Specific Relief Can Be Granted If 'Karta' Enters Agreement Without Joint Owners For Benefit Of Joint Family, To Clear Loan Availed By Them: Karnataka HC

The Karnataka High Court has held that relief of specific performance can be granted against a defendant who is the Karta of the family when the other members of the joint family are not included in the sale agreement if the sale consideration is used for benefit of the joint family and for clearing the loan availed by joint owners.

A single judge bench of Justice H P Sandesh dismissed an appeal filed by C Kempanna challenging the order of the trial court and the first appellate court allowing the suit filed by the plaintiff.

It said, “The plaintiff can seek the relief against defendant No.1 for the specific performance when the other members of the joint family are not included since the sale consideration is used for the benefit of the joint family and for clearing the loan availed by defendant Nos.1 and 3.”

“Since defendant No.4 is only a subsequent purchaser and there is a clear material that defendant No.3 was not in the village when the agreement was entered into, but he was party to the loan availed jointly and without seeking relief of declaration, the Court can grant the relief of specific performance since the sale deed is also subsequent one in order to avoid the sale transaction,” it added.

Case Background:

It was stated that Munichannarayappa had entered into an agreement of sale dated 19.02.1987 and received an amount of Rs.23,500 as kartha of the joint family and he had borrowed a loan from PLD Bank, Devanahalli for raising wine yard and it was overdue until February 1987. It was submitted that Munichannarayappa's younger brother Venkatesha had left the village long ago and his whereabouts were not known.

In order to repay the loan, Munichannarayappa offered to sell the suit properties and received the entire sale consideration and executed an agreement for sale on 19.02.1987. On the same day, Munichannarayappa delivered the possession of the suit properties and agreed to execute the sale deed whenever called upon to do so, it was stated.

It was argued that whenever the plaintiff approached defendant No.1, he postponed the execution of the sale deed on one pretext or the other. Hence, he issued the notice dated 14.06.1995, but Munichannarayappa failed to comply with the demand made.

Munichannarayappa's younger brother Venkatesha came to the village in the year 1995 and having come to know about the sale agreement, created a sale deed dated 22.05.1995 in favour of C. Kempanna. Subsequent to which the plaintiff filed the suit, it was submitted.

Appellant argued that both the courts below have overlooked the fact that the appellant has purchased the ½ extent of all the suit schedule properties from R3 after he got the same in the partition between him and R1 vide the registered sale deed and as such R4 is not entitled to the relief of specific performance.

Further, it was argued that the first appellate court, without properly appreciating the oral and documentary evidence, erroneously upheld the judgment of the Trial Court. It was stated that since defendant No.3 was not a signatory to the said sale agreement and the sale agreement is not by defendant Nos.1 and 3.

No doubt, there was a loan transaction and P.W.1 the sale agreement cannot be believed and the very approach of both the Courts and findings are erroneous, it was stated.

The respondents argued that defendant No.1 had not entered the witness box, instead, he examined his son as the power of attorney holder as D.W.1 and the son was eight years old.

It was stated that in the sale agreement there was no time limit and an untenable reply was given and immediately the suit was filed. It was further argued that since a concurrent finding was given, there was no substantial question of law to be considered.

The Courts below have given the finding that admittedly the entire sale consideration is paid and the same is only in order to clear the bank loan and the same is also admitted, it was argued.

Moreover, it was stated that possession was delivered as on the date of the agreement, Section 53A was brought in to favour the plaintiff and possession was also proved, which was considered by the Trial Court and the first Appellate Court.

Findings:

The bench noted that as per Section 34 of the Act, it is clear that discretion has to be exercised on well-settled principles and the Court has to take note of the nature of obligations in respect of which performance is sought. The conduct of the parties and the effect of the Court granting the decree is also very important.

The Court also stated that it has to look into the contract between the parties, and has to ascertain whether there exists an element of mutuality in the contract. Only then can the Court come to a conclusion whether the relief of declaration is necessary or not, it was held.

Further, it was held that the prayer in the appeal was only to direct defendant Nos.1 to 4 to execute the valid sale deed in favour of the plaintiff in respect of the suit schedule property and in the alternative to pass the decree for refund of the amount.

It further held that no relief was sought for the relief of declaration to declare that the sale deed executed in favour of the plaintiff as null and void.

Court also rejected the contention of defendant No.1 that his signature was obtained on blank stamp paper as security towards a loan of Rs.10,000 and the same was concocted.

It said “The same has not been proved. The person who takes the said defence must come before the Court and depose, but he did not step into the witness box. On the other hand, he examined his son and admittedly he was eight years old and was not having any acquaintance with the facts of the case and agreement of sale is of the year 1987.”

It noted that the partition between the defendants took place in the year 1994 and no partition had taken place prior to 1987,  while D.W.2 admitted that defendant No.1 was managing the affairs of the joint family.

It held that defendant Nos.1 and 2 in the written statement admitted that the defendants had borrowed the loan from PLD Bank, which was repaid earlier to 1987  and that the evidence of D.W.1 and D.W.2 as well as reply notice was clear with regard to the purpose for which the property was agreed to be sold.

It added “The appreciation by the Trial Court and the First Appellate Court is very clear with regard to the payment of Rs.23,500/- and handing over the possession and also recital is very clear that possession is with the plaintiff in terms of the sale agreement.”

“In order to clear the loan only the transaction took place and by entering into the agreement of sale, received the entire sale consideration and the possession was delivered and the same is for the benefit of the family. When such being the case, the very contention of the learned counsel for the appellant that the Courts below committed an error cannot be accepted," it concluded.

It also turned down the contention that the suit is barred by limitation. It said that when time is not the essence of the contract, only on refusal did the cause of action arise and immediately a suit was filed.

Accordingly, it dismissed the appeal.

Appearance: Advocate Sachin B S for Appellant

Advocate P.V.Chandrashekar FOR R1 & R2.

Senior Advocate S.Srivatsa for Advocate S.D.N.Prasad FOR R4(a), R4(b), R4(d) & R4(c)(1 to 3).

Citation No: 2024 LiveLaw (Kar) 165

Case Title: C Kempanna AND Munichannarayappa & others

Case No: R.S.A.NO.1102/2008

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