Karnataka High Court
K Mahendra Reddy vs H V Basavaraju on 12 June, 2024
Author: S.G.Pandit
Bench: S.G.Pandit
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JUNE, 2024
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
R.F.A. No.1258 OF 2016 (SP)
BETWEEN
K MAHENDRA REDDY
S/O K N KRISHNA REDDY,
AGED ABOUT 48 YEARS
R/AT NO 11, SIMHADRI MANSION,
RAMAKRISHNAPPA ROAD,
COX TOWN BANGALORE - 560005
...APPELLANT
(BY SRI B V SHANKAR NARAYANA RAO., SENIOR COUNSEL FOR
SRI T. SUNIL, ADVOCATE)
AND
1 . H V BASAVARAJU
S/O VEERABHADRAIAH,
AGED ABOUT 32 YEARS,
R/AT HOSA ANANDURU VILLAGE,
BELAGOLA HOBLI,
SRIRANGAPATNA TALUK
MANDYA DISTRICT - 571438
2 . N SURYANARAYANA
S/O N V KRISHNAIAH,
AGED ABOUT 50 YEARS
R/AT HANUMA SADANA,
2
NO 6, LALITHAMAHAL ROAD
K C LAYOUT
MYSORE - 570001
...RESPONDENTS
(BY SRI K N NITHESH, ADVOCATE FOR
SRI K V NARASIMHAN, ADVOCATE FOR R1
SRI V N MADHAVA REDDY, ADVOCATE FOR R2)
THIS RFA IS FILED UNDER SEC.96 R/W ORDER 41 RULE
1 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
24.06.2016 PASSED IN OS NO.5/2014 ON THE FILE OF THE
PRL. SENIOR CIVIL JUDGE AND JMFC., SRIRANGAPATNA,
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 23.04.2024, COMING ON FOR PRONOUNCEMENT
OF JUDGMENT, THIS DAY, POONACHA. J., DELIVERED THE
FOLLOWING:
JUDGMENT
The present first appeal is filed by the 2nd defendant under Section 96 of Code of Civil Procedure, 19081 challenging the judgment and decree dated 24.06.2016 passed in O.S. No.5/2014 by the Principal Senior Civil Judge and JMFC., Srirangapatna2, wherein the suit for specific performance filed by the 2nd defendant-plaintiff has been decreed.
1 Hereinafter referred to as 'CPC' 2 Hereinafter referred to as 'Trial Court' 3
2. For the sake of convenience, the parties herein are referred to as per their rank before the Trial Court.
3. It is the case of the plaintiff that the 1st defendant was the owner of the property bearing No.239/1 of Basthipura Village, Hukere Grama Panchayath, Belagola Hobli, Srirangapatna Taluk, Mandya District measuring East to West 325 feet, North to South 268 feet, in all 87120 square feet3. That the 1st defendant offered to sell the suit property due to his legal necessities for a total sale consideration of ₹1,08,00,000/-. That the plaintiff agreed to purchase the same and the parties entered into an Agreement of Sale dated 25.03.20134 whereunder the plaintiff paid an advance of ₹20 lakhs. The sale transaction was to be completed within five months and the plaintiff was to pay the balance sale consideration at the time of registration of the Sale Deed.
4. It is the further case of the plaintiff that he was ready and willing to perform his part of the contract. 3 Hereinafter referred to as 'the suit property' 4 However, the defendant went on postponing the same on one pretext or the other. The defendant has collected an additional advance of ₹5 lakhs on 23.04.2013 which has been endorsed on the said Agreement. That despite receiving the advance amount, the defendant has been postponing the execution of the sale deed. That the plaintiff got issued legal notice dated 19.08.2013 calling upon the defendant to perform his part of contract and to convey the suit property in favour of the plaintiff by receiving the balance sale consideration in terms of the said Agreement. That the notice was served on the defendant on 31.08.2013. However, he failed to comply with the same. Hence, the plaintiff filed a suit for specific performance.
5. Initially, the suit was filed only against the 1st defendant. Subsequently, pursuant to order dated 07.10.2014 passed by the Trial Court, the 2nd defendant has been arrayed as a party to the suit. The 1st defendant 4 Hereinafter referred to the 'said Agreement' 5 entered appearance through his counsel. However, no written statement has been filed.
6. The 2nd defendant who was the purchaser of the suit property from the 1st defendant vide registered Sale Deed dated 31.05.2013 entered appearance in the suit and contested the case of the plaintiff by filing written statement. The ownership of the suit property by the 1st defendant was admitted. It is the case of the 2nd defendant that he was unaware of the alleged Agreement of Sale dated 25.03.2013 entered into between the plaintiff and the 1st defendant. That since the 1st defendant had approached the 2nd defendant in March 2013 and offered to sell the suit property for a sum of ₹40 lakhs, the 2nd defendant agreed to the same and that the 1st defendant did not disclose about the Agreement of Sale dated 25.03.2013. That the 1st defendant conveyed the suit property in favour of the 2nd defendant vide registered Sale Deed dated 31.05.2013 and the 1st defendant received the sale consideration amount of ₹40 lakhs 6 through a cheque for a sum of ₹30 lakhs and a bank remittance of ₹10 lakhs. That pursuant to the registered Sale Deed dated 31.05.2013, the revenue documents has been transferred in favour of the 2nd defendant and the 2nd defendant has been in possession of the suit property. That the 2nd defendant is a bonafide purchaser for value and that the 1st defendant and the plaintiff have played fraud by not disclosing the Agreement dated 25.03.2013. Hence, he sought for dismissal of the suit.
7. Based on the pleadings, the Trial Court framed the following issues:
"1. Whether the plaintiff proves that on 25-3-2013 the 1st defendant has entered into an agreement of sale with him agreeing to sell the suit schedule property for a sale consideration of ₹1,08,00,000/- and received advance amount of ₹20,00,000/- agreeing to execute the required sale deed within a period of 5 months after receiving balance sale consideration amount?
2. Whether the plaintiff proves that on 23-4-2013 1st defendant has received further advance amount of ₹5,00,000/- towards balance sale consideration amount by executing a shara on the agreement of sale?
3. Whether the plaintiff proves his readiness 7 and willingness to perform his part of the contract?
4. Whether the 2nd defendant proves that he is a bonafide purchaser of the suit schedule property from the 1st defendant under a registered sale deed dated: 31-5-2013 for value without notice of previous contract?
5. Whether the 2nd defendant proves that the suit of the plaintiff without seeking cancellation of sale deed dated: 31-5-2013 is not maintainable?
6. Whether the suit is properly valued for the purpose of payment of court fee?
7. Whether the plaintiff is entitled for specific performance of contract?
8.What decree or order?"
8. The Plaintiff examined himself as PW.1 and a witness to the Agreement of Sale dated 25.03.2013 as PW.2. Exs.P1 to P3(a) have been marked in evidence. The 2nd Petitioner examined himself as DW.1 and attesting witnesses to the registered Sale Deed dated 25.03.2013 have been examined as DWs.2 and 3 and the scribe of the registered Sale Deed has been examined as DW.4. Exs.D1 to D9 have been marked in evidence. The Trial Court by 8 its judgment and decree dated 24.6.2016, decreed the suit of the plaintiff and passed the following order:
"The suit of the plaintiff is decreed with cost for the relief of specific performance of contract against the defendants no.1 and 2.
The registered sale deed dated: 31-5-2013 executed by the first defendant in favour of second defendant is declared as void against the first defendant and further declared that the said sale deed is not binding on the plaintiff.
The first defendant is directed to execute the required sale deed in favour of the plaintiff in terms of agreement of sale dated:25-3-2013 by receiving balance sale consideration amount of ₹83,00,000/- . The second defendant is directed to join the first defendant in execution of the sale deed in favour of the plaintiff within a period of two months from the date of this order.
If the defendant's no.1 and 2 fail to execute the sale deed within stipulated period of time the plaintiff is at liberty to approach the court and get the sale deed executed and registered through the agency of the court.
Draw decree accordingly."
9. Being aggrieved, the present appeal is filed by 2nd defendant.
10. Learned Senior counsel Sri. B.V.Shankara Narayana Rao appearing for the appellant/2nd defendant 9 vehemently contends that 2nd defendant is a bonafide purchaser for value and has been in possession of the suit property. He further contends that the plaintiff has not proved that he was ready and willing to complete the sale transaction and that the finding of the Trial Court regarding readiness and willingness is erroneous and liable to be interfered with. He further contends that no specific prayer has been made in the plaint for cancellation of the registered Sale Deed dated 31.05.2013 executed between the 1st defendant and 2nd defendant and hence, he contends that the suit of the plaintiff is liable to be dismissed for the said ground alone.
11. Per contra, Sri Nithish K.N., learned counsel appearing for the 1st respondent- plaintiff contends that the total sale consideration mentioned in the Agreement of Sale dated 25.03.2013 (Ex.P1) for a sum of ₹1,08,00,000/- and the sale consideration mentioned in the registered Sale Deed 31.05.2013 (Ex.D2) is executed by the 1st defendant in favour of 2nd defendant is for a sum of 10 ₹40 lakhs. That the sale consideration in the said two documents itself falsifies the case of the 2nd defendant that he was a bonafide purchaser for the value. He further contends that the plaintiff has adequately proved the Sale Agreement (Ex.P1). With regard to readiness and willingness, he contends the requisite averments have been made in the plaint as well as evidence has been adduced by the plaintiff to demonstrate that he was ready and willing to complete the sale transaction within the stipulated time and had also issued a legal notice dated 19.08.2013 calling upon the 1st defendant to complete the sale transaction. He further submits that pursuant to the judgment and decree passed by the Trial Court, the plaintiff has deposited a sum of ₹83 lakhs before the Trial Court on 19.08.2016. That the 1st defendant made an application to withdraw the said amount which application was allowed by the Trial Court vide order dated 17.10.2016. Hence, he contends that the plaintiff having paid the entire sale consideration of ₹1 crore 8 lakhs in the 11 year 2016 itself, the appeal filed by the plaintiff is liable to be dismissed.
12. Both the learned counsels have relied upon various judgments, which shall be referred to in the course of this judgment to the extent the same is necessary for adjudication of the questions that arise for consideration.
13. The submissions of both the learned counsels have been considered and the material on record including the records of the Trial Court have been perused. The questions that arise for consideration are:
i) Whether the finding recorded by the Trial Court regarding the plaintiff having been proved the due execution of the Agreement of Sale dated 25.03.2013 is just and proper?
ii) Whether the finding of the trial Court regarding the readiness and willingness of the plaintiff to complete the sale transaction is just and proper?12
iii) Whether the 2nd defendant has demonstrated that he was bonafide purchaser of the value of the suit property from the 1st defendant?
iv) Whether the judgment and decree passed by the Trial Court is erroneous and liable to be interfered with?
Re Question No.1:
14. To prove Agreement of Sale dated 25.03.2013, the plaintiff himself has been examined as PW.1. The witness to the said Agreement has been examined as PW.2. The evidence adduced by the plaintiff with regard to the execution of Agreement has not seriously been contested by the defendants. The plaintiff has paid a sum of ₹20 lakhs as advance to the 1st defendant and thereafter a sum of ₹5 lakhs has been paid on 23.4.2013 which has been endorsed by the 1st defendant in the last page of the Agreement (Ex.P1). Regarding execution of the said Agreement and the payment of advance amount, the same has been stated in the testimony of PWs.1 and 2.13
There is no serious cross examination regarding the same. The trial Court has considered the oral and documentary evidence on record with regard to the execution of the Agreement and has rightly recorded a finding that the plaintiff has proved the due execution of the Agreement of Sale dated 25.03.2013. The appellant has not pointed out as to how finding is erroneous as having been recorded without considering any specific material available on record. In view of the aforementioned, question No.1 framed for consideration is answered in the Affirmative.
Re: Question No.2:
15. With regard to the readiness and willingness of the plaintiff, it is relevant to note that in the plaint, the plaintiff at para No.3 has pleaded that he was ready and willing to complete the sale transaction. Further, in the examination- -in - chief of PW.1 the plaintiff is once again deposed that he is ready and willing to pay the balance sale consideration and complete the sale transaction. It is 14 further forthcoming that the plaintiff got issued a legal notice dated 19.08.2013 (Ex.P3) whereunder the defendant has been called upon to receive the balance sale consideration within four days from the date of receiving notice and complete his transaction. It is forthcoming from the postal acknowledgment (Ex.P3(a)) that the said notice has been served on the 1st defendant.
16. It is forthcoming from the cross examination of PW.1 and PW.2 that the aspect regarding readiness and willingness of the plaintiff has not been seriously contested by the 2nd defendant.
17. It is relevant to note that consequent to the judgment and decree dated 24.06.2016 whereunder the plaintiff was required to pay the balance sale consideration of ₹83 lakhs, on 19.08.2016 the said sum of ₹83 lakhs was deposited before the Trial Court by the plaintiff.
18. It is further relevant to note that the 1st defendant, not having contested the suit, it is the 2nd 15 defendant who is the subsequent purchaser who has taken the contention regarding the plaintiff not being ready and willing to complete the sale transaction. The Trial Court has recorded a finding that the 2nd defendant being a subsequent purchaser is not entitled to take the plea of readiness and willingness. The said finding of the Trial Court is erroneous having regard to the judgment of the Hon'ble Supreme Court in the case of Ram Awadh v.
Achhaibar Dubey5, wherein it has held as follows:
"6. The obligation imposed by Section 16 is upon the court not to grant specific performance to a plaintiff who has not met the requirements of clauses (a), (b) and (c) thereof. A court may not, therefore, grant to a plaintiff who has failed to aver and to prove that he has performed or has always been ready and willing to perform his part of the agreement the specific performance whereof he seeks. There is, therefore, no question of the plea being available to one defendant and not to another. It is open to any defendant to contend and establish that he mandatory requirement of Section 16(c) has not been complied with and it is for the court to determine whether it has or has not been complied with and, depending upon its conclusion, decree or decline to decree the suit. We are of the view that the decision in Jugraj Singh case [(1995) 2 SCC 31] is erroneous."
(emphasis supplied) 5 (2000) 2 SCC 428 16 18.1 The judgment in the case of Ram Awadh5 has also been followed by the Hon'ble Supreme Court in the case of Kadupugotla Varalakshmi v. Vudagiri Venkata Rao & Ors.,6.
19. However, in view of the material available on record as noticed above, the plaintiff having adequately pleaded and adduced the evidence that he was ready and willing to pay the balance sale consideration and the plaintiff having deposited the balance sale consideration before the Trial Court immediately consequent to the judgment and decree passed by the Trial Court, the appellants have failed in demonstrating that the said finding regarding readiness and willingness is erroneous and liable to be interfered with by this Court. Hence, question No.2 framed for consideration is answered in the Negative.
6 2021 SCC OnLine SC 365 17 Re: Question No.3:
20. It is the vehement contention of learned Senior Counsel for the appellant that the plaintiff is a bonafide purchaser for value who had no notice of the Agreement of Sale dated 25.03.2013 (Ex.P1) executed between the plaintiff and the 1st defendant. While considering the said contention, it is relevant to note that the total sale consideration mentioned in the Agreement of Sale dated 25.03.2013 (Ex.P1) is a sum of ₹1,08,00,000/-. However, the sale consideration mentioned in the registered Sale Deed dated 31.05.2013 (Ex.D2) is a sum of ₹ 40 lakhs. The sale consideration mentioned in the registered Sale Deed dated 31.05.2013 (Ex.D2) itself falsifies the case of the 2nd defendant that he was a bonafide purchaser of the value. The 2nd defendant has not produced any material on record to demonstrate that the said sum of ₹40 lakhs is the market value of the suit property.
21. Further, in the cross examination dated 08.03.2016 of DW.1, it has been stated by the 2nd 18 defendant that he does not know anything regarding the suit property. Further when various questions regarding the suit property have been put to DW.1 in the cross- examination, no satisfactory answer is forthcoming from the 2nd defendant.
22. The 2nd defendant has examined DWs.2 and 3 who are the witnesses to the registered Sale Deed dated 31.05.2013 (Ex.D2) and DW.4 who is the scribe of Ex.D2. However, the testimony of the said persons do not in any manner indicate that the 2nd defendant is a bonafide purchaser for value. Exs.D2 to D9 which have been produced by the defendants are the revenue records, wherein entries have been made pursuant to the registered Sale Deed (Ex.D2). No other documents have been produced by the 2nd defendant to demonstrate that he is a bonafide purchaser for value.
23. It is further relevant to note that consequent to the judgment and decree dated 24.06.2016 passed by the Trial Court, the plaintiff has deposited a sum of ₹83 lakhs 19 on 19.08.2016. Thereafter, on 29.08.2016, the 1st defendant filed an application for release of the said sum of ₹83 lakhs deposited by the plaintiff. The Trial Court vide its detailed order dated 17.10.2016, allowed the said application subject to the condition that the 1st defendant executes an indemnity bond and surety. In the said order dated 17.10.2016, it has been noticed by the Trial Court that the 1st defendant, in the affidavit accompanying the application for permission to withdraw the amount has stated that he is ready to execute the Sale Deed and he is further ready to pay back the amount of ₹40 lakhs received by the 2nd defendant. It is further forthcoming from the order dated 17.10.2016 that 2nd defendant who is the appellant herein has not resisted the said application filed by the 1st defendant for withdrawal of the amount. Hence, vide the said order dated 17.10.2016 the Trial Court ordered for release of the deposit amount of ₹83.00 lakhs in favour of 1st defendant. Subsequently, this Court vide interim order dated 22.11.2016 passed in 20 the present appeal granted stay of the judgment and decree passed by the Trial Court.
24. It is clear from the aforementioned that the 2nd defendant failed in demonstrating that he is a bonafide purchaser for value and has further not adduced any evidence in support of the contention that the plaintiff and 1st defendant has colluded together. The Trial Court while considering the said aspect regarding readiness and willingness as well as the contention regarding the 2nd defendant being a bonafide purchaser of the value, has noticed that the sale consideration of ₹40 lakhs in terms of the registered Sale Deed dated 31.05.2013 (Ex.D2) has been paid and that the said Sale Deed has been executed in a hurried manner.
25. The judgments relied upon by the learned counsel for the respondent/plaintiff are considered as under:
21
i. In the case of Dundappa & Ors., v.
7
Hussainsab Dastageersaheb Pinjar & Ors., , a
learned Single Judge of this Court has held as follows:
"13. Admittedly the sale deed dated 14.12.2007 is executed in haste without there being any agreement of sale. The entire sale consideration appears to have been paid on the same day at the time of execution of the sale deed, thereby indicating that there was no agreement and transaction is completed in a hurry. If that is to be looked into in the background of notice dated 28.11.2007 and defendants 1 to 3 giving a reply on 7.12.2007 and subsequently within one week therefrom i.e., on 14.12.2007 the present sale deed Ex.P.8 or D.1 is executed. This clearly gives an indication that the entire transaction which is covered under Ex.P.8 or D.1 which is one and the same is with an intention to hoodwink the legitimate claim of the plaintiff who had entered into an agreement of sale on 28.11.2005 itself.
14. In that view of the matter both the Courts below while considering the pleading and evidence have rightly felt that there is an attempt on the part of defendants 1 to 3 and 4 to hoodwink the right of the plaintiff to seek specific performance. Hence the suit of the plaintiff is decreed by answering the issues framed in the original suit and as well as the points for consideration in the lower appellate Court. As against the concurrent finding in both the proceedings this Court find no grounds are made out to consider admission of these appeals and also for consequential relief."
(emphasis supplied) 7 Judgment dated 9.2.2015 passed in RSA Nos.5259 & 5461/2010s 22 ii. In the case of M.M.S.Investments, Madurai v. Veerappan & Ors., 8, the Hon'ble Supreme Court has held as follows:
"6. Questioning the plea of readiness and willingness is a concept relatable to an agreement. After conveyance the question of readiness and willingness is really not relevant. Therefore, the provision of the Specific Relief Act, 1963 (in short "the Act") is not applicable. It is to be noted that the decision in Ram Awadh case [(2000) 2 SCC 428] relates to a case where there was only an agreement. After the conveyance, the only question to be adjudicated is whether the purchaser was a bona fide purchaser for value without notice. In the present case the only issue that can be adjudicated is whether the appellants were bona fide purchasers for value without notice. The question whether the appellants were ready and willing is really of no consequence. In Ram Awadh case [(2000) 2 SCC 428] the question of the effect of a completed sale was not there. Therefore, that decision cannot have any application so far as the present case is concerned. Once there is a conveyance the concept would be different and the primary relief could be only cancellation."
(emphasis supplied) iii. Learned counsel for the plaintiff relies on the judgment of the Hon'ble Supreme Court in the case of Silvey & ors., v. Arun Varghese & Ors.,9 to contend "that the conduct of the defendant cannot be ignored 8 (2007) 9 SCC 660 9 (2008) 11 SCC 45 23 while weighing the question of exercise of discretion for decreeing or denying a decree for specific performance."
26. In view of the aforementioned, it is clear that the finding of the Trial Court that the 2nd defendant is not a bonafide purchaser of the value is just and proper and not liable to be interfered with by this Court in the present appeal. Hence, question No.3 framed for consideration is answered in the Negative.
Re. Question No.4:
27. It is the vehement contention of the learned Senior counsel for the appellant that the plaintiff not having sought for cancellation of the Sale Deed dated 28.09.2013, the suit of the plaintiff is liable to be dismissed. In that regard, it is relevant to note that during the pendency of the Agreement of Sale dated 25.03.2013, the said Sale Deed dated 28.09.2013 was executed. The plaintiff initially filed the suit only against the 1st defendant. Subsequently pursuant to the application for amendment which was allowed by the Trial Court on 24 07.10.2014, the subsequent purchaser has been arrayed as 2nd defendant in the suit.
28. Section 19(b) of the Act of 1963 states as follows:
"19. Relief against parties and persons claiming under them by subsequent title.-- Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against--
(a).........
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
......... "
(emphasis supplied)
29. It is clear from Section 19(b) of the Act of 1963 that the specific performance of the contract could be enforced against a person who is claiming title which arises subsequent to the contract, unless the subsequent purchaser has purchased the property in good faith without notice of the original contract. 25
30. In the present case, as noticed by the Trial Court as well as noticed hereinabove, the appellant/defendant No.2 has failed in demonstrating that he is a bonafide purchaser for value.
31. Learned Senior Counsel for the appellant places reliance on the judgment of the Hon'ble Supreme Court in the case of Sukhwinder Singh v. Jagroop Singh10. However, the said judgment will not aid the case of the appellant, inasmuch as in the said case although the plaintiff has specifically sought for setting aside of the subsequent sale, the Hon'ble Supreme Court had recorded a finding that the plaintiff had failed to prove his readiness and willingness.
32. The plaintiff is not a party to the Sale Deed dated 28.09.2013. In this regard, it is relevant to note the judgment in the case of Sri U.Vijaya Kumar & Another 10 (2021) 20 SCC 245 26 v. Smt. Malini V.Rao11, wherein a coordinate Bench of this Court has held as under:
28. .......... A suit for cancellation must be brought by a person who was a party to the deed or by a person who is otherwise bound by it in law. But a person who is neither party to the deed nor bound by it need not sue for its cancellation. .........."
33. Hence, question of the plaintiff seeking cancellation of the said Sale Deed dated 28.09.2013 does not arise and the said contention put forth on behalf of the appellant being untenable, is liable to be rejected.
34. In view of the aforementioned, the appellant has failed in demonstrating that the judgment and decree passed by the Trial Court is erroneous and liable to be interfered with. Hence, question No.(iv) framed for consideration is answered in the negative.
35. In view of the aforementioned, the following:
ORDER
i) The above appeal is dismissed.11
ILR 2016 KAR 2670 27
ii) The judgment and decree dated 24.06.2016 passed in O.S. No.5/2014 by the Principal Senior Civil Judge and JMFC., Srirangapatna is affirmed.
No costs.
Sd/-
JUDGE Sd/-
JUDGE BS