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PETITIONER: KALIANNA GOUNDER

       Vs.

RESPONDENT: PALANI GOUNDER & ANR.

DATE OF JUDGMENT: 17/09/1969

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. GROVER, A.N.

CITATION:  1970 AIR 1942            1970 SCR  (2) 455  1970 SCC  (1)  56

ACT:     Deed--Construction    of--Allegation    of    subsequent alteration  to incorporate sellers obligation to clear  land encumbrances--If a material alteration vitiating agreement.

HEADNOTE:     The appellant agreed on July 4, 1956 to purchase certain lands  from  the respondents for Rs. 12,000.   A  memorandum reciting  that  Rs.  2,000  were  paid  as  advance  by  the appellant  to the respondents was executed by both  parties. Three days later the respondents informed the plaintiff by a letter that only a sum of Rs. 350 was paid by the  appellant and  not Rs. 2,000 as ’recited in the memorandum  and  since the  balance  of  Rs. 1,650 which was promised  to  be  paid within  three  days  was  not  paid,  the  agreement   stood cancelled.  The appellant thereafter immediately  instituted a  suit  for  a  decree  for  specific  performance  of  the agreement  and  deposited in court a sum of  Rs.  10,000  on account  of  the balance purchase price due  from  him.   In their  written  statement  the  respondents   claimed   that Rs.  1,650  out of Rs. 2,000 not having  been so  paid,  the agreement was cancelled; and that in any event the agreement having  been  altered  in material  particulars  after  its. execution by the addition of the words; "clear the debts and execute the sale deed free from encumbrances", the suit  was not maintainable.     The  Trial  Court  upheld  the:  appellant’s  claim  and decreed  the  suit. The High Court in appeal,  reversed  the decree.  On appeal to this Court,     HELD  : Allowing the appeal: (i) On the evidence and  in view  of the express recital in the agreement that a sum  of Rs.  2,000  was paid by the appellant and  received  by  the respondents, the respondents" story that only Rs. 350 was in fact  paid was untrue and had been put up as an  excuse  for resigning from the agreement.     (ii)  Even  assuming  that the words  in  question  were introduced  in the memorandum after its execution since  the respondents were liable to clear any encumbrances subsisting on the land before executing the sale deed,     cannot be regarded as a material alteration for, it  did

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not  alter the rights or liabilities of the parties  or  the legal effect of the instrument [463 A]     Nathu  Lal and Ors. v. Mussamat Gomti Kuar  and  Others, L.R. 67 I.A. 318; referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1360 1966.     Appeal from the judgment and decree  dated  January  19, 1962 of the Madras High Court in Appeal No. 351 of 1958.     M.C.   Chagla,  M.K.  Ramamurthi,  S.  Sethuratnam,   J. Ramamurthy and Vineet Kumar, for the appellant. V.V. Nair, for the respondent. 456 The Judgment of the Court was delivered by     Shah,   J.    Palani   Gounder   ’and   his   son   T.P. Sengottaiah--hereinafter     collectively    called     "the defendants"--own  Survey  No.  765-B  in  Kugallur  village. Kalianna Gounder--hereinafter called "the plaintiff"--agreed on  July 4, 1956 to purchase from the defendants  that  land for  Rs. 12,000.  A memorandum reciting that Rs. 2,000  were paid  as  advance  by the plaintiff to  the  defendants  was executed   by  t,he  plaintiff  and  the  defendants.    The memorandum  was  written  by one  Ramamurthy  Iyer  and  the signatures thereon were attested by one Kaliyanna Gounder.     On  July 7, 1956, the defendants informed the  plaintiff by  a  letter that, only a sum of Rs. 350 was  paid  by  the plaintiff to the defendants and not Rs. 2,000 as recited  in the  memorandum, and since ’the balance of Rs.  1,650  which was promised to be paid within three days was not paid,  the agreed  stood  cancelled. The plaintiff on  receipt  of  the letter instituted an action in the Civil Court for a  decree for specific performance of the agreement, and deposited  in Court  Rs. 10,000 which according to him was the balance  of the  purchase price due by him.  The defendants filed  their written statement contending, inter alia, that they were  in urgent  need of money, and they had agreed to sell the  land to  the  plaintiff, but the plaintiff paid only Rs.  350  on July 4, 1956, and obtained possession of the memorandum on a representation  that  he will pay the balance of  Rs.  1,650 within  three  days and since the amount was  not  paid  the agreement was cancelled, and that in any event the agreement having  been altered in material particulars, after  it  was executed,  by  adding  the words: "Clear  the  debt.  s  and execute  the sale deed free from encumbrance", the suit  was not maintainable.   The  Court of First Instance upheld the plaintiff’s  claim and  decreed  the  suit  for  specific  performance  of  the agreement.  In appeal to the High Court of Madras the decree was  reversed. The High Court, held that the plaintiff  paid Rs. 350 only on July 4 1956, and on a representation that he will  pay  the  balance  of Rs.  1,650  payable  as  advance obtained  possession  of  the agreement  of  sale,  and  the plaintiff not having paid the amount payable by him the suit for specific performance of the agreement was  maintainable. The  High Court also held that the agreement was altered  in material  particulars  by adding the  covenant  relating  to "clearance of encumbrance" after the memorandam was executed With  certificate granted by the High Court this  appeal  is preferred by the plaintiff.   Two  questions fall to be determined in this  appeal;  (1) whether the plaintiff paid Rs. 350 only as contended by  the defendants 457

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on July 4, 1956, and obtained possession of the agreement on a  false representation: and (2) whether the memorandum  was altered  in material paticulars after execution, and was  on that account discharged ?     The plaintiff in his statement before the Court asserted that he paid the full amount of Rs. 2,000 on July 4, 1956 to the defendants.  He-was supported by his witness  Ramamurthy Iyef--the  writer  of  the document.  On  the  side  of  the defendants  there  is the evidence of T.P.  Sengottaiah  who asserted  that  only Rs. 350 were paid at the  time  of  the execution  of  the  memorandum  and  when  the  balance  was demanded the plaintiff promised to pay the same within three days.   He also stated that the amount was not  paid  within three days as promised and on that account the agreement was cancelled.   His  testimony was supported by  the  attesting witness.     The  learned Trial Judge accepted the testimony  of  the plaintiff  and his witness Ramamurthy Iyer.  The High  Court was  of the view that the testimony of T.P.  Sengottiah  and the attesting witness should be preferred.  In our  judgment the  dispute may be resolved by considering the  conflicting testimony   of   the  witnesses  in  the  light   of   broad probabilities.     The  memorandum  expressly recites that  the  defendants "have received Rs. 2,000 as advance" and "within sixty  days from  today"  the plaintiff "should pay the balance  of  the sale price and execute the sale deed.  Failing that, besides losing  the  advance amount, nothing is binding as  per  the agreement".   The memorandum containing a recital  that  Rs. 2,000  were  received  by  the  defendants  as  advance  was delivered to the plaintiff.  The plaintiff is an  illiterate agriculturist,  whereas the defendants are educated  people, and the second defendant was at the material time  President of  the  Local Panchayat.  The case of the  defendants  that they relied upon the bare word of the plaintiff that he will pay  the balance of Rs. 1,650 within three days and on  that representation  they parted with the memorandum is,  in  our judgment,  unreliable.   There was no relation  between  the plaintiff  and the defendants which placed the former  in  a position  of  trust or confidence.  If the  defendants  were willing  to execute an agreement with the recital  that  the amount of Rs. 2,000 was received, though in fact it was  not so  received,  they  would  have  insisted  upon  making  an endorsement  at the foot of the agreement that only Rs.  350 were  paid and the plaintiff had obtained extension of  time for payment of the balance within three days.  In any  event they  would  have,  when they parted  with  the  memorandum, insisted  upon some writing from the plaintiff that  he  had paid  only  Rs.  350 and not Rs. 2,000  as  recited  in  the memorandum. 458     The  High Court was of the view that the  plaintiff  was unable to show that he could procure a sum of Rs. 2,000  for payment as advance to the defendants and that  there was  no independent  evidence  regarding the actual payment  of  Rs. 2,000.   But the burden of proving in the  circumstances  of the case, that Rs. 2,000 were not paid lay heavily upon  the defendants.   Again,  there is strong evidence  to  indicate that the plaintiff had at his disposal a substantial  amount on which he could have drawn.  On July 14, 1956, exactly ten days  after  t, he date on which the agreement  was  entered into,  the plaintiff deposited in Court a sum of Rs.  10,000 in the action for specific performance commenced by him.  If the  case  of the plaintiff depended merely  upon  his  oral testimony  for payment of Rs. 2,000, absence of  independent

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evidence   evidencing  payment  may  have  some   value   as supporting  the case of the defendants.  But when there  was an express recital in the agreement that a sum of Rs.  2,000 was  paid  by  the  plaintiff and it  was  received  by  the defendants,  it was not necessary for the plaintiff to  lead evidence as to the source from which he obtained the money.     The High Court observed that the plaintiff did not reply to  the  notice  dated  July  7,  1956.   But  it  was   the plaintiff’s   case that he received the notice on  July  14, 1956,  and on the same day he instituted the suit.   Failure to  reply to the notice  cannot therefore be a  circumstance of any value in the present case.     It was also observed by the High Court that there was no particular  reason  for the defendants to  resile  from  the terms  of the agreement within three days of its  execution, and set up a false plea, and that in "such cases evidence is given  to prove that it was a temptation of a  better  offer that  induced the party to resile from the agreement".   The plaintiff  did state in his evidence that his  pangalis  who were  inimical to him had made  an offer of Rs.  16,000  for the  property,  and  because of that  offer  the  defendants resiled  from the agreement.  In the view of the High  Court this part of the case of the plaintiff could not be believed because it was not expressly pleaded in the plaint.  But the plaintiff  did  plead  in  paragraph-6  of  the  plaint  the defendants  had "with the-evil influence and instigation  of Karuppa  Gounden, Pongia Goundar and Appachi Gounder of  the place  who are now planning to have the suit properties  for themselves are now evading to rescind the contract".   This, in  our judgment, is a sufficient plea, if it was  necessary to  plead  it, in support of the case  which  the  plaintiff sought to make out.     The  High  Court discarded the testimony  of  Ramamurthy Iyer on the view that he was inimical to the defendants.  We have  been  taken  through  his  evidence  and  we  see   no justification for hold- 459 ing that his testimony could not be believed.  If Ramamurthy Iyer  was  an enemy of the defendants, it is  very  unlikely that   they  would  permit him to  write  out  an  important document at their residence. The broad probabilities of  the case strongly  support his testimony.     Having  carefully considered the evidence we are of  the view that the story of the defendants that only Rs. 350 were paid  to them on July 4, 1956, and not Rs. 2,000 as  recited in the memorandum is untrue and has been put up as an excuse for resiling from the agreement.     The  second  plea that there was an  alteration  in  the memorandum in material particulars cannot also be sustained. The original document is not before us, but from the  cross- examination of the writer and the plaintiff’s witnesses  and also from the testimony of T.P. Sengottiah and his witnesses it  does  not  appear that the words "Clear  the  debts  and execute the sale deed free from encumbrance" were written in a  cramped style.  This sentence occurs  immediately  before the  Schedule  of property sold and after  the  first  three paragraphs  of the  convenants of the memorandum. There  was no  reason for the writer to leave any space which could  be availed  of  to  add this sentence after  the  document  was executed.   There  is no denial that the sentence  has  been written  by Ramamurthy.  It is true that the High Court  has observed  that  the ink in which the  sentence  was  written appeared to be slightly different in shade from the rest  of the  document.  But Ramamurthy Iyer has deposed that it  was not true that the portion in the, agreement relating to  the

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encumbrance  was  written  subsequent to  the  agreement  in collusion with the plaintiff.  He explained that the ink  in his  fountain-pen was exhausted when he wrote with one  pen, and  he  wrote the portion after reading the  document  with another fountain-pen, and since the portion was written in a hurry  the ink may have differed.  According to him  he  did not  notice  any difference in ink.  There is no  reason  to disbelieve the testimony of Ramamurthy Iyer.     Even  if  it  be assumed  that  the  sentence  regarding encumbrance was written after the deed was executed it  will not  invalidate  the  deed.  The second  defendant  and  his witnesses have admitted that there was no discussion at  the time of the writing and execution of the agreement about the encumbrances upon the land.  There is not even evidence that there   were  any  encumbrances  subsisting  on  the   land. Ordinarily  when property is agreed to be sold for a  price, it  would be the duty of the vendor to clear it of  all  the encumbrances   before   executing  the   sale   deed.    The alteration,   if  any,  cannot  therefore  be  regarded   as material.  As observed in 460 Halsbury’s Laws of England, Vol. 11, 3rd Edn.,  Art. 599  at 368:                   "A material alteration is one which varies               the rights, liabilities, or legal position  of               the parties as ascertained by the deed in  its               original state, or otherwise varies the  legal               effect   of  the  instrument   as   originally               expressed,or   reduces   to   certainty   some               provision  which was origInally  unascertained               and  as such void, or may otherwise  prejudice               the  party  bound by the  deed  as  originally               executed.                   The  effect of making such an  alteration,               without  the  consent of the party  bound,  is               exactly  the  same as that  of  canceling  the               deed."               It  is also stated in Art. 604 at pp. 370  and               371:                    "An alteration made in a deed, after  its               execution,    in some particular which is  not               material  does  not in any    way  affect  the               validity of the deed;                   an  alteration is not material which  does               not  vary the legal effect of the deed in  its               original  state,  but  merely  expresses  that               which  was  implied  by law  in  the  deed  as               originally  written, or which carries out  the               intention  of the parties already apparent  on               the  face  of  the  deed,  provided  that  the               alteration  does not otherwise  prejudice  the               party liable thereunder." This rule has been applied by the Privy Council in Nathu Lal and Ors. v. Mussamat Gomti Kuar and Others(1).  The Judicial Committee observed in that case at p. 331:                     "A  deed  is  nothing   more   than   an               instrument  or agreement under seal;  and  the               principle   of   those  cases  is   that   any               alteration   in   a  material  part   of   any               instrument or agreement avoids it, because  it               thereby ceases to be the same instrument." The               Judicial Committee observed at p. 333:                   "A material alteration has been defined in               the  rule  as  one which  varies  the  rights,               liabilities  or legal position of the  parties

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             ascertained by the deed, etc.", and  after applying that test they held that the  alteration in  that case was not material in the sense of altering  the rights, liabilities or legal position of the parties or  the legal effect of the document. (1) L.R. 67 I.A.318. 461     Since   the   defendants  were  liable  to   clear   the encumbrances,   if  any,  subsisting  on  the  land   before executing  the  sale deed, assuming that  the  covenant  was incorporated  after the execution of the deed, it cannot  be regarded  as a material alteration on that account,  for  it does  not alter the rights or liabilities of the parties  or the legal effect of the instrument.     The appeal is therefore allowed and the decree passed by the  High  Court is set aside and the decree  of  the  Trial Court  is restored with costs in this Court and in the  High Court. R.K.P.S. Appeal allowed. 462