Supreme Court Upholds Absolute Sale Deed, Rejects Conditional Sale Claim: D.R. Rathna Murthy vs. Ramappa (2010)

Date of the Judgment: 8th October 2010

Citation: D.R. Rathna Murthy vs. Ramappa (2010) INSC 705

Judges: P. Sathasivam, J. and Dr. B.S. Chauhan, J.

Can a seller claim a right to repurchase property based on additions made to a sale deed after its execution? The Supreme Court of India recently tackled this question in a case concerning a dispute over a property sale. The core issue was whether a registered sale deed, which the seller claimed was conditional, was actually an absolute sale. The Court had to determine if later additions to the deed, which were not properly attested, could legally transform the nature of the sale. This judgment, delivered by a bench of Justices P. Sathasivam and Dr. B.S. Chauhan, clarifies the importance of proper documentation and attestation in property transactions.

Case Background

The case revolves around a property transaction between D.R. Rathna Murthy (the appellant) and Ramappa (the respondent). On April 23, 1986, D.R. Rathna Murthy purchased a piece of land. The very next day, on April 24, 1986, he sold the same land to Ramappa for ₹10,000, handing over possession to Ramappa. Years later, in 1991-1992, D.R. Rathna Murthy sent a legal notice to Ramappa, claiming that the sale deed was conditional and that he had a right to repurchase the property for the same amount within ten years. Ramappa did not agree to this claim, leading to a legal battle.

Timeline:

Course of Proceedings

The trial court dismissed D.R. Rathna Murthy’s suit for specific performance, concluding that the sale deed was an absolute sale and not a conditional one. The First Appellate Court reversed this decision, holding that the sale deed was conditional and directing Ramappa to execute a sale deed in favor of D.R. Rathna Murthy. The High Court, in a second appeal, overturned the First Appellate Court’s decision, agreeing with the trial court that the sale deed was absolute and that the additions were made after the execution of the document. The High Court found that the First Appellate Court had wrongly re-appreciated the evidence.

Legal Framework

The case involves the interpretation of the sale deed and the application of the Registration Act, 1908, and the Karnataka Registration Rules, 1965. Section 20 of the Registration Act, 1908, deals with documents containing interlineations, blanks, erasures, or alterations. It states:

“Documents containing interlineations, blanks, erasures or alterations.- (1) The registering officer may in his discretion refuse to accept for registration any document in which any interlineations, blank, erasure or alteration appears, unless the persons executing the document attest with their signatures or initials such interlineations, blank, erasure or alteration. (2) If the registering officer registers any such document, he shall, at the time of registering the same, make a note in the register of such interlineations, blank, erasure or alteration.”

While clause 2 of Section 20 was deleted by Karnataka Act No. 41 of 1984, effective from November 7, 1986, the corresponding provisions in the Karnataka Registration Rules, 1965, remained. Rule 41 of the Rules requires the Registering Officer to examine the document and ensure that any unattested interlineations, alterations, erasures, or blanks are attested by the signatures of the executant. Rule 42 of the Rules further mandates that each important interlineation, erasure, or alteration must be noted or described at the foot of the document and signed by the executant before the document is accepted for registration.

Arguments

The appellant, D.R. Rathna Murthy, argued that the sale deed was conditional, granting him the right to repurchase the land within ten years. He claimed that he exercised this option within the stipulated time. He contended that the First Appellate Court correctly appreciated the evidence and concluded that it was a conditional sale deed. He further argued that the High Court should not have re-appreciated the evidence in a second appeal.

The respondent, Ramappa, argued that the sale deed was an absolute sale and that the word “Avadhi” and the clause regarding reconveyance were fraudulently inserted after the execution of the document. He contended that these additions were made without his consent or knowledge. He argued that the First Appellate Court should not have reversed the findings of the trial court based on a re-appreciation of evidence.

The innovativeness of the argument by the respondent lies in highlighting the discrepancies in the sale deed itself, particularly the interlineations and additions, and using these to argue that the document was manipulated after it was executed.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the sale deed dated 24.04.1986 granted the plaintiff a right to repurchase the suit property?
2. Whether the plaintiff is entitled to the specific performance of the contract?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

• Rajappa Hanamantha Ranoji v. Mahadev Channabasappa & Ors., AIR 2000 SC 2108 – This case was cited to highlight that the High Court can interfere with findings of fact in a second appeal if the findings are perverse.
• Hafazat Hussain v. Abdul Majeed & Ors., (2001) 7 SCC 189 – This case was used to support the point that re-appreciation of evidence is permissible in exceptional circumstances in a second appeal.
• Bharatha Matha & Anr. v. R. Vijaya Renganathan & Ors., JT 2010 (5) SC 534– This case was cited to reiterate that the High Court can interfere with findings of fact in a second appeal if the findings are perverse and also to highlight that probative value of the entries in a document may still be required to be examined in the fact and circumstances of a particular case.
• Dularia Devi v. Janardan Singh & Ors., AIR 1990 SC 1173 – This case was cited to support the view that if averments are accepted that part of the contract was inserted after the execution of the document, it becomes a clear case of manipulation/fraud.
• State of Bihar & Ors. v. Sri Radha Krishna Singh & Ors., AIR 1983 SC 1984 – This case was cited to highlight that probative value of the entries in a document may still be required to be examined in the fact and circumstances of a particular case.
• Sardar Jogender Singh v. State of U.P., (2008) 17 SCC 133 – This case was cited to support the view that in normal circumstances, the vendor would not agree for reconveyance for the same consideration as the value of land generally increases.
• Satish & Ors. v. State of U.P. & Ors., (2009) 14 SCC 758 – This case was cited to support the view that in normal circumstances, the vendor would not agree for reconveyance for the same consideration as the value of land generally increases.
• Section 20 of the Registration Act, 1908 – This section deals with interlineations, blanks, erasures or alterations in a document.
• Rule 41 of the Karnataka Registration Rules, 1965 – This rule provides for examination of a document by the Registering Officer.
• Rule 42 of the Karnataka Registration Rules, 1965 – This rule provides for the manner of noting interlineations etc.

Judgment

The Supreme Court upheld the High Court’s decision, dismissing the appeal by D.R. Rathna Murthy. The Court agreed that the word “Avadhi” and the reconveyance clause were added to the sale deed after its execution. The Court emphasized that these additions were not attested by the executant, as required by the Registration Act and Rules.

The following table shows how the authorities were viewed by the Court:

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the suspicious circumstances surrounding the interlineations and additions to the sale deed. The Court noted that the word “Avadhi” was inserted in the margin at three places without attestation, and the clause regarding reconveyance was added in a different font and spacing, indicating that these additions were made after the execution of the document. The Court also considered the fact that the respondent had made significant improvements to the land, which he would not have done if he had agreed to a conditional sale. The Court also noted that the appellant had sold the land for the same price he had purchased it for, which was unusual, further raising doubts about the legitimacy of the conditional sale claim.

The ratio of fact to law that influenced the court’s decision is shown below:

The court’s reasoning was based on a careful examination of the facts, including the physical appearance of the sale deed and the circumstances surrounding the transaction. The court also applied the relevant legal provisions, including Section 20 of the Registration Act, 1908, and Rules 41 and 42 of the Karnataka Registration Rules, 1965. The court found that the interlineations and additions were made without the consent of the respondent. The court also noted that the respondent had made improvements to the land, which he would not have done if he had agreed to a conditional sale.

The Court considered the argument that the First Appellate Court had correctly appreciated the evidence, but rejected this argument. The Supreme Court emphasized that the High Court was correct in finding that the First Appellate Court had wrongly re-appreciated the evidence and that the trial court’s decision was correct.

The Court stated, “The manner in which interlineations have been made in the document itself reveal that addition was made subsequent to the execution of the document otherwise there was enough space to insert such a clause in the same manner in which the entire sale had been scribed.”

The Court also stated, “The additions in question are surrounded by the suspicious circumstances of a grave nature and, therefore, the same are required to be ignored. The contract being severable, the terms of contract included by these additions being void, cannot be taken note of.”

The Court further noted, “In normal circumstances, the vendor would not agree for reconveyance for the same consideration for the reason that the value of the land generally goes upwards and within a period of ten years it could have at least become double.”

There were no minority opinions in this case.

Key Takeaways

• Any alterations or additions to a registered document, especially a sale deed, must be properly attested by the executant.
• Interlineations, erasures, or additions made after the execution of a document without proper attestation can render those parts of the document invalid.
• Courts can examine the physical characteristics of a document to determine its authenticity and validity.
• The circumstances surrounding a transaction, such as the actions of the parties and the market value of the property, can be considered in determining the validity of a claim.
• The Supreme Court has reiterated that High Courts can interfere with the findings of fact in second appeals if the findings are perverse.

Directions

The Supreme Court did not give any specific directions other than dismissing the appeal.

Specific Amendments Analysis

The judgment does not specifically discuss any amendments.

Development of Law

The ratio decidendi of this case is that any additions or interlineations to a registered document, such as a sale deed, must be properly attested and made with the consent of all parties involved. The case clarifies that courts can examine the physical attributes of a document to determine its validity. This case also reinforces the principle that the High Court can interfere with findings of fact in a second appeal if the findings are perverse. There is no change in the previous position of law.

Conclusion

In conclusion, the Supreme Court dismissed the appeal, upholding the High Court’s decision that the sale deed was an absolute sale and not a conditional one. The Court emphasized that the additions made to the sale deed after its execution were invalid due to lack of proper attestation and consent. This judgment reinforces the importance of proper documentation and attestation in property transactions and clarifies the circumstances under which a High Court can interfere with the findings of fact in a second appeal.