Karnataka High Court
Smt T Susheelamma vs Sri R Krishna on 22 September, 2023
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
R.F.A No.495/2021
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22nd DAY OF SEPTEMBER, 2023
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA
R.F.A No.495 OF 2021 (SP)
BETWEEN:
1. SMT. T. SUSHEELAMMA
W/O DR. GOPALA KRISHNA
AGED ABOUT 77 YEARS
2. SRI. T. ARUN KUMAR
S/O DR. GOPALA KRISHNA
AGED ABOUT 50 YEARS
BOTH ARE RESIDING AT
NO.12/1, (OLD NO.143)
10TH 'A' MAIN, 5TH CROSS
1ST BLOCK, JAYANAGAR
BENGALURU-560 011. ...APPELLANTS
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
SMT. SUMANA NAGANAND, ADVOCATE)
AND:
1. SRI. R. KRISHNA
S/O LATE RANGAPPA
AGED ABOUT 49 YEARS
PROPRIETOR
NISARGA BUILDERS
NO.37/11, 2ND FLOOR
BRIGADE ROAD CROSS
BENGALURU-560 001.
R.F.A No.495/2021
2
2. KARNATAKA STATE INDUSTRIAL AND
INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED
KHANIJA BHAVAN
NO.49, 4TH FLOOR, EAST WING
RACE COURSE ROAD
BENGALURU-560 001.
REPRESENTED BY ITS
DEPUTY MANAGER
SRI. R. MANMOHAN ...RESPONDENTS
(BY SHRI. ASHOK HARANAHALLI, SENIOR ADVOCATE FOR
SHRI. DHIRENDRA N. KATTI, ADVOCATE FOR R1;
SHRI. VENKATESH ARBATTI, ADVOCATE FOR R2)
THIS RFA IS FILED UNDER SEC.96 R/W ORDER 41, RULE 1
OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
07.04.2021 PASSED IN OS.NO.7836/2011 ON THE FILE OF THE
VIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,
BENGALURU, DECREEING THE SUIT FOR SPECIFIC
PERFORMANCE.
THIS RFA, HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 30.08.2023 COMING ON FOR PRONOUNCEMENT
OF JUDGMENT THIS DAY, P.S.DINESH KUMAR, J.,
PRONOUNCED THE FOLLOWING:-
JUDGMENT
This appeal by the defendants is directed against the judgment and decree dated April 04, 2021 in O.S. No. 7836/2011 passed by the VIII Additional City Civil and Sessions Judge, Bengaluru, decreeing the suit for specific performance of contract.
R.F.A No.495/20213
2. We have heard Shri. S.S. Naganand, learned Senior Advocate for the appellants/defendants and Shri. Ashok Haranahalli, learned Senior Advocate for the respondent No.1/plaintiff and Shri. S. Venkatesh Arbatti, learned Advocate for the KSIIDC1/respondent No.2.
3. For the sake of convenience, parties shall be referred as per their status before the Trial Court.
4. Plaintiff's case is, defendants are the owners of the suit property. They offered to sell the same to plaintiff for a consideration of Rs.2.50 Crores vide 'agreement to sell' dated 12.01.2011. Simultaneously, with the execution of the agreement, plaintiff paid a sum of Rs.1,75,06,067/- to defendants as earnest money. The balance consideration was agreed to be paid within a period of six months from the date of the agreement. On the same day, under a supplementary agreement, plaintiff paid an additional sum of Rs.24,93,933/- in cash (Rs.12,50,000/- to first defendant and Rs.12,43,933/- to second defendant). Defendants agreed to receive the balance consideration at the time of 1 Karnataka State Industrial and Infrastructure Development Corporation Limited R.F.A No.495/2021 4 execution of the Sale Deed. The original documents were handed over to the plaintiff.
5. Plaintiff issued a public notice dated 17.05.2011 in Times of India and Vijaya Karnataka Dailies calling for objections and no objections were received. Plaintiff wrote letters dated 13.07.2011 and 22.07.2011; and caused a legal notice dated 06.08.2011 to the defendants to receive the balance consideration and to execute the sale deed. Defendants failed to comply with the demand compelling the plaintiff to bring the instant suit for specific performance.
6. Defendant No.2 resisted the suit by filing written statement denying the offer to sell the suit property, and contending inter alia that the money was received as loan against the security of the suit property to discharge their earlier debt from previous lender. The 'Agreement to Sell' was executed as suggested by plaintiff to secure the loan. Further, as demanded by plaintiff, the original documents of the suit property were delivered by defendants for legal scrutiny. Defendants were ready to refund the loan with interest thereon.
R.F.A No.495/20215
7. Defendant No.1 has adopted the written statement filed by defendant No. 2.
8. Based on the pleadings, the learned Trial Court has framed following issues:
(1) Whether the plaintiff proves that the defendants executed an agreement of sale in respect of the suit schedule property in favour of the plaintiff for a total consideration of Rs.2,50,00,000/- on 12-01-2011 and received a sum Rs. 1,75,06,067/- as earnest money? of (2) Whether the plaintiff further proves on 12-01-2011 the defendants received the substantial sale consideration amount of Rs.2 Crores from the plaintiff and executed a supplementary agreement of sale dated 12-01-2011 agreeing to execute the registered sale deed within six months from the date of agreement of sale dated 12-01-2011?
(3) Whether the plaintiff further proves that he is ready and willing to perform his part of contract? (4) Whether plaintiff proves that the defendants have failed to perform their part of contract in spite of repeated reminders, persuasions and legal notice dated 06-08-2011? (5) Whether the defendants prove that the advance amount paid by the plaintiff is not part of sale consideration, defendants agreeing to sell the suit schedule property, but it is a loan transaction and therefore, the defendants are ready to return the said amount with interest to the plaintiff?R.F.A No.495/2021
6 (6) Whether the plaintiff is entitled for the relief of specific performance or in alternative he is entitled for refund of Rs.2 Crores with interest from the defendants? (7) What order or decree?
9. On behalf of the plaintiff, he examined himself as P.W.1 and got marked Exs. P1 to P23. On behalf of defendants, two witnesses were examined as D.W.1 and D.W.2; and Exs. D1 to D4 marked. Answering issues No. 1 to 4 and 6 in the affirmative and issue No. 5 in the negative, the Trial Court has decreed the suit.
10. Shri. Naganand, for the appellants, praying to allow this appeal, submitted that:
Ex.P1 and P2 were executed as security towards loan transaction between the parties and defendants never offered to sell the suit property; the learned Trial Court has not properly appreciated the defence taken by defendants and the admission made by P.W.1 in his cross- examination with regard to issue No. 5; R.F.A No.495/2021 7 the learned Trial Court has failed to appreciate and consider the deposition of Atul Kumar, D.W.2, who is the attesting witness to Ex.P1 and the person who has negotiated the loan transaction between the parties;
the learned Trial Court has erred in holding that the plaintiff has proved the execution of Ex.P1 and receipt of consideration;
on an earlier occasion, D.W.2 had arranged for loan from Mr. Stuart Clarke. When Mr. Clarke demanded the money back, Atul Kumar introduced the plaintiff and negotiated for loan on behalf of defendants. Atul Kumar was not examined by plaintiff but he has been examined on behalf of defendants;
due to urgent requirement of funds, defendants had signed the agreement to sell without reading its contents. It was agreed that agreement would be cancelled once the money was repaid. R.F.A No.495/2021 8
11. Shri. Haranahalli, for the plaintiff, supporting the impugned judgment and decree, mainly contended that defendants have not produced any documentary evidence to show that the agreement was in respect of loan transaction. The 'Agreement to Sell' is a registered document containing all relevant clauses required in an 'Agreement to Sell'. Defendants have signed the agreement to sell with open eyes and received substantial consideration. They also demanded for some more additional sale consideration which has been paid under a supplementary agreement. Defendants have not objected for issuing public notices. They have also not responded to the legal notice. With these submissions, Shri. Haranahalli has prayed for dismissal of this appeal.
12. Shri. Arbatti, for the KSIIDC, submitted that:
the suit property has been mortgaged to KSIIDC on 16.10.1998 to secure the loan advanced to M/s. Master Strips Private Limited and the first defendant is the surety;R.F.A No.495/2021
9 first defendant has deposited the original title deeds with the KSIIDC and created equitable mortgage in 1998;
KSIIDC has taken over primary assets belonging to M/s. Master Strips Private Limited; KSIIDC has filed Miscellaneous Petition No. 218/2021 (earlier registered as Miscellaneous Petition No. 13/2011) for attachment and sale of the suit property and the said Miscellaneous Petition was posted for judgment on 31.08.2023; defendants have suppressed all the material facts with regard to the loan transaction with the KSIIDC;
KSIIDC has the first charge over the suit property.
13. We have carefully considered the rival contentions and perused the record.
14. In light of the above submissions, following questions arise for our consideration:
R.F.A No.495/202110
(i) Whether the plaintiff proves the 'Agreement to Sell'?
(ii) Whether the defendants prove that the 'Agreement to Sell' was document to secure the loan?
(iii) Whether the plaintiff was ready and willing to perform his part of the contract?
(iv) Whether the impugned judgment and decree calls for any interference?
15. In substance, plaintiff's case is, defendants have entered into the 'Agreement to Sell' on 12.01.2011 agreeing to sell the suit property for a total consideration of Rs.2.50 Crores and received an advance sale consideration of Rs.1,75,06,067/- under the said agreement. Defendants have also received a further sum of Rs.24,93,933/- under a Supplementary Agreement executed on the same day. To prove this document, plaintiff has examined himself as P.W.1. In his evidence, in the form of Affidavit, he has reiterated the facts stated in the plaint. R.F.A No.495/2021 11
16. It was argued by Shri. Naganand, that though the document is styled as an 'Agreement to Sell', in fact, it is a document to secure the loan advanced by plaintiff to defendants. He strongly urged to take note that plaintiff has not chosen to examine both attesting witnesses to the agreement. On the other hand, defendants have examined one of the witnesses Atul Kumar.
17. We have perused the examination-in-chief and the cross-examination of P.W.1. He has admitted that defendants had approached him through a real estate agent, but he did not remember that defendants had approached through an agent by name Shri. Kiran. He has stated that real estate agent did not have an office and he was dealing in all places. He has admitted that in his firm, M/s. Nisarga Builders, a person by name Kiran was working as Manager and he had no difficulty to bring him to the Court.
18. Clause 2 of the agreement is with regard to payment of consideration. It is recorded therein that plaintiff had paid a sum of Rs.20,06,067/- in favour of Mr.Stuart R.F.A No.495/2021 12 Clarke through Demand Draft bearing No.429353 dated 11.01.2011 drawn on Canara Bank, Cantonment Branch, a sum of Rs.80 Lakhs to first defendant Smt. T. Susheelamma and Rs.74,93,933/- in favour of second defendant Shri. T. Arun Kumar.
19. To substantiate his contention that defendants had approached plaintiff for a loan to repay their earlier debt to Mr. Stuart Clarke, Shri. Naganand pointed out that defendants had requested the plaintiff to give a demand draft for Rs.20,06,067/- in the name of Mr.Stuart Clarke. Defendants have tendered the very same demand draft to Mr.Stuart Clarke and got cancelled their earlier agreement with him as per the Cancellation Deed (Ex.D2). We have perused Ex.D2. It is stated therein that on 29.02.2008, defendants had executed a registered 'Agreement to Sell' the suit property for a sum of Rs.1.50 Crores in favour of Mr.Stuart Clarke. Parties have cancelled the said agreement as per Ex.D2. Defendants have refunded the said sum of Rs.1.50 Crores to Mr.Stuart Clarke by cash, cheques and a R.F.A No.495/2021 13 demand draft for Rs.20,06,067/-. The said demand draft is the very same demand draft given by plaintiff to defendants.
20. The 'Agreement to Sell' is witnessed by two attesting witnesses namely Mr. A. Kiran and Mr. K.N. Atul Kumar. Kiran's address is mentioned as Nisarga Builders, Brigade Road, Bangalore. Plaintiff has not chosen to examine both attesting witness, whereas Atul Kumar has been examined as defence witness. He has stated in his examination-in-chief that plaintiff and second defendant were his friends. Second defendant was having his own business and was in need of funds. First defendant had requested for financial assistance and he had introduced her to Mr.Stuart Clarke. On his request, Mr.Stuart Clarke had financed second defendant and for that purpose, defendants had executed an agreement of sale dated 29.02.2008 (Ex.D1) and they had handed over all the original documents of the suit property to him as security. Subsequently, second defendant had requested him for some additional financial assistance and he had introduced him to the plaintiff. Defendants got cancelled their earlier R.F.A No.495/2021 14 agreement dated 29.02.2008 with Mr.Stuart Clarke and collected all the documents.
21. Defendants have received Rs. 20,06,067/- from the plaintiff to pay Mr.Stuart Clarke to discharge their debt. This conduct is in line with the defence urged on behalf of defendants and it is fully supported by the evidence of both D.W.1 and D.W.2. D.W.2 has withstood the cross-examination and given a cogent explanation that plaintiff was not a registered money lender and therefore, he had got executed the 'Agreement to Sell' as security towards the money lent by him.
22. It is not in dispute that defendants had taken financial accommodation from Stuart Clarke. In both transactions D.W.2, Atul Kumar has introduced the parties to each other. In the case of Stuart Clarke the financial accommodation was Rs.1.50 Crores in the year 2008 and the quantum of money paid by plaintiff in 2011 is Rs.2.50 Crores. In both transactions the document between the parties is styled as an 'agreement to sell'. The suggestions made to P.W.1 in the cross-examination as to R.F.A No.495/2021 15 whether he was ready to receive back the loan explains defendants' stand that they had treated the transaction as a loan transaction. While replying to this question, plaintiff has stated that he was prepared to purchase the suit property. On this aspect, it was argued by Shri. Naganand that plaintiff did not assert that he had already entered into Ex.P1 to purchase the property but on the other hand, he has stated that he was 'prepared' to purchase the property. We see some force in this contention because the line of cross-examination was to drive home the point that it was a loan transaction with a specific suggestion, whether plaintiff was prepared to receive back the loan amount. Plaintiff's reply as contended by Shri. Naganand does not suggest that plaintiff was assertive about the 'Agreement to Sell' but merely stated that he was 'prepared' to take the property.
23. The learned Trial Judge has recorded thus in para 12 of the judgment:
"12. On perusal of the evidence produced by the parties and arguments submitted at their respective Counsel, it appears to me that as rightly contended by the defendants' Counsel, though the document is titled as agreement for sale, the same is not decisive in order to ascertain the R.F.A No.495/2021 16 exact nature of the transactions. In order to ascertain the nature of the documents, contents of the documents will have to be read as a whole."
(Emphasis Supplied)
24. The above finding clearly demonstrates that the learned Trial Judge was not 'convinced' that Ex.P1 was an 'agreement to sell'. However, the learned Trial Judge has held the same as an 'agreement to sell' for two reasons. Firstly, that the defendants had admitted their signatures in the Ex.P1 and secondly, in view of the authority in Narbada Devi Gupta Vs. Birendra Kumar Jaiswal and Another2.
25. The learned Trial Judge has held in para 17 of the impugned judgment that the evidence of D.W.2 with regard to defendants borrowing loan and executing Ex.P1 as security, appeared to be 'incorrect' because defendants had not pleaded about the requirement of money. This observation is contrary to the pleadings in para 3 and 9 of the written statement and oral evidence of both D.W.1 and D.W.2. We may record that in para 3 and 9 of the written statement it is stated thus:
2
(2003) 8 SCC 745 R.F.A No.495/2021 17 "3. The Second Defendant submits that, they required money to repay the money borrowed from their previous borrower. The borrower asked Defendants to execute an agreement of sale in respect of Suit Schedule Property as a security to the borrowed money. Accordingly, they have entered into agreement of sale with their borrower. The said borrower demanded these Defendant to repay the said amount with interest thereon. Therefore, these Defendants approached the Plaintiff and requested him to lend money for the aforesaid purpose. The Plaintiff agreed to lend money and asked the Defendants to execute an agreement of sale in respect of Suit Schedule Property as security of the amount. The Defendants have no any other way and executed an agreement of sale dated 12.01.2011 in favour of the Plaintiff as a security. But, not agreed to sell the Suit Schedule Property in favour of the Plaintiff. The Plaintiff also demanded the Defendant to furnish original documents in respect of the Suit Schedule Property for legal scrutiny and after obtaining legal opinion, he would return the said original documents to them. These Defendants have orally requested and demand to the Plaintiff to return the said documents. But, the Plaintiff failed to return the same.
9. The second Defendant denies the allegations made in para 9 and 10 of the plaint and submit that, he never agreed to sell the Suit Schedule Property in favour of the Plaintiff. But, the Plaintiff obtained the agreement of sale from them as security of loan transaction."
26. So far as the title deeds and the arguments of Shri. Arbatti that defendants owe money to the KSIIDC and they have mortgaged the suit property by depositing the R.F.A No.495/2021 18 original title deeds with KSIIDC are concerned, we may record that this aspect has no bearing on the subject matter of this appeal because, KSIIDC will have to works out its remedy in separate proceedings.
27. Shri. Naganand has placed reliance on U.N.Krishnamurthy Vs. A.M.Krishnamurthy3 and contended that plaintiff has to prove that all along and till the final decision of the suit, he was ready and willing to perform his part of the contract.
28. We may record that in his cross-examination, P.W.1 has stated that he did not remember if he had produced any document to show that he had remaining sale consideration with him. There is no other material on record to show that plaintiff had demonstrated before the Court that he had the remaining sale consideration till the final decision in the suit.
29. Shri. Naganand has next relied upon Katta Sujatha Reddy Vs. Siddamsetty Infra Projects4 to urge that 3 (2022) SCC OnLine SC 840 (para 46) 4 (2023) 1 SCC 355 (para 59) R.F.A No.495/2021 19 amendment to Section 10 of the Specific Relief Act, 1963 is prospective in nature.
30. Shri. Haranahalli has placed reliance on following authorities:
i. P.Ramasubbamma Vs. V. Vijayalakshmi and Ors5; We may record that the passage relied upon by the learned Senior Advocate is based on the facts of that case and therefore does not lend any support to plaintiff's case.
ii. Vimal Chand Ghevarchand Jain Vs. Ramakant Eknath Jadoo6;
Relying on this authority, it was urged by Shri. Haranahalli that Ex.P.1 is a registered document and therefore carries a presumption that transaction was a genuine one and the onus of proof was upon defendants to show that the Deed did not reflect the true nature of transaction. This argument was opposed by Shri. Naganand by placing reliance on Gangabai Vs. Chhabubai7, contending 5 AIR 2022 SC 1793 (para 5.8) 6 (2009) 5 SCC 713 (para 19) 7 (1982) 1 SCC 4 (para 11) R.F.A No.495/2021 20 that the bar contained in Sub-Section (1) of Section 92 of the Indian Evidence Act, 1872 was not applicable to the facts of this case because the said Sub-Section is not attracted when the case of the party is that transaction recorded in the document was never intended to be acted upon at all and it was a sham document.
It is held in Gangabai that when a party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence, oral evidence is admissible to show that the document executed was never intended to operate as it appeared. We may further record that in Vimalchand no attesting witness was examined. In contradistinction, in the case on hand, one of the attesting witnesses Atul Kumar has been examined as a defence witness. Further in para 31 of Vimalchand, it is held that when a true character of a document is questioned extrinsic evidence by way of oral evidence is admissible.
R.F.A No.495/202121
iii. Sughar Singh Vs. Hari Singh8;
Placing reliance on this authority, it was urged by Shri.Haranahalli that in view of the amendment, the Court has no discretion and therefore, this appeal must be dismissed on this ground alone.
31. In reply, it was argued by Shri. Naganand that in view of Katta Sujata the amendment to Specific relief Act, 1963 is prospective in nature. He submitted that when two authorities on the same point are cited before the Court, the latter shall prevail. In support of this contention, he placed reliance on K.Balakrishna and Another Vs. State of Karnataka and others9, wherein it is held that if there are two conflicting judgments of the Hon'ble Supreme Court of India of Benches with equal number of Judges, then the latter decision shall prevail over the former one. But where the earlier judgment is of a larger Bench and the later judgment is of a smaller Bench then the decision of larger Bench will be binding. The judgment in Sughar Singh relied upon by Shri. Haranahalli is decided on October 26, 2021 by 8 2021 SCC OnLine SC 975 (para 47) 9 2022 SCC OnLine Kar 175 (para 11) R.F.A No.495/2021 22 a Bench of two Hon'ble Judges and the judgment in Katta Sujatha is decided on August 25, 2022 by a Bench of three Hon'ble Judges. Therefore, the authority in Katta Sujatha shall prevail and the Court shall have discretion while deciding this case as the transaction is prior to the date of amendment in 2018.
32. On facts, as on date, first defendant is aged 79 years and her son is aged 52 years. The premises in question is a residential house. The transaction is of the year 2011. Plaintiff is a builder. If the specific performance is now ordered, keeping in view the drastic increase in the value of properties in Bengaluru, defendants would be put to greater hardship as they may not be able to secure an alternative residential accommodation in the vicinity. On the other hand, plaintiff may find a place in any locality for his project.
33. In view of the above discussion, this appeal merits consideration for more than one reason:
firstly, because the plaintiff has not examined the attesting witnesses to prove Ex.P1; R.F.A No.495/2021 23 secondly, because one of the attesting witnesses Atul Kumar, examined on behalf of defendants, has categorically stated that the transaction was one of financial accommodation and not of sale of the suit property. There is no reason to disbelieve his evidence nor it was argued that Atul Kumar's evidence is not credible. Further there is no other evidence on record on behalf of plaintiff. Hence in our view, defendants have successfully demonstrated that Ex.P1 was executed only for the purpose of loan transaction; thirdly because, plaintiff has not produced any material to show that he was ready with the remaining sale consideration all along till the final decision of the suit as held in U.N.Krishnamurthy; fourthly because, first defendant is a senior citizen aged about 79 years and the property in question is a house property, whereas plaintiff is a builder. Therefore, the comparative hardship which the defendants may suffer is much higher if specific performance is ordered. The Section 10 R.F.A No.495/2021 24 of the Specific Relief Act, 1963 contains a modicum of discretion and keeping in view the comparative hardship, the discretion deserves to be exercised in favour of defendants; fifthly because, the learned Trial Judge has also primarily held that Ex.P1 was not decisive whether as it was an Agreement to Sell or a security document for loan. His finding is based on admission of signature on Ex.P1 and authority in Narbada Devi Gupta. We may record that the specific defence urged in paragraphs No.3 and 9 of the written statement coupled with the evidence of DW2, completely demolishes plaintiff's case. Accordingly, On reappreciation of entire evidence on record, we answer the points No.(i) and (iii) in the negative, point No.(ii) in the affirmative. Consequently, point No. (iv) deserves to be answered in the affirmative and in favour of the defendants.R.F.A No.495/2021
25
34. Hence the following:
ORDER i. Appeal is allowed.
ii. Judgment and decree in O.S No. 7836/2011 dated April 07, 2021 is set-aside and the suit is decreed in part by granting the alternative relief of refund of Rs. Two Crores with interest at the rate of 12% p.a. from the date of agreement till the date of payment.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS/Preksha/Pooja