Family Settlement or Family Arrangement in Law

Saji Koduvath, Advocate, Kottayam

Abstract

  • Perquisites of Family Settlement or Family Arrangement are the following-
    • It must be to settle disputes among family members (and it is not applicable to dealings between strangers); or for maintaining the interest and peace of the members of the family.
    • It must be for fair distribution of property.
    • The parties thereto must have been entered into voluntarily.
  • Distinctive characteristics of Family Settlement or Family Arrangement-
    • Oral family settlement is valid.
    • Only those who have an antecedent title, claim, or interest in the property can enter into a family settlement.
    • If it does not create or extinguish rights, registration is not mandatory.
    • Family Arrangement would operate as an estoppel
  • Kale v. Deputy Director of Consolidation, (1976) 3 SCC 119: AIR 1976 SC 807 is considered, in the subsequent decisions, as the leading Supreme Court decision that authoritatively laid down the essentials of Family Settlement or Family Arrangement.
  • In Ravinder Kaur Grewal v. Manjit Kaur, [2020] 9 SCC 706, it is held that it is not open to resile from the Family Settlement and the parties are estopped from contending to the contrary.

1. Kale v. Deputy Director of Consolidation, the leading decision

It is held in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, as under:

  • “10. In other words to put the binding effect and the essentials of a family settlement in a concretized form, the matter may be reduced into the form of the following propositions:
  • .(1) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family;
  • .(2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence;
  • .(3) The family arrangements may be even oral in which case no registration is necessary;
  • .(4) It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immoveable properties and therefore does not fall within the mischief of Section 17(2) [Section 17(1)(b)?] of the Registration Act and is, therefore, not compulsorily registrable;
  • .(5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld, and the Courts will find no difficulty in giving assent to the same;
  • .(6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement.” ( Quoted in: K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757)

Finally it was held as under:

  • “We would, therefore, return the reference with a statement of the following general propositions:
    • With reference to the first question:
  • (1) A family arrangement can be made orally.
  • (2) If made orally, there being no document, no question of registration arises.
    • With reference to the second question:
  • (3) If though it could have been made orally, it was in fact reduced to the form of a “document”, registration (when the value is Rs. 100 and upwards) is necessary.
  • (4) Whether the terms have been “reduced to the form of a document” is a question of fact in each case to be determined upon a consideration of the nature and phraseology of the writing and the circumstances in which and the purpose with which it was written.
  • (5) If the terms were not “reduced to the form of a document”, registration was not necessary ( even though the value is Rs. 100 or upwards); and, while the writing cannot be used as a document of title, it can be used as a piece of evidence for what it may be worth, e.g., as corroborative of other evidence or as an admission of the transaction or as showing or explaining conduct.
  • (6) If the terms were “reduced to the form of a document” and, though the value was Rs. 100 or upwards, it was not registered, the absence of registration makes the document inadmissible in evidence and is fatal to proof of the arrangement embodied in the document.
    • With reference to the third question:
  • (7) Where it has been found that there is not legally binding oral family arrangement, or that the arrangement, though reduced to writing with the intention that the document should be the document of title, cannot be proved for want of registration, and where no question of estoppel arises, the mere facts that mutation has taken place and that possession has been taken cannot remedy, by virtue of what is known to English law as the doctrine of “part performance”, the absence of registration.”

Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, is referred to in the following decisions:

  • K.  Arumuga Velaiah v. P. R.  Ramasamy, 2022-3 SCC 757
  • S.  Kuldeep Singh v. S.  Prithpal Singh, AIR 2022 SC 3967
  • Ripudaman Singh v. Tikka Maheshwar Chand, 2021-7 SCC 446
  • Khushi Ram v. Nawal Singh, AIR 2021 SC 1117
  • Vineeta Sharma v. Rakesh Sharma, AIR 2020 SC 3717; 2020-9 SCC 1
  • Ravinder Kaur Grewal v. Manjit Kaur, AIR 2020 SC 3799; 2020-9 SCC 706

2. Family Arrangement is binding and operate as an Estoppel

It is held in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, as under:

  • “The principle that there is no estoppel against the statute does not apply to the present case. Assuming, however, that the said document was compulsorily registrable the Courts have generally held that a family arrangement being binding on the parties to it would operate as an estoppel by preventing the parties after having taken advantage under the arrangement to resile from the same or try to revoke it.” (quoted and followed in Ravinder Kaur Grewal and Ors. v. Manjit Kaur and Ors., [2020] 9 SCC 706).

After referring various previous decisions [#] it was emphasised in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, fixing the legal position, as under:

  • “This Court has also clearly laid down that a family arrangement being binding on the parties to the arrangement clearly operates as an estoppel so as to preclude any of the parties who have taken advantage under the agreement from revoking or challenging the same.” (followed in K Arumuga Velaiah v. PR Ramasamy, 2023-3 SCC 757)
    • [#] Ramgopal v. Tulshi Ram, AIR 1928 All 641,
    • Sitala Baksh Singh v. Jang Bahadur Singh, AIR 1933 Oudh 347,
    • Kalawati v. Sri Krlshna Prasad, ILR 19 Lucknow 57,
    • Bakhtawar v. Sunder Lal, AIR 1926 All. 173,
    • Awadh Narain Singh v. Narain Mishra, AIR 1962 Pat 400.

3. “Family” be understood in a wider sense

In Khushi Ram v. Nawal Singh, AIR 2021 SC 1117, it is observed as under:

  • “23. A Three Judge Bench in the celebrated judgment of this Court in kale and Ors. Vs. deputy director of Consolidation and Ors., (1976) 3 SCC 119, had elaborately considered all contours of the family settlement. This Court laid down that term “family” has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis.”

4. Does Family Arrangement Requires Registration

It is further held in K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757 as under:

  • “Ultimately, this Court held (in Kale v. Deputy Director of Consolidation) that the family arrangement in the nature of a compromise which was considered in that case did not require registration. It was further held that since the existence of the family arrangement was admitted in that case, the same was binding on the principle of estoppel. Also, even if the family arrangement could not be registered it could be used for collateral purpose, i.e. to show the nature and character of possession of the parties in pursuance of the family settlement and also for the purpose of applying the rule of estoppel which flowed from the conduct of the parties, who, having taken benefit under the settlement for seven years, later tried to resile from the settlement.”

Finally, on the facts of the case, referring previous decisions[#] it is held in K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757 as under:

  • “On a perusal of the award which is in the form of a resolution, it is clear that there was no right created in any specific item or asset of the joint family properties in any person but the parties resolved to take certain actions in pursuance of a family arrangement. Therefore under Annexure P­10 (Ex. B­13) there was no right created in favour of any party in any specific item of joint family property. The said document which has been styled as an award is, in our view, only a memorandum of understanding/family arrangement to be acted upon in future. Hence, in our considered view, the said document did not create rights in specific properties or assets of the family, in favour of specific persons. Therefore, the same did not require registration under section 17(1)(e) of the Act. The said document was in the nature of a document envisaged under section 17(2)(v) of the Act.”
    • [#] Bhoop Singh v. Ram Singh Major, 1995-5 SCC 709, and
    • Ravinder Kaur Grewalv. Manjit Kaur, 2020-9 SCC 706,
    • Ripudaman Singh v. Tikka Maheshwar Chand, 2021-7 SCC 446.

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Principles and Procedure

Admission, Relevancy and Proof

Land LawsTransfer of Property Act

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Law on Documents

Contract Act

Easement

Stamp Act & Registration

Will

Arbitration

Divorce

Negotiable Instruments Act

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Pendente Lite Transferee Cannot Resist or Obstruct Execution of a Decree

Jojy George Koduvath.

O. XXI r. 102, CPC bars placing obstruction by pendente lite transferees

Rule 99 of Order XXI of the CPC says that where any person other than the judgment debtor is dispossessed, he can make an application complaining of such dispossession.

Rule 101 directs that all questions (including questions relating to right, title or interest in the property) arising on the applications under Rule 99 shall be determined by the Court dealing with the application, and not by a separate suit.

Rule 102 bars placing such obstruction by pendente lite transferees.

Usha Sinha v. Dina Ram is the Classic decision. Held – If pendente lite transferee could resist, Every time he will transfer the property

Usha Sinha V. Dina Ram and others (2008) 7 SCC 144, is the classic decision on this subject. It is pointed out that if pendente lite transferee could resist or obstruct execution of a decree, every time the decree holder seeks execution, the judgment debtor will transfer the property. It is laid down in this decision-

  • Rule 102 declares that if the resistance is caused or obstruction is offered by a transferee pendente lite of the judgment debtor, he cannot seek benefit of Rule 98 or 100 of Order XXI.
  • If unfair, inequitable or undeserved protection is afforded to a transferee pendente lite, a decree holder will never be able to realize the fruits of his decree.
  • Every time the decree holder seeks a direction from a Court to execute the decree, the judgment debtor or his transferee will transfer the property and the new transferee will offer resistance or cause obstruction. To avoid such a situation, the rule has been enacted.
  • Rule 102, therefore, clarifies that there should not be resistance or obstruction by a transferee pendente lite.
  • Since the appellant is a purchaser pendente lite and as she has no right to offer resistance or cause obstruction and as her rights have not been crystallized in a decree, Rule 102 of Order 21 of the Code comes into operation. Hence, she cannot resist execution during the pendency of the suit instituted by her.

Scope of adjudication is confined to whether transfer was pendent lite

It is pointed out in Usha Sinha V. Dina Ram that it was held in Silverline Forum Pvt. Ltd. v. Rajiv Trust, (1998) 3 SCC 723, that where there is a the transfer pendente lite, the scope of adjudication is confined to a question whether he was a transferee during the pendency of a suit in which the decree was passed. Once the finding is in the affirmative, the Executing Court must hold that he had no right to resist or obstruct and such person cannot seek protection from the Executing Court.

Whether ‘Pendente Lite Transfer’ – if it was After Dismissal of Suit, for Default

In Jini Dhanraj Gir v. Shibu Mathew (SC, 16 May, 2023), one of the questions arisen was whether there was ‘pendente lite transfer’, if the transfer was made after dismissal (post-dismissal) of the suit for default (and before its restoration). It was argued that during the time when the transfer was effected there was no pending lis. The Executing Court posted the EP to determine the question as to whether the transfer would attract Rule 102.

The Apex Court observed that the claim raised by the Respondents, ‘cannot be thrown out at the threshold since it is well within their rights to contest the application under Order XXI Rule 97, CPC‘. The Apex Court directed that it was most appropriate for the Executing Court to determine the question as to whether the transfer would attract Rule 102.

Rules 97 to 102, Order XXI CPC

“Order XXI – Execution of decrees and orders

97. Resistance or obstruction to possession of immovable property –

  • .(1) Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person obtaining possession of the property, he may make an application to the Court complaining of such resistance or obstruction.
  • .(2) Where any application is made under sub­rule (1), the Court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.

98. Orders after adjudication –

  • .(1) Upon the determination of questions referred to in rule 101, the Court shall, in accordance with such determination and subject to the provisions of sub­rule (2), ­
  • .a. make an order allowing the application and directing that the applicant be put into the possession of the property or dismissing the application; or
  • .b. pass such other order as, in the circumstances of the case, it may deem fit.
  • .(2) Where, upon such determination, the Court is satisfied that the resistance or obstruction was occasioned without any just cause by the judgment­ debtor or by some other person at his instigation or on his behalf, or by any transferee, where such transfer was made during the pendency of the suit or execution proceeding, it shall direct that the applicant be put into possession of the property, and where the applicant is still resisted or obstructed in obtaining possession, the Court may also, at the instance of the applicant, order the judgment­ debtor, or any person acting at his instigation or on his behalf, to be detained in the civil prison for a term which may extend to thirty days.

99. Dispossession by decree­ holder or purchaser –

  • .(1) Where any person other than the judgment debtor is dispossessed of immovable property by the holder of a decree for the possession of such property or, where such property has been sold in execution of a decree, by the purchaser thereof, he may make an application to the Court complaining of such dispossession.
  • .(2) Where any such application is made, the Court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.

100. Order to be passed upon application complaining of dispossession –

  • Upon the determination of questions referred to in rule 101, the Court shall, in accordance with such determination, –
  • .a. make an order allowing the application and directing that the applicant be put into the possession of the property or dismissing the application; or
  • .b. pass such other order as, in the circumstances of the case, it may deem fit.

101. Question to be determined –

  • All questions (including questions relating to right, title or interest in the property) arising between the parties to a proceeding on an application under rule 97 or rule 99 or their representatives, and relevant to the adjudication of the application, shall be determined by the Court dealing with the application, and not by a separate suit and for this purpose, the Court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions.

102. Rules not applicable to transferee pendente lite –

  • Nothing in rules 98 and 100 shall apply to resistance or obstruction in execution of a decree for the possession of immovable property by a person to whom the judgment­ debtor has transferred the property after the institution of the suit in which the decree was passed or to the dispossession of any such person.
  • Explanation – In this rule, “transfer” includes a transfer by operation of law.

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Book No, 1 – Civil Procedure Code

Power of attorney

Title, ownership and Possession

Principles and Procedure

Admission, Relevancy and Proof

Land LawsTransfer of Property Act

Evidence Act – General

Sec. 65B

Law on Documents

Contract Act

Easement

Stamp Act & Registration

Will

Arbitration

Divorce

Negotiable Instruments Act

Book No. 2: A Handbook on Constitutional Issues

Religious issues

Book No. 3: Common Law of CLUBS and SOCIETIES in India

Book No. 4: Common Law of TRUSTS in India

What is Easement, in law? Right of Easement Simplified

Saji Koduvath, Advocate, Kottayam.  

What is Easement?

  • Easement is a right possessed by the owner of a land (dominant land),
    • to use the land of another (servient land),
    • for the beneficial enjoyment of the dominant land.

Easement Does Not Confer Ownership or Possession

By virtue of easement –

  • No Ownership is bestowed in the (servient) land (AIR 2004 All 359; AIR 1925 Bom 335).
  • No Possession is obtained in the (servient) land. (2011 (2) KLT 605; AIR 1925 Bom 335).  
  • No Substantive Interest is created in the (servient) land. (2003 (1) KLT 320; AIR 1954 All 393).

Easement (सुखाधिकार) is Well Recognised, And Circumscribed by Law

  • Easement is a limited right touse’or ‘enjoyanother’s land.
  • It is to do, or to prevent to do, some specific thing.
  • It is to be exercised in a way least onerous to ‘another’s land’.
  • It is not a right to build and enjoy.
  • The right gained cannot be enlarged.
    • That is, an easement of way to a particular (dominant) property cannot be extended to another property by the dominant owner; an easement for residential purpose cannot be enlarged for an industrial purpose. (Sec. 28, 29, 43 etc.)
  • Servient owner can use his land in any manner (without disturbing enjoyment of the easement).

According to ‘Katiyar on Easements’:                                                                   

  • Easement is not a right to land or exclude owner.
  • It is not a right to permanent occupation. 
  • It does not confer exclusive right of user/enjoyment.
  • And, it is not a corporeal interest in land.

Easement – Definition under the Indian Easements Act

SECTION 4 of the Indian Easements Act defines Easements as under:

  • “An easement is a right
  • which the owner or occupier of certain land possesses,
    • as such,
  • for the beneficial enjoyment of that land 
  • to do and continue to do something, or to prevent and continue to prevent something being done,
  • in or upon, or in respect of, certain other land not his own.”

Salient Limitations of Easement under the Indian Easements Act

  • The owner of a land only ‘uses’or ‘enjoys‘ land of another (Sec. 31)
  • It is only ‘enjoyment’ of soil or things ‘subsisting’ (Explanation in Sec. 4).
  • It allows limited enjoyment of land, and advantages from its situation: S. 7
  • Right be exercised in a way least onerous to ‘another’s land’: Sec. 22
  • Servient owner can secure full enjoyment; but, he should cause as little inconvenience: Sec. 24: 2017-2 KLT 63

It is Not a right to:                                            

  • tend to total destruction of servient tenement: S. 17 (2003 (1) KLT320)
  • make additional burden: S. 23
  • make constructions in, or cultivate upon: (2003 (1) KLT 320).
  • prevent servient owner to use: S. 27 : 2003 (1) KLT 320
  • enlarge purpose of, or accustomed user: S. 28
  • substantially increase an easement: S. 29
  • prevent servient owner from obstructing excessive  ‘user’ of servient land – as ‘enjoyment of easement’: S. 31
  • increase burden by making permanent change in do. tent: S. 43
  • capable of forming grant – No easement, if Not capable of forming grant (without document or registration): 1987 (2) KLT 1037.

No easement if:

  • right claimed is incidents of ownership.
  • servient property belongs to him. Easement is a right with conscious knowledge that the servient property does not belong to him. AIR 1966 Raj 265. It must also be with proper animus as to easement: AIR 1973 Mad 173.

The word ‘Servient’ is derived from ‘Serve’

Literal meaning of the word ‘servient’ is – subordinate, subservient and subject to another. Etymologically it is derived from ‘servus’ (Latin) meaning – slave or servant.

Sec. 4 Explains ‘Servient Heritages’ as under:

  • Dominant and Servient Heritages and OwnersThe land for the beneficial enjoyment of which the right exists is called the dominant heritage, and the owner or occupier thereof the dominant owner; the land on which the liability is imposed is called the servient heritage, and the owner or occupier thereof the servient owner.”

Thus, the land upon which the right is claimed is ‘servient’ land.

For the Beneficial Enjoyment of that Land.

The most outstanding clause in the definition of easement is “Beneficial Enjoyment”.

Easements are primarily for the beneficial enjoyment of dominant heritage. Easement stands as part and parcel of dominant land. The definition says that an easement is a ‘right which the owner or occupier of certain land possesses, as such’. 

As Such

‘As such’ is used for emphasis to convey that easement is essentially connected to the dominant land, and it is inherently for the beneficial enjoyment of annexed/appertained (dominant) land; and not a right ‘in gross’ (for the benefit of individuals).

It also conveys the idea that the ‘easement’ must be one existing: and not one intended to be created in future.

Profit-a-prendre – Indian Law Varies from English Law

Under English Law, an easement is a privilege alone; and profit-a-prendre (right to take) is not an easement. It does not allow “Removal and Appropriation” also. The Indian Easements Act purposefully used “to do something in or upon”, decisively avoiding, ‘to use’ or ‘to enjoy’; because, Indian Law allows ‘profit-a-prendre‘ [fishing, pasturing, grass-cutting for thatching, etc.]. It is allowed on Indian situations – but, without conferring substantial interest in the servient land. ‘Profit a predre’ is not appurtenant to any dominant land; and it is a right ‘in gross’ (for the benefit of individuals).

Explanation to Sec. 4 of the Indian Easements Act, 1882 reads as under:

  • “Explanation – In the first and second clauses of this section, the expression “land” includes also things permanently attached to the earth;
  • the expression “beneficial enjoyment” includes also possible convenience, remote advantage, and even a mere amenity;
  • and the expression “to do something” includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage, or anything growing or subsisting thereon.”

From the above Explanation it is clear that easement includes appropriation of certain tangible material things or natural resources (Profit-a-Prendre). They are further made clear by the Illustrations to various sections as shown under:

  • Illustn.-(d) of S.4. It speaks as to Graze cattle, take water and fish out from the tank, take timber from wood, take fallen leaves for manuring.
  • Illustn.- (b) of S. 22. It states about cutting  thatching- grass
  • Illustn.- (a) of S. 24. It refers to easement to lay pipes.

Hence, it is clear: Easement is not a mere ‘Privilege’; but, it includes:

  • limited (legally-recognised) enjoyment /user/interest in serviant heritage, and
  • a right for (expressly-recognised) profit.

Though Profit-a-prendre is allowed by Indian law considering the peculiarities of Indian situations, it is not a corporeal right.  And, it does not allow maintaining a substantial interest over the servient land.  No profit-a-prendre in gross also, i.e., for the benefit of individuals. On a close look, it can be seen that it is substantially related to ‘user’ of servient land.

“To do do something & ‘Removal and Appropriation

In State of Bihar v. Subodh Gopal Bose, AIR 1968 SC 281, our Apex Court held as under:

  • “By the Explanation to Sec. 4 the expression “to do something” includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage, or anything growing or subsisting thereon. A profit-a- prendre is therefore included in the definition of “easement” in Sec. 4 of the Indian Easements Act. But an easement being a right which is super-added to the ordinary common law incidents of the ownership of a dominant tenement, and which connotes a corresponding burden on a servient tenement, can only be created by grant, or by statute.”

Easement is acquired; not arise out of ‘Express Permission’

Sec. 12, Easements Act states that an easement is acquired (under grant, partition or prescription) by the owner of an immovable property. Section 12, Indian Easements Act, 1882 reads as under:

  • 12. Who may acquire easements-An easement may be acquired by the owner of the immovable property for the beneficial enjoyment of which the right is created, or on his behalf, by any person in possession of the same.
  • One of two or more co-owners of immovable property may, as such, with or without the consent of the other or others, acquire an easement for the beneficial enjoyment of such property.
  • No lessee of immovable property can acquire, for the beneficial enjoyment of other immovable property of his own, an easement in or over the property comprised in his lease.

It is observed by the Apex Court in Bachhaj Nahar Vs. Nilima Mandal, AIR 2009 SC 1103, that the claimant of easement (prescription) should plead and prove that the right claimed was enjoyed independent of any agreement with the owner of the property over which the right is claimed, as any user with the express permission of the owner will be a licence and not an easement. 

Easement and Licence – Distinction

Division Bench of the Delhi High Court, in Chandu Lal v. Municipal Corporation of Delhi, AIR 1978 Del 174, distinguished easement and licence as under:

  • “26… A mere licensee has only a right to use the property. Such a right does not amount to an easement or an interest in the property but is only a personal privilege to the licensee. After the termination of the license, the licensor is entitled to deal with the property as he likes. This right he gets as an owner in possession of his property. He need not secure a decree of the Court to obtain the right. He is entitled to resist in defence of his property the attempts of a trespasser to come upon his property by exerting the necessary and reasonable force to expel a trespasser……..”

Acquisition of Easements – “Basis of Every Right of Easement is Grant”

The Indian Easements Act, 1882 refers to the different methods by which easements are acquired. They are pointed out (Ramkanya Bai v. Jagdish, AIR 2011 SC 3258) to be the following:

  1. easements by grantexpress grant by the owner of the servient heritage
  2. easements of necessity: based on implied grants or reservations made by the owner of a servient heritage at the time of transfers or partitions
  3. easements by prescription: it is presumed that it is acquired by peaceable and open enjoyment, without interruption for twenty years and
  4. customary easements: it is inferred that it is acquired by virtue of a local custom.

For easement by prescription, it is not necessary that the user should be exclusive, but the claimant should exercise it under some claim existing in his own favour independently of all others.

The origin of all easements is, theoretically, grant by the servient owner. It may be express or implied. It may also be presumed from long user.

In Lachhi v. Ghansara Singh, AIR 1972 HP 89, it is held as under:

  • “The basis of every right of easement by whatsoever method it may have been acquired, is theoretically a grant from the servient-owner.
    • It may be expressed, as is mentioned in Sections 8 to 12 of the Act, or
    • it may be implied from the circumstances as in Section 13 of the Act. or
    • it may be presumed from long and continued user for a certain period as in Section 15 of the Act, or
    • it may be inferred from a long and continued practice of user by a certain class of the public in certain locality.” 

Grant may be Express or “Implied

The origin of all easements is, theoretically, grant by the servient owner. It may be express or implied. It may also be presumed from long user.

  • Note: Traditionally, the term ‘implied easement’ was used by the conventional authorities only to denote ‘easement of necessity‘. However, in Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, the Supreme Court used the same to refer to an easement of grant ‘arising by implication‘.

It is observed in Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, as under:

  • “13. On the question of easement by grant, the Appellate Court was of the opinion that the plaintiff’s claim in that respect stood proved. The plaintiff had acquaintance and association with the Ashramam and Yogini Amma from his childhood days as revealed from the oral and documentary evidence. Considering the location and nature of `B’ schedule pathway, the location of two pillars at its inception and the gate from which it started, it could be seen that it had been in use by the plaintiff as a pathway. The plaintiff had been residing in the house on `A’ schedule property even prior to the deed of settlement. Therefore, the Appellate Authority arrived at the conclusion that the plaintiff had obtained right of easement of grant from Yogini Amma over the `B’ schedule pathway.
  • An easement of grant is a matter of contract between the parties and it may have its own consideration. (B.B. Katiyar’s Commentaries on Easements and Licenses, p. 762).  It may be either express or even by necessary implication. Though easement of necessity will come to an end with the termination of necessity, easement acquired by grant cannot be extinguished on that ground as per section 13(b) of the Indian Easements Act, 1882. Therefore, even assuming that the plaintiff had an alternative pathway as contended by the defendants, it does not extinguish the right of easement of grant in favour of the plaintiff. Therefore, the Trial Court was justified in granting a relief of declaration of right of easement of grant over the `B’ schedule pathway. However, the declaration granted on the ground of easement of necessity was not justified.”

The aforesaid Supreme Court decision (Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622) arose from the Kerala High Court decision, Sree Swyam Prakash Ashramam v. N. Gopala Pillai on 9 May, 2006. It was affirmed by the Supreme Court. The Kerala High Court held as under:

  • “Theoretically all easements have their origin in some sort of grant by the servient owner. The grant may be express or it may be implied from the surrounding attendant circumstances and conduct of the parties or it may even be presumed from long user. In the case of an express grant of easement the limit thereof depends on the words used.”

Upholding the view of the Kerala High Court the Apex Court held as under:

  • “In our view, therefore, the High Court was also fully justified in holding that there was implied grant of ‘B’ schedule property as pathway, which can be inferred from the circumstances for the reason that no other pathway was provided for access to ‘A’ schedule property of the plaint and there was no objection also to the use of ‘B’ schedule property of the plaint as pathway by the original plaintiff (since deceased) at least up to 1982, when alone the cause of action for the suit arose.”

Also read: Implied Grant: A Valid Mode of Creation of Easement under Indian Law

No Explicit ‘Consideration’ Required for Easement by Grant

Neither the provisions of the enacted law (Easements Act, 1882) nor judicial decisions specifically address the requirement of ‘consideration’ in the creation of easements by grant. This omission is understandable, as Indian law clearly permits the acquisition of easements by grant – both express and implied. Since an easement may arise by implication, and the intention to grant can be inferred from the terms of the grant or the surrounding circumstances, the fundamental principle of easement law – that every easement is, in theory, rooted in a grant – supports the conclusion that no express consideration is required for the creation of an easement by grant.

Sec. 8 of the Indian Easements Act reads:

  • “An easement may be acquired by the owner of the immovable property for the beneficial enjoyment of which the right is created, or, on his behalf, by any person in possession of the same.”

Sec. 13 further elaborates on easements of necessity and quasi-easements, indicating that such easements can arise from the transfer or bequest of immovable property, again without a requirement for consideration.

In Sree Swayam Prakash Ashramam v. G. Anandavally Amma, the Supreme Court held:

  • “Theoretically all easements have their origin in some sort of grant by the servient owner. The grant may be express or it may be implied from the surrounding attendant circumstances and conduct of the parties or it may even be presumed from long user.”

Consideration is not an essential element for easement of grant. In Sree Swayam Prakash Ashramam v. G. Anandavally Amma, the Supreme Court held easement of grant is a matter of contract between the parties and it may have its own consideration. (B.B. Katiyar’s Commentaries on Easements and Licenses, p. 762). 

Extent of Easement If used for several purposes, inferred for all purposes

Generally speaking, law on easement is strict and stand against unreasonably enlarging easements and imposing additional burthen on servient tenement.

But, in Cowling v Higginson (1838) 4 M & W 245, it was held as under:

  • “If a way has been used for several purposes, there may be a ground for inferring that there is a right of way for all purposes.”

At times the courts in India also took a pragmatic stand that easement for one purpose can be changed to another, provided there is no additional burden (agricultural purposes might be used for the purpose of a factory provided no additional burden). It can be shown that what is prohibited is “substantial increase(as provided in Sec. 29). See:

  • Jesang v. Whittle, (1899) ILR 23 Bom 595,
  • Manchersha Sorabji v. Virjivallabhdas, (1926) ILR 50 Bom 635,
  • Mahammad Beari v. Badava Beari, (1931) 61 Mad LJ 58.

Easement – Enlargement & Imposing Additional Burthen.

Under the provisions of the Easements Act, the dominant owner cannot –

  • enlarge purpose of, or accustomed user (S. 28) and
  • substantially increase an easement (S. 29).
    • For example, an easement of way to a particular (dominant) property cannot be extended to another property by the dominant owner; an easement for residential purpose cannot be enlarged for an industrial purpose. (Sec. 28, 29, 43 etc.)

Sec. 28 of the Easement Act reads as under:

  • 28 Extent of easements -With respect to the extent of easements and the mode of their enjoyment, the following provisions shall take effect:-
  • Easement of necessity -An easement of necessity is co-extensive with the necessity as it existed when the easement was imposed.
  • Other easements -The extent of any other easement and the mode of its enjoyment must be fixed with reference to the probable intention of the parties, and the purpose for which the right was imposed or acquired. In the absence of evidence as to such intention and purpose-
    • .(a) Right of way -A right of way of any one kind does not include a right of way of any other kind;
    • (b) Right to light or air acquired by grant -The extent of a right to the passage of light or air to a certain window, door on other opening, imposed by a testamentary or non-testamentary instrument, is the quantity of light or air that entered the opening at the time the testator died or the non-testamentary instrument was made;
    • (c) Prescriptive right to light or air -The extent of a prescriptive right to the passage of light or air to a certain window, door or other opening is that quantity of light or air which has been accustomed to enter that opening during the whole of the prescriptive period irrespectively of the purposes for which it has been used;
    • (d) Prescriptive right to pollute air or water-The extent of a prescriptive right to pollute air or water is the extent of the pollution at the commencement of the period of user on completion of which the right arose; and
    • (e) Other prescriptive rights -The extent of every other prescriptive right and the mode of its enjoyment must be determined by the accustomed user of the right.

Sec. 29 of the Easement Act reads as under:

  • 29. Increase of easement -The dominant owner cannot, by merely altering or adding to the dominant heritage, substantially increase an easement. Where an easement has been granted or bequeathed so that its extent shall be proportionate to the extent of the dominant heritage, if the dominant heritage is increased by allution, the easement is proportionately increased, and if the dominant heritage is diminished by dilution, the easement is proportionately diminished. Save as aforesaid, no easement is effected by any change in the extent of the dominant or the servient heritage.

Existence of alternate way will End Easement of Necessity

Existence of alternate way, how ever inconvenient, will end Easement of Necessity.

  • See: Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622
  • Gouri Amma Krishnamma v. Seethalakshmi Amma, AIR 2004 Ker 75,
  • Thilakraj v. Sebastian, 2014-4 Ker LT 714, 2014 KHC 5042,
  • Rameshchandra Bhikhabhai Patel v. Sakriben,  AIR 1978 Guj 62.

In Hero Vinoth (Minor) v. Seshammal, (2006) 5 SCC 545, AIR 2006 SC 2234, it is held that an easement by grant would not get extinguished under Section 41 of the Act which relates to an easement of necessity.

Easement of Necessity is limited to Barest Necessity, however inconvenient it is

In Hero Vinoth (Minor) vs. Seshammal, (2006) 5 SCC 545, AIR 2006 SC 2234, our Apex Court held as under:

  • “An easement of necessity is one which is not merely necessary for the reasonable enjoyment of the dominant tenement, but one where dominant tenement cannot be used at all without the easement. The burden of the servient owner in such a case is not on the basis of any concession or grant made by him for consideration or otherwise, but it is by way of a legal obligation enabling the dominant owner to use his land. It is limited to the barest necessity however inconvenient it is irrespective of the question whether a better access could be given by the servient owner or not. When an alternate access becomes available, the legal necessity of burdening the servient owner ceases and the easement of necessity by implication of law is legally withdrawn or extinguished as statutorily recognized in Section 41. Such an easement will last only as long as the absolute necessity exists. Such a legal extinction cannot apply to an acquisition by grant and Section 41 is not applicable in such case.”

Who has the Burden to show Alternate Way

In Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, it is held that the plaintiff claiming easement of necessity or grant has only a primary burden to prove the absence of any alternate pathway.

“In a case where the original plaintiff was claiming easement right either as grant or as of necessity the plaintiff has only a primary burden to prove the absence of any alternate pathway. As the defendants have not proved the existence of any pathway for access to Plaint `A’ schedule property the version of the plaintiff that there is no alternate pathway shall be accepted. … The defendants have not entered the witness box to disprove the evidence led by the plaintiff.

Who has the Onus to show Alternate Way Could Not be Used ‘As Of Right’

When the existence of alternate way is shown by the alleged servient owner of easement of necessity, the onus to prove that the way cannot be used “as of right” is upon the dominant owner. In Antony @ Anthappan v. George,  LAWS(KER) 2012-11-179 it is held by t6he Kerala High Court as under:

  • “11. When the existence of an alternate way is shown, the appellants ought to have shown that they could not use it as of right. That is because that is a matter within the knowledge of the appellants. The appellants did not adduce evidence in that line.”

The High Court then remanded the case giving the dominant owners an opportunity to adduce evidence to show that the alternate way was not one which they were entitled to use as of right.

Apparent and Continuous Easements

Sec. 5 of the Easements Act defines apparent and continuous easements.

  • An apparent easement is defined as one the existence of which is shown by some permanent sign which, upon careful inspection by a competent person, would be visible to him; and
  • a continuous easement is one whose enjoyment is, or may be, continual without the act of man.

Easement of Necessity and Quasi Easement

  • Easement of Necessity: even if – no visible sign (not apparent); and even if – never used before (not continuous). E.g., a foot path to a landlocked plot.
    • But, there should have strict necessity.
  • Quasi Easement – must be visible (apparent) and must be functioning without repeated human action (continuous). E.g., water flowing through a pipe or a drainage system.
    • It is based on prior use before land division.
    • It requires only reasonable necessity, not strict necessity.

Implied Grant and Quasi-Easement

  • The question of implied grant (or quasi-easement) arises only if the alleged easement is:
    • Apparent (i.e., visible upon reasonable inspection), and
    • Continuous (i.e., functions without repeated human intervention)
  • E.g., Water flowing through a pipe, A drainage trench, Overhead electric cables.

Implied Grant and Quasi Easement in a ‘Formed’ Way

There could be no implied grant where the easements are not continuous and non-apparent. But, in Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, our Apex Court found quasi easement under Section 13(b) of the Indian Easements Act over a way in the following circumstances –

  • Though there could be no implied grant where the easements are not continuous and non-apparent, if there is a ‘formed road’ existing over one part of the tenement for the apparent use of another portion or there is ‘some permanence in the adaptation of the tenement’ from which continuity may be inferred, an exception can be inferred (Annapurna Dutta vs. Santosh Kumar Sett, AIR 1937 Cal.661, B.K. Mukherjee, referred to).
  • There was implied grant of ‘B’ schedule property as pathway, which can be inferred from the circumstances for the reason that no other pathway was provided for access to dominant property and there was no objection also to the use of disputed way by the plaintiff.
  • An easement may arise by implication, if the intention to grant can properly be inferred either from the terms of the grant or the circumstances.
  • A trace of the pathway could be presumed to be in existence from the time when the plaintiff acquired the properties by separation of tenements.
  • Only access to the property was through disputed pathway.
  • It was required for the reasonable and convenient use of the plaintiff’s property and that on severance of the tenements, plaintiff can be presumed to have got a right over disputed pathway by an implied grant and also an easement of necessity.
  • The user was not obstructed for very long time.
  • There was no reason to disbelieve the plaintiff’s version that disputed way was given as grant for his use as he was a close relative of the former.
  • There was an apparent and continuous use which was necessary for the enjoyment of the `A’ schedule property within the meaning of Section 13(b) of the Indian Easements Act.
  • The defendants have not entered the witness box to disprove the evidence led by the plaintiff.
  • Therefore, the plaintiff was entitled to easement right in respect of the pathway.

Pleaded ‘Grant’; Not, Implied Grant – Apex Court, allowed Implied Grant

Though the plaintiff pleaded only ‘Grant’, and not, Implied Grant,  our Apex Court, in Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, allowed Implied Grant observing as under:

  • “It is true that the defendant/appellant alleged that no implied grant was pleaded in the plaint. The Trial Court, in our view, was justified in holding that such pleadings were not necessary when it did not make a difference to the finding arrived at with respect to the easement by way of grant. Accordingly, there is no substance in the argument raised by the learned senior counsel for the appellants.”

Grant of Right of Way must be Liberally Construed

Katiyar on Easements repeatedly said in his treatise that a ‘grant of right of way must be liberally construed’ to ensure the dominant owner’s beneficial enjoyment of his land. Gale on Easements (leading English treatise) and “Law of Easements and Licenses” by P.S. Narayana also emphasised this principle.

In Mathai v. Jordi Poulose,  ILR 2011-2 Ker 484; 2011-2 KHC 591; 2011-2 KLT 605, it was found that the suit agreement, made it clear that the right given thereunder was not a personal right but a right for the beneficial enjoyment for the property, and it could only be a right of easement and not a licence. The High Court  referring Ram Sarup Gupta v. Bishun Narain Inter College, AIR 1987 SC 1242, said further as under:

  • “18. True, the plaint did not specifically show that appellant has claimed a right of easement by grant. But as rightly argued by the learned counsel appearing for the appellant, a pleading must be liberally construed and placing undue emphasis on the form is not in the interest of justice. The Honourable Supreme Court in Ram Sarup Gupta v. Bishun Narain Inter College (AIR 1987 SC 1242) held:
  • “It is well settled that in the absence of pleading, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to meet. In order to have a fair trial it is imperative that the party should state the essential material facts so that other party may not be taken by surprise. The pleadings however should receive a liberal construction, no pedantic approach should be adopted to defeat justice on hair splitting technicalities. Sometimes, pleadings are expressed in words which may not expressly make out a case in accordance with strict interpretation of law, in such a case it is the duty of the Court to ascertain the substance of the pleadings to determine the question. It is not desirable to place undue emphasis on form, instead the substance of the pleadings should be considered. Whenever the question about lack of pleading is raised the enquiry should not be so much about the form of the pleadings, instead the Court must find out whether in substance the parties knew the case and the issues upon which they went to trial. Once it is found that in spite of deficiency in the pleadings parties knew the case and they proceeded to trial on those issues by producing evidence, in that event it would not be open to a party to raise the question of absence of pleadings in appeal.”

Leading English cases on – Easements cannot be Increased

Following are the leading English cases extensively referred by Katiyar (on Easements) in this regard-

1. Williams v. James: [1867] LR 2 CP 577, held that ‘a right of way obtained by prescription for the purpose of carting hay to field ‘cannot be increased so as to affect the servient tenement by imposing upon it any additional burthen’.

  • This decision is followed in Jotindra Mohan Mitter v. Probodh Kumar Dutt, AIR 1932 Cal 249, and it was held –
  • “In ascertaining the extent of the right of user of a road when the condition of the adjoining property has been altered, the fact that there was plenty of room in the road had never been taken into consideration. The right must be measured according to the principle laid down by Wills, J., in Williams v. James [1867] 2 C.P. 577 as a reasonable use for the purpose of the land in the condition in which it was when the user took place, that is in the case of this mansion, in the state in which it was when the grant was made. The matter must however be looked at reasonably, and no small addition to the house would be improper. Here there had been a very large increase.

2. Wimbledon and Putney Commons Conservators v. Dixon: (1875) 1 Ch D 362, held that ‘if a right of way to a field be proved by evidence of user, however general, for whatever purpose qua field, the person who is the owner of that field cannot from that say, I have a right to turn that field into a manufactory, or into a town, and then use the way for the purpose of the manufactory or town so built.’

  • This decision is followed in Manchersha Sorabji Shet v. Virijvalavdas Jekisandas, (1926) 28 BomLR 1158, and it was held –
  • “In Wimbledon and Putney Commons Conservators v. Dixon (1875) 1 Ch D 362 it was held that the immemorial user of a right of way for all purposes for which a road was wanted in the then condition of the property, does not establish a right of way for all purposes in an altered condition of the property where that would impose a greater burden on the servient tenement. Where a road had been immemorially used to a farm not only for usual agricultural purposes, but in certain instances for carrying building materials to enlarge the farm-house and rebuild a cottage on the farm, and for carting away sand and gravel dug out of the farm, it was decided that those circumstances did not establish a right of way for carting the materials required for building a number of new houses on the land.”

3. Corporation of London v. Riggs (1880) 13 Ch. D. 798 held that a right of way of necessity is not a general right “for all purposes”; it is limited to the uses to which it had been put at the time when the action first arose or when the way of necessity was created.

  • This decision is followed in Manchersha Sorabji Shet v. Virijvalavdas Jekisandas, (1926) 28 BomLR 1158, and it was held –
  • “Again, in Corporation of London v. Riggs (1880) 13 Ch.D. 798 the head-note runs as follows :- Where the owner of a close surrounded by his own land grants the land and reserves the close, the implied right to a way of necessity to and from the close over the land operates by way of re-grant from the grantee of the land, and is limited by the necessity which created it.”

Will Easement of Necessity Ripen into a Prescriptive Easement?

In other words-

  • Can one claim ‘easement of necessity’ and ‘easement by prescription’ with respect to a (same) way?  
  • Does a way  that started with minimum width (say a foot-path) under the claim ‘easement of necessity’, and continued with a higher width (so that cars can be taken), in the course of time,  for more than 20 years, will yield or bring-in ‘easement by prescription’?

We find answer in negative form in Tanba Nusaji Mahajan v, Pandhari Mahajan, 2004 (6) BomCR 782, 2004 (4) MhLJ 109. It is held as under:

  • “10. However, a way of necessity is distinguished from the right of way acquired by prescription and cannot ripen into a prescriptive easement so long as the necessity continues. A way of necessity arises by virtue of conditions entirely different from easement of way created by prescription. The former arises by implication of law out of the necessities of the case and is based upon principle of law which negative the existence of a way by continuous adverse user. The acquisition of way by adverse user is based upon the theory of the hostility of the use to the title of the person over whose lands it is acquired, while a way of necessity is based upon an implication of an intended grant and the use of it is based entirely upon such implication or consent to its use.”

Read: Prescriptive Rights in Easements and Adverse Possession – Inchoate until Title thereof is Upheld by a Competent Court

“In or upon, or in respect of, certain other land not his own”

Easement is a right to do something in or upon land of another. Even if the easement involves ‘construction’, it should be of another; because, Sec. 4: Explanation reads: “land” includes also things permanently attached to earth.

If the subsisting-construction is made by, or it belongs to, dominant owner, no doubt, there will be no easement. [1987 (2) Ker LT 1037 (Bund); AIR 1915 PC 131 (Jetty); AIR 1971 SC 1878].

  • Vasudeva Prabhu   Madhava Prabhu, AIR 1993 Ker 68 (no easement in co-ownership property)
  • Venkateswaraswamivari Devasthanam v. Velidandla Kanakalakshmi, AIR 1976 AP 250
  • Sumanlal Bhagwandas v. Naginlal Bhagwandas, AIR 1967 Guj 87,
  • Raychand Vanmali-das v. Maneklal Mansukhbhai, AIR 1946 Bom 266
  • Marghabhai Vallavbhai v. Motibhai Mithabhai, AIR 1932 Bom 513.

Beneficial Enjoymentin Easement includes Removal and Appropriation

The Explanation to the definition of Easement (in Sec. 4) reads as under:

  • “Explanation – In the first and second clauses of this section, the expression “land” includes also things permanently attached to the earth;
  • the expression “beneficial enjoyment” includes also possible convenience, remote advantage, and even a mere amenity;
  • and the expression “to do something” includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage, or anything growing or subsisting thereon.”

Easement Not Allows to ‘Enjoy’ After Making a Construction or Cultivation.

Easement is a Right for ‘enjoyment’ of things ‘subsisting’.  It is a Right for limited enjoyment, and advantages arising from its situation; and it does not allow to build-and-enjoy. It is clear from Sec. 7 which indicates that easement is only a right for limited enjoyment of (a) land and (b) advantages arising from its situation. It is also clear from the Scheme of the Act as shown under:

  • S. 4 An easement is a ‘right which the owner or occupier of certain land possesses’ “as such”
  • S.4: Illustn. (d):  Graze cattle, take water and fish out from the tank, take timber from wood, take fallen leaves for manuring .
  • S. 7: Only a right for limited enjoyment of (a) land & (b) advantages arising from its situation. (It is stated:  Easements are restrictions of (a) Exclusive right (of owner) to enjoy immovable property, (b) Rights to advantages arising from its situation)
  • S. 12 An easement is acquired by owner an immovable property.
  • S. 17: Not a right – to tend to total destruction of the servient tenement. (2003 (1) KLT 320)
  • S. 21 An easement must not be used for any purpose not connected with enjoyment of the dominant heritage.
  • S. 22: Exercise easement – least onerous to servient tenement (Illustn.- b: can cut thatching- grass, not to destroy plants)
  • S. 23: Not to make additional burden (Illus.- b: not to advance eaves; Illus.- d: not another pollution)
  • S. 24: Secure full enjoyment, but cause as little inconvenience.  Illus. (a) easement to lay pipes
  • S. 27: Servient owner is entitled to use – consistent with  easement
  • S. 28: Easements of  necessity, Right of way, Other prescriptive rights not to enlarge purpose, accustomed user etc.
  • S. 29: Dominant owner Cannot substantially increase an easement
  • S. 31: If excessive user – servient owner may obstruct the user.
  • S. 43: Permanent change in the dominant heritage and the burden increased – easement is extinguished

Easement and Grant

The term ‘Grant’ is used in law to denote-

  • A generic term to mean ‘transfer’ of immovable property (e.g., sale, lease, gift etc.).
  • But, it will not be a ‘transfer’ of property; and remain as a concession, permission, settlement, grant of easement etc., if it is used in place of ‘transfer’, purposefully, to denote a lesser right.
  • Present, aid, help etc., and the act of a settlor of trust, or of donor of a charity.
  • A technical term to denote conditional-transfer of lands by sovereign especially when it is purposefully used to differentiate from ‘transfer’ of property.
  • More than a licence (which does not create an estate or interest) and less than an outright and unconditional ‘transfer’ of property.

Characteristics of ‘Grant’

  • Usually it denotes a grant by deed.
  • It can be with or without consideration.
  • Unless specifically specified, it is creation of an ‘interest’ in property (in case of easement, no interest is created; but only a right of enjoyment). 
  • As long as the conditions are fulfilled, grant is usually irrevocable.
  • Conditions can also be fixed to limit the period of grant.
  • Inferior interest, out of an interest retained by the grantor, e.g. the grant of a lease of land by the person holding the freehold. (Collins Dictionary of Law).

Doctrine of ‘Designed Purpose‘ and Easement of Necessity

Easement of necessity can be claimed for effective user of a property, in the ordinary course for its designed purpose, if it is ‘essentially necessary’(with required width – for taking vehicles also – in case of a way).

Read Blog: Extent of Easement (Width of Way) in Easement of Necessity, Quasi Easement and Implied Grant

Grant’ – Salmond on Jurisprudence

What is ‘grant’ is stated in Salmond’s Jurisprudence, 12th Edition, at pages 338-339, under the heading ‘The Classes of Agreements’. According to Salmond  a grant

  • ” is an agreement“,
  • “creates a right
  • is NOT “a right in Personam between the parties to it”,
  • examples – “grants of leases, easements, charges, patents, franchises, licences and so forth“.

Salmond distinguishes ‘grant’ from other legal concepts as under.

  • “…. A contract is an agreement which creates an obligation or a right in personam between the parties to it.
  • grant is an agreement which creates a right of any other description; examples being grants of leases, easements, charges, patents, franchises, licences and so forth.
  • An agreement which transfers a right may be termed generically an assignment. On which extinguishes a right is a release, discharge, or surrender.” (Quoted in H. Anraj v. Government of Tamil Nadu  (& Shri Dipak Dhar v. The State of West Bengal), AIR 1986 SC 63: (1986) 1 SCC 414.)

Taken from: What is Easement? Does Right of Easement Allow to ‘Enjoy’ After Making a Construction?

Should Date of Beginning of 20 Years be pleaded?

In Justiniano Antao v. Bernadette B. Pereira, (2005) 1 SCC 471, it was pointed out as follows:

  • “In order to establish a right by way of prescription to the detriment of the other party, one has to show that the incumbent has been using the land as of right peacefully and openly and without any interruption for the last 20 years. There should be specific pleadings and categorical evidence in general and specifically that since what date to which date one is using the access for the last 20 years.”

Kerala High Court, in Soman Nair v. Manoj Kumar, 2014 (P. Bhavadasan, J.) distinguished the decision Justiniano Antao v. Bernadette B. Pereira, observing as under:

  • “12. A reading of the decision reported in Justiniano Antao’s case (cited supra) would reveal that the dictum has to be read in the context of facts of the case. That was a case where the Apex Court found that till 1984, the claimant was using another way and only thereafter the claim over the way through servient tenement was made. A vague assertion had been made in the said case that the pathway has been used for a long time. It was under those circumstances, the Apex Court had occasion to hold as mentioned above.
  • 13. In the case on hand, the definite pleading as could be culled out from the written statement and counter claim is that defendants as well as their predecessors-in-interest have been using the pathway in question for a long time in fact for more than 30 years and this is only means of access  to their property.”

Pappachan v. Alex, ILR 2023-3 Ker 523; 2023-5 KHC 10, distinguished the decision Justiniano Antao v. Bernadette B. Pereira, observing as under:

  • “24. In Justiniano Antao (supra) there was no pleading by the plaintiff that she used the pathway in question for a period of 20 years. Holding that in the absence of such a pleading which is elementary and essential to claim a prescriptive easement right, the Apex Court held that the date from which the right of way was started to use should have been pleaded. The pleadings set forth by the appellants in this case certainly constitute sufficient pleadings to claim easement by prescription. It is true that they did not plead as to from which date they started using that pathway. They, however, pleaded that for the last more than 35 years they have been using that pathway. In the light of such a specific pleadings the law laid down in Justiniano Antao [(2005) 1 SCC 471] does not disentitle the appellants from claiming the relief.”

Prescriptive easement is created by adverse user, by the Hostile use

It is held in Kantaben Parsottamdas v. Ganshyambhai Ramkrishan Purohit, AIR 2022  Guj  146, as under:

  • “15. It is pertinent to note that the prescriptive easement is created by adverse user, by the hostile use to the title of servient owner, whereas easement of necessity is based upon the grant either express or implied.”

Easement by Prescription – ‘Acquires’ by “Hostile or Notorious Act

Chapsibhai Dhanjibhai Danad vs Purushotram, 1971 AIR 1878, it was pointed out as under:

  • “In Ravachand v. Maniklal (ILR 1946 Bom. 184), it was held that an easement by prescription under ss. 12 and 15 of the Act is in fact an assertion of a hostile claim of certain rights over another man’s property and in order to acquire the easement the person who asserts the hostile claim must prove that he had the consciousness to exercise that hostile claim on a property which is not his own and where no such consciousness is proved he cannot establish a prescriptive acquisition of the fight.”

In Raychand Vanmalidas vs Maneklal Mansukhbhai, (1946) 48 BomLR 25, it was held as under:

  • “In any case it must be shown that the right was enjoyed as an easement, that is, as an assertion of a hostile claim of certain limited rights over somebody else’s property. Such an assertion cannot be held proved without satisfactory proof of the requisite consciousness. Prescriptive easement, as opposed to easement by grant, is always hostile. It is in fact an assertion of a hostile claim of certain rights over another man’s property and as such it resembles in some respects the claim to ownership by adverse possession of property; both are of hostile origin and are, therefore, prescriptive rights obtained by adverse enjoyment for a certain period, the difference being that while in the case of adverse possession the possessor must assert his own ownership, in the case of easement he must assert limited rights of user on a property and acknowledge its ownership in some one else. It must, therefore, follow, in my opinion, that a person who asserts such a hostile claim must prove that he had the consciousness of exercising that hostile claim on a property which is not his own, and where no such consciousness is proved, he cannot prove the prescriptive acquisition of the right”.

Easement by prescription is ‘acquired’ by ‘prescriptive’ user. It should not have been by permission or agreement. In case of easement, law requires pleading and proof – that the right claimed was enjoyed independent of any express permission (Bachhaj Nahar Vs. Nilima Mandal, AIR 2009 SC 1103).

It is held in Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 62, that the acquisition of easement by prescription may be classified under the head of implied grant; for, all prescription presupposes a grant.

Easement-by-Prescription – ‘Grant’or Acquisition by “Hostile or Notorious Act”

The basis of every right of easement is theoretically a grant from the servient-owner. Grant is presumed in easement by prescription, from long and continued user. Is there incongruity (in easement by prescription) between ‘grant’ (on one part) and ‘acquisition’ of easement by “prescription” which suggests ‘adverse’ and ‘hostile or notorious’ user (on the other part)?

  • The answer would be that the ‘grant’ herein is only a “presumption in law; and virtually, easement by prescription has to be acquired by hostile and/or notorious acts.

Tanba Nusaji Mahajan v. Pandhari Mahajan, 2004 (6) BomCR 782, 2004 (4) MhLJ 109 lays down the legal position accepted by Indian law, clearly, as under:

  • “The acquisition of way by adverse user is based upon the theory of the hostility of the use to the title of the person over whose lands it is acquired, while a way of necessity is based upon an implication of an intended grant and the use of it is based entirely upon such implication or consent to its use.”

Should plaintiff schedule Servient Heritage?

In P. V. Abdul Majeed Hajiv.  Shorabi, 2020-4 KHC 53; 2020-4 KLT 629 the Kerala High Court answered the question with reference to Order VII Rule 3 CPC.  It is held as under:

  • “4. … For claiming prescriptive right of easement, the servient heritage over which the claim is raised should be specifically and separately scheduled in the plaint so as to grant a decree in accordance with the mandate under Order VII Rule 3 CPC.”

In Kizhakke Neliyarambath Rafeek v. Thavararakkattil Choyikutty Master, 2021-5 KHC 592; 2021-5 KLT 574, it is held as under:

  • “12. On a reading of the common judgment of the first appellate court dated 18.6.2019, this Court is of the view that the court correctly analysed the points for consideration in the impugned judgment. The first appellate court mainly arrived at the following conclusions:-
  • …. The pathway claimed by the plaintiff therein alone is scheduled as schedule ‘B’. In a suit for easement right, the servient heritage and dominant heritage must be shown in the plaint as separate schedules.”

Dominant Owner  Cannot Dispute The Title Of The Servient Owner

It is trite law that the dominant owner  cannot dispute the title of the servient owner (Reghuprasad v. M.  Raghunathan, AIR 2020 Ker 16). 

In Omana v. Reji Kurian, AIR 2022 Ker 91, it is held (K. Babu, J.) as under:

  • “19. Yet another aspect that requires consideration is that the pleadings of the defendants in the written statement go in the line, denying the title of the plaintiff over the ‘B’ schedule way. One of the fundamental ingredients in a claim of easement is the admission of the title of the servient owner by the dominant owner. On this ground alone, the claim of the defendants over plaint ‘B’ schedule property by way of easement by prescription must fail.”

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“Otherwise Through an Account” in Section 142, NI Act

Jojy George Koduvath.

Taken from the Blog: Where to file Cheque Bounce Cases (Jurisdiction of Court – to file NI Act Complaint)?

The Negotiable Instruments Act, 1881, Sub Sec. (2) of Sec. 142 reads as under:

  • “(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction
  • (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
  • (b) if the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.

The words ‘otherwise through an account‘ requires explanation. It can be simplified as under:

  • if the cheque is presented for payment by the payee or holder in due course directly# otherwise through an account in the bank of the drawer, (the proper court is that within whose local jurisdiction) the branch of the drawee bank where the drawer maintains the account, is situated.
  • #E.g. (i) a bearer cheque (contra-distinct to account-payee cheque), presented directly in the drawee Bank, over the counter” (Brijendra Enterprise v. State of Gujarat, 2016(3) Guj LH 143; Mahendra Kumar Kedarnath Modi v. State of Gujarat, 2018 (1) Guj LH 288; 2018 (2) Crimes 441).
  • E.g. (ii) Using Kiosk Banking facility – Reserve Bank of India introduced the system of Kiosk Banking under which specified persons can avail  the banking facilities like cheque transfers, money transfers, balance inquiries, cash deposits, remittances etc., similar to that of ATM/CDM facility (See: Mahendra Kumar Agarwal v. The State of West Bengal, 2021 Cr LJ 3889; 2022-3 BC 135).

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No Application Needed for Filing or Admitting Copy of Document

Taken from the Blog: Secondary Evidence of Documents & Objections to Admissibility – How & When?

Saji Koduvath, Advocate, Kottayam.

No Application Needed for Filing or Admitting Secondary Evidence

Section 65of the Evidence Act permits secondary evidence in the circumstances or contingencies mentioned therein. The admissibility of the evidence, and the question whether the conditions for leading the secondary evidence are satisfied or not, comes for consideration only in the trial and at the time of exhibiting the document. It is no doubt clear that before adducing the secondary evidence, the party concerned has to establish that the situation stipulated in section 65 exists.

No Petition required for Filing or Admitting Photocopy

Our Apex Court held in Dhanpat v. Sheo Ram, (2020) 16 SCC 209, as under:

  • “20. There is no requirement that an application is required to be filed in terms of Section 65(c) of the Evidence Act before the secondary evidence is led. A party to the lis may choose to file an application which is required to be considered by the trial court but if any party to the suit has laid foundation of leading of secondary evidence, either in the plaint or in evidence, the secondary evidence cannot be ousted for consideration only because an application for permission to lead secondary evidence was not filed.”

In Satyam Kumar Sah v. Narcotic Control Bureau, 2019 SCC OnLine Del 8409, it is pointed out that Section 65 does not contemplate filing of any application or seeking prior permission of the court for leading secondary evidence; and that merely because an application under Section 65, Indian Evidence Act was filed and allowed, would not ipso facto make secondary evidence admissible, which is otherwise inadmissible.

Loss of Original: It is incumbent upon the party producing the secondary evidence to prove the loss of original under Sec. 65 Clause (c).  Permission is also needed to lead secondary evidence.

In a suit for specific performance, in Hira v. Smt. Gurbachan Kaur, 1988 (2) PLR 173, photocopy of the suit agreement alone was produced. After beginning evidence it was submitted that original was lost and application was filed seeking permission to adduce copy. Besides the delay in submitting loss of original, the plaintiff did not state when and under what circumstance the original was lost. In these circumstances the High Court found that the denial of permission to lead secondary evidence, by the trial court, was justifiable. (See also: Gurditta v. Balkar Singh, 1989 (1) PLR 418; Sobha Rani v. Ravikumar– AIR 1999 P&H 21).

In Raj Kumari v. Lal Chand, 1994 (1) Civil Court Cases 477, an issue was raised as to whether the applicant was entitled to secondary evidence. Therefore, it was held that the loss of the document was not required to be proved before trial, on the application under Section 65 Evidence Act.

  • Note: It appears that in a proper case, in its very peculiar facts, it may be justified in non-suiting the plaintiff, taking a preliminary issue on non-production of original, or insufficiency of grounds for non-production of original; but, it appers, it cannot be taken as a general rule.

Photocopy is a Reliable Secondary Evidence

It falls under Sec. 63(2) it being the product of ‘mechanical processes which in themselves insure the accuracy of the copy‘. In Y. Narasimha Rao v. Y. Venkata Lakshmi, 1991-3 SCC 451, it is held as under:

  • “A photostat copy is prepared by mechanical process which in itself ensures the accuracy of the original.”

In M.  Ratnavarma Padival v. Rathnavarma Ajri, 2023-6 KarLJ 614, it is held as under:

  • “Xerox copy, as is known in common parlance, is a photostat copy, made from a mechanical proces , which ensures the accuracy. To bring a photostat copy, within the ambit of the first part of secondary evidence, as provided in Sec. 63(2) of the Indian Evidence Act, one must establish that the copy is made from the original through a mechanical process which ensures the accuracy.”
  • See also:
  • C.  Siva Ranadheer Raju v. K.  Prasannalakshmi, AIR 2023  AP 43
  • Amangenti Prameela v. P. Venkat Reddy, 2004 (3) ALT 218
  • Shaikh Aftab Ahmed v. Bhimrao, 2020-1 BomCR 251
  • Nirma Limited v. Addl. Dist. and Sessions Judge Sojat, 2019 3 CivCC 733, (Raj);
  • Keshu Ram v. Sonaki Bai, AIR 2018 Raj. 10

Contra Proposition – ‘Accuracy shall be Established on Oath’

In Aneeta v. Saraswati, (2012)4 MPLJ 56, it was held that for admitting a document as secondary evidence not only the satisfaction of Sec. 65 was required, but it was also required that photocopy was compared with the original in terms of Section 63(3). Referring this decision it is observed in Makhanlal v. Balaram, 2018-1 RN 174 (MP) as under:

“The application filed by the petitioner reveals that no factual foundation was laid by the petitioner in respect of the preparation of the photocopy from the original, comparing the copy with the original or its preparation by such mechanical process which ensures the accuracy of the copy .”

As regards Photocopy, it is laid down in Surinder Kaur v. Mehal Singh, 2014(1) R.C.R. (civil) 467 (P&H) as under:

  • “a) Photostat copy of a document can be allowed to be produced only in absence of original document.
  • b) When a party seeks to produce Photostat copy it has to lay the foundational facts by proving that original document existed and is lost or is in possession of opposite party who failed to produce it.
  • Mere assertion of the party is not sufficient to prove these foundational facts.
  • c) The objections as to non existence of such circumstances or non existence of foundational facts must be taken at earliest by the opposite party after the photostat copy is tendered in evidence.
  • d) When the opposite party raises objection as to authenticity of the Photostat copy its authenticity has to be determined as every copy made from a mechanical process may not be accurate. Both the requirements of clause (2) of section 63 are to be satisfied.
  • e) Allowing production of Photostat copy in evidence does not amount to its proof. Its probative value has to be proved and assessed independently. It has to be shown that it was made from original at particular place and time.
  • f) In cases where the Photostat copy is itself suspicious it should not be relied upon. Unless the court is satisfied that the Photostat copy is genuine and accurate it should not be read in evidence.
  • g) The accuracy of Photostat copy shall be established on oath to the satisfaction of court by the person who prepared such copy or who can speak of its accuracy.”
    • Note: It appears that the proposition, ‘accuracy shall be established on oath’, is a surplusage (for, a photocopy, by itself, ‘insures the accuracy of the copy’ under Sec. 63, and the court is free to apply the presumptions under Sec. 114).

What are the instances where Notice is not required to render Secondary Evidence 

As per Section 66, there is no need to render a notice for tendering a secondary evidence:

  • “(1) when the document to be proved is itself a notice;
  • (2) when, from the nature of the case, the adverse party must know that he will be required to produce it;
  • (3) when it appears or is proved that the adverse party has obtained possession of the original by fraud or force;
  • (4) when the adverse party or his agent has the original in Court;
  • (5) when the adverse party or his agent has admitted the loss of the document;
  • (6) when the person in possession of the document is out of reach of, or not subject to, the process of the Court.”

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Sale Deeds Without Consideration – Void

Jojy George Koduvath.

Sale Deeds Without Consideration – Void

According to Sec. 54 of the Transfer of Property Act, 1882, ‘sale’ is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

If a sale deed is executed without payment of price, it is not a sale. It is of no legal effect. Therefore, void (Kewal Krishnan v. Rajesh Kumar, AIR  2022 SC 564; Sujan Singh v. Lalsahab, TK Thommen, J., 1993 JLJ 552). It could be ignored.  In the light of these legal principles it was found in Kewal Krishnan v. Rajesh Kumar, AIR  2022 SC 564, that that the respondent-purchasers had no earning capacity and no evidence was adduced by them about the payment of the price mentioned in the sale deeds; and hence, the sale deeds were held as void.

Nominal sale consideration – Cannot be said to be a sale Without Consideration

In Placido Francisco Pinto v. Jose Francisco Pinto, 2021 4 CivCC 284;2021 9 JT 456; 2021 8 MLJ 565; 2021 4 RCR(Civ) 471; 2021 11 Scale 575, it is found –

Executing a sale deed mentioning a nominal sale consideration – cannot be said to be a sale without consideration. And it is pointed out that what is permitted to prove under Sec. 92 Evidence Act is “want or failure of consideration”. (Sec. 92 says that no evidence of any oral agreement or statement shall be admitted for the purpose of contradicting, varying, adding or subtracting from its terms.)

A void deed need not be challenged by claiming a declaration

It was also held by the Apex Court in Kewal Krishnan v. Rajesh Kumar, AIR 2022 SC 564, that a void deed need not be challenged by claiming a declaration; and that a plea thereof can be set up and proved even in collateral proceedings.

Price constitutes an Essential ingredient of Sale

The Supreme Court held in Vidhyadhar v. Mankikrao,1999-3 SCC 573, that the sale under Sec. 54 of the TTP Act, being a transfer of ownership in exchange for a price paid or promised, in order to constitute a sale there must be exchange of a price. It is held as under:

  • “The definition further says that the transfer of ownership has to be for a “price paid or promised or part-paid and part-promised”. Price thus constitutes an essential ingredient of the transaction of sale. …”
  • “The real test is the intention of the parties. In order to constitute a “sale”, the parties must intend to transfer the ownership of the property and they must also intend that the price would be paid either in presenti or in future. The intention is to be gathered from the recital in the sale deed, conduct of the parties and the evidence on record.”

The Supreme Court in Kaliaperumal v. Rajagopal, 2009 4 SCC 193, held that payment of entire consideration is not a condition precedent for completion of sale and passing of title. In such a case the vendor cannot avoid the sale, though he is entitled to a charge upon the property for the unpaid part of the sale price, under Section 55(4)(b) of the Act. It was further pointed out that the true test of passing of property is the intention of parties. The Apex Court held as under:

  • “Such intention is primarily to be gathered and determined from the recitals of the sale deed. When the recitals are insufficient or ambiguous the surrounding circumstances and conduct of parties can be looked into for ascertaining the intention, subject to the limitations placed by Section 92 of the Evidence Act.”

It is noteworthy that the 1st proviso to Section 92 of the Evidence Act enables to give proof on ‘want or failure of consideration’ which would ‘invalidate the document’.

In Jant Ram Satnami v. Daya Das Satnami,  2019-2 CGLJ 168, 2019-1 Civ LJ 914, it was held that whether the vendor really intended to transfer the ownership by execution and registration, or contracted to do so only after receipt of the consideration as a condition precedent, would depend upon the terms of the contract.

Completion of “Sale” and Transfer of “Ownership”

Notwithstanding any recital of “sale” in a deed, it shall be open to show that a “ownership” was not transferred.

  • Sec. 55(4)(a) of the TP Act says – “The seller is entitled – (a) to the rents and profits of the property till the ownership thereof passes to the buyer ….”.
  • Sec. 55(5)(b) of the Act reads – “The buyer is bound – … (b) “pay or tender, at the time and place of completing the sale, the purchase money to the seller …”;

Admission of Consideration before Sub Registrar can be Withdrawn

Admission about receipt of consideration that is made before the Sub Registrar can be withdrawn under Sec 31 of the Evidence Act (Nagubai, AIR 1956 SC 593, Sujan Singh v. Lalsahab, TK Thommen, J., 1993 JLJ 552). The admission only shifts the onus. (Kishorilal, AIR 1959 SC 504).

Execution of a Registered Sale Deed is not Conclusive

It is pointed out in Sujan Singh v. Lalsahab, TK Thommen, J., 1993 JLJ 552, that the execution of a registered document is ‘not conclusive’ in the light of sub-Sec. (4) (a) and (5)(b), Sec. 55 of the TP Act, as shown above. If the “price” was not paid, the seller has the legal right to retain possession of the property and to enjoy “its rent and profits”. Law permits continuation of “ownership” on vendee notwithstanding any recital of “sale” in a deed. And, title will not stand legally passed on the execution of the document.


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BURDEN of PROOF – Initial Burden and Shifting Onus of Proof in Indian Law

Saji Koduvath, Advocate, Kottayam & Jojy George Koduvath, Kottayam.

Taken from: Rules on Burden of proof and Adverse Inference

Key Takeaways

  • 1. Burden of proof is always static and does not shift; onus of proof shifts.
    • Burden of proof it is upon whom who suffers, if no evidence on the question in dispute.
    • Burden of proof would be on the party who asserts the affirmative of the issue.
    • Plaintiff has to win on title A Plaintiff has to win the title-suit on his evidence; not on the weakness of the adversary.
    • But it must be noted that the plaintiff need to show only a high degree of probability and that it shifts the onus on the defendant.
    • Court is Entitled to Consider the Title set up by the Defendants also.
  • 2. Burden of Proof loses significance if both parties adduced evidence.
  • 3. Suit on title & high degree of probabilityIf plaintiff discharges his burden by showing high degree of probability (that the title vests in him), onus shifts.
    • Onus of proof ‘shifts’ on adducing adequate evidence by the party concerned.
    • If the defendant fails to release the onus shifted, the burden on plaintiff shall stand discharged (and the title with the plaintiff is inferred).
  • 4. Adverse inference is drawn when a party withholds documents, even if he has no burden.
    • If a party does not examine himself: Adverse inference is drawn if a party does not examine himself: But, it is Not an Invariable Rule.
    • Adverse inference is taken after considering (a) pleadings, (b) relevancy of the withheld evidence and (c) burden of proof.
    • Presumption and adverse inference for non-production of evidence are always optional.
  • 5. If the defendant establishes his right as lessee etc. If the defendant establishes his right to continue possession as lessee, licencee, mortgagee etc. (honouring title of the plaintiff) the plaintiff’s suit for possession will fail.
  • 6. Burden of proof is static; Contrary Observations are Legally Incorrect.
  • 7. When burden of proof is discharged?
  • When there is (i) sufficient evidence is adduced or (ii) admission by other side

Burden and Standard of Proof in English Law

The Evidence Act in force in India systematically codifies the rules of evidence in civil and criminal cases; and provides clear guidelines on what is admissible in court and how evidence is to be presented. But, in the UK (especially England and Wales), there is no full-fledged or comprehensive single enactment similar to the ‘Evidence Act’ in India.

Fundamentally, English courts follow the Common Law (judge-made law), with respect to the basic doctrines of evidence, such as Burden of proof, Standard of proof,  Probative evidence, Relevancy, Res gestae rule, Direct evidence, Circumstantial evidence, Primary evidence. Various procedural enactments provide piecemeal statutory provisions, also. The important statutes in this regard are-

  • Police and Criminal Evidence Act 1984 (PACE)
  • Criminal Justice Act 2003
  • Youth Justice and Criminal Evidence Act 1999
  • Civil Evidence Act 1995.

Burden of Proof’ and ‘Onus’ used in English Courts

‘Burden of proof’ is related to the requirement as to the standard of evidence placed upon each party to the legal proceedings. The burden or standard in criminal cases (“beyond a reasonable doubt”) is different from that in civil cases (“preponderance or balance of probabilities,” “a good arguable case,” or “much the better of the argument”).

The term ‘onus’ is also used in English courts in place of ‘burden of proof‘.

Indian Law: Abstract – Primary Principles

Burden of proof is static ; It never shifts

  • The burden of proof is always static and does not shift.
  • Burden of proof lies on the person, who would fail if no evidence is adduced on either side.
  • Ordinarily, the burden of proof would be on the party who asserts the affirmative of the issue and it rests, after evidence is gone into, upon the party against whom, at the time the question arises, judgment would be given, if no further evidence were to be adduced by either side.

See:

  • Kundanlal v. Custodian Evacuee Property, AIR 1961 SC 1316,
  • Raghavamma v. A. Chenchamma,AIR 1964 SC 136,
  • Bharat Barrel v. Amin Chand, (1999) 3 SCC 35,
  • Gian Chand & Brothers v. Rattan Lal, AIR 2013 SC 1078,
  • Rajesh Jain v. Ajay Singh, AIR 2023  SC 5018; 2023-10 SCC 148.

What is ‘Onus’ used in Indian Courts?

  • Onus means – ‘the responsibility or duty to do something.
  • Though the Indian Evidence Act does not contain the word “onus”, it is made clear by judicial pronouncements that it differs from the ‘static’ burden of proof. The onus of proof ‘shifts’ the duty of proving a fact upon one party when it is discharged, as the reply evidence is required from the other party.
  • Burden of Proof and Onus of Proof (as used in Indian Law) are recognized in English Law as ‘Legal Burden‘ and ‘Evidential Burden‘ respectively.

Halsbury’s Laws of England – ‘Legal burden‘ and ‘Evidential burden

Distinction between the legal burden of proof and evidential burden of proof  is expounded in Halsbury’s Laws of England, 4th Edition, Volume 17 [para 13 and 14]. It reads as under:

  • “13. The legal burden is the burden of proof which remains constant throughout a trial; it is the burden of establishing the facts and contentions which will support a party’s case. If at the conclusion of the trial he has failed to establish these to the appropriate standard, he will lose. The legal burden of proof normally rests upon the party desiring the court to take action; thus, a claimant must satisfy the court or tribunal that the conditions which entitle him to an award have been satisfied. In respect of a particular allegation, the burden lies upon the party for whom substantiation of that particular allegation is an essential of his case. There may therefore be separate burdens in a case with separate issues.”
  • “14. The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence?”

Onus of proof ‘shifts’

  • Onus of proof ‘shifts’ on adducing ‘satisfactory’ (or high degree of) evidence by the party upon whom the onus lies, and thus discharging his burden.

Burden of proof Loses its Importance

  • (a) if both parties adduced evidence
  • (b) if there is sufficient evidence on an issue.

Burden of proof remains academic

In such a situation, it remains academic:

  • Chidambara Sivaprakasa Pandara Sannadhigal v. Veerama Reddi, 49 IA 286 303: AIR 1922 PC 292 (referred to in: Seturatnam Aiyar v. Venkatachala Gounden, (1919)   47 IA 76 and Kumbham Lakshmanna v. Tangirala Venkateswarlu, AIR 1949 PC 278);
  • Union of India v. Sugauli Sugar Works (P) Ltd., 1976-3 SCC 32 (referred to in Sushil Kumar v. Rakesh Kumar, , 2003-8 SCC 673; Rakesh Kumar v. Sunil Kumar, 1999-2 SCC 489; Mohd.  Abdullah Azam Khan v. Nawab Kazim Ali Khan, 2022 (11 ) JT 214: 2022 (16 ) SCALE 689: 2023 KLT OnLine 1084 (SC)
  • Cox and Kings (Agents) Ltd. v. Workmen [(1977) 2 SCC 705 (referred to in Sushil Kumar v. Rakesh Kumar, , 2003-8 SCC 673; Rakesh Kumar v. Sunil Kumar, 1999-2 SCC 489; Mohd.  Abdullah Azam Khan v. Nawab Kazim Ali Khan, 2022 (11 ) JT 214: 2022 (16 ) SCALE 689: 2023 KLT OnLine 1084 (SC)
  • Raghunathi v. Raju Ramappa Shetty, AIR 1991 SC 1040;
  • Sushil Kumar v. Rakesh Kumar, 2003-8 SCC 673,
  • Mohd.  Abdullah Azam Khan v. Nawab Kazim Ali Khan, 2022 (11 ) JT 214: 2022 (16 ) SCALE 689: 2023 KLT OnLine 1084 (SC)

Burden of proof gets significance

  • (a) when no evidence at all on the question in dispute
  • (b) when a person on whom the burden of proof lay, failed to adduce any evidence altogether
  • (c) when no adequate evidence so as to shift onus, or
  • (d) when best evidence is withheld.
  • (e) when Court cannot “Make Up its Mind” from the evidence adduced (Kumbhan Lakshmanna v. Tangirala Venkateswarlu, AIR 1949 PC 278).

When burden of proof is discharged?

When there is (i) sufficient evidence is adduced or (ii) admission by other side

National Insurance Co. Ltd. vs. Rattani (2009) 2 SCC 75: AIR 2009 SC 1499, answers this question. It says –

  • 1. The question as to whether burden of proof has been discharged by a party to the lis or not, would depend upon the facts and circumstances of the case.
  • 2. If the facts are admitted or, if otherwise,sufficient materials have been brought on record so as to enable a Court to arrive at a definite conclusion, it is idle to contend that the party on whom the burden of proof lies would still be liable to produce direct evidence.

See also: Mohd. Abdullah Azam Khan Vs. Nawab Kazim Ali Khan, 2022 (11 ) JT 214: 2022 (16 ) SCALE 689: 2023 KLT OnLine 1084 (SC), National Insurance Company Ltd.  v. Savitri Devi, 2013-11 SCC 554.

Kumbhan Lakshmanna v. Tangirala Venkateswarlu, AIR 1949 PC 278, where it was held as under:

  • “When, after the entire evidence is adduced, the tribunal feels it cannot make up its mind as to which of the versions is true, it will hold that the party on whom the burden lies has not discharged the burden; but if it has on the evidence no difficulty in arriving at a definite conclusion, then the burden of proof on the pleadings recedes into the background.” 
  • Quoted in: Dulhin Mahabati Kuer v. Raghunandan Prasad Singh, AIR 1958 Pat 249, Surajbhan Kailash Chand v. Hari Shanker Vashsist, AIR 1976 Delhi 70, Krishne Gowda v. Ningegowda, ILR 1987 Kar 2883, Patel Ramanbhai Mathurbhai v. Govindbhai Chhotabhai Patel, 2020-1 GLH 261, Vinod Agrawal v. Bharat Kumar Lathi,  ILR  2012 MP 84.

In R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami, AIR 2003 SC 4548: (2003) 8 SCC 752, it is held as under:

  • “In our opinion, in a suit for possession based on title once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant it is for the defendant to discharge his onus and in the absence thereof the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff’s title.
  • Quoted in: Anil. Rishi vs. Gurbaksh Singh, (2006) 5 SCC 558; City Municipal. Council, Bhalki Vs. Gurappa, (2016) 2 SCC 200.

Duty to produce ‘helpful documents’

  • The Supreme Court held in Gopal Krishnaji Ketkar v. Mahomed Haji Latif, AIR 1968 SC 1413, that adverse inference has to be drawn (even if no burden), if a party to the suit withheld documents.
  • In National Insurance Co. Ltd., New Delhi v. Jugal Kishore, 1988-1 SCC 626, it was stated as under:
    • “This Court has consistently emphasized that it is the duty of the party which is in possession of a document which would be helpful in doing justice in the cause to produce the said document and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof.”
  • See also:
    • Union of India v. Vijay Krishna Uniyal, 2018-11 SCC 382.

“Legal Burden” and Sec. 101 Evidence Act

In Rajesh Jain v. Ajay Singh, AIR 2023  SC5018; 2023-10 SCC 148, it is observed as under:

  • “29. There are two senses in which the phrase ‘burden of proof ’ is used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One is the burden of proof arising as a matter of pleading and the other is the one which deals with the question as to who has first to prove a particular fact. The former is called the ‘legal burden’ and it never shifts, the latter is called the ‘evidential burden’ and it shifts from one side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR 1961 SC 1316)].
  • 30. The legal burden is the burden of proof which remains constant throughout a trial. It is the burden of establishing the facts and contentions which will support a party’s case. …. On the other hand, the evidential burden may shift from one party to another as the trial progresses according to the balance of evidence given at any particular stage; the burden rests upon the party who would fail if no evidence at all, or no further evidence, as the case may be is adduced by either side (See Halsbury’s Laws of England, 4th Edition para 13). While the former, the legal burden arising on the pleadings is mentioned in Section 101 of the Evidence Act, the latter, the evidential burden, is referred to in Section 102 thereof. [G. Vasu V. Syed Yaseen (AIR 1987 AP139) affirmed in Bharat Barrel Vs. Amin Chand [(1999) 3 SCC 35].”

‘Onus Probandi’ and Sec. 106 of the Evidence Act

The Latin maxim, Onus Probandi, means ‘burden of proof’.  This maxim generally conveys the rule and impression that one who asserts a positive fact has to prove it.

  • Sec. 101 to 103 of the Indian Evidence Act, 1872, deal with the burden of proof in general. Sec. 104 to 106 deal with specific situations.

Sec. 101 to 106, Indian Evidence Act, reads as under:

  • S. 101. Burden of proof. Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.
  • S. 102.   On whom burden of proof lies. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
  • S. 103. Burden of proof as to particular fact. The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
  • S.104. The burden of proving the fact to be proved to make evidence admissible. The burden of proving any fact necessary to be proved in order to enable any person to give evidence of any other fact is on the person who wishes to give such evidence.
  • S.105. The burden of proving that the case of accused comes within exceptions. When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Indian Penal Code, (45 of 1860), or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the Court shall presume the absence of such circumstances.
  • S.106. The burden of proving fact specially within knowledge. When any fact is specially within the knowledge of any person, the burden of proving that fact is upon him.

In an election case, referring Sec. 106 and Sec. 114 of the Evidence Act, the Supreme Court, observed in Puneet Rai v. Dinesh Chaudharv, (2003) 8 SCC 204, that the onus was on the respondent to prove that he belongs to ‘Passi’ community which falls in the Schedule caste category.

In  Sushil Kumar v. Rakesh Kumar, (2003) 8 SCC 673, the Supreme Court found that the burden of proving the age of the elected candidate (above 25 years) was upon him. The Apex Court held as under:

  • “28. It is no doubt true that the burden of proof to show that a candidate who was disqualified as on the date of the nomination would be on the election petitioner.
  • 29. It is also true that the initial burden of proof, that nomination paper of an elected candidate has wrongly been accepted, is on the election petitioner.
  • 30. In terms of Section 103 of the Indian Evidence Act, however, the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
  • 31. Furthermore, in relation to certain matters, the fact being within the special knowledge of the respondent, the burden to prove the same would be on him in terms of Section 106 of the Indian Evidence Act. However, the question as to whether the burden to prove a particular matter is on the plaintiff or the defendant would depend upon the nature of the dispute.
  • 32. The age of a person, in an election petition has to be determined not only on the basis of the materials placed on records but also upon taking into consideration the circumstances attending thereto. The initial burden to prove the allegations made in the election petition although was upon the election petitioner but for proving the facts which were within the special knowledge of the respondent, the burden was upon him in terms of Section 106 of the Evidence Act.
  • It is also trite that when both parties have adduced evidence, the question of onus of proof becomes academic [See: Union of India and Others vs. Sugauli Sugar Works (P) Ltd., (1976) 3 SCC 32,(Para 14) and M/s Cox and Kines (Azents) Ltd. vs. Their Workmen and Others, AIR 1977 SC 1666, (Para 36)]. Furthermore, an admission on the part of a party to the lis shall be binding on him and in any event a presumption must be made that the same is taken to be established.”

‘Onus Probandi’ and Rule of ‘Best Evidence’

Rule of ‘Best Evidence’ requires a party to suit to produce all material evidence with him. If he fails to produce the best evidence, then illustration ‘g’ of Section 114 Evidence Act allows the court to take the presumption that, if that evidence had been produced, it would have been unfavourtable to him. In Dharampal v. State of Haryana (P& H, 2020) it is observed as under:

  • “20. Chapter VII in Part-Ill of the Evidence Act, 1872 examines the burden of proof and onus of proof or “onus probandi”. Section 101 lays down that whosoever, wants the court to give judgment as to any legal right or liability dependent on the existence of fact, which he asserts, must prove that those facts exist. However, Section 106 provides that any fact which is essentially within the knowledge of any person, the burden of proving that fact is upon him. Illustration-b to Section 106 specifically provides that if A is charged with travelling on a railway train without ticket, the burden of proving that he had bought a ticket is on the person who was found travelling. Still further, illustration ‘g’ of Section 114 require production of best evidence before the Court/authority. It lays down that the evidence which could be but is not produced, would be deemed to be unfavourable to the person who holds it from the Court/authority. It means that if a person fails to produce the best evidence which he could produce then the presumption would be that the aforesaid evidence, if had been produced, would be unfavorable to the person, who withholds it.”

Suit on Title – Weakness of the Defence & High Degree of Probability

A Plaintiff has to win the title-suit on his evidence; not on the weakness of the adversary. But it must be noted that the plaintiff need to show only a high degree of probability; and that it shifts the onus on the defendant.

This principle applies in both civil and criminal cases. In M. Srinivasulu Reddy v. State Inspector of Police, 1991 (3) ALT 542, 1993 CriLJ 558, it is held as under:

  • “The prosecution cannot take advantage of the weaknesses of the defence or cannot take advantage of the inconsistent stand taken by the accused from time to time. The prosecution must stand on its own legs basing on the evidence that has been let in by it.”

The Supreme Court of India, in Ratnagiri Nagar Parishad v. Gangaram Narayan Ambekar, (2020) 7 SCC 275, held as under:

  • “The initial burden of proof is on the plaintiffs to substantiate his cause, if he failed to discharge the same, the weakness in the defense cannot be the basis to grant relief to the plaintiffs and burden cannot be shifted on the defendants.”

In R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami, AIR 2003 SC 4548: (2003) 8 SCC 752, the law is stated in the following terms :

  • “A fact is said to be ‘proved’ when, if considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of a particular case, to act upon the supposition that it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. …”
  • In a suit for recovery of possession based on title it is for the plaintiff to prove his title and satisfy the court that he, in law, is entitled to dispossess the defendant from his possession over the suit property and for the possession to be restored to him. However, as held in A. Raghavamma v. A. Chenchamma there is an essential distinction between burden of proof and onus of proof:
    • burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence.
  • In our opinion, in a suit for possession based on title once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant it is for the defendant to discharge his onus and in the absence thereof the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff’s title.
  • In the present case, the trial Court and the first appellate Court have noted that the plaintiff has not been able to produce any deed of title directly lending support to his claim for title and at the same time the defendant too has no proof of his title much less even an insignia of title. Being a civil case, the plaintiff cannot be expected to proof his title beyond any reasonable doubt; a high degree of probability lending assurance of the availability of title with him would be enough to shift the onus on the defendant and if the defendant does not succeed in shifting back the onus, the plaintiff’s burden of proof can safely be deemed to have been discharged. In the opinion of the two Courts below, the plaintiff had succeeded in shifting the onus on the defendant and, therefore, the burden of proof which lay on the plaintiff had stood discharged. …”.
  • The suit property, which is a shop, is situated just adjoining the property owned by the temple. It has come in the evidence that the property which is now owned by the temple was at one time owned by the forefathers of the plaintiff and they made an endowment in favour of the temple. The father of the plaintiff, and then the plaintiff, continued to be the trustees. The trouble erupted when in the late sixties the Charity Commissioner appointed other trustees and Chief Executive Officer of the trust dislodging the plaintiff from trusteeship. The plaintiff staked his claim to trusteeship of the temple submitting that the office of the trustee of the temple was hereditary and belonged to the plaintiff. The plaintiff was managing the trust property as trustee while the property adjoining to the property of the temple, i.e. the suit property, was in possession of the plaintiff as owner occupied by the tenant, the defendant No.2., inducted as such by the father of the plaintiff. At the instance of the Chief Executive Officer of the trust, the defendant No.2, during the continuance of the tenancy in favour of the plaintiff, executed a rent note in favour of the temple attorning the latter as his landlord. This the defendant no.2 could not have done in view of the rule of estoppel as contained in Section 116 of the Evidence Act. It was at the instance of the newly appointed trustees and the Chief Executive Officer who on behalf of the temple started claiming the suit property in occupation of the tenant, defendant No.2, to be trust property belonging to the temple. But for this subsequent development the title of the plaintiff to the suit property would not have been in jeopardy and there would have been no occasion to file the present suit.
  • The learned counsel for the temple, defendant-respondent No.1, faintly urged that the appellant being a trustee of the temple was trying to misappropriate the property belonging to the temple. For such an insinuation there is neither any averment in the written statement nor any evidence laid. Such a submission made during the course of hearing has been noted by us only to be summarily rejected. We have already held that the appellant is the owner of the suit property entitled to its possession and recovery of arrears of rent from the defendant No.2.
  • … A high degree of preponderance of probability proving title to the suit property was raised in favour of the appellant and the courts below rightly concluded the burden of proof raised on the plaintiff having been discharged while the onus shifting on the defendant remaining undischarged. ..”
  • (Quoted in: Anil. Rishi vs. Gurbaksh Singh, (2006) 5 SCC 558; City Municipal. Council, Bhalki Vs. Gurappa, (2016) 2 SCC 200)

In Smriti Debbarma v. Prabha Ranjan Debbarma, 2023 SCC OnLine SC 9,it is held bu our Apex Court as under:

  • “31. The burden of proof
    • [See Paragraph 19 in Anil Rishi v. Gurbaksh Singh, (2006) 5 SCC 558 where the expression ‘burden of proof’ is used in three ways, namely, (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter-evidence; and (iii) an indiscriminate use in which it may mean either, or both of the others.]
  • to establish a title in the present case lies upon the plaintiff as this burden lies on the party who asserts the existence of a particular state of things on the basis of which she claims relief [See Addagada Raghavamma v. Addagada Chenchamma and Another, AIR 1964 SC 136.] This is mandated in terms of Sec. 101
    • [Sec. 101: Burden of Proof.- Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.]
  • of the Evidence Act, which states that burden on proving the fact rests with party who substantially asserts in the affirmative and not on the party which is denying it. This rule may not be universal and has exceptions,[See Ss. 103, 104 and 105 of the Evidence Act.] but in the factual background of the present case, the general principle is applicable. In terms of Sec. 102
    • [Sec. 102: On whom the burden of proof lies.- The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.]
  • of the Evidence Act, if both parties fail to adduce evidence, the suit must fail.[See Anil Rishi v. Gurbaksh Singh, (2006) 5 SCC 558.] Onus of proof, no doubt shifts and the shifting is a continuous process in the evaluation of evidence, but this happens when in a suit for title and possession, the plaintiff has been able to create a high degree of probability to shift the onus on the defendant. In the absence of such evidence, the burden of proof lies on the plaintiff and can be discharged only when he is able to prove title.[See R.V.E. Venkatachala Gounder  v. Arulmigu Viswesaraswami V.P. Temple and Another, (2003) 8 SCC 752.] The weakness of the defence cannot be a justification to decree the suit. [See Union of India and Others v. Vasavi Cooperative Housing Society Limited and Others, (2014) 2 SCC 269.] The plaintiff could have succeeded in respect of the Schedule ‘A’ property if she had discharged the burden to prove the title to the Schedule ‘A’ property which squarely falls on her. This would be the true effect of Ss. 101 and 102 of the Evidence Act. [See Sebastiao Luis Fernandes (DEAD) Through LRs. And Others v. K.V.P. Shastri (DEAD) Through LRs. And Others, (2013) 15 SCC 161.]
  • Therefore, it follows that the plaintiff should have satisfied and discharged the burden under the provisions of the Evidence Act, failing which the suit would be liable to be dismissed.”

Court is Entitled to Consider the Title set up by the Defendants also

In Ram Chandra Sakharam Mahajan Vs. Damodar Trimbak, AIR 2007 SC 2577, it is observed –

  • In a recovery on title suit, the burden is on the plaintiff to establish title.
  • Court is also entitled to consider the rival title set up by the defendants
  • Weakness of defence to establish title, would not enable plaintiff to a decree.

The Apex Court held:

  • “The suit is for recovery of possession on the strength of title. Obviously, the burden is on the plaintiff to establish that title. No doubt in appreciating the case of title set up by the plaintiff, the Court is also entitled to consider the rival title set up by the defendants. But the weakness of the defence or the failure of the defendants to establish the title set up by them, would not enable the plaintiff to a decree. There cannot be any demur to these propositions.”
  • “14. We find that the trial Court and the appellate Court were not justified in refusing the amendment of the plaint sought for by the plaintiff. No doubt there had been delay in seeking amendment but that delay could have been compensated by awarding costs to the contesting defendants 1 to 9. Therefore, we are satisfied that the amendment sought for by the plaintiff ought to have been allowed. We are inclined to allow the amendment sought for, since it would enable the Court to pin-pointedly consider the real dispute between the parties and would enable it to render a decision more satisfactorily to its conscience. We, therefore, allow the amendment as sought for by the plaintiff at a belated stage. The amendment will be carried out by the plaintiff in the trial Court within three months from this date as per the practice followed in the trial Court. Obviously defendants 1 to 9 would have an opportunity to file an additional written statement to the amended plaint. They will be entitled to file an additional written statement within a period of four months from the date of this judgment.”

Document ex-facie reveals no title – specific declaration as to invalidity not necessary

The Supreme Court held in Kizhakke Vattakandiyil Madhavan v. Thiyyurkunnath Meethal Janaki (Aniruddha Bose & Sudhanshu DhuliaJJ.), 2024(2) KLT 789 (SC), held as under:

  • “18. …. If a document seeking to convey immovable property ex-facie reveals that the conveyer does not have the title over the same, specific declaration that the document is invalid would not be necessary. The Court can examine the title in the event any party to the proceeding sets up this defence. Chiruthey could not convey any property over which she did not have any right or title. Her right, if any, would stem from the second deed of lease (Exhibit A-1). We are conscious of the fact that no claim was made before any forum for invalidating the deed dated 14th July 1910 (Exhibit A-20).”

By proving a deed, title of the executing person is not automatically confirmed

The Supreme Court held in Kizhakke Vattakandiyil Madhavan v. Thiyyurkunnath Meethal Janaki (Aniruddha Bose & Sudhanshu DhuliaJJ.), 2024(2) KLT 789 (SC), also held as under:

  • “18. … It would be trite to repeat that even if subsistence of a deed is proved in evidence, the title of the executing person (in this case Chiruthey) does not automatically stand confirmed. ….. … But in absence of proper title over the subject property, that lease deed even if she was its sole lessor would not have had been legally valid or enforceable. If right, title or interest in certain property is sought conveyed by a person by an instrument who herself does not possess any such form of entitlement on the subject being conveyed, even with a subsisting deed of conveyance on such property, the grantee on her successors-in-interest will not have legal right to enforce the right the latter may have derived from such an instrument.”

Easement of Necessity – Who has the Burden to show Alternate Way

In Sree Swayam Prakash Ashramam v. G. Anandavally Amma, AIR 2010 SC 622, it is held that the plaintiff claiming easement of necessity or grant has only a primary burden to prove the absence of any alternate pathway.

  • “In a case where the original plaintiff was claiming easement right either as grant or as of necessity the plaintiff has only a primary burden to prove the absence of any alternate pathway. As the defendants have not proved the existence of any pathway for access to Plaint `A’ schedule property the version of the plaintiff that there is no alternate pathway shall be accepted. … The defendants have not entered the witness box to disprove the evidence led by the plaintiff.”

Who has the Onus to show Alternate Way Could Not be Used ‘As Of Right’

When the existence of alternate way is shown by the alleged servient owner of easement of necessity, the onus to prove that the way cannot be used “as of right” is upon the dominant owner. In Antony @ Anthappan v. George,  LAWS(KER) 2012-11-179 it is held by t6he Kerala High Court as under:

  • “11. When the existence of an alternate way is shown, the appellants ought to have shown that they could not use it as of right. That is because that is a matter within the knowledge of the appellants. The appellants did not adduce evidence in that line.”

The High Court then remanded the case giving the dominant owners an opportunity to adduce evidence to show that the alternate way was not one which they were entitled to use as of right.

No pleading; but, Issue Covered by Implication – Evidence can be relied on

The Supreme Court, in the matter of Standard Chartered Bank v. Andhra Bank Financial Services Ltd., (2006) 6 SCC 94, held that if parties know that a plea was involved in trial and if such a plea is covered by issue by implication then in such a case mere fact that the plea was not expressly taken in pleading would not necessary disentitle a party from relying upon it if it is satisfactorily proved by evidence.

Plaintiff Fails to Establish ‘Probabilityand Defendant ‘Withholds Documents

From R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami, AIR 2003 SC 4548: (2003) 8 SCC 752, the law is clear –

  • in a suit for possession based on title once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant it is for the defendant to discharge his onus and in the absence thereof the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff’s title.

Adverse Inference Drawn (Even if no burden), if Withheld Documents

The Supreme Court held in Gopal Krishnaji Ketkar v. Mahomed Haji Latif, AIR 1968 SC 1413, as under:

  • Even if a party to the suit has no burden, the Court can draw an adverse inference if he withholds important documents in his possession.

From the above, it is definite that, in a proper case, if the defendant who withholds important document (admittedly) in his possession, the court can take the adverse presumption against the defendant, even if the plaintiff (who has the burden of proof or who is bound to create a high degree of probability) did not adduce any evidence.

Duty to produce helpful document

In National Insurance Co. Ltd., New Delhi v. Jugal Kishore, 1988-1 SCC 626, Our Apex Court stated the law as under:

  • “This Court has consistently emphasized that it is the duty of the party which is in possession of a document which would be helpful in doing justice in the cause to produce the said document and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof.” (quoted in: Sushil Kumar v. Rakesh Kumar, (2003) 8 SCC 673)

Also Read: Best Evidence Rule in Indian Law

Party Does Not Examine -Adverse Inference if only he is a Material Witness

In Bijoy Kumar Karnani vs Lahori Ram Prasher,  AIR 1973 Cal 465, the High Court considered the argument as to non-examination of the plaintiff as a witness in the light of Section 114, illustration (g) of the Evidence Act which provides that the Court may presume that evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. The court pointed out that the plaintiff was not a material witness as to the disputed facts, sans admitted facts. Citing Gurbakhsh Singh v. Gurdial Singh, AIR 1927 PC 230, it was observed that the argument of the defendant would be apt if only the plaintiff was a material witness, as stated by the  Privy Council as under:

  • “The true object to be achieved by a Court of Justice can only be furthered with propriety by the testimony of the party who personally knowing the whole circumstances of the case can dispel the suspicions attaching to it. The story can then be subjected to all its particulars to cross-examination.”

Adverse Inference – if a Party Not Examine HimselfNot an Invariable Rule

In Iswar Bhai C. Patel vs. Harihar Behera, (1999) 3 SCC 457, the Supreme Court observed as under:

  • “17…..Having not entered into the witness-­box and having not presented himself for cross-­examination, an adverse presumption has to be drawn against him on the basis of the principles contained in Illustration (g) of Section 114 of the Evidence Act, 1872.” (Quoted in: Iqbal Basith v. N. Subbalakshmi, (2021) 2 SCC 718)

The Supreme Court also observed in Vidhyadhar v. Manikrao, AIR 1999 SC 1441, as under:

  • “Where a party to the suit does not appear in the witness box and states his own case on oath and does not offer himself to be cross examined by the other side, a presumption would arise that the case set up by him is not correct.”

 Party Not Examine HimselfNot an Invariable Principle

But, it is not an invariable principle. Two contra-situations are pointed out by Kerala High Court:

  1. It is applied only against the party on whom the burden of proof lies;
  2. It is not applicable where there is no much scope for any oral evidence.

In Mammu Haji and Company Vs. Vasanthalakshmi, 2014 -3 KHC 213 that this proposition of law laid down by the Apex Court applies only in cases where the party on whom the burden of proof lies withholds himself from adducing evidence. It is held as under:

  • “In short, this decision can be applied against the party on whom the burden of proof lies; but did not adduce evidence. In the instance case, the burden of proof absolutely lies on the defendant who claims protection under S.106 of the Act. Therefore, the non-examination of the plaintiff is not fatal and no adverse inference can be drawn against the plaintiff, where the lease arrangement is admitted as such by the defendant, and the entire burden of proof lies on the defendant.”

In Upendra Rao v. Ammini,  ILR 2017-1 Ker 466, the Kerala High Court pointed out that the principle in Vidhyadhar v. Manikrao  (that when a party to a suit does not appear in the witness-box and does not offer himself to be cross-examined by the other side, adverse presumption  can be taken) cannot be applied to the facts of a case where there is not much scope for any oral evidence.

In P.  Sukumaran v. K. A.  Hamza Haji, ILR 2015-2 Ker 166, the Kerala High Court distinguished Vidhyadhar v. Manikrao observing as under”

  • “13. In Vidhyadhar’s case , the Apex Court was dealing with a case where the first defendant in the suit contended that, the sale deed executed by the second defendant in favour of the plaintiff was fictitious and the whole transaction was a bogus transaction as only Rs. 500/- was paid as sale consideration to the second defendant. He further claimed that payment of Rs. 4500/- to the second defendant at his home before the registration of the deed was wholly incorrect. This plea was not supported by the first defendant as he did not enter the witness box. It was in such circumstances, the Apex Court held that, the non-examination of the first defendant, by itself, is enough to reject his claim that the transaction of sale between second defendant and the plaintiff was a bogus transaction.
  • 14. But, in the case on hand, the tenancy in respect of the petition schedule building and the rate of rent are not in dispute. When a plea of discharge of rent is set up by the tenant, the burden is upon him to prove that plea of discharge and no adverse inference or a presumption under Section 114(g) of the Evidence Act, 1872, can be drawn against the landlord on his omission to appear as a witness and to state his own case on oath.”

In Janki Vashdeo Bhojwani v. Indusind Bank Ltd., (2005) 2 SCC 217, our Apex Court followed Vidhyadhar v. Manikrao, AIR 2005 SC 439, and held as under:

  • No one can delegate the power to appear in witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power of attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.”

Adverse Inference –When Court cannot “Make Up its Mind”

It is only if the Tribunal or the Court feels it cannot “make up its mind” as to which of the version is true, it will be held that the party on whom the burden lies has not discharged the burden. See, Kumbhan Lakshmanna v. Tangirala Venkateswarlu, AIR 1949 PC 278, where it was held as under:

  • “This section (Sec. 102) shows that the initial burden of proving a prima facie case in his favour is cast on the plaintiff; when he gives such evidence as will support a prima facie case, the onus shifts on to the defendant to adduce rebutting evidence to meet the case made out by the plaintiff. As the case continues to develop the onus may shift back again to the plaintiff. It is not easy to decide at what particular stage in the course of the evidence the onus shifts from one side to the other. When, after the entire evidence is adduced, the tribunal feels it cannot make up its mind as to which of the versions is true, it will hold that the party on whom the burden lies has not discharged the burden; but if it has on the evidence no difficulty in arriving at a definite conclusion, then the burden of proof on the pleadings recedes into the background.” 
  • (Quoted in: Dulhin Mahabati Kuer v. Raghunandan Prasad Singh, AIR 1958 Pat 249, Surajbhan Kailash Chand v. Hari Shanker Vashsist, AIR 1976 Delhi 70, Krishne Gowda v. Ningegowda, ILR 1987 Kar 2883, Patel Ramanbhai Mathurbhai v. Govindbhai Chhotabhai Patel, 2020-1 GLH 261, Vinod Agrawal v. Bharat Kumar Lathi,  ILR  2012 MP 84)

Burden of Proof Not Relevant when “Both Sides had Adduced Evidence”

In Moran Mar Basselios Catholicos v. Thukalan paulo Avira, AIR 1959 SC 31, the Constitution bench of the Supreme Court held as under:

  • The question of burden of proof at the end of the case when both the parties have adduced their evidence is not of very great importance and the Court has to come to a decision on a consideration of all the materials.

In Kalwa Devadattam v. Union of India,  (1964) 3 SCR 191, the Supreme Court held as under:

  • “The question of onus probandi is certainly important in the early stages of a case. It may also assume importance where no evidence at all is led on the question in dispute by either side; in such a contingency the party on whom the onus lies to prove a certain fact must fail. Where however evidence has been led by the contesting parties on the question in issue; abstract considerations of onus are out of place; truth or otherwise of the case must always be adjudged on the evidence led by the parties. ” 

In Arumugham v. Sundarambal, AIR 1999 SC 2216, it has been held as under:

  • “On the question of burden of proof we are of the view that even assuming burden of proof is relevant in the context of the amended provision of Sec. 100 C.P.C., the same would not be relevant when both sides had adduced evidence. It would be relevant only if a person on whom the burden of proof lay, failed to adduce any evidence altogether.”

The Supreme Court, in Anil Rishi v. Gurbaksh Singh, AIR 2006 SC 1971, referring Sec. 102 of the Evidence Act (The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side), explained ‘burden of proof’ as under:

  • “Pleading is not evidence, far less proof. Issues are raised on the basis of the pleadings. The defendant-appellant having not admitted or acknowledged the fiduciary relationship between the parties, indisputably, the relationship between the parties itself would be an issue. The suit will fail if both the parties do not adduce any evidence, in view of Section 102 of the Evidence Act. Thus, ordinarily, the burden of proof would be on the party who asserts the affirmative of the issue and it rests, after evidence is gone into, upon the party against whom, at the time the question arises, judgment would be given, if no further evidence were to be adduced by either side.”

Burden of proof remains only academic

In Raghunathi v. Raju Ramappa Shetty, AIR 1991 SC 1040, it is observed that it is a settled law that once the parties have been permitted to produce evidence in support of their respective cases and it is not their grievance that any evidence was shut out the question of burden of proof loses significance and remains only academic.

It is held by the Supreme Court in Thiruvengada Pillai v. Navaneethammal, AIR 2008 SC 1541, that when the execution of an unregistered document put forth by the plaintiff was denied by the defendants, it was for the plaintiffs to establish that the document was forged or concocted. It is observed that the party who asserts something has to prove that thing. It is pointed out that when the plaintiff had come to Court alleging that the first defendant had executed an agreement of sale in his favour and when the defendant denied it, the burden was on the plaintiff to prove that the defendant had executed the agreement, and not on the defendant to prove the negative.

Even if No Plea, Propouner has to clear Suspicion

In K. Laxmanan v. Thekkayil Padmini, AIR 2009 SC 951, the Apex Court held that when there were suspicious circumstances regarding the execution of a Will, the onus was on the propounder to explain them to the satisfaction of the Court; and only when such responsibility was discharged, the Court would accept the Will as genuine. It was further observed that even where there were no such pleas, but circumstances gave rise to doubt, it was on the propounder to satisfy the conscience of the Court. These decisions are followed in Joseph John Peter Sandy v. Veronica Thomas Rajkumar, AIR 2013 SC 2028. 

The Privy Council in Seturatnam v. Venkatachella, AIR 1920 PC 67, observed that where the parties have led all the evidence and relevant facts were before the court and all that remained for decision was what interference was to be drawn from them, the question of burden of proof was not important. In Chidambara v. Veerama, AIR 1922 PC 292, the Privy Council held that when entire evidence was once before the court, the debate as to onus of proof was purely academic. (See: Legal Heirs of Renushree Lahkar v. Pradip Kumar Lahkar, 2018-4 Gau LT 733).

See also:

  • Standard Chartered Bank v. Andhra Bank Financial Services Ltd., (2006) 6 SCC 94,
  • Union of India v. Sugauli Sugar Works (P) Ltd., (1976) 3 SCC 32,
  • Cox and Kines (Azents) Ltd. v. Their Workmen, AIR 1977 SC 1666)

Will – Burden to Prove Coercion, Undue Influence or Fraud, on him who alleges it

Who has the ‘burden of proof’ when a Will is resisted with the allegation of coercion, undue influence or fraud? How to deal with such a situation? It is considered in V. Kalyanaswamy v. L. Bakthavatsalam, 2020-9 Scale 367.

In V. Kalyanaswamy v. L. Bakthavatsalam, the Supreme Court held as under:

  • “83. Lastly, while the burden to prove the will and to satisfy the conscience of the court that there are no suspicious circumstances or if there are any to explain them is on the propounder of the will, the burden to prove that the will is procured by coercion, undue influence or fraud is on the respondents who have alleged the same.”

It is made clear-

  • The burden to prove that the Will is free from suspicious circumstances is on the propounder.
  • If there are suspicious circumstances to explain, the propounder has to explain them.
  • (However), if the respondent alleges that the Will is procured by coercion, undue influence or fraud, the burden to prove such allegations is on the respondent.

Burden of proof loses its importance (and remains academic) if both parties adduced evidence Does it mean that Sec. 102 to 111 have no Significance?

Answer – Never.

The court when analyses the evidence (at the time of verdict) it should proceed without being considering the “Burden of Proof” if (a) both parties adduced evidence or (b)  there is sufficient evidence on an issue. But, no doubt, it does not mean that the consequences of ‘no sufficient evidence‘, ‘no evidence adduced as to facts in especial knowledge of a party’, etc. shall have no effect; on the contrary, the edicts in the provisions in Sec. 102 to 111 Evidence Act will follow with its full vigor.

Our Apex Court in National Insurance Company Limited v. Rattani, 2009-2 SCC 75: AIR 2009 SC 1499, it is observed as under:

  • “14. The question as to whether burden of proof has been discharged by a party to the lis or not would depend upon the facts and circumstances of the case. If the facts are admitted or, if otherwise, sufficient materials have been brought on record so as to enable a court to arrive at a definite conclusion, it is idle to contend that the party on whom the burden of proof lay would still be liable to produce direct evidence to establish that the deceased and the injured passengers were gratuitous passengers.”
  • See also: Mohd. Abdullah Azam Khan Vs. Nawab Kazim Ali Khan, 2022 (11 ) JT 214: 2022 (16 ) SCALE 689: 2023 KLT OnLine 1084 (SC), National Insurance Company Ltd.  v. Savitri Devi, 2013-11 SCC 554.

Sec. 107 to 111 Evidence Act reads as under:

  • S.107. The burden of proving the death of person known to have been alive within thirty years. When the question is whether a man is alive or dead, and it is shown that he was alive within thirty years, the burden of proving that he is dead is on the person who affirms it.
  •  S.108. The burden of proving that person is alive who has not been heard of for seven years. Provided that when the question is whether a man is alive or dead, and it is proved that he has not been heard of for seven years by those who would naturally have heard of him if he had been alive, the burden of proving that he is alive is shifted to the person who affirms it.
  • S.109. The burden of proof as to relationship in the case of partners, landlord and tenant, principal and agent. When the question is whether persons are partners, landlord and tenant, or principal and agent, and it has been shown that they have been acting as such, the burden of proving that they do not stand, or have ceased to stand to each other in those relationships respectively, is on the person who affirms it.
  • S.110. The burden of proof as to ownership.  When the question is, whether any person is the owner of anything of which he is shown to be in possession, the burden of proving that he is not the owner is on the person who affirms that he is not the owner.
  • S.111. Proof of good faith in transactions where one party is in the relation of active confidence. Where there is a question as to the good faith of a transaction between parties, one of whom stands to the other in a position of active confidence, the burden of proving the good faith of the transaction is on the party who is in a position of active confidence.

Presumption on a Registered Document – “It is VALIDLY EXECUTED

  • Section 35 in the Registration Act, 1908 says that the Registrar allows registration of a document (i) if only he is satisfied as to the identity of the person who executes the document, and (ii) if the executant admits the execution of the document.
  • Presumptions can be invoked in view of the Sec. 58 and 59 Sec. 60 (certificate) of the Registration Act. The presumption of regularity of official acts in Illustration (e) of Section 114 of the Evidence is also attached to a registered deed.
  • In short, the certificate endorsed on a registered deed by the registering officer is a relevant piece of evidence for proving its execution – Piara v. Fatnu, AIR 1929 Lah 711.
  • Therefore, there is a presumption – registered document is validly executed –
    • Prem Singh v. Birbal, AIR 2006 SC 3608;
    • Abdul Rahim v. Abdul Zabar, AIR 2010 SC 211
    • Jamila Begum v. Shami Mohd., AIR 2019 SC 72;
    • Manik Majumder v. Dipak Kumar Saha, AIR  2023 SC 506.
  • A registered document carries with it a presumption that it was executed in accordance with law – Bellachi v. Pakeeran, AIR 2009 SC 3293.
  • The facts spelled out by the endorsements made under Sections 58 and 59 of the Registration Act may be presumed to be correct without formal proof thereof – Bhagat Ram v. Suresh, AIR 2004 SC 43.

Registered Deeds: Proof of CORRECTNESS drawn, Invoking Presumption

  • Besides the presumption on a registered document that it is validly executed, there is also a presumption that the “transaction is a genuine one” (Vimal Chand Ghevarchand Jain v. Ramakant Eknath Jajoo, 2009- 5 SCC 713; Jamila Begum v. Shami Mohd., AIR 2019 SC 72) .
  • And, there is a presumption of Correctness also (Majumder v. Dipak Kumar Saha, AIR 2023 SC 506, BV Nagaratna, J.). The onus of proof, therefore, would be on the person who questions the same.

Do Presumptions as to VALID EXECUTION & CORRECTNESS Import TRUTH?

Two views emerge on registered documents-

  • First, Presumption as to VALID EXECUTION  & CORRECTNESS lead to further (invariable) presumption as to ‘truth’ of contents.
  • Second (and more cogent), under Sec. 114 of the Evidence Act, court may presume the existence of any fact. In most cases, the court will infer ‘truth’ if there is presumption as to VALID EXECUTION  & CORRECTNESS. But, in proper cases, the court can desist to deduce ‘truth’ despite presumption as to VALID EXECUTION  & CORRECTNESS.

In short, Presumptions as to VALID EXECUTION & CORRECTNESS may Import TRUTH. It may result:

  • 1. Shift Burden in Most cases. The party in whom the ‘burden of proof’ rests can rely on ‘registration certificate’ as proof and truth of the contents of the deed.
    • The certificate endorsed on a registered deed by the registering officer is a relevant piece of evidence for proving its execution – Piara v. Fatnu, AIR 1929 Lah 711.
  • It being presumed to be VALID & CORRECT, it further gives a presumption as to truth of the contents also, under Sec. 114 Evidence Act (regard being had to the common course of natural events, human conduct etc.) .
  • There being presumption as to ‘VALID EXECUTION  & CORRECTNESS’ and thereby presumption as to truth of the contents also, the onus of proof is shifted upon the party who challenges the presumption as to truth of the contents.
  • 2. No Question of Shifting Burden in certain cases. But, the above proposition is not an invariable rule. If it comes out from the pleadings, documents or issues that the burden is upon the person who produced the registered document to prove its truth, the presumed presumption will not help him.
    • For example – The executant of the registered deed would not have executed such a deed, in all probabilities (regard being had to the common course of natural events, human conduct etc.) as revealed from the pleadings or documents produced; or, its untrue nature can be (prima facie) ‘judicially noticed’.

Sec. 114 Evidence Act

Sec. 114 Evidence Act reads as under:

  • “114. Court may presume existence of certain facts —The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. Illustrations ……”

Where the Law Casts Burden to Prove Two Ingredients, Both are to be Proved

Under the second proviso to Section 11(3) of the Kerala BRC Act requires the tenant to prove tow ingredients to take the benefit of the proviso in case of an eviction suit. They are: (1) he is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and (2) there is no other suitable building available in the locality for such person to carry on such trade or business. Therefore, proof of one limb will not shift the burden to the landlord.

  • In Thomas v. Joseph, 1986 KerLJ 149; 1986 KLT 392 it is held that the both limbs are not disjunctive, but conjunctive.  
  • It is pointed out in Raghavan v. Raju, 1998-2 KerLJ 358; 1998-2 KLT 394, that these two requirements are not alternative, but conjunctive.
  • In Ammeer Hamsa v. Ramabhadran, 2019 (2) KHC 465 (DB) held it is trite law that the two ingredients are conjunctive and the burden of proof is on the tenant.

Rebuttal of Presumption in NI Act cases

1. Because of the presumptions (under the NI Act), in cheque-bounce-cases, a complainant need not adduce positive evidence on consideration and debt or other liability‘.

2. As regards the Standard of ‘rebuttal evidence’ on presumption, there is an apparent conflict, as to what is needed –
                “Cogent Evidence” (as observed in
                Bir Singh v. Mukesh Kumar,
                2019-4 SCC 197 – Two Judge Bench)
                 or
                “Preponderance of Probabilities
               (Rangappa v. Sri Mohan, 3-Judge Bench,
                2010-11 SCC 441, and other decisions).

3. The apparent conflict is resolved in Oriental Bank of Commerce v. Prabodh Kumar Tewari, 2022-7 SCR 72 (DY Chandrachud, A S Bopanna, JJ.). It is pointed out –
                (1). Three-Judge Bench decision in
                 Rangappa v. Sri Mohan holds the field.
                (2). It is held in Rangappa v. Sri Mohan –
it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of “Preponderance of Probabilities”. 
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution has to fail if it does not discharge the shifted onus. 


End Notes

Relevant provisions of the Evidence Act:

S. 101. Burden of proof.  Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.

S. 102.   On whom burden of proof lies.

The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.

S. 103. Burden of proof as to particular fact

The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

S.104. The burden of proving the fact to be proved to make evidence admissible

The burden of proving any fact necessary to be proved in order to enable any person to give evidence of any other fact is on the person who wishes to give such evidence.

S.105. The burden of proving that the case of accused comes within exceptions

When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Indian Penal Code, (45 of 1860), or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the Court shall presume the absence of such circumstances.

S.106. The burden of proving fact specially within knowledge.

When any fact is specially within the knowledge of any person, the burden of proving that fact is upon him.

S.107. The burden of proving the death of person known to have been alive within thirty years.

When the question is whether a man is alive or dead, and it is shown that he was alive within thirty years, the burden of proving that he is dead is on the person who affirms it.

 S.108. The burden of proving that person is alive who has not been heard of for seven years.

Provided that when the question is whether a man is alive or dead, and it is proved that he has not been heard of for seven years by those who would naturally have heard of him if he had been alive, the burden of proving that he is alive is shifted to the person who affirms it.

S.109. The burden of proof as to relationship in the case of partners, landlord and tenant, principal and agent

When the question is whether persons are partners, landlord and tenant, or principal and agent, and it has been shown that they have been acting as such, the burden of proving that they do not stand, or have ceased to stand to each other in those relationships respectively, is on the person who affirms it.

S.110. The burden of proof as to ownership

 When the question is, whether any person is the owner of anything of which he is shown to be in possession, the burden of proving that he is not the owner is on the person who affirms that he is not the owner.

S.111. Proof of good faith in transactions where one party is in the relation of active confidence.

Where there is a question as to the good faith of a transaction between parties, one of whom stands to the other in a position of active confidence, the burden of proving the good faith of the transaction is on the party who is in a position of active confidence.

S. 114.   Court may presume existence of certain facts.

The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.

Illustrations

The Court may presume —

  • (a) that a man who is in possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen, unless he can account for his possession;
  • (b) that an accomplice is unworthy of credit, unless he is corroborated in material particulars;
  • (c) that a bill of exchange, accepted or endorsed, was accepted or endorsed for good consideration;
  • (d) that a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or states of things usually cease to exist, is still in existence;
  • (e) that judicial and official acts have been regularly performed;
  • (f) that the common course of business has been followed in particular cases;
  • (g) that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;
  • (h) that if a man refuses to answer a question which he is not compelled to answer by law, the answer, if given, would be unfavourable to him;
  • (i) that when a document creating an obligation is in the hands of the obligor, the obligation has been discharged.

But the Court shall also have regard to such facts as the following, in considering whether such maxims do or do not apply to the particular case before it: —

  • as to illustration (a) — a shop-keeper has in his bill a marked rupee soon after it was stolen, and cannot account for its possession specifically, but is continually receiving rupees in the course of his business;
  • as to illustration (b) — A, a person of the highest character is tried for causing a man’s death by an act of negligence in arranging certain machinery. B, a person of equally good character, who also took part in the arrangement, describes precisely what was done, and admits and explains the common carelessness of A and himself;
  • as to illustration (b) — a crime is committed by several persons. A, B and C, three of the criminals, are captured on the spot and kept apart from each other. Each gives an account of the crime implicating D, and the accounts corroborate each other in such a manner as to render previous concert highly improbable;
  • as to illustration (c) — A, the drawer of a bill of exchange, was a man of business. B, the acceptor, was a young and ignorant person, completely under As influence;
  • as to illustration (d) — it is proved that a river ran in a certain course five years ago, but it is known that there have been floods since that time which might change its course;
  • as to illustration (e) — a judicial act, the regularity of which is in question, was performed under exceptional circumstances;
  • as to illustration (f) — the question is, whether a letter was received. It is shown to have been posted, but the usual course of the post was interrupted by disturbances;
  • as to illustration (g) — a man refuses to produce a document which would bear on a contract of small importance on which he is sued, but which might also injure the feelings and reputation of his family;
  • as to illustration (h) — a man refuses to answer a question which he is not compelled by law to answer, but the answer to it might cause loss to him in matters unconnected with the matter in relation to which it is asked;
  • as to illustration (i) — a bond is in possession of the obligor, but the circumstances of the case are such that he may have stolen it.

Burden of Proof General Principles and Nuances of Sections 101 to 106

Our Apex Court in Mohd.  Abdullah Azam Khan Vs. Nawab Kazim Ali Khan, 2023 KLT OnLine 1084 (SC), authoritatively lays down the General principles as to Burden of Proof. It reads:

  • 12.1. The legal scheme governing various aspects of ‘burden of proof’ in the Indian context, is contained in Sections 101 to 106 of the Indian Evidence Act.
  • 12.2. As per Section 101 of the Indian Evidence Act, when a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. This section is based on the rule, ei incumbit probatio qui dicit, non qui negat, which means that the burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it, because a negative is usually incapable of proof. The burden of proving a fact always lies upon the person who asserts and until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom the burden lies has been able to discharge his burden. However, the above rule is subject to the general principle that things admitted need not be proved.
  • 12.3. The question as to whether burden of proof has been discharged by a party to the lis or not, would depend upon the facts and circumstances of the case. If the facts are admitted or, if otherwise,sufficient materials have been brought on record so as to enable a Court to arrive at a definite conclusion, it is idle to contend that the party on whom the burden of proof lies would still be liable to produce direct evidence, vide National Insurance Co. Ltd. vs. Rattani (2009) 2 SCC 75: AIR 2009 SC 1499.
  • 12.4. Burden to prove documents lie on plaintiff alone as onus is always on the person asserting a proposition or fact which is not self­evident. This position is summarised in the observation to the effect that, an assertion that a man who is alive was born requires no proof; the onus, is not on the person making the assertion, because it is self­evident that he had been born. But to assert that he had been born on a certain date, if the date is material, requires proof; the onus is on the person making the assertion, vide Robins vs. National Trust & Co. Ltd. 1927 AC 515: 101 IC 903.
  • 12.5. It is also to be noted at this juncture that there is an essential distinction between burden of proof and onus of proof. Burden of proof lies upon a person who has to prove the fact and it never shifts, onus of proof on the other hand, shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. For instance, In a suit for possession based on title, once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant, it is for the defendant to discharge his onus and in the absence thereof, the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiffs title, vide RVE Venkatachala Gounder vs. Arulmigu Viswesaraswami and VP Temple AIR 2003 SC 4548: (2003) 8 SCC 752.
  • 12.6. In terms of section 102 of the Evidence Act, the initial burden to prove its claim is always on the plaintiff and if he discharges that burden and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff of the same.
  • 12.7. Where, however, evidence has been led by the contesting parties, abstract considerations of onus are out of place and truth or otherwise must always be adjudged on the evidence led by the parties [Kalwa Devadattam vs. Union, AIR 1964 SC 880]
  • 12.8. As per Section 103, the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. This section amplifies the general rule in section 101 that the burden of proof lies on the person who asserts the affirmative of the issue. It lays down that if a person wishes the court to believe in the existence of a particular fact, the onus of proving that fact, is on him, unless the burden of proving it is cast by any law on any particular person.
  • 12.9. Section 105 is an application of the rule in section 103. When parties to a dispute adduce evidence to substantiate their claim, onus becomes academic and divided, entailing each party to prove their respective plea.
  • 12.10. Section 106 is an exception to the general rule laid down in Section 101, that the burden of proving a fact rest on the party who substantially asserts the affirmative of the issue. Section 106 is not intended to relieve any person of that duty or burden but states that when a fact to be proved is peculiarly within the knowledge of a party, it is for him to prove it. It applies to cases where the fact is especially within a party’s knowledge and to none else. The expression ‘especially’ used in Section 106 means facts that are eminently or exceptionally within one’s knowledge. This means a party having personal knowledge of certain facts has a duty to appear as a witness and if he does not go to the witness box, there is a strong presumption against him. In an Election Petition, the initial burden to prove determination of age of returned candidate lies on the petitioner, however, burden lies on the respondent to prove facts within his special knowledge. (Sushil Kumar vs. Rakesh Kumar [ (2003) 8 SCC 673) ]. 
  • 12.11. The provisions of Section 106 are unambiguous and categorical in laying down that when any fact is especially within the knowledge of a person, the burden of proving that fact is upon him. If he does so, he must be held to have discharged his burden but if he fails to offer an explanation on the basis of facts within his special knowledge, he fails to discharge the burden cast upon him by Section 106. [Source: Sarkar on Law of Evidence, 20th Edition, Volume 2.]
  • 12.12. In Sushil Kumar vs. Rakesh Kumar (supra), the controversy was with regard to the improper acceptance of the nomination of the sole respondent therein on the premise that he was under qualified to contest the Bihar Legislative Assemble election from 181, Parbatta Constituency. In the said case, inter alia, the horoscope of the respondent therein and admission register of New St. Xaviers School, Boring Road, Patna and transfer certificate issued by Swami Vivekananda Vidyalaya, Mithapur, Patna, were produced as documents to prove that the successful candidate therein was not eligible to contest the said Assembly election. In the said case, Section 35 of the Indian Evidence Act was referred to and it was observed that the register maintained in terms of a statute or by a statutory authority in regular course of business would be a relevant fact and if such vital evidence had been produced, it would clinch the issue. It was observed that there is no reliable evidence on record to show that the date of birth was recorded in the school register on the basis of the statement of any responsible person and that the admission register or a transfer certificate issued by a primary school do not satisfy the requirements of Section 35 of the Evidence Act.

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What is Collateral Purpose?

Jojy George Koduvath, Kottayam.

Introspection

Does the law allow to use unstamped or insufficiently stamped document in evidence?  NoSec. 35 of the Indian Stamp Act is the relevant provision.
But, it can be used for collateral purposes; or the substantive purpose after payment of penalty (except promissory note).
Does the law allow to use unregistered (compulsory registrable) deed in evidence?  NoSec. 49 of the Registration Act bars.
But, it can be used for collateral purposes.
Should the court exclude an unregistered (compulsory registrable) deed even if marked without objection?Yes (2008) 8 SCC 564
But, it can be used for collateral purposes.
When does question of using a document for ‘collateral purpose‘ arise?  ….In case of an unregistered (compulsorily registrable)  document: Sec. 49 of the Registration Act.
Can the court allow to use an unstamped or insufficiently stamped document for ‘collateral purpose‘?  NoIt is the duty of every Judge not  to  admit a document that is not duly stamped, even if no objection to other side. 2017-3 AIR(Kar)(R) 570; AIR 2015 Kar 175.
Can a document, required to be registered, but not registered, be used in a suit for specific performance.YesIt may be used in a suit for specific performance under Proviso to Sec. 49 of the Registration Act. And, it can be received as evidence of an oral agreement of sale.
S. Kaladevi v. V.R. Somasundaram, (2010) 5 SCC 401; Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar, 2018 (7) SCC  639.

What is Collateral Purpose?

The word ‘collateral’ signifies something beyond or parallel. According to Law Lexicon it means “that which is by the side, and not the direct line; that which is additional to or beyond a thing” (Amit Khanna.  Vs Suchi Khanna, 2008-10 ADJ 426; 2009-75 AllLR 34; 2009-1 AWC 929).

The Apex Court in K.B. Saha and Sons Private Limited v. Development Consultant Ltd., (2008) 8 SCC 564: 2008 AIR SCW 4829, held as under:

  • “A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.”
  • “A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.”

Yellapu Uma Maheswari v. Buddha Jagadheeswararao, (2015) 16 SCC 787, is an authority to see, what is ‘collateral purpose’. It is held that following matters can be proved with an unregistered partition deed, as ‘collateral purpose’-

  • severancy of title,
  • nature of possession of various shares;
    • but not primary purpose, i.e. division of joint properties by metes and bounds.

It is held as under:

  • “In a suit for partition, an unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded. Hence, if the appellant-defendant wants to mark these documents for collateral purpose it is open for them to pay the stamp duty together with penalty and get the document impounded and the trial court is at liberty to mark Exts. B-21 and B-22 for collateral purpose subject to proof and relevance.” 

Should an opportunity be given to cure defect, by paying deficit Stamp Duty?

In Kalaivani @ Devasena v. J. Ramu, 2010(1) CTC 27,  it was held that an opportunity should be given to the party who produces the document with insufficient stamp, to pay the deficit stamp duty and penalty so that the document could be exhibited; and that if penalty is not paid, the document should be impounded. It is held as under:

  • “24. .. It is well settled that even an unregistered document is admissible in evidence for collateral purpose provided it is adequately stamped under the Stamp act. If the document is both unstamped and unregistered, as the document in question here, it is no doubt true that it cannot be looked into for collateral purpose also. But such a document should not be thrown out at the threshold itself and an opportunity must be extended to the party who wants to mark the document on his side by directing him to pay the deficit stamp duty along with the penalty upto date, then the document could be admitted in evidence for collateral purpose. If the person does not pay the Court, then the document is to be impounded and sent to the Collector for taking action under the law.”

Unstamped or Insufficiently Stamped Pro-note

Unstamped or insufficiently stamped promissory note cannot be marked in evidence. The weight of authority is on the side that says it is incurable. Hence no secondary evidence can also be lead on the same. It cannot be used for collateral purpose also. But the creditor can prosecute a suit upon ‘original consideration’.

See Blog: (CLICK): Adjudication as to Proper Stamp under Stamp Act

 No Adjudication Needed If Power of Attorney is Sufficiently Stamped

Can Unregistered Agreement be admitted in a suit for specific performance?

  • It is held in S. Kaladevi Vs. V.R. Somasundaram, (2010) 5 SCC 401, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.
  • It is followed in Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar, 2018 (7) SCC  639.

Relevant Provisions in the Registration Act:

Sec. 17(1) (g) and 49 are the relevant provisions. They read as under:

  • “17. Documents of which registration is  compulsory– (1) The following documents shall be registered, …, namely:
  • (State Amendment –AP) Agreement of sale of immovable property of the value of one hundred rupee and upwards. (Similar State Amendment in Tamil Nadu and Kerala also.)
  • “49. Effect of non-registration of documents required to be  registered.– No document required by section 17 …. to be registered shall-
  • (a) affect any immovable property comprised therein
  • (b) ….
  • (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
    • Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument.”

K.B. Saha and Sons Private Limited v. Development Consultant Ltd.

The Apex Court in K.B. Saha and Sons Private Limited v. Development Consultant Ltd., (2008) 8 SCC 564: 2008 AIR SCW 4829, has laid down the principle in respect of the collateral purpose.

  •        “34. From the principles laid down in the various decisions of this Court and the High Courts, as referred to here-in-above, it is evident that :-
  •        A document required to be registered is not admissible into evidence under section 49 of the Registration Act.
  •       Such unregistered document can however be used as an evidence of collateral purpose as provided in the Proviso to section 49 of the Registration Act.
  •        A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
  •       A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
  •      If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.

‘Collateral Purpose‘ under Sec. 49 Registration Act

Section 49 of the Registration Act expressly states admissibility of unregistered documents  in evidence for collateral purposes.

The Supreme  Court observed in Sri Venkoba Rao Pawar v. Sri S. Chandrashekar, that the collateral purpose/transaction must be independent of, or divisible from the transaction which requires registration.

In S. Kaladevi Vs. V.R. Somasundaram, (2010) 5 SCC 401, Our Apex Court held as under:

  • “11. The main provision in Section 49 provides that any document which is required to be registered, shall not affect any immovable property comprised therein nor such document shall be received as evidence of any transaction affecting such property. The proviso, however, would show that an unregistered document affecting immovable property and required by the 1908 Act or the Transfer of Property Act, 1882 to be registered may be received as an evidence to the contract in a suit for specific performance or as evidence of any collateral transaction not required to be affected by registered instrument. By virtue of the proviso, therefore, an unregistered sale deed of an immovable property of the value of Rs.100 and more could be admitted in evidence as evidence of a contract in a suit for specific performance of the contract. Such an unregistered sale deed can also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908, Act.”
  • 12. Recently in the case of K.B. Sahaand Sons Private Limited v. Development Consultant Limited ,(2008) 8 SCC 564, this Court noticed the following statement of Mulla in his Indian Registration Act, 7th Edition, at page 189:
    • “……The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir; the former Chief Court of Oudh; the Judicial Commissioner’s Court at Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17 and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it……”
  • “This Court then culled out the following principles (K.B. Saha case, SCC p. 577, para 334):
    • “1. A document required to be registered, if unregistered is not admissible into evidence under Section 49 of the Registration Act.
    • 2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act.
    • 3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
    • 4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
    • 5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.
  • To the aforesaid principles, one more principle may be added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.”

It is held in Ameer Minhaj v. Dierdre Elizabeth (Wright) Issar, 2018 (7) SCC  639, after quoting Sec. 17 Registration Act, as under:

  • 10. On a plain reading of this provision, it is amply clear that the document containing contract to transfer the right, title or interest in an immovable property for consideration is required to be registered, if the party wants to rely on the same for the purposes of Section 53A of the 1882 Act to protect its possession over the stated property. If it is not a registered document, the only consequence provided in this provision is to declare that such document shall have no effect for the purposes of the said Section 53A of the 1882 Act.
  • The issue, in our opinion, is no more res integra. In S. Kaladevi Vs. V.R. Somasundaram and Ors., (2010) 5 SCC 401, this Court has restated the legal position that when an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received as evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the 1908 Act. 

After quoting Sec. 49 Registration Act it is observed by the Apex Court as under:

  • 11. In the reported decision (i.e. S. Kaladevi Vs. V.R. Somasundaram, (2010) 5 SCC 401), this Court has adverted to  the principles delineated in K.B. Saha and Sons Private Limited  v. Development Consultant Limited, (2008) 8 SCC 564 and has added one more principle  thereto that a document is required to be registered, but  if unregistered, can still be admitted as evidence of a contract in a suit for specific performance. In view of this exposition, the conclusion recorded by the High Court in the impugned judgment that the sale agreement dated 9th July, 2003 is inadmissible in evidence, will have to be understood to mean that the document though exhibited, will bear an endorsement that it is admissible only as evidence of the agreement to sell under the proviso to Section 49 of the 1908  Act and shall not have any effect for the purposes of  Section 53A of the 1882 Act. In that, it is received as evidence of a contract in a suit for specific performance and nothing more. The genuineness, validity and binding nature of the document or the fact that it is hit by the provisions of the 1882 Act or the 1899 Act, as the case may be, will have to be adjudicated at the appropriate stage as noted by the Trial Court after the parties adduce oral and documentary evidence.”

Basis of the Erudite Decision in S Kaladevi (as stated in Para 11 of the decision)

  1. Proviso in Section 49:
    1. “The proviso, however, would show that an unregistered document affecting immovable property and a document ‘required to be registered, but  if unregistered’, may, still, be received as an evidence to the contract in a suit for specific performance …. “
  2. Admitted as proof of an oral agreement of sale
    1. “Such an unregistered sale deed … can be received in evidence ….. as evidence of an oral agreement of sale.”

Unregistered Agreement can be used in Specific performance Even After the Amendment on Sec. 17

In C.  Ramya Vs. C.  Ganambal, 2020-5 Mad LJ 416 the Madras Court pointed out that the Madras and Andhra High Courts took the view that even after the amendment on Sec. 17 (Agreement of sale of immovable property is a compulsorily registrable document), non-registration of an agreement of sale does not operate as a total bar to look into the contract, since proviso to Section 49 has carved out two exceptions –

  • (i) a document ‘required to be registered, but  if unregistered,’ may, still, be received as an evidence to the contract in a suit for specific performance, and
  • (ii) it can be used for any ‘collateral purpose’.

The following are the cases referred to by the Madras High Court:

  • G. Veeramani Vs. N. Soundaramoorthy, 2019(6) CTC 580;
  • D. Devarajan v. Alphonsa Mary, 2019 (2) CTC 290;
  • Minor Ravi Bharathi Vs. P. Balasubramani, 2014(3) MWN (Civil) 578.

Unregd. Partition Deed Admissible to see Severance & No Suit for Partition lie

In Chinnapareddigari Pedda Muthyalareddy v. Chinnappareddigari Venkatareddy,AIR 1969 AP 242, unregistered partition lists were drawn up showing the properties allotted to the respective sharers. The lists were construed as partition deeds and were held by the trial Court to be inadmissible in evidence for proving division by metes and bounds. No oral evidence was held to be admissible under section 91 of the Evidence Act to prove the factum of partition or the nature of possession.

In appeal the Andhra Pradesh High Court (FB-Jaganmohan Reddy, C.J.) held that the unregistered partition deed was admissible not for proving terms of the partition or as the source of title, but for the purpose of showing that there was a disruption (division/severance) in status and that no suit for partition would lie on the basis that the properties were still joint family properties. This decision is relied on in Booraswami v. Rajakannu, 1978-1 MLJ 248; and held further, relying on K. Kanna Reddy v. K. Venkata Reddy, AIR 1965 AP 274, that for determining status and the nature of the possession oral evidence was also admissible (for proving the factum of partition).

Effect of Marking a Document Without Objection

Unregistered (Compulsorily Registrable) Documents:

With respect to unregistered documents it is held by the Apex Court in K.B. Saha and Sons Private Limited v. Development Consultant Ltd, (2008) 8 SCC 564: 2008 AIR SCW 4829, held as under:

  • “34. From the principles laid down in the various decisions of this Court and the High Courts, as referred to here-in-above, it is evident that :
  • A document required to be registered is not admissible into evidence under section 49 of the Registration Act.
  • Such unregistered document can however be used as an evidence of collateral purpose as provided in the Proviso to section 49 of the Registration Act. ….”

In the light of the Supreme Court decision in K.B. Saha and Sons Private Limited , it appears that the observation of the Karnataka High Court in Nanda Behera v. Akhsaya Kumar Behera, 2017AIR (CC) 1893, that once the Court, rightly or wrongly, decides to admit the documents in evidence, so far as the parties are concerned, the matter is closed, is not applicable to unregistered (compulsorily registrable) documents.

However, the Calcutta High Court in Dipak Kumar Singh v. Park Street Properties (P) Limited, AIR 2014 Cal 167, distinguished K.B. Saha & Sons Private Limited, (2008) 8 SCC 564, and other decisions saying that ‘the question of admissibility of a document, which had been admitted in evidence, was not taken up for consideration’ in those decisions.

The High Court relied on Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655 (question as to admissibility on the ground that it has not been stamped), which held that once a document had been marked as an exhibit in a case and the trial had proceeded all along on the footing that the document was an exhibit in the case and had been used by the parties in examination and cross-examination of their witnesses, it was not open either to the trial court itself or to a court of appeal or revision to go behind that order.

The other decisions referred to and distinguished in Dipak Kumar Singh v. Park Street Properties (P) Limited are the following:

  • Ram Kumar Das v. Jagdish Chandra Deo, Dhabal Deb: AIR 1952 SC 23,
  • Satish Chand Makhan v. Govardhan Das Byas: (1984) 1 SCC 369,
  • Anthony v. K.C. Ittoop: (2000) 6 SCC 394,
  • Surya Kumar Manji v. Trilochan Nath: AIR 1955 Cal 495,
  • Kunju Kesavan v. M.M. Philip: AIR 1964 SC 164,
  • Prasanta Ghosh  v. Pushkar Kumar Ash: 2006 (2) CHN 277.

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N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. and Ground Realities of Indian Situation in Arbitration Process

Saji Koduvath, Advocate, Kottayam.

Contents in a Nutshell

The Seven Judge Bench of the Supreme Court, in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., overruling Earlier Decision of the Five Judge Bench, on 13, Dec. 2023, held as under:

  • Defects on unstamping or inadequate stamping of documents are curable defects.
  • They are not void (though such documents would be inadmissible under Sec. 35 of the Stamp Act)
  • Though the courts (in proceedings for appointment of arbitrators) under Sec. 8 and 11 of the Arbitration Act only examines whether the arbitration agreement “prima facie exists,  and the objection as to non-stamping fall within the ambit of the arbitral tribunal.

Earlier Decision of the Five Judge Bench

  • The 5-Judge Bench of our Apex Court, in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1, by majority (3:2), held that existence of a valid arbitration agreement (with sufficient stamp) was necessary, for ‘reference to arbitrator’ under Sec. 8 of the Arbitration and Conciliation Act, 1996.
  • After 2015 Amendment on Arbitration and Conciliation Act, for ‘referring’  parties to arbitration (under Sec. 8) the courts should have “FOUND ‘PRIMA FACIE’ –
    • (i) the EXISTENCE of the arbitration agreement and
    • (ii) the VALIDITY thereof.
  • Sec. 8(1), as amended, reads as under:
    • A judicial authority …. shall … refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”
  • The scope of judicial review and jurisdiction of the court under Sec. 8 (for reference to arbitrator) and Sec. 11 (for appointing arbitrator) of the Arbitration Act are identical.

Existence of Arbitration Dispute

 Section 16 of the Arbitration and Conciliation Act 1996 declares the competence of arbitration tribunal to determine the existence or validity of the arbitration agreement . It reads as under:

  • “16. Competence of arbitral tribunal to rule on its jurisdiction. – (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,–
    • (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
    • (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
  • (2) Where an award is remitted under sub- section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court.
  • (3) An award remitted under sub- section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.”

PART I

N.N. Global Mercantile v. Indo Unique Flame – Contentions, in Substance

The legal disputes in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1, 2023 SCC OnLine SC 495, was placed before the Apex Court, treading following course:

  • A suit was filed by the appellant, to enforce a contract.
  • The defendant applied for reference under Section 8 of the Arbitration and Conciliation Act, the contract being contained an arbitration clause.
  • Trial Court rejected the application.
  • A Writ Petition was filed by the defendant challenging the Order. It was contended that the Arbitration Agreement was unenforceable as the (main) contract was unstamped.
  • The High Court allowed the Writ Petition. (Hence the plaintiff became the appellant before the Supreme Court.)

It was argued before the Apex Court that the Arbitration Agreement in the contract was enforceable and could have been acted upon, even if the contract was unstamped and unenforceable under the Indian Stamp Act. The 2-Judge Bench of the Supreme Court, referred the matter to 3-Judge Bench.

The 3-Judge Bench of the Supreme Court, referred the case to 5-Judge Bench, pointing out that an arbitration clause would stand as a distinct, separate and independent from the substantive contract.  This is based on the doctrine of severability or separability. That is, when the parties enter into such a contract, there are two separate agreements,

  • (i) the substantive contract and
  • (ii) the arbitration agreement.

In this premise, the 3-Judge Bench opined as under: 

  • Even if the main contract was bad for it was unstamped or insufficiently stamped, the arbitration clause could be enforced.
  • The defect on insufficiency of stamp could be cured as provided in the Stamp Act, and therefore, it could not be said that an unstamped or insufficiently stamped instrument did not exist in the eye of the law.
  • The failure to stamp a document, did not affect the validity or unenforceability of the document, but it merely rendered the document inadmissible in evidence.

Before the 5-Judge Bench of the Supreme Court, it was argued –

  • by the respondents/defendants, on the basis of the relevant provisions of the Arbitration Act (especially Sec. 16), that an arbitration clause would stand as a distinct, separate and independent from the substantive contract and that an arbitration reference can be made by the court even if the arbitration agreement was insufficiently stamped; and
  • by the appellant/plaintiff, in view of the provisions in the Indian Stamp Act (especially Sec. 33 and 35), that the arbitration reference could not be made by the court on the basis of an insufficiently stamped agreement. It was pointed out that unstamped or insufficiently stamped documents cannot be used as evidence for any purpose, as provided in the Stamp Act; and that for reference under Sec. 8 of the Arbitration Act the court has to specifically find that prima facie a “valid arbitration agreement exists“.

N.N. Global held – If Arb. Agreement Unstamped, NoValid Arb. Agreement Exists

It is held, by majority (3:2), in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, that an arbitration reference cannot be made by the court under Sec. 8 of the Arb. Act, on the basis of an unstamped or insufficiently stamped agreement.

The Majority affirmed the findings in this regard, in the two earlier 3-Judge Bench decisions.

  • (i) Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 (it was held that an arbitration reference cannot be made on the basis of an unstamped or insufficiently stamped agreement).
  • (ii) Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1 (it was held that landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations).

The majority judgment Para 110 and 111 of N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, reads as under:

  • “110. An instrument, which is eligible to stamp duty, may contain an Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law within the meaning of Section 2(h) of the Contract Act and is not enforceable under Section 2(g) of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a contract and not enforceable in law, cannot, therefore, exist in law. Therefore, we approve of paragraphs-22 and 29 of Garware (supra). To this extent, we also approve of Vidya Drolia (supra), insofar as the reasoning in paragraphs-22 and 29 of Garware (supra) is approved.
  • 111. The true intention behind the insertion of Section 11(6A) in the Act was to confine the Court, acting under Section 11, to examine and ascertain about the existence of an Arbitration Agreement.”

PART II -_Relevant Provisions of Law

Arbitration and Conciliation Act on Arbitrability

Sec. 8(1), Sec. 11(6A) and Sec. 16 of the Arbitration Conciliation Act requires consideration in this regard.

There is a major change in the concept of ‘separability’ of the arbitration clause in a contract, after 2015 Amendment. The Amendment directed that the existence or validity of an arbitration agreement has to be ‘found’ by the Court, before referring the parties to arbitration, and appointing arbitrator, under the Arbitration and Conciliation Act.

Sec. 8(1) of the Arbitration Conciliation Act reads (after 2015 Amendment) as under:

  • 8. Power to refer parties to arbitration where there is an arbitration agreement – (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”

Sec. 11(6A) of the Arbitration Act (inserted by 2015 Amendment) reads as under:

  • “11. Appointment of arbitrators – (1) … (2) … (3) … (4) … (5) …
  • (6A). The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.”

Sec. 16, Arbitration and Conciliation Act reads as under:

  • 16. Competence of arbitral tribunal to rule on its jurisdiction – (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose –
    • (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
    • (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
  • (2) … (3) ….

Section 33 and 35 of the Indian Stamp Act, 1899

Section 33 of the Indian Stamp Act, 1899 reads as under:

  • 33. Examination and impounding of instruments(1) Every person having by law or consent of parties, authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.
  • (2) … (3) …

Section 35 of the Indian Stamp Act, 1899 reads as under:

  • 35. Instruments not duly stamped inadmissible in evidence, etc. – No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
  • Provided that – (a) any such instrument shall, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
  • (b) …. (c) ….. (d) …. (e) …..

PART III -_Decisive Earlier Decisions

SBP and Co. v. Patel Engg. Ltd.

Our Apex Court had occasion to consider the apparent inconsistency between Sec. 16 and Sec. 11 of the Arbitration Act, in SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618.

  • Sec.16 enjoins the arbitral tribunal ‘to rule on its own jurisdiction’, including ruling on any objections with respect to the ‘existence or validity’ of the arbitration agreement and it is made clear that the arbitration clause shall be treated as an agreement independent of the other terms of the contract.
  • Sect. 11(7) conferred finality to the decision of the Chief Justice, as regards the ‘reference’ to arbitration.

The explanation placed by the learned Senior Counsel, Mr. K.K. Venugopal, was pointed out by the Court.  He argued that Sect. 16 had ‘full play’ only when an Arbitral Tribunal was constituted without intervention under Sec. 11.

In SBP and Co. our Apex Court held as under:

  • “Prima facie, it would be difficult to say that in spite of the finality conferred by sub-section (7) of Section 11 of the Act, to such a decision of the Chief Justice, the Arbitral Tribunal can still go behind that decision and rule on its own jurisdiction or on the existence of an arbitration clause.”

In Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209, it was observed as under:

  • “It is settled by SBP & Co. that Section 16 of the 1996 Act has full play only after the arbitral tribunal is constituted, without intervention of the Court under Section 11.”

Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd.

As regards the enforceability of an unstamped agreement and the bifurcation of an arbitration clause, it is held in Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209, as under:

  • “… A close look at Section 11(6A) would show that when the Supreme Court or the High Court considers an application under Sections 11(4) to 11(6), and comes across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the Stamp Act to first impound the agreement or conveyance and see that stamp duty and penalty (if any) is paid before the agreement, as a whole, can be acted upon. It is important to remember that the Stamp Act applies to the agreement or conveyance as a whole. Therefore, it is not possible to bifurcate the arbitration clause contained in such agreement or conveyance so as to give it an independent existence, as has been contended for by the respondent. The independent existence that could be given for certain limited purposes, on a harmonious reading of the Registration Act, 1908 … “
  • “22. When an arbitration Clause is contained “in a contract”, it is significant that the agreement only becomes a contract if it is enforceable by law. We have seen how, under the Indian Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of Section 11(6A), when read with Section 7(2) of the 1996 Act and Section 2(h) of the Contract Act, would make it clear that an arbitration Clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates has, in no manner, been touched by the amendment of Section 11(6A).”
  • “29. This judgment in Hyundai Engg. case is important in that what was specifically under consideration was an arbitration Clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration Clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration Clause that is contained in the sub-contract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6A) deals with “existence”, as opposed to Section 8, Section 16, and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court’s understanding of the expression “existence” in Hyundai Engg. Case as followed by us.”

Vidya Drolia v. Durga Trading Corporation

Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, made it clear-

  • For appointing an arbitrator, Courts shall make a Prima Facie ‘finding’ under Sec. 11(6A) as to “Non­-arbitrability of disputes”; and 
  • the prima facie examination is to make a “check”and to protect parties from being forced to arbitrate when the matter is demonstrably “non-­arbitrable”.

It is held in Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, as under:

  • “133. Prima facie case in the context of Section 8 is not to be confused with the merits of the case put up by the parties which has to be established before the Arbitral Tribunal. It is restricted to the subject-matter of the suit being prima facie arbitrable under a valid arbitration agreement. Prima facie case means that the assertions on these aspects are bona fide.
  • 134. Prima facie examination is not full review but a primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non-arbitrable disputes. The prima facie review at the reference stage is to cut the deadwood and trim off the side branches in straight forward cases where dismissal is barefaced and pellucid and when on the facts and law the litigation must stop at the first stage. Only when the court is certain that no valid arbitration agreement exists or the disputes/subject-matter are not arbitrable, the application under Section 8 would be rejected. At this stage, the court should not get lost in thickets and decide debatable questions of facts. Referral proceedings are preliminary and summary and not a mini trial… …
  • 139. … Conversely, if the court becomes too reluctant to intervene, it may undermine effectiveness of both the arbitration and the court. There are certain cases where the prima facie examination may require a deeper consideration. The court’s challenge is to find the right amount of and the context when it would examine the prima facie case or exercise restraint. The legal order needs a right balance between avoiding arbitration obstructing tactics at referral stage and protecting parties from being forced to arbitrate when the matter is clearly non-arbitrable.”

The Apex Court further observed as under:

  • “146. We now proceed to examine the question, whether the word existence” in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudentially and textualism it is possible to differentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word “existence”. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not binding. Existence of an arbitration agreement presupposes a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of “existence” requires understanding the context, the purpose and the relevant legal norms applicable for a binding and enforceable arbitration agreement. An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party cannot sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law.
  • 147. We would proceed to elaborate and give further reasons:
  • 147.1. In Garware Wall Ropes Ltd. [Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324], this Court had examined the question of stamp duty in an underlying contract with an arbitration clause and in the context had drawn a distinction between the first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to “existence” and “validity” of the arbitration agreement being apposite and extremely important, we would repeat the same by reproducing para 29 thereof : (SCC p. 238)
    • “29. This judgment in Hyundai Engg. case [United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530] is important in that what was specifically under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the sub-contract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6-A) deals with “existence”, as opposed to Section 8, Section 16 and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court’s understanding of the expression “existence” in Hyundai Engg. case [United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530] , as followed by us.”
  • Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.”
  • “153. Accordingly, we hold that the expression ‘existence of an arbitration agreement’ in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment. In cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the Arbitral Tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability.”
  • 154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.
  • 154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. ”
    • The afore stated passages from Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, is quoted and followed in NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389.

BSNL and Anr. v. Nortel Networks India (P) Ltd.

In BSNL and Anr. v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738, it is held held as under:

  • “45.1 …While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere “only” when it is “manifest” that the claims are ex facie time-barred and dead, or there is no subsisting dispute…” (quoted and followed in NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389).

NTPC Ltd. v. SPML Infra Ltd.

NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389, without changing the foundations laid down by the Apex Court in earlier decisions, Dr. DY Chandrachud; CJI, made clear the position of law with clarity and emphasis. It is observed as under:

  • “24. Following the general rule and the principle laid down in Vidya Drolia (supra), this Court has consistently been holding that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engg. Pvt. Ltd., (2021) 5 SCC 671, Sanjiv Prakash v. Seema Kukreja, (2021) 9 SCC 732, and Indian Oil Corporation Ltd. v. NCC Ltd., (2022) SCC OnLine SC 896, the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BSNL and Anr. v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738, and Secunderabad Cantonment Board v. B. Ramachandraiah , arbitration was refused as the claims of the parties were demonstrably time-barred.
  • 25. Eye of the Needle: The above-referred precedents crystallise the position of law that the pre-referral jurisdiction of the courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant’s privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non- arbitrability of the dispute.
  • 27. The standard of scrutiny to examine the non-arbitrability of a claim is only prima facie. Referral courts must not undertake a full review of the contested facts; they must only be confined to a primary first review and let facts speak for themselves. This also requires the courts to examine whether the assertion on arbitrability is bona fide or not. The prima facie scrutiny of the facts must lead to a clear conclusion that there is not even a vestige of doubt that the claim is non-arbitrable. On the other hand, even if there is the slightest doubt, the rule is to refer the dispute to arbitration.
  • 28. The limited scrutiny, through the eye of the needle, is necessary and compelling. It is intertwined with the duty of the referral court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable. It has been termed as a legitimate interference by courts to refuse reference in order to prevent wastage of public and private resources. Further, as noted in Vidya Drolia (supra), if this duty within the limited compass is not exercised, and the Court becomes too reluctant to intervene, it may undermine the effectiveness of both, arbitration and the Court. Therefore, this Court or a High Court, as the case may be, while exercising jurisdiction under Section 11(6) of the Act, is not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen arbitrator, as explained in DLF Home Developers Limited v. Rajapura Homes Pvt. Ltd., 2021 SCC OnLine SC 781″

In N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1, taking note of the divergence in the debated points among Judges, Hrishikesh Roy, J., one of the (two) judges who dissented from the view of the majority, laid down the following-

  •  “… Let our minority opinion (self and Learned Brother Justice Ajay Rastogi, who has written a separate opinion), appeal to the brooding spirit of the future as also the powers of the legislature to examine the interplay between the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899; and to emphatically resolve the imbroglio to avoid any confusion in the minds of the stakeholders in the field of arbitration.”

PART III

Seven-Judge-Bench reconsiders NN Global Mercantile v Indo Unique Flame

Seven-Judge Bench of the Supreme Court (D.Y. Chandrachud, CJI, and S.K. Kaul, Sanjiv Khanna, B.R. Gavai, Surya Kant, J.B. Pardiwala and Manoj Misra JJ.) was constituted to reconsider the five-judge bench decision in NN Global Mercantile v Indo Unique Flame(2023) 7 SCC 1.

It was in a Curative Petition.

The seven-judge bench heard it on the “larger ramifications and consequences”.

The main arguments were the following:

  • The lack of a stamp was “rectifiable and curable”.
  • It cannot render the arbitration agreement void.
  • NN Global Mercantile declared an unstamped arbitration agreement was void.
  • It is not correct (If ‘Void’, it cannot be resurrected later).

The matter was referred to Seven–Judge Bench on the following order-

  • “Having regard to the larger ramifications and consequences of the view of the majority in NN Global Mercantile Private Limited vs Indo Unique Flame Limited and Others, we are of the considered view that the proceedings should be placed before a seven-Judge Bench to reconsider the correctness of the view of the five-Judge Bench.”

Findings of the Seven-Judge Bench – on Stamp Act

  • The Stamp Act is a fiscal statute only.
  • The Act itself provided for curing defects on non-stamping.
  • Hence such unstamped agreements are not void.

Findings of the Seven-Judge Bench – on Arbitration Act

  • The Arbitration Act provided for minimum judicial interference.
  • Arbitration Act is a self-contained code.
  • It provides for the separability of the arbitration agreement from the main contract.
  • Arbitral tribunals had jurisdiction to determine the limits of their own jurisdiction
  • At the referral stage by deferring to the jurisdiction of the arbitral tribunal in issues pertaining to the existence and validity of an arbitration agreement”.

Harmonious interpretation of  Stamp Act and Arbitration Act

  • The Arbitration Act, a comprehensive legal code.
  • It is a “special” statute.
  • It did not specify stamping as a pre-condition of a valid arbitration agreement.
  • It requires courts to confine at the referral stage to examination of the existence of arbitration agreement.

The Seven Judge Bench of the Supreme Court held:

  • Defects on Unstamping or inadequate stamping is a curable defect.
  • They are not void (though inadmissible under Sec. 35 of the Stamp Act)
  • Though the courts (in proceedings for appointment of arbitrators) under Sec. 8 and 11 of the Arbitration Act only examines whether the arbitration agreement “prima facie exists”,  and the objection as to non-stamping fall within the ambit of the arbitral tribunal.

 The Supreme Court has Overruled

  • NN Global Mercantile v Indo Unique Flame, (2023) 7 SCC 1;
  • SMS Tea Estates v Chandmari Tea Co, (2011) 14 SCC 66;
  • Garware Wall Ropes v Coastal Marine Constructions, (2019) 9 SCC 209.

OBSERVATIONS AND FINDINGS OF THE APEX COURT

Non-Stamping Does Not Render a Document Invalid or Nonexistent.

  • “194. The interpretation accorded to the Stamp Act by this Court in the present judgment does not allow the law to be flouted. The arbitral tribunal continues to be bound by the provisions of the Stamp Act, including those relating to its impounding and admissibility. The interpretation of the law in this judgment ensures that the provisions of the Arbitration Act are given effect to while not detracting from the purpose of the Stamp Act. 195. The interests of revenue are not jeopardised in any manner because the duty chargeable must be paid before the agreement in question is rendered admissible and the lis between the parties adjudicated. The question is at which stage the agreement would be impounded and not whether it would be impounded at all. The courts are not abdicating their duty but are instead giving effect to:
    • a. The principle of minimal judicial intervention in Section 5 of the Arbitration Act;
    • b. The prima facie standard applicable to Sections 8 and 11 of the Arbitration Act; and
    • c. The purpose of the Stamp Act which is to protect the interests of revenue and not arm litigants with a weapon of technicality by which they delay the adjudication of the lis.
    • d. The interpretation of the law must give effect to the purpose of the Arbitration Act in addition to the Stamp Act.” (bold in original).

Referral Court (Sec. 11 & 8 Stage) is Not Constrained From Acting Upon Certified Copy

The Apex Court held as under:

  • “217. An arbitration agreement or its certified copy is not rendered void or unenforceable because it is unstamped or insufficiently stamped. We accordingly clarify that the position of law laid down in Jupudi Kesava Rao (supra) and Hariom Agrawal (supra) cannot constrain a referral court at Section 11 stage (as well as Section 8 stage) from acting upon a certified copy of an arbitration agreement and referring the parties to arbitral tribunal.”

Referral Court Not to Impound Unstamped Stamped Instrument

The Apex Court further held as under:

  • “218. The discussion in preceding segments indicates that the referral court at Section 11 stage should not examine or impound an unstamped or insufficiently stamped instrument, but rather leave it for the determination by the arbitral tribunal. When a party produces an arbitration agreement or its certified copy, the referral court only has to examine whether an arbitration agreement exists in terms of Section 7 of the Arbitration Act. The referral court under Section 11 is not required to examine whether a certified copy of the agreement/ instrument/ contract discloses the fact of payment of stamp duty on the original. Accordingly, we hold that the holding of this Court in SMS Tea Estate (supra), as reiterated in N N Global 2 (supra), is no longer valid in law.”

Conclusions of the Apex Court

  • “224. The conclusions reached in this judgment are summarised below:
    • a. Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable;
    • b. Non-stamping or inadequate stamping is a curable defect;
    • c. An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine whether the arbitration agreement prima facie exists;
    • d. Any objections in relation to the stamping of the agreement fall within the ambit of the arbitral tribunal; and
    • e. The decision in NN Global 2 (supra) and SMS Tea Estates (supra) are overruled. Paragraphs 22 and 29 of Garware Wall Ropes (supra) are overruled to that extent.”

Conclusion

In any event, the legislatures (and the courts also) – as they are duty bound to ponder the welfare of the ‘downtrodden which is the majority’ – will have to consider whether the following are ground realities-

  • 1. The majority of Execution Petitions that come before the Execution (civil) Courts are for realisation of amounts below Rupees 10 Lakh ; and the lion’s share of it is filed by the persons who are engaged, directly or indirectly, in Money Lending activity, or initiated by similar “Service Providers”; and the opposite parties thereof belong (comparatively) to lower strata.  
  • 2. A large number of Execution Petitions that come before the Execution (civil) Courts are that from the uncontested Arbitration Awards from “Outside-States”.
  • 3. There is no effective “legal frame” (rules) for fixing remuneration of the Arbitrators.

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No Valid Arbitration Agreement ‘Exists’ – Can Arbitration Clause be Invoked?

No; Courts to make a “Finding”, Prima Facie, as to Existence of a Valid Arb. Agreement, for ‘Reference to, or Appointment of’, Arbitrator.

Jojy George Koduvath & Saji Koduvath Advocate, Kottayam.

PART – I

Contents in a Nutshell

  • There is a major change by 2015 Amendment on Arbitration and Conciliation Act, 1996 as regards (i) the reference for arbitration under Sec. 8, and (ii) the appointment of arbitrator under Sec. 11.
  • After 2015 Amendment, for referring  parties to arbitration and for appointing arbitrator, the courts should have “FOUND“, ‘PRIMA FACIE’
    • (i) the EXISTENCE of the arbitration agreement and
    • (ii) the VALIDITY thereof
    • (in short, legitimacy of arbitrability).
  • Sec. 8(1), as amended, reads as under:
    • A judicial authority …. shall … refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”
  • The arbitration agreement should be a ‘binding’ and ‘subsisting’ one, for qualifying it to be “valid” and “existing”.
  • Referral proceedings are preliminary and summary  in nature, and do not envisage a “mini trial”. But, there are certain cases where the prima facie examination may require a deeper consideration. This prima facie examination is to make a “check” and to protect parties from being forced to arbitrate when the matter is demonstrably “non-­arbitrable” (See: Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1).
  • The limited scrutiny, through the eye of the needle, is necessary and compelling. ” If there is the slightest doubt, the rule is to refer the dispute to arbitration” (NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389).
  • The 5-Judge Bench of our Apex Court, in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, affirmed the views in Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, as to the requirement of a valid arbitration agreement for reference under Sec. 8 of the Arbitration Act.
  • It is held by majority (3:2) in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. that an arbitration reference cannot be made by the court on the basis of an insufficiently stamped agreement.

Appointment of Arbitrators, Before 2015

Sec. 16(1)(a) of the Arbitration and Conciliation Act, 1996 provides that the arbitration clause in a contract is treated as independent of the other terms of the contract.

There being no specific direction (to the court) in the Arbitration Act, before 2015 Amendment, to decide on existence or validity of an arbitration agreement, while referring the parties to arbitration, under Sec. 8(1), and appointing arbitrator under Sec. 11, courts could have taken a liberal stand.

After 2015 Amendment

Courts Decide – Existence of Arb. Agreement and its Non­-arbitrability

There is a major change in the concept of ‘separability’ of the arbitration clause, after 2015 Amendment. The Amendment directed that the existence or validity of an arbitration agreement has to be ‘found’ by the Court, before referring the parties to arbitration, and appointing arbitrator, under the Arbitration and Conciliation Act..

Even before 2015, the general rule prevailed was that the arbitration agreement would cease to ‘exist’ by the expiry (end) of contract by efflux of time. It was made clear in P. Manohar Reddy & Bros. v. Maharashtra Krishna Valley Development Corporation, (2009) 2 SCC 494. It was pointed out-

  • “An arbitration clause, as is well known, is a part of the contract. It being a collateral term need not, in all situations, perish with coming to an end of the contract. It may survive. This concept of separability of the arbitration clause is now widely accepted.”

Sec. 8(1) – Existence of a Valid Arbitration Agreement must be “Found”

Sec. 8(1) of the Arbitration Conciliation Act reads (after 2015 Amendment) as under:

  • 8. Power to refer parties to arbitration where there is an arbitration agreement (1). A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”

Sec. 11(6A) existence of an arbitration agreement

Sec. 11(6A) of the Arbitration Act (inserted by 2015 Amendment) reads as under:

  • “11. Appointment of arbitrators – (1) … (2) … (3) … (4) … (5) …
  • (6A). The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.”

Arbitration Agreement is a Collateral Term, Independent of other Terms

In SMS Tea Estates Pvt Ltd. v. Chandmari Tea Co Pvt. Ltd., 2011-14 SCC 66, it is observed as under:

  • “12. When a contract contains an arbitration agreement, it is a collateral term relating to the resolution of disputes, unrelated to the performance of the contract. It is as if two contracts — one in regard to the substantive terms of the main contract and the other relating to resolution of disputes — had been rolled into one, for purposes of convenience. An arbitration clause is therefore an agreement independent of the other terms of the contract or the instrument. Resultantly, even if the contract or its performance is terminated or comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract.”

In Garware Wall Ropes Ltd. v. Coastal Marine Constructions and Engineering Ltd., SCC 2019-9 SCC 209, it is pointed out that “these principles found statutory recognition” in Sec. 16(1). It reads as under:

  • 16. Competence of arbitral tribunal to rule on its jurisdiction – (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose
  • (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
  • (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”
    • See also: SMS Tea Estates Pvt Ltd. v. Chandmari Tea Co Pvt. Ltd., 2011-14 SCC 66, Enercon (India) Ltd. v. Enercon GMBH, 2014-5 SCC 1; Avitel Post Studioz Limited v. HSBC  Holdings (Mauritius) Limited, 2021-4 SCC 713.
  • Note: It is beyond doubt that the intention of Sec. 16(1) the Act is not to resurrect an arbitration clause that cannot be invoked in cases –
    • (i)  where the period of limitation provided for suits is elapsed;
    • (ii) where there is death or end of contract by ‘breach’ by one party; or
    • (iii) where there is a rescission or alteration of contract under Sec. 62 of the Contract Act, and thereby the parties need not have performed the original contract.

Existence’ of Contract, Necessary – for Operation of Arbitration Clause

It was held by the Supreme Court, in Union of India v. Kishorilal Gupta and Bros., AIR 1959 SC 1362 (a case on rescission or alteration of contract under Sec. 62 of the Contract Act), as under:

  • “10. The following principles relevant to the present case emerge from the aforesaid discussion:
    • (1) An arbitration clause is a collateral term of a contract as distinguished from its substantive terms; but nonetheless it is an integral part of it;
    • (2) however comprehensive the terms of an arbitration clause may be, the existence of the contract is a necessary condition for its operation; it perishes with the contract;
    • (3) … (4) … (5) … (6) …..”
  • The afore-stated passage in Union of India v. Kishorilal Gupta is quoted in:
    • Indian Drugs and Pharmaceuticals Limited v. Indo Swiss Synthetics Gem Manufacture Company Limited, 1996-1 SCC 54;
    • Sanjiv Prakash v. Seema Kukreja, 2021-9 SCC 732;
    • Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1.

The Apex Court decision, Union of India v. Kishorilal Gupta and Bros., AIR 1959 SC 1362, is referred to in Union of India v. Jagdish Kaur, AIR 2007 All-  67, as under:  

  • “20. The suit was instituted by the landlady on 1 -7-2004 after expiry of term of agreement. Courts below have rightly held that after expiry of five years, the agreement was non-existent and the arbitration clause was not applicable. This view finds support from the law laid down by Hon’ble the Apex Court in Union of India v. Kishori Lal Gupta and Brothers, (1959) AIR SC 1362.”

See also: Cosme Farma Laboratories Ltd.  v. Shwarde Pharmaceutical Pvt.  Ltd., 2013-2 GoaLR 559.

Expiry of Contract by Efflux of Time – Can Arbitration Clause be Invoked?

It is beyond doubt that the arbitration clause cannot be invoked in a case where the period of limitation provided for suits is elapsed.

If the period fixed in a contract for sale of a property (where time is essence of contract) is over, and the vendor alleges breach from the part of purchaser, there will not be a valid and subsisting contract from the viewpoint of the vendor. In such a case –

  • if a dispute arises (even within the limitation period for taking legal action), the “existence or validity of an arbitration agreementhas to be decided by the Court, for referring the parties to arbitration, under Sec. 8(1), and appointing arbitrator under Sec. 11, of the Arbitration and Conciliation Act.

End of Contract by Breach – Court to decide – Whether Arb. Clause be Invoked

Before the 2015 amendment, in Branch Manager, Magma Leasing & Fin. Ltd. v.  Potluri Madhavilata  (2009) 10 SCC 103,  the core question considered was whether the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract even if its performance has come to an end on account of termination due to breach. It was held as under:

  • “18. The statement of law expounded by Viscount Simon, L.C. in the case of Heyman as noticed above, in our view, equally applies to situation where the contract is terminated by one party on account of the breach committed by the other particularly in a case where the clause is framed in wide and general terms. Merely because the contract has come to an end by its termination due to breach, the arbitration clause does not get perished nor rendered inoperative; rather it survives for resolution of disputes arising “in respect of” or “with regard to” or “under” the contract. This is in line with the earlier decisions of this Court, particularly as laid down in Kishori Lal Gupta & Bros.”

It is legitimate to say that this position does not continue in view of the amended provisions, after 2015.

If the Contract (with arbitration clause) says that the contract will “stand cancelled” or “become void” or “come to an end”, on breach of that contract, whether the arbitration clause will work in such a case, for fixing damages, may be, still, a matter of adjudication by the arbitrator. In any case, ‘arbitrability’ of the same has to be decided by the “court”, in the light of Sec. 8(1) and 11(6A).

WhyPrima Facie’ Review and Finding by ‘Courtu/S. 8(1) and 11 ?

  • For referring the parties to arbitration, under Sec. 8(1) of the Arbitration and Conciliation Act, 1996 (as amended in 2015), and for appointing arbitrator under Sec. 11
    • the standard of scrutiny to examine the non-arbitrability of a claim by Referral courts is only prima facie; and the referral courts must not undertake a full review of the contested facts; they must only be confined to a primary first review (See: Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1; NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389)); and
    • the court has to (prima facie) “find” that a “valid arbitration agreement exists“.
  • That is, the arbitration agreement should be a ‘binding’ and ‘subsisting’ one, for qualifying it to be “valid” and “existing”.
  • There will be no “arbitrable” dispute if-
    • the contract is ‘ended’ (by virtue of the provisions of the contract), for breach by one party, and the party in breach is ready to pay the predetermined damages for breach (and nothing remains for arbitration).

Arbitration Clause in a Perished/Expired Contract, Arbitrator Not Appointed

Relying on Union of India v. Kishorilal Gupta and Bros., AIR 1959 SC 1362, it is held in Eigen Technical Service Pvt.  Ltd.  v. Vatika Limited,  2013-172 Pun LR  27: 2013-4 Arb LR 367, that arbitration clause in a redundant and perished contractby efflux of time, cannot be invoked. The court relied on an Allahabad decision stating as under:

  • “High Court of Allahabad in a judgment dated 10.11.2006 passed in Writ Petition No. 21275 of 2006 titled as Union of India Thru. Secry., Ministry of Postal v. Jagdish Kaur has also observed that arbitration clause contained in an expired agreement is also deemed as expired and is no more valid.”

Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1

Our Apex Court, in Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, made it clear-

  • For appointing an arbitrator, Courts shall make a Prima Facie ‘finding’ under Sec. 11(6A) as to “Non­-arbitrability of disputes”; and 
  • the prima facie examination is to make a “check” and to protect parties from being forced to arbitrate when the matter is demonstrably “non-­arbitrable”.

It is held in Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, as under:

  • “133. Prima facie case in the context of Section 8 is not to be confused with the merits of the case put up by the parties which has to be established before the Arbitral Tribunal. It is restricted to the subject-matter of the suit being prima facie arbitrable under a valid arbitration agreement. Prima facie case means that the assertions on these aspects are bona fide.
  • 134. Prima facie examination is not full review but a primary first review to weed out manifestly and ex facie non-existent and invalid arbitration agreements and non-arbitrable disputes. The prima facie review at the reference stage is to cut the deadwood and trim off the side branches in straight forward cases where dismissal is barefaced and pellucid and when on the facts and law the litigation must stop at the first stage. Only when the court is certain that no valid arbitration agreement exists or the disputes/subject-matter are not arbitrable, the application under Section 8 would be rejected. At this stage, the court should not get lost in thickets and decide debatable questions of facts. Referral proceedings are preliminary and summary and not a mini trial… …
  • 139. … Conversely, if the court becomes too reluctant to intervene, it may undermine effectiveness of both the arbitration and the court. There are certain cases where the prima facie examination may require a deeper consideration. The court’s challenge is to find the right amount of and the context when it would examine the prima facie case or exercise restraint. The legal order needs a right balance between avoiding arbitration obstructing tactics at referral stage and protecting parties from being forced to arbitrate when the matter is clearly non-arbitrable.”

The Apex Court further observed as under:

  • “153. Accordingly, we hold that the expression ‘existence of an arbitration agreement’ in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment. In cases of debatable and disputable facts, and good reasonable arguable case, etc., the court would force the parties to abide by the arbitration agreement as the Arbitral Tribunal has primary jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability.”
  • 154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.
  • 154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. ”
    • The afore stated passages from Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1, is quoted and followed in NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389.

Though Scope of scrutiny is Limited, it is Necessary and Compelling

NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389, without changing the foundations laid down by the Apex Court in earlier decisions, Dr. DY Chandrachud; CJI, made clear the position of law with clarity and emphasis. It is observed as under:

  • “24. Following the general rule and the principle laid down in Vidya Drolia (supra), this Court has consistently been holding that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engg. Pvt. Ltd., (2021) 5 SCC 671, Sanjiv Prakash v. Seema Kukreja, (2021) 9 SCC 732, and Indian Oil Corporation Ltd. v. NCC Ltd., (2022) SCC OnLine SC 896, the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BSNL and Anr. v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738, and Secunderabad Cantonment Board v. B. Ramachandraiah , arbitration was refused as the claims of the parties were demonstrably time-barred.
  • 25. Eye of the Needle: The above-referred precedents crystallise the position of law that the pre-referral jurisdiction of the courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant’s privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non- arbitrability of the dispute.
  • 26. As a general rule and a principle, the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. …
  • 27. The standard of scrutiny to examine the non-arbitrability of a claim is only prima facie. Referral courts must not undertake a full review of the contested facts; they must only be confined to a primary first review and let facts speak for themselves. This also requires the courts to examine whether the assertion on arbitrability is bona fide or not. The prima facie scrutiny of the facts must lead to a clear conclusion that there is not even a vestige of doubt that the claim is non-arbitrable. On the other hand, even if there is the slightest doubt, the rule is to refer the dispute to arbitration.
  • 28. The limited scrutiny, through the eye of the needle, is necessary and compelling. It is intertwined with the duty of the referral court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable. It has been termed as a legitimate interference by courts to refuse reference in order to prevent wastage of public and private resources. Further, as noted in Vidya Drolia (supra), if this duty within the limited compass is not exercised, and the Court becomes too reluctant to intervene, it may undermine the effectiveness of both, arbitration and the Court. Therefore, this Court or a High Court, as the case may be, while exercising jurisdiction under Section 11(6) of the Act, is not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen arbitrator, as explained in DLF Home Developers Limited v. Rajapura Homes Pvt. Ltd., 2021 SCC OnLine SC 781″

In BSNL and Anr. v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738, it is held held as under:

  • “45.1 …While exercising jurisdiction under Section 11 as the judicial forum, the court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere “only” when it is “manifest” that the claims are ex facie time-barred and dead, or there is no subsisting dispute…” (quoted and followed in NTPC Ltd. v. SPML Infra Ltd., 2023 SCC OnLine SC 389).

N.N. Global Mercantile v. Indo Unique Flame – Contentions, in Substance

The legal disputes in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, was placed before the Apex Court, treading following course:

  • A suit was filed by the appellant, to enforce a contract.
  • The defendant applied for reference under Section 8 of the Arbitration and Conciliation Act, the contract being contained an arbitration clause.
  • Trial Court rejected the application.
  • A Writ Petition was filed by the defendant challenging the Order. It was contended that the Arbitration Agreement was unenforceable as the (main) contract was unstamped.
  • The High Court allowed the Writ Petition. (Hence the plaintiff became the appellant before the Supreme Court.)

It was argued before the Apex Court that the Arbitration Agreement in the contract was enforceable and could have been acted upon, even if the contract was unstamped and unenforceable under the Indian Stamp Act. The 2-Judge Bench of the Supreme Court, referred the matter to 3-Judge Bench.

The 3-Judge Bench of the Supreme Court, referred the case to 5-Judge Bench, pointing out that an arbitration clause would stand as a distinct, separate and independent from the substantive contract.  This is based on the doctrine of severability or separability. That is, when the parties enter into such a contract, there are two separate agreements,

  • (i) the substantive contract and
  • (ii) the arbitration agreement.

In this premise, the 3-Judge Bench opined as under: 

  • Even if the main contract was bad for it was unstamped or insufficiently stamped, the arbitration clause could be enforced.
  • The defect on insufficiency of stamp could be cured as provided in the Stamp Act, and therefore, it could not be said that an unstamped or insufficiently stamped instrument did not exist in the eye of the law.
  • The failure to stamp a document, did not affect the validity or unenforceability of the document, but it merely rendered the document inadmissible in evidence.

Before the 5-Judge Bench of the Supreme Court, it was argued –

  • by the respondents/defendants, on the basis of the relevant provisions of the Arbitration Act (especially Sec. 16), that an arbitration clause would stand as a distinct, separate and independent from the substantive contract and that an arbitration reference can be made by the court even if the arbitration agreement was insufficiently stamped; and
  • by the appellant/plaintiff, in view of the provisions in the Indian Stamp Act (especially Sec. 33 and 35), that the arbitration reference could not be made by the court on the basis of an insufficiently stamped agreement. It was pointed out that unstamped or insufficiently stamped documents cannot be used as evidence for any purpose, as provided in the Stamp Act; and that for reference under Sec. 8 of the Arbitration Act the court has to specifically find that prima facie a “valid arbitration agreement exists“..

N.N. Global held – If Arb. Agreement Unstamped, No ‘Valid Arb. Agreement Exists

It is held, by majority (3:2), in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, that an arbitration reference cannot be made by the court under Sec. 8 of the Arb. Act, on the basis of an unstamped or insufficiently stamped agreement.

The Majority affirmed the findings in this regard, in the two earlier 3-Judge Bench decisions.

  • (i) Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 (it was held that an arbitration reference cannot be made on the basis of an unstamped or insufficiently stamped agreement).
  • (ii) Vidya Drolia v. Durga Trading Corporation, 2021-2 SCC 1 (it was held that landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations).

The majority judgment Para 110 and 111 of N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, reads as under:

  • “110. An instrument, which is eligible to stamp duty, may contain an Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law within the meaning of Section 2(h) of the Contract Act and is not enforceable under Section 2(g) of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a contract and not enforceable in law, cannot, therefore, exist in law. Therefore, we approve of paragraphs-22 and 29 of Garware (supra). To this extent, we also approve of Vidya Drolia (supra), insofar as the reasoning in paragraphs-22 and 29 of Garware (supra) is approved.
  • 111. The true intention behind the insertion of Section 11(6A) in the Act was to confine the Court, acting under Section 11, to examine and ascertain about the existence of an Arbitration Agreement.”

Section 33 and 35 of the Indian Stamp Act, 1899

Section 33 of the Indian Stamp Act, 1899 reads as under:

  • 33. Examination and impounding of instruments (1) Every person having by law or consent of parties, authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.
  • (2) … (3) …

Section 35 of the Indian Stamp Act, 1899 reads as under:

  • 35. Instruments not duly stamped inadmissible in evidence, etc. – No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
  • Provided that – (a) any such instrument shall, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
  • (b) …. (c) ….. (d) …. (e) …..

PART – II

Dispute Must have been Covered by the Arbitration Clause

It is held by the Supreme Court, in Zenith Drugs & Allied Agencies Pvt. Ltd. v. Nicholas Piramal India Ltd., AIR 2019 SC 3785, 2020-17 SCC 419, that for appointment of an arbitrator, there must have been an arbitration agreement, and the existence of the arbitration dispute must have been covered by an arbitration clause.

Effect of Fraud on Arbitration Agreement

In A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, it was held as under:

  • “25. ……..It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence  or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court on the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself…….”. (Quoted in: Zenith Drugs & Allied Agencies Pvt. Ltd. v. Nicholas Piramal India Ltd., AIR 2019 SC 3785, 2020-17 SCC 419)

It was pointed out in Zenith Drugs & Allied Agencies Pvt. Ltd. v. Nicholas Piramal India Ltd., AIR 2019 SC 3785, 2020-17 SCC 419, that the plea of fraud being raised in entering the compromise, the merits of such a plea could be decided only by the Civil Court upon consideration of the evidence adduced by the parties.

Validity Decided by Court; Arbitrators have no Conclusive Power

In Uttar Pradesh Rajkiya Nirman Nigam Limited v. Indure Private Limited, 1996-2 SCC 667: AIR 1996 SC 1373, it is held (even prior to 2015 Amendment) as under:

  • 14. In “Law of Arbitration” by Justice Bachawat (2nd Edn.) at page 155 it is stated that
    • “the question whether matters referred to were within the ambit of clause for reference of any difference or dispute which may arise between the parties, it is for the Court to decide”. ….
  • 15. The clear settled law thus is that the existence or validity of an arbitration agreement shall be decided by the Court alone. Arbitrators, therefore, have no power or jurisdiction to decide or adjudicate conclusively by themselves the question since it is the very foundation on which the arbitrators proceed to adjudicate the disputes.”

Conclusion

In N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, it was argued –

  • by one side, on the basis of the relevant provisions of the Arbitration and Conciliation Act, that an arbitration reference can be made by the court even if the arbitration agreement was insufficiently stamped; and,
  • by the other side, in view of the provisions in the Indian Stamp Act, that the arbitration reference could not be made by the court on the basis of an insufficiently stamped agreement.

The Majority (3 Judges) pronounced the verdict accepting the latter contention.

Taking note of the divergence in the debated points, among Judges, it is observed by Hrishikesh Roy, J., one of the (two) judges who dissented from the view of the majority, laid down the following-

  •  “… Let our minority opinion (self and Learned Brother Justice Ajay Rastogi, who has written a separate opinion), appeal to the brooding spirit of the future as also the powers of the legislature to examine the interplay between the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899; and to emphatically resolve the imbroglio to avoid any confusion in the minds of the stakeholders in the field of arbitration.”

Let the pointers be that as it may.

In any event, the legislature – as it is duty bound to ponder the welfare of the downtrodden, which is the majority – will have to consider the following are ground realities-

  • 1. The majority of Execution Petitions that come before the Execution (civil) Courts are for realisation of amounts below Rupees 10 Lakh ; and the lion’s share of it is filed by the persons who are engaged, directly or indirectly, in Money Lending activity, or initiated by similar “Service Providers”; and the opposite parties thereof belong (comparatively) to lower strata.  
  • 2. A large number of Execution Petitions that come before the Execution (civil) Courts are that from the uncontested Arbitration Awards from “Outside-States”.
  • 3. There is no effective “legal frame” (rules) for fixing remuneration of the Arbitrators.

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Foot Note:

Sec. 8 of the Arbitration And Conciliation Act, 1996 (after 2015 Amendment)
Power to refer parties to arbitration where there is an arbitration agreement.
 (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.


Sec. 11 A of the Arbitration And Conciliation Act, 1996
11. Appointment of arbitrators.
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and—
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment,
the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court.
(6) Where, under an appointment procedure agreed upon by the parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,
a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.
(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.
(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision.
(8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of section 12, and have due regard to—
(a) any qualifications required for the arbitrator by the agreement of the parties; and
(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Supreme Court or the person or institution designated by that Court may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.
(10) The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6), to it.
(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, different High Courts or their designates, the High Court or its designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.
(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the "Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "Supreme Court"; and
(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to the Supreme Court or, as the case may be, the High Court in those sub-sections shall be construed as a reference to the "High Court" within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court.
(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.
(14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.
Explanation.— For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution.

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Read in this Cluster  (Click on the topic):

Book No, 1 – Civil Procedure Code

Power of attorney

Title, ownership and Possession

Principles and Procedure

Land LawsTransfer of Property Act

Evidence Act – General

Contract Act

Easement

Stamp Act & Registration

Will

Arbitration

Divorce

Book No. 2: A Handbook on Constitutional Issues

Book No. 3: Common Law of CLUBS and SOCIETIES in India

Book No. 4: Common Law of TRUSTS in India