2014 (12) TMI 1300 - SC - Indian Laws

Prayer of the appellant to be added as a party in a suit for specific performance filed by Respondent No.1-plaintiff - Held that - High Court erred in interfering with the order of the trial Court impleading the appellant as a party defendant. Admittedly the appellant is a beneficiary of the Trust and under the provisions of the Trusts Act the Trustee has to act reasonably in exercise of his right of alienation under the terms of the trust deed. Appellant cannot thus be treated as a stranger. No doubt it may be permissible for the appellant to file a separate suit as suggested by Respondent No.1 but the beneficiary could certainly be held to be a proper party. There is no valid reason to decline his prayer to be impleaded as a party to avoid multiplicity of proceedings. Thus the appellant could not be held to be a stranger being beneficiary of the Trust property. The trial Court was justified in impleading him as a party. The High Court erred in interfering with the order of the trial Court. Accordingly we allow this appeal set aside the impugned order of the High Court and restore that of the trial Court dated 10th August 2010 impleading the appellant as a party defendant in the suit.

Summary

Issues:
1. Justification of High Court in reversing trial Court's order to add appellant as a party in a suit for specific performance.

Analysis:
The case involved an appeal against the Orders of the High Court of Madras, which reversed the trial Court's decision to allow the appellant to be added as a party in a suit for specific performance. The plaintiff had filed a suit claiming that the defendants, acting as trustees of a family welfare trust, failed to execute a sale deed for a property despite receiving an advance amount. The appellant, a beneficiary of the trust, sought to be impleaded as a party in the suit, arguing that the sale price was undervalued, which would prejudice his interests. The trial Court accepted the application, citing a previous judgment emphasizing the importance of giving an opportunity to all interested parties in cases involving trust properties.

The plaintiff challenged this decision in the High Court, arguing that the appellant was neither a necessary nor a proper party in the suit. The High Court agreed with the plaintiff, stating that the trial Court should examine whether permission was required before the sale agreement due to the property being a trust property. The appellant then appealed to the Supreme Court.

In the Supreme Court, the appellant contended that he was a proper party under the Code of Civil Procedure and the Indian Trusts Act, as his rights as a beneficiary needed protection. The respondent, however, maintained that the appellant was a stranger to the transaction and should not be added as a party. After considering the arguments, the Supreme Court held that the High Court erred in interfering with the trial Court's decision. The Court emphasized that the appellant, being a beneficiary of the trust, was not a stranger and had a legitimate interest in the suit. The Court cited provisions of the Trusts Act and the Code of Civil Procedure to support its decision to allow the appellant to be impleaded as a party to avoid multiplicity of proceedings and ensure all relevant questions were settled effectively.

The Supreme Court's judgment highlighted the importance of Order I Rule 10(2) of the Code of Civil Procedure, which allows for the addition of necessary or proper parties to fully adjudicate on all issues in a suit. The Court clarified the distinction between necessary and proper parties, emphasizing that the appellant, as a beneficiary with a direct interest in the subject matter of the suit, was a proper party. The Court reinstated the trial Court's order to add the appellant as a party defendant in the suit for specific performance, overturning the High Court's decision.