- 1 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 3RD DAY OF JUNE, 2025 BEFORE THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR REGULAR FIRST APPEAL NO. 100520 OF 2018 (SP) BETWEEN: SATEESH S/O BHARAMAPPA KONABEVU, AGE: 39 YEARS, OCC: NIL, R/O: KURABAGERI, MALAGER ONI, RANEBENNUR, TQ: RANEBENNUR, DIST: HAVERI, P.C. NO:581 115. … APPELLANT (BY SRI. P.G. MOGALI, ADVOCATE) AND: KATTEPPA S/O YAMANAPPA MALAGI, AGE: 31 YEARS, OCC: AGRICULTURE AND VEGETABLE BUSINESS, R/O: KURABAGERI, MALAGER ONI, RANEBENUR, TQ: RANEBENNUR, DIST: HAVERI, P.C. NO:581 115. … RESPONDENT (BY SRI. M.H. PATIL, ADVOCATE) THIS REGULAR FIRST APPEAL IS FILED UNDER SEC. 96 OF CPC., PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED: 01.10.2018 PASSED IN O.S.NO.24/2015 ON THE FILE OF THE LEARNED III ADDITIONAL SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, RANEBENNUR. THIS APPEAL, COMING ON FOR FINAL HEARING THIS DAY, THE JUDGMENT WAS DELIVERED THEREIN AS UNDER: Digitally signed by MALLIKARJUN RUDRAYYA KALMATH Location: HIGH COURT OF KARNATAKA DHARWAD BENCH - 2 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR) This Regular First Appeal is filed by the defendant/appellant challenging the judgment and decree dated 01.10.2018 passed in O.S No.24/2015 on the file of III Additional Senior Civil Judge and JMFC, Ranebennur (hereinafter referred to as the ‘Trial Court’), thereby, the suit filed by the plaintiff for specific performance of contract is decreed with cost. 2. For the sake of convenience and easy reference, the parties are referred to as per their rankings before the Trial Court. 3. The plaintiff with pleadings stated that defendant is the owner of suit property by virtue of share allotted to him in his family partition dated 01.12.1999. The defendant for his financial need had agreed to sell the suit property for a total sale consideration of Rs.12,00,000/- to the plaintiff and had entered into an agreement of sale dated 06.12.2014, which is registered one. At the time of - 3 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 registration of agreement of sale, the plaintiff had paid a sum of Rs.10,00,000/- to the defendant. But thereafter, the defendant has not come forward to execute Sale Deed by receiving balance sale consideration. Therefore, the plaintiff was constrained to issue legal notice dated 12.01.2015 to defendant. But the defendant did not turn-up to execute the Sale Deed. Therefore, the plaintiff has filed the suit for specific performance of contract. 4. The defendant has filed the written statement contending that he has not intended to sell the suit property. But for his financial need he has taken a loan of Rs.12,00,000/- from the plaintiff and for security purpose, a document is executed, but it was converted into an agreement of sale. Therefore, the defendant pleaded that there is no agreement of sale and whatever amount taken by the plaintiff is only for security towards loan purpose. 5. Based on the pleadings of the parties, the Trial Court has framed the following issues: - 4 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 1. “Whether plaintiff proves that, defendant executed agreement of sale dated 20.01.2015 agreeing to sell the suit properties for consideration of Rs.12 lakh and received 10 lakhs as earnest money? 2. Whether defendant proves that, he executed the agreement of sale as security to the loan? 3. Whether plaintiff proves that, he was always ready and willing to perform his part of contract? 4. Whether plaintiff is entitled for the relief of specific performance as prayed for? 5. What order or decree?” 6. The plaintiff was examined as PW.1 and three witnesses were examined as PW.2 to PW.4 and got marked documentary evidence as Ex.P1 to Ex.P11. The defendant was examined as DW.1 and got marked documentary evidence as DW.1. 7. The Trial Court has decreed the suit by directing the defendant to execute an absolute registered Sale Deed to the plaintiff after receiving balance sale consideration of Rs.2,00,000/-. The Trial Court assigned reasons that Ex.P1 is - 5 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 the registered agreement of sale and the defendant has failed to prove that he has received the amount from plaintiff as a loan transaction. Further, the trial Court assigned a reason that the defendant had failed to prove that for security purpose, he has offered suit property (agreement of sale). Therefore, the Trial Court forms an opinion that the defendant had executed agreement of sale and thus decreed the suit in favour of plaintiff. 8. Being aggrieved by it, the defendant has filed the present appeal. The defendant has raised many grounds that suit property is the only house for defendant and if the said suit house is sold out, then he and his family members will face great hardship. Further, it is submitted that the plaintiff has landed properties and owned a house in Ranebennur town. Therefore, the suit property was not required for the plaintiff. Therefore, prays to set aside the decree passed by the Trial Court and dismiss the suit. 9. The learned counsel for the appellant submitted that the defendant had never agreed to sell the suit - 6 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 property, but has only taken loan from the plaintiff, since he was constructing house building. Therefore, in this regard, the documents which was executed as a security purpose, was illegally converted into an agreement of sale. Further submitted that, just because, an agreement of sale is registered one and decree granted is lawful, but still it is Court discretion as to whether to grant a decree for specific performance or not as per Section 20 of the Specific Relief Act, 1963 (hereinafter referred to as the ‘Act’) and they have submitted that the defendant had only suit house for his family, whereas the plaintiff is the owner of house situated in Ranebennur city and also owner of various other properties. Therefore, when the plaintiff has already owned a house, but the defendant does not have any other house except suit property, therefore on the contrary, the defendant would face more hardship compared to the plaintiff, in case the suit is decreed in full for specific performance of contract. Therefore, prays to set aside the judgment and decree passed by the Trial Court. - 7 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 10. On the other hand, learned counsel for the respondent submitted that the defendant had executed registered agreement of sale and had an intension to sell away the property in favour of plaintiff. Therefore, the plaintiff is entitled relief of decree for specific performance of contract, which is rightly recorded by the Trial Court. Further submitted that the defendant has failed to prove loan transaction and the suit property is offered for security purpose. Therefore submitted that the appreciation of evidence made by the Trial Court is perfectly justifiable and correct one. Hence, prays to dismiss the appeal. 11. Heard arguments from both sides and perused records. The points that arise for consideration is as follows: i) Whether, under the facts and circumstances involved in the case, if the suit is decreed in favour of plaintiff by granting decree for specific performance of contract, then the defendant would face more hardship compare to plaintiff? ii) Whether, under the facts and circumstances involved in the case, the plaintiff is entitled relief of specific performance of contract? - 8 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 iii) Whether the judgment and decree passed by the Trial Court needs any interference of this Court? 12. In the present case, it is not disputed that the defendant is the owner of suit property. Ex.P1 is the registered agreement of sale. It is the contention of defendant that he has taken loan of Rs.12,00,000/- from the plaintiff and for security purpose, registered agreement of sale is made. But the defendant has never intended to sell away the suit property. But it is the contention of plaintiff that the defendant has voluntarily offered suit property for sale and received an earnest amount of Rs.10,00,000/- out of Rs.12,00,000/-. The plaintiff has to pay remaining amount of Rs.2,00,000/-. Hence, the plaintiff is entitled decree for specific performance of contract. Out of Rs.12,00,000/-, the only remaining thing is that the plaintiff has to pay Rs.2,00,000/-. Therefore, submitted that since the plaintiff has paid substantial sale consideration amount, the plaintiff is entitled decree for specific performance. But upon considering the cross examination, the plaintiff has admitted - 9 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 that the plaintiff is owner of 3 acres of land and also owner of house in Ranebennur town. But it is the contention of the defendant that the suit property is the only house for his and family purpose. When these circumstances are considered, then, grant of relief of decree of specific performance is discretionary as per Section 20 of the Act. Just because, an agreement of sale is proved and grant of decree is lawful to do so, but still the Court has discretion whether to grant or not the decree for specific performance considering the factors compared hardship between the plaintiff and defendant, whether granting of decree is amounting to arbitrary and whether it creates an unfair advantage over the defendant by the plaintiff. When these factors are taken into consideration, as enumerated in Section 20 of the Act and the facts are considered in this regard, the plaintiff has not denied that the suit property is only property of defendant for his residence and also the plaintiff admitted in his cross examination that he has owned one house in Ranebennur town and also an agricultural land. The plaintiff is doing vegetable marketing business. Whereas, the suit property is - 10 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 the only residential house property for the defendant and his family members. Therefore, upon considering the compared hardship in this regard, if decree is granted in full, then defendant would be put into more hardship compared to the plaintiff. Further, if decree for specific performance of contract is granted, then, it would be unfair advantage over the defendant by the plaintiff. Therefore, under these facts and circumstances involved in the case, the discretion has to exercise not to grant the main relief of specific performance but the plaintiff is liable to be compensated by directing the defendant to reimburse the amount he has received with interest. In this regard, the discretion exercised by the Trial Court is not correct and proper. Therefore, the judgment and decree passed by the trial Court is liable to be set aside. Therefore, the appeal is liable to be allowed. Hence, I answer point No.(i) and (iii) in the ‘affirmative’ and point No.(ii) in the ‘negative’. 13. In the result, I proceed to pass the following: - 11 - HC-KAR NC: 2025:KHC-D:7275 RFA No. 100520 of 2018 ORDER i. The appeal is allowed. ii. The judgment and decree dated 01.10.2018 passed in O.S No.24/2015 on the file of III Additional Senior Civil Judge and JMFC, Ranebennur is set aside. iii. The defendant is directed to refund the amount of Rs.10,00,000/- with interest at the rate of 12% p.a. from the date of agreement of sale dated 06.12.2014. iv. In case, the defendant fails to repay the amount as directed above, then, the plaintiff is at liberty to file execution petition and recover the amount as per law. v. Draw decree accordingly. Sd/- (HANCHATE SANJEEVKUMAR) JUDGE PMP para 1 to 11 RKM para 12 to end CT:BCK LIST NO.: 1 SL NO.: 39