IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF AUGUST, 2019 BEFORE THE HON’BLE MR. JUSTICE H.P.SANDESH RFA.No.1970/2007 BETWEEN:
K.G. VENKATESH S/O. K.R. GOPALAKRISHNA SETTY AGED ABOUT 47 YEARS BUSINESSMAN LAKSHMI BAZAR CHITRADURGA-577 501. ... APPELLANT (BY SRI. R.V. JAYAPRAKASH, ADV.) AND:
1. S.B. NIRMALA W/O. S. GOVINDARAJULU AGED ABOUT 71 YEARS 2. S.B. SATHYANARAYANA NAIDU SON OF S. GOVINDARAJULU NAIDU AGED ABOUT 44 YEARS 3. S.B. LAKSHMINARAYANA NAIDU SON OF S. GOVINDARAJULU NAIDU AGED ABOUT 46 YEARS ALL ARE RESIDING AT NEAR PRIVATE BUS STAND SANTHE MAIDANA CHITRADURGA-577 501.
4. S.B. ASHARANI W/O. RAMACHANDRA NAIDU AGED ABOUT 47 YEARS K.R. PURAM SAMPIGE ROAD HASSAN-573 201.
5. THE ASSISTANT GENERAL MANAGER KARNATAKA STATE FINANCIAL CORPORATION BESIDES BASAVESHWARA THEATRE CHITRADURGA-577 501. ... RESPONDENTS (SRI. B.L. KUMAR, ADV. FOR R1 TO R3 SRI. B.V. SRINIVAS, ADV. FOR R4 R-5 DELETED VIDE ORDER DATED 05.08.2009) THIS RFA IS FILED UNDER SECTION 96 OF CPC AGAINST THE JUDGMENT AND DECREE DATED 14.08.2007 PASSED IN O.S.NO.148/1998 ON THE FILE OF THE II ADDL. CIVIL JUDGE (SR. DN.), CHITRADURGA, DECREEING THE SUIT FOR DECLARATION AND INJUNCTION.
THIS RFA COMING ON FOR HEARING AND HAVING BEEN RESERVED FOR JUDGMENT, THIS DAY THE COURT DELIVERED THE FOLLOWING:
J U D G M E N T The appellant has filed this appeal challenging the judgment and decree dated 14.08.2007 on the file of II Additional Civil Judge (Sr. Dvn) at Chitradurga decreeing the suit in favour of the plaintiff.
2. The parties are referred as in the original rankings in order to avoid confusion.
3. The brief facts of the case:
The plaintiffs have filed the suit against the defendants for declaration and injunction stating that the plaintiffs are the wife, sons and daughter of one Govindarajulu Naidu, who passed away on 13.01.1986. After the death of Govindarajulu Naidu, the property was transferred in the name of the 1st plaintiff and all of them were living together. They are in possession of the suit schedule property. When the plaintiffs were in joint family, there were running Saikrishna Automobiles in new Santhe Maidana, Chitradurga. For the said business, they have borrowed loan of Rs.3,45,000/- on 03.07.1991 and Rs.3,00,000/- on 16.01.1992 and in total Rs.6,45,000/- from the 2nd defendant. They have executed equitable mortgage deed with respect to the suit schedule property by pledging all the title deeds. The mortgage transaction is not yet cancelled by paying entire money. Defendant No.1 is the family friend from the year 1975 and he had supplied cement at the time of construction of Maruthi-in-Lodge and other articles. Defendant No.1 was also attending the family functions. Defendant No.1 was paying the money to 3rd plaintiff and he was getting back that money. Defendant No.1 was having acquaintance with the family members of the plaintiffs. When the plaintiffs were in need of money of Rs.2,00,000/-, the 1st defendant had paid Rs.1,95,000/- and asked the plaintiffs to execute the security document. The document was prepared with the assistance of Vidyaprasad since these plaintiffs have faith in the 1st defendant.
4. Defendant No.1 has filed the suit in O.S. No.105/1997 and only after receipt of summons, the plaintiffs came to know that defendant No.1 had got concocted the sale deed. The plaintiffs in the suit made allegations of fraud played by the defendant No.1 in obtaining the sale deed and contended that the original documents were hypothecated with the defendant No.2 and defendant No.1 knowing fully well instead of security document for advancing the money fraudulently obtained the sale deed. It is also the case of the plaintiffs that the defendants had purchased a site adjoining the site of plaintiff No.3 and the said transaction is nothing to do with the disputed property.
5. Defendant No.1 in service of notice of the suit appeared and filed the written statement contending that the plaintiffs have colluded with defendant No.2 and filed the suit. Supplying of cement and other articles is denied and denied the entire averments of the plaint and instead of contended that an amount of Rs.1,95,000/- was received and executed the sale deed and also promised to discharge the loan due to defendant No.2 and also promised to deliver the original documents. It is also contended that suit is barred by limitation.
6. Defendant No.2 who filed written statement contended that plaintiff and defendant No.1 have colluded together to deprive the rights of this defendant and causing delay in recovery proceedings. It is also contended that defendant No.2 has initiated the proceedings against the plaintiffs and defendant No.1 in Miscellaneous No.16/1997 and alleged sale deed does not create any right against defendant No.2 and prayed the Court to dismiss the suit.
7. The Court below considering the pleadings of both parties, framed the following issues and also re-casted the issues.
1. Whether plaintiffs proved the sale deed dated 21.03.1994 was executed by defendant No.1 in favour of plaintiffs by playing fraud and undue influence on them as pleaded in plaint?
2. Whether plaintiffs are entitled for declaration of their title over plaint schedule property?
3. Whether plaintiffs are entitled for injunctive relief prayed for?
4. Whether Court fee paid in plaint is not correct?
5. What decree or order?
Re-casted Issue No.1.
Whether plaintiffs proved that the sale deed dated 23.03.1994 was executed by them in favour of defendant No.1 under fraud and undue influence of 1st defendant as pleaded in the plaint?
8. The plaintiffs in order to prove their case, examined the witness P.W.1 who is the plaintiff No.2 and got marked Exs.P.1 to 8. Defendant No.1 examined as D.W.1 and got marked the documents as Exs.D.1 to 3 and defendant No.2 also examined as D.W.2. The Court below having considered both oral and documentary evidence, decreed the suit declaring that the sale deed executed in favour of defendant No.1 was void and declared the plaintiffs are the absolute owners of the suit schedule property. The Court below also granted permanent injunction in favour of plaintiffs.
9. Being aggrieved by the judgment and decree, the present appeal filed by defendant No.1. The learned counsel appearing for defendant No.1, in his argument, he vehemently contended that the Court below failed to consider the evidence of the admission of P.W.1 and also not properly understood the order passed in Miscellaneous Petition No.16/1997. P.W.1, during the cross-examination, he has stated that he did not know anything about the sale transaction between the plaintiffs and defendants. When such being the case, the trial Court without there being any material on record, ought to have held that the plaintiffs are not entitled for a decree. Hence, the findings of the trial Court suffer from illegality and irregularity.
10. The Court below also ought to have noted that learned District Judge in Miscellaneous No.16/1997 has clearly held that he has no jurisdiction to decide the validity of the sale deed dated 21.03.1994 and ought not to have held that defendant No.1 has no right to contest the suit. In view of the order passed in Miscellaneous No.16/1997, the learned counsel also in his argument vehemently contended that the Court below ought to have dismissed the suit as the same is barred by limitation and cancellation of the sale deed was filed after lapse of three years from the date of its execution and there was no any fraud. Hence, prayed this Court to dismiss the suit by setting aside the judgment and decree.
11. In support of his contention, he has relied upon the judgment of the Apex Court in the case of U.Manjunath Rao vs. U.Chandrashekar and another reported in (2017) 15 SCC 309 with regard to responsibility of First Appellate Court and further contended that what are the necessities in considering the first appeal and there must be a reasoned order properly stating the facts, issues arising and their proper adjudication.
12. The learned counsel also relied upon the judgment in the case of Bishundeo Narain and another vs. Seogeni Rai and others reported in AIR 1951 SC 280 and brought to my notice in para Nos.24 and 25 of the judgment that in order to prove fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid.
13. The learned counsel also relied upon the judgment in the case of Ratan Pal Singh vs. Kunwar Pal Singh and another reported in AIR 2001 Allahabad 224 and referring this Judgment, brought to my notice in para No.13 of the judgment. If assuming that the property in question was hypothecated or mortgaged with the UCO Bank in lieu of loan, the title of property in question was not transferred to Bank and it remained with the defendant. Mere depositing the title deeds in favour of defendant No.2 does not create any transfer and learned counsel would contend that the plaintiffs have promised to clear the loan which was obtained from defendant No.2.
14. The learned counsel also, in his argument, vehemently contend that the Court below has committed an error in coming to the conclusion that sale transaction is not proved and non-examination of plaintiff Nos.1 and 3 is fatal to the case of the plaintiffs since P.W.1 does not know the transaction with the defendant No.1. Hence, prayed this Court to set-aside the judgment and decree.
15. On the other hand, the learned counsel appearing for respondents/plaintiffs in his argument he vehemently contend that defendant No.1 was aware of the fact that Karnataka State Financial Corporation has filed petition against the plaintiffs and also defendant No.2 since there was a mortgage in favour of Karnataka State Financial Corporation for an amount of Rs.6,45,000/-. Defendant No.1, in spite of played fraud, obtained the sale deed in connivance with one Vidyaprasad who is the friend of defendant No.1 and no dispute that loan transaction is of the year 1991-92. It is contended that the alleged sale deed in favour of defendant No.1 is of the year 1994 and that too the sale deed is obtained on the hundred rupees Stamp paper and paid the balance amount of stamp duty through the making of payment. P.W.1, in his evidence, has categorically stated how a fraud has been played by the defendant No.1. Defendant No.2, who is the Karnataka State Financial Corporation Manager, has categorically stated that there was a transaction between the plaintiffs and defendant No.2. In Ex.P.1- the sale deed, there was a recital with regard to Karnataka State Financial Corporation Loan and Stamp Vendor is his friend and also he admits the Ex.P.8 – Miscellaneous Order. The District Court in miscellaneous order negatived the contention of defendant No.1, which is against him and the same has not been challenged.
16. In support of his contention, he relied upon the judgment in the case of Chhedi vs. Smt.Indrapat reported in AIR 1972 ALLAHABAD 446 and brought to my notice the Article 59 and referring the same would contend that the suit for setting aside a decree obtained fraudulently – Limitation – Starting point – Suit has to be brought within a period of three years when the fact entitling the plaintiff to have the decree set aside becomes known to him.
17. The learned counsel also referring the judgment in the case of Gouri Amma Vaidehi Amma vs. Parameswaran Pillai Madhavan Pillai and another reported in AIR 1957 Travancore – Cochin 312. The scope and applicability of Limitation Act – Suit by plaintiff to declare that a sale deed executed by him is nominal and sham – Article does not apply.
18. The learned counsel also relied upon the judgment in the case of Radhika Mohan Gope vs. Hari Bashi Saha reported in LAWS(PVC) 1933 3 57 with reference to para No.3 of the judgment wherein it is held that, the learned Judge will have to decide the question as to whether the plaintiff's prayer in that respect is barred by limitation or not, upon a consideration of the question as to whether he has instituted the suit within three years from the date on which the facts entitling him to have the instrument cancelled or set aside became known to him.
19. The learned counsel also relied upon the judgment in the case of Raman Menon vs. Saw Mills and Industries Limited reported in (KER) 1970 3 5. In this judgment, the High Court held that the suit is within three years – the entire claim is within time – appeal dismissed and brought to my notice at para No.9 of the judgment that under Article 95 the starting of limitation is from the date of knowledge of the fraud.
20. Having relied upon these judgments, the learned counsel would contend that when the fraud comes to know to the plaintiffs, they have filed suit within time and hence, is not liable to be dismissed. The learned counsel would contend that the Court below has considered the material on record and rightly decreed the suit and there are no grounds to set-aside the judgment of the trial Court.
21. Having considered the arguments of learned counsel for appellant/defendant No.1 counsel and also respondents/plaintiffs counsel, the points that would arise for my consideration are;
1) Whether the suit is barred by limitation as contended by defendant No.1?
2) Whether the Court below has committed an error in dismissing the suit?
3) What order?
22. Point No.1:- Though the pleadings are available with regard to the limitation and on perusal of the issues, the trial Judge did not frame the issue with regard to the limitation. However, this Court as a First Appellate Court can consider the question of fact and question of law. The plaintiffs in the plaint in para No.9, it is specifically contended that after receipt of the suit summons in O.S. No.105/1997, came to know about the fraud in obtaining the sale deed. No doubt, defendant No.1 in the written statement in para No.9 specifically contended that suit for cancellation of sale deed is barred by limitation and the same is liable to be dismissed. P.W.1 – plaintiff No.2 who has been examined before the Court, in his evidence, he has reiterated the averments of the plaint and he was subjected to cross-examination. In the cross- examination, with regard to limitation is concerned, nothing is elicited from the mouth of P.W.1 that they were in the knowledge of contents of Ex.P.1. No doubt, P.W.1 admits that he has signed Ex.P.1 – Sale Deed. It is suggested that Ex.P.1 was executed as sale deed and not as security document and the same was denied. Nothing is elicited in the cross-examination that all of them were having the knowledge that it was a sale deed and not a security document. In the cross-examination of D.W.1 who is the defendant No.1, though he claims that shop portion was given to his possession. Again, he states that they have retained the possession stating that they want to keep their things in the said shop and promised to vacate the same. Nothing on record for having given the possession and nothing is also elicited with regard to the sale deed was executed and possession was delivered on the same day. Hence, the very contention of the defendant No.1 that suit is barred by limitation cannot be accepted. The principles laid down in the judgment by the learned counsel for plaintiffs that the limitation starts from the date of knowledge of fraud is clear that the limitation starts from the date of knowledge of the fraud and not within three years as contended by defendant No.1. The plaintiffs throughout in their pleadings and evidence have categorically contended that only after receipt of suit summons, they came to know about the fraud. Immediately, they filed the suit and hence, the very contention of learned counsel for appellant/defendant No.1 cannot be accepted. The Article 59 of the Limitation Act applies in the present case that starting point is about the knowledge of fraud. Hence, I answer point No.1 in the Negative.
23. Point No.2:- The case of the plaintiffs before the lower Court that defendant No.1 has obtained the decree fraudulently instead of obtaining the security document for advancing amount of Rs.1,95,000/- in connivance with the Stamp Vendor, he obtained the sale deed. The question is, whether defendant No.1 has played the fraud or not? The plaintiffs have pleaded the circumstances under which the fraud has been committed. It is the contention of the learned counsel for defendant No.1 in the appeal that the Court below did not consider the admission elicited from the mouth of P.W.1 regarding the knowledge of transaction. P.W.1 categorically admitted in the cross-examination that only his mother and brother had the knowledge of the transaction. No doubt, there was an admission in the cross-examination, but they have not examined his mother and also his brother. The question is, whether the same takes away the case of the plaintiffs.
24. Having considered the admission elicited from the mouth of defendant No.1 who has been examined as D.W.1. He categorically admits that as on the date of sale transaction, he had the knowledge of availing of Rs.3,00,000/- from Karnataka State Financial Corporation. His contention is that the plaintiffs have agreed to clear the same. It is important to note the fact that the plaintiffs have availed Rs.3,45,000/- on 03.07.1991 and also an amount of Rs.3,00,000/- on 16.01.1992 and the same has not been disputed by the defendant No.1. Though he claims that he was not aware of the same, but in the cross-examination, he categorically admits that there was a loan from Karnataka State Financial Corporation and documents were also pledged with the Karnataka State Financial Corporation.
25. It is pertinent to note that original title deeds are pledged with the Karnataka State Financial Corporation and at the time of executing the sale deed in favour of defendant No.1, original documents are not given to him. It is also important to note that the possession has not been delivered in favour of defendant No.1. If it is not sham transaction, both possession as well as original documents would have been given to defendant No.1. It is pertinent to note that D.W.1 admits that against him and also against the plaintiffs, suit was filed and also miscellaneous petition was also filed against both of them and there was an order to recovery of the amount from the respondents in favour of Karnataka State Financial Corporation. He also categorically admits that against the order passed in Miscellaneous No.16/1997, no writ is filed. He further admits that as on the date of sale, the property was valued only for Rs.1,95,000/-. He has not produced any document. But, he claims that as on the date of sale, the property value was only Rs.2,00,000/-. No document is placed before the Court about the value. It is pertinent to note that it is the case of the plaintiffs that he obtained the sale deed only on the hundred rupees stamp paper and specific contention was taken that he obtained the sale deed on hundred rupees paper and remaining amount was deposited in the Bank. It is important to note that in the cross-examination, he categorically admits that the scribe of the sale deed is one Vidyaprasad and he is alive and further, he admits that in between Vidyaprasad and defendant No.1, there was a transaction between them and only he prepared the sale deed. When the plaintiffs have alleged the fraud and that in connivance with the said Vidyaprasad, the sale deed was obtained, defendant No.1 did not choose to examine the said Vidyaprasad before the Court. Though the defendants deny that they were not having the cement business. But, in the cross- examination, he admits that his brother is doing the said business. But, he voluntaries that he is also having the Hardware Shop. Hence, it is clear that it supports the case of the plaintiffs that he has supplied the cement and steel as contended by the plaintiffs for construction of the building. He further admits that plaintiff No.3 has constructed the building Maruthi in Lodge at Medahalli. I have already pointed out that though he claims possession was given in respect of the shops, but he voluntaries that the same was retained by the plaintiffs showing that they are going to vacate and handed over the same. The possession has not been delivered. When such being the case, the answers elicited from the mouth of defendants, the very contention of defendant No.1 that the other plaintiffs have not been examined and the same is fatal to the case of the plaintiffs cannot be accepted. First of all, sale deed is obtained for an amount of Rs.1,95,000/-. Even though, there was a loan of Rs.6,45,000/- from Karnataka State Financial Corporation in respect of the very same property that too in the year 1991-92 prior to sale deed of defendant in the year 1994. It is pertinent to note that he was aware of the said transaction prior to obtaining the sale deed. No doubt, there was a recital in Ex.P.1 to clear the loan. If really the sale transaction is not sham transaction, he ought to have been insisted the plaintiffs to clear the loan and got the original documents pledged with Karnataka State Financial Corporation and the same has not been done. The other circumstance is that the scribe of the document of sale deed is none other than the friend of defendant No.1 and he was having the transaction with the said Vidyaprasad. Apart from that, he did not challenge the order passed in the Miscellaneous No.16/1997. It is pertinent to note that in the miscellaneous proceedings also the District Court held that he is not the bonafide purchaser. Having considered the material on record, since he took the defence that he was a bonafide purchaser and the said finding has been attained its finality and categorically admits that he did not file any writ against the said order. No doubt, the learned counsel appearing for appellant/defendant No.1 would contend that the said Court is not having jurisdiction to comes to a conclusion of nature of transaction between the parties and the same has not been challenged and the same has reached its finality. It has to be noted that the circumstances goes against defendant No.1 in all respects. Mere admission of P.W.1 that plaintiff No.1 and his brother has not been examined before the Court though they were aware of the transaction will not take away the case of the plaintiffs.
26. In view of the discussions made above, I am of the opinion that I do not find any reasons to comes to a other conclusion. The Court below has considered the material available on record, particularly admission of D.W.1 in the cross-examination with regard to the transaction is concerned, since he was well aware of the earlier pledging of the documents of title in favour of Karnataka State Financial Corporation. He obtained the sale deed and not insisted for clear the said transaction and not received the original documents and no possession has been taken. Hence, it is clear that it was a loan transaction between the parties as contended by the plaintiffs. Hence, this Court cannot interfere with the findings of the trial Court. However, it is clear that defendant No.1 has paid the amount of Rs.1,95,000/- and plaintiffs have not disputed the same. P.W.1 has categorically admitted that the same has not been paid though he claims that interest has been paid on the said amount. No document has been placed before the Court for having paid the interest and when the Court comes to a conclusion that it was not the sale transaction and it was the security document as contended by the plaintiffs, the trial Judge ought to have ordered for repayment of Rs.1,95,000/- with interest and the same has not been done. Hence, I am of the opinion that defendant No.1 is entitled for the said amount with interest.
27. In view of the discussions made above, I pass the following;
ORDER i) The appeal is allowed in part.
ii) The judgment and decree dated 14.08.2007 passed in O.S.No.148/1998 on the file of II Additional Civil Judge (Sr. Dn.) at Chitradurga in favour of plaintiffs declaring that the sale deed is obtained by fraud is confirmed.
iii) However, the plaintiffs are directed to pay an amount of Rs.1,95,000/- with interest at the rate of 9% per annum from the date of the sale deed dated 23.03.1994 till realization.
iv) The Registry is directed to draw the decree in terms of the above modification.
Sd/- JUDGE NBM