Full Judgment Text
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 28 DAY OF JUNE, 2024
BEFORE
THE HON'BLE MR. JUSTICE H.P. SANDESH
R.S.A. NO.139/2018 (SP)
BETWEEN:
1 . H.M.MAHADEVAPPA
S/O MADAPPA,
AGED ABOUT 69 YEARS,
2 . H.M.SIDDALINGAMURTHY
S/O MADAPPA,
AGED ABOUT 38 YEARS,
BOTH ARE
R/O HONAGAHALLI VILLAGE,
B.G.PURA HOBLI,
MALAVALLI TALUK,
MANDYA DISTRICT-571401. … APPELLANTS
(BY SRI C.P.DHANANJAYA, ADVOCATE)
AND:
1 . P.LOKESHA
S/O CHINNASWAMY REDDY
AGED ABOUT 42 YEARS,
LAKKURU HOBLI, MALUR TALUK,
KOLAR DISTRICT - 563 101. … RESPONDENT
(BY SRI S.R.RAVI PRAKASH, ADVOCATE)
R
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THIS R.S.A. IS FILED UNDER SECTION 100 OF CPC,
AGAINST THE JUDGMENT AND DECREE DATED 16.10.2017
PASSED IN R.A.NO.44/2015 ON THE FILE OF THE SENIOR CIVIL
JUDGE, MALAVALLI, DISMISSING THE APPEAL AND MODIFYING
THE JUDGMENT AND DECREE DATED 24.3.2015 PASSED IN
O.S.NO.381/2013 ON THE FILE OF THE PRL. CIVIL JUDGE AND
JMFC, MALAVALLI.
THIS R.S.A. HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 21.06.2024 THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:
J U D G M E N T
1. Heard the learned counsel for the appellants and
also the learned counsel for the respondents. This second
appeal is filed against the concurrent finding in granting the
relief of specific performance in O.S.No.381/2013 and in
R.A.No.44/2015.
2. The parties are referred to as per their original
rankings before the Trial Court, in order to avoid confusion
and for the convenience of the Court.
3. The factual matrix of case of the plaintiff before
the Trial Court that defendant entered into agreement
dated 28.05.2012 with the plaintiff to sell the suit schedule
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property for a sale consideration of Rs.2,89,000/-and paid
earnest money of Rs.2,00,000/- and balance amount
payable at the time of registering the document. It also his
case that he is always ready and willing to perform his part
of contract. The defendant has appeared and filed written
statement contending that the plaintiff is a professional
money lender and he advanced the money to the several
persons. They have only borrowed Rs.2,00,000/- and
executed agreement of sale as security for the said amount
of Rs.2,00,000/- and the land value of the said property is
more than Rs.20,00,000/- and contended that they are
ready to pay the principle amount together with interest in
which the Court directs to pay the plaintiff. The suit
schedule properties are very valuable land and with an
intention to grab the suit schedule properties for lower
price, filed a suit for the relief of specific performance. The
Trial Court having considered the pleadings of the parties,
framed the following issues:
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1) Whether the plaintiff proves that,
defendants entered into agreement with him to
sell suit schedule properties for consideration of
Rs.2,89,000/-?
2) Whether the plaintiff further proves
that defendants received Rs.2,00,000/- from the
plaintiff as earnest money and executed
registered agreement of sale on 28.05.2012?
3) Whether the plaintiff proves that he is
always ready and willing to perform his part of
contract?
4) Whether the defendant further proves
that, the plaintiff is professional moneylender?
5) Whether the defendants further prove
that, they have borrowed Rs.2,00,000/- and
executed agreement of sale security?
6) Whether the plaintiff entitles for the
relief’s sought?
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7) What order or decree?
4. The Trial Court has given an opportunity to
substantiate their case. The plaintiff himself has examined
as PW1 and also examined three witnesses as PW2 to PW4
and got marked Ex.P1 to Ex.P12. On the other hand, the
defendant in order substantiate his defense, examined
himself as DW1 and got marked the document Ex.D1 and
Ex.D2. The Trial Court having considered both oral and
documentary evidence available on record comes to the
conclusion that there is a registered sale agreement and the
same was executed for the sale of the property and
received earnest money of Rs.2,00,000/- and balance was
payable at the time of registration and also comes to the
conclusion that he is always ready and willing to perform
his part of contract and answered the issue Nos.1 to 3 as
affirmative and the defense of the defendant has not been
accepted and ordered for the relief of specific performance.
Having considered the market value per acre Rs.90,000/-
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calculated the total sale consideration of land as against the
agreed sale consideration of Rs.2,89,000/- and directed to
pay the balance amount out of Rs.4,08,000/-. Whenever
they intimate the plaintiff that he obtained the permission
from the appointing authority. Being aggrieved by the said
judgment and decree, an appeal is filed by the defendant in
R.A.No.44/2015. The First Appellate Court having
considered the grounds urged in the appeal, formulated the
point whether the judgment and decree is illegal, perverse
and opposed to law, facts and probabilities of the case. The
First Appellate Court having re-assessed the material
available on record, answered the point as negative and
dismissed the appeal. However, modified the judgment of
the Trial Court in coming to the conclusion that the findings
of the Trial Court is incorrect reason that the defendants
have resisted the claim of the plaintiff on false ground.
Hence, they have not entitled for additional amount as
granted by the Trial Court and directed to execute
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registered sale deed in favour of the plaintiff by receiving
the balance consideration of Rs.89,000/- and the plaintiff
shall deposit the said amount before the Trial Court within
two months. Being aggrieved both the judgments, the
present second appeal is filed before this Court. The
grounds which have been urged in the second appeal that
both the Courts have committed an error in appreciating
both oral and documentary evidence available on record
and conclusion drawn by the trial Judge answering issue
Nos.4 and 5 as negative is contrary to the material
available on record and ought to have answered the same
as affirmative and conclusion drawn by the trial Judge is
erroneous. Both the Courts fail to take note of the fact that
the respondent is a resident of Hulimangala village, Lakkuru
Hobli, Malur Taluk, Kolar District and appellants are the
residents of Honagahalli Village, B.G.Pura Hobli, Malavalli
Taluk, Malavalli. The appellants have availed loan and not
agreed to sell the property. The document has been
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executed only as security to pay the said loan. Both the
Courts fail to take note of the contents of the document
Ex.D2-sale agreement, which is the undisputed document.
The value of the suit schedule property is more than
Rs.20,00,000/- per acre, as per the value of the property
which is near the suit property. The main contention of the
appellant in the appeal particularly in paragraph No.15 that
both the Courts fail to exercise the discretion under Section
20 of the Specific Relief Act. Whenever the contract become
unequivocal, there is unfair advantage, the Court can
decline the specific relief of contract. The appellant drawn
the attention to the valuation furnished by the respondent
witnesses. In terms of the said evidence itself that 1 acre
market value is Rs.90,000/-. If the properties are situated
at Kaggalipura the suit schedule properties measures 4.23
guntas and as per the present market value per acre is
more than Rs.15,00,000/-. Even if it is computed the
market value that of the suit schedule properties, it is
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valued Rs.4,08,000/- and whereas the agreement is only
for Rs.2,89,000/-. The facts pleaded by the Trial Court and
also the answer elicited from the mouth of witnesses has
not been properly appreciated. Even approximate value of
the suit schedule properties are Rs.4,08,000/- as per the
Trial Court judgment and directed to pay balance amount of
Rs.1,19,000/- and the same also reversed by the First
Appellate Court without considering the factual aspects of
the case. This Court having considered the grounds urged
in the second appeal. At the time of admission, this Court
considered the material on record and framed the following
substantial question of law:
“Whether the Courts below have considered the
mandate under Section 20 of Specific Relief Act,
1963 in the light of the evidence on record? ”
5. The counsel appearing for the appellants during
the course of his argument would vehemently contend that
admittedly the property is 4 acre 33 guntas as allegedly
agreed to sell the property. The Trial Court also comes to
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the conclusion that even admitted value per acre is
Rs.90,000/- and ordered to pay the sale consideration in
terms of the S.R value i.e., difference value. The counsel
would vehemently contend that this fact has not been
considered by the First Appellate Court. The First Appellate
Court modified and comes to the conclusion that the said
point finding is incorrect. Both the Courts fail to consider
the hardship and discretion while granting the relief of
specific performance. The counsel would vehemently
contend that when the suit is filed for the relief of specific
performance and it is the discretion vest with the Court to
appreciate the material available on record. Both the Courts
have not discussed the very discretion. The counsel also
brought to notice of this Court paragraph No.34 of the
judgment of the Trial Court wherein though the discussed
Section 20 of the Specific Relief Act and not passed any
detailed order and only an observation is made that the
relief can be moulded under Order VII Rule 7 of CPC and
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not exercised the discretion properly. The counsel also
would vehemently contend that the First Appellate Court
not properly appreciated the Section 20 of Specific Relief
Act and only a formal discussion was made in the paragraph
No.34 and not discussed the evidence available on record
with regard to the exercising the discretion. Hence, the
Court has to exercise the discretion considering the material
available on record.
6. Per Contra, the counsel appearing for the
respondent/plaintiff would vehemently contend that the
very contention is that the document of sale agreement is
only a collateral security, the same has not been proved
that it was a loan transaction and the document is executed
as security document as contended. The counsel also would
vehemently contend that in order to prove the sale
agreement, witnesses have been examined and nothing is
elicited from the mouth of the witnesses. The document is
also a registered sale agreement. It is contended that
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nothing is suggested to the witnesses as the said document
is a collateral security. The counsel would vehemently
contend that no time is fixed as 6 months in terms of the
sale agreement since sale agreement dated 28.05.2012.
Though contend that the market value is more and relied
upon document Ex.D2, the same is dated 19.05.2014
almost after 2 years, the said sale agreement came into
existence. The counsel also would vehemently contend that
the property which is agreed is remote village property. No
road access to the suit schedule property. In respect of
Ex.D2, there are two roads and property which is agreed is
a dry land. The counsel would vehemently contend that
though guideline value is more and agreed sale
consideration is lesser. No unfair advantage is taken and
defense which has been taken has not been proved. No
suggestions made to the witnesses. Even not sought for
any relief of cancellation of agreement. When such being
the case, the contention of the appellants’ counsel that
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discretion has not been properly exercised cannot be
accepted. The counsel also would vehemently contend that
the registered document is in existence unless the same is
questioned and the same cannot be ignored. The PW3
supported the case of the plaintiff also. The reasoning given
by the Trial Court and First Appellate Court are justified and
Ex.P7 also categorically admitted. Hence, it does not
require any interference.
7. The counsel in support of his argument, he relied
upon the judgment of the Apex Court passed in Civil Appeal
No.3574/2009 dated 18.09.2020 in case of B.Santoshamma
and another V/s D.Sarala and another and the counsel
brought to notice of this Court paragraph No.69 with regard
to the exercising of discretion, the amendment effect from
01.10.2018 and the same have been substituted with the
word specific performance of contract shall be enforced
subject to the provisions contained in sub-section (2) of
Section 11, Section 14 and Section 16. The relief of specific
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performance of contract is no longer discretionary and
brought to notice of discussion made in paragraph No.70
after the amendment.
8. The counsel also relied upon the judgment of
this Court full bench reported ILR 2014 KAR 4257 in case
of The Hassan Co-operative Milk Producers Societies
Union Limited and Others V/s State of Karnataka,
Department of Co-operative Societies and others and
brought to notice of this Court paragraph No.21 that the
effect of amendment by way of substitution and to find out
whether amendment by Act No.3 of 2013, by way of
substitution would have retrospective operation. In this
paragraph this Court discussed the judgment of the Apex
Court i.e., distinction between suppression of rule and
substitution of a rule and held that the process of
substitution consists of two steps: first, the old rule is made
to cease to exist and, next, the new rule is brought into
existence in its place. Thus, what emerges from the
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aforesaid judgments of the Supreme Court is that an
amendment which has the effect of substitution of a
provision has the effect of replacing the old provision by the
substituted provision and in the absence of repugnancy,
inconsistency and absurdity, must be construed as if it has
been incorporated in the Act right from ab-initio. In other
words, an amendment by way of substitution has
retrospective operation. The counsel referring this judgment
would vehemently contend that if any substitution is made
by amendment, the same is having the effect of
retrospective.
9. The counsel also relied upon the judgment
reported in ILR 1984 KAR 858 in case of
C.Munichowdappa V/s State of Karnataka and others
and brought to notice of this Court paragraph No.31
wherein an observation is made that decisions make it
abundantly clear that the discretionary power given to an
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authority cannot be claimed as a matter of right and no
party has a vested right in the said remedy.
10. The counsel also relied upon the judgment of the
Apex Court passed in Civil Appeal No.5110/2021 dated
26.10.2021 in case of Sughar Singh V/s Hari Singh (Dead)
through LRs. and Others and brought to notice of this Court
the discussion made in paragraph No.10 with regard to the
execution of agreement duly executed and plaintiff is found
to be ready and willing to perform his part of contract,
grant of decree of specific performance is not automatic and
it is a discretionary relief is concerned, the same cannot be
accepted and/or approved. In such a case, many a times it
would be giving a premium to the dishonest conduct on the
part of the defendant/executant of the agreement to sell.
Even the discretion under Section 20 of the Act is required
to be exercised judiciously, soundly and reasonably. The
plaintiff cannot be punished by refusing the relief of specific
performance despite the fact that the execution of
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agreement to sell in his favor has been established and
proved and that he is found to be always ready and willing
to perform his part of the contract. The counsel also
brought to notice of this Court paragraph No.10.1 also
wherein held that even otherwise no cogent reasons have
been given as to why the decree of specific performance
shall not be passed in favour of the plaintiff. The counsel
also brought to notice of this Court paragraph No.11 and an
observation is made that there are concurrent findings of
facts recorded by the Courts below that the defendant
Nos.2 to 5 were in knowledge of the agreement to sell in
favour of the plaintiff, despite the same they purchased the
suit schedule land surreptitiously.
11. The counsel appearing for the respondent in his
reply argument would vehemently contend that the
defendant specifically pleaded that it was only a loan
transaction and not a sale transaction. Even he told that he
would pay the amount which he has received with interest
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and immediately after the receipt of notice, met him and
offered to pay the amount and cancel the agreement, but
he did not agree with an intention to knock of the property
for lower price.
12. The counsel also would vehemently contend that
the notice also issued after 10 months and not issued the
notice before 6 months and time is essence of the contract
and 6 months time is fixed. The counsel also brought to
notice of this Court, the Ex.P7-reply given by him wherein
also specifically pleaded that it was only a loan transaction
and not the sale transaction and property value more than
Rs.20,00,000/- per acre not exceeds. The counsel also
would vehemently contend that when specific pleading is
made with regard to the sale transaction throughout from
the date of issuance of reply and also chief examination and
in the cross-examination no question is put with regard to
hardship which has been pleaded by the plaintiff and also it
is a specific case that bore well is installed and there are
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coconut trees, the same has been appreciated by both the
Trial Courts as well as the First Appellate Court. The counsel
also would vehemently contend that the Trial Court comes
to the conclusion that sale consideration is not in terms of
the S.R value. The Trial Court itself has enhanced
voluntarily and ordered to pay the more consideration.
Hence, the counsel would vehemently contend that Section
20(b) of Specific Relief Act has not been properly
considered by both the Courts.
13. The counsel in support of his argument brought
to notice of this Court KCS Rules and contend that every
government servant shall on his first appointment to any
service or post and thereafter at the interval of every
twelve month submit a return of his assets and liabilities by
furnishing useful particulars. No government or any
member of his family shall, except with the previous
knowledge of the prescribed authority, acquire or dispose of
any immovable property by lease, mortgage, purchase,
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sale, gift or otherwise either in his own name or in the
name of any member of his family. Provided that the
previous sanction of the prescribed authority shall be
obtained by the Government Servant if any such
transaction is with a person having official dealing with the
Government, or otherwise than through a regular or
reputed dealer. No such permission is taken.
14. The counsel for the appellant in his argument
relies upon judgment of this Court reported in ILR 2014
KAR 5778 in case of Smt.Asharaj and others V/s
S.G.Nagaraj @ Suga Nagaraj and brought to notice of
this Court discussion made in paragraph No.31 and an
observation is made that it is true that inadequacy of
consideration is not a ground to reject the relief of specific
performance. But that can be considered as one of the
attending circumstances with other attending circumstances
like the plaintiff being a money lender and transaction in
question being a loan transaction and suppression of the
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material fact of the existence of a two storied 15 square
R.C.C building in the suit land and fence being put all
around the land and fruit bearing plants being in existence.
The consideration shown in Ex.P1 is so grossly inadequate
that no prudent man can consider the same as a reasonable
consideration. The consideration show in Ex.P1 is not just
on the lower side but shockingly inadequate. Instances of
advancing loan and insisting for a registered agreement of
sale as security for the same is not uncommon in our
country. It is in this regard the Court is bound to look into
all the circumstances surrounding a transaction in order to
know the exact nature of the transaction.
15. The counsel also relied upon the judgment of the
Apex Court passed in Civil Appeal No.150/2022 dated
20.01.2022 in case of Shenbagam and others V/s
K.K.Rathinavel and brought to notice of this Court the
discussion made in paragraph No.34 that ordinarily, the
plaintiff is not to be denied the relief of specific performance
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only on account of the phenomenal increase of price during
the pendency of litigation. That may be, in a given case,
one of the considerations besides many others to be taken
into consideration for refusing the decree of specific
performance. As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to have, for her
alone, the entire benefit of phenomenal increase of the
value of the property during the pendency of the litigation.
While balancing the equities, one of the considerations to
be kept in view is as to who is the defaulting party. It is
also to be borne in mind whether as party is trying to take
undue advantage over the other as also the hardship that
may be caused to the defendant by directing specific
performance. The totality of the circumstances is required
to be seen. It is also observed in paragraph No.36 that in
deciding whether to grant the remedy of specific
performance, specifically in suits relating to the sale of
immovable property, the Court must be cognizant of the
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conduct of the parties, the escalation of the price of the suit
property, and whether one party will unfairly benefit from
the decree. The remedy provided must not cause injustice
to a party, specifically when they are not at fault. It is also
observed that the price of the suit property would
undoubtedly have escalated. Given the blemished conduct
of the respondent-plaintiff in indicating his willingness to
perform the contract, we decline in any event to grant the
remedy of specific performance of the contract. However,
we order a refund of consideration together with interest at
6% per annum.
16. The counsel also relied upon the judgment in
Civil Appeal No.3049/2017 in case of Jayakantham and
others V/s Abaykumar and brought to notice of this
Court discussion made in paragraph No.9 wherein judgment
of the Apex Court has been discussed in case of
Parakunnan Veetil Joseph’s son Mathew V/s
Nedumbara Kurvila’s son and others wherein extracted
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Section 20 of the Specific Relief Act, 1963 and also brought
to notice of this Court paragraph No.11 that the material
which has been placed on record indicates that the terms of
the contract, the conduct of parties at the time of entering
into the agreement and circumstances under which the
contract was entered into gave the plaintiff an unfair
advantage over the defendants. These circumstances make
it inequitable to enforce specific performance and in
paragraph No.12 also discussed that for the above reasons
a decree for the payment of compensation in lieu of specific
performance would meet the ends of justice.
17. Having considered the principles laid down in the
judgments referred supra by both the parties and also
substantial question of law framed by this Court. This Court
has to consider the material available on record. This Court
has framed the substantial questions of law as whether the
Courts below have consider the mandate under Section 20
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of Specific Relief Act, 1963 in the light of the evidence
available on record.
18. Now, this Court has to see the very pleadings of
the parties and also the evidence. In view of the pleadings
of the plaintiff, it is the specific case that an agreement was
entered for a valuable sale consideration of Rs.2,89,000/- in
respect of the property measuring 2 acre 13 guntas in
Sy.No.222/1 and in respect of Sy.No.222/2 measuring 1
acre 5 guntas and in respect to Sy.No.222/3 measuring 1
acre 5 guntas, total extent 4 acre 23 guntas and sale
consideration is fixed as Rs.2,89,000/- and also it is the
case that earnest money of Rs.2,00,000/- has been paid as
on the date of sale agreement. It is also important to note
that sale agreement which has been executed is a
registered document. The defendant particularly in the
written statement took the specific defense in paragraph
No.6 that he was in financial crisis in view of agricultural
loss. Hence, he has approached the defendant for financial
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assistance and he had agreed to lend money. In paragraph
No.7 specific defense was taken that he has borrowed the
loan of Rs.2,00,000/- and he insisted to execute the
agreement of sale and hence, he had put the signature to
agreement of sale and inspite of he offered the amount, he
did not come forward to receive the amount and even he is
ready to pay the amount with interest as pleaded in
paragraph No.8 of the written statement. No dispute with
regard to there exists a sale agreement. No dispute with
regard to having paid the amount of Rs.2,00,000/- on
28.05.2012. The Issue between the parties is whether it is
a loan transaction and whether the discretion has been
exercised by both the Courts. It has to be noted that it is
emerged in the evidence that the S.R value of the property
as on the date of sale is Rs.90,000/- per acre as sale
consideration. It is not in dispute that the Trial Court having
noticed the same directed the plaintiff to pay the difference
amount of Rs.1,19,000/-. Having considered the property is
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measuring 4 acre 23 guntas and computed the market
value it comes to Rs.4,08,000/- whereas the agreement is
only for Rs.2,89,000/- however, invoked Order 7 Rule 7 of
CPC to mould the relief and directed to pay the difference
amount. Hence, it is clear that the sale consideration is not
in terms of the S.R value. The First Appellate Court
reversed the finding of the Trial Court in coming to the
conclusion that the said finding of the Trial Court is
incorrect for a simple reason that, the defendants have
resisted the claim of the plaintiff on false grounds. Hence,
they are entitled for the additional amount as granted by
the Trial Court. The very approach of the First Appellate
Court is not correct and Court has to take note of the
material available on record in toto. The First Appellate
Court in paragraph No.23 of the judgment discussed the
defendant’s counsel has also drawn the attention of the
Court towards the contents of Ex.D2–sale agreement and
argued that the value of the suit schedule property is more
28
than Rs.20,00,000/-. If the value of the suit property is
Rs.90,000/- per acre, the total value of the suit property
comes to Rs.4,08,000/-. The finding is given that the said
contention raised by the learned counsel for the appellant is
not maintainable for the simple reason that Ex.D2 is sale
agreement which was executed during the year 2014, which
is after the execution of the sale agreement. The sale
transaction of the present case held between the plaintiff
and defendants is in the year 2012. The said reasoning also
not correct since the difference between both the sale
agreement subject matter in issue and also the said Ex.D2
is only for a period of 2 years. But, in terms of Ex.D2, the
value is Rs.45,76,000/-. Apart from that the witness PW3
who has been examined on behalf of plaintiff for the relief
of specific performance has categorically admitted in the
cross-examination that the property will be sold more than
the market value. He is also the owner of the land and he is
also having kushki land. He also sold some of the
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properties. When the Document Ex.D2 is confronted to him,
he categorically admits that he sold his property to an
extent of 5 acre 8 guntas at the rate of Rs.22,000/- per
gunta. The value of the sale consideration is Rs.45,76,000/-
and also he re-iterates that the property will be sold more
than the market value fixed by the government. This
admission is also not discussed by both the Trial Court as
well as the First Appellate Court and reasoning given by the
appellate Court that the sale deed executed after 2 years.
There cannot be higher rate of Rs.45,76,000/- within a
span of 2 years and consideration of Rs.2,89,000/- to an
extent 4 acre 23 guntas and that too lesser the value of
market value fixed by the government i.e., Rs.90,000/- per
acre. Hence, it is clear that the very contention of the
appellant/defendant that taking an unfair advantage, the
sale agreement is obtained.
19. It is important to note that PW1 is the
government school teacher and he categorically admits that
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while purchasing the property, he has to take the
permission from the government. The counsel for the
appellant also relied upon the KCS Rules. No doubt at the
time of getting registered the document he has to obtain
the permission. It is important to note that there is a
mescription of extent of the property particularly in
Sy.No.221/1 in the R.T.C and also he admit that it is only
mentioned as 18 guntas and he came to know about the
same. He has not given any notice for rectification.
20. It is important to note that there are tourism
places at the distance of 17 kms from the place of suit
schedule property. He also categorically admits that PW3 is
his witness. He categorically admits that the said PW3 is
also having the properties and also he admits that there is
a bore well and also coconut tress. He says that the bore
well is not in order. Hence, it is clear that the property
though contend that it is in remote place and not fertile
land, but the fact is that the property is having the bore
31
well and coconut trees all these aspects ought to have been
considered while exercising the discretion in favour of the
parties.
21. The other witness is PW2, he also categorically
admits that formers are facing difficulties in view of shortfall
of rain and they used to get the loan. The defendant No.1 is
agriculturist and he also admits that while availing loan
from the bank, they need more documents. The suggestion
was made that when it is difficult to get the loan from the
bank, they used to get the loan from the private people. He
says that he is not aware of the same.
22. The other witness is PW4 who is the scribe of the
document. In his cross-examination also he admits that
while preparing the document, they mention the genesis of
title and he also admits that he inserted two lines in Ex.P1
and the same has to be counter signed and the same has
note been done. No doubt in the cross-examination of DW1,
he also categorically admits that other than suit schedule
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property he is having 3 acres of land. The contention of the
counsel that except this property, he is not having any
other property. Hence, the counsel appearing for the
respondent brought to notice of this Court, he is having
other properties also, the same is also having IP set. He
re-iterates that bore well is installed in the suit schedule
property. The difference between the property which was
sold by the PW3 and also the property of the defendants is
at the distance of 1 ½ Kms, the same is noted by both the
Trial Court as well as First Appellate Court. It is important
to note that when the notice was issued in terms of the
Ex.P2 in terms of Ex.P1, the specific defense is set out by
the defendant in terms of Ex.P7 that it was only a loan
transaction and also categorical defense was set out that
property valued more than Rs.20,00,000/- and the same
cannot be sold for an amount of Rs.2,00,000/-. Having
considered the reply in the beginning itself, he took the
specific defense that the property is having more than
33
Rs.20,00,000/-. Having considered the document Ex.D2 as
well as the evidence of PW3, both the Courts ought to have
considered the material on record while exercising the
discretion in favour of the plaintiff. No doubt the counsel
appearing for the appellant relied upon the several
judgments of the Apex Court with regard to exercising of
the discretion and also brought to notice of this Court
amendment made in the year 2018 and also discussions
were made if it is substitution, the same to be retrospective
interpretation and not prospective interpretation. It is
important to note that the Apex Court judgment quoted by
the appellant is the recent judgment delivered on
20.01.2022, the same is subsequent to the Specific Relief
Act. In paragraph No.34 of the said judgment, it is brought
to notice of this Court the Apex Court discussed in detail
which is extracted as hereunder:
In Nirmala Anand V/s Advent Corporation
(P.) Ltd. and others, three-Judge Bench of this
Court observed that in case of a phenomenal
34
increase in the (2013) 8 SCC 131 PART price of
the land, the Court may impose a reasonable
condition in the decree such as payment of an
additional amount by the purchaser. In
decreeing the suit for specific performance, the
Court observed:
“ It is true that grant of decree of
specific performance lies in the discretion of the
Court and it is also well settled that it is not
always necessary to grant specific performance
simply for the reason that it is legal to do so. It
is further well settled that the Court in its
discretion can impose any reasonable condition
including payment of an additional amount by
one party to the other while granting or refusing
decree of specific performance. Whether the
purchaser shall be directed to pay an additional
amount to the seller or converse would depend
upon the facts and additional amount to the
seller or converse would depend upon the facts
and circumstances of a case. Ordinarily, the
plaintiff is not to be denied the relief of specific
performance only on account of the phenomenal
increase of price during the pendency of
35
litigation. That may be, in a given case, one of
the considerations besides many others to be
taken into consideration for refusing the decree
of specific performance. As a general rule, it
cannot be held that ordinarily the plaintiff cannot
be allowed to have, for her alone, the entire
benefit of phenomenal increase of the value of
the property during the pendency of the
litigation. While balancing the equities, one of
the considerations to be kept in view is as to
who is the defaulting party. It is also to be borne
in mind whether as party is trying to take undue
advantage over the other as also the hardship
that may be caused to the defendant by
directing specific performance. The totality of the
circumstances is required to be seen.”
(Emphasis supplied)
23. Having perused the discussions made by the
Apex Court, the Apex Court observed in decreeing the suit
for specific performance held that ordinarily, the plaintiff is
not to be denied for the relief of specific performance only
on account of phenomenal increase of price during the
36
pendency of the litigation. One of the consideration besides
many others to be taken into consideration for the refusing
decree of the specific performance. As a general rule that it
cannot be held that ordinarily the plaintiff cannot be allowed
to have, for her alone, the entire benefit of phenomenal
increase of the value of the property during the pendency of
the litigation. While balancing the equities, one of the
considerations to be kept in view is as to who is the
defaulting party. It is also observed that It is also to be
borne in mind whether as party is trying to take undue
advantage over the other as also the hardship that may be
caused to the defendant by directing specific performance.
The totality of the circumstances is required to be seen. In
the case on hand, it has to be noted that it is not the case
of phenomenal increase of price during the pendency of
litigation. But, in the case on hand, it is specifically
admitted that the market value is more i.e., Rs.90,000/-
and sale consideration is fixed only Rs.2,89,000/- to the
37
total area of the property 4 acre 33 guntas. Even at the
time of the selling the property the value is more. Hence, it
is clear that even at the time of entering into agreement,
the consideration is less than the market value. I have
already pointed out the PW3 categorically admitted that
property will be sold more than the market value. The
witness of the plaintiff himself categorically admits and re-
iterates property would be sold more than the market value
fixed by the government. But, in the case on hand, lesser
the value considering the consideration in terms of the sale
agreement. The Apex Court also in the judgment referred
supra also held that in suit relating to the sale of immovable
property, the Court must be cognizant of the conduct of the
parties, the escalation of the price of the suit property, and
whether one party will unfairly benefit from the decree. In
the case on hand also that it is the case of the specific
defense of the defendant that the market value is more and
he agreed to execute a document of sale agreement as a
38
security for loan transaction. When the sale consideration is
fixed Rs.2,89,0000/- and only an amount of Rs.2,00,000/-
was paid and aggregate value of the sale consideration is
lesser the value of the market value. These are the aspects
ought to have been discussed by the Trial Court as well as
the First Appellate Court, the same has not been done.
Hence, the judgment of the Apex Court in Shenbagam
and others V/s K.K.Rathinavel case referred supra is
applicable to the facts of the case when the property
market value is more than the agreed rate of consideration
and it is not a case of phenomenal increase of the property
value during the pendency even at the time of entering into
the agreement, consideration is less than the market value.
The other judgment delivered by the Apex Court also in the
year 2017 i.e., in case of Jayakantham and others V/s
Abaykumar referred by the appellants’ counsel. The Apex
Court discussed Section 20 of the Specific Relief Act and
Court is not bound to grant specific performance merely
39
because lawful to do so. The grant of the relief of specific
performance is discretionary, the circumstances specified in
Section 20 is only illustrative and not exhaustive. The Court
has to take note of the conduct of the parties and
respective interest under the contract and also Court has to
take note of circumstances under which the contract was
entered into gave the plaintiff an unfair advantage over the
defendants. In the case on hand, when sale consideration
was fixed less than the market value and admittedly the
property will be sold more than the market value. The Court
has to take note that it is an unfair advantage over the
defendants and held in this judgment that these
circumstances will make the inequitable to enforce specific
performance.
24. Having considered the principles laid down in the
judgments referred supra and also the judgments relied
upon by the respondent’s counsel, no doubt the proviso is
substituted and interpretation as contended by the
40
respondent’s counsel when the relief is for discretionary
relief, Court has to take note of totality of circumstances of
the case which is discussed in detail also and the judgment
relied upon by the appellant in ILR 2014 KAR 5778 also
the division bench of this Court held that in paragraph
No.31, it is true that inadequacy of consideration is not a
ground to reject the relief of specific performance. But that
can be considered as one of the attending circumstances
with other attending circumstances like the plaintiff being a
money lender and transaction in question being a loan
transaction and suppression of the material fact of the
existence of a two storied 15 square R.C.C building in the
suit land and fence being put all around the land and fruit
bearing plants being in existence. The consideration shown
in Ex.P1 is so grossly inadequate that no prudent man can
consider the same as a reasonable consideration. The
consideration show in Ex.P1 is not just on the lower side but
shockingly inadequate. Instances of advancing loan and
41
insisting for a registered agreement of sale as security for
the same is not uncommon in our country. Having
considered the principles laid down in the judgment and
also considering the circumstances under which the
document came into existence in the case on hand also and
the plaintiff is government employee working as a teacher
and admittedly the defendant is a farmer and not having
any worldly knowledge and also taking into consideration of
mentioned in Ex.D2 in respect of the property which is
located in the very same hobli as well as the nature of the
property is a dry land and also located at the distance at
1½ kms between both of them. The sale consideration in
respect of 5 acres of land is an amount of Rs.45,76,000/-.
But, in the case on hand, in respect of extent of 4 acre 33
guntas only sale consideration is Rs.2,89,000/- and it is
nothing but shockingly inadequate, not on the just lower
side. These are the aspects ought to have been considered
by both the Courts. Both the Trial Court as well as First
42
Appellate Court even not discussed anything except
discussing Section 20 of Specific Relief Act. The evidence
available on record has not been discussed in detail with
regard to the exercising the power under Section 20 of the
Specific Relief Act while exercising the discretion Court has
to take note of the facts as well as question of law and the
same has not been done by both the Courts. The answer
elicited from the mouth of witnesses of plaintiff regarding
availment of loan by the farmers under difficult
circumstances also not discussed while exercising
discretion. Mere execution of registered sale agreement of
sale itself cannot be a ground to grant the relief of specific
performance and court must be cognizant of the conduct of
parties. Hence, I answered the substantial questions of law
accordingly.
25. In view of the discussions made above, I pass
the following:
ORDER
i) The second appeal is allowed .
43
ii) The judgment and decree of the Trial Court in
O.S.No.381/2013 and the First Appellate Court
in R.A.No.44/2015 is set-aside and ordered to
refund the amount of Rs.2,00,000/- (Rupees
Two Lakhs only) from the date of agreement
with interest at 12%.
Sd/-
JUDGE
RHS