Sections 91/92 Evidence Act: When Parties Put Their Agreement Into Writing, It is Conclusively Presumed To Be Full & Final Statement Of Intentions - Supreme Court

A Bench of Justices L Nageswara Rao, Sanjiv Khanna and B.R.Gavai, made the above observations while dealing with a case involving the validity of the term of a Partnership Deed. The judgement-V Anantha Raju & Anr v T.M.Narasimhan & Ors-authored by Justice B.R.Gavai examined the contentions of the plaintiff and defendants in light of S.91 and S.92 of the Evidence Act.

Factual Background

The petitioners and defendants were partners in a partnership firm. As per a 1992 Deed, the plaintiff No.1 was entitled to have 50% share in profits and losses, subject to him furnishing a capital contribution of a specified amount within one year, failing which his share would only be to the extent of 10%. Vide a Deed dated 1995, some other persons were inducted as partners and the share of Plaintiff 1 and Plaintiff 2 (P1's son) were reduced to 25% each. By a 2004 Deed, Plaintiffs were removed from the partnership Deed.
The defendants contend that the mentioning of 25% share in 1995 Deed was only a mistake of record and that the plaintiffs were only entitled to 10% share.
The High Court, in the impugned judgement and order, upheld the Trial Court's holding that the plaintiffs together were entitled to 10% share in the profits. In appeal from the impugned judgement, the plaintiff reached the Supreme Court.

Court's reasoning

The Court noted that it can be seen from the admission given by Defendant no.1 in his written statement as well as in his affidavit in lieu of examination-in-chief, that the partners have executed the 1995 Deed, is unambiguous and clear. Relying on Roop Kumar v Mohan Thedani which had elaborately explained the import of S.91 and S.92 of the Evidence Act, the Court noted that:

"When persons express their agreements in writing, it is for the express purpose of getting rid of any indefinite-ness and to put their ideas in such shape that there can be no misunderstanding, which so often occurs when reliance is placed upon oral statements. " (Para 22)

The court held that if a document has been produced to prove its terms under Section 91, the provisions of Section 92 come into operation for the purpose of excluding evidence of any oral agreement or statement for the purpose of contradicting, varying, adding or subtracting from its terms.

It holds:

"It has been held that when parties deliberately put their agreement into writing, it is conclusively presumed, between themselves and their privies, that they intended the writing to form a full and final statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith and treacherous memory" (Para 23)

The court held that in view of S.91 of the Evidence Act, the evidentiary value of the 1995 Deed would stand on a much higher pedestal, as against the oral testimony of the parties.

The Court also distinguishes the cases relied upon by the petitioners- Gangabai w/o Rambilas Gilda v Chhabubai w/o Pukharajji Gandhi and Ishwar Dass Jain (Dead) through Lrs v Sohan Lal (Dead) by Lrs- where it was held that it is permissible for the party to a deed to contend that the deed was not intended to be acted upon, but was only a sham document. The judgements notes:

" It would be necessary to lead oral evidence to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties" (Para 24)

The judgement observed that if it was the case of the defendants that the terms mentioned in the 1995 Deed were inadvertent or a mistake in fact, then the burden to prove the same shifted upon the defendants to prove that the Deed did not reflect the mutual intention of the parties.

With regard to the defendant's plea that the 1995 Deed was a mistake of fact, the Court notes that the Preamble to the 1995 Deed specifically states that the parties have decided to amend the term of the Partnership after negotiation of the terms. Thus, since the 1995 Deed clearly shows that it is executed after due deliberations, negotiations and mutual consensus on the terms and conditions to be incorporated therein and the contention that the share is mentioned as 25% by mistake "does not sound logical or reasoned." The judgement observes that if the 25% share mentioned in 1995 Deed was due to mistake or inadvertence, nothing precluded the defendants from rectifying the same between 1995 and 2004.

The Apex Court modified the finding of the High Court in the impugned judgement that the plaintiffs together have only 10% share in profits and losses and declared that the plaintiff together are entitled to 50% share in profits and losses.

Case Details

Case Title : V Anantha Raju & Anr v T.M.Narasimhan & Or

Coram : Justices L Nageswara Rao, Sanjiv Khann and BR Gavai

Citation : LL 2021 SC 598

Click here to read/download the judgment