Case Note & Summary
This appeal arose from proceedings initiated by the Official Assignee of Bombay under Section 55 of the Presidency-towns Insolvency Act, 1909, to declare void a deed of gift executed by the insolvent. The donor, after executing a deed of gift in favor of his wife and sons (the appellants) on May 22, 1950, was adjudged an insolvent on August 21, 1951, on the application of his creditors. His estate thereupon vested in the Official Assignee. On September 26, 1951, the Official Assignee took out a notice of motion under Section 55, seeking a declaration that the deed of gift was void as against the creditors. The donees resisted the motion, pleading that although the document was styled a deed of gift, the transaction was in reality a transfer for valuable consideration. They sought to lead evidence in support of this plea, but the Official Assignee objected, contending that such evidence was barred by Section 92 of the Indian Evidence Act, 1872, which excludes oral evidence to contradict, vary, add to, or subtract from the terms of a written instrument. The core legal issue was whether Section 92 of the Evidence Act applied in the circumstances. The Supreme Court held that Section 92 is confined in its operation to suits or proceedings between parties to the instrument or their representatives in interest. Where the dispute is between a stranger to the instrument and a party or his representative in interest, Section 92 has no application. The Court reasoned that when the Official Assignee moves under Section 55 of the Insolvency Act to set aside a transaction, he is not acting as a representative in interest of the insolvent debtor but in his own right as an officer of the court, seeking to recover assets for the body of creditors. In that capacity, he is a stranger to the instrument of gift. Consequently, the contest between the donees (who were the representatives in interest of the insolvent donor) and the Official Assignee was not one between parties to the deed or their respective representatives in interest. Therefore, Section 92 did not bar the donees from adducing oral evidence to prove that the deed was actually a transfer for consideration. The appeal was accordingly allowed, affirming the donees' right to lead evidence of the true nature of the transaction.
Headnote
A) Evidence - Admissibility of Oral Evidence to Contradict Deed - Section 92 of Indian Evidence Act, 1872 - Section 55 of Presidency-towns Insolvency Act, 1909 - The Supreme Court held that Section 92 applies only as between parties to an instrument or their representatives in interest. When the Official Assignee initiates proceedings under Section 55 to avoid a gift, he is not acting as the insolvent's representative in interest but as a stranger to the instrument. Therefore, the donees are at liberty to lead oral evidence to show that the deed was in fact a transfer for valuable consideration, notwithstanding the terms of the deed. Held that Section 92 did not bar such evidence and the appeal was allowed.
Issue of Consideration
Whether Section 92 of the Indian Evidence Act, 1872 bars the donees under a deed of gift from leading oral evidence to prove that the transaction, though framed as a gift, was in reality a transfer for valuable consideration, when the Official Assignee challenges the deed under Section 55 of the Presidency-towns Insolvency Act, 1909.
Final Decision
The Supreme Court held that Section 92 of the Indian Evidence Act, 1872, was not applicable to the proceedings because the Official Assignee, when moving under Section 55 of the Presidency-towns Insolvency Act, 1909, was not acting as a representative in interest of the insolvent but as a stranger to the instrument. Therefore, both parties were at liberty to lead oral evidence, and the appeal was allowed.
Law Points
- Section 92 of the Evidence Act applies only as between parties to an instrument or their representatives in interest
- Official Assignee acting under Section 55 of the Presidency-towns Insolvency Act is not a representative in interest of the insolvent but a stranger to the instrument
- strangers to a deed are free to lead oral evidence contradicting
- varying
- adding to
- or subtracting from its terms
