A Perfectly Drafted Or Registered Document Must Yield To Realities Of Execution: Karnataka High Court

The Karnataka High Court observed that a perfectly drafted or registered document must yield to realities of execution.

The Court observed thus in a Miscellaneous First Appeal filed against the Order of the Senior Civil Judge which allowed Applications of the Plaintiffs under Order 39 Rule 1 and 2 read with Section 151 of the Civil Procedure Code, 1908 (CPC).

A Single Bench of Justice Ramachandra D. Huddar elucidated, “Had the trial Court failed to pass such an order and if the plaintiffs are displaced or property sold to third parties, any future judgment in their favour would become illusory. The Courts are not powerless spectators to such eventualities. They must act promptly to prevent injustice and preserve the efficacy of final orders. The Indian Courts have increasingly adopted a robust approach in protecting parties from abuse of form. A document however, perfectly drafted or registered must yield to realities of execution. It is not the ink that determines its validity but, the consent behind it. This evolution of doctrine form formalism to realism - is particularly important in property cases where fraud, undue influence and coercion are often disguised under layers of paper work.”

The Bench reiterated that fraud is a matter of fact and it cannot be dismissed or accepted at the stage of interim orders.

Senior Advocate K.G. Raghavan represented the Appellants while Senior Advocate Uday Holla represented the Respondents.

Case Background

The controversy in this case revolved around the execution of a registered sale deed concerning an immovable property. It was the claim of the Plaintiffs that the property was agreed to be sold for Rs. 20 crores but the Appellant misrepresented and fraudulently altered the terms to reflect a much lower price of Rs. 7,01,51,515/- in the registered deed. The Plaintiff moved the Trial Court seeking a declaration that the sale deed was vitiated by fraud and sought consequential reliefs including the cancellation of the sale deed and interim injunction to restrain the Appellant from dealing with the property or disturbing their possession.

The Trial Court granted temporary injunction as prayed for and restrained the Appellants and other Defendants from alienating, encumbering, or creating third party interests over the property and also from interfering with the Plaintiff’s possession over the property during the pendency of the Suit. Hence, the Appeal was filed before the High Court seeking to challenge the Trial Court’s Order on several grounds including, but not limited to, the alleged absence of a prima facie case in favour of the Plaintiffs, the lack of urgency to warrant injunctive relief, and the Trial Court’s failure to consider that the Plaintiffs had voluntarily executed the sale deed and received the agreed sale consideration.

Court’s Observations

The High Court in the above context of the case, noted, “… there is no contemporaneous acknowledgment or digital trial that proves that the plaintiffs read and agreed to the specific figure Rs.7,01,51,515/- so mentioned in the draft. The draft itself even if shown does not demonstrate free, informed, and conscious acceptance of the reduced price.”

The Court said that the reliance on WhatsApp exchanges inconclusive for several reasons:

(i) The mere sharing of a draft does not establish that the final executed version was identical to the draft.

(ii) Drafts are inherently subject to revision and negotiation. Unless it is shown that the final version of the deed was read, verified and understood by the Plaintiffs at the time of execution, this defence cannot defeat the allegations of misrepresentation.

“… the earlier agreement between the parties especially registered agreement 17.10.2022 fixing the sale deed at Rs.20.30 crores provide strong contextual support to the plaintiffs claim that drastically lower figure was neither agreed nor anticipated. Thus, whatsApp exchange while relevant, do not conclusively negate the plaintiffs claim. They may at best be, one among several pieces of evidence to be evaluated at trial”, further remarked the Court.

The Court observed that under law, a registered sale deed carries a presumption of a due execution and consideration, however, this presumption is not irrebuttable and it is a rebuttable presumption of fact and can be displaced by credible evidence, coercion or absence of real consideration.

“… the invocation of the presumption under registered law cannot, by itself, defeat a prayer for temporary injunction. The presumption must be tested against other evidence and cannot override allegations of fraud that require trial”, it added.

The Court also said that while the `Doctrine of Clean Hands' is relevant in granting relief, it must be applied cautiously and allegations of suppression or misrepresentation must be clearly established and cannot be inferred solely by filing a suit.

“This Court cannot re-evaluate the evidence or substitute its discretion for that of the trial Court merely because another view is possible. Only if the orders suffers from manifest error or perversity would interference be warranted. No such defect is found in the impugned order”, it noted.

Furthermore, the Court remarked that it is a time honored maxim that “fraud vitiates everything, fraud unravels all”, no procedural formality including registration can sanctify a transaction that is the result of deceit.

“The plaintiffs core grievance is that, they were mislead as to the actual terms of sale deed. While execution is not denied but plaintiffs argue that, the deed reflects wrong price consideration was not fully paid, and contents were not allowed to be read. As stated supra, these are all serious allegations and even if ultimately disproved, they are not frivolous”, it added.

Conclusion

The Court enunciated that the nature of fraud alleged is not commercial default but vitiation of consent and in such case, the doctrine of estoppel, registration and presumption of due execution are subordinated to the requirement of a full trial.

“… when there is a well pleaded allegation supported by prima facie material, the court is duty bound to ensure, that the no further mischief occurs pending trial. A civil court's primary duty in such a situation is, to preserve the subject matter of the suit and prevent the irretrievable harm to either party”, it emphasised.

The Court observed that if indeed the Plaintiffs had agreed to the lower consideration and accepted fully, there would be no reason for them to challenge their deed within weeks of execution, risking litigation and cost and the very fact that, the Plaintiff acted promptly by issuing two notices, approaching the Court and producing original documents - demonstrate bona fides.

“After comprehensive review of the pleadings, evidence, arguments and legal principles, this Court concludes that, the order passed by the trial Court does not suffer from any legal infirmity. On the contrary, it is a well-reasoned and balanced sensitive to the equities involved. … The appellant has failed to demonstrate any error, perversity or jurisdictional defect, therefore, the appeal is liable to be dismissed”, it concluded.

Accordingly, the High Court dismissed the Appeal and affirmed the impugned Order.

Cause Title- B.H. Mahalingappa & Ors. v. B.M. Jagadish & Ors. (Neutral Citation: 2025:KHC:29804)

Appearance:

Appellants: Senior Advocate K.G. Raghavan and Advocate Sundara Raman M.V.

Respondents: Senior Advocate Uday Holla and Advocate S. Rajashekar.

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