- 1 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE V SRISHANANDA REGULAR SECOND APPEAL NO. 209 OF 2025 BETWEEN: H.V. DEVARAJANAIDU S/O H K VENKATASWAMY NAIDU, AGED ABOUT 67 YEARS, PRESENTLY RESIDING AT MODALIYAR STREET, ARSIKERE - 573 103. …APPELLANT (BY SRI. VIVEK A.R, ADVOCATE) AND: A V RAMESH BABU S/O A VEERARAAGHAVALU NAIDU, AGED ABOUT 68 YEARS, R/AT SUBHASH NAGAR, ARSIKERE - 573 103. …RESPONDENT THIS RSA IS FILED UNDER SEC.100 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 13.11.2024 PASSED IN RA.NO.39/2023 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JMFC., ARSIKERE. DISMISSING THE APPEAL AND CONFIRMING THE JUDGMENT AND DECREE DATED 17.07.2023 PASSED IN OS.NO.312/2016 ON THE FILE OF THE II ADDITIONAL CIVIL JUDGE AND JMFC., ARSIKERE. R Digitally signed by SHARADAVANI B Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE V SRISHANANDA ORAL JUDGMENT Heard Sri. Vivek A.R., learned counsel for the appellant. 2. This Court did not deem it fit to issue notice to the respondent having regard to the issue to be thrashed out at the time of admission itself. 3. Defendant in O.S.No.312/2016 is the appellant challenging the validity of the judgment passed in O.S.No.312/2016 confirmed in R.A.No.39/2023. 4. Facts of the case for disposal of the appeal in the nutshell are as under: A suit for recovery of business income and arrears of rent came to be filed by the plaintiff against the defendant in a sum of Rs.3,20,000/- with interest at the rate of 18% per annum in respect of the following immovable property - 3 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 whereunder the defendant was running bar and restaurant: SCHEDULE CgÀ¹ÃPÉgÉ mË£ï SÁ¹A ¸ÉÃmï ¯ÉÊ£ï £À £ÀUÀgÀ ¸À¨sÉ SÁvÉ/C¸É¸ÉäAmï ºÀ¼É £ÀA. 199/201 ºÉƸÀ£ÀA.269/270 gÀ Dgï.¹.¹.©°ØAUï. ZÉPÀÄ̧A¢ü: ¥ÀƪÀðPÉÌ: £ÀUÀgÀ¸À¨sÉ gÀ¸ÉÛ, ¥À²ÑªÀÄPÉÌ: £ÀUÀgÀ¸À¨sÉUÀ°è, zÀQëtPÉÌ: SÁ¹A¸ÉÃmï ¯ÉÊ£ï gÀ¸ÉÛ, GvÀÛgÀPÉÌ: ¸Áé«Ä£ÁzsÀ£ï PÀlÖqÀ. 5. It was agreed between the parties that rent of the property and share of the business profit from bar and restaurant was to the tune of Rs.40,000/- per month. Excise license was in the name of Sri. H.K. Venkataswamy Naidu and running concern based on that license was taken over by the defendant with the agreement that he would run business and business profit would be shared between the landlord and the defendant. 6. In view of the demise of the original license holder namely Sri. H.K. Venkataswamy Naidu, there was a - 4 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 dispute as to who should own the excise license. Relationship between the plaintiff and defendant is that the defendant is the brother-in-law of the plaintiff. The dispute ultimately reached in filing the suit in O.S.No.561/2015 wherein there was an admission with regard to the rate of rent and business income. 7. When the said suit in O.S.No.561/2015 was pending, the plaintiff herein filed the suit for recovery of sum of Rs.3,20,000/- being the arrears of rent. In the suit, the defendant after contest for some time, handed over the keys of the suit property to the plaintiff and also paid sum of Rs.9,60,000/-. Thus, noting the said aspect of the matter, the suit came to be decreed as prayed for. 8. Being aggrieved by the same, defendant filed an appeal before the First Appellate Court in R.A.No.39/2023 contending that the Trial Court ought not to have decreed the suit though defendant has paid a sum - 5 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 of Rs.9,60,000/- only on the basis of the admission made by the defendant in O.S.No.561/2015. 9. Learned Judge in the First Appellate Court after re-appreciating the material evidence on record, dismissed the appeal after noting that an admission made by the defendant in some other proceedings would bind in subsequent proceedings in view of Section 18 of the Indian Evidence Act. 10. Being further aggrieved by the same, defendant has filed the present appeal which is academic in nature and in the event the defendant succeed in this appeal, he is entitled for refund of the amount already paid to the plaintiff in O.S.No.312/2016. 11. In the appeal, following grounds and substantial questions of law are raised: GROUNDS: The order passed by the trial court and the first appellate court is bad in law, not in appreciation of the correct facts and circumstances of the case and without considering - 6 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 the actual legal position. The order of the trial court and the first appellate court is inconsistent with regards to the fact and circumstances of the case. The trial court and the first appellate court had no jurisdiction to adjudicate the suit as the same is within the preview and jurisdiction of Commercial court established under the commercial courts act since the suit pertains to recovery of rent and business income from the Appellant. The Trial and the first appellate Court failed to appreciate that, the appellant herein had made a statement in OS No 561/2015 that he was paying a composite amount 40,000/- being amount towards business income and rent. Nowhere in the said statement the Appellant had quantified the rent amount to be Rs.40,000/-. the trial court without examining the averments in the suit wherein the Respondent had claimed that, appellant was supposed to pay Rs.40,000/- as rent and without examining the definition of lease as per section 105 of the Transfer of Property Act to the facts of the case, passed a judgment and decree that the amount of rent and business share payable is Rs.40,000/- per month. It is pertinent to mention here that, the Respondent had contended in para 3 of the plaint that rent alone was Rs.40,000/- payable by the Appellant and there was no averment with regards recovery business income amount from the Appellant. In the absence of any averment, the trial and the first appellate court without assigning any - 7 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 reason for quantification of the rent amount has passed the impugned orders which require to be set aside. It is submitted that, the Transfer of property act defines a lease as follows: A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. It is submitted that as per the said definition, the following aspects has to be present and pleaded for recovery of rent which are: a. The time period of lease b. The amount of lease In the present case, the Respondent has in his suit averred that the amount payable towards rent and business income is Rs.40,000/-nowhere in the suit the amount of rent to be paid by the appellant has been specifically quantified. In such circumstance the trial court was not justified in quantifying the rent at Rs.40,000/-. The respondent has stated the amount of Rs.40,000 - 8 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 based on the statement made by the appellant in OS No 561/2015 wherein the bifurcation of the amount has not been mentioned. In the absence any evidence with regards to the quantification of lease amount and period of lease, the trial and first appellate courts were not justified in decreeing the suit and dismissing the appeal respectively. It is submitted that, the transaction of lease has to be in writing in the form of an instrument and necessary stamp duty to be paid to the concerned government based on the duration of the lease. It is submitted that, in the present case there is no averment with regards to the duration of the lease and the date of commencement of the lease, further no instrument of lease evidence payment of duty has been produced before the court to substantiate the claim of lease. In the absence an instrument evidencing the period of lease with payment of appropriate stamp duty, the courts below were not justified in accepting the contention of the Respondent that amount recoverable was pertaining to lease. It is submitted that, though transfer of property act provides for oral lease, the same is acceptable only if there is no local law mandating writing of lease in the form of instrument. In the present case, the stamp act provides for payment of duty with reference to lease transaction and such duty is payable based on the rent amount and duration of lease as mentioned in the instrument. In the present case there is no instrument - 9 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 detailing the period and lease amount payable, further duration of lease and the lease rent has not been quantified, consequently leading to nonpayment of stamp duty. As per section 34 of the Karnataka Stamp any instrument not duly stamped shall not be admissible in evidence. The cumulative reading of definition of lease and the provisions of stamp act leads to conclusion that the transaction of lease is required to be reduced in writing and such instrument has to be necessary stamped with payment of appropriate duty. In the present case none of the above actions have been initiated. Consequently the trial and first appellate courts were not justified in accepting the lease transaction as contended by the Respondent herein. SUBSTANTIAL QUESTION OF LAW: A. Whether the trial Court and the first appellate court were justified in decreeing the suit on the facts and circumstances of the case? B. Whether the trial and first appellate court had jurisdiction to adjudicate the suit and the appeal on the facts and circumstances of the case? C. Whether the Trial and the first appellate Court were justified in accepting the transaction of lease when the amount for lease not quantified and period of lease was not specifically stated in the suit as mandated in - 10 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 Transfer of property act on the facts and circumstances of the case? D. Whether the Trial and the first appellate Court were justified in accepting the transaction of lease when the same was not reduced in writing and necessary stamp duty was not paid on such instrument on the facts and circumstances of the case? E. Whether the First appellate court was justified in directing the Appellant to pay the lease amount along with interest when the said amount was already paid to Respondent in execution proceedings bearing Ex. Petition NO 40/2019 on the facts and circumstances of the case? 12. Sri. Vivek A.R., learned counsel for the appellant reiterating the grounds urged in the appeal memorandum vehemently contended that there is no independent proof placed on record before the Trial Court in O.S.No.312/2016 with regard to the payment of rent which was a composite factor inasmuch the agreement contemplated not only the payment of rent but also sharing the business profit. There is already a dispute with regard to as to who has to own the excise license which - 11 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 held by Sri. H.K. Venkataswamy Naidu and thus decreeing the suit by the Trial Court confirmed by the First Appellate Court has resulted in grave miscarriage of justice and sought for admitting the appeal on the aforesaid substantial questions of law. 13. Having heard the counsel for the appellant, this Court perused the material on record meticulously. 14. On such perusal of material on record, it is crystal clear that the bar and restaurant was being run by Sri. H.K. Venkataswamy Naidu by possessing a proper excise license in the name and style of 'Chalukya Bar and Restaurant' in the suit premises. 15. Thereafter, running concern was under loss and thereafter defendant took over the responsibility of running the bar and restaurant on some arrangement with the plaintiff. According to such arrangement, the profit would be shared and a sum of Rs.40,000/- would be paid inclusive of rent and profit. - 12 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 16. In the meantime, Sri. H.K. Venkataswamy Naidu died and thereafter there was a dispute as to who should own the excise license held by Sri. H.K. Venkataswamy Naidu resulting in filing a suit in O.S.No.561/2015 which is still pending for adjudication. 17. In the meantime, the plaintiff laying the claim for arrears of rent inclusive of the profit in a sum of Rs.3,20,000/- with interest at the rate of 18% per annum in O.S.No.312/2016. 18. Learned Trial Judge while considering the rival contentions of the parties also took into consideration the admission made by the defendants in O.S.No.561/2015 about the admission to the extent of Rs.40,000/- to be paid which inclusive of rent of the suit property as well as the profit of the bar and restaurant and license. 19. In paragraph No.11 of the judgment, learned Trial Judge has bestowed his attention as to the accounts - 13 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 for the period from 19.08.2014 to 25.03.2015 as per Ex.P4. 20. In Paragraph No.12 of the said judgment, it has considered the effect of the admission given by a party in some other proceedings as per Section 18 of the Indian Evidence Act and found that when there is a categorical admission by the defendant with regard to the payment of Rs.40,000/- per month and when defendant failed to show that he has paid the said sum of Rs.40,000/- per month, decreed the suit of the plaintiff. 21. During the pendancy of the suit, the defendant handed over the keys of the suit property to the plaintiff and also made a payment of Rs.9,60,000/-. 22. Thereafter, the defendant filed an appeal before the First Appellate Court as to the approach of the Trial Court in decreeing the suit solely on the basis of the admission made by the defendants in O.S.No.561/2015 which is still pending for adjudication. - 14 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 23. Learned Judge in the First Appellate Court after re-appreciating the material evidence on record, dismissed the appeal of the plaintiff holding that the admission made by the defendant, would be an admission in the subsequent proceedings between the same parties by resorting to Section 18 of the Indian Evidence Act. 24. Being further aggrieved by the same, the defendant has filed the present second appeal. 25. In other words, the entire gamut of the present appeal surrounds under Section 18 of the Indian Evidence Act. 26. For ready reference, Section 18 of the Indian Evidence Act is culled out hereunder: 18. Admission by party to proceeding or his agent.––Statements made by a party to the proceeding, or by an agent to any such party, whom the Court regards, under the circumstances of the case, as expressly or impliedly authorised by him to make them, are admissions. - 15 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 by suitor in representative character.––Statements made by parties to suits suing or sued in a representative character, are not admissions, unless they were made while the party making them held that character. Statements made by –– (1) by party interested in subject-matter.––persons who have any proprietary or pecuniary interest in the subject-matter of the proceeding, and who make the statement in their character of persons so interested, or (2) by person from whom interest derived.–– persons from whom the parties to the suit have derived their interest in the subject-matter of the suit, are admissions, if they are made during the continuance of the interest of the persons making the statements. 27. On close reading of the above provision, an admission made by a party on oath in any previous proceedings would be a sufficient admission of a fact in subsequent proceedings between the same parties and binds them. Only exception in this regard is, if a person has made an admission in a representative capacity, unless authority is placed on record in respect of the alleged admission which would bind all others whom the - 16 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 particular person made an admission would represent, the admission cannot be pitted against such person in a subsequent proceedings. 28. In the case on hand, the dispute between the parties is also with regard to who has to succeed to the excise license of Sri. H.K. Venkataswamy Naidu who was the original license holder and who died. 29. In such dispute, the defendant having made a categorical admission with regard to the amount of rent and profit to be shared in respect of 'Chalukya Bar and Restaurant' which was admittedly being run by the defendant after the said business ran into loss, is a sufficient admission in the subsequent proceedings wherein recovery of sum of Rs.3,20,000/- was claimed by the plaintiff. 30. Thus, the appreciation of the admission made by the defendant in O.S.No.561/2015 between the same parties, being made as the basis for decreeing the suit of - 17 - HC-KAR NC: 2025:KHC:38513 RSA No. 209 of 2025 the Trial Court and confirmed by the First Appellate Court needs no interference having regard to the scope of Section 100 of the Code of Civil Procedure. 31. Accordingly, the following Order: ORDER Appeal is meritless and hereby dismissed. Sd/- (V SRISHANANDA) JUDGE SNC List No.: 1 Sl No.: 66 CT: BHK