2015 (9) TMI 1571 - SC - Indian Laws

Dismissal of appeal - failure of assignee to file an application to continue the proceedings - appellant had released her interest in the suit property in favour of her daughter Smt. Padmavathi on 11.4.2011 and said Padmavathi in turn had transferred the property in favour of Mr. G.R. Ramesh vide sale deed - Held that - We have heard learned counsel for the parties and opine that the impugned judgment is patently illegal. Merely due to the assignment or release of the rights during the pendency of the appeal the appellant did not in any manner lose the right to continue the appeal. Merely by transfer of the property during the pendency of the suit or the appeal plaintiff or appellant as the case may be ordinarily has a right to continue the appeal. It is at the option of the assignee to move an application for impleadment. Considering the provisions contained in Order 22 Rule 10 and Order 22 Rule 11 of the Code of Civil Procedure the impugned judgment and order of the High Court cannot be allowed to be sustained. Ihe legislature has not envisaged the penalty of dismissal of the suit or appeal on account of failure of the assignee to move an application for impleadment and to continue the proceedings. Thus there cannot be dismissal of the suit or appeal as the case may be on account of failure of assignee to file an application to continue the proceedings. It would be open to the assignor to continue the proceedings notwithstanding the fact that he ceased to have any interest in the subject-matter of dispute. He can continue the proceedings for the benefit of assignee. High Court has gravely erred in law in dismissing the appeal on the aforesaid ground.

Summary

Issues:
Appeal against dismissal of suit due to release of interest in property during pendency of appeal.

Analysis:
The appeal involved a judgment and order dated 24.9.2013 passed by the High Court of Karnataka at Bangalore in Regular First Appeal No.1735 of 2011. The plaintiff had filed the suit for declaration of title and restoration of possession based on a registered sale deed dated 10.11.1965. The suit was dismissed by the trial court, and the appeal was filed. The High Court dismissed the appeal on the ground that the plaintiff had released her interest in the property to her daughter, who subsequently transferred it to another party. The Supreme Court opined that the High Court's judgment was illegal as the mere assignment or release of rights during the pendency of the appeal did not automatically result in the loss of the right to continue the appeal. The Court referred to Order 22 Rule 10 and Order 22 Rule 11 of the Code of Civil Procedure to support its opinion.

The Court highlighted that under Order 22 Rule 10, the legislature did not prescribe the penalty of dismissal of the suit or appeal due to the assignee's failure to move an application for impleadment. The assignor could continue the proceedings for the benefit of the assignee, even if they no longer had an interest in the subject matter of the dispute. The Court cited a previous case to emphasize that the legislature made a clear distinction in cases of devolution of interest during a suit, indicating that the proceeding could continue by or against the original party, even if they no longer had an interest in the dispute. The Court clarified that obtaining leave to carry on the suit did not result in a new suit but continued the old suit with the new party bound by all previous proceedings.

Furthermore, the Court emphasized that under Rule 10 of Order 22, the suit could be continued by the person upon whom the interest had devolved, but it was not obligatory for them to seek leave. The Court stated that the original party could continue the suit, and the new party would be bound by the decree unless there was evidence of fraud or collusion. The Court also referred to another case to support the principle that the assignee could be bound by the decree if they had knowledge of the proceedings. Ultimately, the Supreme Court held that the High Court had erred in law by dismissing the appeal based on the release of interest and set aside the judgment, remitting the appeal back to the High Court for fresh consideration in accordance with the law.