Karnataka High Court
Sri M C Puttaswamy vs Sri S Sridhara Rao S/O Srinivasa ... on 4 January, 2023
Bench: N S Gowda
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RFA No. 2077 of 2006
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF JANUARY, 2023
BEFORE
THE HON'BLE MR JUSTICE N S SANJAY GOWDA
REGULAR FIRST APPEAL NO. 2077 OF 2006 (SP)
BETWEEN:
SRI M C PUTTASWAMY
S/O MASTI GOWDA
AGED ABOUT 61 YEARS,
R/AT NO.8, 11TH MAIN,3RD BLOCK,
JAYANAGAR, BANGALORE 560011.
...APPELLANT
(BY SRI. S NAGARAJA - ADVOCATE)
AND:
SRI S SRIDHARA RAO
S/O SRINIVASA RAO
AGED ABOUT 60 YEARS,
R/AT NEAR N.T.M. SCHOOL,
BATARAYANAPURA,
MYSORE ROAD, BANGALORE 10.
...RESPONDENT
Digitally (BY SRI. B MANJUNATH - ADVOCATE)
signed by
PANKAJA S THIS RFA FILED U/O 41 RULE 1 R/W SEC.96 OF CPC BY
Location: THE ADVOCATE FOR APPELLANT PRAYING THIS HO'BLE COURT
High Court BE PLEASED TO SET ASIDE THE JUDGEMENT AND DECREE DT.
of Karnataka 16.06.2006 PASSED IN O.S.NO.10517/1994 ON THE FILE OF
THE XXVIII ADDL.CITY CIVIL JUDGE, MAYOHALL UNIT,
BANGALORE, AND PASS JUDGMENT AND DECREE FOR
SPECIFIC PERFORMANCE OF SALE AGREEMENT DATED
05.01.1991 BY ALLOWING THIS APPEAL.
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RFA No. 2077 of 2006
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
1. This appeal is by the plaintiff who had instituted the
suit seeking to enforce a registered agreement of sale
dated 5.1.1991. Under this agreement, according to the
plaintiff, the defendant had agreed to sell the suit property
to the plaintiff for a total sale consideration of
Rs.1,00,000/- and he had also paid Rs.91,000/- as
advance. A period of six months had been stipulated for
completing the sale transaction.
2. On 27.3.1992, endorsement was made that the
defendant was not in a position to execute the sale deed in
time and hence, the date for completion of the sale
transaction was extended and fixed as 27.5.1992.
Thereafter, another endorsement was made extending the
time further from 27.5.1992 to 15.10.1992. This
endorsement was made on 18.9.1992 and on that day
while making the endorsement, a sum of Rs.5,000/- was
RFA No. 2077 of 2006
paid as cash by the plaintiff. Thus, as on 18.9.1992, a
total sum of Rs.96,000/- was paid out of the sale
transaction of Rs.1,00,000/-. It was the case of the
plaintiff that the defendant did not abide by his
commitment to execute the sale deed despite issuance of
legal notices and left with no other alternative, the plaintiff
was constrained to file the suit.
3. The defendant contested the suit principally on the
ground that he had not executed agreement of sale but it
was, in fact, a loan transaction. He contended that he had
approached the plaintiff for raising a loan of Rs.75,000/-
on interest since the plaintiff was running a Finance
Institution under the name and style Santhosh Finance
Corporation. He contended that the plaintiff had lent him a
sum of Rs.75,000/- on 8.1.1991 on the condition that the
defendant should pay interest at the rate of 5% per
month. It was contended that in view of the urgent
requirement of money to finalise the purchase of land, he
RFA No. 2077 of 2006
had to accept the exorbitant rate of interest demanded by
plaintiff.
4. It was also contended that at the time of lending
money, the plaintiff had obtained signatures of the
defendant on many documents including on blank stamp
papers and these documents were sought to be misused.
It was also contended that the defendant had repaid a
sum of Rs.48,000/- by paying sums regularly and
therefore, the suit could not be decreed.
5. The Trial Court framed seven issues. After analyzing
the evidence adduced during trial, the Trial Court recorded
a finding that the plaintiff had proved that the agreement
of sale executed on 5.1.1991 and a sum of Rs.90,000/-
had been paid on 5.1.1991 and a further sum of
Rs.5,000/- was paid on 18.9.1992. The Trial Court also
recorded that the plaintiff had proved that he was ready
and willing to perform his part of contract.
RFA No. 2077 of 2006
6. As far as the issue as to whether the transaction
between the plaintiff and the defendant was a loan
transaction, the Trial Court held that the defendant had
failed to prove this issue.
7. However, the Trial Court went on to record a finding
that that the plaintiff was not entitled for relief of
specific performance on the ground that the property
had been sold prior to the filing of the suit itself and the
purchaser had put up a three-storied structure on the
property and the plaintiff had not even impleaded the
subsequent purchaser as a party to the suit. The Trial
Court taking note of this fact concluded that the plaintiff
was not entitled for a decree of specific performance and
was entitled only to refund of the advance amount along
with interest at 6% p.a.
8. Learned counsel for the plaintiff-appellant contends
that when the Trial Court recorded a finding that the
agreement of sale had been proved and the defendant had
RFA No. 2077 of 2006
failed to establish that it was a loan transaction, its refusal
to grant specific performance could not be sustained. He
contended that since 96% of the sale consideration had
been paid, the Trial Court ought to have decreed the suit.
9. In the alternative, learned counsel submitted that the
interest awarded by the Trial Court at the rate of 6% was
improper having regard to the fact that a huge sum of
Rs.96,000/- was paid way back in the year 1991. He
submitted that the defendant having utilised the said
money and also having sold the property, had gained a
double benefit and therefore, interest should have been
awarded at least at the rate of 18% p.a. He also
contended that the Trial Court ought to have also awarded
costs.
10. It is no doubt true that the Trial Court has taken note
of the fact that the agreement of sale was a registered
instrument and the execution of the agreement was also
not seriously disputed by the defendant. The fact that the
RFA No. 2077 of 2006
defendant admitted that there was a loan transaction and
had signed on blank papers at the time of availing of loan,
by itself, proves that the agreement of sale was, in fact,
executed by the defendant.
11. However, the Trial Court has taken the view that the
property in question had been sold to a third party, who,
had in turn, constructed a three storied structure and
therefore, it would be inequitable to grant a decree of
specific performance more so, when the purchaser had not
even been impleaded as a defendant in the suit.
12. In my view, this exercise of equitable discretion by
the Trial Court is just and proper and cannot be found fault
with. The ultimate decision of the trial Court to direct
refund of the money paid by the plaintiff cannot also
therefore be found fault with.
13. However, it cannot be denied that the defendant not
only received money from the plaintiff but at the same
RFA No. 2077 of 2006
time, sold the property in favour of a third party and he
therefore, made an immense profit. In fact he received the
sale consideration twice over in respect of the suit
property. In this view of the matter, the award of 6%
interest on the sum of Rs.96,000/- would be inequitable
and it would be appropriate to award interest at the rate of
12% from the date of the suit as against the interest of
6% awarded by the trial Court.
14. The plaintiff would also be entitled to the costs of the
suit as well as of this appeal.
15. The decree of the Trial Court refusing specific
performance and ordering only refund of the amount paid
by the plaintiff is affirmed and the decree is modified only
in so far as it relates to the rate of interest and payment of
costs. As stated above, the plaintiff will be entitled to
interest on the sum of Rs.96,000/- at the rate of 12%
from the date of the suit till its realisation and the plaintiff
RFA No. 2077 of 2006
will also be entitled to the costs of the suit as well as of
this appeal.
16. The appeal is accordingly, allowed in part.
SD/-
JUDGE
rs
