Anand S/O. Holabasappa Gurav vs Murageppa S/O. Shrishailappa ...
2022 Latest Caselaw 7564 Kant

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                                     RFA No. 100123 of 2015




     IN THE HIGH COURT OF KARNATAKA, DHARWAD
                          BENCH

       DATED THIS THE 27TH DAY OF MAY, 2022

                         PRESENT
       THE HON'BLE MRS JUSTICE K.S.MUDAGAL
                            AND
        THE HON'BLE MR JUSTICE M.G.S. KAMAL
 REGULAR FIRST APPEAL NO. 100123 OF 2015 (SP)


BETWEEN:

SRI. ANAND S/O. HOLABASAPPA GURAV
AGE: 34 YEARS, OCC: AGRICULTURE,
R/O. MUDHOL, DIST: BAGALKOT
R/BY HIS PA HOLDER
SADASHIV S/O. BASAPPA BAGODI
@ BAGEWADI,
AGE: 41 YEARS, OCC: AGRICULTURE,
R/O. MUDHOL, DIST: BAGALKOT.

(POWER OF ATTORNEY DISCHARGED BY ORDER DATED
30.09.2021)

                                               ...APPELLANT

(BY SRI.S.B.DODDAGOUDRA, ADV. FOR
SMT.SUMANGALA A CHAKALABBI, ADV.)

AND:

1.    SRI.MURAGEPPA
      S/O. SHRISHAILAPPA ITTANGI
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                                    RFA No. 100123 of 2015


     AGE: 31 YEARS, OC: BUSINESS,
     R/O. MUDHOL, DIST: BAGALKOT.

2.   SHIVALEELA W/O. SIDDU KULLOLI
     AGE: 33 YEARS,
     OCC: HOUSEHOLD WORK,
     R/O. BHANTANUR, TQ: MUDHOL,
     DIST: BAGALKOT.

                                           ...RESPONDENTS

(BY SRI. MRUTYUNJAY TATA BANGI, ADV.)

      THIS REGULAR FIRST APPEAL FILED UNDER ORDER
41 RULE 1 R/W SEC. 96 OF CPC, 1908, AGAINST THE
JUDGMENT AND DECREE DATED 17.04.2015 PASSED IN
O.S.NO.94/2012 ON THE FILE OF THE SENIOR CIVIL
JUDGE      AND   JUDICIAL   MAGISTRATE      FIRST   CLASS,
MUDHOL, DISMISSING THE SUIT FILED FOR SPECIFIC
PERFORMANCE OF CONTRACT.

      THIS REGULAR FIRST APPEAL COMING ON FOR
FINAL HEARING THIS DAY, M.G.S.KAMAL J., DELIVERED
THE FOLLOWING:
                        JUDGMENT

1. Present appeal under Section 96 of the Code of

Civil Procedure (for short 'the CPC') filed by the plaintiff

aggrieved by the judgment and decree dated 17.04.2015

passed in O.S. No.94/2012 on the file of the Senior Civil

Judge and JMFC, Mudhol, (for short 'the Trial Court') by

RFA No. 100123 of 2015

which the suit of the plaintiff for relief of specific

performance of a contract and in the alternative for the

relief of refund of earnest money has been dismissed.

2. It is the case of the plaintiff that defendant No.1

being the absolute owner in possession of immovable

property bearing CTS No.61 measuring 39.38 sq.mtrs. of

Mudhol (hereinafter referred to as 'the suit property' for

short), had offered the same for sale to meet his family

necessity. That the plaintiff had agreed to purchase the

suit property for a total sale consideration of Rs.18 lakhs,

of which he paid Rs.15 lakhs as earnest money and in

furtherance thereof defendant No.1 had executed and

registered an agreement of sale dated 06.09.2011. That

the balance sale consideration of Rs.3 lakhs was agreed to

be paid within one year and on receipt of which, defendant

No.1 was required to execute and register sale deed and

handover the physical possession of the suit property.

That the plaintiff being ready with the balance sale

consideration of Rs.3 lakhs had requested the defendant

RFA No. 100123 of 2015

No.1 to receive the same and execute deed of sale as

agreed which was complied with constraining the plaintiff

to cause issue of a legal notice dated 16.08.2012. That

defendant No.1 instead of complying with the demand

made in the legal notice with malafide intention of causing

loss to the plaintiff had created a false document namely,

a gift deed on 30.06.2012 in favour of defendant No.2,

who was also aware of the sale transaction between the

plaintiff and defendant No.1. Hence, the plaintiff filed the

suit.

appeared through their counsel. Defendant No.2 filed

written statement which was adopted by defendant No.1.

In the written statement, defendant No.2 though admitted

herself to be the sister of defendant No.1, denied the

plaint averments. It is specifically contended that the

defendant No.1 was carrying on coconut business and

being in need of money had borrowed money from the

plaintiff who is into money lending business. That on two

RFA No. 100123 of 2015

previous occasions, defendant No.1 had borrowed loan

from the plaintiff and had repaid the same. The plaintiff

used to obtain agreements of sale without possession from

the defendant No.1 as security for the repayment of the

loan and on such repayment, those agreements of sale

were being cancelled. She referred to earlier such

agreements dated 06.03.2010 and 27.03.2011, which

were cancelled on 11.10.2010 and 06.09.2011

respectively. That the present agreement of sale being the

subject matter of suit is the third such agreement entered

into between the plaintiff and defendant No.1 to secure

the loan advanced by the plaintiff and defendant No.1.

That the defendant No.1 was ready to repay Rs.15 lakhs

to the plaintiff. However, since the plaintiff insisted for

payment of heavy interest, defendant No.1 could not

comply with the demand. That the defendant No.1 being

the absolute owner of the suit property, executed and

registered deed of gift dated 30.06.2012 in favour of

defendant No.2 out of his natural love and affection and

RFA No. 100123 of 2015

she has thus become the absolute owner of the suit

property. Hence, sought for dismissal of the suit.

4. Based on the aforesaid pleadings, the Trial

Court framed the following issues:

1. Whether the plaintiff proves that defendant No.1 executed agreement of sale in respect of CTS No. 61 measuring 39.38 sq.mtrs. situated at Mudhol within the boundaries shown in paragraph 2 of the plaint, in favour of plaintiff on 06.09.2011 by receiving earnest money of Rs.15,00,000/- and agreeing to executed registered sale deed after receiving balance consideration amount of Rs.3,00,000/- within one year from the date of execution of agreement of sale?

2. Whether the plaintiff proves that he is ready and willing to perform his part of the contract all along?

3. Whether defendant No.2 proves that the defendant No.1 executed registered agreement of sale on 06.09.2011 in favour of plaintiff for security of loan of Rs.15,00,000/- from the plaintiff?

4. Whether the defendant No.2 further proves that defendant No.1 was ready to pay the loan amount but the plaintiff demanded heavy interest on the loan amount?

RFA No. 100123 of 2015

5. Whether the plaintiff is entitled for alternate relief as prayed for?

6. Whether the plaintiff is entitled for relief of specific performance of the contract as sought for?

7. What decree or order?

5. Plaintiff examined his power of attorney holder

namely Sadashiv as PW1 and additional two witnesses,

Prashant and Sajjad as PWs.2 and 3 and exhibited 7

documents as Exs.P1 to P7. Defendant No.1 examined

himself as DW1 and one Suresh as DW2 and exhibited 4

documents as Exs.D1 to D4. The Trial Court has answered

issue Nos.1, 2, 5 and 6 in the negative, while issue Nos.3

and 4 in the affirmative and consequently dismissed the

suit. Thus, being aggrieved by the same, the plaintiff is

before this Court.

6. Sri.S.B.Doddagoudra, learned counsel for the

appellant reiterating the grounds urged in the appeal

memorandum submitted that:

RFA No. 100123 of 2015

a) the Trial Court grossly erred in dismissing the

suit of the plaintiff despite the fact that defendant

No.1 who is the owner of suit schedule property and

the vendor in the agreement of sale dated

06.09.2011 did not choose to file the written

statement. Defendant No.2 who claims to be the

owner of suit property pursuant to the alleged deed

of gift dated 30.06.2012 had no locus standi to deny

the sale transaction and the terms of agreement

between the plaintiff and defendant No.1. That the

Trial Court failed to appreciate that in the absence of

written statement by the defendant no.1 no value

could be attached to the evidence led in by the

defendant No.1.

b) That despite admission by defendant No.2

regarding execution and registration of the

agreement of sale by defendant No.1 in favour of the

plaintiff and also with regard to the receipt of Rs.15

RFA No. 100123 of 2015

lakhs, the Trial Court grossly erred in dismissing the

suit.

c) That the Trial Court in the presence of

registered agreement of sale erred in relying upon

the oral evidence of the defendants contrary to the

provision of Section 92 of the Evidence Act, 1872.

d) The Trial Court failed to appreciate that the

plaintiff being ready with the balance sale

consideration had issued legal notice dated

16.08.2012 calling upon the defendants to receive

the same and to execute and register the deed of

sale, to which the defendants had neither replied nor

complied with the demand made therein.

e) That the Trial Court grossly erred in accepting

the contention of defendant No.2 with regard to the

alleged demand of heavy interest by the plaintiff on

Rs.15 lakhs, though she is not a party to the

transaction and further erred in declining to grant

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RFA No. 100123 of 2015

even the alternate relief of refund. The Trial Court

has failed to see that the defendants have not shown

the bonafides by refunding the amount atleast by

way of cheque or demand draft. Thus, sought for

allowing of the appeal by decreeing the suit and

setting aside the judgment and decree of dismissal

passed by the Trial Court.

7. Sri. Mrutyunjaya Tata Bangi, learned counsel

for the defendants justifying the judgment and decree

passed by the Trial Court submitted that Exs.D1 to D4 are

the documents which would indisputably establish the fact

that the plaintiff and defendant No.1 have had continuous

loan transactions even prior to entering into the

agreement dated 06.09.2011-Ex.P3. That the instant

transaction was merely a money transaction and

agreement of sale at Ex.P3 was a nominal document

brought into existence for the security of repayment of

loan. That the Trial Court was justified in declining to grant

the relief of specific performance as the plaintiff had failed

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RFA No. 100123 of 2015

to prove his case. That there is no merit in the appeal.

Hence, sought for dismissal of the same.

8. Heard the learned counsel for the parties.

Perused the records.

9. Ex.D1 is a registered agreement of sale entered

into between the plaintiff and defendant No.1 on

29.03.2011 in respect of the very same suit property

being land bearing CTS No.61 measuring 39.38 sq.mtrs for

a total sale consideration of Rs.8 lakhs of which, Rs.6

lakhs is shown to have been paid with balance amount of

Rs.2 lakhs to be paid within 3 years and to execute deed

of sale with delivery of possession of the said property.

Ex.D2 is a deed of cancellation dated 06.09.2011 canceling

the agreement dated 29.03.2011-Ex.D1. Clause 2 at page

2 of Ex.D2 states that the second party therein (who is the

plaintiff herein) being in need of money and not being

interested to continue the sale transaction had received

Rs.6 lakhs from the first party therein (who is the

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RFA No. 100123 of 2015

defendant No.1 herein) by cancelling the said sale

transaction.

10. Similarly, Ex.D3 is a registered agreement of

sale entered into between the plaintiff and the defendant

No.1 on 06.03.2010 in respect of the land bearing CTS

No.1323 measuring 59.63 sq.mtrs for a total sale

consideration of Rs.5 lakhs of which, Rs.4 lakhs is shown

to have been paid with balance amount of Rs.1 lakhs to be

paid within 1 year and to execute deed of sale with

delivery of possession of the said property. Ex.D4 is a

deed of cancellation dated 11.10.2010 canceling the

earlier agreement dated 06.03.2010-Ex.D3. Identical to

that of Ex.D2, even in Ex.D4, in clause 2 of page 2

thereof, there is a mention to the effect that the second

party therein (who is the plaintiff herein) being in need of

money and not being interested to continue the sale

transaction had received Rs.4 lakhs from the first party

therein (who is the defendant No.1 herein) by canceling

the said sale transaction.

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RFA No. 100123 of 2015

11. As rightly taken note of by the Trial Court,

Ex.P2-agreement of sale dated 06.09.2011 subject matter

of the present suit has come into existence simultaneously

with the execution of registration of Ex.D2. The property

subject matter of Ex.P2 is CTS No.61 measuring 39.38

sq.mtrs. and the suit property is also CTS No.61

measuring 39.38 sq.mtrs. There is no whisper of any

nature whatsoever much less an explanation either in the

notice or in the plaint offered by the plaintiff regarding this

simultaneous transaction at Ex.P2 and D2 and previous

transaction referred to in Exs.D1 to D4.

12. The pattern of transaction of payment of

money, though termed as sale consideration and

repayment of the same by cancellation of sale agreements

as seen in Exs.D1 to D4 is similar and identical with the

transaction in Ex.P1 being the subject matter of the suit.

13. When the suit property purportedly agreed to

be sold and purchased between the defendant No.1 and

the plaintiff in terms of Ex.D1, which was cancelled in

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RFA No. 100123 of 2015

terms of Ex.D2 on simultaneously entering into Ex.P1 and

lack of any reference/explanation thereof by the plaintiff

as noted above has constrained the Trial Court, rightly so,

not to accept the case of the plaintiff in exercise of his

discretionary jurisdiction for grant of the relief of specific

performance of the said contract at Ex.P1.

14. That apart, non-appearance of the plaintiff

personally before the Court and seeking to prosecute the

suit through a power of attorney holder who has pleaded

complete ignorance in the cross-examination with regard

to the previous transactions as per Exs.D1 to D4 has

further worsened the case of the plaintiff. Thus, the

contention raised by the defendants in their written

statement with regard to transaction in question being one

to secure the repayment of the loan appears to be

plausible and acceptable under the facts and circumstance

of the matter. The finding of the Trial Court in this regard

warrants no interference.

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RFA No. 100123 of 2015

15. However, as regards rejection of alternate relief

of refund of Rs.15 lakhs, it is seen that the defendants in

unequivocal terms admitted at paragraph 15 of the written

statement regarding receipt of Rs.15 lakhs from the

plaintiff and at paragraph 16 has expressed his readiness

to repay the same. The Trial Court however, though taken

note of the said admission has declined to refund the same

on the premise that "when specific performance of the

contract cannot be granted and Rs.15 lakhs is not the

earnest money, the question of refund of Rs.15 lakhs also

does not arise". This reasoning of the Trial Court is

improper and needs to be interfered with. It is the settled

position law that in suits for specific performance, the

plaintiff is entitled to seek alternate relief in the event the

decree for specific performance cannot be granted for any

reason and once the bargain to sale/purchase of any land

fails, the unsuccessful buyer becomes entitle in law to

claim refund of the earnest money. Besides, in view of

Section 70 of Indian Contract Act, defendant No.1 cannot

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RFA No. 100123 of 2015

be allowed to make unjust enrichment for himself at the

cost of the plaintiff.

16. Admittedly, the plaintiff had paid Rs.15 lakhs in

terms of the agreement at Ex.P1 as sale consideration in

respect of the suit schedule property. It is under the

circumstances referred to above, more particularly the

simultaneous execution and registration of deed of

cancellation dated 06.09.2011 at Ex.D2 and execution and

registration of agreement of sale dated 06.09.2011 at

Ex.P1, the bonafides of the plaintiff in purchasing the suit

schedule property is questioned and consequently his

prayer for grant of specific performance of the contract is

declined. That alone would not lend any credence or

justification in not granting the relief of refund of admitted

amount of Rs.15 lakhs.

17. Defendant No.1 has admittedly received the

sum of Rs.15 lakhs on the date of Ex.P1 and has been

deriving the benefit thereof. Further, defendant No.1 has

purportedly conveyed the suit schedule property in favour

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RFA No. 100123 of 2015

of his sister-defendant No.2 by executing deed of gift

30.06.2012. The plaintiff has filed the present suit seeking

relief against both defendant Nos.1 and 2. In view of the

rejection of relief for specific performance of contract, it is

axiomatic that the defendants be directed to jointly and

severally repay sum of Rs.15 lakhs together with interest

at the rate of 9% per annum from the date of the suit till

realization. In the result, the following:

ORDER

The appeal is partly allowed with costs throughout.

The impugned judgment and order of dismissal of the

suit is hereby set aside.

The suit of the plaintiff is partly allowed. The prayer

for specific performance of contract is dismissed.

The suit is decreed for refund of the earnest money

with interest. Respondent Nos.1 and 2/defendant Nos. 1

and 2 jointly and severally shall pay Rs.15 lakhs to the

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RFA No. 100123 of 2015

plaintiff with interest thereon at the rate of 9% p.a. from

the date of suit till the payment.

The said amount shall be deposited before the Trial

Court within three months from the date of this judgment.

Draw decree accordingly.

SD/-

JUDGE

SD/-

JUDGE JM/KGK