A document titled as an agreement of sale shall not be construed as such if its recitals reveal that its primary purpose is the security of a loan repayment rather than a genuine mutual intent between parties for the transfer of property title.

The Court made the following:

Reserved on 31.03.2026

Pronounced on 15.04.2026

Uploaded on 15.04.2026

HONOURABLE SRI JUSTICE V. GOPALA KRISHNA RAO

SECOND APPEAL No.1250 of 2011

JUDGMENT:

This second appeal under Section 100 of the Code of Civil Procedure (for short, 'C.P.C.') is filed aggrieved against the decree and judgment dated 07.06.2011 in A.S.No.08 of 2005 on the file of the Court of learned III Additional District Judge (FTC) Nellore, (for short, 'the first appellate Court'), in reversing the decree and judgment dated 17.11.2004 in O.S.No.50 of 1994 on the file of the Court of learned Senior Civil Judge, Gudur, (for short, 'the trial Court').

2. The appellant herein is the defendant and the respondents herein are the plaintiffs before the trial Court. The sole-appellant died during the pendency of the second appeal and the appellant No.2 is added as the Legal Representative of the deceased sole-appellant.

3. The plaintiffs initiated action in O.S.No.50 of 1994, on the file of the trial Court with a prayer for specific performance directing the defendant to execute a regular sale deed in favour of the plaintiffs basing on the agreement of sale dated 31.08.1991.

4. The trial Court dismissed the suit. Felt aggrieved of the same, the unsuccessful plaintiffs in the above said suit filed A.S.No.08 of 2005 on the file of the first appellate Court. By decree and judgment dated 07.06.2011 in A.S.No.08 of 2005, the first appellate Court allowed the appeal suit by setting aside the decree and judgment passed by the trial Court.

5. For the sake of convenience, both parties in the second appeal will be referred to as they were arrayed in the original suit.

6. Case of the plaintiffs, in brief, as set out in the plaint averments in O.S.No.50 of 1994, is as follows:

The defendant borrowed a sum of Rs.1,70,000/- from the plaintiffs on 31.08.1991 and executed a stamped agreement of sale in favour of the plaintiffs agreeing to repay the said amount on or before 30.08.1993, failing which the defendant will execute a registered sale deed in respect of the plaint schedule property in favour of the plaintiffs and also deliver the possession of the same. In spite of demands made by the plaintiffs, the defendant failed to repay the amount. The plaintiffs pleaded that they got issued a legal notice to the defendant on 26.02.1994 for which the defendant issued a reply notice on 05.03.1994 with false allegations. Hence, the present suit.

7. The defendant filed written statement before the trial Court. The brief averments in the written statement filed by the defendant are as follows:

The defendant pleaded that the alleged agreement of sale is a concocted and fabricated document and brought into existence for unlawful gain. The defendant pleaded that the market value of the plaint schedule property is about Rs.4,00,000/- and he never agreed to sell the same for paltry amount. The defendant further pleaded that the possession said to have been delivered amounts to a conveyance deed and the plaintiffs are also aware that the plaint schedule property affected by the land ceiling Act and pending the proceedings under the A.P. Land Reforms (Ceiling on Agricultural Holdings) Act under the agreement of sale is null and void as per Section 17 of the A.P. Land Reforms Act and as such the agreemen