P B BHATT Vs. V R THAKKAR

JUDGEMENT

(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. Laud's 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 Murray's English Dictionary (1919 edn.) the expression "term" is given as having several meanings some of which have relation to the concept of a period of time with which we are not concerned. One of the meanings which however is applicable to the present case is given as "limiting condition" and the plural of the expression "term" is given as having the meaning of conditions or stipulations limiting what is proposed to be granted or done. It is then stated that the expression is rarely used in the singular, and the meaning of the expression when used in the singular is stated to be "that which is so required or demanded, a condition or pre - requisite of something". The expression "terms" in the plural, therefore, means according to Murray's Dictionary a condition or stipulation which limits what is to be granted or done, and in my opinion, therefore, it cannot apply to something which is in the nature not of a limitation of what is to be done under a contract, but of a condition precedent to the very formation of the contract. In distinguishing between "representations" and "terms" in relation to a contract, Anson on the Principles of the English Law of Contract (22nd edn) at p. 114 appears to give to the expression "terms" the meaning of representation or assurances intended to be an integral part of the agreement. This again would, in my opinion, show that it can have no application to a statement or representation which is in the nature of a condition precedent to the very formation of the contract. On pp. 119 - 120 Anson deals with the distinction in the law relating to sale of goods between a condition and a warranty, but that I am afraid, is not of much assistance for the purpose of ascertaining the meaning of the expression "terms" used in Ss. 91 and 92 of the Indian Evidence Act. In dealing with the question of classification of terms, Chitty on Contracts (23rd edn.) Vol I p. 279 para 595 also deals with the distinction between conditions and warranties and the statements made in that paragraph are, therefore, also not of direct assistance for the purpose of determining the point of admissibility with which I am dealing. This much would, however, follow from the way in which the distinction between conditions and warranties has been dealt with both in Anson as well as in Chitty, that the expression "terms" connotes both conditions as well as warranties and that contracts are normally made up of a number of terms, some of which are regarded as major or essential terms and are, therefore, called warranties. From this also it would follow that the expression "terms" applies to provisions contained in contracts which have already come into existence and are legally enforceable, The proposition that Sections 91 and 92 are not applicable to just anything and everything that is contained in a written contract does not really need authority, but if authority were needed it is to be found in the decision of a Division Bench of the Madras High Court in the case of Venkatasubbiah Chetty v. Govindarajulu Naidu, (1908) ILR 31 Mad 45, where it was held that oral evidence was admissible to show that the party liable on the contract contracted for himself and as the agent of his partners, and that such partners are liable to be sued on the contract though no allusion is made to them in the written contract. In that connection, referring to Ss. 91 and 92 of the Indian Evidence Act, it was stated in the Judgment (at p. 47) that the question as to who the contracting parties were was not one of the "terms of a contract" within the meaning of those sections. I hold that the expression "terms" in Ss. 91 and 92 of the Indian Evidence Act must relate to statements, assertions or representations contained in a written contract which relate to the subject - matter of the contract and to something to be done or not to be done under the Contract, and has no application to a provision in the nature of a condition precedent to the very existence or formation of a contract. On that ground alone, therefore, the objection raised Mr. Shah to the admissibility of oral evidence for the purpose of showing the circumstances in which that provision came to be inserted in the writing annexure 'a' to the plaint must be rejected, and it is really not necessary for me to deal with the second ground which is urged by Mr. Laud to repel that objection. I will, however, briefly deal with the same also as it has been argued at some length.

(3.) THE real question which arises in connection with the same is in regard to the scope and application of proviso 6 to Section 92 of the Evidence Act. It has been contended by Mr. Shah on behalf of defts Nos. 1 to 5 that the said proviso must be limited in its application to cases which fall within one or other of the sections of Chapter VI of the Evidence Act, which follow that proviso viz. Sections 93 to 98 thereof. The scope of Sections 91 to 98 of the Indian Evidence Act, including proviso 6 to Section 92 has been considered by me in the case of Belapur Co. Ltd. v. Maharashtra State Farming Corporation, AIR 1969 Bom 231 in which after considering various authorities on the point, I have summarised the legal position in the following terms :-