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2024 Supreme(Kar) 419

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
H.P. SANDESH, J.
H.M. Mahadevappa, S/o. Madappa & Ors. - Appellants
Versus
P. Lokesha, S/o. Chinnaswamy Reddy - Respondent
R.S.A. No. 139 of 2018 (SP)
Decided On : 28-06-2024

Advocates Appeared:
For the Appellant : Sri C.P. Dhananjaya.
For the Respondent: Sri S.R. Ravi Prakash.

IMPORTANT POINT
The court emphasized that specific performance is discretionary and must consider the fairness of the transaction and the conduct of the parties involved.

Headnote:

Specific Performance - Sale Agreement - Specific Relief Act, 1963, Section 20 - The court analyzed the provisions of the Specific Relief Act, particularly Section 20, which governs the discretion of courts in granting specific performance, emphasizing the need to consider the conduct of parties and the fairness of the transaction.

Fact of the Case:

The plaintiff entered into a sale agreement with the defendant for a property, paying earnest money. The defendant claimed the agreement was merely a security for a loan. The trial court ruled in favor of the plaintiff, granting specific performance, which was upheld by the appellate court with modifications.

Finding of the Court:

The court found that both lower courts failed to adequately consider the evidence regarding the nature of the transaction and the market value of the property, leading to an inequitable enforcement of the sale agreement.

Issues: Whether the courts below properly exercised discretion under Section 20 of the Specific Relief Act in light of the evidence presented.

Ratio Decidendi: The court held that the discretion to grant specific performance must consider the fairness of the transaction and the conduct of the parties, particularly when the sale price is significantly lower than the market value.

Result: The second appeal is allowed, and the judgments of the lower courts are set aside, ordering a refund of the earnest money with interest.

JUDGMENT :

H.P. Sandesh, J.

1. Heard the learned counsel for the appellants and also the learned counsel for the respondents. This second appeal is filed against the concurrent finding in granting the relief of specific performance in O.S.No.381/2013 and in R.A.No.44/2015.

2. The parties are referred to as per their original rankings before the Trial Court, in order to avoid confusion and for the convenience of the Court.

3. The factual matrix of case of the plaintiff before the Trial Court that defendant entered into agreement dated 28.05.2012 with the plaintiff to sell the suit schedule property for a sale consideration of Rs.2,89,000/-and paid earnest money of Rs.2,00,000/- and balance amount payable at the time of registering the document. It also his case that he is always ready and willing to perform his part of contract. The defendant has appeared and filed written statement contending that the plaintiff is a professional money lender and he advanced the money to the several persons. They have only borrowed Rs.2,00,000/- and executed agreement of sale as security for the said amount of Rs.2,00,000/- and the land value of the said property is more than Rs.20,00,000/- and contended that they are ready to pay the principle amount together with interest in which the Court directs to pay the plaintiff. The suit schedule properties are very valuable land and with an intention to grab the suit schedule properties for lower price, filed a suit for the relief of specific performance. The Trial Court having considered the pleadings of the parties, framed the following issues :

    (1) Whether the plaintiff proves that, defendants entered into agreement with him to sell suit schedule properties for consideration of Rs.2,89,000/-?

(2) Whether the plaintiff further proves that defendants received Rs.2,00,000/- from the plaintiff as earnest money and executed registered agreement of sale on 28.05.2012?

(3) Whether the plaintiff proves that he is always ready and willing to perform his part of contract?

(4) Whether the defendant further proves that, the plaintiff is professional moneylender?

(5) Whether the defendants further prove that, they have borrowed Rs.2,00,000/- and executed agreement of sale security?

(6) Whether the plaintiff entitles for the relief’s sought?

(7) What order or decree?

4. The Trial Court has given an opportunity to substantiate their case. The plaintiff himself has examined as PW1 and also examined three witnesses as PW2 to PW4 and got marked Ex.P1 to Ex.P12. On the other hand, the defendant in order substantiate his defense, examined himself as DW1 and got marked the document Ex.D1 and Ex.D2. The Trial Court having considered both oral and documentary evidence available on record comes to the conclusion that there is a registered sale agreement and the same was executed for the sale of the property and received earnest money of Rs.2,00,000/- and balance was payable at the time of registration and also comes to the conclusion that he is always ready and willing to perform his part of contract and answered the issue Nos.1 to 3 as affirmative and the defense of the defendant has not been accepted and ordered for the relief of specific performance. Having considered the market value per acre Rs.90,000/- calculated the total sale consideration of land as against the agreed sale consideration of Rs.2,89,000/- and directed to pay the balance amount out of Rs.4,08,000/-. Whenever they intimate the plaintiff that he obtained the permission from the appointing authority. Being aggrieved by the said judgment and decree, an appeal is filed by the defendant in R.A.No.44/2015. The First Appellate Court having considered the grounds urged in the appeal, formulated the point whether the judgment and decree is illegal, perverse and opposed to law, facts and probabilities of the case. The First Appellate Court having re-assessed the material available on record, answered the point as negative and dismissed the appeal. However, modified the j

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