The expression "terms" in Sections 91 and 92 of the Indian Evidence Act does not include a provision in the nature of a condition precedent to the very existence or formation of a contract.

Headnote:
EVIDENCE ACT - SECTIONS 91, 92 - ADMISSIBILITY OF ORAL EVIDENCE - ORAL EVIDENCE TO SHOW CIRCUMSTANCES IN WHICH PROVISION RELATING TO EXECUTION OF AGREEMENT WITHIN A MONTH CAME TO BE INSERTED IN ANNEXURE A TO THE PLAINT - WHETHER ADMISSIBLE - MEANING OF THE EXPRESSION "TERMS" IN SECTIONS 91 AND 92 OF THE INDIAN EVIDENCE ACT.
Fact of the Case:

During the examination-in-chief of the first plaintiff, the defendants objected to the admissibility of oral evidence to show the circumstances in which a provision relating to the execution of an agreement within a month came to be inserted in Annexure A to the plaint, arguing that Sections 91 and 92 of the Indian Evidence Act barred such evidence.
Finding of the Court:

The court held that the expression "terms" in Sections 91 and 92 of the Indian Evidence Act refers to statements, assertions, or representations contained in a written contract that relate to the subject matter of the contract and to something to be done or not to be done under the contract, and does not apply to a provision in the nature of a condition precedent to the very existence or formation of a contract.
Issues: 1. Whether oral evidence is admissible to show the circumstances in which a provision relating to the execution of an agreement within a month came to be inserted in Annexure A to the plaint? 2. Whether the expression "terms" in Sections 91 and 92 of the Indian Evidence Act includes a provision in the nature of a condition precedent to the very existence or formation of a contract?
Ratio Decidendi: 1. The court interpreted the expression "terms" in Sections 91 and 92 of the Indian Evidence Act to mean statements, assertions, or representations contained in a written contract that relate to the subject matter of the contract and to something to be done or not to be done under the contract, and not to a provision in the nature of a condition precedent to the very existence or formation of a contract. 2. The court held that proviso 6 to Section 92 of the Indian Evidence Act allows for the admissibility of extrinsic evidence to find out the meaning of words used in a document or to connect them with the proper subject matter, or to arrive at the true effect of the transaction to which the document relates.
Final Decision: The court overruled the defendants' objection and held that oral evidence was admissible to show the circumstances in which the provision relating to the execution of an agreement within a month came to be inserted in Annexure A to the plaint.

JUDGMENT - 1. Whilst the first plaintiff was being examined in - chief by Mr. Laud and was deposing to an interview between himself and plaintiffs Nos. 2 and 3 accompanied by a broker named Narayandas Budhwani and the first defendant and one Chandrakant Thakore, he deposed to the terms which were offered by the first defendant in regard to the businesses of Femina Stores and Meghdoot Restaurant which were proposed to be taken by the Plaintiffs under a conducting agreement, along with ac option to purchase the same. The first plaintiff deposed that after those terms were proposed, there was a discussion which went on for about half - hour. The first plaintiff was then put a question, "what happened then ?" At the stage Mr. Shah on behalf of the defendants Nos. 1 to 5 raised an objection to the effect that in view of the plaintiffs own case in para 7 of the plaint that the agreement in question had been reduced into writing in the form of annexure A to the Plaint, no oral evidence could be permitted to be given having regard to the provisions of Sections 91 and 92 of the Indian Evidence Act. I have heard counsel on both sides at considerable length on that question of admissibility. Mr. Lauds contention on that question was two fold. First he contended that S. 91 barred the leading or oral evidence in cases in which a contract had been reduced into writing only in regard to the "terms" of that contract, and the statement contained in the concluding part of annexure A to the Plaint that the transaction was subject to an agreement to conduct - cum - sale being entered within a month cannot be said to be a term of the contract between the parties. Mr. Laud pointed out that all the other statements contained in annexure A to the plaint were terms of the contract which were in conformity that the oral contract pleaded in para 6 of the plaint. Fro that purpose, Mr. Laud also relied on Explanation 3 to Section 91 of the Evidence Act. The second contention of Mr. Laud was that he was in any event entitled to lead oral evidence for the purpose of showing the circumstances in which the provision relating to the execution of an agreement within a month came to be inserted in annexure A to the plaint under proviso 6 to Section 92 of the Evidence Act which permits any fact to be proved which shows in what manner the language of a document is related to existing facts.

2. I will now proceed to deal with the first contention of Mr. Laud. I may stated at the very outset that neither counsel has cited any authorities before me except authorities in the nature of standard works and dictionary to show that is the precise legal connotation of the expression "terms" in relation to a contract. Turning first to the plaint language of Sections 91 and 92 of the Evidence Act, in my opinion, when those sections refer to the "terms" of a contract they necessarily postulate that there is a contract in existence, the statements contained in which are the nature of terms. As a matter of plain language and grammatical construction I have, therefore, no hesitation in taking the view that the expression "terms" of a contract in Section 91 and the corresponding expression in Section 92, have no application to a statement contained in a writing which is in the nature of a condition precedent to the very formation of that contract. It is the contention of Mr. Shah himself that the concluding words of annexure A to the Plaint are in the nature of a condition precedent to the very formation of the contract, and that condition not having been fulfilled, no contract ever came into existence. As against that, it is the case of Mr. Laud for the plaintiffs that the statement contained in the concluding words of annexure A is a mere expression of a desire as to how the transaction was to go through. In either view of the matter, therefore, it cannot be said to be a term of the contract. In Murrays English Dictionary (1919 edn.) the expression "term" is given as having sever

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1971 Supreme(Bom) 97

The expression "terms" in Sections 91 and 92 of the Indian Evidence Act does not include a provision in the nature of a condition precedent to the very existence or formation of a contract.

Cases Referred (1)