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PETITIONER: BAI HIRA DEVI AND OTHERS

       Vs.

RESPONDENT: THE OFFICIAL ASSIGNEE OF BOMBAY

DATE OF JUDGMENT: 20/02/1958

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. BHAGWATI, NATWARLAL H. KAPUR, J.L.

CITATION:  1958 AIR  448            1958 SCR 1384

ACT: Evidence-Deed  of  gift-Donor  adjudged   insolvent-official Assignee   challenging  gift-If  donees  entitled  to   lead evidence  showing  gift to be  transfer  for  consideration- Whether  Official  Assignee representative  in  interest  of insolvent--Evidence Act, s. 92.--Presidency-towns Insolvency Act (III Of 1909), s. 55.

HEADNOTE: One D executed, on May 22, 1950, a deed of gift in favour of the appellants, his wife and sons.  Upon the application  of his creditors D was adjudged an insolvent on August 21, 1951 and  his estate vested in the respondent.  On September  26, 1951, the respondent took out a notice of motion under s. 55 of  the  Presidency-towns Insolvency Act for  a  declaration that  the  deed of gift was void.  In reply  the  appellants pleaded  that the transaction, though it purported to  be  a gift, was in reality a transfer for valuable  consideration. The   respondent  objected  that  the  evidence  which   the appellants  sought  to  lead in support of  their  plea  was inadmissible under s. 92 of the Indian Evidence Act : Held,  that s. 92 of the Evidence Act was not applicable  to the  proceedings  and the appellants were entitled  to  lead evidence in support of the plea raised by them.  Section  92 is  only  applicable  to  cases as  between  parties  to  an instrument  or  their representatives in  interest.   Where, however  the dispute is between a stranger to an  instrument and  a party to it or his representative in interest, S.  92 is inapplicable, and both the stranger and the party or  his representative  are  at  liberty to lead  evidence  of  oral agreement  notwithstanding  the fact that such  evidence  if believed, may contradict, vary, add to or subtract from  its terms.  In the present case, though the appellants were  the representatives   in   interest  of   the   insolvent,   the respondent,  when  he made the petition under S. 55  of  the Presidency-towns  Insolvency  Act,  was  not  acting  as   a representative in interest of the insolvent, and, therefore, the  proceedings  were  not  between  the  parties  to   the instrument or their representatives in interest.

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JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 197  of 1956. Appeal from the judgment and order dated August 6,1954,  of the Bombay High Court in Appeal No. 30 of  1954, arising  out  of the judgment and order  dated  January  28, 1954, of the said High Court in Insolvency No. 74 of 1951. 1385 M.   C.  Setalvad, Attorney-General for India, S. N.  Andley and J. B. Dadachanji, for the appellants. Purshottam Tricumdas and I. N. Shroff, for the respondent. 1958.  February 20.  The following Judgment of the Court was delivered by GAJENDRAGADKAR  J.-This appeal by special leave arises  from the  notice of motion taken out by the  respondent  official assignee under s. 55 of the Presidency towns Insolvency  Act against the appellants for a declaration that a deed of gift executed  by the insolvent Daulatram Hukamchand on  May  22, 1950, in favour of the appellants was void.  It appears that some  creditors  of Daulatram filed a petition in  the  High Court  of  Judicature at Bombay, Insolvency Case No.  74  of 1.951,  for  an order that the said  Daulatram  be  adjudged insolvent as he had given notice of suspension of payment of the debts on August 2, 1951.  Daulatram was adjudicated  in- solvent on August 21, 1951, with the result that the  estate of the insolvent vested in the respondent under s. 17 of the Act.   On  September 26, 1951, the respondent took  out  the present  notice  of motion.  The impugned deed of  gift  has been  executed  by the insolvent in favour of his  wife  and three  sons who are the appellants before us.  In  reply  to the  notice  of  motion  appellants I to  3  filed  a  joint affidavit  setting  out the facts  and  circumstances  under which  the  said  deed  of gift had  been  executed  by  the insolvent  in their favour.  In substance,  the  appellants’ case  was that, though the document purported to be a  gift, it  was  really  a transaction supported  by  valuable  con- sideration  and as such it did not fall within the  mischief of  s.  55  of the Act.  At the hearing of  this  notice  of motion  before  Mr.  Justice Coyajee,  when  the  appellants sought  to  lead  evidence  in support  of  this  plea,  the respondent  objected and urged that the evidence  which  the appellants  wanted to lead was inadmissible under s.  92  of the  Indian  Evidence  Act.   The  learned  Judge,  however, overruled   the  respondent’s  objection  and  allowed   the appellants to lead 1386 their evidence.  In the end the learned Judge did not accept the appellants’ contention and, by his judgment delivered on January 28, 1954, he granted the declaration claimed by  the respondent under s. 55 of the Act.  Against this judgment and order the appellants preferred an appeal (No. 30 of 1954) which was heard by Chagla C. J.  and Shah  J. The learned Judges took the view that  Mr.  Justice Coyajee had erred in law in allowing oral evidence to be led by  the  appellants  in  support  of  their  plea  that  the transaction  evidenced by the deed of gift was in reality  a transfer  for consideration.  The learned Judges  held  that the  gift  in  question had been executed by  the  donor  in favour  of the donees out of natural love and affection  and that, under s. 92, it was not open to the appellants to lead evidence  to show that the transaction was supported not  by the  consideration  of  natural love and  affection  but  by another kind of valuable consideration . On this view of the matter  the  learned Judges did not think  it  necessary  to

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consider  the oral evidence actually led by  the  appellants and  decide whether Mr. Justice Coyajee was right or not  in rejecting the said evidence on the merits.  That is how  the appeal  preferred by the appellants was dismissed on  August 6, 1964.  On September 23, 1954, the application made by the appellants for a certificate was rejected by the High  Court at  Bombay; but special leave was granted to the  appellants by  this  Court  on November 3, 1954, and that  is  how  the appeal has come before us for final disposal. The  principal point which arises in this appeal is  whether the  appellants were entitled to lead oral evidence  with  a view  to show the real nature of the  impugned  transaction. In deciding this question, it would be necessary to consider the  true scope and effect of ss. 91 and 92 of the  Evidence Act. Chapter VI of the Evidence Act which begins with s. 91 deals with the exclusion of oral by documentary evidence.  Section 91  provides that, " 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, 1387 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 As, evidence is  admissible  under the  provisions hereinbefore contained." The normal rule  is that  the contents of a document must be proved  by  primary evidence which is the document itself in original.   Section 91  is  based on what is sometimes described as the  "  best evidence  rule ". The best evidence about the contents of  a document is the document itself and it is the production  of the  document  that  is required by s. 91 in  proof  of  its contents.   In a sense, the rule enunciated by s. 91 can  be said  to  be an exclusive rule inasmuch as it  excludes  the admission  of oral evidence for proving the contents of  the document except in cases where secondary evidence is allowed to be led under the relevant provisions of the Evidence Act.  Section 92 excludes the evidence of oral agreements and  it applies  to  cases where the terms of contracts,  grants  or other  dispositions  of  property have been  proved  by  the production of the relevant documents themselves under s.  91 ; in other words’ it is after the document has been produced to prove its terms under s. 91 that the provisions of s.  92 come into operation for the purpose of excluding evidence of any  oral  agreement  or  statement,  for  the  purpose   of contradicting,  varying, adding to or subtracting  from  its terms.  The application of this rule is limited to cases  as between  parties to the instrument or their  representatives in  interest.  There are six provisos to this  section  with which we are not concerned in the present appeal.  It  would be  noticed  that ss. 91 and 92 in  effect  supplement  each other.  Section 91 would be frustrated without the aid of s. 92 and s. 92 would be inoperative without the aid of s.  91. Since s. 92 excludes the admission of oral evidence for  the purpose of contradicting, varying, adding to or  subtracting from the terms of the document properly proved 176 1388 under  s. 91, it may be said that it makes the proof of  the document conclusive of its contents.  Like s. 91, s. 92 also can be said to be based oil the best evidence rule.  The two sections,  however,  differ in  some  material  particulars. Section  91 applies to all documents,  whether they  purport

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to  dispose  of  rights or not, whereas  s.  92  applies  to documents which can be described as dispositive.  Section 91 applies   to   documents  which  are  both   bilateral   and unilateral,  unlike  s.  92  the  application  of  which  is confined only to bilateral documents.  Section 91 lays  down the rule of universal application and is not confined to the executant  or executants of the documents.  Section  92,  on the  other  hand, applies only between the  parties  to  the instrument  or their representatives in interest.  There  is no doubt that s. 92 does not apply to strangers who are  not bound  or  affected by the terms of the  document.   Persons other  than  those who are parties to the document  are  not precluded  from  giving extrinsic  evidence  to  contradict, vary, add to or subtract from the terms of the document.  It is  only  where a question arises about the  effect  of  the document as between the parties or their representatives  in interest  that  the  rule  enunciated by  s.  92  about  the exclusion  of oral agreement can be invoked.  This  position is made absolutely clear by the provisions of s. 99  itself. Section 99 provides that " persons who are not parties to  a document  or  their  representatives in  interest  may  give evidence  of  any facts tending to  show  a  contemporaneous agreement  varying the terms of the document." Though it  is only  variation  which is specifically mentioned in  s.  99, there  can be no doubt that the third party’s right to  lead evidence which is recognized by s. 99 would include, a right to lead evidence not only to vary the terms of the document, but  to contradict the said terms or to add to  or  subtract from them.  If that be the true position, before considering the  effect  of  the provisions of s. 92 in  regard  to  the appellants’  right  to  lead  oral  evidence,  it  would  be necessary  to  examine whether s. 92 applies at all  to  the present proceedings between the official assignee who is the respondent and the 1389 donees from the insolvent who are the appellants before us. Does the official assignee represent the insolvent, and  can he  be  described as the  representative-ininterest  of  the insolvent, when he moves the Insolvency Court under s. 55 of the Presidency-towns Insolvency Act ? It is true that, under s.   17  of  the    Act,  on  the  making  of  an   order of adjudication, the property of the insolvent wherever situate vests  in the official assignee and becomes divisible  among his  creditors;  but  the property in  respect  of  which  a declaration is claimed by the official assignee under s.  55 has already gone out of the estate of the insolvent, and  it cannot be said to vest in the official assignee as a  result of  the  order of adjudication itself.   Besides,  when  the official assignee makes the petition under s. 55 he does  so obviously  and solely for the benefit of the creditors.   An insolvent  himself has, and can possibly have, no  right  to challenge the transfer effected by him.  In this respect the official assignee has a higher title than the insolvent and, when,  under s. 55, he challenges any transfer made  by  the insolvent,  he acts not for the insolvent or on his  behalf, but  in  the interest of the whole body of  the  insolvent’s creditors.  In theory and on principle, as soon as an  order of  adjudication is made, all proceedings in regard  to  the estate  of  the  insolvent come under  the  control  of  the Insolvency Court.  It may be said that the official assignee in  whom the estate of the insolvent vests is to  guard  not only  the  interests of the creditors of the  insolvent  but also  " public morality and the interest which every  member of  the public has in the observance of commercial  morality "(1).   There  is no doubt that it is the  Insolvency  Court

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alone  which  has  jurisdiction  to  annul  the  insolvent’s transactions,   whether   the  case  is  governed   by   the Presidency-towns   Insolvency  Act  or  by  the   Provincial Insolvency  Act;  and so the proceedings taken under  s.  55 cannot  be deemed to be proceedings taken for and on  behalf of the insolvent at all. (1)  " The Law of Insolvency in  India " -By Rt.  Hon.   Sir D. F. Mulla, Kt.--2nd Ed., p. 231. 1390 The  provisions  of  s.  55  themselves  support  the   same conclusion.  Under s. 55, any transfer of property not being a  transfer made before and in consideration of marriage  or made in favour of a purchaser or encumbrancer in good  faith and for valuable  consideration shall, if the transferor  is adjudged insolvent within two years of the date of transfer, be  void against the official assignee.  This section,  like s. 53-A of the Provincial Insolvency Act, makes the impugned transfers voidable at the instance of the official  assignee or the receiver.  The transfers in question are not declared void as between the parties themselves; they are avoided  by the official assignee or the receiver and their avoidance is intended  to enure for the benefit of the whole body of  the creditors  of the insolvent.  The relevant sections  of  the two Insolvency Acts in effect require the Insolvency  Courts to  set aside the impugned transactions in exercise  of  the Insolvency Courts’ exclusive jurisdiction in that behalf The obvious  object of these provisions is to bring back to  the insolvent’s  estate, property which has left the  estate  by the impugned act of the insolvent himself and make the  said property  available for distribution amongst his  creditors. It  would, therefore, be impossible to hold that,  when  the official  assignee makes a petition under s. 55 of the  Act, he   is  acting  as  a  representative-ininterest   of   the insolvent. In this connection it would be relevant to remember that, in cases  governed by the Presidency-towns Insolvency Act,  the practice  in  Calcutta  and  Bombay  consistently  allows  a creditor who has proved his debt to     file  a petition  to set aside the transfer under s.    55 of the Act if he shows that the official assignee, on     being     tendered      a reasonable  indemnity  has unreasonably refused to  make  an application.   Similarly,  under s. 54-A of  the  Provincial Insolvency Act, a creditor himself can make the  application if  the  receiver refuses to take any action.   Now,  if  an application  is  made  by a creditor  for  setting  aside  a voluntary  transfer effected by the insolvent, there can  be no doubt that the creditor is not the representative- 1391 in-interest   of  the  insolvent  and  the  creditor   would obviously not be affected by the provisions of s. 92 of  the Indian Evidence Act.  It would really be anomalous if s.  92 were  to  apply to proceedings instituted  by  the  official assignee  under  s. 55 though the said  section  cannot  and would  not  apply  to similar proceedings  instituted  by  a creditor.  Having regard to the object with which s. 55  has been enacted, the nature of the proceedings taken under  it, and  the  nature  and effect of the  final  order  which  is contemplated  under it, it is clear that, like the  creditor who may apply, the official assignee also cannot be said  to be the representative-in-interest of the insolvent in  these proceedings.   If  that be the true position, s.  92  cannot apply to the present proceedings between the respondent  and the  appellants;  and  so there can be  no  doubt  that  the respondent  would not be precluded from leading evidence  of

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an oral agreement for the purpose of contradicting, varying, adding  to  or subtracting from the terms  of  the  impugned document. The question raised by Shri Purushottam which still  remains to  be considered is whether the appellants who  undoubtedly are  the  representatives in interest of the  insolvent  can avoid  the application of a. 92. In our opinion, the  answer to this question must be in favour of the appellants.  It is urged  before us by Shri Purushottam that the scheme of  the relevant provisions of Ch.  VI of the Indian Evidence Act is inconsistent  with the appellants’ contention that they  can lead  oral  evidence about the alleged agreement  which  may tend  to  change the character of  the  transaction  itself. Shri Purushottam bases his argument mainly on the provisions of s. 91 read with s. 99 of the Act.  He contends that s. 91 requires the production and proof of the document itself for the purpose of proving the contents of the document; and  by necessary implication all evidence about any oral  agreement which may affect the terms of the document is excluded by s. 91  itself.  We are not impressed by this argument.   As  we have already observed, ss. 91 and 92 really supplement  each other.   It  is  because  s. 91 by  itself  would  not  have excluded 1392 evidence of oral agreements which may tend to vary the terms of  the document that s. 92 has been enacted; and if  s.  92 does  not  apply  in the present case,  there  is  no  other section  in  the Evidence Act which can be said  to  exclude evidence of the agreement set up by the appellants.  What s. 91 prohibits is the admission of oral evidence to prove  the contents of the document.  In the present case, the terms of the  document are proved by the production of  the  document itself.   Whether or not the said terms could be  varied  by proof of an oral agreement is a matter which is not  covered by  s. 91 at all.  That is the subject-matter of s. 92;  and so,  if s. 92 does not apply, there is no reason to  exclude evidence  about an oral agreement solely on the ground  that if  believed  the said evidence may vary the  terms  of  the transaction.  Shri Purushottam ’also relied upon the  provi- sions of s. 99.  His argument is that it is only persons who are  not parties to a document or their  representatives  in interest who are allowed by s. 99 to give evidence of  facts tending  to  show a contemporaneous  agreement  varying  the terms of the document. lit other words, the effect of s.  99 is not only to allow strangers to lead such evidence, but to prohibit  parties or their representatives-in-interest  from leading such evidence independently of tile provisions of s. 92 of the Evidence Act.  We do not read s. 99 as laying down any such prohibition by necessary implication.  As a  matter of  fact, from the terms of s. 92 itself, it is  clear  that strangers  to the document are outside the scope of s. 92  ; but  s. 99 has presumably been enacted to clarify  the  same position.  It would be unreasonable, we think, to hold  that s.  99  was intended not only to clarify the  position  with regard  to  the strangers to the document, but also  to  lay down a rule of exclusion of oral evidence by implication  in respect   of   the  parties  to  the   document   or   their representatives  in  interest.   In our  opinion,  the  true position  is that, if the terms of any transfer  reduced  to writing are in dispute between a stringer to a document  and a  party  to  it  or his  representative  in  interest,  the restriction imposed by s. 92 in regard to 1393 the exclusion of evidence of oral agreement is inapplicable; and both the stranger to the document arid the party to  the

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document or his representative in interest are at liberty to lead  evidence  of oral agreement notwithstanding  the  fact that  such evidence, if believed, may contradict, vary,  add to or subtract from its terms.  The rule of exclusion  enun- ciated by s. 92 applies to both parties to the document  and is  based  on  the  doctrine  of  mutuality.   It  would  be inequitable and unfair to enforce that rule against a  party to a document or his representative in interest in the  case of  a dispute between the said. party or his  representative in  interest on the one hand and the stranger on the  other. In dealing with this point we may incidentally refer to  the relevant statement of the law by Phipson in his treatise  on " Evidence": " Where the transaction has been reduced into writing merely by  agreement of the parties ", it is observed, "  extrinsic evidence to contradict or vary the writing is excluded  only in  proceedings between such parties or their  privies,  and not  in those between strangers, or a party and a  stranger; since  strangers cannot be precluded from proving the  truth by the ignorance, carelessness, or fraud of the parties  (R. v. Cheadle, 3 B. and Ad. 833); nor, in proceedings between a party  and  a stranger, will the former be  estopped,  since there would be no mutuality " (1). The  result  is  that s. 92 is wholly  inapplicable  to  the present  proceedings and so the appellants are  entitled  to lead  evidence  in support of the plea raised by  them.   It appears  that the attention of the learned Judges who  heard the appeal in the High Court at Bombay was not drawn to this aspect  of the matter.  That is why they proceeded  to  deal with  the question about the admissibility of oral  evidence led by the appellants on the assumption that s. 92 applied. We must accordingly set aside the decree passed by the court of  appeal in the High Court at Bombay and send  the  appeal back to that Court for disposal on the merits in  accordance with law.  In the circum- (1)  Phipson on Evidence-9th Ed., p. 602. 1394 stances  of  this case, we think that the fair order  as  to costs  of this appeal would be that the costs  should  abide the  final  result in the appeal before the  High  Court  at Bombay. Appeal allowed. Case remanded.