The 2nd defendant in O.S.No.5 of 1998 on the file of the District Judge, Krishna District at Machilipatnam is the appellant herein.

2. The suit was one filed for specific performance of contract of sale by the plaintiff alleging that the 1st defendant is the absolute owner of the property and agreed to sell the property @Rs.75,000/- per acre and executed an agreement of sale on 30.01.1995. A sum of Rs.4,00,000/- is said to have been paid and in spite of repeated demands, the 1st defendant postponed the execution of the sale deed and a notice was also given but after the demand made by the plaintiff by virtue of the registered deed dated 01.04.1996 and without giving reply he executed a registered sale deed dated 10.12.1996 in favour of the 2nd defendant, who is his sister and delivered possession to her. It is a fraudulent transaction and, therefore, both the defendants are liable to execute the sale deed or to refund the amount of Rs.4,00,000/- with interest at 12% per annum.

3. The 1st defendant remained ex parte and the 2nd defendant filed a written statement contending that the sale agreement is not true and is a fabricated one. She claims to have purchased the property for a consideration of Rs.2,85,200/- and obtained the sale deed. The possession of the land was also delivered, hence he is a bona fide purchaser for valuable consideration. A suit was filed in O.S.No.11 of 1997 against the plaintiff and after appearance the plaintiff got issued a notice on 19.02.1997 contending that the 1st defendant and his mother executed the pronote for Rs.1,25,000/-on 10.12.1995. On the basis of it, I.P.No.12 of 1997 was filed to declare the 1st defendant as an insolvent contending that the sale deed is a fabricated one. The contract is not enforceable and the plaintiff is not aware of the said contract and I.P.No.12 of 1997 was dismissed on 26.04.2000, in which the sale was challenged and, therefore, the plaintiff cannot further challenge the sale transaction.

4. On the basis of the above pleadings, the following issues have been framed for trial:

1. Whether the plaintiff is entitled for the specific performance of contract of sale dated 30.01.1995 against defendants 1 and 2 and to recover the possession of the property?

2. Whether the second defendant is bona fide purchaser for valuable consideration without notice of the earlier contract of sale?

3. Whether the Court fee paid is proper and correct?

4. Whether the sale deed dated 10.12.1996 in favour of the second defendant is fraudulent transfer to avoid the suit agreement of sale deed?

5. Whether the plaintiff is entitled to alternative relief? and

6. To what relief?

Additional Issues:

1. Whether the plaintiff is entitled for refund of Rs.4,00,000/-with interest from the second defendant? And

2. Whether the plaintiff is entitled to raise the plea of fraudulent transaction of the sale deed dated 10.12.1996 in view of the decision in I.P.No.12 of 1997?

5. On behalf of the plaintiff, P.Ws.1 to 5 were examined and marked Exs.A-1 to A-16 and on behalf of the defendants, D.Ws.1 to 4 were examined and Exs.B-1 to B-9 were marked. Ex.X-1 was marked in the evidence of P.W.3.

6. After considering the evidence on record, the learned District Judge held in para 29 that the plaintiff is not entitled for the specific performance of the contract. The learned District Judge in para 22 also referred to the conduct of the plaintiff and he felt that the transaction essentially is a loan transaction. But, however, the learned Judge found that the 2nd defendant is no other than the sister of the 1st defendant and there is a doubt about the capacity of the 2nd defendant to purchase the land and when under the agreement Ex.A-1, it was sold for Rs.71,000/- per acre, the 2nd defendant claims to have purchased it only for Rs.40,000/-per acre and in view of the above circumstances, the transaction under Ex.B-2 cannot be believed. The lower Court held that the burden is on the 2nd defendant