Kalianna Gounder Vs. Palani Gounder
& ANR  INSC 250 (17 September 1969)
17/09/1969 SHAH, J.C.
CITATION: 1970 AIR 1942 1970 SCR (2) 455 1970
SCC (1) 56
Deed--Construction of--Allegation of
subsequent alteration to incorporate sellers obligation to clear land
encumbrances--If a material alteration vitiating agreement.
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 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.
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,
Ramamurthy and Vineet Kumar, for the
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 the
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
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
Two questions fall to be determined in this
appeal; (1) whether the plaintiff paid Rs. 350 only as contended by the defendants
457 on July 4, 1956, and obtained possession of the agreement on a false
representation: and (2) whether the memorandum was altered in material particulars
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
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
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 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 there under." 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 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 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.