2013 (2) TMI 898 - SC - Indian Laws

Procedure for impleadment under Order 1 Rule 10 of Code of Civil Procedure - Suit for specific performance - Doctrine of lis pendens - Whether if the Appellant who is the transferee pendente lite having notice and knowledge about the pendency of the suit for specific performance and order of injunction can be impleaded as party under Order 1 Rule 10 on the basis of sale deeds executed in their favour by the Defendants Sawhneys - HC dismissed the application on the ground that there was an injunction order passed way back on 04.11.1991 in the suit for specific performance restraining the Defendants-Sawhneys from transferring or alienating the suit property passed the purported sale deeds executed by the Defendants in favour of the Appellant was in violation of the undertaking given by the Respondents which was in the nature of injunction. Division Bench affirmed the order of the Single Judge and held that in view of the injunction in the form of undertaking given by the Respondents-Sawhneys and recorded in the suit proceedings how the property could be purchased by the Appellants in the year 2008. HELD THAT - Sub-rule(2) of Rule 10 of Order 1 provides that the Court may either upon or without an application of either party add any party whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all questions involved in the suit. Since the Respondent is not a party to the agreement of sale it cannot be said that without his presence the dispute as to specific performance cannot be determined. Therefore he is not a necessary party. It is well settled that the doctrine of lis pendens is a doctrine based on the ground that it is necessary for the administration of justice that the decision of a court in a suit should be binding not only on the litigating parties but on those who derive title pendente lite. The provision of this Section does not indeed annul the conveyance or the transfer otherwise but to render it subservient to the rights of the parties to a litigation. As noticed above even before the institution of suit for specific performance when the Plaintiff came to know about the activities of the Sawhneys to deal with the property a public notice was published at the instance of the Plaintiff in a newspaper The Hindustan Times dated 12.02.1990 (Delhi Edn.) informing the public in general about the agreement with the Plaintiff s. In response to the said notice the sister concern of the Appellant M/s Living Media India Limited served a legal notice on the Defendants- Sawhneys dated 24.06.1990 whereby he has referred the agreement to sell entered into between the Plaintiff s and the Defendants- Sawhneys . Even after the institution of the suit the counsel who appeared for the Defendants-Sawhneys gave an undertaking not to transfer and alienate the suit property. Notwithstanding the order passed by the Court regarding the undertaking given on behalf of the Defendants- Sawhneys and having full notice and knowledge of all these facts the sister concern of the Appellant namely Living Media India Ltd. entered into series of transaction and finally the Appellant M/s. Thomson Press got a sale deed executed in their favour by Sawhneys in respect of suit property. Therefore we have no hesitation in holding that the Appellant entered into a clandestine transaction with the Defendants-Sawhneys and got the property transferred in their favour. Hence the Appellant - M/s Thomson Press cannot be held to be a bonafide purchaser without notice. This Court again in the case of Dwarka Prasad Singh and Ors. v. Harikant Prasad Singh and Ors. 1972 (11) TMI 96 - SUPREME COURT subscribed its earlier view and held that in a suit for specific performance against a person with notice of a prior agreement of sale is a necessary party. For the ends of justice the Appellant is to be added as party-Defendant in the suit. The appeal is accordingly allowed and the impugned orders passed by the High Court are set aside. T.S. THAKUR J. - I entirely agree with the conclusion that the Appellant ought to be added as a party-Defendant to the suit I wish to add a few lines of my own. It is true that the application which the Appellant made was only under Order I Rule 10 Code of Civil Procedure but the enabling provision of Order XXII Rule 10 Code of Civil Procedure could always be invoked if the fact situation so demanded. It was in any case not urged by counsel for the Respondents that Order XXII Rule 10 could not be called in aid with a view to justifying addition of the Appellant as a party-Defendant. Such being the position all that is required to be examined is whether a transferee pendente lite could in a suit for specific performance be added as a party Defendant and if so on what terms. To sum up (1) The Appellant is not a bona fide purchaser and is therefore not protected against specific performance of the contract between the Plaintiff s and the owner Defendants in the suit. (2) The transfer in favour of the Appellant pendente lite is effective in transferring title to the Appellant but such title shall remain subservient to the rights of the Plaintiff in the suit and subject to any direction which the Court may eventually pass therein. (3) Since the Appellant has purchased the entire estate that forms the subject matter of the suit the Appellant is entitled to be added as a party Defendant to the suit. (4) The Appellant shall as a result of his addition raise and pursue only such defenses as were available and taken by the original Defendants and none other. With the above additions I agree with the order proposed by my Esteemed Brother M.Y. Eqbal J. that this appeal be allowed and the Appellant added as party Defendant to the suit in question.

Summary

Issues Involved:
1. Impleadment of the Appellant as a party-defendant under Order 1 Rule 10 of the Code of Civil Procedure.
2. Doctrine of lis pendens and its applicability.
3. Bona fide purchaser and protection against specific performance.
4. The effect of a sale pendente lite.
5. The right of a transferee pendente lite to seek addition as a party-defendant under Order XXII Rule 10 of the Code of Civil Procedure.

Detailed Analysis:

1. Impleadment of the Appellant as a Party-Defendant under Order 1 Rule 10 of the Code of Civil Procedure:
The appeal challenges the High Court's decision affirming the dismissal of the appellant's application for impleadment as a defendant in a suit for specific performance. The appellant, a subsequent purchaser of the suit property, argued that they were a necessary and proper party for the complete and effective adjudication of the suit. The court held that the appellant, being aware of the pending litigation and the injunction against the sale of the property, could not claim impleadment as a matter of right. The court emphasized that the presence of a subsequent purchaser with notice of the original contract is not necessary for the determination of the specific performance suit.

2. Doctrine of Lis Pendens and its Applicability:
The doctrine of lis pendens, codified in Section 52 of the Transfer of Property Act, was discussed extensively. It was reiterated that this doctrine aims to maintain the status quo during the pendency of litigation involving immovable property. The court noted that any transfer of property during the pendency of a suit is subject to the outcome of the litigation and does not annul the conveyance but makes it subservient to the rights of the parties in the suit. The court emphasized that the appellant, having notice of the pending suit and the injunction, was bound by the doctrine of lis pendens.

3. Bona Fide Purchaser and Protection Against Specific Performance:
The appellant claimed to be a bona fide purchaser for value without notice of the original contract. However, the court found that the appellant had notice of the pending suit and the injunction against the sale. The court held that under Section 19(b) of the Specific Relief Act, specific performance could be enforced against a subsequent purchaser unless they are a bona fide purchaser without notice. The court concluded that the appellant could not claim the protection of a bona fide purchaser as they had notice of the original contract and the pending litigation.

4. The Effect of a Sale Pendente Lite:
The court reaffirmed that a sale pendente lite is not void but remains subject to the outcome of the pending litigation. The court cited several precedents to emphasize that any transfer of property during the pendency of a suit is subject to the rights of the parties as determined by the court. The court held that the appellant's purchase of the suit property during the pendency of the litigation was subject to the final decree in the specific performance suit.

5. The Right of a Transferee Pendente Lite to Seek Addition as a Party-Defendant under Order XXII Rule 10 of the Code of Civil Procedure:
The court discussed the provisions of Order XXII Rule 10, which allows for the continuation of a suit by or against a person upon whom an interest has devolved during the pendency of the suit. The court noted that while the appellant's application was under Order 1 Rule 10, the enabling provision of Order XXII Rule 10 could be invoked to justify the addition of the appellant as a party-defendant. The court held that a transferee pendente lite could be added as a party-defendant to protect their interest, especially when the transferor may not defend the title properly or may collude with the plaintiff.

Conclusion:
The court allowed the appeal, setting aside the High Court's orders and directing the impleadment of the appellant as a party-defendant in the suit. The court clarified that the appellant, after impleadment, would be permitted to take all defenses available to the original defendants, as the appellant derived title from the vendor during the pendency of the suit. The court emphasized that this decision was in line with the principles of justice and the need for complete adjudication of the issues involved in the suit.