Dismissed¶15

L M Nataraj v. Dharani

Karnataka HC18 Jul 2025RSA/1274/2016

Case brief

AI extract

What is this about?

Second appeal dismissed confirming concurrent findings; specific performance refused where transaction held to be a loan and the sale agreement a security document; alternative relief of refund of Rs.2,00,000 with 10% p.a. interest from 16.09.2011 upheld; no substantial question of law under Section 100 CPC; no privity of contract for defendants who did not execute the agreement; agreement dated 16.09.2011; legal notice dated 13.01.2012 refused; Chikkamagaluru Trial Court and First Appellate Court decrees confirmed; no costs.

What did the court decide?

None to the appellants; the judgment and decree passed by the Courts below are confirmed; no order as to costs; I.A.No.2/2016 disposed of as not surviving. ¶15

L M Nataraj Vs Dharani — Karnataka HC (2025) — LawSathi Research

What the court decided

AI extract

Outcome

None to the appellants; the judgment and decree passed by the Courts below are confirmed; no order as to costs; I.A.No.2/2016 disposed of as not surviving.

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Issue for consideration

Whether the impugned judgments and decrees of the Courts below contain any error and whether any substantial question of law arises for consideration in this Regular Second Appeal under Section 100 CPC. +1 more

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Court's answer

No error is found in the impugned judgments and no substantial question of law arises for consideration in this Regular Second Appeal.

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Ratio / Principle

The Trial Court was justified in passing its judgment, which recorded that the transaction between the plaintiff and defendant Nos. 1 and 3 was a loan transaction and not a sale transaction, a finding the plaintiff did not challenge.

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Key takeaways

The First Appellate Court rightly re-appreciated the entire evidence on record and affirmed the judgment and decree passed by the Trial Court.ratio¶14

Detailed headnote1 paragraphs

Specific Performance / Loan-cum-Security Document — Agreement dated 16.09.2011 to sell suit property for Rs.10 Lakhs with Rs.2 Lakhs advance; defence that the plaintiff advanced a Rs.2 Lakhs loan and took the agreement only as security — Trial Court (O.S.No.68/2012, Addl. Senior Civil Judge, Chikamagalore) decreed only the alternative relief, refund of Rs.2 Lakhs with interest at 10% p.a. from 16.09.2011 till repayment, and dismissed specific performance; the plaintiff did not challenge that decree — First Appellate Court (R.A.No.1/2014, I Addl. District Judge, Chikkamagaluru, judgment dated 01.03.2016) on re-assessment affirmed, holding the plaintiff had to prove execution of the sale agreement, that there was no privity of contract with defendant Nos.2, 4 and 5 who did not execute it, and that it was a loan agreement executed as a security document — Regular Second Appeal under S.100 CPC dismissed by Karnataka High Court (Ashok S. Kinagi J., 18.07.2025): no error in the impugned judgments and no substantial question of law arises; decrees of both Courts below confirmed; no order as to costs.

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1 - NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18^TH DAY OF JULY, 2025 BEFORE

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THE HON'BLE MR. JUSTICE ASHOK S.KINAGI REGULAR SECOND APPEAL NO. 1274 OF 2016 (SP)

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BETWEEN:

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L.M. NATARAJ

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S/O LATE MARULASIDDAPPA, AGED ABOUT 60 YEARS,

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SINCE DECEASED BY LRs

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1(a) SMT. SHAKUNTHALA, W/O LATE L.N.NATARAJ,

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AGED ABOUT 58 YEARS,

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1(b) SIDDESHA, S/O LATE L.N. NATARAJ,

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AGED ABOUT 29 YEARS,

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BOTH ARE R/O LAKKAMANAHALLI VILLAGE AND POST, LAKYA HOBLI, CHICKMAGALUR TALUK - 577 101.

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Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA

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MAHANTHESH, S/O L.M.NATARAJ AGED ABOUT 31 YEARS, R/O LAKKAMMANAHALLI VILLAGE AND POST, LAKYA HOBLI, CHIKMAGALUR TALUK-577 101.

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(BY SRI RAVIKUMAR N.R., ADVOCATE)

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…APPELLANTS

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AND:

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DHARANI, S/O VENKATA SETTY, AGED ABOUT 59 YEARS, R/O GOWRI KALUVE, V.P.EXTENSION, CHIKMAGALUR CITY, CHIKMAGALUR TALUK AND DISTRICT-577 101.

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…RESPONDENT

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(BY SRI S. RAJASHEKAR, ADVOCATE)

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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THIS RSA IS FILED UNDER SEC. 100 OF CPC., 1908 AGAINST THE JUDGMENT AND DECREE DATED 01.03.2016 PASSED IN RA.NO.1/2014 ON THE FILE OF THE 1^st ADDL. DISTRICT JUDGE, CHIKKAMAGALURU, DISMISSING THE APPEAL AND CONFIRMING THE JUDGMENT AND DECREE DATED 11.11.2013 PASSED IN OS.NO.68/2012 ON THE FILE OF THE ADDL. SENIOR CIVIL JUDGE AND JMFC., CHIKAMAGALORE.

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI

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ORAL JUDGMENT

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This Regular Second Appeal is filed by the appellants, challenging the judgment and decree dated 01.03.2016 passed in R.A.No.1/2014 by the learned I Additional District Court, Chikkamagaluru and the judgment and decree dated 11.11.2013 passed in O.S.No.68/2012 by the learned Additional Senior Civil Judge, Chikkamagalur.

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For convenience the parties are referred to based on their ranking before the Trial Court. The appellants were defendant Nos. 1 and 3, and the respondent was the plaintiff.

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The plaintiff filed a suit against the defendants for specific performance of a contract. It is the case of the plaintiff that the defendants are the absolute owners of the suit schedule property and agreed to sell the suit schedule property

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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for a consideration of Rs.10 Lakhs. The defendents entered into the sale agreement on 16.09.2011 to sell the suit schedule property. Accordingly, the plaintiff paid a sum of Rs.2 Lakhs towards an advance sale consideration amount. It was agreed that the balance sale consideration amount to be paid within three months from the date of execution of the sale agreement and on the execution of a registered sale deed. The plaintiff requested the defendants to receive the balance sale consideration amount and execute a registered sale deed. The defendants did not give any heed to the request made by the plaintiff. The plaintiff to prove he was always ready and willing to perform his part of a contract issued legal notice on 13.01.2012, calling upon the defendants to receive the balance sale consideration amount, and execute a registered sale deed. The defendants refused to accept the legal notice. Hence, a cause of action arose for the plaintiff to file a suit for specific performance of a contract. Accordingly, prays to decree the suit.

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Defendant No.1 filed a written statement and

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defendant Nos.2 to 5 filed a memo adopting the written statement filed by defendant No.1. Defendant No.1 denied the

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4 - NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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averments made in the plaint. It is contended that there is no privity of contract between plaintiff and defendant Nos.2, 4 and 5. Hence, the suit filed by the plaintiff against defendant Nos. 1 and 3 to 5 is not maintainable and it is contended that defendant No.1 requested the plaintiff to advance a loan of Rs.2 Lakhs. The plaintiff insisted on the execution of the sale agreement as security for the repayment of the loan amount. Defendant No.1 executed a sale agreement as the security for the repayment of the loan amount. Defendant No.1 and his son have signed the agreement. It is contended that the defendants offered to pay the loan amount but the plaintiff refused to accept. Hence, prays to dismiss the suit.

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The Trial Court based on the pleadings of the parties, framed the relevant issues.

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The plaintiff, to substantiate his case, examined himself as PW.1, examined 2 witnesses as PW.2 and PW.3, and marked 8 documents as Ex.P1 to Ex.P8.

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In rebuttal, defendant No.1 was examined himself as DW.1, and one document was marked as Ex.D1.

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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The Trial Court after assessing the verbal and documentary evidence decreed the suit of the plaintiff in part with cost for the alternative relief claimed by the plaintiff. That is the refund of an amount of Rs.2 Lakhs to the plaintiff with interest at the rate of 10% p.a. from the date of execution of a sale agreement that is from 16.09.2011 till the repayment of the same, and dismissed the suit for specific performance of contract. The defendants, aggrieved by the judgment and decree passed in O.S No.68/2012, filed an appeal in R.A.No.1/2014 on the file of the learned First Additional District Court, Chikkamagaluru. The First Appellate Court after reassessing the verbal and documentary evidence dismissed the appeal vide judgment dated 01.03.2016. The defendants aggrieved by the impugned judgments, filed this Regular Second Appeal.

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Perused the records, and considered the submission of the learned counsel for the defendants.

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Learned counsel for the defendants submits that the

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defendants have denied the execution of the sale agreement, and it is also submitted that there is no privity of contract between defendant Nos.2, 4 and 5 and the plaintiff. He submits

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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that both Courts below have committed an error in passing the impugned judgments. He submits that defendant No.1 obtained

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a loan from the plaintiff and executed a sale agreement as security for the repayment of the loan amount. The said aspect was not adequately considered by the Courts below, and committed an error in passing the impugned judgments. Accordingly, prays to allow the appeal.

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Perused the orders and considered the submissions of the learned counsel for the defendants.

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The plaintiff filed a suit for specific performance of a contract alleging that defendant No.1 had agreed to sell the suit schedule property for a consideration of Rs.10 Lakhs and an agreement for sale was entered on 16.09.2011, and paid Rs.2 Lakhs towards an advance sale consideration amount. It was agreed that the balance sale consideration amount would be paid within three months from the date of execution of a sale agreement and at the time of registration of sale deed get the sale deed executed in favour of plaintiff. The plaintiff to show that he was ready and wiling to perform his part of a contract, issued a legal notice on 13.01.2012. The defendants denied the execution of a sale agreement, and contended that

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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the transaction between the defendants and the plaintiff was a

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loan transaction and not a sale transaction.

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From the perusal of a written statement filed by defendant No.1, the defendant has admitted regarding a monetary transaction between the plaintiff and defendant No.1 and also receiving of Rs.2 Lakhs. Although the defendants have contended that they offered to repay the loan, it is not the case of the defendants that they have repaid the loan obtained from the plaintiff. The trial Court has recorded a finding that the transaction between the plaintiff and defendant Nos. 1 and 3 is a loan transaction, not a sale transaction. The plaintiff did not challenge the judgment and decree passed by the Trial Court dismissing the suit for specific performance of a contract as the defendant had admitted regarding the transaction between the plaintiff and defendant Nos.1 and 3. The Trial Court was justified in passing the impugned judgment. The First Appellate Court, on reassessing the verbal and documentary evidence, has held that the plaintiff has to prove the execution of sale agreement. There is no privity of contract between the plaintiff and defendant Nos.2, 4 and 5 as they did not execute the sale agreement. It is a not sale agreement, it is the loan agreement

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NC: 2025:KHC:27162 RSA No. 1274 of 2016

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HC-KAR

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and the same was executed as a security document. The First

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Appellate Court has rightly re-appreciated the entire evidence on record, and affirmed the judgment and decree passed by the Trial Court.

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In view of the above discussion, I do not find any error in the impugned judgments and any substantial question of law that arise for consideration in this appeal.

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