[Cites 9, Cited by 0]
Karnataka High Court
Sri Mallappa S/O Siddappa Mur vs Kasturi W/O Basappa Aiduddi on 7 April, 2026
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RSA No. 101317 of 2022
HC-KAR
IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 7TH DAY OF APRIL 2026
BEFORE
THE HON'BLE MRS JUSTICE GEETHA K.B.
REGULAR SECOND APPEAL NO. 101317 OF 2022 (SP)
BETWEEN
SRI. MALLAPPA
S/O. SIDDAPPA MURI,
AGE: 58 YEARS, OCC: AGRICULTURIST,
R/O. MARAD-SHIVAPUR VILLAGE,
TALUK: GOKAK,
DISTRICT: BELAGAVI.
...APPELLANT
(BY SRI. GURUBASAVARAJ J.K., ADVOCATE FOR
SRI. M.B. HIREMATH, ADVOCATE)
AND
1. KASTURI
W/O. BASAPPA AIDUDDI,
AGE: 41 YEARS, OCC: HOUSEHOLD WORK,
Digitally signed
by GIRIJA A.
BYAHATTI
R/O. MARAD-SHIVAPUR VILLAGE,
Location: HIGH
COURT OF
GOKAK- TALUK,
KARNATAKA,
DHARWAD DISTRICT: BELAGAVI-590002.
BENCH
2. KUMAR SHIVANAND
S/O. BASAPPA AIDUDDI,
AGE: 17 YEARS, OCC: STUDENT,
R/O. MARAD-SHIVAPUR VILLAGE,
GOKAK- TALUK,
DISTRICT: BELAGAVI-590002.
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RSA No. 101317 of 2022
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3. KUMARI NAGAVVA
D/O. BASAPPA AIDUDDI,
AGE: 14 YEARS, OCC: STUDENT,
R/O. MARAD-SHIVAPUR VILLAGE,
GOKAK- TALUK,
DISTRICT: BELAGAVI-590002.
4. KUMARI SIDDAVVA
D/O. BASAPPA AIDUDDI,
AGE: 12 YEARS, OCC: STUDENT,
R/O. MARAD-SHIVAPUR VILLAGE,
GOKAK- TALUK,
DISTRICT: BELAGAVI-590002.
5. KUMAR SIDDAPPA
S/O. BASAPPA AIDUDDI,
AGE: 09 YEARS, OCC: STUDENT,
R/O. MARAD-SHIVAPUR VILLAGE,
GOKAK- TALUK,
DISTRICT: BELAGAVI-590002.
...RESPONDENTS
(BY SRI. SHRIHARSH NEELOPANT, ADVOCATE FOR C/R1-R5)
THIS RSA IS FILED UNDER SECTION 100 OF CPC PRAYING
TO SET ASIDE THE JUDGMENT AND DECREE DATED 18.04.2021
PASSED BY THE XII ADDITIONAL DISTRICT JUDGE BELAGAVI
SITTING AT GOKAK IN R.A. NO.8027/2021 AND CONSEQUENTLY
CONFIRM THE JUDGMENT AND DECREE DATED 27.11.2021
PASSED BY THE PRINCIPAL SENIOR CIVIL JUDGE GOKAK IN O.S.
NO.109/2014 AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 13.03.2026 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT
DELIVERED THE FOLLOWING:
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RSA No. 101317 of 2022
HC-KAR
CORAM: THE HON'BLE MRS JUSTICE GEETHA K.B.
CAV JUDGMENT
1. The appellant/plaintiff has filed this appeal under
Section 100 of the CPC, praying for setting aside the
judgment and decree dated 18.04.2022 passed in
R.A.No.8027/2021 on the file of XII Additional District
and Sessions Judge, Belagavi, sitting at Gokak
(hereinafter referred to as 'the First Appellate Court',
for brevity), wherein the appeal was allowed in part
with costs, and the decree of specific performance
granted by the Trial Court was set aside and
substituted with a decree for refund of ₹6,88,000/- to
the plaintiff, by the appellant.
2. The suit in O.S.No.109/2014 filed by the plaintiff had
been decreed by the Trial Court, directing the
defendant to execute registered sale deed in terms of
the registered agreement of sale dated 14.03.2012, by
receiving balance sale consideration of ₹12,000/-
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within two months. Aggrieved by the same, defendant
has preferred the first appeal, which was allowed in
part with costs, and the decree of specific performance
granted by the Trial Court was set aside and
substituted with a decree for refund of ₹6,88,000/- to
the plaintiff, by the appellant.
3. Aggrieved by the judgment and decree of the First
Appellate Court, the plaintiff is before this Court.
4. The parties would be referred with their ranks as they
were before the Trial Court, for the sake of
convenience and clarity.
5. The following substantial questions of law were framed
by this Court on 17.04.2023:
1) Whether the first Appellate Court was justified in
considering unamended Section 20 of the Specific
Relief Act despite substitution of Section 20 by Act
No.18 of 2018?
2) Whether the first Appellate Court was justified in
considering the stray sentences in the cross-
examination of PW-1 to render agreement of sale
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at Ex.P-2 as a loan agreement without considering
the totality of the evidence?
6. The case of the plaintiff before the Trial Court in a
nutshell is that:
6.1. The defendant is the owner of the suit schedule
property bearing Block No.218, measuring 2
acres out of a total extent of 8 acres 31 guntas,
situated at Chikkanandi Village, Gokak.
6.2. The defendant was in dire need of money for his
family necessities and for repayment of hand
loans. Hence he put the above property for sale
and disclosed his intention of selling the
property.
6.3. The plaintiff, being interested in purchasing the
same, entered into negotiations with the
defendant. The defendant agreed to sell the
property for a total consideration of ₹7,00,000/-
and received an advance amount of ₹6,88,000/-
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by executing a registered agreement of sale
dated 14.03.2012.
6.4. The plaintiff was and is always ready and willing
to perform his part of the contract, however,
defendant postponed execution of the sale deed
on one or other pretext. Ultimately, the plaintiff
issued a legal notice dated 19.02.2014 to the
defendant through his counsel.
6.5. Despite service of the said notice, defendant has
not come forward to execute the sale deed.
Hence, the plaintiff filed the suit for the relief of
specific performance of the agreement dated
14.03.2012, directing the defendant to execute a
regular registered sale deed in his favour on
receipt of the balance sale consideration of
₹12,000/-, along with costs and other
appropriate reliefs.
6.6. Defendant filed his written statement contending
that the suit is false, frivolous, vexatious, and
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mala fide, filed with an ulterior motive and is not
tenable in law. He admitted the description of the
suit schedule property and his ownership thereof,
but he denied all other averments made in the
plaint. He contended that no sale talks had
taken place between the plaintiff and defendant,
and that no advance or sale consideration was
paid to him.
6.7. The defendant further contended that the suit
schedule property is ancestral joint family
property and that he has no exclusive right, title,
or interest over the same. According to him, his
wife, sons, and daughters have pre-existing
rights over the suit schedule property. He also
asserted that his financial condition was sound
and that there was no legal necessity to sell the
property.
6.8. It was further contended that the defendant was
addicted to bad vices, and to satisfy his
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unwarranted habits, the plaintiff, who is allegedly
engaged in money-lending without a valid
license, had advanced loans to him and others at
exorbitant rates of interest. The defendant
alleged that the suit agreement was a concocted
document created by the plaintiff in collusion
with others to recover the alleged loan amount.
6.9. The defendant also contended that the main
occupation of family of defendant is agriculture;
the suit schedule property is the only source of
livelihood for his family, and its sale would
render them without any means of income. He
further claimed entitlement to discretionary relief
under Section 20 of the Specific Relief Act. It is
contended that the wife and children of
defendant were not parties to the alleged
agreement of sale, rendering the same illegal,
void, and unenforceable in law.
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6.10. The defendant denied receipt of any legal notice
from the plaintiff and contended that there had
been no partition among the defendant and other
sharers of the family. On these grounds, he
prayed for dismissal of the suit with costs.
6.11. During pendency of the suit, defendant died and
his legal representatives, namely his wife and
children, were brought on record as defendant
Nos.1(a) to 1(e). However, prior to his death,
defendant had already been examined as D.W.1.
6.12. After completion of pleadings, Trial Court framed
the following issues:
1. Whether the plaintiff proves that, the
defendant is owner of suit property
proposed to sell them, plaintiff intended to
purchase entered into an agreement of sale
of Rs.7,00,000/-?
2. Whether he further proves that, by virtue
of talks, he paid Rs.6,88,000/- to the
defendant towards earnest money,
defendant by receiving said amount agreed
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to execute registered sale deed within 3
years from the date of agreement of sale in
favour of plaintiff?
3. Whether defendant proves execution of
agreement of sale towards security of hand
loan borrowed by him from the plaintiff?
4. Whether he further proves ever ready &
willingness to perform his part of contract?
5. Whether plaintiff is entitled for the relief
of specific performance of contract?
6. What order or decree?
6.13. After recording evidence of both sides and
hearing their arguments, the Trial Court came to
the conclusion that the plaintiff had proved due
execution of the sale agreement by defendant
and accordingly decreed the suit. It was further
held that plaintiff was entitled for sale deed in his
favour, and thus the suit was decreed in its
entirety as prayed for in the plaint.
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6.14. Aggrieved by the judgment and decree of the
Trial Court, the legal representatives of
defendant preferred an appeal before the First
Appellate Court in R.A.No.8027/2021. After
hearing arguments of both sides, First Appellate
Court came to the conclusion that execution of
the suit agreement was proved. However, it held
that plaintiff was not entitled to the discretionary
relief of specific performance. Placing reliance on
an admission allegedly made by plaintiff that the
agreement was executed as security for the loan
advanced by plaintiff, the First Appellate Court
directed the defendants to refund the earnest
money to the plaintiff.
6.15. Aggrieved by the said judgment and decree,
plaintiff/appellant is before this Court.
7. Sri.Gurubasavaraj J. K., learned counsel for the
appellant would submit that there is no proper
appreciation of evidence by the First Appellate Court.
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It is contended that the Court has exercised its
discretion solely based on stray admission of plaintiff
that the sale agreement was taken as security for a
loan, and on that basis erroneously denied the relief of
specific performance and directed refund of the
advance amount, and even interest is also not
awarded. Hence, he prays for allowing the appeal.
8. Per contra, learned counsel for the respondents would
submit that;
8.1. The plaint itself is liable to be rejected, as the
entire payment of ₹6,88,000/- is alleged to have
been made in cash, which is in violation of the
provisions of the Income Tax Act, 1961. He
further submits that, in a recent judgment, the
Hon'ble Supreme Court has held in a similar case
that rejection of plaint is proper.
8.2. It is further contended that the amendment to
the Specific Relief Act is prospective in nature,
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and therefore substantial question of law No.(1)
is to be answered in negative.
8.3. He would further submit that, there was a
compromise entered into between the agreement
holder, his mother, wife and brother in
O.S.No.156/2013, as per Ex.P.8, wherein the
original defendant, his mother, and his wife
received their shares of ₹2,43,000/-,
₹2,00,000/-, and ₹2,00,000/- respectively and
relinquished their rights in favour of defendant
No.4 therein. This shows that the suit schedule
property was ancestral property of defendant,
and thus his children had equal rights over the
suit schedule property. Without impleading them
as parties to the agreement and the suit, the suit
was not maintainable. Hence, he prayed for
dismissal of the appeal with costs.
9. Substantial Question No.(i) Whether the first
Appellate Court was justified in considering
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unamended Section 20 of the Specific Relief Act
despite substitution of Section 20 by Act No.18
of 2018?
9.1. The suit schedule property is the only property
for the respondents for their livelihood. Hence if
the sale agreement is executed, they would put
to relative hardship.
9.2. In this regard, learned counsel for the
respondents relied upon the judgment of the
Division Bench of this Court in the case of
Sri.M.Suresh Vs. Smt.Mahadevamma and
Others1, wherein, referring to the judgment of
the Hon'ble Supreme Court in State of Punjab
vs. Mohar Singh2 and other decisions, it has
been held that the amendment to the Specific
Relief Act is prospective in nature and not
retrospective.
R.F.A.No.1560 of 2011, disposed of on 23.10.2020
(1955) 1 SCR 893
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9.3. Admittedly, the suit agreement in the present
case is of the year 2002, whereas the
amendment to the Specific Relief Act came into
force in the year 2018. Therefore, the amended
provisions, including the substitution of Section
20 of the Specific Relief Act, in no way affects
the transaction between plaintiff and defendant
in the year 2002. The discretionary relief under
the unamended Section 20 of the Specific Relief
Act continues to apply to transactions prior to
the amendment. Hence, the First Appellate Court
was justified in considering the unamended
Section 20 of the Specific Relief Act, despite
substitution of Section 20 by Act No.18/2018.
Hence, it is crystal clear that the substantial
question of law No.(i) is answered in negative.
10. Substantial question No.(ii) Whether the first
Appellate Court was justified in considering the
stray sentences in the cross-examination of PW-
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1 to render agreement of sale at Ex.P-2 as a loan
agreement without considering the totality of
the evidence?
10.1. Learned counsel for the respondents also relies
upon the judgment of the Hon'ble Supreme
Court in the case of The Correspondence,
RBANMS Educational Institution Vs. B.
Gunashekar & Another3. Paragraphs 5, 18.1 to
19 of the said judgment read as under:
5. The respondents filed a suit bearing
O.S.No.25968 of 2018 against the
appellant, before the City Civil Court and
Sessions Judge at Bangalore, seeking
permanent injunction restraining the
appellant from creating any third-party
interest over the suit schedule property,
based on an alleged agreement to sell
executed by the respondents and Ramesh
S. Reddy with one Maheshwari
Ranganathan and others, in respect of the
suit schedule property, on 10th April, 2018
for a sale consideration of Rs.9,00,00,000/-,
for which, they claim to have paid
Civil Appeal No.5200 of 2025, disposed of on 16.04.2025
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Rs.75,00,000/- as an advance payment. It
was alleged in the plaint that the appellant
was trying to manipulate the title deeds of
the suit schedule property with an intention
to alienate or dispose of the same to third
parties.
18.1. Further, through the averments made
in the plaint and in the agreement, the
respondents/plaintiffs have claimed to have
paid huge sum towards consideration by
cash. It is pertinent to recall that Section
269ST of the Income Tax Act, was
introduced to curb black money by
digitalising the transactions above
Rs.2,00,000/- and contemplating equal
amount of penalty under Section 271DA of
the Act. As per the said provisions, action is
to be taken on the recipient. However, there
is also an onus on the plaintiffs to disclose
their source for such huge cash. The Central
Government thought it fit to cap the cash
transactions and move forwards towards
digital economy to curb the dark economy
which has a drastic effect on the economy
of the country. It will be useful to refer to
the Budget Speech during the introduction
of the Finance Bill, 2017 and the extract of
the memo presented with the Finance Bill,
2017, which lay down the object:
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Budget Speech:
"VII. DIGITAL ECONOMY
111. Promotion of a digital economy is an
integral part of Government's strategy to
clean the system and weed out corruption
and black money. It has a transformative
impact in terms of greater formalisation of
the economy and mainstreaming of financial
savings into the banking system. This, in
turn, is expected to energise private
investment in the country through lower
cost of credit.
India is now on the cusp of a massive digital
revolution.
.....
Promoting Digital Economy
162. The Special Investigation Team (SIT)
set up by the Government for black money
has suggested that no transaction above
Rs.3 lakh should be permitted in cash. The
Government has decided to accept this
proposal. Suitable amendment to the
Income-tax Act is proposed in the Finance
Bill for enforcing this decision." Extract from
Memo of Finance Bill, 2017 "Restriction on
cash transactions In India, the quantum of
domestic black money is huge which
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adversely affects the revenue of the
Government creating are source crunch for
its various welfare programmes. Black
money is generally transacted in cash and
large amount of unaccounted wealth is
stored and used in form of cash.
In order to achieve the mission of the
Government to move towards a less cash
economy to reduce generation and
circulation of black money, it is proposed to
insert section 269ST in the Act to provide
that no person shall receive an amount of
three lakh rupees or more,--
(a) in aggregate from a person in a day;
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one
event or occasion from a person, otherwise
than by an account payee cheque or
account payee bank draft or use of
electronic clearing system through a bank
account.
It is further proposed to provide that the
said restriction shall not apply to
Government, any banking company, post
office, savings bank or co-operative bank.
Further, it is proposed that such other
persons or class of persons or receipts may
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be notified by the Central Government, for
reasons to be recorded in writing, on whom
the proposed restriction on cash
transactions shall not apply. Transactions of
the nature referred to in section 269SS are
proposed to be excluded from the scope of
the said section.
It is also proposed to insert new section
271DA in the Act to provide for levy of
penalty on a person who receives a sum in
contravention of the provisions of the
proposed section 269ST. The penalty is
proposed to be a sum equal to the amount
of such receipt. The said penalty shall
however not be levied if the person proves
that there were good and sufficient reasons
for such contravention. It is also proposed
that any such penalty shall be levied by the
Joint Commissioner. It is also proposed to
consequentially amend the provisions of
section 206C to omit the provision relating
to tax collection at source at the rate of one
per cent. of sale consideration on cash sale
of jewellery exceeding five lakh rupees.
These amendments will take effect from 1st
April 2017." However, when the Bill was
passed, the permissible limit was capped
under Rupees Two Lakhs, instead of the
proposed Rupees Three Lakhs. When a suit
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is filed claiming Rs.75,00,000/- paid by
cash, not only does is create a suspicion on
the transaction, but also displays, a
violation of law. Though the amendment
has come into effect from 01.04.2017, we
find from the present litigation that the
same has not brought the desired change.
When there is a law in place, the same has
to be enforced. Most times, such
transactions go unnoticed or not brought to
the knowledge of the income tax
authorities. It is settled position that
ignorance in fact is excusable but not the
ignorance in law. Therefore, we deem it
necessary to issue the following directions:
(A) Whenever, a suit is filed with a
claim that Rs.2,00,000/- and above
is paid by cash towards any
transaction, the courts must intimate
the same to the jurisdictional
Income Tax Department to verify the
transaction and the violation of
Section 269ST of the Income Tax
Act, if any, (B) Whenever, any such
information is received either from
the court or otherwise, the
Jurisdictional Income Tax authority
shall take appropriate steps by
following the due process in law, (C)
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Whenever, a sum of Rs.2,00,000/-
and above is claimed to be paid by
cash towards consideration for
conveyance of any immovable
property in a document presented
for registration, the jurisdictional
Sub-Registrar shall intimate the
same to the jurisdictional Income
Tax Authority who shall follow the
due process in law before taking any
action, (D) Whenever, it comes to
the knowledge of any Income Tax
Authority that a sum of
Rs.2,00,000/- or above has been
paid by way of consideration in any
transaction relating to any
immovable property from any other
source or during the course of
search or assessment proceedings,
the failure of the registering
authority shall be brought to the
knowledge of the Chief Secretary of
the State/UT for initiating
appropriate disciplinary action
against such officer who failed to
intimate the transactions.
19. In light of the above discussion, we are of the
firm view that the plaint ought to have been rejected
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under Order VII Rule 11(a) and (d) CPC. Hence, the
orders passed by the High Court as well as the trial
Court rejecting the application filed by the appellant,
cannot be sustained in law and deserve to be set
aside.
10.2. In the aforesaid case, the suit was filed only for
the relief of permanent injunction, and therefore
the Trial Court was justified in rejecting the
plaint when there was an efficacious alternative
remedy available to the plaintiff.
10.3. In the aforesaid judgment, it is held that the
Courts have to inform the Special Investigation
Team set up by the Government regarding black
money transactions involving agreements where
the consideration exceeds ₹2,00,000/- and is
paid in cash and it is not held that in such an
event, the suit for specific performance of the
agreement is to rejected.
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10.4. In the instant case, the alleged sale transaction
is for ₹6,88,000/-, out of which ₹6,00,000/- is
stated to have been paid in cash. Thus, the
transaction exceeds ₹2,00,000/-. Under such
circumstances, the transaction ought to have
been carried out through banking channels as
per the provisions of the Income-tax Act.
However, it is for the Income-tax authorities to
examine the matter and take action against the
erring parties. For that reason, the plaint cannot
be rejected.
10.5. The relief prayed for in the aforesaid case and
present case is entirely different. As discussed
above, in that case there was only the relief of
permanent injunction sought, which is clearly
barred under Section 41(h) of the Specific Relief
Act, and hence the plaint was rejected under
Order VII Rule 11(d) of the CPC. However, that
is not the situation in the present case, as the
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relief sought herein is different. Hence the
aforesaid judgment is not helpful for the
respondents to claim that the plaint is liable to
be rejected.
11. With this background, the oral evidence led by both
parties is to be considered only for the limited purpose
of determining whether the transaction between the
plaintiff and the defendant was in fact a loan
transaction and whether the exercise of discretion by
the First Appellate Court in granting only refund is
justified.
12. The main contention of the legal representatives of
defendant is that, the suit schedule property is the
only property available for their livelihood and that
their main occupation is agriculture. However, it is
relevant to note that Ex.P.6 is the compromise decree
passed in the suit filed by some of the relatives of
defendant, against defendant and others for the relief
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of partition and separate possession. In the said suit,
the mother and wife of defendant are also made as
parties to the suit as defendant Nos.3 and 5. In the
said suit, all the parties have entered into
compromise, which was accepted by the Court. The
compromise petition is filed as per Ex.P.8. In that
compromise petition, the present defendant was
defendant No.1 and he has taken ₹2,43,000/- towards
his share and relinquished his right over property to
his uncle defendant No.4 - Yamanappa; likewise,
mother of defendant No.1 - Tayawwa (defendant
No.3) and wife of defendant No.4 - Smt.Kasturewwa
(defendant No.5) have taken their share of
₹2,00,000/- each in cash and relinquished their
respective rights in favour of defendant No.4 -
Yamanappa.
13. The property relinquished by defendant Nos.1, 3 and 5
in favour of defendant No.4 in that suit is the present
suit schedule property. The said suit was filed in the
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year 2013 and compromise was entered into on
09.11.2015. The present suit agreement was in the
year 2002 and the suit was pending before the First
Appellate Court at the time of entering into this
compromise. This compromise has not been
questioned by the legal representatives of the
defendant. Notably, the first legal representative,
Smt.Kasturewwa, was one of the parties to the said
compromise and she has relinquished her rights.
14. Therefore, the contention of the legal representatives
of the defendant that the suit schedule property is the
only source of livelihood and if it is parted with they
would suffer hardship cannot be accepted, because
admittedly they have handed over this property to one
of their relatives i.e., defendant No.4. Hence, as it is,
even if it is held that defendants are put to hardship
and plaintiff is directed to return only earnest money,
the defendants will not get any property and the
property is already not in possession of the defendants
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as per their own compromise entered in another suit
with their family members.
15. The defendant is not disputing the sale agreement
made by him. According to him, there was no
necessity for him to sell the suit schedule property,
however, he was addicted to bad vices and plaintiff
has given loan and took his signature to the sale
agreement. In this regard, the defendant, who was
examined as D.W.1, has stated the above said facts in
his affidavit evidence, and in the cross-examination, it
was admitted that Yamanappa is his uncle. He
admitted about filing of O.S.No.56/2013, entering into
compromise by pleading his ignorance that he does
not know reading and writing, but he identified the
photographs which are affixed on the said compromise
petition. Thus, the compromise petition was marked
through him. In the further cross-examination, D.W.1
categorically admitted that, at his convenience some
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times, he would put signature and sometimes he
would put LTM to the documents.
16. The plaintiff, in his cross-examination, has
categorically admitted that the suit schedule property
is the ancestral property of the defendant and that he
is not aware as to whether there was any partition
between the defendant and his sisters. He further
deposed that the defendant had informed him that
there were some family problems, but he did not
enquire into the nature of such problems or the
necessity for sale of the property.
17. According to the plaintiff, he has paid a sum of
₹6,88,000/- in cash to the defendant by bringing the
said amount from his house. He deposed that the said
amount was not kept in any bank but was kept in his
house since eight years. He further deposed that,
except the sale agreement, there is no document to
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HC-KAR
show that he has paid the aforesaid amount to the
defendant.
18. As per the recitals of the sale agreement, the total
sale consideration was ₹7,00,000/-, out of which
plaintiff has paid an advance amount of ₹6,88,000/-.
Thus, substantial amount that is more than 90% of
the consideration was paid by the plaintiff to
defendant. However, despite such substantial
payment, the plaintiff did not take possession of the
suit schedule property at the time of registration of
the sale agreement. Further, the plaintiff did not
institute the suit immediately, but filed it only in the
year 2014, that is nearly two years after the date of
the sale agreement.
19. Furthermore, in the agreement itself there is recital
that three years time was given to defendant to
complete the terms and conditions imposed on him. It
is agreed that three years time is fixed for payment of
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HC-KAR
the balance consideration and execution of the sale
deed. If such substantial amount of ₹6,88,000/- out of
₹7,00,000/- was paid as earnest money, nobody
would wait for three years to get the sale deed. Even
possession was also not handed over to the plaintiff in
this agreement.
20. Furthermore, in paragraph 10 of the cross-
examination, a suggestion was put to plaintiff that, in
villages, it is common practice to execute documents
such as agreements of sale as security for loans.
P.W.1 categorically admitted the said suggestion. In
that regard, the trial Court put a question to the
plaintiff as to whether for giving loan he has obtained
the document. He categorically admitted the said
suggestion, which reads as under:
"10. ...¸ÁªÀiÁ£ÀåªÁV ºÀ½îUÀ¼À°è ¸Á® PÉÆlÖªÀgÀÄ
¨sÀzÀævÉUÁV EAvÀºÀ PÁUÀzÀUÀ¼À£ÀÄß ªÀiÁrPÉƼÀÄîvÁÛgÉAzÀgÉ
¤d. £Á£ÀÄ F jÃw PÁUÀzÀUÀ¼À£ÀÄß ¨ÉÃgÉ AiÀiÁjAzÀ®Æ
ªÀiÁrPÉÆAr®è EzÉà ªÉÆzÀ® ¨Áj.
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NC: 2026:KHC-D:5083
HC-KAR
£ÁåAiÀiÁ®AiÀÄzÀ ¥Àæ±ÉßB ¸Á® PÉÆnÖzÀÝPÉÌ ¤ÃªÀÅ F ¥ÀvÀæ
ªÀiÁrPÉÆAr¢ÝgÁ?
GvÀÛgÀB ºËzÀÄ."
21. These admissions clearly indicate that the transaction
between the plaintiff and the defendant was in the
nature of a loan transaction and not an out-and-out
sale transaction.
22. In view of these aspects, the First Appellate Court has
rightly exercised its discretion in directing refund of
the earnest money. However, the amount ought to
have been directed to be refunded with interest and
not the mere agreement amount, as it is the loan
transaction.
23. Hence, this Court passes the following:
ORDER
Appeal Filed under Section 100 CPC is
partly allowed. The judgment and decree dated
18.04.2022 passed in R.A.No.8027/2021 on the
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HC-KAR
file of XII Additional District and Sessions Judge,
Belagavi, sitting at Gokak, is modified as follows:
Legal Representatives of defendant are
directed to refund the advance sale consideration
of ₹6,88,000/- to plaintiff with up to date
interest at 8% p.a. from the date of suit till
realization.
Draw decree accordingly.
Sd/-
(GEETHA K.B.)
JUDGE
gab
CT-MCK
List No.: 1 Sl No.: 1
