1. The plaintiffs in a suit for the realisation of money are the appellants.

2. O.S.No.50/1999 on the files of the Sub Court, Thalassery, was filed claiming an amount of Rs.27,14,349/- with interest from the defendants. Plaintiffs contend that the defendants sold the plaint schedule item No.1 measuring 143 acres and 31 cents to the plaintiffs as per Ext.A3 sale deed for a total consideration of Rs.270 lakhs, at an average price of Rs.1,88,400/- per acre. After the sale, the plaintiffs discovered that, as regards 7 ½ acres shown as item No.2 in the plaint schedule, the defendants had no title or possession, and that the defendants had misrepresented that the entire item No. 1 was sold to the plaintiffs.

                  2.1. Accordingly, claiming the value of 7 ½ acres of land to the tune of Rs.14,13,000/- with interest apart from an amount of Rs.2,60,000/- as payment made to the workers in the plaint schedule property for and on behalf of the defendants, along with interest, the suit was filed.

3. The defendants resisted the suit and also preferred a counterclaim for Rs.4,45,000/-. The defendants, opposing the plaintiffs' contentions, contended that the property was sold for a consideration of Rs.270 lakhs, though initially Rs.277 lakhs was fixed, and it is only after the second defendant gave all information regarding the properties and the litigation in respect of 7 ½ acres that the consideration was reduced. The defendants contended that the plaintiffs sought to conceal the litigation regarding 7 ½ acres, as they were trying to obtain a loan from the bank showing the entire property. It is towards conducting the said litigation that Rs.7 lakhs was deducted from the fixed consideration. Thus, contending that the plaintiffs have not suffered any loss and that they were made aware of the litigation with respect to the property, they prayed for dismissal of the suit. The defendants also contended that they lost interest due to the delayed payment of consideration by the plaintiffs and that the value of a building, which the plaintiffs did not give, was claimed as a counterclaim along with interest and was computed as Rs.4,45,000/-.

4. The trial court dismissed both the suit and the counterclaim as per the judgment impugned. No appeal has been filed against the rejection of the counterclaim.

5. Heard the learned counsel on both sides and perused the records.

6. The learned counsel for the appellants, Sri. M.K. Sumod, argues that the judgment in the instant case is patently wrong on facts and law. He argues that, admittedly, the sale deed was executed for the entire extent of the land, including the disputed 7.5 acres, upon receipt of full consideration. It is argued that in such cases, when there is a defect in title, he had the choice of either rescinding the entire contract or claiming compensation. He chose the latter. The defence taken in the written statement and pursued in evidence, which tried to vary the contents of the sale deed, could not have been considered in view of the bar under Sections 91 and 92 of the Evidence Act.

7. The learned counsel further argued that the defence was that the litigation and the issues relating to the disputed land were disclosed to the plaintiffs, and therefore it cannot be treated as a defect in title, which goes against the express provisions in Section 55 of the Transfer of Property Act. Thus, according to him, even on admitted facts, the plaintiffs were entitled to a decree for compensation. It is also argued that the plaintiffs had paid the dues towards the workers, which the defendants should have, and they are liable to recover the same as well.

8. The learned counsel for the appellants relied on the judgments in Gouri Amma v. Kesavan [1985 KHC 190], Go𝕛alan Nair and Others v. Abraham Mathews [2007 (1) KHC 119], Jhamaklal v. Mishrilal [1956 SCC Online MP 78 = AIR 1957 MB 23], Cham𝕛alal v. Roo𝕛a [AIR 1963 RAJ 38 ] and Aboobacker N.M and Another v. Sunil [2018 (1) KHC 57].

9. The learned counsel for the defendants, Sri. B. Renjith Kumar, argues that the plaintiffs had no bonafides in filing the suit as they have not produced the original of Ext.A1, the receipt, which would show the payment of Rs. 1,00,000/- as an advance and a total consideration of Rs.277 lakhs and also the original of Ext.A2, which is the agreement to sell. He submits that the same would assume significance as the receipt clearly mentions the total consideration, which was reduced thereafter to Rs.270 lakhs because of the disputed extent of land measuring 7.5 acres. The plaintiffs had agreed to continue the litigation, and instead of doing so, they filed a fresh suit against third parties regarding the disputed land. It is after obtaining the advantage of a reduction in the sale consideration that the suit was filed, alleging a defect in title.

10. It is also argued that the lawyer's notice issued on behalf of the plaintiffs, Ext.B8, clearly shows that the consideration fixed was Rs.277 lakhs and not Rs.270 lakhs. The evidence of the witnesses on the side of the plaintiffs also strengthens the circumstances set up by the defendants. Thus, it is contended that the findings of the trial court call for no interference. It is also argued that the bar under Sections 91 or 92 will not apply as the defendants are only attempting to show the circumstances which would show the intention of the parties at the time of execution of the sale deed. The learned counsel also relied on the judgments of the Honourable Supreme Court in S. Chattanatha Karayalar v. Central Bank of India Ltd. and Others [1965 KHC 744] and Tharammel Peethambaran v. T. Ushakrishnan [2026 KHC Online 6106].

11. The point for determination is whether the plaintiffs/appellants are entitled to compensation with respect to 7½ acres of land included in the sale over which they could not get right or possession, and whether they are entitled to return of the amount allegedly paid to the workers for and on behalf of the defendants.

12. To adjudicate the above issue, the impact of Section 55 of the Transfer of Property Act has to be considered. The relevant provisions read as follows.

                  “55. Rights and liabilities of buyer and seller - In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold:-

                  (1) The seller is bound -

                  (a) to disclose to the buyer any material defect in the property [or in the seller's title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover;

                  ……………………………..

                  (2). The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same:

                  Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it.

                  The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

                  ……………………

                  (6) The buyer is entitled -

                  …………….

                  (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller’s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.

                  An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a) and paragraph (5), clause (a), is fraudulent.”

13. Section 55 embodies the rights and liabilities of a seller and purchaser of immovable property. Section 55(1)(a) casts a statutory obligation on the seller to disclose every material defect in the property or in his title of which the seller is aware and which the purchaser could not discover by ordinary care. Section 55(2) imports into every sale an implied statutory warranty that the seller has the power to transfer the interest professed to be conveyed, and that the purchaser's knowledge of the defect neither constitutes a "contract to the contrary" nor excludes the statutory covenant. The implied covenant of title under Section 55(2) can be excluded only by clear and unambiguous words expressly negativing the vendor's guarantee of title, and mere disclosure of the defect in the conveyance or the purchaser's knowledge thereof does not extinguish the statutory warranty. Therefore, the law is clear that the above section gives a warranty of title even in cases where the buyer is aware of the defect in title. If a defect is to be held as material, it must be of such a nature that it might reasonably be supposed that, had the buyer been aware of it, he would not have entered into the contract at all, since he would be getting something different from what he contracted to purchase.

14. Thus, where it is found that the vendor did not have title or lacked the authority to transfer the interest professed to be conveyed, the purchaser is entitled to appropriate relief, including recovery of the purchase money or rescission of the contract, as the circumstances may warrant. In cases where a seller is guilty of a failure to disclose a material defect in the property sold by him to the buyer and the former is aware of such defect and the latter is not, or of which defect the latter could not be aware with ordinary care, then such an omission or failure on the part of the seller must be held to be fraudulent. Where the buyer is thereby deprived of possession of the property sold, it is open to him to sue the seller for return of the purchase money together with interest by way of damages. This remedy is independent of a suit for rescission of the sale deed, which a buyer may also bring if he so chooses, and in such a case, he may also sue for damages. It is not a requirement of law that a suit for return of the purchase money on breach of warranty of title would be incapable of being maintained in law without suing for the cancellation of the sale deed.

15. Further, the consequences of Section 73 of the Contract Act apply where a vendor contracts to convey full ownership of a property but, through his inability to convey the full title professed to be transferred, commits a breach of contract. That is, where 'A' contracts to sell to 'B' full ownership rights in a property and subsequently fails to convey the full title promised, 'A' is legally bound to compensate 'B' under Section 73 of the Contract Act. The purchaser's knowledge of the defect in the vendor's title neither varies the express contractual obligation to convey full title nor constitutes a contract to the contrary so as to defeat the statutory warranty under Section 55(2) of the Transfer of Property Act.

16. Likewise, where the vendor falsely represents himself to possess full ownership and authority to convey the property, such false representation amounts to misrepresentation, attracting the principles underlying Section 55(2) of the Transfer of Property Act and Section 27 of the Specific Relief Act, 1963. (See: Gouri Amma v. Kesavan [1985 KHC 190]; Go𝕛alan Nair and Others v. Abraham Mathews [2007 (1) KHC 119]; Adikesavan Naidu and Ors v. M.V. Gurunatha Chetti and Ors [AIR 1918 Madras 1315 (FB)]; Mahomed Ali Sheriff and Ors v. Budharaju Venkata𝕛athi Raju and Ors [MANU/TN/0097/1920]; Jhamaklal v. Mishrilal [1956 SCC OnLine MP 78 = AIR 1957 MB 23]; Ramalinga Padayachi v. Natesa Padayachi [AIR 1967 Madras 461]; Lallubhai Ru𝕛chand v. Mohanlal Sakarchand [AIR 1935 Bombay 16]; J.W. Thomas v. Hanuman Prasad [MANU/UP/0496/1929]; Cham𝕛alal and Ors v. Roo𝕛a and Ors [AIR 1963 Raj 38] and Aboobacker N.M. and Another v. Sunil [2018 (1) KHC 57].

17. In the present case, the fact that the plaintiffs took assignment of the entire property scheduled to the plaint as per Ext.A3 sale deed is not in dispute. The recitals in the sale deed would show that the defendants claimed a marketable title over the entire property shown in the schedule, which also included the 7½ acres, the disputed land. There is no mention of any litigation with respect to any portion of the property. The defence in the written statement and in the arguments appears to be that the plaintiffs were made aware of the litigation with respect to 7½ acres of land and that the plaintiffs had agreed to prosecute the same, and instead they filed a case against the persons in possession about which the defendants have no knowledge. It is also their case that the consideration of Rs.277 lakhs was fixed, and the same was reduced to Rs.270 lakhs because of the dispute regarding 7.5 acres. However, there is nothing on record to suggest that the plaintiffs were ever made aware of the alleged defect in title.

18. The case of the defendants is based on Ext.A1 receipt, the original of which was not produced by either party. The defendants would contend that Ext.A1 would show that the entire consideration was Rs. 277 lakhs and not Rs. 270 lakhs, which fact is strengthened by Ext.B8, the lawyer's notice. Ext.B8, the lawyer's notice, would show that the lawyer had mistakenly stated the amount shown as consideration in the document, and it is not as if he had mentioned the actual consideration. This fact was clarified when he was examined as a witness. The incorrect statement about the consideration mentioned in the lawyer's notice cannot be taken as proof of the consideration fixed, much less a knowledge of the defect in title.

19. That apart, the plea of the defendants contrary to the terms of the sale deed is clearly hit by the principles of Sections 91 and 92 of the Evidence Act. The terms of the contract are reduced into the form of a document, which is a requirement of law, and in such cases, no evidence can be given in proof of the terms of the contract, except as contained in the document. In cases where the document has been proved, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to or subtracting from its terms.

20. If the nature and intent of the transaction must be gathered from the terms of the document itself, and if no evidence of any parol agreement can be admitted for the purpose of contradicting or modifying the terms in a document, the defendants cannot be allowed to assert that what was intended was a completely different transaction than what is recorded in the document. The contention of the defendants that the consideration shown in the document is not the actual consideration and a different contract exists cannot be countenanced in view of the express recitals in the deed and going by the provisions noticed above.

21. The reasoning of the trial court that a mere litigation with respect to part of the property cannot be held to be a defect in title or that the plaintiffs did not prove a marketable title for 7.5 acres is patently wrong and against the pleaded case and the evidence adduced. When the defendants themselves contended that there were disputes concerning 7.5 acres, but it was known to the plaintiffs, the finding of the trial court cannot be sustained at all. That part of the judgment and decree is therefore clearly an error of fact and law.

22. As regards the contention of the plaintiffs that they have paid to the workers for and on behalf of the defendants, the plaintiffs ought to have shown that they had paid an amount which the defendants ought to have paid. There is no convincing evidence at all to upset the finding of the trial court on that score. There is nothing to show that any liability of the defendants was paid over by the plaintiffs. No other issues arise for consideration.

23. In view of the above findings, the judgment and decree to the extent it refused the claim for realisation of the amount based on the reduction of 7.5 acres conveyed are set aside. Accordingly, the appeal is allowed in part, and the appellants are granted a decree for Rs Rs.14,13,000/-, being the consideration paid for 7.5 acres of land, with an interest of 6% from 10.05.1996 till realisation.

The appeal is allowed in part as above.