- 1 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE H.P.SANDESH REGULAR SECOND APPEAL NO.816 OF 2021 (SP) BETWEEN: 1. SRI Y.S. NAGARAJ S/O SIDDEGOWDA AGED ABOUT 57 YEARS R/AT: YALANAHALLI VILLAGE HIRISAVE HOBLI CHANNARAYAPATNA TALUK HASSAN DISTRICT-573124. …APPELLANT (BY SRI. VENKATESH R. BHAGAT, ADVOCATE) AND: 1. SRI Y.K. PUTTASWAMY GOWDA S/O LATE MESTHRI KAPANIGOWDA AGED ABOUT 64 YEARS R/AT: YALANAHALLI VILLAGE HIRISAVE HOBLI CHANNARAYAPATNA TALUK HASSAN DISTRICT-573124. …RESPONDENT (BY SRI. M.N. UMASHANKAR, ADVOCATE FOR SRI. NARASIMHA MURTHY G.V., ADVOCATE FOR C/R) THIS RSA IS FILED UNDER SECTION 100 OF THE CPC, AGAINST THE JUDGMENT AND DECREE DATED 31.08.2021 PASSED IN RA.NO.95/2018 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JMFC, CHANNARAYAPATNA, DISMISSING THE APPEAL AND CONFIRMING THE JUDGMENT AND DECREE Digitally signed by DEVIKA M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 DATED 24.08.2018 PASSED IN O.S.NO.625/2011 ON THE FILE OF THE PRINCIPAL CIVIL JUDGE AND JMFC, CHANNARAYAPATNA. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE H.P.SANDESH ORAL JUDGMENT 1. This matter is listed for admission. Heard the learned counsel for the appellant and also the learned counsel for the respondent. 2. This second appeal is filed against the concurrent finding of the Trial Court granting the relief of specific performance and same is confirmed by the First Appellate Court. The factual matrix of case of the plaintiff before the Trial Court while seeking the relief of Specific performance, it is contended that the defendant entered into an agreement of sale on 01.10.2001, agreeing to sell the suit schedule property for a sale consideration of Rs.68,000/- and had received the entire sale consideration. It is the contention of the plaintiff that there was a prohibition for alienation and hence, the defendant - 3 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 had agreed to get the permission from the competent authority and even in case, if such permission is not granted, he can execute the sale deed after the completion of the remaining period of 8 years. When the legal notice was issued and acknowledged the same, he did not give any reply and hence, he was forced to file the suit for the relief of specific performance and he was always ready and willing to have the sale deed. It is the specific contention that when he was agreed to get the permission, but he did not comply with the agreement and hence, he violated the terms and conditions of the sale agreement. The defendant appeared and filed written statement contending that the said document is only a loan document and not the sale and property was granted to the defendant on 30.09.1994 and there was a non- alienation clause in the grant certificate. The defendant is a poor farmer. The plaintiff and defendant are from same village. During the year 2001 to meet the medical expenses of his family members and to clear earlier loans, - 4 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the defendant approached the plaintiff for an amount of Rs.68,000/-. At that time, plaintiff put a condition that he would advance money only if the defendant execute the sale agreement. The plaintiff being a lawyer and intelligent person, taking undue advantage of illiteracy of the defendant, got prepared the agreement of sale as per his wish. The defendant being in helpless position signed the agreement of sale due to need of money, but, the defendant never agreed to sell the suit schedule property to the plaintiff and he did not receive amount as per agreement, but he received the amount as loan. The defendant had denied the very transaction as sale transaction and it is only a loan transaction and market value of the suit schedule property is Rs.50,000/- per gunta and hence, the sale consideration shown in the agreement is not the sale consideration as on the date of the transaction. In view of the same that it is a loan transaction, he did not obtain any permission from the competent authority to sell the property and he was not - 5 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 aware of the procedure and hence, he did not issue any reply notice and defendant is ready to refund the amount of Rs.68,000/-. 3. The Trial Court having taken note of the pleadings of the parties, framed the issues and allowed the parties to lead evidence. The plaintiff examined himself as P.W.1 and also examined four witnesses as P.W.2 to P.W.5 and produced the document Ex.P.1 to Ex.P.59. On the other hand, defendant examined himself as D.W.1 and got marked document Ex.P.1 to Ex.P.22. The Trial Court having considered the pleadings of the parties and also the evidence available on record, particularly evidence of the P.W.1 as well as witnesses P.W.2, P.W.3 and P.W.4 who are the attesting witnesses to the agreement, comes to the conclusion that the same is a sale transaction and not the loan transaction and also comes to the conclusion that when the recital of the document is Ex.P.1 is very clear that when there was a prohibition for sale of the property, a condition is also mentioned in the agreement itself that - 6 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the defendant would get the permission from the competent authority then, he will sell the property and other recitals of the document also very clear that it is a sale transaction and not a loan transaction and also taken note of the admission on the part of D.W.1 in his signature on Ex.P.1 and also receipt of the amount, but, only contention that it was a loan transaction and the same has been discussed in paragraph No.26 and also taken note of except the evidence of D.W.1 that it was a loan transaction, not contravene the same and even defendant in his cross-examination has admitted the receipt of the notice and he did not give any reply to the notice. The same reveals that plaintiff was ready and willing to perform his part of contract and considering all these materials, particularly with regard to the prohibition of non-alienation and the same also discussed in paragraph No.30 and comes to the conclusion that plaintiff has proved the issues that the same is a sale transaction and - 7 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 granted the relief of specific performance directing him to execute the sale deed within 2 months. 4. Being aggrieved by the said judgment and decree, an appeal is filed in R.A.No.95/2018 and First Appellate Court also having considered the grounds which have been urged in the appeal memo, formulated the point whether the plaintiff has proved that there was a sale agreement and whether the plaintiff was always ready and willing to have the sale deed, whether the same was a loan transaction as contended in his written statement, whether judgment and decree requires interference. The First Appellate Court having re-assessed both oral and documentary evidence, answered the point Nos.1 and 2 as affirmative in coming to the conclusion that there was a sale transaction and plaintiff was always ready and defendant did not prove his contention that it was a loan transaction and also taken note of the recitals of the document in Ex.P.1 particularly while answering point No.2 in affirmative comes to the conclusion that on the contrary - 8 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the defendant who was required to obtain permission from the Deputy Commissioner to alienate the granted land and failed to show that he has performed his part of contract. Inspite of notice issued by the plaintiff under Ex.P.8 and Ex.P.10. The defendant has not even replied for the same and Ex.P.1 is a sale transaction though it contended that it is a loan transaction and the very recital is clear that it is a sale transaction and confirmed the judgment of the Trial Court. 5. Being aggrieved by the concurrent finding, the present second appeal is filed before this Court. The main contention of the counsel appearing for the appellant before this Court is that both the Courts failed to consider that there was a sale transaction and counsel would vehemently contend that the document at Ex.P.1 is an unregistered document of agreement of sale and the same is not proved by the plaintiff in accordance with law. The counsel would vehemently contend that both the Courts failed to take note of readiness and willingness to perform - 9 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 his part of obligation does not arise when agreement of sale itself is not proved. The counsel would vehemently contend that the plaintiff is a practicing advocate and he was having a domination over the defendant and under the influence only, got the document instead of loan transaction, he got the sale agreement. The very specific defense of the defendant in the written statement is also very clear with regard to the same. The counsel also brought to notice of this Court that there was a grant. The counsel submits that there was a non-alienation for a period of 15 years. The land was granted in the year 1994 and counsel also brought to notice of this Court the conditions of grant that is Karnataka Land Grant Rules, 1969 wherein clause 1(i) the present amendment is very clear that the grantee shall not alienate the land for a period of 25 years, earlier it was 15 years from the date of taking possession provided that he may after the period of 5 years, with the previous permission, subject to such conditions as may be specified by the Deputy - 10 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 Commissioner, alienate the whole or any portion of such land, but, however, the Deputy Commissioner shall not grant such permission unless he satisfied that alienation is for the purpose of acquiring other land or for improving the remaining land and granting credits to government an amount equal to 50% of the market value of such land as on the date of sanction of such alienation as decision taken by the Deputy Commissioner. The counsel would vehemently contend that when there was a specific bar to alienate the property ought not to have granted the relief of specific performance. 6. The counsel also brought to notice of this Court Section 23 of Contract Act, wherein it is clearly stated that consideration and objects are lawful and what not also specifically mentioned that the consideration or object of an agreement is lawful unless it is forbidden by law and if such a nature that if permitted, it would defeat the provisions of any law or is fraudulent and involves or implies injury to the person or property of another. The - 11 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 Court regards it as immoral or opposed to public policy. The counsel referring Section 23, would vehemently contend that the same is forbidden by law and taken note of the object of the land grant rules and specifically prohibits the same and when such transaction was made and the same is not lawful, question of granting the relief of specific performance does not arise. The counsel would vehemently contend that the very relief granted by the Trial Court and Appellate Court is against the material on record. 7. Per contra, the counsel appearing for the respondent would vehemently contend that the Trial Court and Appellate Court considering the material available on record, particularly the recitals of the document of Ex.P.1 and also the defence which has been taken that as loan transaction and taken note of that it was a sale transaction and not the loan transaction. Even he had agreed to obtain the permission from the competent authority. But, he did not obtain the permission and immediately after the lapse - 12 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 of 8 years which was remaining caused the legal notice and legal notice was also served on him and he has not given any reply to the notice. The counsel also would vehemently contend that the Trial Court already executed a sale deed in favour of the respondent vide sale deed dated 05.10.2021. Even during the pendency of the appeal and there was no any stay order by the First Appellate Court and already the agreement is enforced by obtaining the sale deed and hence, this second appeal becomes infructuous. 8. The counsel would vehemently contend that with regard to the non-alienation clause is concerned, the Division Bench of this Court in a case of Syed Zaheer and Others V/s C.V. Siddveerappa reported in ILR 2010 KAR 765 held that discretion to decree specific performance cannot be exercised when the terms of the contract or the conduct of the parties at the time of entering into contract are the circumstances under which the contract was entered into as such that they give the - 13 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 plaintiff an unfair advantage over the defendant where the performance of the contract would involve some hardship to the defendant whereas, its non-performance would involve no such hardship on the plaintiff and also held that while explaining these circumstances, explanation-I speaks about unfair disadvantage and explanation-II related to hardship which is a circumstance in favour of the defendant while explanation-III and IV are in favour of the plaintiff, when in a case where the plaintiff has done substantial acts in consequence of contract capable of specific performance or refused to perform specific performance, merely because the contract is not enforceable at the instance of the defendant and also even discussed with regard to Section 23 of the Contract Act. The Trial Court was correct in holding that the respondent who had filed suit for specific performance was ready and willing and had in fact performed his part of contract and there was no reason as to why specific performance could not be granted to him. - 14 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 9. The counsel also would contend that this Court in the similar set of facts and circumstances, in the Judgment in R.S.A.No.1358/2022 vide judgment dated 27.06.2025 in case of B.S.Lakshman and Puttshetty and Others, elaborately discussed in the same circumstances and comes to the conclusion that by taking into note of when the defendant having the knowledge about there was an alienation and also when the recital is very clear that he would convey the property by executing the document after the period of non-alienation and having the knowledge about the same and knowingfully well the non-alienation clause, executes a document and later he cannot contend that there was a non-alienation clause and he is not ready to sell the property. 10. The counsel also relied upon the judgment passed by this Court in R.S.A.No.1903/2006 dated 25.02.2008 and brought to notice of this Court paragraph No.11 insofar as the contention that suit agreement is void referring to the recitals in the grant certificate, the lower - 15 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 Appellate Court held that there is a prohibition for other alienation and an agreement of sale, the property is not alienated, the law governing the case on hand, do not provide that even the agreement of sale during the prohibited period are illegal or void as is the case in some of the enactments. Therefore, it cannot be said that the suit agreement is void ab-initio. When the parties agree to execute a sale deed after the expiry of the prohibited period and decline to do so, as has happened in the instant case, immediately after the expiry of the prohibited period, first and second defendants have sold the property in favour of third defendant. On the day the suit is filed to enforce this agreement, it cannot be said that suit agreement was void and unenforceable. The whole object behind the non-alienation clause and the Courts taking a hard view not to enforce this agreement is to see that the grantee to whom the grant is made continues to enjoy the property and eke out their livelihood. Normally these grantees are all persons belonging to weaker sections of - 16 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the society and people with money and power, take advantage of their innocence or helplessness, try to grab these properties which are granted to them. This is how the Courts are coming to the rescue of these people. But, in the instant case, this land is granted to the first defendant because her land was acquired for Hemavathi project. In exchange to the land which is acquired, after paying compensation to the allottee, the land is granted. It is not a case of the grant in favour of the weaker section of the society. The land grant is by way of additional compensation. The counsel would vehemently contend that when he had the knowledge about the prohibition and entered into an agreement knowingfully well the consequence of the agreement and also agreed to obtain the permission from the competent authority to sell the property, now the very contention that there was a prohibition cannot be accepted. 11. In reply to this argument, the counsel in support of his argument, he relies upon the judgment of - 17 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the Apex Court in confirming the judgment of this Court Division Bench reported in ILR 2010 KAR 765 in a case of B.S.Lakshman and Puttshetty & Others produced the order passed in Civil Appeal No.9551-9552 of 2019 and Apex Court held that we are not inclined to interfere with the impugned judgment and order dated 18.12.2009 passed by the High Court of Karnataka at Bangalore in R.F.A No.376/2003 and R.F.A.No.377/2003 and appeals are dismissed and counsel would contend that the judgment passed by this Court is upheld by the Apex Court, under these circumstances, not entitled for even for admission. 12. The counsel appearing for the appellant in reply to this argument, relied upon the judgment reported in (2022) 12 SCC 321 in the case of G.T.Girish V/s Y.Subba Raju (Dead) By Legal Representatives and brought to the notice of this Court that the Apex Court held regarding illegality of contract or its subject matter, applicability of Section 23 of the Contract Act. The counsel - 18 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 referring this judgment would vehemently contend that when the very transaction itself is void, there may not be any enforcement and brought to notice of this Court particularly wherein paragraph No.91 held that whatever may be intention of the parties, a contract which is expressly or impliedly prohibited by a statute may not be enforced by the Court and hence, ought not to have granted the relief of specific performance and the same ought not to have been confirmed by the Appellate Court. 13. Having heard the learned counsel for the appellant and also the learned counsel for the respondent and also considering the material on record, it is not in dispute that there was a sale agreement, but, only it is the contention of the appellant’s counsel that it was only a loan transaction, but on the insistence of the plaintiff, the document came into existence as a sale agreement. Having perused the recitals of the document of Ex.P.1-sale agreement, it is very clear that the defendant having the knowledge about the fact that there was prohibition and - 19 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 even he had agreed to obtain the permission from the competent authority from the Deputy Commissioner and in the agreement itself, he has stated that he is going to file an application on the very same day seeking permission from the competent authority to sell the property. Apart from that in the recitals also very clear that in case if he was unable to get the permission from the competent authority, the defendant can get the sale deed through a Court for specific performance and no doubt in the further recital, there is a clause in the agreement with regard to the forfeiture is concerned in case plaintiff did not come forward to have the sale deed and also there is a recital with regard to in case if the sale deed is not executed, the amount can be refunded with interest. Having taken note of these recitals of the document at Ex.P.1, it is very clear that it is nothing but a sale, not a loan transaction as contended by the appellant’s counsel and the same has been considered by the Trial Court and also by the Appellate Court. If it is a loan transaction, there was no - 20 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 need to get the permission of the Deputy Commissioner to sell the property and hence, the very defence which was taken is falsified considering the documentary evidence of Ex.P.1 and also nothing is established during the course of the evidence. 14. The other contention of the counsel that there was a prohibition under the land grant rules and no doubt the counsel appearing for the appellant brought to notice of this Court grant condition No.9 sub-clause I, there is a prohibition not to alienate the same, earlier it was for 15 years and now it is 25 years. But, at the time of granting the land in the year 1994, it was 15 years. But, at the same time, it is very specific that in the provision itself that if after lapse of 5 years, permission can be granted and when such recital in the agreement Ex.P.1 is very clear and apart from that the recital also very clear that if permission is not obtained within the period of 8 years since 8 years was remaining to conclude 15 years of non- alienation clause and specific averment is also made that - 21 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 the defendant is having a liberty to approach the Court and get the relief. No doubt there is a clause with regard to the refund of the amount is concerned, but, when the defence was taken that it was not the sale transaction and when the Court comes to the conclusion that it was a sale transaction and Court has to read the very entire recital of the said agreement and when such being the facts and circumstances, both the Trial Court and Appellate Court taken note of it is a sale transaction and not the loan transaction and hence, rightly passed an order to execute the sale deed and the same is also confirmed by the Appellate Court. Even after the expiry of period of 8 years, when the notice was issued, no reply was given even after receipt of notice also and the same was also taken note of by the Trial court as well as the Appellate Court while concurring the judgment of Trial Court and Appellate Court and while answering the point for consideration with regard to the ready and willingness also considered the same. - 22 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 15. The other contention of the counsel appearing for the appellant relying upon Section 23 of Contract Act and also relying upon the judgment of the Apex Court referred supra, it is very clear that there was a non- alienation clause and agreement was executed even during the subsistence of non alienation clause also to be taken note of, but the recitals of the document is very clear that even after the expiry of the period, he is going to execute the sale deed. When such being the case, when the dispute is with regard to the sale agreement and loan agreement, though contract is entered between the parties and consciously entered into an agreement stating that going to execute the sale deed after the completion of 8 years of the remaining period and he specifically mentioned in the agreement itself that he is ready to execute the sale deed and also the recitals is very clear that the entire sale consideration was paid under the agreement and when such being the case, the judgment which is relied upon by the counsel appearing for the - 23 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 appellant in case of G.T.Girish referred supra will not comes to the aid of the appellant. 16. 16. The counsel would vehemently contend that the very transaction itself is doubtful and also the contention that the respondent being an advocate taken the advantage of domination and obtained the sale agreement and the said contention also cannot be accepted for the reason that recitals of the document of sale agreement is very clear that he had received the entire consideration and agreed to execute the sale agreement and also making an attempt to get the permission from the Deputy Commissioner and also specific averment is made in the agreement itself that he is going to get the permission from the competent authority and if that is the case, if he has played the dominance over the defendant, there was no need to mention that recital with regard to getting the permission from the competent authority. On perusal of the document of Ex.P.1, he is not an illiterate and he had signed the document in English and document Ex.P.1 is - 24 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 also very clear and the same is evident. When such being the case, the very contention that he played the domination over the appellant cannot be accepted having taken note of all these factors into consideration and also this Court with regard to the very prohibition is concerned, relied upon the judgment of the Division Bench reported ILR 2010 KAR 765 referred supra and also this Court on the earlier occasion also when the same circumstances arises before this Court in the judgment in Lakshman’s case in R.S.A.No.1358/2022 taken a note of the facts and circumstances. When the appellant consciously entered into an agreement to sell the property knowingfully well that there was a prohibition and also recital is made in the agreement itself is clear that he is going to execute the sale deed even after the completion of the non-alienation period. Hence, I do not find any ground to admit and frame substantive question of law. 17. In view of the discussions made above, I pass the following: - 25 - HC-KAR NC: 2025:KHC:49625 RSA No. 816 of 2021 ORDER i) The Second Appeal is dismissed with exemplary cost of Rs.25,000/- payable at the Registry within two weeks from today. If the cost is not paid within two weeks, the Registry is directed to recover the same in accordance with law. ii) In view of dismissal of the appeal, I.As., if any do not survive for consideration, the same stands disposed of. Sd/- (H.P.SANDESH) JUDGE RHS List No.: 1 Sl No.: 15