IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30th DAY OF AUGUST, 2017 BEFORE THE HON’BLE Mr. JUSTICE S.N.SATYANARAYANA R.S.A. No.1741 OF 2010 BETWEEN:
SIDDARAMA S/O RAMIAHA, AGED ABOUT 41 YEARS, R/AT D.NO.81/2, T.K. LAYOUT, CHAMARAJAMOHALLA, MYSURU – 570 005. ...APPELLANT (BY SRI. M.V. VEDACHALA, ADVOCATE) AND:
1. A.L. LAKKE GOWDA, S/O LAKKE GOWDA, AGED ABOUT 52 YEARS, R/AT ALANAHALLI, AKKIHEBBAL HOBLI, K.R. PET TALUQ, MANDYA DISTRICT – 571 401.
2. SMT. SHASHIKALA W/O K. NAGARAJ, AGED ABOUT 38 YEARS, R/AT D.NO.10 (142) BEHIND LINE OF HOUSES, NEAR GANAPATHI TEMPLE, VIJAYSHREEPURA, MYSORE – 570 006. ...RESPONDENTS (BY SRI. Y.S. SHIVA KUMARA, ADVOCATE FOR R-1, SRI. P. NATARAJU, ADVOCATE FOR C/R-2) . . . .
THIS REGULAR SECOND APPEAL IS FILED UNDER SECTION 100 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 20.03.2010 PASSED IN R.A. NO.220/2008 AND 8/2009 ON THE FILE OF THE I ADDL. DISTRICT JUDGE, MYSORE, PARTLY ALLOWING THE APPEALS AND SETTING ASIDE THE JUDGMENT AND DECREE DATED: 11.11.2004 PASSED IN O.S.NO.534/2003 ON THE FILE OF THE JUDGE, COURT OF SMALL CAUSES AND CIVIL JUDGE (SR. DN), MYSORE.
THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT The plaintiff in O.S. No.534/2003 on the file of the Court of Small Causes and Civil Judge (Sr. Dn.) at Mysuru has come up in this second appeal impugning the divergent finding rendered by the Court of I Additional District Judge, Mysuru in allowing R.A. No.220/2008 and partially allowing R.A. No.08/2009 by setting aside the judgment and decree dated 11.11.2004 in O.S. No.534/2003.
2. Brief facts leading to the second appeal are as under:
The suit in O.S. No.534/2003 is filed by the appellant herein seeking specific performance of agreement of sale dated 26.11.2002 vide EX.P1 wherein it is stated that the first defendant Lakkegowda had agreed to sell suit schedule site in favour of plaintiff for valuable consideration of Rs.80,000/- and at the time of agreement of sale a sum of Rs.60,000/- has been paid by cash and had agreed to pay the balance sale consideration at a later stage. It is also stated that the said agreement of sale had a default clause wherein the plaintiff in the event of his failure to execute the sale deed had agreed to pay damages in a sum of Rs.30,000/- and in the very same sale agreement a counter default clause was also incorporated against the plaintiff in holding that in the event he failed to get the sale deed executed in his favour, he will forego Rs.30,000/- from out of the sale consideration which is already paid under agreement of sale dated 26.11.2002 and it is stated by the plaintiff that subsequently the defendant also received balance sale consideration of Rs.20,000/- vide EX.P2 dated 1.6.2003. However, he did not come forward to execute the sale deed necessitating the plaintiff to file a suit for specific performance against him. Initially the suit was filed only against first defendant, subsequently it is seen that the suit is amended including the second defendant as one of the party and seeking a prayer to declare the transaction between the first and second defendant with reference to sale of suit schedule property by first defendant to second defendant is null and void.
3. Incidentally in O.S. No.534/2003 the plaintiff had also sought for alternate prayer in seeking refund of the sale consideration at Rs.80,000/- along with a prayer for payment of damagers. In the said suit on service of summons defendant Nos.1 and 2 entered appearance, wherein first defendant in the written statement denied everything including execution of agreement of sale and tried to set up a defence that there was a loan transaction between himself and plaintiff in the month of August, 1999, during which period he had taken loan of Rs.30,000/- from the defendant. While taking the loan he had executed two blank stamp papers of Rs.100/- denomination each and that at no point of time he had intention to sell the property to the plaintiff and he has also contended that since he was financially not in a good condition to repay the money, taking advantage of the same the defendant had persuaded him to execute the sale deed dated 27.11.2002 wherein amount paid towards sale consideration of Rs.60,000/- was Rs.30,000/- towards loan amount and Rs.30,000/- towards lump sum interest and it is also stated that no amount was received by him at the time of executing the agreement of sale. It is further contended that subsequent to execution of sale deed he has not executed any document including EX.P2 -
consideration receipt wherein it is stated that he has paid another Rs.20,000/- for obtaining title deed of suit property from MUDA.
4. It is also contended that the entire transaction is a concocted story by the plaintiff to deceive him of his property. Subsequently additional written statement is also filed stating that the entire transaction is in the nature of security for the loan taken by plaintiff. In the said proceedings second defendant entered appearance, denied having any knowledge of agreement of sale executed on 26.11.2002 and also consideration receipt dated 01.06.2003 executed by first defendant in favour of plaintiff and also any contract between the plaintiff and first defendant with reference to purchase of the suit property and she would state that she has purchased the suit property of valuable consideration at Rs.66,000/- and that the suit property is registered in her name, katha is also registered in her name and she is in possession and enjoyment of the same. With this the court below proceeded to frame issues and recorded evidence in the aforesaid suit.
5. On behalf of the plaintiff he himself examined as PW.1 and also examined another person by name Swamy B, one of the witness to the agreement of sale - EX.P1 as PW.2. He also produced in all ten documents which are EXs.P1 to P10 which includes registered copy of the agreement of sale, consideration receipt as EXs.P1 and P2, legal notice and other original documents like sanction letter, possession letter, katha extract, kandayam receipt, encumbrance certificate in respect of the suit schedule property. On behalf of defendant first defendant examined himself as DW.1. The other witness who was examined as DW.3 and second defendant’s husband as DW.2, who is also signatory to EX.P1 and essentially his presence in the proceedings as DW.2 is to demonstrate that the entire transaction culminating in EX.P1 is loan transaction and it is not a clear transaction for sale of the suit property. In the court below DW.1 produced in all four documents. EXs.D1 to D3 are three post cards which are written by the plaintiff during the period 2001 demanding repayment of loan of Rs.30,000/- and in one of the document namely, EX.D1 he would quantify the loan amount with interest at Rs.60,000/- vide EX.D1. The court below having seen that the execution of agreement being accepted by DW.1 has decreed the suit ignoring the other defence which are raised regarding earlier loan transaction and documents produced and relied upon by the first defendant with reference to earlier loan transaction. The first defendant being aggrieved by the judgment and decree in O.S. No.534/2003 preferred an appeal in R.A. No.220/2008 on the premise that the trial court has not property appreciated all the documents which are made available to that and the defence which are raised is ignored and documents are not looked into and even while considering the prayer when alternate prayer was there seeking refund and damage the same could have taken into consideration with the fact that the defendant having established the loan transaction between the parties which is of the year 1999 and the offshoot of that is EX.P1 and denial of EX.P2 not being considered was also made as one of the grounds.
6. Simultaneously another appeal is filed in R.A. No.8/2009 by second defendant contending that the Court below has not appreciated evidence properly wherein in the absence of there being no material to show that she had knowledge of earlier transaction between the plaintiff and first defendant. The grant of specific relief in favour of plaintiff ignoring the sale transaction made in her favour which has taken place in the second defendant not having knowledge of earlier transaction. Same is required to be set aside and the judgment rendered by the court below should be modified to the extent of refund of the sale consideration with damages.
7. The lower appellate court clubbed both the appeals together. Thereafter proceeded to frame the points for consideration on the basis of the grounds urged in the appeal and thereafter on hearing the learned counsel appearing for the appellants as well as common respondent proceeded to allow both the appeals and consequently modified the judgment and decree dated 11.11.2004 in O.S. No.534/2003 for the relief of specific performance to that of decree for recovery of a sum of Rs.90,000/- payable by first defendant to plaintiff with interest at 6% p.a. on Rs.60,000/- and further holding that the interest is required to be paid from 26.11.2002 till realization of the entire amount.
8. The plaintiff in the original suit having suffered a divergent finding in the lower appellate court by modifying the judgment for decree to that of refund has come up in this second appeal challenging the common judgment passed in R.A. No.220/2008 and R.A. No.8/2009 by common judgment dated 20.03.2010.
9. This second appeal was heard for admission on 14.08.2017 on which day this Court admitted the second appeal to consider the following substantial questions of law.
1. Whether the lower appellate Court was justified in reversing the judgment and decree passed by the trial Court in O.S. No.534/2003 despite the fact that the plaintiff had paid the entire sale consideration for purchase of the suit schedule property to defendant No.1 under registered agreement of sale dated 26.11.2002 vide EX.P1 and receipt dated 01.06.2003 vide EX.P2, prior to the date of execution of the subsequent sale deed by defendant No.1 in favour of defendant No.2 on 24.12.2003 vide EX.D4 ?
2. Whether the lower appellate Court has rightly understood the default clause in registered agreement of sale dated 26.11.2002 vide EX.P1 ?
10. Thereafter this matter was taken up for final hearing in the presence of learned counsel Sri M V Vedachala for the appellant and learned counsel Sri Y S Shiva Kumara for the first respondent and Sri P Nataraju for the second respondent.
11. This Court after going through the judgment of both the courts below in the light of the grounds urged in this second appeal and also the pleadings - oral and documents available on record proceeded to answer the aforesaid two substantial questions of law in the affirmative for the following reasons.
12. The fact that first defendant in the Court below is owner of suit schedule property is not in dispute. It is also not in dispute that he has entered into an agreement for sale in favour of defendant No.1 on 26.11.2002. As rightly observed by both the courts below the agreement of sale by first defendant in favour of plaintiff is established. However, the circumstance under which the execution of agreement of sale has come into place is not properly appreciated by the trial court while considering the suit filed by the plaintiff. However, in the lower appellate court, the lower appellate court has looked into all the documents, particularly the agreement of sale, consideration receipt and as well as the post cards which are produced by defendant vide EXs.D1 to D3 which throw light regarding the nature of the transaction. The three letters which are EXs.D1 to D3 are of the year 2001 for the period from April to July, 2001 wherein the relationship between the plaintiff and first defendant is clearly disclosed as the first defendant is the friend of the plaintiff’s elder brother known to each other and he had a financial difficulties in the month of August, 1999 which necessitated him to approach the plaintiff for loan of Rs.30,000/- which was given by the plaintiff to the first defendant. It is also seen that the first defendant having taken the loan did not stick to the assurance given by him to the plaintiff and he started demanding him for repayment of the loan which has resulted in nasty letters written by the plaintiff to the defendant vide EXs.D1 to D3. In one of them he would categorically state that if Rs.30,000/- which was given in the month of August, 1999 had been put in any bank would have yielded Rs.60,000/-. Thereafter the agreement of sale is entered into between the parties on 26.11.2002 where the sale consideration for sale of suit property is shown as Rs.80,000/-, when it comes to payment of sale consideration what is shown as the advance consideration is shown as Rs.60,000/-. According to the plaintiff he has paid the entire amount by cash which he has not established as to how and when he mobilized the funds as on the date of agreement of sale on 26.11.2002.
13. Per contra, the first defendant while accepting the execution of agreement would state that Rs.60,000/- shown as consideration in EX.P1 is Rs.30,000/- towards loan amount and Rs.30,000/- being the lump sum interest for that and however in the proceedings before the trial court though the plaintiff accept execution of agreement vide EX.P1 he denies execution of consideration receipt for having received Rs.20,000/- on 01.06.2003. At this juncture if the written statement is looked into wherein it is clearly stated by the defendant that at the time of borrowing loan his signature was taken on two blank stamp papers. If that is taken into consideration, the possibility of very same blank stamp paper being available with the defendant is used for creation of consideration receipt cannot be disputed. However, another hitch will come in the way to accept this. Because the loan transaction is admittedly in the month of August, 1999 whereas the stamp paper on which consideration receipt which is drawn is purchased in the month of March, 2001.
Be that as it may, but the fact remains that the stamp paper which is issued in the month of March 2001 is used for drawing up of consideration receipt in the month of June, 2003. If the stamp paper which is used for execution of EX.P1 is looked into, it is taken on the same date i.e., on 26.11.2002. When that is looked into it gives a doubt as to the stamp paper was purchased earlier and kept for the purpose of preparing consideration receipt in the year 2003. In any event there is no cogent explanation on the part of plaintiff with reference to execution of sale receipt vide EX.P2 by defendant No.1 in favour of plaintiff which he has failed to establish before the lower appellate court while reappreciating the pleadings and evidence. The lower appellate court as court of first appeal has rightly looked into all these documents and being convinced that there is enough material to link the transaction of loan with reference to EXs.D1 to D3 and also the consideration amount as shown in agreement which is at EX.P1. Assuming for a moment if this is a clear sale transaction there was no need for any default clause to be included in the said agreement, which by itself is an indication that the possibility of the EX.P1 being a document executed as and by way of security for loan transaction cannot also be disputed. In this background the lower appellate court has rightly appreciated the suit transaction based on pleadings and evidence and has rightly come to the conclusion that though the plaintiff has established execution of EX.P1 and it is to be seen in the background of loan transaction as document for security. Therefore insertion of the default clause has a special meaning and significance in this background. Therefore, while reappreciating the evidence in the background of all these has rightly modified the judgment passed in O.S. No.534/2003 granting the relief of specific performance to plaintiff.
14. The observation of the lower appellate Court in holding that under Section 21 of the Specific Reliefs Act the grant of specific relief is discretionary and it has to be on the basis of the pleading and also in the background of transaction the Court will have to mould the relief appears to be just and proper. Therefore in this background the lower appellate court has rightly ordered for refund of Rs.60,000/- which is properly established as having paid under EX.P1 (adjusted by way of principal and loan quantified at Rs.60,000/-) and so far as EX.P2 balance sale consideration is rightly rejected by the lower appellate court. Therefore, in the fact situation this Court feel that the lower appellate court modifying the judgment and ordering refund of Rs.60,000/- along with Rs.30,000/- damages as claimed by way of alternate prayer appears to be just and proper. However, when it comes to granting of interest at 6% over and above, that Rs.60,000/- sale consideration appears to be on lower side. The interest at 6% is on the lower side, more particularly when the entire transaction is loan transaction. During the said period the running rate in the bank was to be in the range of 10% to 12% depending upon the nature of transaction. Therefore, in the fact situation if plaintiff would deposit that amount in nationalized bank in long duration deposit he would have earned minimum of 10% to 12%.
15. In that view of the matter, this Court while dismissing this appeal with reference to the prayer for specific performance would consider enhancing the rate of interest fixed by the court below from 6% to 12% and direct the first defendant to repay a sum at Rs.90,000/- with interest at 12% on Rs.60,000/- payable from 26.11.2002 till the date of payment of the entire amount. If the entire amount is not paid within six months from today, the plaintiff is also entitled to additional cost of Rs.30,000/-. Accordingly, this second appeal is disposed of with the aforesaid observation.
ykl Sd/- JUDGE