Karnataka High Court Upholds Order For Specific Performance Of Sale Agreement, Says If Owner Intended To Avail Loan It Would Execute Mortgage Deed

The Karnataka High Court has upheld an order of the trial court decreeing a suit for specific performance of a sale agreement in favour of the plaintiff and rejected the contention of the defendants who are businessmen that they had availed loan from the plaintiffs and had not agreed to sell the schedule property.

A division bench of Justice E S Indiresh and Justice Ramachandra D Huddar dismissed the appeal filed by Nagendra and others and said,

“If at all the defendants are of the view that, they have availed loan from the plaintiffs and have not entered into sale agreement and if such being the case, there was no impediment for the defendants to execute the mortgage deed instead of executing a sale agreement and therefore, the finding recorded by the trial Court is just and proper.”

The appellants challenged the order of trial court decreeing the suit filed by Chandrakant Jain and another. It was argued that defendants are owning a sugar factory and due to financial difficulties the sugar factory became sick and as such, the defendants requested the plaintiffs for financial assistance. The plaintiffs agreed to pay Rs.18,00,000 as loan and in order to provide security for the loan, the defendants had executed the agreement of sale, it was submitted.

The respondent (original plaintiff) argued that appellant intended to sell the property owing to loss in the sugar factory business and the same was reflected in the agreement of sale.

The bench on going through the records said the agreement of sale is a registered document and both the parties are capable of understanding the contents of the agreement of sale.

“The defendant addressed a letter, agreeing to abide by the agreement of sale dated 09.08.2010 and also handed over the original mother deed dated 22.02.2022 in favour of the plaintiffs. This would categorically demonstrate that the defendants intend to sell the schedule property for their financial difficulties,” it observed.

Court also noted that plaintiffs had produced the Certificate of Balance, making it clear that plaintiffs were ready and willing to meet the balance consideration.

“Having arrived at a conclusion regarding the financial soundness of the plaintiffs to purchase the schedule property and also the financial difficulties faced by the defendants at the relevant point of time on account of their factory being declared as sick, execution of the registered agreement of sale dated 09.08.2010, cannot be ruled out and being the businessman owning factory, cannot raise plea that the agreement of sale has to be read as loan document,” Court said.

Rejecting the contention of the appellants that schedule property fetched more value than the amount specified in the agreement of sale, Court referred to Narinderjit Singh Vs. North Star Estate Promoters Limited (2012) where Supreme Court held escalation of price is not a ground to deny specific performance of agreement to sell.

Accordingly, Court dismissed the appeal.

Appearance: Advocates N Dinesh Rao and V.S Kalasurmath for Appellants.

Senior Advocate Gurudas S Khannur for Advocate Sharanabasavarj for R1 AND R2. Citation No: 2024 LiveLaw (Kar) 220

Case Title: Nagendra & Others AND Chandrakant Jain & ANR

Case No: REGULAR FIRST APPEAL NO.100383 OF 2017

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