In Singamasetty Bhagavath Guptha & Anr. vs Allam Karibasappa (D) by LRs / Allam Doddabasappa (D) by LRs, the Supreme Court of India reaffirmed that when a trial court misreads or misappreciates evidence, the appellate court has the power to interfere with its findings of fact. The case arose from a long-standing dispute over a partnership share and transactions made during insolvency proceedings. The Court held that the Karnataka High Court erred in overturning the trial court’s well-reasoned findings without proper re-evaluation of evidence, emphasizing that appellate interference is justified where factual conclusions are based on misreading or ignoring material evidence.
Case Summary & Procedural History
Parties & Background
The dispute concerns a small share (one anna in a rupee) in a partnership firm called M/s. Gavisiddheshwara & Co., originally held by Mr. Singamasetty Subbarayudu.
After his death, the appellant (his heir) was inducted into the partnership.
The respondent (Allam Karibasappa) claimed that in 1975, the appellant had offered to sell his share, and that he accepted, communicating that acceptance and demanding payment.
Before this transaction could be fully effected, insolvency proceedings were initiated against the appellant (and his mother) by creditors. The District Court (Bellary) declared them insolvent in 1977 and appointed a receiver.
In 1977, the respondent filed an interlocutory application (I.A. No. XV) under the Provincial Insolvency Act, asking the receiver to accept Rs. 95,000 and transfer the share to him.
On 04.01.1983, the District Court allowed I.A. No. XV and directed the receiver to execute a registered transfer deed. The receiver executed a deed on 11.03.1983.
Subsequently, the adjudication of insolvency was annulled (in 1996) by the District Court (under section 35 of the Act), and the appellants paid off their debts.
Meanwhile, in 1997, the High Court set aside the 04.01.1983 order and remanded I.A. XV for fresh consideration. On remand, the District Court conducted a full-fledged trial and found that the documents (Exs. P4–P7) supposed to show the contract (offer/acceptance) were fabricated. It dismissed I.A. XV and directed cancellation of the 11.03.1983 transfer deed.
However, in 2011, the Karnataka High Court reversed that decision. It held that even though the insolvency had been annulled, the 11.03.1983 deed was “saved” under Section 37 of the Provincial Insolvency Act (i.e. the sale/disposition by receiver were to remain valid). But it limited the binding effect to only the appellant’s half-anna share (not the mother’s) for want of her consent.
The Supreme Court granted special leave and, on 25 September 2025, delivered judgment allowing the appeals by the appellants, setting aside the High Court decision and restoring the District Court’s order (i.e. cancellation of the transfer deed).
Legal Issues & Key Holdings
While the case covers multiple issues (insolvency law, finality under Section 37, etc.), the Supreme Court’s discussion of appellate interference in factual findings (especially where trial court misreads evidence) is particularly noteworthy.
1. Scope of Appellate Interference in Factual Findings
The Supreme Court reaffirmed that although fact-finding is primarily within the domain of the trial court, an appellate court (or a first appellate court) is not precluded from reversing a trial court’s finding of fact in certain circumstances.
It laid down the following guiding principles (in line with earlier precedents):
Where there is conflict of oral evidence, and the decision turns on credibility, the trial judge’s conclusions ordinarily deserve deference. But if there is a special feature in the evidence overlooked by the trial court, or if the appellate court discerns a balance of improbabilities that outweighs the trial court’s view, interference may be justified.
An appellate court reversing on facts must engage closely with the trial court’s reasoning. It cannot simply dismiss the findings as based on surmise or conjecture without showing how the evidence supports a contrary conclusion.
If the trial court has misread or ignored material evidence, or based its findings on inadmissible evidence or assumptions, that can be a ground for appellate interference.
In the present case, the Supreme Court held that the High Court had committed a jurisdictional error by reversing the District Court’s findings without properly reappreciating the evidence. The High Court’s approach was reduced to labeling the trial court’s findings as based on “surmises and conjectures,” without independent reasoning.
Thus, the case is a fresh illustration that if the trial court misreads evidence, appellate courts must not remain idle — they can and must re-evaluate evidence, point out the misreading or omission, and provide reasons for a different conclusion.
2. “Duly Made” Acts Under Section 37: Finality & Validity as Preconditions
While not directly on the general doctrine of appellate review, the case also sharpens the contours of Section 37 (Provincial Insolvency Act) — which saves sales, dispositions, payments, and acts “duly made” by receiver or court, even if insolvency is later annulled.
The Supreme Court clarified:
For a transaction to be “saved,” it must be duly made — i.e. valid, bona fide, and grounded in a final, subsisting order. If the foundational order is set aside, or the transaction is found to be tainted (e.g., based on fabricated documents), Section 37 cannot rescue it.
Mere execution of a deed is not enough; there must be finality in the underlying judicial order permitting that act.
In this case, since the 04.01.1983 order (which formed the basis for the transfer) was set aside, and on remand the trial court found the supporting documents fabricated, the Supreme Court held there was no “duly made” sale to be protected under Section 37.
Relation to the Proposition:
“If Trial Court Misreads Evidence, Appellate Court Can Interfere with Finding of Facts”
This case is a strong affirmation of exactly that proposition, on the following ground:
The Supreme Court allowed interference even though the dispute involved factual findings (i.e. whether the documents showing the contract were genuine) because the appellate (High Court) had failed to properly re-appreciate the evidence.
The Supreme Court criticized the High Court’s reliance on superficial dismissal (“surmises and conjectures”) rather than independent scrutiny — reinforcing that appellate interference is warranted when the trial court’s approach is flawed or misdirected.
This decision thus provides a concrete example in the insolvency-law context where appellate courts must step in to correct misreadings of evidence even in cases that involve deeply contested facts.