Summary and Analysis of Sri R Raghu vs Sri G M Krishna & Anr

1. Heading of the Judgment

Sri R Raghu vs. Sri G M Krishna & Anr.
Citation: 2025 INSC 1040
Court: Supreme Court of India
Bench: Hon'ble Mr. Justice Vikram Nath and Hon'ble Mr. Justice Prasanna B. Varale
Date of Judgment: August 25, 2025

2. Related Laws and Sections

The case involved the application and interpretation of the following laws:

• Code of Civil Procedure, 1908 (CPC):
  Order XXI Rule 54: Attachment of property.
  Order XXI Rule 90: Application to set aside sale on grounds of material irregularity or fraud.
  Section 47: Questions to be determined by the court executing a decree.

• State Financial Corporations Act, 1951:
  Section 32(8): Powers of the court in execution proceedings initiated by a financial corporation.

• Karnataka Land Reforms Act, 1961:
  Sections 79A, 79B, 79C: These sections (now repealed) prohibited certain entities, including trusts, from holding agricultural land.

3. Basic Judgment Details

• Parties:
  Appellant (in Civil Appeal No. 8544/2024): Sri R Raghu (Auction Purchaser)
  Respondent/Cross-Appellant (in Civil Appeal No. 8545/2024): Sri G M Krishna (Judgment Debtor/Original Owner)
  Respondent No. 2: Karnataka State Financial Corporation (KSFC) (Decree Holder)

• Origin of the Case: These appeals arose from the order dated August 17, 2023, passed by the High Court of Karnataka in a Civil Revision Petition (C.R.P. No. 539/2015).

• High Court's Decision: The High Court partially allowed R Raghu's revision petition. It upheld the auction sale of the land but directed R Raghu to pay an additional Rs. 25 lakhs per acre to G M Krishna. It also ordered a fresh survey to demarcate the exact boundaries of the auctioned property.

• Supreme Court's Final Decision: The Supreme Court dismissed both appeals and closed the contempt proceedings. It affirmed the High Court's order, finding its solution to be just and equitable in the peculiar circumstances of the case.

4. Explanation of the Judgment

This case represents the final chapter in two decades of litigation over a piece of land auctioned to recover a debt. The Supreme Court's judgment balances the need for finality in court auctions with the need to address fraudulent conduct.

Background and Endless Litigation

The dispute began when the Karnataka State Financial Corporation (KSFC) obtained a decree against a company for a loan default. G M Krishna was the guarantor. To recover the debt, KSFC initiated execution proceedings. As part of this, 5.5 acres of G M Krishna's agricultural land (Survey No. 67) was put up for auction.

In 2003, R Raghu became the highest bidder at the court auction and purchased the land for Rs. 18,50,000. A sale certificate was issued in 2005. However, R Raghu participated in the auction in a dual capacity—sometimes claiming to be an individual agriculturist and other times acting as a trustee for a trust called Ved Vignam Maha Vidya Peeth (VVMP). This ambiguity became the seed for endless litigation.

G M Krishna challenged the sale multiple times over the years on various grounds, including:

1. That the sale should be set aside because a trust, which was prohibited under the Karnataka Land Reforms Act from holding agricultural land, was the real purchaser, and not an individual agriculturist.

2. That the property was never properly identified and demarcated, leading to a dispute that the sale certificate included adjacent land (Sy. No. 71/2A) that was not part of the auction.

All these challenges, including one that reached the Supreme Court in 2007, were dismissed, primarily on grounds of delay.

The Core Legal Battle

In 2014, G M Krishna filed a fresh application under Section 47 CPC, once again seeking to declare the auction sale null and void. This time, the Executing Court ruled in his favour, setting aside the sale entirely. It found that R Raghu had acted fraudulently by adopting inconsistent stances about his role.

R Raghu challenged this order in the High Court. The High Court, in the impugned order, took a unique middle path. It refused to set aside the auction sale, acknowledging that the matter had attained finality. However, it also condemned R Raghu's conduct. As a remedy, it:

1. Upheld the sale of Survey No. 67.

2. Directed R Raghu to pay an additional Rs. 25 lakhs per acre to G M Krishna as extra compensation for the land.

3. Ordered a fresh survey by the District Court to definitively demarcate the exact 5.5 acres that were auctioned, to resolve the boundary dispute.

Both parties were aggrieved by this order and filed appeals in the Supreme Court.

Supreme Court's Analysis and Reasoning

The Supreme Court concurred entirely with the High Court's reasoning and its creative solution. The Court's analysis rested on two main pillars:

1. Upholding the Auction Sale and Rejecting the Challenge:
The Court agreed that G M Krishna's challenge was barred. His earlier application to set aside the sale had been dismissed all the way to the Supreme Court over a decade ago. He could not be allowed to re-agitate the same issue in a fresh round of litigation. Furthermore, the legal basis for his challenge—Sections 79A, 79B, and 79C of the Karnataka Land Reforms Act—had been repealed retrospectively in 2020. This meant the prohibition on trusts holding agricultural land was erased, nullifying the main ground of objection.

2. Justifying the High Court's Directions:

• On the Fresh Survey: The Supreme Court noted that the difficulty in identifying the exact property was a genuine issue raised from the beginning. It held that R Raghu, as the auction purchaser, was only entitled to the specific 5.5 acres that were sold, not a single inch more. Therefore, the direction for a definitive survey to fix the boundaries was logical and necessary to end the perpetual dispute.

• On the Additional Payment: The Court strongly disapproved of R Raghu's "dual role" and conduct, which "casts doubt on the entire proceedings." While the Court was unwilling to disturb the finality of the auction, it found the High Court's solution of ordering an additional payment to be a "just and equitable" way to balance the scales. The additional Rs. 25 lakhs per acre was deemed a "well-deserved and justified" penalty for his behavior, compensating the original owner for the undervalued sale and the years of litigation.

Final Conclusion and Ruling

The Supreme Court dismissed both appeals, thereby:

• Confirming R Raghu's ownership of the auctioned land (Sy. No. 67).

• Upholding the directive for R Raghu to pay G M Krishna an additional Rs. 25 lakhs per acre.

• Upholding the order for a fresh survey to demarcate the property's boundaries.

• Closing the contempt petition filed against R Raghu.

The judgment emphasizes that while finality of court proceedings is paramount, courts have the equitable power to craft creative solutions to ensure justice is done, especially in cases involving questionable conduct by a party.