Karnataka High Court
T Y Udayakumar vs Nagaraju on 15 April, 2024
Author: M.G.S. Kamal
Bench: M.G.S. Kamal
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RSA No. 931 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF APRIL, 2024
BEFORE
THE HON'BLE MR JUSTICE M.G.S. KAMAL
REGULAR SECOND APPEAL NO. 931 OF 2021 (PAR)
BETWEEN:
T Y UDAYAKUMAR
S/O N. YEDIYURAPPA
AGED ABOUT 51 YEARS
R/AT KUVEMPUNAGAR
TUMKUR CITY - 572 101.
...APPELLANT
(BY SRI. SAMPATH A.,ADVOCATE)
AND:
1. NAGARAJU
S/O G P NATARAJ
AGED ABOUT 40 YEARS
Digitally signed R/AT GANDHINAGAR
by SUMA B N EXTENSION,
Location: High TUMKUR CITY - 572 101.
Court of
Karnataka
2. S.T. RAJANNA
S/O T H THIMMAIAH
AGED ABOUT 40 YEARS
R/AT OPP TO POST OFFICE
BHEEMASANDRA,
TUMKUR CITY - 572 101.
3. LAKSHMINARASIMHA MURTHY
S/O CHELUVAIAH SHETTY
AGED ABOUT 47 YEARS
R/AT VIDHYANAGAR EXTENSION
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RSA No. 931 of 2021
TUMKUR CITY - 572 101.
...RESPONDENTS
(BY SRI. G.S. PRASANNA KUMAR, ADVOCATE FOR C/R1;
NOTICE TO R2 & R3 D/W V/O DATED:25.05.2022)
THIS RSA IS FILED UNDER SECTION 100 OF CPC
AGAINST THE JUDGMENT AND DECREE DATED 25.08.2021
PASSED IN R.A.No.251/2019 ON THE FILE OF THE VI
ADDITIONAL DISTRICT AND SESSIONS JUDGE, TUMAKURU,
DISMISSING THE APPEAL AND CONFIRMING THE ORDER
DATED 16.10.2019 PASSED ON IA No.IV IN O.S.No.477/2017
ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE AND
CJM, TUMAKURU, ALLOWING THE IA No.IV FILED UNDER
ORDER VII RULE 11(a), (c) AND (d) R/W SEC.151 OF CPC FOR
REJECTION OF PLAINT.
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is by the plaintiff No.1 aggrieved by the
judgment and decree dated 16.10.2019 passed in
O.S.No.477/2017 on the file of Additional Senior Civil
Judge and CJM, Tumakuru, (hereinafter referred to as
'Trial Court' for short) which is confirmed by the judgment
and order dated 25.08.2021 passed in R.A.No.251/2019
on the file of VI Additional District and Sessions Judge,
Tumakuru (hereinafter referred to as 'First Appellate Court'
for short).
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2. The above suit is filed by the plaintiffs seeking
declaration that plaintiff No.1 is entitled for 33.3% and
plaintiff No.2 is entitled for 16.7% of share in the schedule
property and consequently to direct the defendants to
effect partition and separate possession of their respective
share in the schedule property.
3. Schedule property consisting of following two
items;
1. The property bearing Sy. No. 11/2F1A2, Re-
Sy.No.11/3, measuring 1 acre 02 guntas of
converted land, situated at Belagumba Grama,
Kasaba Hobli, Tumakuru Taluk and bounded as
follows:-
East by : Joint Hissa-4,
West by : Joint Hissa-2F1A2,
North by : Joint Hissa-2F1A3,
South by : The Property in between the
joint Sy.No.8, 9.
2. The property bearing Sy.No.11/2F1A2, Re-
Sy.No.11/4, measuring 1 acre 02 guntas of
converted land, situated at Belagumba Grama,
Kasaba Hobli, Tumakuru Taluk and bounded as
follows:-
East by : Joint Hissa-2F1A3,
West by : Joint Hissa-3,
North by Joint Hissa-2F1A3,
South by : The Property in between the
joint Sy.No.9.
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4. The case of the plaintiffs is that plaintiffs and
defendants are close acquaintance for several years and
having financial transactions with each other and as such
had made investments in developing immovable properties
by forming residential layouts. That in furtherance to their
business objects, they decided to purchase certain lands.
Accordingly, they had jointly invested in suit schedule
immovable properties bearing Sy.No.11/2-F1A2, Re-
survey No.11/3, Re-survey No.11/4 totally measuring 2
Acres 4 guntas at Belagumba Grama, Tumkuru Taluk.
However, sale deed dated 02.05.2016 in respect of suit
schedule property was executed by vendors in the name of
defendant No.1, as defendant No.1 was the only person
who was eligible to hold suit schedule property. It is the
further contention of the plaintiffs that said sale deed was
executed in the name of the defendant No.1 on trust
believing the cordial relationship which existed amongst
them. It is further contended subsequently plaintiffs and
defendants had entered into an agreement on 03.05.2016
styled as 'sale agreement'. It is further pleaded that in
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terms of said agreement dated 03.05.2016 it was agreed
between plaintiffs and defendant No.1 that plaintiff No.1
would be entitled for 33.3% and plaintiff No.2 and
defendant No.2 together entitled for 33.4% and defendant
No.1 would be entitled for 33.3% of the investment
returns in the aforesaid property. Since defendants did not
keep up their promise and assurance in complying with the
terms of said sale agreement dated 03.05.2016 plaintiffs
filed the above suit.
5. Written statement was filed by the defendants
denying the plaint averments defendant No.1 filed an
application under Order 7 Rule 11 (a) (c) and (d) r/w
Section 151 of CPC seeking rejection of the plaint as the
same is barred by law and not maintainable for want of
cause of action.
6. Trial Court framed issues, however took up the
matter for consideration of application in I.A.No.IV filed by
the defendant No.1.
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7. In the said application it is contended that the
plaintiff was required to establish existence of enforceable
right in order to seek declaration and consequential relief
of partition in the suit. That the suit property is the self
acquired property of defendant No.1 and the plaintiffs are
not related to him. That the agreement dated 03.05.2016
based on which relief is sought is not signed by defendant
No.1 and signature found thereon is forged. That the said
agreement does not create any right in favour of the
plaintiff to seek the relief as sought for. That the right in
respect of immovable property can be acquired only under
a registered document. That relief sought is based on an
unregistered document/insufficiently stamped is not
maintainable. As such there is no cause of action. The
other ground urged in the application is the suit was
barred under the provisions of The Prohibition of Benami
Property Transactions Act, 1988 (for short `Act, 1988').
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8. The trial Court accepting the contention raised in
the application in I.A.No.IV as noted above rejected the
plaint by holding that there was no cause of action and
that the same is barred by law namely provisions of the
Act, 1988.
9. Aggrieved by the same plaintiffs preferred
R.A.No.251/2019 before the first Appellate Court. By the
impugned order dated 25.08.2021 First Appellate Court
confirmed the reasoning and conclusion arrived at by the
trial Court and consequently dismissed the appeal.
Aggrieved by the same appellant/plaintiff No.1 is before
this Court.
10. This Court by order dated 04.04.2022 admitted
the above appeal to consider the following substantial
questions of law:
"i) Whether the trial Court having framed Additional
Issue No.2 and having heard the rival parties on
Additional Issue No.2, erred in rejecting the plaint
by applying provisions of Order VII Rule 11 of CPC
(a, c & d).
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ii) Whether the Court below while examining the
scope of rejection of plaint under Order VI Rule 11
of CPC, was justified in recording a finding that, the
plaintiff has not offered satisfactory explanation in
regard to execution of the alleged agreement dated
03.05.2016, on which the plaintiff is placing
reliance and the said finding prima facie violates
the first principle that while considering rejection of
plaint, it is trite that only pleadings in the plaint are
germane and the Court cannot take cognizance of
any materials or pleadings placed by defendant".
11. Learned counsel for the appellant reiterating the
grounds urged in the memorandum of appeal submitted
that the trial Court and first Appellate Court have
misconstrued and misread the contents of the plaint. In
that he submits that the very premise on which the suit is
filed is that the plaintiffs and defendants have jointly
invested into the suit property and that they were entitled
for specific shares in the suit property which understanding
was reduced into writing in terms of document styled as
"agreement of sale". Thus, he submits that transaction in
question is in the nature of partnership amongst the
parties to which they are entitled for specific share. It is
his further case that nowhere in the plaint is there a
mention of transaction being a Benami transaction. He
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further submits that a specific averment is made in
paragraph 5 of the plaint to the effect that the suit
schedule property was purchased in the name of the
defendant No.1 only on "trust" and that defendant No.1
was the only eligible person to hold the property. Thus he
submits that provisions of Act, 1988 would not apply to the
instant case which the trial Court and First Appellate Court
have lost sight of. He further submits even if it is a
transaction falling under the Act, 1988 same requires to be
adjudicated after conducting trial and parties leading
evidence in that regard.
12. Referring to the reasoning arrived at by the trial
Court with regard to validity and otherwise of the
agreement dated 03.05.2016, learned counsel submits
that in an application for consideration of rejection of plaint
under Order VII Rule 11 CPC the trial Court and First
Appellate Court could have gone into merits or otherwise
of the said document. Insufficiency of stamp and
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requirement of registration are not the grounds for
rejection of the plaint.
13. Thus he submits trial Court and First Appellate
Court have committed serious illegality and irregularity in
rejecting the plaint even while adverting to the merits of
the case of the plaintiff. Hence, seeks for allowing of the
appeal and answering substantial question of law in favour
of the plaintiff. Learned counsel for the appellant relied
upon the following Judgments:
1. NEERU DHIR Vs. KAMAL KISHORE DHIR reported
in AIRONLINE 2020 DEL 667
2. PAWAN KUMAR Vs. BABULAL SINCE DECEASED
THROUGH LRS reported in AIR 2019 SC (SUPP) 116
3. N. RUDRAPPA Vs. R. SIDDAMMA IN RSA
No.5247/2009, DD DATE: 20.08.2016.
4. SMT. LAKSHMI Vs. SRI. M. VENKATARAMANAIAH
AND ANR IN RSA NO.1273/2009, DD DATE:
21.01.2013.
5. GURUSWAMI GANGA NAIKAR Vs. MS. VAISHALI
MOHAN KSHIRSAGAR AND OTHERS reported in
2019(3) ABR 577.
14. Per contra, learned counsel for respondents-
defendants justifying the impugned Judgment and decree
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passed by the trial Court and First Appellate Court submits
that admittedly plaintiffs and defendants had entered into
agreement of sale dated 03.05.2016. That as per Section
54 of the Transfer of Property Act, an agreement of sale
does not create any right, title and interest in favour of the
purchaser and as such the very relief sought for is one for
declaration and in the absence of pre-existing right in
terms of agreement of sale, suit itself is not maintainable
as there is no cause of action for the same, which is rightly
taken note of and appreciated by trial Court and First
Appellate Court warranting no interference at the hands of
this Court.
15. As regards bar contained under the Act, 1988 is
concerned learned counsel submits that friendship which
admittedly existed between plaintiffs and defendants
cannot be treated as "trust" to save transaction from the
bar contained under Section 4 of the Act, 1988. He further
brings to the notice of this Court the reasons assigned by
the trial Court with regard to cause of action in that he
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points out that the trial Court while adverting to document
dated 03.05.2016 has come to the conclusion that the
plaintiffs are not entitled to claim any right, title and
interest over the suit property based on the said
document. Thus, he submits trial Court and First Appellate
Court have rightly appreciated the plaint and documents
enclosed to the plaint and rejected the plaint for want of
cause of action and having barred under the provisions of
the Act, 1988 and no interference is required. Learned
counsel for respondents relied upon the following
Judgments:
1. SHRI. CHARANJEET SINGH & ANR Vs. SHRI
HARVINDER SINGH & ANR., in CS(OS)486/2018
DECIDED ON 06.07.2023.
2. DAHIBEN Vs. ARVINDBHAI KALYANJI BHANUSALI
(GAJRA) reported in (2020) 7 SCC 366.
3. T. ARVINDANDANDAM Vs. T.V. SATYAPAL AND
OTHERS reported in (1977) 4 SCC 467.
4. RAGHAVENDRA SHARAN SINGH Vs. RAM
PRASANNA SINGH reported in (2020) 16 SCC 601.
5. KULDEEP SINGH PATHANIA Vs. BIKRAM SINGH
JARYAL reported in (2017) 5 SCC 345.
16. Heard and perused the records.
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17. The admitted facts of the matter are that suit
property has been purchased under the deed of sale dated
02.05.2016 in the name of defendant No.1. The claim of
the plaintiffs is that, they and the defendants had jointly
invested for the purpose of purchase of the suit property
and that the transaction is one of a partnership. That the
deed of sale was executed in the name of defendant No.1
for and on behalf of the plaintiffs on trust considering their
relationship, as the defendant No.1 at the relevant point of
time was the only eligible person to have the deed of sale
executed and hold the property. It is further case of the
plaintiffs that by agreement dated 03.05.2016 though
styled as agreement of sale the parties had specifically
agreed that the plaintiff No.1 and defendant No.1 would be
entitled for 33.3% each and plaintiff No.2 and defendant
No.2 together would be entitled to 33.4% in the proceeds
of the property or for the share in the property as the case
may be. It is based on these two elementary pleadings
the suit is filed seeking declaration as above.
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18. It is settled position of law that for the purpose
of considering an application seeking rejection of plaint, it
is only bare reading of averments of the plaint alone to be
seen and nothing else. Not even a whisper in the written
statement. As already noted above plaintiffs at paragraph
5 of the plaint have averred as under:
"The plaintiffs submit that, while purchasing the
schedule property, among the plaintiffs and the
defendants, the defendant No.1 was only the
person, eligible to hold the land. The plaintiffs and
the defendants by believing the cordial relationship
among them and on trust, have obliged to register
the Sale Deed in the name of the 1st defendant,
even though they have invested the amount to
purchase the schedule property. However, the
mutual understanding of the plaintiffs and the
defendants, which was arrived before purchasing of
the property, was reduced into writing on
03.05.2016 styled as sale Agreement with an
intention to avoid confusion and also the
complications in future".
19. Further at paragraphs 6 and 7 of the plaint,
plaintiffs have pleaded as under:
"6. The plaintiffs submit that, as per the mutual
understanding of both the plaintiffs and the
defendants, the Agreement dated 03.05.2016 was
came into existence. As per the said Agreement the
investment made by the plaintiffs and the defendants
as detailed hereunder:
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1st plaintiff - 33.3%
2nd plaintiff and the 2nd defendant - 33.4%
1st defendant - 33.3%
7. The plaintiffs submit that, by virtue of the
Agreement dated 3.5.2016, which came into
existence in consequent to the Sale Deed dated
2.5.2016, which is based on the mutual
understanding of both the plaintiffs and the
defendants, joint interest, title and right has been
created over the schedule property. The Agreement
dated 3.5.2016 executed among the plaintiffs and
the defendants are in force and the same is binding
on all the parties."
20. The averments in the plaint as noted above would
indicate that the plaintiffs have claimed that the suit
property was purchased in the name of defendant No.1
upon trust by jointly making investment each being
entitled for specified share and their understanding was
reduced into writing in terms of agreement dated
03.05.2016.
21. As rightly contended by the learned counsel for
the appellant, it is the defendants who have raised the
ground of maintainability of the suit in view of prohibition
contained under Section 4 of the Act, 1988.
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22. Relevant at this juncture to refer to the definition
of "Benami Transaction" as found in Section 2(9)(A), (b)
(ii) which reads as under:
"2.(9) "benami transaction" means,--
(A) a transaction or an arrangement--
(a) where a property is transferred to, or is held by,
a person, and the consideration for such property
has been provided, or paid by, another person; and
(b) the property is held for the immediate or future
benefit, direct or indirect, of the person who has
provided the consideration,
except when the property is held by--
(i) xxxx
(ii) a person standing in a fiduciary capacity for the
benefit of another person towards whom he stands
in such capacity and includes a trustee, executor,
partner, director of a company, a depository or a
participant as an agent of a depository under the
Depositories Act, 1996 (22 of 1996) and any other
person as may be notified by the Central
Government for this purpose;
23. Thus, even if the plea contained in the plaint as
noted above falls within the definition of Benami
transaction, whether the same is barred or falls within the
exception of the provisions contained in the Act requires to
be tried and adjudicated while leading evidence and the
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same in the considered view of this Court cannot be a
ground for rejection of plaint.
24. Apex Court in the case of Mangathai Ammal
(died) through Legal representatives and ors Vs
Rajeshwari and ors reported in (2020)17 SCC 496 at
paragraph 8 has held as under:
"8. While considering the issue involved in the present
appeal viz. whether the transactions/Sale Deeds in favour
of defendant no.1 can be said to be benami transactions
or not, the law on the benami transactions is required to
be considered and few decisions of this Court on the
aforesaid are required to be referred to.
8.1 In the case of Jaydayal Poddar Vs Bibi Hazra, [(1974)
1 SCC 3] it is specifically observed and held by this Court
that the burden of proving that a particular sale is benami
and the apparent purchaser is not the real owner, always
rests on the person asserting it to be sold. It is further
observed that this burden has to be strictly discharged by
adducing legal evidence of a definite character which
would either directly prove the fact of the benami
transaction or establish circumstances unerringly and
reasonably raising an interference of that fact. In
paragraph 6 of the aforesaid decision, this Court has
observed and held as under :
"6. "It is well settled that the burden of proving
that a particular sale is benami and the apparent
purchaser is not the real owner, always rests on
the person asserting it to be so. This burden has
to be strictly discharged by adducing legal
evidence of a definite character which would
either directly prove the fact of benami or
establish circumstances unerringly and reasonably
raising an inference of that fact. The essence of a
benami is the intention of the party or parties
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concerned; and not unoften, such intention is
shrouded in a thick veil which cannot be easily
pierced through. But such difficulties do not
relieve the person asserting the transaction to be
benami of any part of the serious onus that rests
on him; nor justify the acceptance of mere
conjectures or surmises, as a substitute for proof.
The reason is that a deed is a solemn document
prepared and executed after considerable
deliberation, and the person expressly shown as
the purchaser or transferee in the deed, starts
with the initial presumption in his favour that the
apparent state of affairs is the real state of
affairs. Though the question whether a particular
sale is benami or not, is largely one of fact, and
for determining this question, no absolute
formulae or acid tests, uniformly applicable in all
situations, can be laid down; yet in weighing the
probabilities and for gathering the relevant
indicia, the courts are usually guided by these
circumstances:(1) the source from which the
purchase money came; (2) the nature and
possession of the property, after the purchase;
(3) motive, if any, for giving the transaction a
benami colour; (4) the position of the parties and
the relationship if any, between the claimant and
the alleged benamidar; (5) the custody of the title
deeds after the sale and (6) the conduct of the
parties concerned in dealing with the property
after the sale."
25. Thus, even if it is to be considered as a Benami
transaction same requires full-fledged trial and
adjudication thereon. In the instant case as noted above
plaintiff claims that the property was purchased in the
name of defendant No.1 as a Trustee which was subject to
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proof, falls within the exception of the definition of Benami
transaction.
26. Further as regards the cause of action is
concerned the trial Court at paragraphs 25 and 26 of the
Judgment appears to have adverted to the merits of the
case. Apart from dealing with admissibility of the
document the trial Court has gone into merits of the
contention of the plaintiffs and the defendants with regard
to reasons assigned by the plaintiffs for purchase of the
property in the name of defendant No.1 and has found the
same unacceptable and unsatisfactory. The trial Court has
further observed that the plaintiffs have not explained
proper execution of document/agreement 'PÀæAiÀÄzÀ M¥ÀàAzÀ PÀgÁgÀÄ
¥ÀvÀæ' dated 03.05.2016 and that the plaintiffs are not
entitled to claim any right, title and interest over the
schedule property based on the said document.
27. This under the circumstances of the matter
cannot be considered to be a case justifying the rejection
of plaint under Order VII Rule 11 CPC. The trial Court in
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the considered view of this Court has adjudicated the
rights of the parties by holding that they are not entitled
for the relief without even subjecting parties to trial or
subjecting documents for scrutiny in evidence. Such
procedure is not contemplated under Order VII Rule 11
CPC. Though several decisions are relied upon by the
learned counsel for appellant and respondents there
cannot be any dispute with regard to principles enunciated
therein.
28. In that view of the matter, substantial questions
of law are answered accordingly. Trial Court and First
Appellate Court have thus erred in rejecting the plaint by
going into the merits of the case contrary to the settled
principles of law that only plaint averments are to be
looked at and not the defence statement.
Accordingly, appeal is allowed.
Judgment and decree dated 16.10.2019 passed in
O.S.No.477/2017 by the trial Court and Judgment and
order dated 25.08.2021 passed in R.A.No.251/2019 by the
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First Appellate Court are set aside. Plaint is restored to its
original file. Matter is remitted to trial Court. Trial Court
shall proceed from the stage where it was before passing
the impugned order and dispose of the matter on merits.
All contentions are left open.
Considering the matter is pending consideration since
the year 2017 the trial Court shall endeavour to dispose of
the matter as expeditiously as possible within an outer
limit of one year from the date of receipt of certified copy
of this order.
Parties shall co-operate for expeditious disposal of
the matter. Since the parties are represented through
their respective learned counsel before this Court, they
shall appear before the trial Court on 05.06.2024 without
waiting for any further notice.
Sd/-
JUDGE
RU/SBN
