2026 Supreme(Online)(Kar) 27526

THE HIGH COURT OF KARNATAKA
H.P. Sandesh, J
V. Chandrashekar – Appellant
Versus
Munithimma Reddy @ Subbarayappa – Respondent
Regular Second Appeal No.239/2010 (SP)|Regular Second Appeal No.528/2010 (SP)

A first appellate court's finding can be reversed in a second appeal if it is perverse or based on an erroneous appreciation of evidence, such as accepting part of an endorsement while rejecting the rest or ignoring material admissions.

Headnote:(A) Specific Relief Act, 1963 - Sections 16(c) and 22 - Agreement of sale - Specific performance - Concurrent finding of fact - Reversal by Lower Appellate Court - High Court interference in Second Appeal - Scope of Section 100 CPC - Where the Lower Appellate Court's finding is perverse or based on no evidence or erroneous appreciation of evidence, the High Court can interfere in a second appeal. (Paras 31, 47, 52)

(B) Evidence - Agreement of sale - Proof - Admission of signatures - Where a party admits his signatures on a document and the endorsements thereon, a mere denial of the execution of the document is not sufficient to disprove it, especially when the document’s recitals and circumstances corroborate the plaintiff’s case. (Paras 33, 34, 39, 45)

(C) Evidence - Adverse inference - Non-examination of a party - If a defendant who has filed a written statement fails to enter the witness box and subject themselves to cross-examination, an adverse inference can be drawn against them. (Paras 41, 52)

(D) Specific Relief Act, 1963 - Agreement of sale - Prior agreement - Burden of proof - Where the defendant sets up a prior agreement of sale in favour of a third party, the burden is on the defendant to prove its genuineness. Vacillatory and contradictory statements by the defendant’s witnesses regarding the execution of the prior agreement can lead to a finding that the document was created to defeat the plaintiff’s claim. (Paras 39-41, 52) (E) Evidence - Document - Endorsement - Part acceptance and part rejection - A court cannot accept a part of an endorsement in a document while rejecting another part, especially when the signatures on the document are admitted and the other part is not proved to be false. (Paras 44, 52)

Facts of the case:
The appellant/plaintiff filed a suit for specific performance of an agreement of sale dated 11.07.1999 for property measuring 35 guntas. The plaintiff claimed he had paid the entire sale consideration of Rs.1,22,500/- to the defendants (owners). The defendants denied the agreement, claiming the plaintiff obtained signatures on blank papers. The defendants also claimed they had executed a prior agreement of sale in favour of a third party (defendant No.3) on 03.02.1999, and subsequently sold the property to him on 05.10.2004. The Trial Court decreed the suit for specific performance. The First Appellate Court set aside this decree, holding the plaintiff had not proved the prior agreement with one Dayananda Reddy and had not proved readiness and willingness, but directed the refund of Rs.77,500/- with interest. The High Court admitted the second appeal on substantial questions of law.

Findings of Court:
The High Court found that the First Appellate Court's findings were perverse and not based on the evidence. The court held that the defendants' witnesses (DW1, DW2, DW4) gave vacillatory statements regarding the genuineness of the prior agreement (Ex.D1), which did not inspire confidence. The court noted that the defendant No.1 admitted his signatures on the plaintiff’s agreement (Ex.P1) and subsequent endorsements, which proved the agreement. The court also drew an adverse inference against defendant No.2 for not appearing as a witness. The court held that the courts below erred in accepting part of a payment endorsement while rejecting another part. Consequently, the High Court reversed the First Appellate Court's judgment and restored the Trial Court’s decree for specific performance.

Issues: 1. Whether the Lower Appellate Court was justified in reversing the Trial Court's decree for specific performance, particularly in light of the vacillatory statements of the defendants' witnesses regarding the genuineness of the prior agreement? 2. Whether the Lower Appellate Court was justified in eschewing the conduct of the second defendant who did not appear for cross-examination, warranting an adverse inference? 3. Whether the courts below erred in accepting a part of an endorsement on the agreement while rejecting the remaining part?

Ratio Decidendi: The court held that when a party admits his signatures on an agreement of sale and the endorsements of payment, the agreement is sufficiently proved. A subsequent sale deed executed in favour of a third party based on an unproven prior agreement cannot defeat the plaintiff’s right to specific performance, especially when the prior agreement is found to be created and collusive. The lower appellate court's finding that the plaintiff failed to prove the agreement was perverse and reversed.

Result: Appeals allowed; the judgment of the First Appellate Court is set aside; the suit for specific performance is decreed; the defendants are directed to execute the sale deed in favour of the plaintiff; failure to do so gives the plaintiff liberty to enforce the agreement in accordance with law. (Paras 55, Order)