PATNA HIGH COURT
R.L.Narasimham and G.N.Prasad JJ.
Ram Narayan Pandey
Versus
Kedar Nath Tewari
Letter Patent Appeal No. 129 of 1959 ;
Decided On : JANUARY 30, 1965
EVIDENCE ACT, 1872 - SECTION 92 - INTERPRETATION - ORAL EVIDENCE - ADMISSIBILITY - PARTIES TO A CONTRACT - TERMS OF A CONTRACT - DISTINCTION - MORTGAGE BOND - RECITALS - ORAL EVIDENCE TO PROVE REAL LENDER - ADMISSIBILITY.
Fact of the Case:
Plaintiffs filed a suit on a mortgage bond executed by defendant No. 1 in their favor. Only one of the plaintiffs held a registration certificate under the Bihar Money Lenders Act, 1938. The trial court held that only the plaintiff with the registration certificate was entitled to maintain the suit and passed a decree in his favor for one-third of the amount due under the bond. On appeal, the High Court modified the decree and held that the other two plaintiffs were mere name lenders and that the plaintiff with the registration certificate was entitled to a decree for the full amount of the outstanding loan.
Finding of the Court:
The High Court held that oral evidence was admissible to prove that only one of the plaintiffs was the real lender and that the other two plaintiffs were mere name lenders. The court distinguished between the terms of a contract and the parties to a contract and held that Section 92 of the Evidence Act, which excludes oral evidence to contradict, vary, add to, or subtract from the terms of a contract, does not extend to the parties to the contract.
Issues: 1. Whether oral evidence is admissible to prove that a person appearing in a document as the lender of a loan is not the real lender but only a name-lender. 2. Whether the recitals in a mortgage bond describing all the plaintiffs as the money-lenders are binding as admissions.
Ratio Decidendi: 1. Section 92 of the Evidence Act excludes oral evidence to contradict, vary, add to, or subtract from the terms of a contract. However, the parties to a contract are not terms of the contract. Therefore, oral evidence is admissible to prove who the real parties to a contract are. 2. Recitals in a mortgage bond describing all the plaintiffs as the money-lenders are not binding as admissions.
Final Decision: The appeal was dismissed with costs payable to the plaintiff respondent No. 2.
G.N.Prasad, J.
1. This is an appeal by the defendants first party against the decision of a learned Single Judge of this Court modifying the decree passed by the trial court in a suit instituted by the plaintiffs (respondents 1 to 3) on foot of a mortgage bond for Rs. 4,000/-executed by defendant No. 1 in their favour on the 21st June 1948, with stipulation to pay interest at the rate of 70 maunds of paddy by kutcha weight per year. After giving credit for the value of paddy paid by the defendants in satisfaction of the interest for the first year, the plaintiffs laid their claim at Rs. 5,803/-
2. Among the plaintiffs, only Kedar Nath Tewary (Plaintiff No. 2) held a registration certificate (Ext. 6) dated the 4th March 1947 under the Bihar Money Lenders Act, 1938, entitling him to carry on money-lending business up to a limit of Rs. 5,000-, and it was alleged in paragraph 6 of the plaint that the amount claimed in the suit belonged exclusively to plaintiff No. 2, but the names of the other, two plaintiffs were
"also advisedly entered in the mortgage bond in the category of creditors. Hence in order to avoid objection plaintiffs Nos. 1 and 8 also become plaintiffs".
3. Various pleas in defence were put for ward in their written statement by the contesting defendants 1 and 2; but it is necessary to mention only one of them, namely, that Sec. 4 of the Bihar Money Lenders (Regulation of Transactions) Act, 1939, is a bar to the maintainability of the suit, inasmuch as all the three plaintiffs have equal rights in the mortgage bond which is the basis of the suit, and that the plaintiffs have wrongly alleged in paragraph 6 of the plaint that the loan was advanced by plaintiff No. 2 only
4. The trial court gave effect to this plea and passed a decree iu favour of plaintiff No. 2, holding that ho alone was entitled to maintain the suit and to a decree for one-third of the amount due under the bond in suit.
5. In appeal by the plaintiffs. Ihe learned Single Judge referred to the case of Ihe plaintiffs set out in paragraph 6 of the plaint, which was supported in their evidence by plaintiff No. 2(P. W. 2) as well as by plaintiff No. 3(P. W. 5). and observing that there was no rebutting evidence on the side of the defendants, the learned Judge came to the conclusion that the case of the plaintiffs must be accepted that the money belonged to plaintiff No. 2 alone and that plaintiffs 1 and 3 were mere name lenders. And since plaintiff No. 2 held the registration certificate Ext. 6 he was entitled to a decree for the amount outstanding which the learned Judge found to be Rs. 5,687/- up to the date of the institution of the suit. The decree passed by the trial court having been modified as aforesaid, the defendants first party have preferred this appeal under Clause 10 of the Letters Patent.
6. The short point raised by Mr. D. N. Verma appearing in support of the appeal is that the learned Single Judge was in error in relying upon oral evidence in support of the plaintiffs case set out in paragraph 6 of the plaint because all such evidence was inadmissible in view of Section 92 of the Evidence Act which, so far as it is relevant, provides:
"When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the from of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall he 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".
In this context the learned counsel drew our attention to the bond in suit which is on the record as Ext. 4 and pointed out that all the three plaintiffs were described therein as the Mahajans or money-lenders in whose favour the mortgage was created. The argument is that in face of this recital in the document (Ext. 4), no evidence can he admissible to the effect that only
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