Supreme Court Upholds Sale Deed Despite Claims of Misrepresentation: Placido Francisco Pinto vs. Jose Francisco Pinto (2021)

Date of the Judgment: September 30, 2021
Citation: 2021 INSC 711
Judges: Hemant Gupta, J. and V. Ramasubramanian, J.
Can a registered sale deed be invalidated based on claims of misrepresentation and lack of consideration, especially when the parties are close relatives? The Supreme Court of India recently addressed this question in a property dispute between two brothers. The Court examined whether the lower courts erred in setting aside a sale deed, emphasizing the importance of registered documents and the burden of proof in cases of alleged fraud. This judgment, authored by Justice Hemant Gupta, clarifies the legal principles surrounding property transactions and the admissibility of oral evidence against written documents.

Case Background

The case involves a property dispute between two brothers, Placido Francisco Pinto (the appellant) and Jose Francisco Pinto (the respondent). Their parents had gifted them portions of their property through a gift deed dated 10.5.1957. The southern portion went to Jose, and the northern portion to Placido. In 1970, Jose, facing financial difficulties, allegedly sold his southern portion of the property to Placido through a registered sale deed dated 14.9.1970 for a stated consideration of Rs. 3,000. Placido claimed that he allowed Jose to stay in the house for five years. After the five-year period, Placido sought possession of the property, leading to the legal battle.

Timeline

Course of Proceedings

The trial court initially ruled in favor of Placido, recognizing the validity of the sale deed. However, the First Appellate Court overturned this decision, stating that the sale deed was obtained by misrepresentation and lacked proper consideration. The High Court affirmed the First Appellate Court’s decision. The First Appellate Court allowed amendments to the pleadings at the appeal stage, which was challenged by the appellants but not examined by the Supreme Court. The Supreme Court then heard the appeal against the High Court’s decision.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 25 of the Indian Contract Act, 1872: This section states that an agreement without consideration is void, unless it is expressed in writing and registered, and is made on account of natural love and affection between parties standing in a near relation to each other. The Court quoted the provision verbatim:
  
  “25. Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. – An agreement made without consideration is void, unless— (1) it is expressed in writing and registered under the law for the time being in force for registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) xx xx In any of these cases, such an agreement is a contract.”
• Order VI Rule 2 of the Code of Civil Procedure, 1908: This rule stipulates that pleadings should contain a concise statement of material facts, not the evidence by which they are proved.
• Order VI Rule 4 of the Code of Civil Procedure, 1908: This rule mandates that any pleading relying on misrepresentation, fraud, or undue influence must state the particulars with dates and items.
• Section 91 of the Indian Evidence Act, 1872: This section deals with the proof of documents. It states that when a contract or disposition of property is required by law to be in writing, it must be proved by the document itself.
• Section 92 of the Indian Evidence Act, 1872: This section excludes oral evidence that contradicts, varies, adds to, or subtracts from the terms of a written document. However, Proviso (1) allows evidence to prove facts that would invalidate a document, such as fraud, intimidation, illegality, want of due execution, or failure of consideration. The Court quoted the provision verbatim:
  
  “92. Exclusion of evidence of oral agreement. – When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be 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: Proviso (1).—Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law.”

Arguments

Appellant’s Arguments (Placido Francisco Pinto):

• The registered sale deed is a valid document, and the burden of proof lies on the respondents to prove otherwise.
• The sale deed was executed in accordance with the law, and there is a presumption of correctness attached to registered documents.
• The respondent admitted that the appellant had paid Rs. 12,000 to his creditors, which constitutes valid consideration.
• The sale was executed to help the younger brother who was facing auction of the property.
• The respondents failed to prove any fraud or misrepresentation in the execution of the sale deed.
• The amendment of the pleadings at the first appeal stage should not have been allowed.

Respondent’s Arguments (Jose Francisco Pinto):

• The sale deed was obtained by misrepresentation and concealment.
• The respondent was not aware of the contents of the document he signed.
• The stated consideration of Rs. 3,000 was inadequate, and the appellant did not plead that he paid this amount.
• The respondent continued to occupy the house, indicating that he did not understand it was a sale deed.
• The sale deed was without consideration, and the oral evidence of payment of debt was not mentioned in the sale deed.
• The respondent was an illiterate person who did not know the language of the document.
• The respondent relied on Smt. Gangabai w/o Rambilas Gilda v. Smt. Chhabubai w/o Pukharajji Gandhi [(1982) 1 SCC 4] and Roop Kumar v. Mohan Thedani [(2003) 6 SCC 595] to contend that oral evidence could be led to rebut the contents of the document.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the Court was:

1. Whether the First Appellate Court and the High Court were correct in setting aside the sale deed based on misrepresentation and lack of consideration.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Presumption of Correctness of Registered Documents: The Court emphasized that registered documents carry a presumption of correctness, and the burden of proof lies on those who challenge them.
• Lack of Proof of Fraud or Misrepresentation: The Court found that the respondents failed to present sufficient evidence of fraud or misrepresentation. The respondent admitted to signing the document at the Sub-Registrar’s office, which indicated that he was aware of the transaction.
• Valid Consideration: The Court considered the payment of Rs. 12,000 by the appellant to the respondent’s creditors as valid consideration. The sale deed, being between close relatives, was also considered to be out of natural love and affection.
• Admissibility of Oral Evidence: The Court reiterated the principle that oral evidence cannot be used to contradict the terms of a written document, unless fraud, misrepresentation, or failure of consideration is proven.

The Court rejected the argument that the sale deed was a sham transaction. The Court held that the facts of the case did not support the claim of misrepresentation or fraud. The respondent admitted to signing the document at the Sub-Registrar’s office, which indicated that he was aware of the transaction. The Court also noted that the payment of Rs. 12,000 by the appellant to the respondent’s creditors was valid consideration. The Court emphasized the importance of upholding the sanctity of registered documents.

The Court quoted the following from the judgment:

• “The only stand of respondent No.1 is ignorance of the nature of the document on which his signatures were obtained. Such ignorance is not an instance of misrepresentation or a fraud in the facts of the present case which would vitiate a sale deed executed and registered with the Sub-Registrar.”
• “It has been admitted by respondent No. 1 that he went to the Sub-Registrar’s office with his wife, signed once outside the Municipal Building and once before the Officers, shows that tactically he has admitted execution of the sale deed without expressly stating so.”
• “There is no oral evidence which could prove fraud, intimidation, illegality or failure of consideration to permit the respondents to lead oral evidence to dispute the sale deed dated 14.9.1970.”

There were no dissenting opinions in this case. Both judges concurred with the judgment.

Key Takeaways

• Registered sale deeds carry a presumption of correctness, and the burden of proof lies on those who challenge them.
• Claims of misrepresentation or fraud must be supported by concrete evidence. Mere ignorance of the contents of a document is not sufficient.
• Payment of debts by a buyer on behalf of a seller can be considered valid consideration, especially in family transactions.
• Oral evidence is generally inadmissible to contradict the terms of a registered document unless fraud, misrepresentation, or failure of consideration is proven.

Directions

The Supreme Court directed the respondents to vacate and hand over the vacant physical possession of the property in question within two months.

Development of Law

The ratio decidendi of this case is that a registered sale deed cannot be easily invalidated based on vague claims of misrepresentation or lack of consideration. The judgment reinforces the principle that registered documents carry a presumption of correctness and that the burden of proof lies on those who challenge them. This judgment does not change the previous position of law but reinforces the importance of registered documents in property transactions.

Conclusion

The Supreme Court allowed the appeal, setting aside the judgments of the First Appellate Court and the High Court. The Court restored the trial court’s decision, which upheld the validity of the sale deed. This judgment emphasizes the importance of registered documents and the need for concrete evidence when challenging them.