Karnataka High Court
Karnataka State Financial Corporation vs Venkataraman Radhakrishnan on 3 June, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF JUNE, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE RAJESH RAI K
REGULAR FIRST APPEAL NO. 457 OF 2010 (DEC-INJ)
BETWEEN:
KARNATAKA STATE FINANCIAL CORPORATION
KSFC BHAVAN, No.1/1, THIMMAIAH ROAD
NEAR CANTONMENT RAILWAY STATION
BENGALURU-52
...APPELLANT
(BY SRI.GURURAJ JOSHI, ADVOCATE)
AND:
1. VENKATARAMAN RADHAKRISHNAN
S/O LATE N. RADHAKRISHNAN
R/AT. NEW YORK,
REP. BY HIS GPA HOLDER
N.R. BALAKRISHNAN
S/O LATE N. RADHAKRISHNAN
R/AT No.98, 4TH MAIN, 1ST CROSS
HAL 3RD STAGE, BENGALURU-75
2. MANMOHAN ROLLER FLOUR MILLS (P) LTD.
REGD. OFFICE AT No.630/34
JANATANAGAR, LUDHIANA
PUNJAB STATE
REP. BY SMT. MANMOHAN KOUR
W/O LATE PRATAP SINGH DARDI
No.4, ABDUL HAFEEZ ROAD
COX TOWN, BENGALURU-05
3. PRATAP SINGH DARDI
SINCE DEAD, REP. BY HIS LRS
a) SMT. MANMOHAN KOUR
W/O PRATAP SINGH DARDI
-
2
AGED ABOUT 68 YEARS
No.4, ABDUL HAFEEZ ROAD
COX TOWN, BENGALURU-05
b) JANENDAR SINGH
S/O PRATAP SINGH DARDI
AGED ABOUT 43 YEARS
No.98, HAL III STAGE
INDIRANAGAR, BENGALURU-38
c) JASWINDER SINGH
S/O PRATAP SINGH DARDI
AGED MAJOR
No.98, HAL III STAGE
INDIRANAGAR
BENGALURU-38
4. SMT. MANMOHAN KOUR
AGED ABOUT 68 YEARS
W/O LATE PRATAP SINGH DARDI
No.4, ABDUL HAFEEZ ROAD
COX TOWN, BENGALURU-05
5. JANENDAR SINGH
S/O PRATAP SINGH DARDI
AGED ABOUT 43 YEARS
No.98, HAL III STAGE
INDIRANGAR, BENGALURU-38
6. JASWINDER SINGH
S/O PRATAP SINGH DARDI
No.98, HAL III STAGE
INDIRANAGAR, BENGALURU-38
...RESPONDENTS
(BY SRI. NATARAJU T., ADV. FOR R1;
VIDE ORDER DATED 28.07.2011
NOTICE TO R2-R6 ARE DISPENSED WITH)
THIS RFA IS FILED UNDER SECTION 96 OF CPC AGAINST
THE JUDGMENT AND DECREE DATED 08.12.2009 PASSED IN
O.S.No.1024/2002 ON THE FILE OF THE IX-ADDL. CITY CIVIL
AND SESSIONS JUDGE, BENGALURU (CCH-5), DECREEING THE
SUIT FOR DECLARATION AND PERMANENT INJUNCTION.
-
3
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 21.03.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
HON'BLE MR. JUSTICE RAJESH RAI K
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)
The defendant No.6 is before this Court in this appeal,
assailing the legality and correctness of the judgment and
decree dated 08.12.2009, passed in O.S.No.1024/2002 on
the file of IX Additional City Civil and Sessions Judge at
Bengaluru (hereinafter referred to as 'the trial Court' for
short).
2. We have heard Shri. Gururaj Joshi, learned
counsel appearing for the appellant and Shri. Nataraju T,
learned counsel appearing for respondent No.1.
3. For the sake of convenience, the parties are
referred to as per the rankings before the trial Court.
-
4. Brief facts of the case are as follows:-
The plaintiff/respondent No.1 instituted
O.S.No.1024/2002 for declaration that the mortgage created
by defendant No.5/respondent No.6 herein- Jaswinder Singh
in respect of defendant No.6 - Karnataka State Financial
Corporation ('KSFC' for short) is invalid and not binding
upon him and the schedule property and also sought for
permanent injunction.
The property in question was initially allotted by the
Bangalore Development Authority ('BDA' for short) to
defendant No.5. The defendant No.5 constructed a building
comprising of ground and first floor on the allotted site.
Subsequently, on 10.01.1994, the BDA executed an
absolute sale deed in favour of defendant No.5. On
10.02.1994, the plaintiff purchased the first floor of the
property in question from defendant No.5 through a
registered sale deed for valid consideration. The ground
floor was purchased by the plaintiff's brother - Jaikumar
Radhakrishnan for a valid sale consideration of
Rs.7,50,000/- and later, the same was sold to the plaintiff
-
for a consideration of Rs.9,00,000/- through a registered
sale deed dated 15.06.1995. The khata has been duly
transferred to the plaintiff's name. The plaintiff has been in
peaceful possession and enjoyment of the property through
the aforementioned sale deed.
On 05.11.1999, an individual, claiming to be an officer
of defendant No.6, approached the plaintiff's brother and
informed him that defendant No.1 had offered the schedule
property as collateral security for the loan advanced to
defendant No.1, creating a mortgage in favour of defendant
No.6 through deposit of title deeds. It was further revealed
that defendants No.1 and 5 had failed to repay the loan,
prompting initiation of proceedings under Section 31(1)(a)
of the State Financial Corporation Act, 1951 ('the SFC Act,
1951' for short). The plaintiff contends that the mortgage
created by defendant No.5 is illegal, invalid and constitutes
fraud upon the plaintiff, as the defendant No.5 had explicitly
undertaken at the time of allotment, not to mortgage the
property except to certain institutions like the Government
-
or Banks and that too, for the purpose of obtaining loans for
construction.
The plaintiff claims that the action of defendant No.5
amounts to fraudulent conduct and that the mortgage,
having been created without plaintiff's knowledge or
consent, is void. The plaintiff sought a decree to protect his
rightful ownership and possession of the schedule property.
The plaintiff also prayed for a declaration that the mortgage
is invalid and that the title to the property remains
unaffected by the alleged action of defendant No.5.
5. The trial Court based on the pleadings, framed
the following issues for its consideration:-
i. Whether the plaintiff proves that the
mortgage created by the 5th defendant in
favour of 6th defendant is invalid and not
binding upon him?
ii. Whether the plaintiff is entitled to the
declaration sought for?
iii. Whether the plaintiff is entitled to the
permanent injunction sought for?
-
6. In order to substantiate his claim, the plaintiff
examined himself as PW-1 and got marked 15 documents as
Exs.P1 to P15. On the other hand, on behalf of defendant
No.6, one Sheik Moula, Deputy Manager, KSFC was
examined as DW-1 and in support of its defense, marked
the documents as Ex.D1 to Ex.D17.
7. Based on the pleadings, oral evidence and
documentary evidence, the trial Court decreed the suit with
costs. The mortgage of the schedule property created by
defendant No.5 in favour of defendant No.6 was declared
invalid and not binding on the plaintiff and the schedule
property. Defendant No.6 was restrained by means of a
decree of permanent injunction from selling the schedule
property u/s. 31(1)(a) of SFC Act, 1951, by enforcing the
mortgage.
8. It is the case of defendant No.6 that the plaintiff
had previously filed a suit in O.S.No.16407/1999 before the
Additional City Civil Judge, Mayo Hall, Bangalore, on
20.11.1999. After service of notice, defendant No.6
contested the suit and the plaintiff, realizing his case was
-
without merit, filed a memo for withdrawal on 14.06.2000.
No liberty was granted to file a fresh suit. As such, the suit
filed herein is barred by the principle of res judicata and the
plaintiff's false affidavit regarding non-filing of the earlier
suit further substantiates that this suit should be dismissed
with exemplary costs.
9. Defendant No.6 further submits that defendant
No.5 - Shri Jaswinder Singh is one of the Directors of the
Company which borrowed a loan, securing the same with
properties including the suit schedule property. On
17.05.1989, defendant No.5 executed an agreement and
also recorded memorandum of entry, offering the property
as collateral security for the loan obtained by defendant
No.1 - Company. It is contended that agreements were also
executed on 12.12.1988, 28.08.1988 and 04.06.1991
securing the loan with suit schedule property on the basis of
a permission granted by the BDA on 30.06.1987. The sale
deed executed by the BDA in favour of defendant No.5 on
10.01.1994 benefits defendant No.5, as the property was
already mortgaged and the mortgage continues to bind the
-
property. Further, a notice was issued by defendant No.6 -
KSFC on 29.09.1993 to defendant No.1 - Company
regarding the dues, a copy of which was also sent to
defendant No.5.
10. The plaintiff and defendant No.5 have allegedly
colluded to obtain sale deeds which are not binding upon
defendant No.5. The plaintiff claims to have checked the
Encumbrance Certificate, but the original possession
certificate remains with defendant No.6 - KSFC. Additionally,
defendant No.5 obtained the sale deed after lapse of the
lease-cum-sale agreement with the BDA. Hence, the sale
deed executed by the BDA does not affect the rights of
defendant No.5 over the property.
11. The plaintiff's purchase of the property in the
year 1994 is subject to executing mortgage in favour of
defendant No.5. The action of defendant No.5 in mortgaging
the property were executed with full knowledge of its
encumbered status and the sale deed is not genuine. It is
further argued that the plaintiff was aware of the mortgage
-
and by purchasing the property in collusion with the other
defendants, seeks to defeat and delay the claims of
defendant No.6 - KSFC. The plaintiff has also filed a Civil
Revision Petition (CRP) No.1695/2001, challenging the order
passed by the District Judge, Bidar, in Misc. No.20/1996,
rejecting his application for impleading under Order I Rule
10 of CPC. The defendant submits that while CRP
No.1695/2001 is pending, Misc. case No.20/1996, is not
maintainable and further argues that Misc.No.20/1996 is
under Section 31(1)(aa) of the SFC Act, 1951, such a
proceeding cannot be stayed in another suit.
12. It is contended by the learned counsel appearing
for the appellant that the trial Court failed to consider the
suit filed by the plaintiff in O.S. No.16407/1999, which was
withdrawn without liberty to file a fresh suit. The trial Court
neglected and failed to frame any issue with respect to
maintainability of the suit, which was hit by Order XXIII Rule
1(4) of the Civil Procedure Code, 1908 ('CPC' for short).
Further, the trial Court ignored the plaintiff's earlier
application for impleading in Misc. case No.20/1996, which
-
was dismissed and also failed to consider the subsequent
filing of CRP No.1695/2001 before this Court, which was
also dismissed.
13. It is contended that the plaintiff and defendants
No.1 to 5 committed fraud by creating illegal sale deeds in
favour of the plaintiff, which are subject to the mortgage
held by the appellant. The trial Court failed to consider the
lawful mortgage and permission granted by the BDA for
mortgaging the property to the appellant, resulting in an
erroneous decision. The appellant prays for remand of the
case to allow presentation of additional evidence, including
the BDA memo, granting mortgage permission and for
dismissal of the suit based on the grounds of fraud and
suppression of facts.
14. In support of his contentions, learned counsel has
placed reliance on the following judgments:-
• Janaki Vashdeo Bhojwani and others v. Indusind
Bank Ltd., reported in (2005) 2 SCC 217 ;
• Vidhyadhar v. Mankikrao and others reported in
(1999) 3 SCC 573 ;
-
• Ram Prasad v. Harinarain and others reported in
AIR 1998 Rajasthan 185;
• Sanjay Kumar Singh v. State of Jharkhand
reported in (2022) 7 SCC 247;
• State of Karnataka and another v. M.A.Mohamad
Sanaulla and another reported in (2022) 14
SCALE 897;
• K.S. Bhoopathy and others v. Kokila and others
reported in AIR 2000 SC 2132;
• Smt. Kori Gowramma v. The Vysya Bank Limited,
Kampli and others reported in 2001 (2) KLJ 524;
and
• S. Kesari Hanuman Goud v. Anjum Jehan and
others reported in (2013) 12 SCC 64.
15. We have considered the contentions advanced.
The plaint averments are that the plaintiff had purchased
the suit schedule property under a registered sale deed
dated 10.02.1994. The ground floor portion was purchased
by the plaintiff's brother by another registered sale deed
dated 11.02.1994. Subsequently, plaintiff's brother sold the
ground floor portion also to the plaintiff under a registered
sale deed dated 15.06.1995. It is contended that the khata
of the suit schedule property had also been transferred in
-
the name of the plaintiff and he was in actual possession
and enjoyment over the property.
16. The further pleadings are that a lease-cum-sale
agreement was executed by defendant No.5 and the BDA on
08.05.1980. Subsequently, the BDA executed an absolute
sale deed which was duly registered on 10.01.1994. It is
contended that the plaintiff came to know of the security
interest created on the property only when an officer of
defendant No.6 came to the property on 05.11.1999 and the
brother of the plaintiff had informed him of the said fact.
Thereafter, enquiries were made and it was found that
defendant No.6 had initiated proceedings under Section
31(1)(a) of the SFC Act, 1951, as Misc. Case No.20/1996
before the District Court, Bidar. The plaintiff approached the
District Court with an application under Order I Rule 10 CPC,
which was dismissed. Consequently, the present suit was
filed on 11.02.2002. The contention in the plaint was that
the plaintiff is a bona-fide purchaser for value without notice
of the mortgage and that he was not bound by any such
mortgage of the property. It is further contended that the
-
5th defendant could not have created any security interest in
the property before 10.01.1994 in the absence of any title in
the property having passed before the said date.
17. Defendant No.6 filed a written statement
specifically contending that O.S.No.16407/1999 had earlier
been filed by the plaintiff on 20.11.1999 before the
Additional City Civil Judge, Mayo hall, Bengaluru, and that
the said suit was withdrawn with no liberty being reserved
for filing a fresh suit. It was contended that the present suit
is liable to be dismissed on the ground that he had not
disclosed the filing of the earlier suit, but had specifically
stated in the plaint that he had not filed any earlier suit on
the same cause of action. It was further contended that
CRP No.1695/2001 was filed against the order of the District
Judge, Bidar, rejecting plaintiff's application for impleading
and the said CRP is pending. It is contended that defendant
No.5 had executed an agreement dated 17.05.1989 and
recorded memorandum of entry giving the suit schedule
property as security for the loan borrowed by defendant
No.1 - Company and notice had been issued on 29.09.1993
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with copy to defendant No.5 informing the dues of the
Company and that the sale deed, if any, executed by
defendant No.5 in favour of the plaintiff can only be subject
to the earlier mortgage in favour of defendant No.6. It was
further contended that it was after obtaining permission
from the BDA on 30.06.1987, defendant No.5 had executed
an agreement dated 20.08.1988 in favour of defendant No.6
creating a mortgage over the property.
18. The question therefore that arises for our
consideration is:-
"Whether the findings entered by
the trial Court require interference in
this appeal?"
19. Ex.P1 is an absolute sale deed executed on
10.01.1994 by the BDA in favour of defendant No.5. It is
stated therein that the purchaser had been put in actual
possession of the premises on 16.05.1980 and that Ex.P1
conveys all right, title and interest over the property to the
purchaser by way of sale. It is admittedly thereafter that
Exs.P2 and P3 - sale deeds were executed by defendant
-
No.5 in favour of the plaintiff and his brother respectively.
The ground floor of the building was also subsequently
purchased by the plaintiff from his brother. Defendant No.5
though served with notice, had remained ex-parte.
20. Ex.D12 is the lease-cum-sale agreement entered
into in respect of the property in question. The said
agreement witnesses that defendant No.5 is put in
possession of the property and that he shall occupy the
property as a tenant for a period of ten years from the date
of taking possession or till the date of termination of the
lease. The amount deposited by the lessee towards value of
the property shall be treated as security deposit for the
performance of the terms and conditions. The agreement
provides for payment of Rs.6/- per year as rent commencing
from 1981. The lessee is to construct the building in the
property within two years from the date of agreement.
Clause 5 of the said agreement specifically states as under:-
"The lessee/purchaser shall not alienate the
site/building that may be constructed thereon during the
period of tenancy. The lessor/vendor may, however,
permit the mortgage of the right, title and interest of the
-
lesee/purchaser in favour of the Government of
Karnataka, the Central Government or bodies corporate
like the Karnataka Housing Board or the Life Insurance
Corporation of India, Housing Co-operative Societies or
Banks to secure moneys advanced by such Governments
or bodies for the construction of the building".
21. Clause 12 further provides that, if the
lessee/purchaser performs all conditions of the agreement,
the lessor/vendor shall, at the end of 10 years, sell the
property to the lessee/purchaser and all attendant charges
shall be borne by the lessee/purchaser.
22. The trial Court found that though defendant No.6
had raised a specific contention that the BDA had given
permission to defendant No.5 on 30.06.1987 to create a
mortgage as security in favour of defendant No.6, such
letter or permission was never produced in evidence. In the
absence of such specific permission, it was concluded that
the 5th defendant could not have mortgaged the property
and such mortgage could not bind the property.
23. We also notice that the period of lease as per
Ex.D12 was for 10 years from 08.05.1980 that is the date of
-
Ex.D12. The sale deed had been executed by the BDA in
favour of defendant No.5 only on 10.01.1994. Therefore, till
the date of execution of the absolute sale deed by the BDA
in favour of defendant No.5, defendant No.5 was in
possession of the property only as a lessee and was bound
by the conditions as provided in Ex.D12. Ex.D12 permitted
creation of mortgage over the property only for the purpose
of obtaining financial assistance from the entities mentioned
therein, for putting up construction in the property. Though
defendant No.6 raises a contention that permission had been
obtained from the BDA by defendant No.5, no material has
been placed before the trial Court in support of the said
contention. In the said circumstances, the finding of the trial
Court was justified.
24. The earlier suit filed by the plaintiff that is
O.S.No.16407/1999 before the Additional City Civil Judge,
Mayo Hall, Bangalore, was one for injunction against the
defendants restraining them from attaching the schedule
property and further disposing of the schedule property by
way of public auction or creating any other charge over the
-
same. It appears that a memo was filed on 24.05.2000,
seeking permission to withdraw the suit with liberty to
pursue the other remedies that are legally available against
the defendants before the appropriate forum. The said
memo was taken on record and the suit was dismissed as
not pressed on 14.06.2000.
25. The learned counsel for the defendants has
placed reliance on several judgments to contend that
dismissal of suit as withdrawn without specific leave to sue
afresh on the same cause of action would amount to a bar
for filing of a subsequent suit. However, we notice that the
plaintiff had filed an application for impleading in the
miscellaneous case before the District Judge, Bidar, the
same was dismissed and later, a Civil Revision Petition was
also attempted as CRP No.1695/2001, challenging the said
order which was also dismissed. It was thereafter that the
present suit was filed seeking a declaration and injunction.
We find that the substantial relief sought in the earlier suit
was different and distinct. After withdrawing the said suit,
the plaintiff had availed the remedies available under the
-
SFC Act. When the said remedies stood exhausted, the
plaintiff had filed the fresh suit seeking a declaration that
the mortgage did not bind him or the property. We are
therefore unable to accept the contention that the present
suit is hit by the principles of Res-Judicata and was not
maintainable.
26. The trial Court had considered the pleadings and
evidence on record and had come to the categoric
conclusion that the plaintiff had pleaded and proved that he
had no knowledge of the mortgage of the property by the 5th
defendant and that the 6th defendant/appellant herein had
not succeeded in discrediting the said evidence. The 5th
defendant remained exparte and there was no attempt to
disprove the said claim. Further, even though applications
have been preferred seeking to produce additional evidence
before this Court, no document to disprove the said
contention or to prove the permission allegedly granted by
the BDA to mortgage the property has been produced.
27. Further, it is contended by the learned counsel
appearing for the respondent/plaintiff that apart from
-
seeking to harass the plaintiff by seeking to enforce the
security interest as against the suit schedule property, no
effort had been made by the appellant to recover the dues
from the principal debtors or the other sureties. It is contended
that the miscellaneous case filed by the appellant in the
District Court, Bidar also stands dismissed for non-prosecution.
28. Having considered the contentions advanced and in
the factual situation of the instant case, we are of the opinion
that the findings of the trial Court on the issues raised are well
founded and require no interference in this appeal. Therefore,
the appeal fails, the same is accordingly dismissed.
All pending interlocutory applications shall stand disposed
of.
The parties shall bear their own costs.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(RAJESH RAI K)
JUDGE
cp*
