- 1 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF JANUARY, 2025 PRESENT THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA REGULAR FIRST APPEAL NO. 100569 OF 2019 (SP) BETWEEN: 1. KUTUBUDDIN S/O UMARSAB MULLA SINCE DECEASED BY LR’S., 1a. ROSHANBEGAM KUTUBUDDIN MULLA AGE: 41 YEARS, OCC: AGRICULTURE, 1b. SAIDAMA MIRASAB MULLA AGE: 25 YEARS, OCC: AGRICULTURE, 1c. SUHAN SALIM DALAYAT AGE: 22 YEARS, OCC: AGRICULTURE, 1d. PARAVIN SADHIKHUSEN MULLA AGE: 19 YEARS, OCC: HOUSEHOLD, 1e. TANVIRABANU KUTUBUDDIN MULLA AGE: 18 YEARS, OCC: HOUSEHOLD, 1f. NAHIDA KUTUBUDDIN MULLA AGE: 16 YEARS, OCC: HOUSEHOLD, BY M/G APPELLANT NO.1(a) 1g. TASHMIYABEGUM KUTUBUDDIN MULLA AGE: 15 YEARS, OCC: HOUSEHOLD, BY M/G APPELLANT NO.1(a) MOHANKUMAR B SHELAR Digitally signed by MOHANKUMAR B SHELAR Date: 2025.03.01 11:17:50 +0530 - 2 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 1h. MOHAMMADYUSUF KUTUBUDDIN MULLA AGE: 14 YEARS, OCC: HOUSEHOLD, BY M/G APPELLANT NO.1(a) ALL ARE R/O: KASABAJAMBAGI, TQ: MUDHOL, DIST: BAGALKOTE. …APPELLANTS (BY SRI. B.S. KAMATE, ADV) AND: 1. RAMANAGOUDA S/O SATALINGAPPA MUDIGOUDRA AGE: 48 YEARS, OCC: AGRICULTURE, R/O: KATAKOL, TQ: RAMDURG-591123, DIST: BELAGAVI. …RESPONDENT (BY SRI. S B HEBBALLI, ADV FOR C/R) RFA FILED UNDER SEC. 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DTD:03.09.2019 PASSED IN O.S.NO.116/2017 ON THE FILE OF THE ADDITIONAL SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, MUDHOL, DECREEING THE SUIT FILED FOR SPECIFIC PERFORMANCE OF CONTRACT. THIS APPEAL, COMING ON FOR FURTHER ARGUMENTS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA - 3 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI) This regular first appeal is filed by the appellants, challenging the judgment and decree dated 03.09.2019 passed in O.S.No.116/2017 by the Additional Senior Civil Judge and JMFC, Mudhol. 2. For convenience, the parties are referred to based on their ranking before the trial Court. The appellants were the legal representatives of the defendant, and the respondent was the plaintiff. 3. Brief facts leading rise to the filing of this appeal are as follows: The plaintiff filed a suit against the defendant for the relief of specific performance of a contract. The defendant is the absolute owner of the suit schedule property. The defendant offered to sell the suit land for the consideration of Rs.36,00,000/- and the plaintiff accepted the offer for the aforesaid consideration, and he paid the earnest amount of Rs.35,00,000/- and the defendant, after - 4 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 receiving Rs.35,00,000/- executed a sale agreement on 20.04.2015 and it was agreed that the balance consideration amount to be paid within one year from the execution of sale agreement. It is contended that the plaintiff was/is always ready and willing to perform his part of the contract by paying the balance consideration amount of Rs.1,00,000/-. Since May 2016, the plaintiff personally approached the defendant with a request to receive the balance consideration amount and execute the registered sale deed. The defendant went on to postponing the execution of the registered sale deed. The plaintiff issued a legal notice dated 11.08.2017 calling upon the defendant to receive the balance consideration amount and execute the registered sale deed. The defendant replied to the legal notice, and denied the transaction between the plaintiff and the defendant, and contended that the said transaction, is not a sale transaction but a loan transaction. The defendant denied performing his part of the contract. Hence, a cause of action arose for the plaintiff to file a suit for specific - 5 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 performance of a contract. Accordingly, prays to decree the suit. 4. The defendant filed a written statement contending that the suit schedule property is the joint family property of the defendant and his family members. The defendant alone had no right to deal with the said property. It is contended that the defendant and the plaintiff have been doing a business for a long time, and they are friends. They used to take a loan from each other as and when required. The defendant had obtained a loan of Rs.35,00,000/- from the plaintiff. The defendant executed a sale agreement as security for the loan amount. The defendant executed a sale agreement as a security for the loan transaction but it is not a sale transaction. The defendant repaid Rs.14,00,000/- out of which, he paid Rs.10,35,064/- through bank on different dates, and Rs.3,66,936/- through, in the presence of the elders and the remaining balance is Rs.20,98,000/-. It was agreed in between the parties that after the - 6 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 repayment of the entire loan, the sale agreement dated 20.04.2015 is to be cancelled. It is contended that except the suit schedule property, the defendant has no any other land for his livelihood. It is contended that in 2015, the market value of the land was Rs.60,00,000/- per acre. If the specific performance of a contract is granted, the defendant will be put to great hardship and inconvenience. Hence, he prays to dismiss the suit. 5. The trial court, based on the pleadings of the parties, framed the following: 1. Whether the plaintiff proves that the defendant was offered to sell the suit property for Rs.36,00,000/- and he was agreed to purchase the suit property for Rs.36,00,000/-and he paid advance sale consideration amount of Rs.35,00,000/- on 20.04.2015 and the defendants by receiving the said amount executed the agreement of the sale on 20.04.2015 and agreed to execute the registered sale deed within one year from the date of execution of agreement of sale after receiving balance sale consideration amount? 2. Whether the plaintiff proves that he is ready and willing to perform his part of contract? 3. Whether the plaintiff is entitled for the relief sought for? 4. What Order or Decree? - 7 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 6. The plaintiff, to substantiate his case, examined himself as PW.1 and examined 3 witnesses as Pws.2 to 4, and marked seven documents as Exs.P1 to P7. In rebuttal, the defendant examined himself as DW.1, examined two witnesses as DWs.2 and 3, and marked one document as Ex.D1. After recording the evidence of the parties to the suit, hearing on both sides and on the assessment of oral and documentary evidence, the trial Court answered issue Nos.1 to 3 in the affirmative, issue No.4 as per the final order. The suit of the plaintiff was decreed with costs. The defendant is directed to receive the balance sale consideration amount and execute the registered sale deed for the suit property in favour of the plaintiff, within 3 months from the date of judgment and decree. 7. The defendant, aggrieved by the judgment and decree passed in O.S.No.116/2017, filed this regular first appeal. 8. Heard the learned counsel for the defendants - 8 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 and the learned counsel for the plaintiff. 9. Learned counsel for the defendants submits that the findings recorded by the court below are wrong and erroneous. He submits that Ex.P2 is a loan transaction, not a sale transaction. Defendant was executed Ex. P2 as security for the loan he obtained. The defendant had repaid the part of the loan amount. He submits that the market value of the suit schedule property was more than Rs.60,00,000/- per acre. He submits that except the suit schedule property, the defendant has no other property for his livelihood. The trial court has not properly considered the issue of hardship and inconvenience. Hence, on these grounds, the judgment and decree passed by the trial court is perverse and arbitrary. Hence, on these grounds, prays to allow the appeal. 10. Per contra, learned counsel for the plaintiff submits that the defendant agreed to sell the suit schedule property for consideration of Rs.36,00,000/- and paid - 9 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 Rs.35,00,000/- as earnest money. The plaintiff offered to pay the balance consideration amount and get the sale deed executed, but the defendant went on postponing for one or the other reason. He also submits that the defendant admitted to the execution of a sale agreement, and receiving of earnest money. The trial court was justified in passing the impugned judgment. There is no error in the impugned judgment. Hence, on these grounds, prays to dismiss the appeal. 11. Perused the records and considered the submissions of the learned counsel for the parties. 12. The points that arise for our consideration are as follows: 1) Whether the plaintiff proves that the defendant agreed to sell the suit schedule property for a consideration amount of Rs.36,00,000/- on 20.04.2015 and the defendant received an amount of Rs.35,00,000/- and executed the sale agreement? 2) Whether the plaintiff was/is ready and willing to perform his part of the contract? - 10 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 3) Whether the defendant proves that in case, the suit for specific performance of the contract is decreed, the defendant would be put to hardship? 4) What order or decree? 13. Re-Point Nos.1 and 2: These points are interlinked. Hence, they are taken together for a common discussion to avoid the repetition of facts. The plaintiff to substantiate his case examined himself as PW.1. He has deposed that the defendant agreed to sell the suit schedule property for consideration of Rs.36,00,000/- and accordingly, the plaintiff paid a sum of Rs.35,00,000/- as an advance consideration amount, and it was agreed that the balance consideration amount to be paid at the time of registration of a sale deed. The plaintiff paid an amount of Rs.35,00,000/- as an advance consideration amount, and the defendant, after receiving the earnest money of Rs.35,00,000/-, executed a sale agreement on 20.04.2015. The plaintiff to prove his readiness and willingness approached the defendant to - 11 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 receive the balance consideration amount and executed the registered sale deed. The defendant went on to postponing for one or the other reason and therefore, the plaintiff was got issued a legal notice. 14. The plaintiff has produced the documents; Ex.P1 is the RTC extract of suit schedule property, which discloses that the defendant is the owner of the suit schedule property. Ex.P2 is the registered sale agreement executed by the defendant in favour of the plaintiff agreeing to sell the suit schedule property for consideration of Rs.36,00,000/-, and the defendant received Rs.35,00,000/-, the advance consideration amount. It was agreed that the balance consideration amount would be paid at the time of registration of a sale deed. The signature of the PW.1 is marked as Ex.P2(a), and the signature of the witness is marked as Ex.P2(b). Ex.P3 is the legal notice dated 11.08.2017 issued by the plaintiff to the defendant, calling upon the defendant to receive the balance consideration amount and execute the - 12 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 registered sale deed. The said notice was duly served upon the defendant. Ex.P4 is the reply notice issued by the defendant to the counsel for the plaintiff on 18.08.2017 denying the execution of the sale agreement and contending the said sale agreement was executed as a security deed for the loan obtained by the defendant and it is a loan transaction and not a sale transaction. It is also stated that the defendant has repaid Rs.14,00,000/- out of which, Rs.10,35,064/- paid through bank and Rs.3,66,936/- was paid in cash, the remaining amount is Rs.20,98,000/-. Ex.P5 is the M.E.No.4838, Ex.P6 is the RTC extract of land bearing No.182/2B and Ex.P7 is the record of rights of land bearing Sy.No.187/1A. 15. The plaintiff also examined an attesting witness to Ex.P2. His signature is marked as Ex.P2(b). He has deposed that the defendant agreed to sell the suit schedule property for consideration of Rs.36,00,000/- and the plaintiff paid Rs.35,00,000/- towards advance consideration amount and the defendant executed a sale - 13 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 agreement marked as Ex.P2. The plaintiff also examined a scribe of Ex.P2 i.e., PW.4. He has deposed that as per the instructions of the defendant, he has drafted an agreement of sale dated 20.04.2015. He has stated that the defendant has instructed PW.4, saying that he has agreed to sell the suit schedule property in favour of the plaintiff for consideration of Rs.36,00,000/-, and has received Rs.35,00,000/- towards advance consideration amount. He identifies his signature on Ex.P2. His signature is marked as Ex.P2(d). PW.3 has deposed in the same terms as PW.2 . PW.4 is the scribe of Ex.P2, and his signature is marked as Ex.P2(e). 16. During the course of cross-examination of PWs.1 to 4, the defendant has suggested to the witnesses that it is not a sale transaction, but is a loan transaction. The said suggestion was denied by PWs.1 to 4. In rebuttal, the defendant examined himself as DW.1. He has deposed that there was a money transaction between the plaintiff and the defendant and the plaintiff insisted on - 14 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 executing the sale agreement as a security for repayment of the loan amount. The defendant executed the sale agreement as per Ex.P2. The transaction between the plaintiff and the defendant was not a sale, but a loan transaction. 17. The defendant has repaid Rs.14,00,000/-. He has deposed that the defendant is liable to pay the balance amount of Rs.20,98,000/-. He also deposed that the market value of the suit land in 2015 was Rs.60,00,000/- per acre. Further, to support his defense, he produced the account statements from 01.04.2015 to 31.03.2016, and further deposed that except for the suit schedule property, family of the defendant has no other properties. He has deposed that the entire family depends on the income derived from the suit schedule property. If the suit for specific performance of the contract is granted, the defendant and his family members would be put to hardship and inconvenience. 18. During the cross-examination, the defendant - 15 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 admitted regarding the execution of the sale agreement and the receipt of Rs.35,00,000/- as an advance consideration amount. On perusal of the entire evidence on record and admission of the defendant regarding the execution of Ex.P2 and receiving of Rs.35,00,000/- as an advance consideration amount, the plaintiff has proved the execution of a sale agreement dated 20.04.2015 and the defendant received Rs.35,00,000/- as an advance consideration amount. Further, the plaintiff, to prove that he was/is always ready and willing to perform his part of contract, he has issued a legal notice on 11.08.2017 as per Ex.P3. 19. We have perused Ex.P2. As per Ex.P2- agreement of sale, the plaintiff is supposed to pay the balance consideration amount and execute the registered sale deed within one year from the date of execution of the sale agreement. Though the agreement was executed on 20.04.2015, the plaintiff ought to have executed the registered sale deed on or before 19.04.2016. The - 16 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 plaintiff did not make any attempts to pay the balance consideration amount within the stipulated time mentioned in the sale agreement and to execute the registered sale deed. The plaintiff kept quiet for more than 2 years and 3½ months without enforcing the agreement of sale. When the plaintiff had paid a substantial consideration amount, there was no necessity for the plaintiff to seek one year for payment of the meagre amount of Rs.1,00,000/-. The conduct of the parties, discloses that it is not a sale transaction but, a loan transaction. 20. It is a loan transaction, and the defendant executed the sale agreement as a security for the purpose of repayment of the loan obtained by the defendant. It is the case of the defendant that the suit schedule property is the joint family property of himself and his family members. His father, and the paternal uncle also have shares in the suit schedule property, and no partition is effected between the defendant and his family members. The defendant is a Mohammedan. There is no joint family - 17 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 concept in the Mohammedan law. Admittedly, the suit schedule property is standing in the name of the defendant as per Ex.P6. Except the suit schedule property, the defendant has no other property. DW.1 deposed in the examination-in-chief that except the suit schedule property, the defendant has no other property. The said aspect was not seriously disputed by the plaintiff. 21. It is the settled law that merely, an agreement of sale is proved, is not a ground for granting the relief of specific performance of contract. The Hon’ble Apex Court in the case of N.P. Thirugnanam (D) By Lrs vs Dr. R. Jagan Mohan Rao & Ors., reported in (1995) 5 SCC 115, held that ; “5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under s.20 of the Specific Relief Act 1963 (for short, 'the Act'). Under s.20, the court is not bound to grant the relief just because there was valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to - 18 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract” In another case, K.S. Vidyanadam And Ors. vs. Vairava, reported in AIR 1997 SC 1751, Hon’ble Supreme - 19 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 Court in Para 13, held that ; “13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 112 years in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices - according to the defendants, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff”. Hence, the relief of specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so. As observed above, the plaintiff did not take any steps to pay the balance consideration amount and to get the registered sale deed executed for more than 2 years and 3 ½ months, granting of specific performance would unfairly prejudice the defendant. The plaintiff can be compensated by a refund of the earnest money with interest. Considering the material on record, the discretionary - 20 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 nature of the relief, and the principles governing its exercises, we find that granting of specific performance in this case would be neither just nor equitable. The plaintiff has failed to fulfill the essential contractual terms, rendering the grant of specific performance inappropriate. The plaintiff has proved the execution of a sale agreement but failed to prove that he was/is always ready and willing to perform his part of the contract. The trial court, without considering the said aspect, has granted the relief of specific performance of a contract. In view of the discussion, we answer point No.1 in the affirmative and point No.2 in the negative. 22. Re-Point No.3: The defense of the defendant that except for the suit schedule property, the defendant has no other property, and the entire family of the defendant is depending on the income derived from the suit schedule property, was not seriously disputed by the plaintiff. In this case, granting of the relief of specific performance of a contract, the defendant would be put to - 21 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 hardship. On the other hand, the plaintiff can be compensated by refunding the amount with reasonable interest. The trial court committed an error in decreeing the suit for the specific performance of the contract, without considering Section 20 of the Specific Relief Act, 1963. The specific performance of the contract is an equitable remedy as the plaintiff has failed to fulfill the essential contractual terms rendering the grant of specific performance inappropriate. The Hon'ble Apex Court in the case of JANARDAN DAS AND OTHERS VS. DURGA PRASAD AGARWAL IN CIVIL APPEAL NO.613/2017 held in para Nos.23 and 24, which reads as follows: 23. In conclusion, considering the discretionary nature of the relief and the principles governing its exercise, we find that granting specific performance in this case would be neither just nor equitable. The plaintiffs' failure to fulfil essential contractual terms, coupled with the lack of authority to bind all co- owners, renders the grant of specific performance inappropriate. The equitable remedy sought by the plaintiffs cannot be granted in light of their conduct and the circumstances of the case. - 22 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 24. In view of the foregoing analysis, we conclude that the plaintiffs failed to demonstrate their continuous readiness and willingness to perform their contractual obligations, and that Defendant No. 1 lacked the authority to bind Defendant Nos. 6 to 8 in the agreement dated 06.06.1993. Given the incomplete and unenforceable nature of the agreement, we find it neither just nor equitable to grant the relief sought by the plaintiffs. 23. The trial court committed an error in decreeing the suit for specific performance of a contract. The trial court ought to have granted alternative relief of refund of the amount. The trial court has not properly exercised the judicial discretion under Section 20 of the Specific Relief Act, 1963. In view of the above discussion, we answer point No.3 in the affirmative. 24. Re-Point No.4: Accordingly, we proceed to pass the following: ORDER The appeal is allowed. The judgment and decree passed by the trial Court insofar as granting relief of specific - 23 - NC: 2025:KHC-D:2033-DB RFA No. 100569 of 2019 performance of a contract is hereby set aside. The suit of the plaintiff is partly decreed. The plaintiff is entitled to a refund of the advance sale consideration amount of Rs.20,98,000/- with interest at the rate of 12% p.a. from the date of filing of the suit till the realization of the amount. The defendants are directed to deposit the amount with accrued interest within the period of 2½ months from the date of receipt of a certified copy of the order, failing which the plaintiff is entitled to recover the amount by due process of law. Sd/- (ASHOK S. KINAGI) JUDGE Sd/- (UMESH M ADIGA) JUDGE Sks CT: BSB