Karnataka High Court
Sri G R Jagadeesh vs Sri B S Chandrashekaraiah on 19 November, 2024
Author: K.Natarajan
Bench: K.Natarajan
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE K. NATARAJAN
REGULAR FIRST APPEAL NO.14 OF 2014
BETWEEN:
1 . SRI. G. R. JAGADEESH
S/O LATE G.S.RACHAPPA,
AGED ABOUT 61 YEARS,
2 . J. SHRUTHI
D/O SRI. G.R.JAGADEESH,
AGED ABOUT 29 YEARS,
3 . J. DEEPTHI
D/O SRI. G.R.JAGADEESH,
AGED ABOUT 25 YEARS,
ALL ARE R/AT NO.2158,
8TH 'A' MAIN, 'B' BLOCK,
WARD OFFICE ROAD, 2ND STAGE,
RAJAJINAGAR, BANGALORE - 560 010.
...APPELLANTS
(BY SRI. NATARAJA H T., ADVOCATE)
AND:
SRI. B. S. CHANDRASHEKARAIAH
S/O LATE SIDDALINGARADHYA,
AGED ABOUT 58 YEARS,
R/AT MALLESHWARA NAGARA,
ARSIKERE TOWN.
...RESPONDENT
(BY SRI. HARISH KUMAR M C., ADVOCATE FOR C/R)
THIS REGULAR FIRST APPEAL IS FILED UNDER SEC.96(1) OF
CPC., AGAINST THE JUDGMENT AND DECREE DATED 7.10.2013
PASSED IN O.S.NO.11/2010 ON THE FILE OF THE SENIOR CIVIL
JUDGE & JMFC., ARASIKERE, PARTLY DECREEING THE SUIT FOR
DECLARATION, REFUND OF ADVANCE AMOUNT.
2
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 21.10.2024 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
RESERVED FOR ORDERS ON: 21.10.2024
PRONOUNCED ON : 19.11.2024
CORAM: HON'BLE MR JUSTICE K.NATARAJAN
CAV JUDGMENT
This appeal is filed by the appellants-defendants under
Section 96 of CPC for setting aside the judgment and decree passed
by the Senior Civil Judge and JMFC, Arsikere (hereinafter referred
to as 'trial Court') in O.S. No.11/2010 dated 07.10.2013.
2. Heard the arguments of learned Counsel for the appellants
and learned counsel for the respondent.
3. The appellants were the defendants and the respondent
was the plaintiff before the trial Court. The rank of the parties is
retained for the sake of convenience.
4. The case of the plaintiff before the trial Court is that the
plaintiff filed the aforesaid suit for declaration that the agreement of
sale executed by the defendants dated 13.09.2010 in favour of the
plaintiff is unenforceable on account of fraud and misrepresentation
played by the defendants and to decree the suit for refund of the
advance amount of Rs.10,51,950/- with interest at 24% p.a. and
with cost.
5. The further case of the plaintiff is that the defendants told
the plaintiff that they are the owners and are in possession of suit
schedule sites which were situated 40 meters away from the middle
of the National Highway No.206 at Arsikere town and approached
the plaintiff for selling the same. Accordingly, the plaintiff agreed
to purchase the same for the sale consideration of Rs.37 lakhs and
the defendants received the advance amount of Rs.5.00 lakhs by
way of cash on 13.09.2010 and executed the agreement of sale. As
per the terms of the agreement, they agreed to receive Rs.32.00
lakhs at the time of registration. The defendants also agreed that if
any complication arises, they would be responsible to resolve the
complication and agreed to hand over all the documents to the
plaintiff. The defendants also started insisting the plaintiff to pay
the entire sale consideration within 15 days of the agreement. As
such, the plaintiff paid another sum of Rs.5.00 lakhs to the
defendants on 29.09.2010 by cash. A shara was also written on the
agreement of sale in the presence of the witnesses. The
defendants insisted for the full payment. There was some doubt in
the mind of the plaintiff and approached the government officials of
National Highway Authority and he came to know that the suit
schedule property is situated within 40 meters away from the
middle of National Highway No.206. The defendants pressurised
the plaintiff to pay the entire sale consideration and the plaintiff
took one retired surveyor and verified the property and he came to
know that the sites shown by the defendants prior to the agreement
of sale were totally different from the sites mentioned in the
agreement of sale. The sites agreed to be sold by the defendants
were situated within 40 meters from the middle of the National
Highway and therefore, the agreement is unenforceable. The
defendants misappropriated the plaintiff and committed fraud on
him. Hence, filed the suit after issuing legal notice to the
defendants.
6. In pursuance of summons, defendant Nos.1 to 3 appeared
and the written statement filed by defendant No.1 was adopted by
the other defendants. It was contended that the suit was not
maintainable and it was frivolous. It was contended that the
defendants were the owners of the property and they admit the
agreement of sale, receipt of Rs.10,00 lakhs i.e. Rs.5.00 lakhs on
13.09.2010 and another Rs.5.00 lakhs on 29.09.2010 and they
were ready to execute the sale deed. The defendants denied the
fact that they pressurised the plaintiff for further advance and
further denied that the suit property is situated within 40 meters
width from the middle of the National Highway No.206.
7. The defendants specifically contended that the plaintiff was
well aware about the alleged National Highway at the time of
inspection of sites and signing the agreement. Therefore,
conducting the survey through a retired surveyor does not arise.
The plaintiff had taken all precautionary measure before signing the
agreement as per the principle caveat emptor or buyer beware. It
is submitted that the office of the Executive Engineer, National
Highway Division had issued NOC to Smt. Manjula, wife of Sri G.C.
Anandappa and one Parvathamma, wife of Sri Gangadharappa,
whose sites were situated on National Highway No.206 and adjacent
to the sites in question belonging to the defendants for the purpose
of getting sanction plan for putting up the commercial buildings and
the said buildings were completed. The NOC given by the concerned
authorities clearly shows that the property in question is situated
beyond the distance stipulated in the alleged circular. Therefore,
the defendants are not liable to pay the advance amount to the
plaintiff.
8. It is further contended that though the time is stipulated
for completion of transaction for 3 months from the date of
agreement from 13.9.2010 the plaintiff fixed the date of registration
as 25.10.2010 he had got two separate sale deeds already in
respect of separate sites, had obtained demand drafts payable to
the defendants and also towards the registration expenses.
However, the plaintiff made unreasonable demand to reduce the
price by Rs.10 lakhs which was not acceptable by the defendants.
The plaintiff had got issued legal notice on 19.11.2010 which was
suitably replied by the defendant. There is no cause of action to file
the suit. Hence, prayed for dismissing the suit.
9. Based upon the pleadings the trial court framed 3 issues
as under:-
"1) Whether the plaintiff proves that for
the reasons stated in the plaint paras, the
agreement of sale dated: 13.9.2010, entered
into between him and the defendants, in
respect of suit schedule properties, is to be
cancelled?
2) Whether plaintiff is entitled to get
refund of earnest sum of Rs. 10,00,000/- with
interest at 24% p.a. from the defendants,
which was paid by him to the defendants,
towards part payment of the sale
consideration?
3) What decree or order?"
10. In order to prove the contention, the plaintiff examined
as PW1 and also examined 3 witnesses as PW.2 to PW.4 and got
marked 11 documents as per Ex.P1 to P11 and the defendant No.1
himself examined as DW1 he also examined DW.2 and DW.3 and
got marked 6 documents. After hearing the arguments, the trial
court answered the issue No.1 in the affirmative, issue No.2 partly
in the affirmative and decreed the suit directing the defendant to
refund the advance amount of Rs.10 lakhs with 9% interest from
the date of agreement, till realisation. Being aggrieved by the
judgment and decree, the defendants filed this appeal before this
court.
11. Learned counsel for the appellants has strenuously
contended that the plaintiff agreed to sell the schedule property
after verifying the place, the sale shall be complied within 3 months
and the evidence of the defendants was not properly appreciated by
them. There are building and other houses which were constructed
adjacent to the suit schedule property. The authorities have given
permission to construct the house and it does not come within the
40 meters in the middle of the high way, the other houses are
situated. Therefore, the agreement is enforceable but the plaintiff
failed to perform his duty under the contract. The appellant got
issued the legal notice by forfeiting the earnest money. However,
the said documents is not produced.
12. He also contended one Parvathamma obtained the
permission and put up construction of building within 22 meters
from the middle of the highway. Though there was prohibition to
put up construction within 40 meters from the middle of the
Highway, but there are many constructions came up in that area.
Therefore, the agreement is enforceable and the plaintiff was
unable to arrange the fund and avoided the payment of balance sale
consideration. Even though the appellant was ready to execute the
sale deed. Hence, prayed for allowing the appeal.
13. The respondent counsel supported the judgment of the
trial court and contended that the agreement itself is unenforceable
where the defendant trying to sell the property which is situated
within 40 meters from the National Highway NH-206. There is
prohibition for constructing any building by the defendant, hurriedly
pressurising the plaintiff for executing the sale deed and received
Rs.10 lakh as advance amount. Therefore, the plaintiff issued the
legal notice and thereafter filed the suit. The trial court rightly
decreed the suit after appreciating the evidence on record. If at all
some persons constructed the building within the prohibitory area,
the plaintiff cannot take risk for purchasing the same. Therefore,
there is nothing to interfere in the judgment. Hence, prayed for
dismissing the appeal.
14. The learned counsel for the appellants also filed I.A.
No.2/2014 under Order XLI Rule 27(1)(b) of CPC seeking
permission of this Court to produce document i.e. legal notice
issued by the appellants-defendant to the respondent-plaintiff on
16.12.2010 where the same was served on the respondent-plaintiff
both RPAD as well as UCP. If these documents were produced
before the court, the trial Court ought to have passed the judgment
by dismissing the suit and there will not be any order for refund of
the earnest money. The trial Court also stated that though the
defendants taken contention regarding forfeiting the earnest
money, but they have not produced the documents. Therefore, the
said document is necessary for the appellant-defendants to produce
before the Court to support their case. Hence, prayed for allowing
the application.
15. Learned counsel for the respondent-plaintiff has
contended that even if the said document is considered, it will not
help to the defendants as the defendants have already given reply
and they have not forfeited the amount. Therefore, prayed for
dismissing the I.A.
16. Having heard the arguments, perused the records, the
points that arise for my consideration is:
1. Whether, the plaintiff proves that
agreement of sale entered into between
plaintiff and the defendant is unenforceable
and is liable to be cancelled?
2. Whether the plaintiff is entitled for
refund of earnest money?
3. Whether the appellants-defendant
made out a case for production of documents
under Order XLI Rule 27(1)(b) of CPC ?
4. Whether the judgment and decree
passed by the trial court calls for any
interference?
17. Having heard the arguments, perused the records and on
perusal of the same, the case of the plaintiff is that he had entered
into an agreement of sale with the defendant on 13.9.2010 and paid
Rs.5 lakhs on the date of agreement and another Rs.5 lakhs
subsequently on 29.9.2010. The sale consideration was Rs.37 lakhs
and it is contended that after verifying the property, he came to
know that the properties is within 40 meters from the National
Highway - 206 (NH-206). Therefore, the authority will not permit
to construct any building within prohibitory distance of 40 meters.
Therefore, by issuing the notice, he has cancelled the agreement.
The defendant had admitted the agreement of sale and the receipt
of Rs.10 lakhs as earnest money but his contention is that the
plaintiff must have been aware, prior to entering into agreement of
sale for purchasing of the property. He has taken risk to purchase
the same. But he is unable to mobilise the fund, therefore, he has
taken some contention of prohibitory area which is not correct. It is
also contended by the defendant that there are other person
constructed, the building adjacent to suit schedule property, which
falls within 22 meters of the NH-206. Such being the case, the
plaintiff failed to perform his part of contract and hence prayed for
dismissing the suit.
18. On perusal of the record, it is seen that the plaintiff
himself was examined as P.W.1 and he has reiterated, in his
examination in chief, the averments made in the plaint. In the
cross examination, the plaintiff admits that the plaintiff is residing in
Arasikere and he is residing by constructing the house. He also
states that he verified the documents before purchasing the
schedule property. He further admits that there is a TVS show
room situated and a three storied building also situated near the
suit schedule property. He further says that the said building might
have been constructed 40 meters away from the road of the
National Highway. He further denies that all the buildings were
constructed after the expansion of road. Again, he denies that
about 6 months back, a four storied building was constructed
leaving the 3 feet margin within 40 feet away from the middle of
the road of the National Highway. He also admits that
subsequently, the defendants issued notice for forfeiting the earnest
money. He further denies that he had not received the notice
issued by the defendants forfeiting the agreement. However, he
admits that there is interpolation in the agreement of sale, where
the property was 40 meters away from the middle of the National
Highway.
19. Ex.P.1 is agreement of sale entered between the plaintiff
and defendants and there is no dispute in this regard. In the
agreement of sale, at paragraph 2, the last line has been added as
'the property is situated away from the prohibited area of NH 206'.
The appellant-defendants have disputed that it is the interpolation
by the plaintiff himself. However, Ex.P.2-notice is issued by the
plaintiff mentioning that the property is situated within 40 meters
from the middle of the National Highway and the notice was served
on the defendants on 19.11.2010. Ex.P.3 is the reply sent by the
defendants wherein the defendants have accepted that the property
is situated within 40 meters of the middle of the National Highway.
He further admits that Rs.10.00 lakhs has been received by way of
advance and Rs.27.00 lakhs is required to be payable and calling
the plaintiff to pay the balance amount and get the sale deed
executed. Ex.P.4 is the RTC which is also not in dispute. Ex.P.5 is
the copy of alienation issued by the Assistant Commissioner of
Hassan. Ex.P.8 is the NOC issued by the Assistant Executive
Engineer of Highway Department, Hassan, where he has stated that
the said property is situated outside the prohibition area and there
is a prohibition for putting up any construction within 40 meters
from the middle of the National Highway. Ex.P.9 is also the NOC
issued by the Assistant Executive Engineer of Highway Department,
Hassan, which reveals that no construction would be allowed within
40 meters from the middle of the National Highway. Ex.P.10 is the
proceedings of the government issued by the National Highway
Authority for widening the national highway road. Ex.P.11 is the
circular issued by the State Government on 22.12.2005 stating that
no construction would be allowed within 40 meters away from the
middle of the National Highway and within 40 meters away from the
middle of the State Highway. Even no construction would be
allowed on the district main road within 25 meters away from the
middle of the road. These documents reveal that there is
prohibition for construction of any building within 40 meters away
from the middle of the National Highway.
20. The plaintiff also examined P.W.2-an independent witness
which corroborates the evidence of plaintiff regarding the
agreement of sale and the payment of advance amount. P.W.2
says that the property is situated away from NH-206 margin as per
the agreement. There is lengthy cross examination done in respect
of P.W.2 and it is brought in the evidence that there are other
buildings situated near the suit schedule property and TVS hotel
was also situated and the same is admitted by the P.W.2.
21. P.W.3- Range Gowda, the Chief Officer of the Town
Municipality, also deposes that as per the Government Circular,
there cannot be any construction of the building within 40 meters
from the middle of the National Highway. In the cross examination,
this witness denies that there are other buildings within 40 meters
and the sanction plan was given by the same authority at Ex.D.3,
but this witness says that for any building within 40 meters, an
action will be taken to remove the same. However, he has stated
that no such action has been taken.
22. P.W.4-Anantharaju, Assistant Engineer of P.W.D, also has
stated that as per the government order, there shall not be any
building permitted to be constructed within 40 meters away from
the middle of the National Highway. In the cross examination, this
witness admits that Ex.D.5-letter given by National Highway
Authority was given to one of the persons for putting up
construction where the said building is situated within 22 meters of
the National Highway.
23. On looking to the evidence of P.Ws.1 to 4, it is clear that
the suit schedule property is situated within 40 meters away from
the middle of National Highway No.206. The defendant himself
examined and also examined two witnesses contending that some
houses were constructed and a building is also constructed within
40 meters from the middle of the National Highway, and therefore,
it is contended that there is no prohibition for construction on the
suit schedule property. It is further contended that others have put
up construction near the suit schedule property, and thereby, the
defendants are willing to perform their part of contract and hence,
the earnest money was forfeited by them. The contention of the
defendants cannot be acceptable. Once the defendants admit that
the suit schedule property is situated within 40 meters away from
middle of the National Highway and there is prohibition for putting
up construction, the plaintiff is not required to purchase the
property though initially without the knowledge of the same, agreed
to purchase by paying Rs.10.00 lakhs as advance amount. But,
definitely, if any, construction is put up, in future, the National
Highway Authority will take action to remove the building and such
a risk cannot be taken by the plaintiff. Therefore, the plaintiff has
issued notice to defendants to cancel the agreement. The
contention of the defendants is that some of the buildings are
situated near the suit schedule property and permission is given by
some of the officers in the Municipality for putting up construction,
but that cannot be a ground to say that the plaintiff should take the
risk of purchasing the property which is situated within 40 meters
from the middle of the National Highway.
24. Therefore, the plaintiff though entered into the
agreement of sale with the defendants and though the defendants
have taken the contention that they have clear title over the
schedule property, but the property is situated within 40 meters
from the middle of the National Highway No.206. The Division
Bench of this Court in the case of DAYANANDA B. SHETTY Vs.
EXECUTIVE ENGINEER, NATIONAL HIGHWAY AUTHORITY
AND OTHERS in W.P.36314/2019 (LB-RES) PIL decided on
25.08.2021, has held that there shall not be any construction within
the area of 40 meters from the centre of the road being National
Highway. The Division Bench has further referred the State
Government circular regarding 'no construction zone' in respect of
the National Highway upto 40 meters from the middle of the
National Highway.
25. Therefore, even if it is purchased by the plaintiff, the
highway authorities may take action to demolish the building on the
property and therefore, the agreement is not enforceable and the
defendants have no clear title over the property. Therefore, I hold
that the plaintiff has proved that the agreement is not enforceable
and liable to be cancelled.
26. Re : Point Nos.2 and 3:
In view of the observation made by this Court, the plaintiff is
able to prove that suit schedule property is not amenable for
construction and the defendants have no clear title and the plaintiff
will put in to trouble in future, since the property is situated within
40 meters from the middle of the National Highway, As per the
evidence of P.Ws.3 and 4, in future, the National Highway Authority
will take action for demolition of construction on the schedule
property. Such being the case, after knowing the information, the
plaintiff has rightly issued the legal notice to the defendants as per
Ex.P.2.
27. The learned counsel for the appellants-defendants has
filed an I.A.No.2/14 under Order XLI Rule 27(1)(b) of CPC along
with the legal notice issued to the appellants-defendant on
16.12.2010, but the respondent-plaintiff issued the legal notice on
19.11.2010 and the appellants-defendant also issued reply notice to
the plaintiff's counsel as per Ex.P.3 on 27.11.2010 and the
defendants have undertaken to execute the sale deed and they
have never forfeited the advance amount and cancelled the
contract. But, subsequently, on 16.12.2010, the defendants issued
the notice for cancelling and forfeiting the earnest money and after
receiving the notice by the appellants-defendant, the respondent-
plaintiff filed the suit before the Court. Such being the case, even if
the document of the appellant-defendants is taken into
consideration, the legal notice dated 16.12.2010 will not help the
appellants' case. Therefore, the provisions under Order XLI Rule
27(1)(b) of CPC and the documents produced therein will not come
to the aid of the appellants. On the other hand, the agreement itself
is unenforceable and therefore, the said agreement shall be
cancelled and the appellants are entitled for the refund of the
advance amount of Rs.10.00 lakhs.
28. The trial Court after considering the evidence on record
has rightly held that the agreement is not enforceable in law and
has rightly decreed the suit. Though the learned counsel appellant-
defendants has relied upon the judgment of the Hon'ble Supreme
Court in the case of SATISH BATRA Vs. SUDHIR RAWAL in C.A.
No.7588/2012 decided on 18.10.2012, it will not come to the aid
of the appellants' case. However, the trial Court has awarded
interest at 9% p.a. on the earnest money. There is no term in the
agreement of sale for repaying the amount with interest at either
24% or 9% p.a. Such being the case, the appellants are required
to pay only 6% interest p.a. on the decretal amount instead of the
interest at 9% p.a. awarded by the trial Court from the date of filing
the suit i.e. 18.12.2010, instead of, from the date of agreement.
Therefore, the judgment and decree passed by the trial Court is
liable to be modified accordingly.
29. In the result, I pass the following order:
(i) The I.A.No.2/14 filed by the appellants under Order XLI
Rule 27(1)(b) of CPC is dismissed.
(ii) Consequently, the appeal filed by the appellant-
defendants is allowed in part.
(iii) The Trial Court has already released the amount to
respondent-plaintiff and permitted to deposit the interest at the rate
of 6% p.a. from the date of filing the suit, within two months.
(iv) Parties shall bear their own costs.
Sd/-
(K.NATARAJAN)
JUDGE
CS/AKV
CT:SK
