- 1 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR MISCELLANEOUS FIRST APPEAL NO. 5227 OF 2025 (CPC) BETWEEN: 1. B.N. ANANTHA S/O SRI. B. NAGARAJU AGED 39 YEARS R/O KRISHNA NILAYA, NO.1462 NORTH EXTENSION, HASSAN 2. SHRI. REVANNA S/O LATE SRI. DEVAPAGOWDA AGED ABOUT 64 YEARS R/O NO.MIG 981, 2ND MAIN KARNATAKA HOUSING BOARD CHANNAPATTANA EXTENSION HASSAN …APPELLANTS (BY SRI. MANU K, ADVOCATE) AND: 1. SHRI. VIJAYAKUMAR P. GOWDA S/O LATE SRI. PUTTEGOWDA AGED ABOUT 55 YEARS 2. SMT. KUMARI VIJAYA GOWDA W/O SRI. VIJAYAKUMAR P. GOWDA AGED ABOUT 51 YEARS BOTH R/O DOOR NO.25, ROJIPURA 4TH WARD, VINAYAKA NAAGARA Digitally signed by ANJALI M Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 DODDABALLAPUR BANGALORE- RURAL …RESPONDENTS (BY SRI. MITHUN GERAHALLI, A, ADVOCATE FOR C/R1 & R2) THIS MFA IS FILED U/O.43 RULE 1(r) OF CPC, AGAINST THE ORDER DT.09.04.2025 ON IA NO.2 IN O.S.NO.66/2024 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JMFC, ARAKALAGUD, REJECTING IA NO.2 FILED U/O.39 RULES 1 AND 2 OF CPC THIS MFA HAVING BEEN RESERVED FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT, DELIVERED/PRONOUNCED THE FOLLOWING: CORAM: HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR CAV JUDGMENT (PER: HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR) This Miscellaneous First Appeal is preferred by the appellants herein under Order XLIII Rule 1 (r) of the Code of Civil Procedure, 1908, (for short, "CPC") challenging the order dated 09.04.2025 passed by the learned Senior Civil Judge and J.M.F.C., Arakalagud in O.S.No.66/2024, whereby the learned trial Court rejected interlocutory application No. II filed under Order XXXIX Rules 1 and 2 of CPC, praying for a temporary injunction to restrain the - 3 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 respondents from alienating or encumbering the suit schedule properties pending adjudication of the main suit. 2. The facts leading to the filing of the suit and the instant appeal are rooted in an arrangement between the parties for joint development of immovable property situated at Shiradanahalli village, Mallipatna Hobli, Arakalagud Taluk, Hassan District. The suit schedule properties comprise lands in survey Nos.85, 86 and 87 totally measuring 8 acres 03 guntas. These lands initially classified as agricultural, were converted for non- agricultural residential use pursuant to an order dated 06.02.2020 issued by the Deputy Commissioner, Hassan. Thereafter, the respondent proposed to develop the said lands into residential sites and entered into certain agreements with the appellants to facilitate the development and sale of the layout. 3. On 24.03.2022, a registered agreement of sale was executed between the appellants and respondents, - 4 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 whereby the respondents agreed to sell a portion of the developed layout - specifically, 92,600 square feet of the residential sites, for a total sale consideration of Rs.2,42,00,000/-(Rupees two crores forty-two lakhs only). The appellants paid a sum of Rs.15,00,000/- (Rupees fifteen lakhs only) through RTGS as an advance towards the sale consideration. The very next day, on 25.03.2022, the parties executed a Joint Development Agreement (JDA), which though unregistered, outlined the terms of development of the land by the appellants at their own expense in exchange for 49% of the developed land. Under this arrangement, the appellants invested an additional Rs.75,00,000/- (Rupees seventy five lakhs only) taking the total monetary outflow to Rs.90,00,000/- (Rupees ninety lakhs only) as per the documents on record. 4. The appellants further claim to have expended Rs.20,00,00,000/- (Rupees twenty crores only) towards development activities, including labour, material - 5 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 procurement, laying of roads, installation of drainage and water systems, construction of a park, and electrical connections. As part of these works, the appellants also made payments to the Electricity Department to the tune of Rs. 14,66,610/- and Rs. 14,787/- respectively, towards layout related electricity connections and meter installations. 5. Despite these substantial investments and efforts, the respondents allegedly failed to fulfil their reciprocal obligations under both the agreement of sale and the JDA. The appellants asserts that repeated requests for execution and registration of the Sale Deed went unheeded, and instead the respondents started negotiating with the third parties and even began alienating parts of the developed layout, thereby frustrating the rights of the appellants and undermining their Investments. A legal notice dated 20.07.2024 was issued by the appellants, calling upon the respondents to honour their commitments. The respondents however, - 6 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 responded with the categorical denial and issued a public notice on 01.08.2024 indicating revocation of the agreement of sale. 6. It is alleged that, aggrieved by these actions, the appellants instituted a suit in O.S.No.66/2024 before the trial Court seeking a specific performance of the agreement of sale and for other appropriate reliefs. In the said suit, they also filed I.A.No. II under Order XXXIX Rules 1 and 2 of CPC, seeking temporary injunction to restrain the respondents from alienating or encumbering the suit schedule properties during the pendency of the suit. The trial Court, by the impugned order dated 09.04.2025, dismissed the said application on three primary grounds: Firstly, that the joint development agreement was unregistered and therefore not enforceable, secondly, that the appellants had failed to make out a prima facie case or demonstrate the balance of convenience in their favour and thirdly, that the agreement of sale and the joint development agreement - 7 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 contained contradictory terms and could not co-exist legally. 7. The appellants contended that, the trial Court's reasoning is flawed both in law and on the facts. It is argued that the agreement of sale, being a registered document, is valid and binding. The joint development agreement, though unregistered, can nevertheless be relied upon for collateral purposes and to demonstrate the nature of the transaction and the conduct of the parties. The appellants rely on the decision of the Hon'ble Supreme Court in Murugugandam vs. Muniyani (Died) through Lrs. reported in 2025 INSC 652, wherein it was held that, an unregistered document may be admissible as evidence in a suit for specific performance, particularly for proving the conduct of the parties and part performance under the Section 49 of the Registration Act, 1908. 8. The learned counsel for the appellants further argued that, these appellants have not only paid - 8 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 substantial consideration but also invested heavily in the development of the layout, which has been partially admitted by the respondents in their reply. He would further submit that, allowing the respondents to alienate the properties during the pendency of the suit would render the main suit infructuous and lead to multiplicity of proceedings, thereby causing irreparable injury which cannot be compensated in monetary terms. 9. On the other hand, the learned counsel for the respondents contend that, these respondents have taken a stand that the appellants have no enforceable right as the joint development agreement was unregistered and hence invalid. It is further submitted that, the appellants had agreed to revoke the agreement and accepted a refund of Rs.1,11,91,000/-, thereby extinguishing any cause of actions. The respondents also emphasized that, the prayers in the plaint are contradictory in nature and disentitles the appellants from equitable relief under the specific relief Act. - 9 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 10. I have carefully examined the impugned order, the pleadings, the documents placed on the record, and rival submissions advanced at the bar. It is settled law that, for the grant of temporary injunction under Order XXXIX Rules 1 and 2 of CPC, the applicant must satisfy three cardinal principles - existence of a prima facie case, balance of convenience in their favour, and the likelihood of irreparable harm if the injunction is not granted. 11. Upon perusal of the Agreement of Sale dated 24.03.2022, it is evident that, the appellants were bona fide purchasers/investors. The payment receipts, bank transaction details and electricity bills substantiate the claim that the appellants had made substantial financial investments pursuant to the agreement. The joint development agreement though unregistered, supplements the agreement of sale and explains the mode and method by which the sale was to be effectuated. The reliance upon the Murugugandam (Supra) is well placed, as the said decision verifies that unregistered document - 10 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 may still be admitted for evidence for establishing part performance, possession and conduct of the parties. 12. The trial Court's mechanical rejection of the joint development agreement solely on the ground of non registration is legally unsustainable. The principle that an unregistered document can still be used for collateral purposes is well established and has been consistently appeared in the catena of judgments. 13. The contention of the respondents that the appellants have accepted a refund is a matter of evidence and cannot be conclusively determined at the interlocutory stage. The assertion of such a refund is disputed by the appellants, and it would be premature for the trial Court to draw adverse conclusions on the suspect without trial. The trial Court's finding that the agreements are contradictory is also erroneous. On a harmonious reading, it becomes evident that, both agreements were part of a composite transaction-first laying out the sale terms and - 11 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 second stipulating the mechanism for development and sharing of developed sites. 14. In view of the rival submissions and on the perusal of the material placed on record, I am of the considered view that, the appellants have established a strong prima facie case based on their monetary investment, development activities undertaken, and the documentation on record. The balance of convenience is clearly in favour of the appellants, as allowing alienation or third party sales would irretrievably affect their rights under the agreement and render the suit ineffective. Irreparable harm is evident from the risk of fragmentation of rights, creation of third party interest, and the possibility of future litigation. Monetary compensation at a later stage cannot substitute the contractual and development rights explained by the appellants. 15. The learned counsel for the appellants relied upon the following judgments: - 12 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 (i) Ambalal Sarabhai Enterprises Limited V/s K S Infraspace LLP Limited and Another - AIR 2020 Supreme Court 307 (ii) Sucha Singh Sodhi (Dead) through legal representatives v. Baldev Raj Wali and Another - (2018) 6 SCC 733 (iii) Nitin Marutrao Kale and Another v. Manikrao Bajirao Malgunde and Others - , 2025 SCC OnLine Bom 34 16. The facts of these cases are quite different than the facts of the said case. 17. The trial Court has erred in not appreciating the factual matrix in its entirety and has misapplied the law on admissibility and enforceability of unregistered document. It is the finding that, no prima facie case or irreparable injury exists is contrary to the material placed on record. 18. Accordingly, this Court finds in the appeal that, the impugned order dated 09.04.2025, passed by the trial Court is liable to be set aside. The interlocutory application No. II filed under Order XXXIX Rules 1 and 2 of CPC deserves to be allowed. However, rights of the - 13 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 parties are kept open to be agitated during the course of the trial. Resultantly, the following: ORDER (i) The appeal is allowed. (ii) The impugned order dated 09.04.2025 passed by the Senior Civil Judge and J.M.F.C., Arakalagud, in O.S.No.66/2024 is hereby set aside. (iii) I.A. No. II filed by the appellants is allowed. The respondents, their agents, servants or any person claiming through them are hereby restrained from alienating, encumbering or creating third party interest in the suit schedule properties pending final disposal of the suit in O.S.No.66/2024. (iv) In view of the facts so brought on record by both the sides, the trial Court is - 14 - HC-KAR NC: 2025:KHC:30308 MFA No. 5227 of 2025 requested to dispose of the suit expeditiously with all its promptitude. No order as to costs. Sd/- (RAMACHANDRA D. HUDDAR) JUDGE AM List No.: 1 Sl No.: 30