The High Court · 2025

Judgment

This appeal is filed against the Judgment and decree dated O5.01.2024 in O.S.No.157 of 2O2l passed by the learned Senior Civil Judge, Nalgonda

2. The suit uide O.S.No.lS7 of 2021 was hled by the appellants / plaintiffs against respondent/defendant for Specific Performance of Contract, the trial Court dismissed the suit with costs. Aggrieved by the said Judgment, plaintiffs in the suit preferred the present appeai.

3. Heard both sides. Perused the recorcl

4. For the sake of convenience, the parties herein are referred to as "plaintiffs" and "defendant" as arrayed in the

trial Court.

5. P.Ws.1 and 2 were examined on behalf of plaintiffs and got marked Exs.Al to A5. No oral and documentary evidence was adduced on behalf of the defendant.

6. The brief facts of the case are that defendant is Promoter, Managing Director and major shareholder in 2 M/s.Sharvani trner5, Private Limited (SEPL), located at Tarnaka, Secunderabad. Defendant is the absolute owner ald peaceful possessor of the agricultural lands in Sy.No'4 to 1O,2211, 468 to 473 and 476 admeasuring Ac. 10.00 guntas situated at Toorpupalli Village Devarakonda Mandal, Nalgonda District. He is having pattadar passbook and title deed bearing No.1104 (New passbook No.T2808O04O736 and Account No.1104). In 2018, the Company was in process of developing Dumajohri Small Hydro Electric Project on Kolab River, near Dumajohri Village above 5O kms', from Jeypore' Koraput District, Orissa State. The company was in need of funds for speedy development of the said project and the defendant had approached the plaintiffs for providing Mezzanine Investment (Angel Investments) to the tune of Rs.40,00,O00/- which the piaintiffs agreed for the same as per the terms and conditions as provided under the agreement-cum-memorandum of understating dated

17.08.2018.

7. Defendant agreed that on the effective date of agreement he shall transfer the shareholdings worth of Rs.40,0O,O00/- in SEPL, at face value in favour of plaintiff 3 No.2 as per paragraph No.1(A) of the agreement. As per paragraph No.l(B) of the agreement of sale, the defendant had entered into an agreement of sale on the same date with the plaintiffs for the sale of _suit schedule property for a total consideration of Rs.50,00,OO0/-. Before entering into the said agreement, plaintiffs have paid Rs.4O,00,000/ and it was duly acknowledged by defendant. Defendant had handed over the original pattadar passbook No.T2808O040736 bearing Katha No.11O4 to the plaintiff No.2 on the clate of execution of the agreement.

8. As per paragraph No.2 of the agreement-cum-MoU, the investment .rras supposecl to be mandatorily purchased back by the defendant at a value of double i.e., Rs.8O,00,0OO/- within 30 months from the date of agreement and the said 30 months were completed on 17.02.2021. In para No.6 of the agreement, it was agreed that in case of default by the defendant in payment of exit value under the terms of the agreement, the parties to the agreement shall proceed with agreement of sale and balance consideration of Rs. 10,0O,O00/- would be paid by plaintiffs and the sale deed shaIl be executed aS per the terms of the agreement of sale. 4 Plaintiffs have been persuading the defendant to transfer the shares as promised but the defendant had been evading the same under one pretext or the other. After February 2O2l, the plaintiffs had been persuading with the defendant and calling upon him to fulfrll the terms of agreement, but he never came forwarcl. Piaintiffs were ready and witting to perform their part of contract in the agreement and they were ready with balance saie consideration of Rs.10,00,000/-. Plaintiffs got issued legal notice to defendant oo 14.06.202I and it was returned with an endorsement 'not claimed'. The counsel of plaintiffs had also sent a copy of the legal notice through e-mail on the defendant's ofhcial e-mail ID and also sent through WhatsApp on his phone number on 26.O5.2021. As such, ptaintiffs hled the suit and requested the Court to direct the defendant to handover the possession of suit schedule property by executing sale deed to an extent of Ac. 10.0O. Notice sent to the defendart returned as lrnclaimed' as such plaintiffs frled I.A.No.242 of 2023 for substitute service of summons by way of paper publication and the same was a-11owed directing the plaintiffs to take out the summons by way of paper publication in Eenadu Telugu ) Daily in Hyderabad edition, but the defendant did not turn up, as such he was set exparte.

9. Plaintiff No.2 filed Ex.Al, agreement-cum-MoU dated

17.08.2018 and trx.A2, unregistered irrevocable agreement of sale dated 77.Oa.2O18. One of the attestors was examined as P.W.2. Ex.A3 is the postal receipt dated 14.06.2021, Ex.A4 is the returned postal cover with the copy of legaI notice. trx.A5 is the digital pattedar passbook of the defendant. Plaintiffs asserted that the defendant is the major shareholder and the agreement entered by the Company for developing the electric project is also not hled. The resolution of the Board is required since the company is incorporated under the Companies Act. There is no evidence to demonstrate that the defendant is absolute promoter of the company. Pattadar passbook is not the document or title and modification in the revenue records will not create title in the property. It is for the plaintiff to show that the defendant is lau,fu1 owner and title holder of the suit property. No document is hled like sale deed, gift deed, will deed, relinquishment deed and accordingly the trial Court dismissed the suit. Aggrieved by the said judgment, the plaintiffs preferred the present appeal. \ \ I 6

10. Plaintiffs stated that regarding the shareholding of the company of the defendant, its memorandum and articles of association, certihcate of incorporation, resolutions passed by the board of directors is irrelevalt in the context. As per the certified copies of pahanies, defendant acquired the suit property by inheritance from his father and his name was mutated in revenue records. As per Ex.A1 agreement, the defendant had admitted and acknowledged receipt of part payment of sale consideration but it was not properly appreciated. Therefore, requested the Court to set aside the judgment of the trial Court.

11. During the pendency of the appeal, appellants hled I.A.No.1 of 2024 for granting temporaqr injunction restraining the defendant/respondent from alienating or transferring, creating any third party interest or changing the nature of the property and the sarne was aliowed ot 15.07.2024. I.A.No.2 of 2024 was hled by defendant to vacate the interim order dated 13.O2.2024 in I.A.No .l of 2024 and it was disrnissed on

15.O7.2024. 1

12. In a counter fi1ed by respondent herein he relied upon MoU dated 15.04.2019 entered between appellant No.2 and respondent arrd his wife. He further stated that the brother of respondent hled O.S.No,400008 of 2Ol9 on 1O.O6.2O19. As the property B went into litigation, as a precautionary measure, appellant No.2 represented by its Karta entered into two other agreements with respondent herein on 22.11.2O1g. The suit for partition is still pending and these facts were not brought to the notice of the Court. He further stated that appellants have issued a 1egal notice dated 05.05.2O21 prematurely to the respondent on 14.06.2027 showing their intention for the first time to pay the sale consideration of Rs.10,00,0O0/- towards the purchase of property A under the agreement of sale dated 17.08.2018. In view of the MoU dated 15.04.2019 and 22.1I.2019, the said agreement of sale is not in force. He lurther stated that he never received any notice and he was set exparte. He also stated that he repaid a sum of Rs.50,0O,O00/ to the appellants vide various bank transactions and nothing remains to be paid by the defendant as such requested the Court to dismiss the appeal. Respondent enclosed agreement cum memorandum :I I 8 of understating dated 15.04.2019 and 22.11.2019 and bank statements along with counter afhdavit.

13. In this case, respondent/defendant did not contest the suit and in the appeal he simply stated that he has not received any summons, but as per the trial Court record, summons sent to the respondent were returned as hnclaimed' and it is proper service and even paper publication was also ordered, even then he did not turn up before the Court. Even in the appeal he did not stated anything to show that he was not residing in the address in which the summons were sent. He simply denied the service of summons. Even after passing of the exparte decree, he has not hled any application to set aside thc exparte order'

14. Appellants relied upon a decision of the Hon'ble Apex Court in Bhivchandra Shankar More Vs' Balu Gangaram More and Others, in which it was held as follows: The scope of Order 9 Rule 13 CPC and Section 96(2) CPC re entirelg different In an application filed. under Order 9 Rute 13 CPC, the Court has to see ruhettrcr the summons utere duly serued or not or tuhether the defendant u-)as preuented bg ang "sufficient cause" from appeaing uthen the suit t.€tari6>.a?issE;f*Ye 9 LUas called for heaing. If the Court is satisfied thot the defendant u)as not duly serued or that he utas preuented for "sufilcient cause", the court may set aside the ex parte decree and restore the suit to its oiginal position. In terms of Section 96(2) CPC, the appeal lies from an oiginal decree passed ex porte. In the regular appeol filed under Section 96(2) CPC, the appellate courl has wide jurisdiction to go into the meits of the decree. The scope of enquiry under two prouisions is entirelg different. Merelg becouse the dekndant pursued the remedy under Order 9 Rule 13 CPC, it does not prohibit tLrc defendant from ftling the appeal if his application under Order 9 RuIe 13 CPC is dismissed.

15. The respondent herein has not frled any application to set aside the exparte order and has not preferred any appeal but contested the present appeal and hied certain documents along with counter affidavit and he has not even filed separate application to receive additional documents as required under CPC. Moreover, the documents were pertaining to the year 2019 and the suit is ftled in the year 2O2I, he ought to have contested the suit and filed the above documents in the suit but faiied to do so. Plaintiffs stated that prior to the filing of the suit, defendant got issued legal I t0 notice and also sent email to the defendant and to the WhatsApp on 14.06.2021 and 26.O5.2021 respectively Defendant/ respondent did not respond to the notice sent prior to the filing of the suit. Even after filing of the suit, he remained exparte and only after hling of the appeal, he filed counter affidavit along with certain documents in I.A.No.1 of

2024. But the Contemporary Bench allowed the I.A.No.1 of 2024 by grating injunction and dismissed the vacate stay petition. Therefore, the said documents and representation made by the respondent is not in accordance with law and cannot be considered 16 . Now it is for the Court to see whether it is simpie money transaction or the plaintiffs are entitled for specifrc performance of Contract 17 . No doubt defendant approached the plaintiffs for an amount of Rs.40 lakhs as per MoU dated 17.08.2018 as they are in need of funds for speedy development of the project. Plaintiffs provided Angel investments to the defe.ndant as per the MoU, but there are certain clauses entered between the parties. The first clause is that the defendant should pay .1 double the amount within 3O months and defendant shali transfer share holding worth of Rs.40 lakhs in SEPL at face value in favour of plaintiff No.2. The second one is that the investment rn'i11 be mandatoqily purchased back by the second party and at the value of double within a period of 30 months. The parties also entered into another agreement on

17.08.2018, in which it was held that Vendee undertakes to pay the Vendor interest on the due amount of Rs.10 lakhs at the rate of 3Oo/o p.a in failure of the payment and registration of sale deed. If at all it is the money transaction, the question of entering agreement of sale does not arise as such it cannot be said that it is only the money transaction and suit for specific performance is not maintainabie.

18. PlaintilTs themselves stated that defendant is the absolute owner and possessor of the agricultural land in Sy.No.4 to lO, 2211, 46a rc 473 and 426, admeasuring Acs.10-0O gl-s, situated at Toorpupalli Vitlage, Devarakonda Manda1, Nalgonda District and they also gave the details of pattadar passbook and title deed and irled trx.A5 to substantiate their version. It is the title document in the State of Telangana as per RoR Act. plaintiffs entered into I t2 agreement of sale with the defendant regarding the suit property, it clearly shows that defendant is the owner of the suit schedule property. They also filed certihed copies of the pahanies to show that defendant acquired the suit scheduie property by inheritance from his father and his narne was mutated in revenue recorcls. Therefore, the observation of the trial Court that plaintiffs failed to prove that defendant is the absolute owner of the property is not tenable.

19. Defendzrnt approached the plaintiffs seeking investment of Rs.40,00,O00/-. Plaintiffs paid the said amount and accordingly Ex.A1 agreement of sale-cum-MoU was executed. Defendant acknowledged the receipt of Rs.4O,00,000/- and also agreed to transfer the share holding worth of Rs.4O,O0,OOO/- in SEPL at face value in favour of plaintiff No.2 from Ch.Narsing Rao shareholding. Defendant also executed irrevocable agreement of sale in favour of plaintiffs in respect of the suit property for a total sale consideration of Rs.50,00,000/-. As the plaintiffs have already paid Rs.40,00,0O0 l-, they agreed to pay the balance amount of Rs. 1O,00,OOO l- at tl:,e time of registration within 3O months. Defendant had a-lso handed over the original pattadar a 13 passbook to the plaintiff No.2 with an understanding that "if the defendant failed to pay the exit value and shares are not transferred the irrevocable agreement of sale/Ex.A2, shall become final." The agreement of sale is admitted document and confirms the transfer between the parties in which the defendant offered to sell the suit dchedule property to the plaintiffs by receiving part sale consideration. As the defendant failed to execute the sale deed, failed to give reply and to comply the demand made in the legal notice, plaintiffs have proved the case as per the exhibits hled by them and thus they are entitled for decree of specif,rc performance.

20. No doubt, in agreement of sale-cum-MoU it was mentioned that defendant is the Promoter, Managing Director and majority share holder in M/s. Sharvani Energ, Pvt.Ltd, (SEPL) located at Tarnaka, Secunderabad. The said agreement was signed by both the parties. Defendant never appeared before the Court and disputed that he is not the party, as such, the {inding of the trial Court that it is for the plaintiff to prove that defendant is the majority share holder cannot be accepted. Even in the MoU in the investment paragraph, in the first line it was mentioned that Second I i I I I l ; I i I I I ' I t4 Party acknowledges the receipt of Rs.4O lakhs. So also, the agreement of sale entered on the same day, it was mentioned that Vendee has paid an amount of Rs.4O lakhs as advance to the Vendor and balance amount of Rs. 1O lakhs will be paid at the time of registration or within 3O months. This clearly shows that there is no dispute regarding payment of Rs.4O lakhs and it was well acknowledged by the defendant, as such plaintiffs need no proof regarding the payment of Rs.40 lakhs to the defendant. In the MoU dated 77.08.2018 in Rou, No.4 of Security, it was mentioned that the investments are secured by providing a ulregistered agreement of sale dated 17.Og.2Olg in favour of plaintiffs for 10 acres ol agricultural lald mentioned in the Survey Numbers and the details of pattadar passbook were also mentioned in detail. in the agreement of sale date 17 .O8.2O18 clause 7 reads as follovgs: Time is not the essence of this document. Vendee undertakes to pag the Vendor interest on the due amount of Rs.1O,OO,O0O/- at the rate of 30% p.a, in case the pagment is not ananged ond sale deed is not got registered uithin the peiod. of 6 months from this dag. .) l5

21. It is for the Court to read the agreement cum MoU of agreement of sale dated 17.08.2018 together to arrive to the conclusion whether plaintiffs are entitled for specific performance of agreemenf of sale or not. There is no dispute regarding the fact that defendant borrowed Rs.40 lakhs from the plaintiffs. Initially, defendant agreed to transfer the share holding worth of Rs/40 lakhs in SEPL in the name of plaintiff No.2. Plaintiff No.1 is none other than wife of plaintiff No.2, as such the entire suit proceedings were recorded by plaintiff No.2 and he also deposed before the Court as P.W.1 and he was never cross-examined. As such, the evidence remains unchallenged. The original pattadar passbook was handed over to defendant on the date of agreement. Defendant agreed to purchase the shares with double pnce within 30 months. Defendant failed to transfer the shares and thus the \ question of purchasing them back does not arise, as such, th conditions entered between the parties were complied, as such the plaintiffs filed the suit for speciflc performance of sale consideration of Rs.10 lakhs as per agreement of sale entered between the parties on the same day. I I I I i I I I I I ( 16 ,c The trial Court without appreciating the facts properly dismissed the suit. Therelore, this Court hnds that it is just and reasonable to set aside the judgment of the tria-l Court. Respondent/ defendalt is directed to receive the balance sale consideration and to execute the registered sale deed in favour of plaintiffs within one month from the date of receipt of a copy of this judgment, failing which plaintiffs are at liberty to get the registered sale deed by the trial Court by duly following the procedure.

23. With the above direction, this Appeal Suit is allowed by setting aside the judgment of the trial Court dated O5.O\.2O24 passed in C.S.No. lS7 of 2021. No order as to CoStS. closed Miscellaneous petitions pending, if any, shall stand //TRUE COPY// Sd/- K. SRINIV A RAO JOINT RE ISTRAR SECTION OFFICER To, 1 2 3 4 p The Senior Civil Judge, Nalgonda. (wrth records if any) One CC to Sri Shyam S Agrawal, Advocate [OPUC] One CC to M/s. R.S. Associates, Advocate [OPUC] Two CD Copies s- g STAI4: 1vr q c o ':/ 05 l{\[n ?ffi i) * ;)t) HIGH COURT DATED:20 t01t2025 JUDGMENT AS.No.77 of 2024 ALLOWING THE APPEAL. WITHOUT COSTS. tN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD MONDAY, THE TWENTIETH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SMT JUSTICE PSREE SUDHA Between: APPEAL SUIT NO: 77 OF 2024

1. Smt. Aarti Loya, Wo. Sri Santosh Kumar Loya, Aged about 41 years, Occ. Service, R:/o. Flat No.502, 3-6-27 8, Thomas Prabhu Reliance Complex Himayatnagar, Hyderabad - 500029.

2. Sri Santosh Kumar Loya, S/o. Sri Ramgopal Loya, Aged about 45 years, Occ. Chartered Accountant, Fi"/o. Flat No.502, 3-6-278, Thomas Prabhu Reliance Complex, Himayatnagar, Hyderabad - 500029. ...APPE LLANTS/PLAINTIFFS AND Sri Nagavaram Prashanth Rao, S/o. Sri Venkateshwara Rao, Aged about 42 yea.s, Occ. Business, No. 12-13-416, Street No.1, Tamaka, Hyderabad. .,.RESPONDENT/DEFENDANT Appeal filed under Section 96 read with Order XLI Rule-1 of the Code of Civil Procedure, '1908 against the judgment and decree dated 05.01 .2024 passed in O.S.No.'157 of 2021 on the file of the court of the Senior Civil Judge, Nalgonda. This appeal coming on for hearlng and upon perusing the grounds of appeal, the Judgment and Decree of the Lower Court and the material papers in the appeal and upon hearing the arguments of Sri Shyam S Agarwal, Advocate for the Appellants and of M/s. R. S. Associates, Advocate for the Respondent. This Court doth Order and Decree as foliows

1. That the Appeal Suit be and hereby is allowed by setting aside the judgment of the trial Court dated 05.01.2024 passed n O.S.No 157 of 2021; and

2. fhal there shall be no order as to costs in this appeal. //TRUE COPY// To, '1 . The Senior Civil Judge, Nalgonda 2. Two CD Copies e Sd/- K. SRINIVAS RAO JOINT REGI TRAR SECTION OFFICER HIGH COURT DATED:2010112025 JUDGMENT+DECREE AS.No.77 of 2024 ALLOWING THE APPEAL. WITHOUT COSTS. 0W