- 1 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 04TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR REGULAR FIRST APPEAL NO.100325 OF 2016 (SP) BETWEEN: RACHAPPA S/O. IRAPPA BALIGAR @ KAJAR, AGE: 34 YEARS, OCC: BUSINESS, R/O: LOKAPUR (VENKATAPUR), TQ: MUDHOL, DIST: BAGALKOT-587122. …APPELLANT (BY SRI GIRISH A.YADAWAD, ADVOCATE) AND: SMT. SAVAKKA W/O. SANGAPPA MULIMANI, AGE: 55 YEARS, OCC: AGRICULTURE, R/O: LOKAPUR (VENKATAPUR), TQ: MUDHOL, DIST: BAGALKOT-587122. …RESPONDENT (BY SRI G.I. GACHCHINAMATH, ADVOCATE FOR C/R1) THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96 OF THE CIVIL PROCEDURE CODE, 1908, PRAYING TO SET ASIDE THE JUDGMENT AND DECREE DATED 05.10.2016, PASSED BY THE SENIOR CIVIL JUDGE AND JMFC, MUDHOL, IN O.S.NO.26/2014, IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.,. THIS REGULAR FIRST APPEAL COMING ON FOR FURTHER ARGUMENTS THIS DAY, THE COURT DELIVERED THE FOLLOWING: Digitally signed by MALLIKARJUN RUDRAYYA KALMATH Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR) This Regular First Appeal is filed by the defendant challenging the judgment and decree dated 05.10.2016, passed in O.S No.26/2014, on the file of Senior Civil Judge and JMFC, Mudhol (hereinafter referred to as the ‘Trial Court’), thereby the suit filed for specific performance of contract is decreed by directing the defendant to execute registered Sale Deed in favour of the plaintiff by receiving the balance sale consideration amount of Rs.2,80,000/-. 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 has filed the suit for specific performance of contract. The suit properties in the present suit are VPC Nos.1180/1 and 1180/2 and the said suit properties are adjacent to each other within the jurisdiction of Lokapur Town, Mudhol Taluk. The defendant is the owner of the suit property. It is pleaded that the defendant was in need of money for family and legal necessities. So, he took - 3 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 out the suit properties for sale, for consideration amount of Rs.12,00,000/-, which was accepted by the plaintiff. Accordingly, the defendant has received advance amount of Rs.9,20,000/- and the balance amount payable by the plaintiff was Rs.2,80,000/- and accordingly executed the agreement of sale on 18.01.2013. But, after execution of agreement of sale, though the plaintiff was ready and willing to perform her part of contract, the defendant was not ready to receive the balance sale consideration amount and also for execution of registered Sale Deed. Therefore, the plaintiff got issued legal notice by calling upon the defendant to execute registered Sale Deed and perform his part of contract. But the defendant gave false reply without mentioning any valid reasons not to execute registered Sale Deed. Therefore, the plaintiff has filed the suit for specific performance of contract. 4. The defendant has filed written statement denying all the pleadings of the plaintiff and also denying the fact that he has executed agreement of sale and received part sale consideration amount of Rs.9,20,000/-. It is also - 4 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 averred that there was a transaction between the plaintiff and defendant and for security purpose agreement of sale was executed. But the defendant has not performed his part of contract. Therefore, prays to dismiss the suit. 5. Upon considering the pleading of both the parties, the Trial Court, has framed the following issues: 1. “Whether the plaintiff proves that defendant being the owner of suit properties agreed to sell them to her for total consideration of Rs.12 lakhs and received advance money of Rs.9,20,000/- and executed registered agreement of sale on 18.01.2013 as contended in para no.3 and 4 of plaint? 2. Whether plaintiff proves that she is ever ready and willing to perform her part of contract? 3. Whether the defendant proves that the alleged agreement of sale is created, illegal and bogus as contended in para no.9 and 10 of written statement? 4. Whether the defendant proves that he alone has no right to execute alleged agreement of sale? - 5 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 5. Whether the plaintiff is entitled for relief sought for? 6. What order or decree?” 6. The plaintiff himself was examined as PW.1 and other three witnesses are examined as PW.2 to PW.4 and got marked documents as Ex.P1 to Ex.P7. The defendant was examined as DW.1 and one witness is examined as DW.2 and got marked documents as Ex.D1 to Ex.D7. 7. The Trial Court has decreed the suit for the main relief by directing the defendant to execute registered Sale Deed in favour of the plaintiff by receiving balance sale consideration amount of Rs.2,80,000/-. The Trial Court has assigned reason that Ex.P2 and Ex.P3 are the registered agreement of sale and the plaintiff has proved that he was ready and willing to perform his part of contract. Further, the Trial Court has assigned reason that the father and brother of defendant have consented for selling away the property as per the agreement of sale in favour of the plaintiff. Further, it is observed that defendant has failed to prove that there - 6 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 was a transaction between the plaintiff and defendant for selling of property as per the agreement of sale and for security for a loan transaction, the defendant had executed agreement. Therefore, the Trial Court has rejected the case of the defendant, since the agreement of sale is registered one and the substantial advance amount of Rs.9,20,000/- was paid to the defendant and the remaining amount to be paid by the plaintiff to defendant is Rs.2,80,000/- only. Therefore, the Trial Court has decreed the suit filed by the plaintiff. 8. Being aggrieved by it, defendant has preferred the present appeal. The defendant has raised many grounds in the appeal that the defendant did not have any intention to execute agreement of sale. Further it is argued that the suit property is a joint family property and plaintiff alone is not the owner of suit property and if decree is confirmed, then that would cause hardship to the defendant and his family members. Therefore, decreeing the suit and execution of the Sale Deed is causing hardship and unfair advantage over the defendant. Therefore, prays to allow the appeal. - 7 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 9. Heard the arguments of learned counsels appearing for both the sides and perused the records. 10. Upon perusing the evidence on record, material placed on record and submission of learned counsels appearing for both the parties, the points that arise for my consideration are as follows: i) Whether, under the facts and circumstances involved in the case, though the agreement of sale is proved to have been executed as it is registered one and if decree is granted for execution of Sale Deed, it amounts to unfair advantage over the defendant and causing hardship to the defendant? ii) Whether, under the facts and circumstances involved in the case, the judgment and decree passed by the Trial Court by granting main relief of decree for specific performance of contract, by directing the defendant to execute the Sale Deed, requires any interference by this Court? - 8 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 11. Learned counsel for the appellant/defendant argued that the suit property is a joint family property. The suit property is a dwelling house and defendant alone is not the owner of suit property and there are other coparceners in the said suit property. Therefore, defendant alone is not competent to execute agreement of sale as the suit property is a joint family property. If the said suit property is sold out for meager amount of Rs.12,00,000/- as agreed therein, the defendant and his family members are not able to purchase any other dwelling house, as it would cause great hardship to them, besides unfair advantage over the defendant. 12. Further submitted that as on the date of alleged agreement of sale, the value of suit is more than Rs.50,00,000/-, but it was agreed for only Rs.12,00,000/-, which fact itself prove that defendant had no intention to sell the suit property, but had merely received loan amount. But such agreement is for security of loan amount. Therefore submitted that the judgment and decree passed by the Trial Court directing the defendant to execute registered Sale Deed in favour of the plaintiff is causing great hardship to - 9 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 the defendant and unfair advantage over the defendant, besides which, amounts to arbitrary. Therefore, prays for allowing the appeal. 13. On the other hand, learned counsel for the respondent/plaintiff submitted that the agreement of sale is registered one, for which, father and brother of defendant have also consented and came over to office of Sub-registrar and got registered the agreement of sale. Though the defendant has taken contention that it was loan transaction, but such defence was not taken in the reply to the legal notice. Though the defendant has taken contention that amount received from the plaintiff is loan transaction, but that is not proved by the defendant. Therefore, from the evidence of PW.2 and PW.3 attesting witnesses proved the fact of execution of agreement of sale and it is registered before the office of Sub-registrar. Therefore, there is a valid agreement of sale and is rightly considered by the Trial Court and correctly decreed the suit for granting the relief of specific performance of contract. Therefore, prays to dismiss the appeal. - 10 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 14. In the present case, the suit property is a dwelling house of two plots within the limits of Lokapur village, Mudhol Taluk. The agreement of sale as per Ex.P3 is executed on 18.01.2013 and accordingly, the plaintiff has paid substantial advance amount of Rs.9,20,000/- and the remaining amount to be paid by the plaintiff to defendant is Rs.2,80,000/- only. Ex.P3 – agreement of sale is the registered document. PW.2 to PW.4 are the attested witnesses. The father and brother of defendant have executed agreement of sale in favour of the plaintiff. Ex.P4 is the legal notice issued by the plaintiff calling upon the defendant to execute a registered Sale Deed. As per Ex.P7 – reply notice, defendant has only denied the contention of legal notice and there is no averment that it was loan transaction as contended by the defendant. 15. Admittedly, the suit property is a dwelling house consisting of two plots. Ex.D4 is the genealogy tree issued by the Panchayat, Lokapur. It is proved fact that the defendant is not the only absolute owner of the suit property. Though the author of the document is not examined, but it is issued - 11 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 by the Panchayat, Lokapur. Therefore, it is relevant and admissible as per Section 74 of the Indian Evidence Act, 1872, for consideration of the fact that the defendant has other coparceners. When other coparceners are in existence, if the suit property is sold by virtue of agreement of sale, then that would cause great hardship not only to the defendant but also to other coparceners. 16. Section 20 of the Specific Relief Act, reads as under: “20. Discretion as to decreeing specific performance.—(1)The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. (2)The following are cases in which the court may properly exercise discretion not to decree specific performance:— (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or - 12 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance. Explanation 1.—Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2.—The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.” 17. Therefore considering conjoint reading of clause (a), (b) and (c) of sub-section (2) of section 20 of the Specific Relief Act and explanation 1 of the said section, mere inadequacy of consideration amount is not amounting to hardship and unfair advantage within the meaning of clause (a) and clause (b) above stated. But the fact remains - 13 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 that upon analyzing the comparative hardship between the plaintiff and the defendant, if the decree for specific performance of contract is granted, then it will be causing more hardship to the defendant compared to the plaintiff, for the reason that for the defendant and five other coparceners the suit property alone is the dwelling house for the residence. If the suit property is sold away to the plaintiff, then for such sale consideration amount of Rs.12,00,000/-, the defendant could not get other residence for such a meager amount of Rs.12,00,000/-. Therefore, upon the comparative hardship, if the suit property is sold away, then the defendant and other coparceners would be put to more hardship than the plaintiff. But on the other hand the plaintiff will not suffer any hardship. If the plaintiff is refunded his amount with interest that resolve the hardship of the plaintiff. But if the property is sold away, then the defendant will suffer hardship permanently. 18. Further, though Ex.P.5 is the property valuation report made by a Civil Engineer, is a private document, but Ex.P.7 is the certificate issued by the Panchayat, Lokapur, - 14 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 that in all its probability the value of the property was more than Rs.12,00,000/- as in the year in which agreement of sale was executed i.e., in the year 2013. Therefore, on all its probabilities, it is proved that even as on the date of agreement of sale, in the year 2013, the said property was valued more than Rs.12,00,000/- and for such total sale consideration of Rs.12,00,000/- and now after lapse of 10 years from the date of agreement of sale, the said property is sold out, then definitely it would be unfair advantage over the defendant. Therefore, under section 20 of the Specific Relief Act discretionary power is vested with the Court. Just because agreement of sale is proved, decreeing the suit is lawful to the plaintiff, but still the Court has discretion whether to grant or not to grant. This factor is not considered by the trial Court. 19. The trial Court simply has swayed away with the registered agreement of sale is proved on the basis of the evidence of attesting witnesses PW.2 to PW.4. Though, escalation of price could not be a factor for denying the relief of grant of specific performance, but the hard reality is that - 15 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 as the time lapses, the value o the property would be more and even if the property is sold out for total sale consideration of Rs.12,00,000/-, as on today, but for this amount the defendant and other coparceners would not be able to get any other suitable dwelling house for their residence. Therefore, this causes more hardship and unfair advantage over the defendant. 20. Therefore the decree of specific performance of contract is not correct. Therefore, the judgment and decree passed by the trial Court requires interference so far as to the main relief is concerned. Therefore, the judgment and decree directing the defendant to execute the registered sale deed in favour of the plaintiff by virtue of the agreement of sale is liable to be set aside. 21. Since it is proved that the defendant has received an amount of Rs.9,20,000/-, therefore the defendant is directed to refund the said amount with interest to the plaintiff along with interest at the rate of 9% p.a. from the date of agreement of sale till full payment is made to the plaintiff. Therefore, the plaintiff is entitled for alternative - 16 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 relief of refund of earnest money of Rs.9,20,000/- as above ordered. Accordingly, I answer the above point for consideration No.1 and 2 in the affirmative. Hence, I proceed to pass the following: ORDER i) The appeal is allowed in part. ii) The judgment and decree dated 05.10.2016, passed in O.S.No.26/2014, on the file of Senior Civil Judge and JMFC, Mudhol, is hereby set aside so far as directing the defendant to execute the registered sale deed in favour of the plaintiff by virtue of registered agreement of sale is concerned. iii) The suit of the plaintiff is decreed for the alternative relief of refund of earnest money of Rs.9,20,000/- to the plaintiff by the defendant with interest at the rate of 9% p.a. from the date of agreement of sale, till the entire amount is paid to the plaintiff. The defendant shall pay the amount within three months from the date of receipt of copy of the judgment. - 17 - NC: 2025:KHC-D:2145 RFA No. 100325 of 2016 iv) In case, if the defendant fails to pay the amount, then the plaintiff initiate recourse for recovery of money as per law. iv) No order as to costs. v) Draw decree accordingly. Sd/- (HANCHATE SANJEEVKUMAR) JUDGE PMP-para 1 to 16 MRK-para 17 to end. CT: UMD. List No.: 1 Sl No.: 11