- 1 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 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. 100609 OF 2023 (MON) BETWEEN: SANJAY S/O. VEERAPPA TEGGI AGE: 43 YEARS, OCC: AGRICULTURE, R/O: RABAKAVI, TQ: RABKAVI- BANHATTI, DIST: BAGALKOT-587314. …APPELLANT (BY SRI. VIJAYKUMAR B. HORATTI, ADVOCATE) AND: RAVINDRANATH Y.M.P. S/O. Y.M. PANCHAXARAPPA AGE: 55 YEARS, OCC: BUSINESS, R/O: 3308/1, H. KUVEMPU NAGAR, 13TH MAIN, SHANKARALEELA GAS AGENCY, MCCB BLOCK, DAVANAGERE, TQ. AND DIST. DAVANAGERE-577001. …RESPONDENT (BY SRI. S.C. BUTI, ADVOCATE) THIS RFA IS FILED UNDER SECTION 96 OF CPC., 1908, AGAINST THE JUDGMENT AND DECREE DATED 25.03.2023 PASSED IN O.S.NO.52/2020 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, BANAHATTI, PARTLY DECREEING THE SUIT FILED FOR REFUND OF EARNEST MONEY AND DAMAGES. THIS APPEAL, COMING ON FOR ORDERS, JUDGMENT WAS DELIVERED THEREIN AS UNDER: Digitally signed by V N BADIGER Location: HIGH COURT OF KARNATAKA Date: 2025.02.20 11:28:41 +0530 - 2 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 CORAM: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE UMESH M ADIGA) This is defendant's appeal against the judgment and decree dated 25th March 2023, passed in O.S.No.52/2020, on the file of Senior Civil Judge & J.M.F.C., Banahatti, (for short, `trial Court'). 2. The plaintiff filed the suit for recovery of earnest money with damages and the trial Court by the impugned judgment, decreed the suit. Same is challenged in the present appeal. 3. We refer to the parties as per their ranks before the trial Court. 4. It is the case of respondent/plaintiff that defendant was the owner and in possession of suit property. He intended to sell the suit property for his financial need in the month of October 2017. Plaintiff - 3 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 came to know about this fact. He approached the defendant and intimated his intention to purchase the suit property. During the said sale talks, defendant agreed to sell the suit property for Rs.12 lakhs and he demanded earnest money of Rs.10 lakhs and he also assured that he would execute the Sale Deed after receiving the balance amount of sale consideration as well as after removing all encumbrances over the suit property. Accordingly, an Agreement of Sale was executed on 28.10.2017 between plaintiff and defendant and it was registered. As per the sale talks, plaintiff had paid Rs.10 lakhs to the defendant. 5. It is the further contention of the plaintiff that all these while he was/is ready and willing to perform his part of the contract, but defendant did not come forward to execute registered Sale Deed by clearing the encumbrances and received the balance sale consideration. Whenever plaintiff approached him, he was postponing execution of the sale deed on one or the other pretext. Prior to filing of the suit, plaintiff came to know - 4 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 that defendant had sold the very same property in favour of one Sangappa Byakood for Rs.10 lakhs and executed registered Sale Deed dated 07.11.2018 behind the back of plaintiff. Immediately plaintiff approached the defendant and enquired in this regard. The defendant did not give any satisfactory answer. Thereafter, plaintiff felt that defendant had already executed registered Sale Deed in favour of Sangappa Byakood and there is no point in fighting the litigation for enforcement of agreement of sale. Therefore, he sent a notice to the defendant calling upon him to refund the earnest money with interest and also damages for committing breach of contract. Defendant received the said notice, but he did not respond to the said notice. Hence, plaintiff was constrained to file a suit for refund of earnest money and damages with interest. 6. The contention of the defendant was that he denied execution of agreement of sale and receipt of Rs.10 lakhs as earnest money as averred in the plaint. - 5 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 According to his contentions, he was in need of money and he had obtained Rs.8 lakhs as hand loan from plaintiff, agreeing to re-pay the said amount with interest at the rate of 1.5%. He further contended that as per the request of the plaintiff, he had executed the said agreement of sale as a security document. While executing the agreement of sale, the plaintiff had included Rs.8 lakhs borrowed by defendant and added Rs.2 lakhs which is interest payable by the defendant and totally mentioned Rs.10 lakhs as earnest money. Defendant also contented that he had re-paid Rs.10 lakhs to the plaintiff in the presence of Chandrashekar Parit and Girish Hadapad, but plaintiff demanded Rs.2 lakhs more and defendant refused to pay the same. Therefore, plaintiff filed the false suit. With these reasons, defendant prayed to dismiss the suit with cost. 7. From the rival contentions of the parties, the trial court framed the following issues: - 6 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 Issues : 1) Whether the plaintiff proves that, the defendant has availed loan of Rs.10,00,000/- on 28.10.2017 and executed a registered agreement for sale acknowledging loan? 2) Whether the defendant proves that, he has paid the loan amount to plaintiff as alleged in Para No.12 of his written statement? 3) Whether the plaintiff is entitled for the relief as sought for? 4) What order or decree? 8. Plaintiff to prove his case, examined two witnesses as PWs.1 and 2 and got marked Exs.P-1 to P-5. The defendant examined DWs.1 and 2. No documents were marked on behalf of defendant. 9. The trial Court after hearing both the parties, answered issue No.1 in the affirmative, issue No.2 in the negative, issue No.3 partly in the affirmative and granted the decree by the impugned judgment. Same is - 7 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 challenged by the defendant on the grounds mentioned in the appeal memo. 10. We have heard the arguments of learned counsel for defendant and plaintiff. 11. Learned counsel for the appellant/defendant submits that defendant never intended to sell the suit property to the plaintiff and in view of his financial needs, he obtained loan of Rs.8 lakhs from the plaintiff and it was also agreed that he has to pay interest at the rate of 1.5% However, the plaintiff insisted the defendant to execute registered agreement of sale as a security document. It is further contended that defendant paid Rs.10 lakhs towards principal amount and interest, to the plaintiff. The plaintiff demanded additional amount of Rs.2 lakhs. When defendant refused to pay the additional amount illegally demanded by the plaintiff, plaintiff has filed the false suit. 12. The appellant/defendant further contended that defendant to prove his contentions, examined himself as - 8 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 DW-1, as well as one witness as DW-2 and both DW-1 and DW-2 have deposed before the Court regarding execution of security document and obtaining of the loan as well as repaying of the same. The trial Court has not considered these facts, but relying on the contents of the alleged agreement of sale, decreed the suit. The said findings are erroneous, therefore prayed to interfere in the said findings. 13. The learned counsel for the respondent/plaintiff would submit that defendant agreeing to sell the suit property, executed an agreement of sale and obtained earnest money of Rs.10 lakhs. The suit property was encumbered by defendant while obtaining loan from other persons. Therefore, plaintiff insisted him to clear all the encumbrances prior to execution of the Sale Deed. Plaintiff repeatedly requested him to clear encumbrances and execute the registered Sale Deed after receiving the balance amount of sale consideration. The defendant went on postponing to execute the registered Sale Deed. - 9 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 Plaintiff was/is always ready and willing to perform his part of the contract. Prior to filing of the suit, plaintiff came to know that defendant had executed Sale Deed in respect of the very same property, in favour of one Sangappa Byakood. Immediately, plaintiff approached the defendant and enquired with him, but defendant did not respond to the plaintiff properly. Thereafter, plaintiff thought that instead of fighting a litigation against the defendant for enforcement of specific performance of contract, it is better to take back the earnest money paid to the defendant with interest and damages. In this regard, he has sent a notice to the defendant and requested him to refund the earnest money with interest and damages. The defendant received the same, but did not respond to the said notice. Helplessly plaintiff has filed the suit for recovery of the said amount with interest and damages. 14. The learned counsel for the respondent/plaintiff has further submitted that plaintiff to prove his contentions, examined himself as PW-1 and examined one - 10 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 witness as PW-2. In the cross-examination of PWs.1 and 2, nothing was brought out to disbelieve their evidence. Defendant admitted the execution of agreement of sale, but he denied the contents of the same. According to Section 90 of Indian Evidence Act, defendant cannot deny the contents of the registered document. There are no materials to believe that Ex.P-1 was executed as a security document. Moreover, defendant has contended that he has re-paid Rs.10 lakhs, being Rs.8 lakhs as a amount of loan and Rs.2 lakhs as interest. Except self-serving statement of DW-1 and DW-2, there are no materials to support the said contention. When he had executed registered document, then why he did not got any document or receipt for having paid the amount of Rs.10 lakhs to the plaintiff, is not forthcoming. Therefore, the said contention of defendant is not proved and it is also not probable. With these reasons, the respondent/ plaintiff prayed to dismiss the appeal with costs. - 11 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 15. From the rival contentions of the parties, following points emerge for our determination : (i) Whether learned trial Judge erred in holding that the defendant has executed Ex.P-1 with an intention to sell the suit property and received earnest money of Rs.10 lakhs? (ii) Whether the findings of the learned trial Judge is erroneous and interference by this Court is required? (iii) What order or decree? Our findings on the above point Nos.1 and 2 are in the negative for the following reasons : 16. Point Nos.1 and 2 : Both these points are taken up together for discussion. Plaintiff himself was examined as PW-1 and in his evidence he has reiterated the plaint averments. During his evidence, he got marked documents from Exs.P-1 to P-5. He has stated that defendant was intending to sell the suit property and he intended to purchase the same. As per sale talks, Ex.P-1 was executed and registered and - 12 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 defendant received Rs.10 lakhs as earnest money. As per the sale talks, both of them have agreed that within 30th September 2017, defendant had to clear all the encumbrances over the suit property and execute registered Sale Deed after receiving balance amount of Rs.2 lakhs. 17. PW-1 has further stated that he was always ready and willing to perform his part of the contract by paying balance amount of sale consideration. Whenever he approached defendant, the defendant on one or the other reason went on postponing to execute the registered Sale Deed on the ground that he has not paid the earlier debt and cleared the encumbrances on the suit property. 18. He further stated that prior to filing of the suit, he came to know that defendant had sold the very same property to one Sangappa Byakood for Rs.10 lakhs by executing registered Sale Deed dated 07.11.2018 and immediately he sent a notice to defendant for refund of earnest money with interest and damages as per Ex.P-2. - 13 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 Defendant received the said notice as per Exs.P-3 and P-4, but he has not responded to the said notice. Hence, he filed the suit. He has also produced the certified copy of registered Sale Deed executed in favour of Sangappa Byakood dated 07.11.2018 at Ex.P-5. 19. The evidence of PW-1 is corroborated by the evidence of PW-2 and in the cross-examinations of both the witnesses, nothing was brought out to disbelieve their evidence or the defence of the defendant, that Ex.P-1 was executed as a security document for the loan obtained by the defendant as alleged in the written statement. 20. In an attempt to disprove the case of the plaintiff, defendant examined himself as DW-1 and examined DW-2 to prove that defendant had re-paid Rs.10 lakhs to the plaintiff towards amount of loan borrowed by him along with interest. During cross- examination of DW-1 and DW-2, they have accepted that they have not obtained any document to prove that they had paid an amount of Rs.10 lakhs to the plaintiff. - 14 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 21. It is an undisputed fact that defendant had executed Ex.P-1 and it is a registered document, executed at an undisputed point of time. The contents of the said document are very clear and it clearly shows that defendant intended to sell his property for Rs.12 lakhs and received the earnest money of Rs.10 lakhs. As rightly submitted by learned counsel for the plaintiff, when a registered document is produced before the Court, the party cannot be permitted to lead evidence contrary to the contents of such agreement or document. If the said document was executed as document of security, then there was no hurdle for him to get the said fact written in the said document or he could have mortgaged the said property in favour of plaintiff. The contentions of defendant is not probable. It is very clear that the said document was executed with an intention to sell the suit property in favour of plaintiff. 22. The contention of the defendant is that he had re-paid cash of Rs.10 lakhs to the plaintiff in the presence - 15 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 of his two friends by name Girish Hadapad and Chandrashekar Parit. It is pertinent to note that admittedly defendant had not obtained any receipt for having re-paid amount of Rs.10 lakhs to the plaintiff. The said conduct of defendant appears to be highly suspicious. When he received the amount from plaintiff and executed registered document, then why he did not insist the plaintiff to execute registered document in this regard or at least obtained receipt for repayment of the same is not forthcoming. In normal circumstances and in such facts and circumstances, any prudent man would either obtain the registered document or receipt. From the said facts, one can infer that the contentions of the defendant are not believable. 23. The learned trial Judge has considered these facts and rightly held that defendant had executed Agreement of Sale as per Ex.P-1 and received earnest money of Rs.10 lakhs. The learned trial Judge also considering the facts and circumstances of the case, - 16 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 awarded damages of Rs.1 lakh. The said relief granted by the trial Court is also not contrary to law. 24. The defendant having obtained earnest money of Rs.10 lakhs during the year 2017 after executing the registered document in favour of plaintiff, behind his back, sold the very same property for lesser amount than mentioned in Ex.P-1 i.e., Rs.10 lakhs and executed registered Sale Deed dated 07.11.2018. The said act of defendant is breach of an agreement. Considering these facts and circumstances and compelling plaintiff to file suit to recover the money, learned trial Judge rightly imposed damages of Rs.1 lakh on the defendant and awarded justifiable rate of interest, which is not erroneous. 25. We have re-appreciated facts and the evidence of both the parties, but unable to find any reason to interfere in the findings of the learned trial Judge. Hence, we answer about points in the negative and pass the following: - 17 - NC: 2025:KHC-D:2273-DB RFA No. 100609 of 2023 ORDER (i) The Appeal is dismissed with costs. (ii) The judgment and decree dated 25.03.2023, passed by the learned Senior Civil Judge & J.M.F.C., Banahatti, in O.S.No.52/2020, is confirmed. Registry to transmit the records along with copy of this judgment to the concerned trial Court without delay. Sd/- (ASHOK S. KINAGI) JUDGE Sd/- (UMESH M ADIGA) JUDGE bk/ LIST NO.: 1 SL NO.: 44