K. N. NAGARAJAPPA & ORS.versusH. NARASIMHA REDDY

                         [2021] 6 S.C.R. 109                           109


                 K. N. NAGARAJAPPA & ORS.                              A
                                 v.
                    H. NARASIMHA REDDY
               (Civil Appeal Nos. 5033-5034 of 2009)
                      SEPTEMBER 09, 2021                               B
   [L. NAGESWARA RAO AND S. RAVINDRA BHAT, JJ.]
       Code of Civil Procedure, 1908 – s.103 – High Courts’
jurisdiction to appreciate factual issues u/s.103 CPC – Held: High
Courts are empowered to exercise limited factual review u/s.103
                                                                       C
CPC – 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   D
be justified – The other is where the findings of fact may call for
examination and be upset, in the limited circumstances spelt out in
s.103 CPC – In the present case, the High Court recorded sound
and convincing reasons why the first appellate court’s judgment
required interference – The first appellate court fell into error in
                                                                       E
overlooking important evidence and appreciating the record in its
true perspective, and reversed the decree of the trial court – High
Court, in second appeal proceeded to examine the documents in
light of the evidence led and corrected the findings as it were
u/s.103 – Impugned judgment of High Court does not expressly
refer to s.103, however, in the circumstances of the case, it is       F
evident that the High Court exercised power in the light of that
provision.
      Dismissing the appeals, the Court
      HELD:1. The jurisdiction which a High Court derives
under Section 100 CPC is based upon its framing of a substantial       G
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    H
                                109
110           SUPREME COURT REPORTS                     [2021] 6 S.C.R.


A     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. [Para 14][116-C-D]
B
            2. 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 first appellate
      court fell into error in overlooking important evidence and
C
      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
D     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.
E
      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.
      Having regard to the overall circumstances, the impugned
      judgment does not call for interference in exercise of special
F     leave jurisdiction (which is available to this Court – even at the
      stage of final hearing). [Para 18][118-D, G-H; 119-A-C]
           Municipal Committee, Hoshiarpur v. Punjab State
           Electricity Board, (2010) 13 SCC 216 : [2010] 13 SCR
           658 and Narayan Sitaramji Badwaik (Dead) Through
G          Lrs. v Bisaram & Ors, (2021) SCC OnLine SC 319 –
           referred to.
                            Case Law Reference
      [2010] 13 SCR 658               referred to          Para 16
      (2021) SCC OnLine SC 319        referred to          Para 17
H
     K. N. NAGARAJAPPA & ORS. v. H. NARASIMHA REDDY                            111


      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.5033-                    A
5034 of 2009.
      From the Judgment and Order dated 31.07.2008 of the High
Court of Karnataka at Bangalore in R.S.A. Nos.368 of 2002 C/w no.736
of 2002.
         D.P. Chaturvedi, S. N. Bhat, Advs. for the Appellants.                B
         Mrs. Nanita Sharma, Adv. for the Respondent.
         The Judgment of the Court was delivered by
         S. RAVINDRA BHAT, J.
      1. In these appeals by Special Leave, a common judgment - in
two second appeals1 rendered by the Karnataka High Court- reversing            C
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        D
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
relation to suit properties (hereafter called “the first suit”). The claim     E
was 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          F
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.     G
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
1
    Dated 31.07.2008 in RSA Nos. 368/2002 and 736/2002                         H
112             SUPREME COURT REPORTS                           [2021] 6 S.C.R.


A     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
B
      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
C     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
D     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
E
      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
F
      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
G     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
      performance.
            6. The aggrieved respondents approached the High Court with
      two second appeals, i.e. RSA No. 368/2002 and RSA No. 736/2002.
H     The respondents contended that the dismissal of their suit on the one
  K. N. NAGARAJAPPA & ORS. v. H. NARASIMHA REDDY                             113
               [S. RAVINDRA BHAT, J.]

hand and the decree of the second suit in favour of the present appellants   A
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            B
      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        C
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   D
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      E
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     F
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         G
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     H
114             SUPREME COURT REPORTS                           [2021] 6 S.C.R.


A     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.
B     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
C
      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.
D     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
E     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
F            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
G     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
H     with the impugned judgment, and submitted that the High Court
  K. N. NAGARAJAPPA & ORS. v. H. NARASIMHA REDDY                               115
               [S. RAVINDRA BHAT, J.]

endorsed the findings of the trial court, which were in consonance with        A
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            B
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            C
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
                                                                               D
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.                                                              E
       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        F
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      G
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           H
116            SUPREME COURT REPORTS                           [2021] 6 S.C.R.


A     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
B
      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
C
      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
D     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:

E           “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
F                    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.”
G
            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
H           exception to Section 100 CPC nor is it meant to supplant it,
     K. N. NAGARAJAPPA & ORS. v. H. NARASIMHA REDDY                        117
                  [S. RAVINDRA BHAT, J.]

         rather it is to serve the same purpose. Even while pressing       A
         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
                                                                           B
         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          C
         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.     D
         (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   E
         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            F
         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             G
         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]”
2
    (2010) 13 SCC 216                                                      H
118               SUPREME COURT REPORTS                         [2021] 6 S.C.R.


A            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
B              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
C              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
D     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
E     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
F     @ 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
G     to decide the 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

H     3
          2021 SCC OnLine SC 319
   K. N. NAGARAJAPPA & ORS. v. H. NARASIMHA REDDY                                119
                [S. RAVINDRA BHAT, J.]

High Court, in second appeal proceeded to examine the documents in               A
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
                                                                                 B
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        C
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             D
no order as to costs.


Bibhuti Bhushan Bose                                        Appeals dismissed.


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