- 1 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 5TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA REGULAR FIRST APPEAL NO. 100087 OF 2021 (SP) BETWEEN: 1. KEERTIKUMAR S/O JAGADISH SONI AGE. 49 YEARS, OCC. AGRICULTURE, 2. SAVITA W/O JAGADISH SONI AGE. 70 YEARS, OCC. HOUSEHOLD WORK AND AGRICULTURE, 3. DAKSHA W/O KEERTIKUMAR SONI AGE. 46 YEARS, OCC. HOUSEHOLD AND AGRICULTURE, ALL ARE R/O KANAKAGIRI TQ. KANAKAGIRI, DIST. KOPPAL P.C.NO.583227. …APPELLANTS (BY SRI. MAHABALESHWAR HASINAL, ADVOCATE) AND: 1. VIDYADARA, S/O LATE VEERABHADRAPPA KOLAGAL Digitally signed by V N BADIGER Location: HIGH COURT OF KARNATAKA Date: 2025.03.01 12:09:01 +0530 - 2 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 AGE. 55 YEARS, OCC. AGRICULTURE, R/O NEKAR STREET, GANGAVATHI TQ. GANGAVATHI, DIST. KOPPAL P.C.NO.583227. 2. RUDRESH SAJJAN S/O. SHANRAPPA SAJJAN AGE. 48 YEARS, OCC. AGRICULTURE, R/O BASAVAESHAWARA NAGAR, MASKI, TQ. LINGASUGUR, DIST. RAICHUR-584122. …RESPONDENTS (BY SRI. B. SHARANABASAWA, ADVOCATE FOR R1; NOTICE TO R2 SERVED) THIS RFA IS FILED UNDER SEC. 96 OF CPC., PRAYING TO, SET ASIDE THE JUDGMENT AND DECREE DATED.01.04.2021 PASSED IN O.S.NO.15/2019 ON THE FILE OF THE SENIOR CIVIL JUDGE, GANGAVATHI, DECREEING THE SUIT FILED FOR SPECIFIC PERFORMANCE OF CONTRACT AND FOR DECLARATION. THIS APPEAL, COMING ON FOR FINAL HEARING, 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:2636-DB RFA No. 100087 of 2021 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE UMESH M ADIGA) Defendants No.2 to 4 have filed this appeal against the judgment and decree dated 01.04.2021 passed by learned Senior Civil Judge, Gangavathi in OS No.15/2019. 2. Plaintiff/respondent No.1 herein has filed a suit for relief of specific performance of agreement and the said suit was decreed by the learned trial judge by the impugned judgment and the same is challenged in the present appeal. 3. We refer the parties as per their ranking before the trial court. 4. Brief facts of the case of both the parties before the trial court are as under: It is the case of the respondent No.1-plaintiff that defendant No.1 is an absolute owner in possession of the suit property and he intended to sell the said property. Plaintiff approached defendant No.1 to purchase the same. During the said talks it was settled that defendant No.1 - 4 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 agreed to sell the said property for Rs.16,00,000/- and out of the said amount, he demanded Rs.15,00,000/- as earnest money and he has also agreed to execute the registered sale deed as and when called upon by the plaintiffs after receiving balance amount of consideration of Rs.1,00,000/-. Accordingly, agreement of sale was executed on 20.05.2015 and the same was registered. It is further case of respondent No.1-plaintiff that he was/is always ready and willing to perform his part of the agreement. He was regularly approaching defendant No.1 and requesting him to execute the registered sale deed after receiving balance amount of sale consideration but defendant No.1 on one or the other way went on postponing of executing the registered sale deed. Therefore, the plaintiff issued a notice dated 28.09.2018 through his advocate to defendant No.1 calling upon him to execute and register the sale deed after receiving balance amount of sale consideration and also hand over the possession of the suit property in favour of the plaintiffs. Defendant No.1 had received the said notice but - 5 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 did not reply the same and he had complied the terms and conditions of the said notice. In view of the said reasons, respondent No.1-plaintiff was constrained to file the suit. With these reasons, respondent No.1-plaintiff prayed for the relief of specific performance of the contract and in the alternate, direct the defendant No.1 to refund the earnest money with interest at the rate of 24% per annum from the date of agreement of sale till its realization. 5. Though the suit summons was duly served on defendant No.1, he did not appear and contested the suit. Defendant Nos.2 to 4 are the purchasers of the part of the suit property dated 14.03.2016 for valid consideration and they are the bonafide purchasers of the suit schedule property for valuable consideration. They denied alleged agreement of sale said to be executed by defendant No.1 in favour of the respondent No.1-plaintiff. With these reasons, defendant Nos.2 to 4 prayed to dismiss the suit. 6. From the rival contentions of the parties, the trial Court had framed the following issues:- - 6 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 1. Whether the Plaintiff proves that on 20-5-2015, Defendant No.1 agreed to sell the suit schedule properties to the Plaintiff for a total sale consideration of Rs.16,00,000/- and received an earnest money of Rs.15,00,000/-? 2. Whether the Plaintiff proves that he was always ready and willing to perform his part of the contract? 3. Whether the Plaintiff proves that the Defendant No.1 has committed breach of contract and sold the properties to Defendant No.2 to 4 without the knowledge of the Plaintiff? 4. Whether the Defendant No.2 to 4 prove that they are the bonafide purchasers? 5. Whether the Defendant No.2 to 4 prove that the suit of the Plaintiff is barred by limitation? 6. Whether the Plaintiff is entitled to the reliefs as sought for? 7. What order or decree? - 7 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 7. The respondent No.1-plaintiff to prove his case examined himself as PW1 and got marked Exs.P1 to P.8. He also examined two witnesses as PW.2 and PW.3. The defendant No.2 was examined himself as DW.1 and defendants got marked four documents as Exs.D1 to D4. 8. The trial court after hearing both the parties and after appreciating the materials available on record answered issue Nos.1 to 3 and 6 in the affirmative, issue Nos.4 and 5 in the negative and decreed the suit by impugned judgment. 9. The said judgment and decree is challenged by the defendant Nos.2 to 3 on the grounds mentioned in the appeal memo. Notice of appeal was sent to respondents and respondent No.1-plaintiff has appeared before the court. Respondent No.2 who is defendant No.1 did not appear before this Court also. 10. We have heard the arguments of learned counsel for both the parties and perused the records. - 8 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 11. The learned counsel for the appellants vehemently contended that Ex.P1 is not an agreement to sell the property but it was a document of security executed by defendant No.1. The said document was executed on 20.05.2015 and defendant No.1 has said to be paid Rs.15,00,000/- as earnest money to the defendant. Inspite of that respondent No.1-plaintiff did not approach the defendant No.1 and persuaded him to execute the sale deed in his favour. The respondent No.1- plaintiff contends that he had approached defendant No.1 and requested him to execute the registered sale deed but there are no materials on record to support his contention. According to the plaint averments and documents placed on record, for the first time on 28.09.2018, respondent No.1-plaintiff had issued notice to defendant No.1 calling upon him to execute the registered sale deed i.e. after 3½ years from the alleged agreement of sale, the said notice was issued. These facts and circumstances clearly indicate that respondent No.1-plaintiff was not at all ready and willing to perform his part of the contract. The said - 9 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 conduct of the respondent No.1-plaintiff also clearly indicates that Ex.P1 was not a real agreement of sale but it was a document of security and no prudent person would keep quite for a period of 3½ years when he had paid major amount of sale consideration without trying to enforce the agreement of sale or persuading the defendant No.1 to execute the sale deed. These facts were not at all considered by the learned trial judge. 12. It is further contended by the appellants that the appellants are bonafide purchasers of the some of the sites mentioned in the agreement of sale. Without notice of the said agreement of sale, appellants have prayed for valid consideration for purchase of the site. The said registered sale deeds are not sham. With these reasons, appellants prayed to set aside the impugned judgment and dismiss the suit with costs. 13. The learned counsel for the respondent No.1- plaintiff has contended that defendant No.1 who had executed an agreement of sale did not appear before trial - 10 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 court and denied the contentions of the plaintiff. There was no privity of contract between respondent No.1- plaintiff and defendant Nos.2 to 4. The defendants No.2 to 4 contended that they are bonafide purchasers of the suit property for valuable consideration. When they have contended the said fact, they cannot contend that Ex.P1 was a document of security executed by defendant No.1. Defendants No.2 to 4 have not disclosed in their written statement or their evidence as to why they came to know that Ex.P1 was executed by the defendant No.1 as a document of security. It is further contended by the respondent No.1-plaintiff that defendant No.1 has executed registered agreement of sale in favour of him. Execution of the said registered agreement of sale in favour of the respondent No.1-plaintiff as mentioned in the encumbrance certificate. In the cross examination of DW1, he has admitted that prior to purchase of the suit property, he saw the encumbrance certificate. When the said fact is admitted by the DW.1, now he cannot contend that there was no mention of agreement of sale executed - 11 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 by the defendant No.1 in favour of the respondent No.1- plaintiff. These facts clearly show that the defendant Nos.2 to 4 are not bonafide purchasers for valuable consideration. The said sale deed executed by the defendant No.1 in favour of the defendant Nos.2 to 4 are sham documents. Only to defeat the rights of the respondent No.1-plaintiff,the said documents are executed by the defendant No.1. It is further contended that respondent No.1-plaintiff was/is ready and willing to perform his part of the contract. Respondent No.1-plaintiff has pleaded this fact in the plaint and gave evidence in this regard. Defendant No.1 who is a competent person to deny the same did not appear either before the trial Court or before this Court and challenged the said pleadings or evidence led by the respondent No.1-plaintiff. The document itself reveals that major amount of sale consideration was already paid by the respondent No.1- plaintiff that is out of Rs.20,00,000/- Rs.19,00,000/- was paid by the respondent No.1-plaintiff and balance was only Rs.1,00,000/-. There is no case made out by the - 12 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 defendant No.1 that respondent No.1-plaintiff had no money to pay Rs.1,00,000/-to the defendant No.1. There are no reasons to disbelieve the evidence of PW.1 about his willingness to purchase a suit schedule property. Considering all these pleadings and evidence of the respondent No.1-plaintiff, the learned trial Judge has rightly decreed the suit as prayed in the plaint and it does not call for any interference by this court. With these reasons, the learned counsel for respondent No.1-plaintiff prayed to dismiss the appeal with costs. 14. Following points emerges for our determination:- 1. Whether the learned trial Judge erred in holding that Ex.P1 is an agreement of sale executed by defendant No.1 in favour of respondent No.1- plaintiff agreeing to sell the suit property for Rs.16,00,000/- and received earnest money of Rs.15,00,000/- and defendant No.1 had also to execute the registered sale deed in favour of the respondent No.1-plaintiff after receiving balance amount of sale consideration of - 13 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 Rs.1,00,000/- whenever plaintiff called him to do so ? 2. Whether the learned trial Judge erred in holding that respondent No.1-plaintiff was always ready and willing to perform his part of the contract? 3. Whether the learned trial Judge erred in not holding that defendant Nos.2 to 4 were bonafide purchasers of suit schedule properties for valuable consideration? 4. Whether the findings of the learned trial Judge are erroneous or arbitrary, illegal and interference by this court is required? 5. What order? 15. Our findings on the above point Nos.1,3 and 4 in the negative and point No.2 in the affirmative for the following reasons: Point No.1: The respondent No.1-plaintiff in his pleadings as well as in his evidence has stated about the execution of agreement of sale dated 20.05.2015, by the defendant - 14 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 No.1, agreeing to sell the suit property in favour of respondent No.1-plaintiff for Rs.16,00,000/- and payment of Rs.15,00,000/- as earnest money to the defendant No.1 and balance amount of Rs.1,00,000/- has to be paid at the time of execution of the registered sale deed. He has also stated that inspite of repeated requests, the defendant No.1 did not executed the sale deed. Defendant Nos.2 to 4 have disputed the said document. During the course of cross examination of PWs.1 to 3 as well as in the evidence of DW.1, it was a new case made out stating that Ex.P1 was executed by the defendant No.1 as a document of security towards the loan obtained by the defendant No.1 from the respondent No.1-plaintiff. During the course of cross examination, defendant No.1 did not get any admission in the evidence of PWs.1 to 3 in this regard. Moreover, as rightly contended by the learned counsel for the respondent No.1-plaintiff, defendant Nos.2 to 4 are not competent persons to deny the execution of agreement of sale. It is also worth to know that Ex.P1 is a registered agreement of sale. Defendant No.1 who had knowledge - 15 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 about the execution of said document and he was an author of the said document did not appear before the court and denied the said document or execution of the said document. Original registered agreement of sale is placed on record. Prior to filing of the suit, notice was issued to defendant No.1. Oral evidence of PWs.1 to 3 and documents produced by the respondent No.1-plaintiff proved that defendant No.1 had executed Ex.P1 after receiving of earnest money of Rs.15,00,000/-, out of sale consideration amount Rs.16,00,000/-. He also undertaken to execute the sale deed after receiving balance of sale consideration of Rs.1,00,000/-, as and when respondent No.1-plaintiff called upon the defendant No.1 to do so. 16. The learned trial judge has discussed this point in detail and assigned the valid reasons and held that defendant No.1 had executed Ex.P1 and received earnest money of Rs.15,00,000/- and he also agreed to execute registered sale deed in favour of respondent No.1-plaintiff after receiving balance amount of sale consideration of - 16 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 Rs.1,00,000/-. Therefore, we are of the opinion that learned trial judge has not committed any error in holding that defendant No.1 had executed Ex.P1 in favour of respondent No.1-plaintiff agreeing to sell the suit property for Rs.16,00,000/- and received Rs.15,00,000/- as earnest money. Accordingly, we answer point No.1 in the negative. Point No.2:- 17. The respondent No.1-plaintiff in his pleadings as well as in the evidence has stated that he was/is always ready and willing to perform his part of the contract. He was continuously in contact with the defendant No.1 and requested him repeatedly to execute the sale deed after receiving balance amount of sale consideration of Rs.1,00,000/-. It is further contention of the plaintiff that defendant No.1 on one or the other reasons, went on postponing the execution of registered sale deed. Therefore, helplessly he issued notice dated 28.09.2018 through his lawyer. The said notice was duly served on the defendant No.1 and inspite of that defendant No.1 did - 17 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 not come forward to execute the registered sale deed by receiving balance amount of sale consideration. 18. Ex.P1 was executed on 20.05.2015. Though, respondent No.1-plaintiff has stated in the pleadings as well as in the evidence that he was in continuous contact with defendant No.1 and requesting him to execute the registered sale deed, to prove this contention, prima facie, he has not produced any material on record to show that he had made such an attempt to pursue the defendant No.1 to execute the registered sale deed in his favour after receiving of balance amount of sale consideration. According to his contention, for the first time, he had issued notice to defendant No.1 on 28.09.2018 i.e. nearly about 3½ years from the date of execution of Ex.P1. During the course of argument, learned counsel for the respondent No.1-plaintiff was unable to explain as to why such notices were not issued within a reasonable period after execution of Ex.P1. As rightly, contended by the learned counsel for appellants that after paying major - 18 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 amount of sale consideration, no prudent man would keep quite for a period of 3½ years waiting for the defendant No.1 to execute the registered sale deed in terms of Ex.P1. The respondent No.1-plaintiff neither issued notice within a period from the date of execution of Ex.P1 nor filed the suit for relief of specific performance of agreement. There are no justifiable reasons to the respondent No.1-plaintiff for waiting for a period of 3½ years to issue notice to defendant No.1 calling upon him to execute the registered sale deed after receiving the balance amount of sale consideration. The respondent No.1-plaintiff has also not produced any document to show that he had balance amount of Rs.1,00,000/-+ registration charges for getting execute the said registered sale deed. Defendant No.1 had executed the registered sale deed in favour of defendants No.2 to 4 on 14.03.2016. Nearly after three years from the said date, respondent No.1- plaintiff had filed the suit. All these facts and circumstances give raise to infer that respondent No.1- plaintiff was not ready and willing to perform his part of - 19 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 the agreement. Therefore, all the while for a period of about 3½ years, he slept over his rights to enforce the said agreement of sale. Respondent No.1-plaintiff has utterly failed to prove and establish that he was/is always ready and willing to perform his part of the contract and to get execute registered sale deed by paying balance amount of sale consideration to the defendant No.1. Merely, defendant No.1 remained exparte does not mean that the court has to ignore fundamental rule of Specific Relief Act, while granting the relief of specific performance. Section 16 of the Specific Relief Act, specifically says that unless respondent No.1-plaintiff is able to please and prove that he was/is always ready and willing to perform his part of the contract, such plaintiff is not entitled for the relief of specific performance of agreement. 19. The learned trial Judge while discussing in the impugned judgment did not noticed these facts properly. The learned trial Judge has not properly appreciated regarding point of readiness and willingness to perform the - 20 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 part of the contract of respondent No.1-plaintiff in getting registered sale deed in his favour from the defendant No.1. When respondent No.1-plaintiff had utterly failed to prove the said fact, he is not entitled for relief of specific performance of contract. 20. The respondent No.1-plaintiff has also prayed for alternate relief of refund of earnest money with interest at the rate of 24% per annum. In this case, respondent No.1-plaintiff was unable to prove and establish that he was/is always ready and willing to perform his part of the contract. Therefore, he is not entitled for the relief of specific performance of agreement and hence, he is entitled for the alternate relief of refund of earnest money. The contention of the learned counsel for the respondent No.1-plaintiff that defendant No.1 is liable to pay interest at the rate of 24% per annum. Admittedly, suit transaction is not a commercial transaction. Respondent No.1-plaintiff had paid Rs.15,00,000/- as earnest money towards part of sale - 21 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 consideration i.e. earnest money. Respondent No.1- plaintiff failed to file the suit well in time and there was no need for him to wait for about 4 years in filing the suit for recovery of said amount or relief of specific performance of the agreement. The respondent No.1-plaintiff himself is a defaulter in non-enforcing of the said agreement of sale in time. Therefore, he is not entitled for interest at the rate of 24% per annum. 21. Defendant No.1 received sale consideration on 20.05.2015. He has been enjoying the said amount nearly for the last 10 years. Even if, the respondent No.1- plaintiff had deposited the said amount in the commercial Bank in the fixed deposit, then he would have earned interest on the said amount. Considering these facts, we feel it appropriate to award interest at the rate of 10% per annum on the said earnest money paid to the defendant No.1 from the date of the suit till its realization. Accordingly, we answer point No.2 in the negative. - 22 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 Point no.3: 22. Defendants No.2 to 4 contended that they are the bonafide purchasers of the suit property for valuable consideration. On behalf of the defendants, DW.1 was examined who is defendant No.2 in this Case. In his cross examination, he has stated that before purchasing of the said property,he has seen encumbrance certificate, demand register and layout plan etc. He had also enquired with neighboring plot owners. The respondent No.1- plaintiff confronted Ex.P8 to DW1 and he had stated that he had not seen the document prior to filing of the said suit. It is pertinent to note that Ex.P1 is a registered agreement of sale. The said transaction is mentioned in Form No.15 i.e. Encumbrance Certificate which is produced at Ex.P2 as well as at Ex.P8. Normally, any prudent purchaser would purchase a site after verifying the revenue records as well as the encumbrance certificate. In this case, DW.1 in the cross examination who admits that he had verified the encumbrance - 23 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 certificate, but when Ex.P8 was confronted to him, he cleverly states that he had not seen the said document. Therefore, his contention that he was a bonafide purchaser of the suit property cannot be accepted. Suit of the respondent No.1-plaintiff cannot be decreed. In view of non-proving of readiness and willingness of the respondent No.1-plaintiff to get execute the registered sale deed, merely we answer this point in the negative and will not give any right to the respondent No.1-plaintiff to get suit decreed. For aforesaid discussion, we answer point No.3 in the negative. Point No.4: 23. The respondent No.1-plaintiff proved that defendant No.1 had executed an agreement of sale as per Ex.P1 and received earnest money of Rs.15,00,000/-, he failed to prove that the he was/is ready and willing to perform his part of the contract. The trial Judge did not considered this point and did not assess the evidence of the PW1 and the document produced by the respondent - 24 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 No.1-plaintiff, in accordance with Section 16 of the Specific Relief Act. Therefore, the said finding of the learned trial Judge needs interference. The respondent No.1-plaintiff is not entitled for the relief of specific performance of agreement. On the contrary, he is entitled for alternative relief of refund of earnest money with interest at the rate of 10% per annum from the date of suit till its realization. Accordingly, we answer point No.4 partly in the affirmative. Point No.5 24. For the above discussions, we pass the following: ORDER Appeal is allowed in part. The judgment and decree dated 01.04.2021 passed in OS No.15/2019 on the file of learned Senior Civil Judge, Gangavathi is modified. - 25 - NC: 2025:KHC-D:2636-DB RFA No. 100087 of 2021 The suit of the respondent No.1-plaintiff is partly decreed. The defendants are directed to refund the earnest money of Rs.15,00,000/- along with interest at 10% per annum from the date of filing of this suit till realization of the entire amount. The defendants are directed to deposit the entire consideration amount with accrued interest within a period of two months from the date of receipt of certified copy of this judgment. Send back the trial court records along with the copy of the judgment. Sd/- (ASHOK S. KINAGI) JUDGE Sd/- (UMESH M ADIGA) JUDGE HMB LIST NO.: 1 SL NO.: 23