Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(SC) 791

SUPREME COURT OF INDIA
(From the High Court of Karnataka at Bengaluru)
M.R. SHAH, SANJIV KHANNA, JJ.
Beereddy Dasaratharami Reddy - Appellant
Versus
V. Manjunath and Another - Respondents
Civil Appeal No. 7037 of 2021 (Arising out of Special Leave Petition (Civil) No. 13853 of 2021)
Decided On : 13-12-2021

Advocates appeared:
For the Appellants :Rajesh Mahale, Advocate
For Respondent:T.S. Shanthi, Narendra Kumar, Advocates

IMPORTANT POINTS
(1) Exercise of powers given rights of Karta on fulfilling requirement of legal necessity or betterment of estate is valid and binding on other coparceners – Agreement to sell cannot be set aside on the ground of absence of legal necessity.
(2) Omission to frame an issue does not vitiate trial where parties go to trial fully knowing rival case.

Headnote:
(A) Hindu Law – Joint Family Property – Agreement to Sell – Right of Karta to execute agreement to sell or sale deed of a joint Hindu family property is settled and is beyond cavil – Where a Karta has alienated a joint Hindu family property for value either for legal necessity or benefit of estate it would bind interest of all undivided members of family even when they are minors or widows – There are no specific grounds that establish existence of legal necessity and existence of legal necessity depends upon facts of each case – Karta enjoys wide discretion in his
decision over existence of legal necessity and as to in what way such necessity can be fulfilled – Exercise of powers given rights of Karta on fulfilling requirement of legal necessity or betterment of estate is valid and binding on other coparceners – Agreement to sell cannot be set aside on the ground of absence of legal necessity. (Paras 6 and 9)
(B) Civil Procedure Code, 1908 – Order XIV Rule 1 – Framing of issue – Omission to frame an issue as required under Order XIV Rule 1 of Code of Civil Procedure, 1908 does not vitiate trial where parties go to trial fully knowing rival case and lead evidence in support of their respective contentions and to refute contentions of other side. (Para 11)
Facts of the case:
Legal issue which arises for consideration in the present appeal is whether K. Veluswamy, as a Karta, has legal authority to execute agreement to sell dated 8th December 2006 for sale of the suit land, being agricultural land.
Findings of Court:
During the pendency of the present appeal, suit property has been transferred to a third person, which transfer would obviously be subject to and hit by the doctrine of lis pendens. Therefore, once Court set aside the impugned judgment and restore the judgment of the trial court, the respondents would be bound to perform their obligations under the agreement to sell dated 8th December 2006 and execute the registered sale deed, notwithstanding any transaction which the respondents have executed.
Result : Appeal allowed.

JUDGMENT :

SANJIV KHANNA, J.

The legal issue which arises for consideration in the present appeal is whether K. Veluswamy, as a Karta, has legal authority to execute agreement to sell dated 8th December 2006 for sale of the suit land, being agricultural land – (i) Sy.No. 7/1P1, measuring 4 acres, 21 guntas of land; (ii) Sy.No. 7/1P2 measuring 5 acres of land; and (iii) Sy.No. 8/3P3 measuring 2 acres of land, in all 11 acres 21 guntas of wet land, situated in Bagganadu Kaval Village, J.G. Hally Hobli, Hiriyur Taluk, Chitradurga District, Karnataka.

2. It is an accepted position that on 8th December 2006, K. Veluswamy as a Karta of the joint Hindu family had executed the agreement to sell of the suit property for Rs.29 lakhs and had received Rs.4 lakhs in advance from Beereddy Dasaratharami Reddy, the appellant before us. K. Veluswamy, the second respondent before us, has not entered appearance and contested this appeal. The appeal is contested by the first respondent before us, namely V. Manjunath, who is the son of K. Veluswamy. (For convenience, K. Veluswamy and V. Manjunath, wherever required have been collectively referred to the respondents).

3. On 26th November 2007, Beereddy Dasaratharmi Reddy instituted the suit for specific performance of the agreement to sell impleading both K. Veluswamy and V. Manjunath. The Court of Senior Civil Judge, Hiriyur decreed the suit vide judgment dated 22nd January 2013 rejecting the defence that the agreement was a camouflage for a loan agreement as K. Veluswamy was in need of money for construction of a farm house. K. Veluswamy as the Karta of the joint Hindu family property was entitled to execute the agreement to sell, which agreement being on account of legal necessity is valid.

4. K. Veluswamy accepted the decision. His son V. Manjunath preferred the regular first appeal before the High Court of Karnataka at Bengaluru and vide the judgment under challenge dated 6th March 2021 he has succeeded. The impugned judgment, while accepting that K. Veluswamy did execute the agreement to sell for the suit property for Rs.29 lakhs and had received Rs.4 lakhs as advance, held that the agreement to sell is unenforceable as the suit property belongs to the joint Hindu family consisting of three persons, K. Veluswamy, his wife V. Manimegala and his son V. Manjunath and, therefore, could not have been executed without the signatures of V. Manjunath. Relying on Pemmada Prabhakar and Others v. Youngmen’s Vysya Association and Others, (2015) 5 SCC 355, it was held that legal necessity is not proved. Execution of the agreement to sell by K. Veluswamy as a Karta of the joint Hindu family is held not established as no issue on the aspect of authority of the Karta to execute agreement to sell and legal necessity was framed. Consequently, it was held that the suit must be dismissed.

5. The agreement to sell, which is an admitted document and marked Exhibit P-1, it is accepted, was signed and executed by K. Veluswamy and his wife V. Manimegala. P.B. Basavarajaiah, father-in-law of V. Veluswamy, had also signed the agreement to sell. Payment of Rs. 4 lacs by Beereddy Dasaratharmi Reddy and receipt of the said amount by K. Veluswamy as advance is also not disputed. Remaining amount of Rs.25 lakhs was to be paid within three months and the sale deed executed and registered. The agreement to sell states that the subject property is a joint Hindu family property, enjoyed jointly and that the Katha is in the joint names. What is significant and important is the avowal by the executants that they were in need of funds to meet the domestic necessities and, consequently, had agreed to sell the suit property. If any dispute arises with regard to the sale transaction, it would be solved by the executants personally at their own risk and cost. Lastly, if there was any loan, mortgage, revenue arrears, etc. over the property, the same shall be cleared by the executants so as to execute and register the sale deed in favour of B