Discuss the cases wherein oral evidence may be adduced to contradict or vary terms of a written contract..... by law to be in a writing.

Question: Discuss the cases wherein oral evidence may be adduced to contradict or vary terms of a written contract which is strictly required by law to be in a writing. [HPJS 2019]

Find the answer to the mains question of the Law of Evidence only on Legal Bites. [Discuss the cases wherein oral evidence may be adduced to contradict or vary terms of a written contract which is strictly required by law to be in a writing.]

Answer

Under Section 91 and Section 92 of the Indian Evidence Act, 1872, when the terms of a contract, grant, or disposition of property are required by law to be in writing, no oral evidence is generally admissible to contradict, vary, add to, or subtract from its terms. However, there are exceptions to this rule where oral evidence may be admitted.

In P. Veerasamy vs. V. Soundararajan (Madras HC, 2014), the plaintiff sought specific performance of a sale agreement, while the defendants claimed it was security for a loan. The lower courts ruled for the plaintiff under Section 92 of the Evidence Act. However, the High Court, considering surrounding circumstances and prior agreements, held the transaction was a loan, not a sale. It denied specific performance, instead granting a money decree of ₹1,90,000/- with 6% interest on ₹1,00,000/- from 25.11.2002 until payment.

Exceptions Where Oral Evidence is Admissible

The following situations allow oral evidence to contradict or vary the terms of a written contract that is required by law to be in writing:

1. Latent Ambiguity (Section 93): If the written contract contains a latent ambiguity (i.e., an ambiguity that arises from external facts), oral evidence may be given to explain or clarify it.

2. Custom or Usage [Section 92, Proviso (2)]: Oral evidence can be introduced to prove a well-established custom or usage which does not contradict the written terms but supplements them.

3. Illegality or Fraud (Section 92, Proviso 1): If the contract was obtained through fraud, coercion, misrepresentation, or undue influence, oral evidence can be given to prove these facts.

4. Failure of Consideration (Section 92, Proviso 1): If the consideration of the contract has failed, oral evidence can be adduced to prove the actual nature of the consideration or its failure.

5. Collateral Oral Agreement (Section 92, Proviso 3): If the oral agreement is a separate and distinct collateral agreement which does not contradict the written contract, it may be proved.

6. Varying the Legal Effect of a Document (Section 92, Proviso 4): If a document appears to have a certain legal effect on its face, but another oral agreement shows a different legal intention, oral evidence is admissible.

7. Proof of Document's Language in Relation to Facts (Section 92, Proviso 6): Evidence can be presented to clarify how the words used in a document correspond to real-world situations or circumstances. This principle allows for interpretation by considering external facts that help determine the document's true meaning, intent, or application.

In Mangala Waman Karandikar v. Prakash Damodar Ranade, AIR 2021 SC 2272, The Supreme Court ruled that Proviso (6) to Section 92 applies only when a document's terms are ambiguous. The case involved a dispute over a business license agreement, where the appellant had allowed the respondent to run her late husband's stationery shop. When she later sought repossession, the respondent claimed it was a rental agreement. The Trial Court favoured the appellant, but the Bombay High Court ruled it as a leave-and-license arrangement. The Supreme Court held that oral evidence cannot contradict a clear written contract, and Section 95 only clarifies ambiguous terms. It concluded that the agreement was for business continuation, not a lease, and the High Court misinterpreted the law.

Although the general rule is that written contracts cannot be contradicted by oral evidence, the exceptions under Section 92 of the Indian Evidence Act allow for flexibility. Courts have consistently upheld these exceptions where justice demands an examination beyond the written word.

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