Karnataka High Court
Sri Y S Nagaraj vs Sri Y K Puttaswamy Gowda on 27 November, 2025
Author: H.P.Sandesh
Bench: H.P.Sandesh
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RSA No. 816 of 2021
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE H.P.SANDESH
REGULAR SECOND APPEAL NO.816 OF 2021 (SP)
BETWEEN:
1. SRI Y.S. NAGARAJ
S/O SIDDEGOWDA
AGED ABOUT 57 YEARS
R/AT: YALANAHALLI VILLAGE
HIRISAVE HOBLI
CHANNARAYAPATNA TALUK
HASSAN DISTRICT-573124.
...APPELLANT
(BY SRI. VENKATESH R. BHAGAT, ADVOCATE)
AND:
1. SRI Y.K. PUTTASWAMY GOWDA
Digitally signed S/O LATE MESTHRI KAPANIGOWDA
by DEVIKA M AGED ABOUT 64 YEARS
Location: HIGH R/AT: YALANAHALLI VILLAGE
COURT OF HIRISAVE HOBLI
KARNATAKA CHANNARAYAPATNA TALUK
HASSAN DISTRICT-573124.
...RESPONDENT
(BY SRI. M.N. UMASHANKAR, ADVOCATE FOR
SRI. NARASIMHA MURTHY G.V., ADVOCATE FOR C/R)
THIS RSA IS FILED UNDER SECTION 100 OF THE CPC,
AGAINST THE JUDGMENT AND DECREE DATED 31.08.2021
PASSED IN RA.NO.95/2018 ON THE FILE OF THE SENIOR CIVIL
JUDGE AND JMFC, CHANNARAYAPATNA, DISMISSING THE
APPEAL AND CONFIRMING THE JUDGMENT AND DECREE
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RSA No. 816 of 2021
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DATED 24.08.2018 PASSED IN O.S.NO.625/2011 ON THE FILE
OF THE PRINCIPAL CIVIL JUDGE AND JMFC,
CHANNARAYAPATNA.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE H.P.SANDESH
ORAL JUDGMENT
1. This matter is listed for admission. Heard the
learned counsel for the appellant and also the learned
counsel for the respondent.
2. This second appeal is filed against the
concurrent finding of the Trial Court granting the relief of
specific performance and same is confirmed by the First
Appellate Court. The factual matrix of case of the plaintiff
before the Trial Court while seeking the relief of Specific
performance, it is contended that the defendant entered
into an agreement of sale on 01.10.2001, agreeing to sell
the suit schedule property for a sale consideration of
Rs.68,000/- and had received the entire sale
consideration. It is the contention of the plaintiff that there
was a prohibition for alienation and hence, the defendant
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had agreed to get the permission from the competent
authority and even in case, if such permission is not
granted, he can execute the sale deed after the
completion of the remaining period of 8 years. When the
legal notice was issued and acknowledged the same, he
did not give any reply and hence, he was forced to file the
suit for the relief of specific performance and he was
always ready and willing to have the sale deed. It is the
specific contention that when he was agreed to get the
permission, but he did not comply with the agreement and
hence, he violated the terms and conditions of the sale
agreement. The defendant appeared and filed written
statement contending that the said document is only a
loan document and not the sale and property was granted
to the defendant on 30.09.1994 and there was a non-
alienation clause in the grant certificate. The defendant is
a poor farmer. The plaintiff and defendant are from same
village. During the year 2001 to meet the medical
expenses of his family members and to clear earlier loans,
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the defendant approached the plaintiff for an amount of
Rs.68,000/-. At that time, plaintiff put a condition that he
would advance money only if the defendant execute the
sale agreement. The plaintiff being a lawyer and intelligent
person, taking undue advantage of illiteracy of the
defendant, got prepared the agreement of sale as per his
wish. The defendant being in helpless position signed the
agreement of sale due to need of money, but, the
defendant never agreed to sell the suit schedule property
to the plaintiff and he did not receive amount as per
agreement, but he received the amount as loan. The
defendant had denied the very transaction as sale
transaction and it is only a loan transaction and market
value of the suit schedule property is Rs.50,000/- per
gunta and hence, the sale consideration shown in the
agreement is not the sale consideration as on the date of
the transaction. In view of the same that it is a loan
transaction, he did not obtain any permission from the
competent authority to sell the property and he was not
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aware of the procedure and hence, he did not issue any
reply notice and defendant is ready to refund the amount
of Rs.68,000/-.
3. The Trial Court having taken note of the
pleadings of the parties, framed the issues and allowed the
parties to lead evidence. The plaintiff examined himself as
P.W.1 and also examined four witnesses as P.W.2 to P.W.5
and produced the document Ex.P.1 to Ex.P.59. On the
other hand, defendant examined himself as D.W.1 and got
marked document Ex.P.1 to Ex.P.22. The Trial Court
having considered the pleadings of the parties and also the
evidence available on record, particularly evidence of the
P.W.1 as well as witnesses P.W.2, P.W.3 and P.W.4 who
are the attesting witnesses to the agreement, comes to
the conclusion that the same is a sale transaction and not
the loan transaction and also comes to the conclusion that
when the recital of the document is Ex.P.1 is very clear
that when there was a prohibition for sale of the property,
a condition is also mentioned in the agreement itself that
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the defendant would get the permission from the
competent authority then, he will sell the property and
other recitals of the document also very clear that it is a
sale transaction and not a loan transaction and also taken
note of the admission on the part of D.W.1 in his signature
on Ex.P.1 and also receipt of the amount, but, only
contention that it was a loan transaction and the same has
been discussed in paragraph No.26 and also taken note of
except the evidence of D.W.1 that it was a loan
transaction, not contravene the same and even defendant
in his cross-examination has admitted the receipt of the
notice and he did not give any reply to the notice. The
same reveals that plaintiff was ready and willing to
perform his part of contract and considering all these
materials, particularly with regard to the prohibition of
non-alienation and the same also discussed in paragraph
No.30 and comes to the conclusion that plaintiff has
proved the issues that the same is a sale transaction and
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granted the relief of specific performance directing him to
execute the sale deed within 2 months.
4. Being aggrieved by the said judgment and
decree, an appeal is filed in R.A.No.95/2018 and First
Appellate Court also having considered the grounds which
have been urged in the appeal memo, formulated the
point whether the plaintiff has proved that there was a
sale agreement and whether the plaintiff was always ready
and willing to have the sale deed, whether the same was a
loan transaction as contended in his written statement,
whether judgment and decree requires interference. The
First Appellate Court having re-assessed both oral and
documentary evidence, answered the point Nos.1 and 2 as
affirmative in coming to the conclusion that there was a
sale transaction and plaintiff was always ready and
defendant did not prove his contention that it was a loan
transaction and also taken note of the recitals of the
document in Ex.P.1 particularly while answering point No.2
in affirmative comes to the conclusion that on the contrary
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the defendant who was required to obtain permission from
the Deputy Commissioner to alienate the granted land and
failed to show that he has performed his part of contract.
Inspite of notice issued by the plaintiff under Ex.P.8 and
Ex.P.10. The defendant has not even replied for the same
and Ex.P.1 is a sale transaction though it contended that it
is a loan transaction and the very recital is clear that it is a
sale transaction and confirmed the judgment of the Trial
Court.
5. Being aggrieved by the concurrent finding, the
present second appeal is filed before this Court. The main
contention of the counsel appearing for the appellant
before this Court is that both the Courts failed to consider
that there was a sale transaction and counsel would
vehemently contend that the document at Ex.P.1 is an
unregistered document of agreement of sale and the same
is not proved by the plaintiff in accordance with law. The
counsel would vehemently contend that both the Courts
failed to take note of readiness and willingness to perform
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his part of obligation does not arise when agreement of
sale itself is not proved. The counsel would vehemently
contend that the plaintiff is a practicing advocate and he
was having a domination over the defendant and under
the influence only, got the document instead of loan
transaction, he got the sale agreement. The very specific
defense of the defendant in the written statement is also
very clear with regard to the same. The counsel also
brought to notice of this Court that there was a grant. The
counsel submits that there was a non-alienation for a
period of 15 years. The land was granted in the year 1994
and counsel also brought to notice of this Court the
conditions of grant that is Karnataka Land Grant Rules,
1969 wherein clause 1(i) the present amendment is very
clear that the grantee shall not alienate the land for a
period of 25 years, earlier it was 15 years from the date of
taking possession provided that he may after the period of
5 years, with the previous permission, subject to such
conditions as may be specified by the Deputy
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Commissioner, alienate the whole or any portion of such
land, but, however, the Deputy Commissioner shall not
grant such permission unless he satisfied that alienation is
for the purpose of acquiring other land or for improving
the remaining land and granting credits to government an
amount equal to 50% of the market value of such land as
on the date of sanction of such alienation as decision
taken by the Deputy Commissioner. The counsel would
vehemently contend that when there was a specific bar to
alienate the property ought not to have granted the relief
of specific performance.
6. The counsel also brought to notice of this Court
Section 23 of Contract Act, wherein it is clearly stated that
consideration and objects are lawful and what not also
specifically mentioned that the consideration or object of
an agreement is lawful unless it is forbidden by law and if
such a nature that if permitted, it would defeat the
provisions of any law or is fraudulent and involves or
implies injury to the person or property of another. The
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Court regards it as immoral or opposed to public policy.
The counsel referring Section 23, would vehemently
contend that the same is forbidden by law and taken note
of the object of the land grant rules and specifically
prohibits the same and when such transaction was made
and the same is not lawful, question of granting the relief
of specific performance does not arise. The counsel would
vehemently contend that the very relief granted by the
Trial Court and Appellate Court is against the material on
record.
7. Per contra, the counsel appearing for the
respondent would vehemently contend that the Trial Court
and Appellate Court considering the material available on
record, particularly the recitals of the document of Ex.P.1
and also the defence which has been taken that as loan
transaction and taken note of that it was a sale transaction
and not the loan transaction. Even he had agreed to obtain
the permission from the competent authority. But, he did
not obtain the permission and immediately after the lapse
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of 8 years which was remaining caused the legal notice
and legal notice was also served on him and he has not
given any reply to the notice. The counsel also would
vehemently contend that the Trial Court already executed
a sale deed in favour of the respondent vide sale deed
dated 05.10.2021. Even during the pendency of the appeal
and there was no any stay order by the First Appellate
Court and already the agreement is enforced by obtaining
the sale deed and hence, this second appeal becomes
infructuous.
8. The counsel would vehemently contend that
with regard to the non-alienation clause is concerned, the
Division Bench of this Court in a case of Syed Zaheer and
Others V/s C.V. Siddveerappa reported in ILR 2010
KAR 765 held that discretion to decree specific
performance cannot be exercised when the terms of the
contract or the conduct of the parties at the time of
entering into contract are the circumstances under which
the contract was entered into as such that they give the
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plaintiff an unfair advantage over the defendant where the
performance of the contract would involve some hardship
to the defendant whereas, its non-performance would
involve no such hardship on the plaintiff and also held that
while explaining these circumstances, explanation-I
speaks about unfair disadvantage and explanation-II
related to hardship which is a circumstance in favour of
the defendant while explanation-III and IV are in favour of
the plaintiff, when in a case where the plaintiff has done
substantial acts in consequence of contract capable of
specific performance or refused to perform specific
performance, merely because the contract is not
enforceable at the instance of the defendant and also even
discussed with regard to Section 23 of the Contract Act.
The Trial Court was correct in holding that the respondent
who had filed suit for specific performance was ready and
willing and had in fact performed his part of contract and
there was no reason as to why specific performance could
not be granted to him.
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9. The counsel also would contend that this Court
in the similar set of facts and circumstances, in the
Judgment in R.S.A.No.1358/2022 vide judgment dated
27.06.2025 in case of B.S.Lakshman and Puttshetty and
Others, elaborately discussed in the same circumstances
and comes to the conclusion that by taking into note of
when the defendant having the knowledge about there
was an alienation and also when the recital is very clear
that he would convey the property by executing the
document after the period of non-alienation and having
the knowledge about the same and knowingfully well the
non-alienation clause, executes a document and later he
cannot contend that there was a non-alienation clause and
he is not ready to sell the property.
10. The counsel also relied upon the judgment
passed by this Court in R.S.A.No.1903/2006 dated
25.02.2008 and brought to notice of this Court paragraph
No.11 insofar as the contention that suit agreement is void
referring to the recitals in the grant certificate, the lower
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Appellate Court held that there is a prohibition for other
alienation and an agreement of sale, the property is not
alienated, the law governing the case on hand, do not
provide that even the agreement of sale during the
prohibited period are illegal or void as is the case in some
of the enactments. Therefore, it cannot be said that the
suit agreement is void ab-initio. When the parties agree to
execute a sale deed after the expiry of the prohibited
period and decline to do so, as has happened in the
instant case, immediately after the expiry of the prohibited
period, first and second defendants have sold the property
in favour of third defendant. On the day the suit is filed to
enforce this agreement, it cannot be said that suit
agreement was void and unenforceable. The whole object
behind the non-alienation clause and the Courts taking a
hard view not to enforce this agreement is to see that the
grantee to whom the grant is made continues to enjoy the
property and eke out their livelihood. Normally these
grantees are all persons belonging to weaker sections of
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the society and people with money and power, take
advantage of their innocence or helplessness, try to grab
these properties which are granted to them. This is how
the Courts are coming to the rescue of these people. But,
in the instant case, this land is granted to the first
defendant because her land was acquired for Hemavathi
project. In exchange to the land which is acquired, after
paying compensation to the allottee, the land is granted. It
is not a case of the grant in favour of the weaker section
of the society. The land grant is by way of additional
compensation. The counsel would vehemently contend
that when he had the knowledge about the prohibition and
entered into an agreement knowingfully well the
consequence of the agreement and also agreed to obtain
the permission from the competent authority to sell the
property, now the very contention that there was a
prohibition cannot be accepted.
11. In reply to this argument, the counsel in
support of his argument, he relies upon the judgment of
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the Apex Court in confirming the judgment of this Court
Division Bench reported in ILR 2010 KAR 765 in a case
of B.S.Lakshman and Puttshetty & Others produced
the order passed in Civil Appeal No.9551-9552 of 2019
and Apex Court held that we are not inclined to interfere
with the impugned judgment and order dated 18.12.2009
passed by the High Court of Karnataka at Bangalore in
R.F.A No.376/2003 and R.F.A.No.377/2003 and appeals
are dismissed and counsel would contend that the
judgment passed by this Court is upheld by the Apex
Court, under these circumstances, not entitled for even for
admission.
12. The counsel appearing for the appellant in reply
to this argument, relied upon the judgment reported in
(2022) 12 SCC 321 in the case of G.T.Girish V/s
Y.Subba Raju (Dead) By Legal Representatives and
brought to the notice of this Court that the Apex Court
held regarding illegality of contract or its subject matter,
applicability of Section 23 of the Contract Act. The counsel
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referring this judgment would vehemently contend that
when the very transaction itself is void, there may not be
any enforcement and brought to notice of this Court
particularly wherein paragraph No.91 held that whatever
may be intention of the parties, a contract which is
expressly or impliedly prohibited by a statute may not be
enforced by the Court and hence, ought not to have
granted the relief of specific performance and the same
ought not to have been confirmed by the Appellate Court.
13. Having heard the learned counsel for the
appellant and also the learned counsel for the respondent
and also considering the material on record, it is not in
dispute that there was a sale agreement, but, only it is the
contention of the appellant's counsel that it was only a
loan transaction, but on the insistence of the plaintiff, the
document came into existence as a sale agreement.
Having perused the recitals of the document of Ex.P.1-sale
agreement, it is very clear that the defendant having the
knowledge about the fact that there was prohibition and
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even he had agreed to obtain the permission from the
competent authority from the Deputy Commissioner and in
the agreement itself, he has stated that he is going to file
an application on the very same day seeking permission
from the competent authority to sell the property. Apart
from that in the recitals also very clear that in case if he
was unable to get the permission from the competent
authority, the defendant can get the sale deed through a
Court for specific performance and no doubt in the further
recital, there is a clause in the agreement with regard to
the forfeiture is concerned in case plaintiff did not come
forward to have the sale deed and also there is a recital
with regard to in case if the sale deed is not executed, the
amount can be refunded with interest. Having taken note
of these recitals of the document at Ex.P.1, it is very clear
that it is nothing but a sale, not a loan transaction as
contended by the appellant's counsel and the same has
been considered by the Trial Court and also by the
Appellate Court. If it is a loan transaction, there was no
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need to get the permission of the Deputy Commissioner to
sell the property and hence, the very defence which was
taken is falsified considering the documentary evidence of
Ex.P.1 and also nothing is established during the course of
the evidence.
14. The other contention of the counsel that there
was a prohibition under the land grant rules and no doubt
the counsel appearing for the appellant brought to notice
of this Court grant condition No.9 sub-clause I, there is a
prohibition not to alienate the same, earlier it was for 15
years and now it is 25 years. But, at the time of granting
the land in the year 1994, it was 15 years. But, at the
same time, it is very specific that in the provision itself
that if after lapse of 5 years, permission can be granted
and when such recital in the agreement Ex.P.1 is very
clear and apart from that the recital also very clear that if
permission is not obtained within the period of 8 years
since 8 years was remaining to conclude 15 years of non-
alienation clause and specific averment is also made that
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the defendant is having a liberty to approach the Court
and get the relief. No doubt there is a clause with regard
to the refund of the amount is concerned, but, when the
defence was taken that it was not the sale transaction and
when the Court comes to the conclusion that it was a sale
transaction and Court has to read the very entire recital of
the said agreement and when such being the facts and
circumstances, both the Trial Court and Appellate Court
taken note of it is a sale transaction and not the loan
transaction and hence, rightly passed an order to execute
the sale deed and the same is also confirmed by the
Appellate Court. Even after the expiry of period of 8 years,
when the notice was issued, no reply was given even after
receipt of notice also and the same was also taken note of
by the Trial court as well as the Appellate Court while
concurring the judgment of Trial Court and Appellate Court
and while answering the point for consideration with
regard to the ready and willingness also considered the
same.
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15. The other contention of the counsel appearing
for the appellant relying upon Section 23 of Contract Act
and also relying upon the judgment of the Apex Court
referred supra, it is very clear that there was a non-
alienation clause and agreement was executed even
during the subsistence of non alienation clause also to be
taken note of, but the recitals of the document is very
clear that even after the expiry of the period, he is going
to execute the sale deed. When such being the case, when
the dispute is with regard to the sale agreement and loan
agreement, though contract is entered between the parties
and consciously entered into an agreement stating that
going to execute the sale deed after the completion of 8
years of the remaining period and he specifically
mentioned in the agreement itself that he is ready to
execute the sale deed and also the recitals is very clear
that the entire sale consideration was paid under the
agreement and when such being the case, the judgment
which is relied upon by the counsel appearing for the
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appellant in case of G.T.Girish referred supra will not
comes to the aid of the appellant.
16. The counsel would vehemently contend that the
very transaction itself is doubtful and also the contention
that the respondent being an advocate taken the
advantage of domination and obtained the sale agreement
and the said contention also cannot be accepted for the
reason that recitals of the document of sale agreement is
very clear that he had received the entire consideration
and agreed to execute the sale agreement and also
making an attempt to get the permission from the Deputy
Commissioner and also specific averment is made in the
agreement itself that he is going to get the permission
from the competent authority and if that is the case, if he
has played the dominance over the defendant, there was
no need to mention that recital with regard to getting the
permission from the competent authority. On perusal of
the document of Ex.P.1, he is not an illiterate and he had
signed the document in English and document Ex.P.1 is
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also very clear and the same is evident. When such being
the case, the very contention that he played the
domination over the appellant cannot be accepted having
taken note of all these factors into consideration and also
this Court with regard to the very prohibition is concerned,
relied upon the judgment of the Division Bench reported
ILR 2010 KAR 765 referred supra and also this Court on
the earlier occasion also when the same circumstances
arises before this Court in the judgment in Lakshman's
case in R.S.A.No.1358/2022 taken a note of the facts and
circumstances. When the appellant consciously entered
into an agreement to sell the property knowingfully well
that there was a prohibition and also recital is made in the
agreement itself is clear that he is going to execute the
sale deed even after the completion of the non-alienation
period. Hence, I do not find any ground to admit and
frame substantive question of law.
17. In view of the discussions made above, I pass
the following:
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ORDER
i) The Second Appeal is dismissed with
exemplary cost of Rs.25,000/- payable at the Registry
within two weeks from today. If the cost is not paid within
two weeks, the Registry is directed to recover the same in
accordance with law.
ii) In view of dismissal of the appeal, I.As., if any
do not survive for consideration, the same stands disposed
of.
Sd/-
(H.P.SANDESH)
JUDGE
RHS
