In a case before the Madras HC, the court relied on judgments by the Apex Court in Gangabai vs. Chhabubai AIR 1982 SC 20 and Ishwar Dass Jain vs. Sohan Lal AIR 2000 SC 426 and held that it is permissible to a party to a deed to contend that the deed was not intended to be acted upon but was only a sham document. The bar of Section 92 Evidence Act arises only when the document is relied upon and its terms are sought to be varied and contradicted. Oral evidence is admissible to show that document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties.
The court stated that agreement, in the present case, was not intended to be acted upon as an agreement of sale, but it was executed for some other purposes namely, as security for loan transaction. Such plea would fall within the exceptions under Section 92 of the Evidence Act because, it is actually a invalidating circumstance which is pleaded before the Court of law and by pleading so, the defendant is not attempting to vary the terms of the contract. The actual attempt is to show that the contract is not one, which was intended to be acted upon.
Madras High Court
P. Vaidynatham vs. K. Sundaram