The Karnataka High Court held that a registered sale deed without any consideration is a sham transaction and functioned merely as a discharged mortgage.

While the Court set aside the First Appellate Court’s finding on adverse possession—reiterating that such a claim is legally unsustainable unless the claimant first admits the true owner's title—it upheld the final order in favour of the plaintiff based on a valid and unchallenged 1957 registered partition deed.

​The Bench of Justice Geetha K.B. observed, “On careful perusal of all the above facts and points of law, this Court is of the opinion that First Appellate Court was right in reversing the judgment and decree of Trial Court holding that Ex.P.2 registered sale deed dated 28.04.1941 was a nominal and sham one because no consideration is passed under said document. However, the First Appellate Court was not right in holding that possession of plaintiff over suit ‘B’ schedule property is by way of adverse possession only based on a production of original sale date dated 28.04.1941. Accordingly, substantial question of law No.1 is answered in affirmative.”

Advocate SH Mittalkod appeared for the Appellant, while Advocate KL Patil appeared for the Respondents.

The Court also observed, “In all the aforesaid citations, it is clearly held that until and unless the ownership of real owner is admitted by the person who is in possession of the property in question, he cannot say that his possession is adverse to the interest of real owner. Hence, plaintiff has not established the plea of adverse possession.”

Brief Facts of the Case

A Regular Second Appeal was filed by the Appellant/Defendant No. 2 under Section 100 of the Code of Civil Procedure to set aside the judgment of the First Appellate Court, which had reversed the Trial Court’s dismissal of the suit.

The plaintiff originally sought a declaration of title and permanent injunction, contending that the suit property was allotted to her father through a registered family partition. She argued that a prior sale deed executed by her grandfather was merely a nominal transaction to secure a loan and that the property was later redeemed, though the legal title was never formally reconveyed.

The plaintiff further asserted that she had perfected her title by adverse possession, alleging that she remained in continuous occupation despite the execution of a subsequent sale deed between the defendants, which she termed a fabricated document. Conversely, the defendants maintained that the third defendant was the absolute owner who had validly sold the property to the second defendant. They contended that possession had lawfully transferred to them, supported by revenue proceedings and a registered sale deed.

While the Trial Court dismissed the suit for lack of proof regarding ownership and possession, the First Appellate Court reversed this decision, holding that the partition deed and long-term hostile possession established the plaintiff's rights. The matter reached the High Court to determine substantial questions of law, primarily whether the lower appellate court was justified in declaring a registered sale deed as a "sham" and whether the plea of adverse possession was legally sustainable under the circumstances.

Contention of the Parties

The Appellant/Defendant contended that the plaintiff’s plea of adverse possession was legally untenable due to the absence of specific pleadings and the failure to admit the third defendant’s title, a prerequisite for such a claim. It was argued that the First Appellate Court erroneously treated the registered sale deed of 1941 as a sham transaction, asserting that title could not legally revert to the plaintiff's grandfather without a registered reconveyance deed. The appellant maintained that the lower appellate court ignored fundamental legal principles regarding the burden of proof and the sanctity of registered documents, thereby necessitating the restoration of the Trial Court’s dismissal.

Conversely, the Respondents/Plaintiff argued that the possession of the original 1941 deed corroborated the claim that the transaction was a mortgage which had been fully discharged. He emphasized that the third defendant’s failure to lead evidence or cross-examine witnesses amounted to an admission of the plaintiff's title, which was further solidified by the 1957 registered partition deed. Furthermore, it was submitted that the appeal had abated following the death of the third defendant, and since the appellant’s rights were purely derivative, the entire appeal was liable to be dismissed amidst contradictions in the appellant’s testimony regarding sale consideration and possession.

Observations of the Court

The Court addressed the substantial questions of law, beginning with the procedural issue of abatement. It ruled that the death of Respondent No. 3 (the vendor) did not cause the entire appeal to abate. Applying the "contradictory decree" test, the Court found that since the appellant had stepped into the shoes of the deceased respondent, the appeal could proceed against the remaining parties without the risk of inconsistent legal outcomes.

The Court also said that the mere nomenclature of a "sale deed" does not satisfy the legal requirements of a sale under Section 54 of the Transfer of Property Act. The fact that the plaintiff produced the original 1941 deed from her legal custody strongly suggested that the transaction was a mortgage that had been discharged, rather than an absolute sale.

The Court noted that the 1957 Registered Partition Deed, which allotted the property to the plaintiff’s father, was never challenged by the defendants or their predecessors for decades. Under the principle that a registered document constitutes notice to the whole world, the defendants' silence was deemed significant.

Furthermore, while the defendants' names appeared in the "owner" column of revenue records, the plaintiff's family was consistently shown in the "cultivator" column, and the defendants failed to provide any evidence of actual physical possession.

“As far as the plea of adverse possession is concerned, it is settled proposition of law that the person who claims to be in adverse possession of the property must prove that he is in continuous, peaceful possession of the property without any obstruction for a statutory period of 12 years and and the second one is animus possidendi i.e., his possession is hostile towards the interest of real owner.”, the Court said.

Following the principle that inconsistent pleas of "title by ownership" and "title by adverse possession" cannot coexist without a clear election, the Court held that the plaintiff failed to establish the legal requirements for adverse possession.

However, despite the failure of the adverse possession plea, the Court's finding that the original 1941 sale deed was a void and sham document meant that the third defendant never had a valid title to convey to the appellant, thereby undermining the appellant's entire claim of ownership.

Conclusion

The Court observed that while the First Appellate Court correctly identified the 1941 deed as a sham, it erred in alternatively granting relief based on adverse possession, especially since the plaintiff did not press that plea in her evidence.

However, because the plaintiff successfully established her title through the 1957 partition deed—which remained unchallenged for over three decades—her claim to the property was substantiated.

The High Court ultimately answered the first substantial question of law in the affirmative (confirming the 1941 deed was a sham) and the second in the negative (rejecting the finding of adverse possession).

Despite this partial correction of the legal reasoning, the appeal was dismissed, and the decree in favor of the plaintiff was confirmed.

Cause Title: Smt. KG Laxmidevi v. Smt. Hampamma and Ors. [Neutral Citation: 2026:KHC-D:6231]

Appearances:

Appellant: Advocate SH Mittalkod

Respondents: Advocates KL Patil, Sourabh Sondur.

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