Supreme Court of India
K.N.Nagarajappa vs H.Narasimha Reddy on 9 September, 2021Author: Uday Umesh Lalit

Bench: Uday Umesh Lalit, S. Ravindra Bhat, Hon’Ble Ms. Trivedi




CIVIL APPEAL NO(S). 5033-5034 OF 2009






1. In these appeals by Special Leave, a common judgment – in two second
appeals1 rendered by the Karnataka High Court- reversing the decree of the first
appellate court, has been challenged.
2. The facts relevant for the purposes of this case are that the registered sale
deeds were executed on 28.05.1973 in respect of distinct parcels of land. On the
same day, one of the transactions related to the sale of three parcels, which is
survey no. 36/1 (28 guntas); survey no.37 (1 acre 30 guntas) and survey no.28/2
(13 guntas)- collectively called “the suit lands” by common sale deed –
exhibited as Ex-1 before the trial court. This document is not in dispute. In OS
No.20/1985, the plaintiff/respondent and purchaser herein filed a suit for
declaration of title and recovery of possession as well as mesne profits in
Signature Not Verified

relation to the suit properties (hereafter called “the first suit”). The claim was
Digitally signed by Dr.
Mukesh Nasa
Date: 2021.09.09
16:35:47 IST

Dated 31.07.2008 in RSA Nos. 368/2002 and 736/2002

premised on the fact that the plaintiff/respondents had purchased the suit
properties by the registered sale deed from the appellants (defendants in the
suit). It was contended that though the appellants had put the plaintiff/
respondents in possession, later, upon developing ill will, they moved the Land
Tribunal seeking occupancy rights and proceeded to dispossess them, i.e. the
plaintiff/respondents from the suit 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
fresh consideration. This time round, the Land Tribunal directed the parties to
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 hereafter referred to as
the “second suit”). In the second suit, it was alleged that the sale deed Ex-1 in
favour of the respondent (defendant in second suit) was a nominal one and was
executed as a security for the loan advanced by the respondent. The appellants
relied upon a document which they claimed was an agreement of sale under
which allegedly the respondent had agreed to execute or reconvey the suit
properties to the appellants. In terms of this agreement, the appellants were to
pay ₹ 9000/- to the respondent within three years. Alleging that the respondent
did not execute the sale deed, despite having received full payment of ₹ 9000/-
with interest @ 15% per annum, the appellants filed the second suit for
declaration, of title and permanent injunction and in the alternative, specific
performance of the agreement of sale dated 28.05.1973. The appellants also
urged and claimed that they were in possession of the suit properties.
4. The Trial Court framed issues with respect to the title, possession and
specific performance and proceeded to record the common evidence. The trial
court held that the respondent was absolute owner of the suit properties by
virtue of sale deed – (a registered document) and also concluded that the

appellants who had filed the second suit were in illegal possession of the suit
properties. With respect to the disputes in the second suit, the trial court held
that the appellants failed to establish execution of the agreement for which they
had sought specific performance. The issue was decided on the basis of
evidence relied upon by the parties. As a result, the respondent’s suit, i.e. the
first 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 the decree in
favour of the respondent in the first suit, appeals were filed by the appellant
before the Additional District Judge. Both the appeals were considered together
– as in the case of a common judgment by the trial court. The first appellate
court gave credence to the submissions of the appellants and allowed their plea.
As a result, it was held that the sale deed in favour of the respondents was a
nominal one and not meant to be acted upon. It was also held that the appellants
had proved the agreement to sell and were entitled to a decree for specific
6. The aggrieved respondents approached the High Court with two second
appeals, i.e. RSA No. 368/2002 and RSA No. 736/2002. The respondents
contended that the dismissal of their suit on the one hand and the decree of the
second suit in favour of the present appellants by the first appellate court, on the
other, was in error of law. The Karnataka High Court framed the following
question of law for consideration:

“Whether the lower appellate Court was justified in granting the decree
in favor of the respondent on the basis of Exb-3″

7. The High Court noted that the principal ground was in regard to the
genuineness and veracity of the agreement to sell relied upon by the
appellant, i.e. Ex D-3. After noting that the findings of the trial court were
in favour of the respondent, which stood reversed by the first appellate court,

the High Court proceeded to consider whether Ex.D-3 could be considered as a
genuine document, having regard to the materials on record. The High Court
noted that the trial court’s findings were based upon several factors. The first,
was the manner of writing in Ex.D-3, which was different from the manner of
writing in Ex P-1 (the admitted registered sale deed). It was specifically noticed
that Ex.D-3 did not contain any particulars with respect to lands situated and
part of the suit (i.e. Survey Nos.36-38) as well as the extent of land in those
survey numbers and the other relevant particulars. On a comparison of the
alleged agreement to sell (Ex.D-3) with the admitted sale deed (Ex.P-1) along
with the other documents, the High Court noted that the trial court did not
accept the contention of the appellants that Ex.D-3 was executed the same day
as Ex.P-1. The second reason which the High Court noted for rejection of Ex D-
3 by the trial court was that the document contained no condition regarding
payment of interest on the sale consideration amount which was allegedly a
loan. The evidence of the appellants, on the other hand, was that 15% interest
was agreed to be paid and that they had paid ₹ 2700/- as interest along with the
sale amount or loan amount to the respondent. This contradiction between the
pleading and documents on the one hand, and the oral evidence on the other
hand, was held to constitute a factor against the present appellant. Thirdly, it
was noted that the appellants did not produce any evidence to establish that the
interest was in fact paid, or as 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 before the court was also held to be fatal to their case. It was lastly
held by the trial court that the claim in the second suit for specific performance
was also barred since it was a specific contention of the appellant that the time
for repayment of ₹ 9000/- was three years which had long since passed. The
other findings too were noted by the High Court.
8. The High Court, after noting these facts and also considering Ex.D-3,
held that the trial court’s judgment and decree, based on an overall

consideration of the findings before it, was sound and justified. The High Court
was of the opinion that in the course of a trial, the court could examine a
document under Section 73 of the Evidence Act. Since the respondent had not
admitted his signatures on Ex.D-3, the Court acted within its powers to examine
the admitted document, i.e. Ex.P-1 and compare the signatures on it with that of
the disputed documents, Ex.D-3. Another important circumstance which
weighed with the High Court was that the appellants did not claim themselves
to be owners despite executing Ex. P-1 because in their application before the
Land Tribunal (filed after executing Ex.P-1), they had admitted that the
respondents were the owners of the suit lands. In fact the appellants’ plea was
that they were tenants of the respondent. The High Court held that there was no
reason for the appellants to put forward such a contention before the Tribunal
had Ex.P-1 been merely a nominal document. The High Court noted that the
trial court had also considered other evidence, such as the revenue records Ex.P-
4 and Ex.P-5 in which the respondents were shown as khatedars. The High
Court reasoned that had Ex.P-1 been only a nominal sale deed, the appellants
would not have permitted the revenue authorities to change the names of owners
of land by allowing the respondent’s name to be replaced on the record.
Contentions of the parties

9. It is urged on behalf of the appellants, that the High Court fell into error,
in interfering with the first appellate court’s decree. Pointing to Section 100 of
the Code of Civil Procedure (CPC) it was urged that in a second appeal, the
High Court’s jurisdiction is limited to examining only substantial questions of
law; in this case, the court proceeded to appreciate the evidence, and differ with
the findings of the first appellate court, which is the final court of facts.
Furthermore, examination of the documents, particularly Ex.D-3 was a purely
factual aspect, which could 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 interfere with the
impugned judgment, and submitted that the High Court endorsed the findings of
the trial court, which were in consonance with law and the evidence on the
record. It was submitted that the trial court having regard to the evidence led
noted several important features about Ex.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 it suspect. Furthermore, the so-called agreement to sell (Ex. D-
3) was contradicted 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 sale deed, Ex.P-1. That
document is not denied. The rival case set-up in defence by the appellants as
well as the claim in the second suit was that Ex.P-1 was nominal and in fact
meant as a security; the appellants also contended that the suit land were to be
re-conveyed after receiving full 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 were granted occupancy rights under the Karnataka Land Reforms Act. On
the order of the Land Tribunal, the respondent was dispossessed. The Tribunal’s
order was set aside by the High Court which remanded the application for re-
consideration afresh. In the second round, the Tribunal relegated the parties to
the Civil Court. In these circumstances, the two suits were filed.
12. The trial court rejected the appellant’s defence and decreed the suit,
disbelieving the agreement to sell (Ex.D-3). Its conclusions were based upon
several reasons. As noted previously, Ex.D-3 neither spelled out 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 court also examined the documentary
evidence in the form of the application for occupancy rights which clearly
disclosed the respondents as owners and claimed that the appellants were

tenants under them. Lastly, it was held that the writings on Ex.D-3 which was
allegedly executed on the same day as Ex.P-1 (the admitted sale deed) were not
the same. The respondent had denied Ex.D-3. The first appellate court faulted
the trial court 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 with
respect to the interpretation of Ex.D-3 by the first appellate court.
13. The impugned judgment has recounted the reasons which persuaded the
trial court to reject Ex.D-3 and approved them. At the same time, the High
Court found fault with the first appellant court in ignoring the important
reasons, which were rooted in the facts of the case, based upon the record which
had resulted in rejection of Ex.D-3 and the decree for possession. The
appellants’ theme song is that in second appeal, the High Court could not have
interfered with what are termed as pure findings of fact. It is submitted that an
examination 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 derives under Section
100 is based upon its framing of a substantial question of law. As a matter of
law, it is axiomatic that the findings of the first appellate court are final.
However, the rule that sans a substantial question of law, the High Courts
cannot interfere with findings of the lower Court or concurrent findings of fact,
is subject to two important caveats. The first is that, if the findings of fact are
palpably perverse or outrage the conscience of the court; in other words, it flies
on the face of logic that given the facts on the record, interference would be
justified. The other is where the findings of fact may call for examination and
be upset, in the limited circumstances spelt out in Section 103 CPC.
15. Section 103 CPC reads as follows:

“103.Power of High Court to determine issues of fact
In any second appeal, the High Court may, if the evidence on the record is
sufficient, determine any issue necessary for the disposal of the appeal,-
(a) which has not been determined by the lower Appellate Court or both by the
Court of first instance and the lower Appellate Court, or
(b) which has been wrongly determined by such Court or Courts reason of a
decision on such question of law as is referred to in section 100.”

16. In the judgment reported as Municipal Committee, Hoshiarpur v. Punjab
State Electricity Board2 , this court held as follows:

“26. Thus, it is evident that Section 103 CPC is not an exception to Section
100 CPC nor is it meant to supplant it, rather it is to serve the same purpose.
Even while pressing Section 103 CPC in service, the High Court has to record
a finding that it had to exercise such power, because it found that finding (s) of
fact recorded by the court (s) below stood vitiated because of perversity. More
so, such power can be exercised only in exceptional circumstances and with
circumspection, where the core question involved in the case has not been
decided by the court(s) below.

27. There is no prohibition on entertaining a second appeal even on a
question of fact provided the court is satisfied that the findings of fact
recorded by the courts below stood vitiated by non-consideration of relevant
evidence or by showing an erroneous approach to the matter i.e. that the
findings of fact are found to be perverse. But the High Court cannot interfere
with the concurrent findings of fact in a routine and casual manner by
substituting its subjective 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-Ismail Madris-Un-Niswan [(1999) 6 SCC 343]
and Dinesh Kumar v. Yusuf Ali [(2010) 12 SCC 740].)

28. If a finding of fact is arrived at by ignoring or excluding relevant
material or by taking into consideration irrelevant material or if the finding so
outrageously defies logic as to suffer from the vice of irrationality incurring
the blame of being perverse, then the finding is rendered infirm in the eye of
the law. If the findings of the Court are based on no evidence or evidence
which is thoroughly unreliable or evidence that suffers from the vice of
procedural irregularity or the findings are such that no reasonable person
would have arrived at those findings, then the findings may be said to be
perverse. Further if the findings are either ipse dixit of the Court or based on
conjecture and surmises, the judgment suffers from the additional infirmity of
non-application of mind and thus, stands vitiated. (Vide Bharatha Matha v. R.
Vijaya Renganathan [(2010) 11 SCC 483]”

(2010) 13 SCC 216

17. In a recent judgment of this court, Narayan Sitaramji Badwaik (Dead)
Through Lrs. v Bisaram & Ors3 this court observed as follows, in the context of
High Courts’ jurisdiction to appreciate factual issues under Section 103 IPC:

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

18. In the opinion of this court, in the present case, the High Court recorded
sound and convincing reasons why the first appellate court’s judgment required
interference. These were entirely based upon the evidence led by the parties on
the record. The appreciation of evidence by the first appellate court was on the
basis of it having overlooked material facts, such as appreciation of
documentary and oral evidence led before the trial court, that the execution of
Ex.D-3 was denied. In these circumstances, the burden was upon the appellants
to establish that the registered sale deed was a nominal document. The findings
of the trial court –as was duly noticed by the High Court recorded five cogent
reasons why the appellants’ pleas could not be accepted. The deposition with
respect to repayment of ₹ 9000/- apart from being bereft of particulars, was also
contrary to the provisions inasmuch as there was no averment with respect to
payment of interest @ 15%. Furthermore, the appellants’ application for
occupancy rights made after the sale deed and the alleged agreement to sell
were executed claimed that the appellants were tenants under the respondent.
Eventually, the order of the Land Tribunal was set aside; upon remand the Land
Tribunal was of the opinion that it did not have the jurisdiction to decide the

2021 SCC OnLine SC 319

issue and left it to the trial court to do so. These important aspects appeared to
have been not appreciated – and their import were overlooked. As a
consequence, the first appellate court fell into error in overlooking important
evidence and appreciating the record in its true perspective and reversed the
decree of the trial court. Moreover, the High Court, in second appeal proceeded
to examine the documents in light of the evidence led and corrected the findings
as it were under Section 103. If the appellants’ arguments were to prevail, the
findings of fact based upon an entirely erroneous appreciation of facts and by
overlooking material evidence would necessarily have to remain and bind the
parties, thereby causing injustice. It is precisely for such reasons that the High
Courts are empowered to exercise limited factual review under Section 103
CPC. However, that such power could be exercised cannot be doubted. The
impugned judgment does not expressly refer to that provision. In the
circumstances of the case, it is evident that the High Court exercised the power
in the light of that provision. Furthermore, we are also of the opinion that
having regard to the overall circumstances, the impugned judgment does not
call for interference in exercise of special leave jurisdiction (which is available
to this Court – even at the stage of final hearing).
19. In view of the foregoing discussion, it is held that there is no merit in the
appeals which are accordingly dismissed. There shall be no order as to costs.


SEPTEMBER 09, 2021.


Leave a Reply

Sign In


Reset Password

Please enter your username or email address, you will receive a link to create a new password via email.