted on the basis of selling the shares and crediting the net proceeds to the appellant. The appellant's alternative theory regarding a conditional purchase was found to be improbable and unsupported by any documentary evidence.
Issues: Whether the transaction involving the transfer of shares from the pledgee banks to a third party was a sale or a mortgage.
Ratio Decidendi: When oral evidence is unreliable and contradictory, the court must rely on the written evidence of the documents. The documentary evidence established a sale, and the appellant's insolvency undertaking further indicated that only the banks could lawfully deal with the shares, making a mortgage transaction involving the appellant improbable.
Result: Appeal dismissed.
In this appeal, which is brought from a judgment and decree of the High Court of Judicature at Bombay in its Appellate Jurisdiction dated the 8-10-l942, reversing two judgments and a decree of that Court in its Ordinary Civil Jurisdiction, their Lordships are confronted with an unfortunate difference of opinion upon what appears to be a pure question of fact. The Appeal Court (Beaumont C. J. and Chagla J.) reluctantly and with a full appreciation of the weight to be attached to the decision of the Trial Judge (Kania J.). who had seen and heard the witnesses, felt constrained to take a different view of the facts from that which he had taken, and their Lordships are clearly of opinion that they were right in doing so.
[2] The substantial question can be shortly stated. The joint Hindu family, of which the appellant is the Karta, earned on certain fatuity businesses, including an agency firm in the name of Jhajharia Dhandhama and Company, which had until February 1939, acted as selling agents for the Sholapur Spinning and Weaving Company Limited, which will be called "the Company." and in the month of June they owned 163 shares of Rs. 1000 in this Company which stood as to 56 in the name of the appellant, as to 106 in the name of his son Nandkishore and as to the remaining one in the name of another nominee.
[3] At the same date these shares were pledged as to 104 with the Allahabad Bank Limited, Calcutta, and as to 59 with the Punjab National Bank Limited, Calcutta, to secure certain overdrafts. But the Company claimed a lien upon them in respect of a large sum alleged to be due from the agency firm. On the other hand the firm had a large claim against the Company in respect, as they alleged, of an Unlawful termination of the selling agency.
[4] On 9-3-1939 the Company resolved to exercise their lien and notice of this resolution was duly given to the agency firm.
[5] At about the same time the pledgee Banks were pressing for payment of the overdrafts. From other quarters also the appellant's family were being harassed. It is beyond doubt that they were in grave financial embarrassment.
[6] The business of the Company was at all material times managed by a firm of managing agents known as Ramkumar Morarka, the second respondents to this appeal, of which the principal partner was Ramkumar Shrinivas, sometimes called Ramkumar Morarka, the third respondent who was also a director of the Company. It appears to be common ground that this Ramkumar Morarka was on unfriendly terms with the appellant.
[7] It is unnecessary to rehearse the events of April and May 1939, during which the appellant's family were in ever increasing difficulties. At the end of May, the first respondent Ramkisondas Dalmia appeared upon the scene. He was a man of wealth and position, thought to be favourably disposed to the appellant, and it was hoped that by his intervention the family fortunes might be retrieved. He had shortly before through a nominee acquired the managing agency of some sugar mills in which the appellant's family were interested.
[8] It is at this point that the question of fact arises The 163 shares of the Company owned by the appellant's family were in June 1939, disposed of (a neutral word will in the first place be used) by the Banks to respondent 1. The appellant alleges that they were mortgaged to respondent 1 and sub-mortgaged by him to respondent 2. The respondents other than respondent 1 claim that they were sold to respondent 1 and that then 100 of them were sold by him to respondent 2 and that the remaining 63 were first pledged and subsequently sold to respondent 2.
[9] Upon this apparently simple question oral evidence, voluminous and bewildering, has been given and their Lordships find themselves in agreement with Chagla J., who in the appeal Court said :
"In a case where oral testimony is of such an unreliable and untrustworthy character the safest policy would be to let the documents speak for themselves."
This does not
