Jojan Singh and others vs Gurdial Singh and others

Dua, J.—Gurdial Singh and Amar Singh sued for a declaration that the decree for possession of land and property described in the heading of the plaint by pre-emption dated 21st January, 1958 on payment of Rs. 8,000/- was the result of misrepresentation and fraud which was not binding on them. According to the Plaintiffs'' allegations they had filed a suit for pre-emption against Defendants Nos. 1 to 5 in which Defendants Nos. 2 to 5, who were vendees, had pleaded in the written statement that the entire sum of Rs. 8,000/-had been paid off by them Defendant No 1, the vendor had sold the , land to Defendants Nos. 2 to 5 for Rs. 8,000/- out of which according to the Plaintiffs'' averment, a sum of Rs. 3,500/- had been kept in trust for payment to Banta Singh, Defendant No. 6 and Rs. 250/- for payment to Tara Singh, Defendant No. 7. On 21st January 1958 Defendants Nos. 1 to 5 are stated to have represented to the Plaintiffs that the sum of Rs. 8,000/- had been paid off in the following manner:

Rs. 4,250/-to Defendant No. 1, Rs. 3,500/- to Defendant No. 6 and Rs. 250/- to Defendant No. 7. Relying on this representation, the Plaintiffs agreed to the decree being passed on payment of Rs. 8,000/- which was accordingly passed on the condition that the entire amount should be paid by 10th May 1958. It transpired later that the mortgage amount had not been paid by the vendees as represented with the result that the land in question was still in possession of the mortgagees, Defendants Nos. 6 and 7. The Plaintiffs in the circumstances deposited only a sum of Rs. 4,250/- for payment to the vendees.

The Plaintiffs later applied for amendment of the decree as also for review of the order but both these prayers were disallowed. It is in these circumstances that the Plaintiffs instituted the suit out of which this appeal arises praying that the order dismissing the suit for nonpayment of the full amount of Rs, 8,000/- should be set aside because it is tainted by fraud.

The suit was resisted on various grounds including the plea of res judicata and of limitation; it whs also pleaded that the Plaintiffs were fully aware of actual facts and there was no fraud.

It is common ground that a sum of Rs. 500/- was still outstanding and payable to the mortgagee. Rs 250/- were, however, pleaded by the Defendants to have been paid off before the passing of the pre-emption decree. The pleadings of the parties gave rise to several issues, but the only one which concerns us at this stage is issue No. 6 which is in the following terms:

Whether the decree in question had been obtained by false representation and fraud as alleged in the plaint ?

The trial Court decided this issue against the Plaintiffs and dismissed the suit. It observed during the course of its judgment as follows:

The main basis of the Plaintiffs'' allegations that they were misled is the Defendant'' averment in the written statement that they had purchased the property for Rs. 8000/- which was fixed in good faith and paid. Now the use of the word ''paid'' cannot be deemed to mean that cash payment of Rs. 8,000/- was made or indicate that it was used with precision bearing in mind the details of the payment. It might as well mean that the payment to be made to the mortgagees was no less than actual payment. Any way, the statement of Gurdial Singh Plaintiff, P. W. 2, the Plaintiff himself rules out the possibility of the Plaintiffs having been defrauded He says that be had not deposited the sum of Rs. 3,500/- because the vendees had not paid it to the mortgagees. According to him, at the time of the razinama it (he) was told that the sum of Rs. 3,500/- had not been paid and that Rs. 249/- had also not been paid,by them. He admits that he had come to know of it during the pendency of the suit and even frankly admitted the payment of Rs. 249/- to Tara Singh having been made during the pendency of the suit, This statement leaves no doubt that the Plaintiffs were aware of the true facts and also when they knew that Rs. 249/- to Tara Singh had been paid during the pendency of the suit it passes one''s comprehension why this sum of Rs. 4,250/- was not deposited within the time prescribed.

On the matter having been taken on appeal, the learned Additional District Judge, Amritsar observed that the plea of mistake was not as clearly set out as it should have been reasonably possible, though from para No. 6 and para No. 12 of the plaint it does appear that the pleas of fraud, misrepresentation, misstatement or mistake, were taken for invalidating the decree. The learned Judge-however, proceeds to observe as follows -

But the fact remains that the counsel for the Defendants-vendees offered to suffer a decree for pre-emption on payment of full consideration of Rs. 8,000/- obviously under the impression that the vendees had obtained redemption of the mortgage debt of Rs. 3,500/- charged on that land. It was under this mistake that he made his statement which was accepted by the Plaintiffs under mistaken belief that the Defendants'' vendees had obtained redemption of the mortgage debt of Rs. 3,500/-. Therefore, the compromise was vitiatted by mutual mistake as to a matter of fact essential to the agreement within the meaning of Section 20 of the Contract Act.

And again, a little lower down, the learned Judge has observed that the same conclusion can be arrived at if the validity of the contract is examined in the light of whether there was misrepresentation, and the Court felt that there was an implied representation that the redemption of the subsisting mortgage of Rs. 3500/- on the land in dispute had been obtained by the Defendants-vendees so as to entitle them to claim Rs. 8,000/-. This representation was accepted by the Plaintiffs, The learned Judge then observes as follows:

Even if it was not an active representation mere silence of the Defendants-vendees when it was their duty to disclose the fact that the redemption of the mortgage had not been obtained, will bring it within the mischief of the provisions regarding invalidity of a contract because misrepresentation.

The Appeal was in the circumstances allowed and reversing the decree of the original Court the Plaintiffs'' suit decreed.

On second appeal, the learned Counsel for the Appellants had read try me the statement of the Appellants'' counsel as also the statement of Gurdial Singh Plaintiff accepting the statement of the Defendants'' counsel. He has referred me to the subsequent proceedings when the Plaintiffs applied to the Court for relief against omission to deposit the full pre-emotion money before 10th May 1958 and specific reference has been made to the order of the Court dated 19th July 1958, Exhibit D. 2. Reference has also been made to the order on review on 12th October t959 by the Court. It has further been urged that in the plaint, no foundation had been laid for the plea of mutual mistake as to a master of fact essential to the agreement which would make i(sic) void. From this point of view, I have been taken through the entire plaint.

In my opinion this appeal must be allowed and the judgment and decree of the learned Additional District Judge set aside and that of the Court of first instance restored. Section 20 of the Indian Contract Act clearly postulates that both parties to an agreement should be under a mistake as to a matter of fact essential to the agreement in order to avoid it. There is absolutely nothing on the record which would show that the vendees were under any such mistake. Besides, issue No. 6 which has been reproduced above also does not seem to have anything to do with the plea of mutual mistake as to an essential fact. So far as the question of misrepresentation is concerned, again I am wholly unable to appreciate the reasoning or the logic contained in the impugned lower Appellate Court''s judgment. Misrepresentation as contemplated by Section 18 of the Indian Contract Act means and includes a positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true, or any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice etc., or causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement. u/s 19 when consent to an agreement is caused by misrepresentation etc., the contract arising therefrom is voidable at the option of the party whose consent was so secured. By means of an Exception to this section it is provided that if such consent was caused by any misrepresentation or by silence etc. within the meaning of Section 17, the contract, nevertheless, is not voidable if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. Section 17, I may here mention, defines fraud and in the Explanation added to this section, it is provided that mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is in itself equivalent to speech. Now, in the present case it is difficult to appreciate as to how it can be urged that the Plaintiffs-pre-emptors had not the meens of discovering the truth in regard to the payment of the mortgage money to the mortgagees with ordinary diligence. The learned Additional District Judge has completely ignored this basic factor. Besides, after all is said and done the fact remains that the Plaintiffs are merely enforcing their right of pre-emption and if the declaration is not granted, no grave injustice would be caused because the vendees who have purchased the property by means of a valid agreement would merely remain in possession. Therefore, keeping in view the equities in favour both of the vendees and the Plaintiffs, in my opinion, the latter cannot claim any higher equity in their favour.

For the foregoing reasons, this appeal succeeds and setting aside the judgment and decree of the lower appellate Court I restore that of the Court of first instance The parties are, however, directed to bear their own costs throughout.