K. N. NAGARAJAPPA & ORS. versus H. NARASIMHA REDDY on 9 September 2021

Issues

1. In these appeals by Special Leave, a common judgment - intwo second appeals[1] rendered by the Karnataka High Court- reversingthe decree of the first appellate court, has been challenged.

2. The facts relevant for the purposes of this case are that theregistered sale deeds were executed on 28.05.1973 in respect of distinctparcels of land. On the same day, one of the transactions related tothe sale of three parcels, which is survey no. 36/1 (28 guntas); surveyno.37 (1 acre 30 guntas) and survey no.28/2 (13 guntas)- collectivelycalled “the suit lands” by common sale deed – exhibited as Ex-1 beforethe trial court. This document is not in dispute. In OS No.20/1985, theplaintiff/respondent and purchaser herein filed a suit for declarationof title and recovery of possession as well as mesne profits inrelation to suit properties (hereafter called “the first suit”). The claimwas premised on the fact that the plaintiff/respondents had purchasedthe suit properties by the registered sale deed from the appellants(defendants in the suit). It was contended that though the appellantshad put the plaintiff/ respondents in possession, later, upon developingill will, they moved the Land Tribunal seeking occupancy rights andproceeded to dispossess them, i.e. the plaintiff/respondents from thesuit property. The Land Tribunal initially ruled in favor of the appellants;however, those findings were set aside by the High Court in W.P. 12662/1981. The question was remanded to the Land Tribunal for freshconsideration. This time round, the Land Tribunal directed the partiesto approach the Civil Court for adjudication of disputes. The plaintiff/respondent therefore filed the first suit, for declaration and possession.The appellants defended the first suit and denied the claims.

3. The appellants filed another suit – (OS 22/1985 hereafterreferred to as the “second suit”). In the second suit, it was alleged that 1 Dated 31.07.2008 in RSA Nos. 368/2002 and 736/2002

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Athe sale deed Ex-1 in favour of the respondent (defendant in secondsuit) was a nominal one and was executed as a security for the loanadvanced by the respondent. The appellants relied upon a documentwhich they claimed was an agreement of sale under which allegedlythe respondent had agreed to execute or reconvey the suit propertiesto the appellants. In terms of this agreement, the appellants were toBpay 9000/- to the respondent within three years. Alleging that therespondent did not execute the sale deed, despite having received fullpayment of 9000/- with interest @ 15% per annum, the appellants filedthe second suit for declaration, of title and permanent injunction and inthe alternative, specific performance of the agreement of sale datedC28.05.1973. The appellants also urged and claimed that they were inpossession of the suit properties.

4. The Trial Court framed issues with respect to the title,possession and specific performance and proceeded to record thecommon evidence. The trial court held that the respondent was absoluteDowner of the suit properties by virtue of sale deed – (a registereddocument) and also concluded that the appellants who had filed thesecond suit were in illegal possession of the suit properties. With respectto the disputes in the second suit, the trial court held that the appellantsfailed to establish execution of the agreement for which they had soughtspecific performance. The issue was decided on the basis of evidenceErelied upon by the parties. As a result, the respondent’s suit, i.e. thefirst suit for declaration, title and possession was decreed, in his favour.The appellants’ suit, however, was dismissed.

5. Aggrieved by the dismissal of the second suit as well as thedecree in favour of the respondent in the first suit, appeals were filedFby the appellant before the Additional District Judge. Both the appealswere considered together - as in the case of a common judgment bythe trial court. The first appellate court gave credence to the submissionsof the appellants and allowed their plea. As a result, it was held thatthe sale deed in favour of the respondents was a nominal one and notGmeant to be acted upon. It was also held that the appellants had provedthe agreement to sell and were entitled to a decree for specificperformance.

6. The aggrieved respondents approached the High Court withtwo second appeals, i.e. RSA No. 368/2002 and RSA No. 736/2002.HThe respondents contended that the dismissal of their suit on the one hand and the decree of the second suit in favour of the present appellantsby the first appellate court, on the other, was in error of law. TheKarnataka High Court framed the following question of law forconsideration:

“Whether the lower appellate Court was justified ingranting the decree in favor of the respondent on the basisof Exb-3”

7. The High Court noted that the principal ground was in regardto the genuineness and veracity of the agreement to sell relied uponby the appellant, i.e. Ex D-3. After noting that the findings of thetrial court were in favour of the respondent, which stood reversed bythe first appellate court, the High Court proceeded to consider whetherEx.D-3 could be considered as a genuine document, having regard tothe materials on record. The High Court noted that the trial court’sfindings were based upon several factors. The first, was the mannerof writing in Ex.D-3, which was different from the manner of writingin Ex P-1 (the admitted registered sale deed). It was specifically noticedthat Ex.D-3 did not contain any particulars with respect to lands situatedand part of the suit (i.e. Survey Nos.36-38) as well as the extent ofland in those survey numbers and the other relevant particulars. On acomparison of the alleged agreement to sell (Ex.D-3) with the admittedsale deed (Ex.P-1) along with the other documents, the High Court notedthat the trial court did not accept the contention of the appellants thatEx.D-3 was executed the same day as Ex.P-1. The second reasonwhich the High Court noted for rejection of Ex D- 3 by the trial courtwas that the document contained no condition regarding payment ofinterest on the sale consideration amount which was allegedly a loan.The evidence of the appellants, on the other hand, was that 15% interestwas agreed to be paid and that they had paid `2700/- as interest alongwith the sale amount or loan amount to the respondent. This contradictionbetween the pleading and documents on the one hand, and the oralevidence on the other hand, was held to constitute a factor against thepresent appellant. Thirdly, it was noted that the appellants did notproduce any evidence to establish that the interest was in fact paid, oras a matter of fact that the principal amount of `9000/- was paid back.In this regard, the omission to record a receipt and produce it beforethe court was also held to be fatal to their case. It was lastly held bythe trial court that the claim in the second suit for specific performancewas also barred since it was a specific contention of the appellant that A

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Athe time for repayment of `9000/- was three years which had longsince passed. The other findings too were noted by the High Court.8. The High Court, after noting these facts and also consideringEx.D-3, held that the trial court’s judgment and decree, based on anoverall consideration of the findings before it, was sound and justified.BThe High Court was of the opinion that in the course of a trial, thecourt could examine a document under Section 73 of the Evidence Act.Since the respondent had not admitted his signatures on Ex.D-3, theCourt acted within its powers to examine the admitted document, i.e.Ex.P-1 and compare the signatures on it with that of the disputeddocuments, Ex.D-3. Another important circumstance which weighedCwith the High Court was that the appellants did not claim themselvesto be owners despite executing Ex. P-1 because in their applicationbefore the Land Tribunal (filed after executing Ex.P-1), they hadadmitted that the respondents were the owners of the suit lands. Infact the appellants’ plea was that they were tenants of the respondent.DThe High Court held that there was no reason for the appellants to putforward such a contention before the Tribunal had Ex.P-1 been merelya nominal document. The High Court noted that the trial court had alsoconsidered other evidence, such as the revenue records Ex.P- 4 andEx.P-5 in which the respondents were shown as khatedars. The HighCourt reasoned that had Ex.P-1 been only a nominal sale deed, theEappellants would not have permitted the revenue authorities to changethe names of owners of land by allowing the respondent’s name to bereplaced on the record.

Contentions of the parties

F9. It is urged on behalf of the appellants, that the High Court fellinto error, in interfering with the first appellate court’s decree. Pointingto Section 100 of the Code of Civil Procedure (CPC) it was urged thatin a second appeal, the High Court’s jurisdiction is limited to examiningonly substantial questions of law; in this case, the court proceeded toappreciate the evidence, and differ with the findings of the first appellateGcourt, which is the final court of facts. Furthermore, examination ofthe documents, particularly Ex.D-3 was a purely factual aspect, whichcould not be, by any stretch of the imagination, considered a legal issue,much less a substantial question of law.

10. Counsel for the respondent urged this court not to interfereHwith the impugned judgment, and submitted that the High Court endorsed the findings of the trial court, which were in consonance withlaw and the evidence on the record. It was submitted that the trial courthaving regard to the evidence led noted several important features aboutEx.D-3, such as lack of any details of the land, or such like particulars,or any mention about the interest payable; all of which rendered itsuspect. Furthermore, the so-called agreement to sell (Ex. D-3) wascontradicted by other evidence on the record.

Analysis and conclusions

11. It is evident from the above discussion that the respondent,in the first suit, claimed possession on the basis of the registered saledeed, Ex.P-1. That document is not denied. The rival case set-up indefence by the appellants as well as the claim in the second suit wasthat Ex.P-1 was nominal and in fact meant as a security; the appellantsalso contended that the suit land were to be re-conveyed after receivingfull payment of 9000, which was in effect made over to the respondent.It is a matter of record that the appellants had applied for and weregranted occupancy rights under the Karnataka Land Reforms Act. Onthe order of the Land Tribunal, the respondent was dispossessed. TheTribunal’s order was set aside by the High Court which remanded theapplication for re- consideration afresh. In the second round, the Tribunalrelegated the parties to the Civil Court. In these circumstances, the twosuits were filed.

12. The trial court rejected the appellant’s defence and decreedthe suit, disbelieving the agreement to sell (Ex.D-3). Its conclusions werebased upon several reasons. As noted previously, Ex.D-3 neither spelledout the details of the suit lands, nor did it state any payment of interest,as was the position too by the appellants. Furthermore, the trial courtalso examined the documentary evidence in the form of the applicationfor occupancy rights which clearly disclosed the respondents as ownersand claimed that the appellants were tenants under them. Lastly, it washeld that the writings on Ex.D-3 which was allegedly executed on thesame day as Ex.P-1 (the admitted sale deed) were not the same. Therespondent had denied Ex.D-3. The first appellate court faulted the trialcourt for not believing Ex.D-3 and proceeded to hold that it was genuine.The substantial question of law framed by the High Court was withrespect to the interpretation of Ex.D-3 by the first appellate court.

13. The impugned judgment has recounted the reasons whichpersuaded the trial court to reject Ex.D-3 and approved them. At the A

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Asame time, the High Court found fault with the first appellant court inignoring the important reasons, which were rooted in the facts ofthe case, based upon the record which had resulted in rejection ofEx.D-3 and the decree for possession. The appellants’ theme song isthat in second appeal, the High Court could not have interfered withwhat are termed as pure findings of fact. It is submitted that anBexamination of Ex.D-3 cannot be termed as substantial question of law,but rather amounts to pure appreciation of facts.

14. Undoubtedly, the jurisdiction which a High Court derivesunder Section 100 is based upon its framing of a substantial questionof law. As a matter of law, it is axiomatic that the findings of the firstCappellate court are final. However, the rule that sans a substantialquestion of law, the High Courts cannot interfere with findings of thelower Court or concurrent findings of fact, is subject to two importantcaveats. The first is that, if the findings of fact are palpably perverseor outrage the conscience of the court; in other words, it flies on theDface of logic that given the facts on the record, interference would bejustified. The other is where the findings of fact may call for examinationand be upset, in the limited circumstances spelt out in Section 103 CPC.

15. Section 103 CPC reads as follows:

E“103.Power of High Court to determine issues of factIn any second appeal, the High Court may, if the evidenceon the record is sufficient, determine any issue necessary forthe disposal of the appeal,- (a) which has not been determined by the lowerFAppellate Court or both by the Court of first instanceand the lower Appellate Court, or (b) which has been wrongly determined by such Courtor Courts reason of a decision on such question oflaw as is referred to in section 100.”G

16. In the judgment reported as Municipal Committee,Hoshiarpur v. Punjab State Electricity Board[2], this court held asfollows:

“26. Thus, it is evident that Section 103 CPC is not anHexception to Section 100 CPC nor is it meant to supplant it, rather it is to serve the same purpose. Even while pressingSection 103 CPC in service, the High Court has to record afinding that it had to exercise such power, because it foundthat finding (s) of fact recorded by the court (s) below stoodvitiated because of perversity. More so, such power can beexercised only in exceptional circumstances and withcircumspection, where the core question involved in the casehas not been decided by the court(s) below.

27. There is no prohibition on entertaining a second appealeven on a question of fact provided the court is satisfied thatthe findings of fact recorded by the courts below stood-vitiated by nonconsideration of relevant evidence or byshowing an erroneous approach to the matteri.e. that thefindings of fact are found to be perverse. But the HighCourt cannot interfere with the concurrent findings offact in a routine and casual manner by substituting itssubjective satisfaction in place of that of the lower courts.(Vide Jagdish Singh v. Natthu Singh [(1992) 1 SCC 647];Karnataka Board of Wakf v. Anjuman-E-IsmailMadris-Un-Niswan [(1999) 6 SCC 343] and Dinesh Kumarv. Yusuf Ali [(2010) 12 SCC 740].)

28. If a finding of fact is arrived at by ignoring or excludingrelevant material or by taking into consideration irrelevantmaterial or if the finding so outrageously defies logic as tosuffer from the vice of irrationality incurring the blame ofbeing perverse, then the finding is rendered infirm in the eyeof the law. If the findings of the Court are based on noevidence or evidence which is thoroughly unreliable orevidence that suffers from the vice of procedural irregularityor the findings are such that no reasonable person wouldhave arrived at those findings, then the findings may be saidto be perverse. Further if the findings are either ipse dixitof the Court or based on conjecture and surmises, thejudgment suffers from the additional infirmity ofnon-application of mind and thus, stands vitiated. (VideBharatha Matha v. R. Vijaya Renganathan [(2010) 11 SCC483]”

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A17. In a recent judgment of this court, Narayan SitaramjiBadwaik (Dead) Through Lrs. v Bisaram & Ors[3]this court observedas follows, in the context of High Courts’ jurisdiction to appreciatefactual issues under Section 103 IPC:

“11. A bare perusal of this section clearly indicates that itBprovides for the High Court to decide an issue of fact,provided there is sufficient evidence on record before it, intwo circumstances. First, when an issue necessary for thedisposal of the appeal has not been determined by the lowerAppellate Court or by both the Courts below. And second,when an issue of fact has been wrongly determined by theCCourt(s) below by virtue of the decision on the question oflaw under Section 100 of the Code of Civil Procedure.”

18. In the opinion of this court, in the present case, the HighCourt recorded sound and convincing reasons why the first appellatecourt’s judgment required interference. These were entirely based uponDthe evidence led by the parties on the record. The appreciation ofevidence by the first appellate court was on the basis of it havingoverlooked material facts, such as appreciation of documentary and oralevidence led before the trial court, that the execution of Ex.D-3 wasdenied. In these circumstances, the burden was upon the appellants toEestablish that the registered sale deed was a nominal document. Thefindings of the trial court –as was duly noticed by the High Courtrecorded five cogent reasons why the appellants’ pleas could not beaccepted. The deposition with respect to repayment of `9000/- apartfrom being bereft of particulars, was also contrary to the provisionsinasmuch as there was no averment with respect to payment of interestF@ 15%. Furthermore, the appellants’ application for occupancy rightsmade after the sale deed and the alleged agreement to sell wereexecuted claimed that the appellants were tenants under the respondent.Eventually, the order of the Land Tribunal was set aside; upon remandthe Land Tribunal was of the opinion that it did not have the jurisdictionGto decide the issue and left it to the trial court to do so. These importantaspects appeared to have been not appreciated – and their import wereoverlooked. As a consequence, the first appellate court fell into errorin overlooking important evidence and appreciating the record in its trueperspective and reversed the decree of the trial court. Moreover, the High Court, in second appeal proceeded to examine the documents inlight of the evidence led and corrected the findings as it were underSection 103. If the appellants’ arguments were to prevail, the findingsof fact based upon an entirely erroneous appreciation of facts and byoverlooking material evidence would necessarily have to remain andbind the parties, thereby causing injustice. It is precisely for such reasonsthat the High Courts are empowered to exercise limited factual reviewunder Section 103 CPC. However, that such power could be exercisedcannot be doubted. The impugned judgment does not expressly referto that provision. In the circumstances of the case, it is evident thatthe High Court exercised the power in the light of that provision.Furthermore, we are also of the opinion that having regard to the overallcircumstances, the impugned judgment does not call for interferencein exercise of special leave jurisdiction (which is available to this Court– even at the stage of final hearing).

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19. In view of the foregoing discussion, it is held that there is nomerit in the appeals which are accordingly dismissed. There shall beDno order as to costs.

Bibhuti Bhushan Bose

Appeals dismissed.

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