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TMI Blog2010 (10) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... their plaint, contended that they have entered into an agreement with the third respondent which was in the nature of a Project Consultancy Agreement and another agreement known as 'Royalty agreement'. Those agreements were executed on 26 October 1988. As per the said agreement, the first respondent agreed to provide its technical knowledge, skill and professional services required for operating a Hotel at Mount Road, Madras, to be constructed by the third respondent. There was a provision in the said agreement whereby and whereunder, the third respondent agreed that they would maintain full ownership of the Hotel throughout the period of agreement and they would disclose the existence of the agreement and operator's vested interest in the hotel to any lender/s, leasing Company/ies, financial institution/s and or Bank/s having or proposing to take any lease, mortgage, charge or other security over the Hotel or any part thereof and shall obtain from such institution/s in writing a confirmation of existence of the agreement and that the agreement would be binding upon the institutions. The project undertaken by the third respondent for construction of the hotel underwent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the said agreement. 6. The fifth respondent as per their communication dated 28 December 2004, informed the first respondent that it had acquired the financial assets of the third respondent together with the underlying security interest from the sixth respondent in terms of the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The first respondent through their Solicitors informed the other respondents 5 and 9 about the subsisting agreement. When the first respondent found that respondents 5 and 7 wrongfully intending to proceed to act in breach of obligation, they filed the suit. 7. Respondents 1 and 2 in their suit in C.S. No. 257/2005 prayed for a judgment and decree: (a)Declaration that the Technical Services agreement dated 26 October, 1988 and the Project Consultancy agreement and Royalty agreement both dated 26 October, 1988 and the agreements dated 12 January, 2000, 10 June 2000 and 4 February 2002 are valid, legal and subsisting and are binding and enforceable on the defendants 3 to 7 and / or its assigns. (b)Permanent injunction restraining the defendants 3 to 7 whether by itself it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hotel property previously belonging to the third respondent in a manner that is contrary to their legal rights under the agreement. Respondents 1 and 2 further contended that the appellants are necessary parties to the proceedings in view of the relief claimed by them in the suit. 11. The appellants on receipt of notice entered appearance and filed their counter in A. No. 6722/2009. According to the appellants, they were not bound by the agreement executed between respondents 1 and 2 with respondents 3 and 4 and as such, no relief could be claimed against them. It was their further contention that the agreement dated 4 February 2002 executed by respondents 3 and 4 clearly established that the right of the first respondent was only to seek refund of the sum of ₹ 15.12 crores together with interest, failing which, to invoke the irrevocable guarantee given by the fourth respondent. According to the appellants, the agreement does not contain a provision that the Technical Services Agreement, Project Consultancy Agreement and Royalty Agreement would continue to bind the subsequent purchasers of the hotel unit. The appellants maintained that they have purchased the property fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y appeal preferred against the order in O.A. No. 6722/2009 is not maintainable as the order was not a judgment within the meaning of Clause 15 of the Letters Patent. (2) The appellants were well aware of the existence of agreement between respondents 1 and 2 and respondents 3 and 4. They have purchased the property with full knowledge of the agreement. Therefore, they are necessary parties to the suit. (3) Respondents 1 and 2 prayed for a Judgment and Decree of declaration against respondents 5 to 9 including their assignees. The appellants have purchased the property pending suit and as such, they are necessary parties to the suit. (4) The appellants were not prejudiced on account of their impeding .On the other hand, the Trial Court would be in a position to pass a comprehensive decree in the presence of the appellants as they have stepped into the shoes of the secured creditors. Analysis:- 15. The prayer in the suit originally was against respondents 5 to 9 including their assignees. Respondents 1 and 2 specifically sought a declaration that the Technical Services Agreement dated 26 October 1988 and the Project Consultancy Agreement and Royalty agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Assets and Enforcement of Security Interest Act, 2002 contains provision indicating the manner in which the property has to be sold. Rule 8 (6)(a) provides that the description of the immovable property to be sold, including the details of the encumbrance known to the secured creditor shall be put on public notice in two leading newspapers, one in vernacular language, having sufficient circulation in the locality. Therefore, even as per the statute, the secured creditor was bound to disclose the details of the encumbrance. In case the property was sold with encumbrance, the purchaser has to clear the encumbrance and only on such clearance, the property would be delivered to them by the secured creditor. The appellants having purchased the property by way of public sale without any attempt to ascertain the encumbrance, cannot be heard to say that they were not aware of the encumbrance or that they are not necessary parties to the suit, even though their principals were already parties to the suit. In case the secured creditor has issued a public notice containing information about the encumbrance, the purchasers would be bound by it. The same yardstick has to be issued in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fides of the party filing such application to implead and the stage of the suit are also relevant factors. But delay cannot be the sole determining factor to decide such application, in view of the express provision, which says that the party could take steps for impleading at any stage of the suit. 22. Impleading of a new party is not automatic. In case the plaintiff files an application to add defendant, notice should be issued to the proposed defendant and he should be heard before impleadment. It is not sufficient to hear him after impleading. The proposed party should be heard in opposition to the application for impleadment. The Authorities:- 23. In Razia Begum v. Sahebzadi Anwar Begum 1959 SCR 1111 : AIR 958 SC 886 , the Supreme Court observed that where the subject-matter of a litigation is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the court is of the opinion that by adding that party, it would be in a better position effectually and completely to adjudicate upon the controversy. The Supreme Court said: 14. As a result of these considerations, we have arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for impleadment under Order 1 Rule 10 CPC, the court would only decide whether the presence of the applicant before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the proceedings. 26. The learned senior counsel for respondents 1 and 2 raised the question of maintainability of the appeal. Since the appeal was admitted earlier and the matter has come up for final hearing, we are not considering the said issue and the question of law is left open to be decided in an appropriate proceeding. 27. In Shah Babulal Khimji v. Jayaben D. Kania (1981) 4 SCC 8 , the Supreme Court considered the circumstances wherein an appeal under Clause 15 of the Letters Patent could be filed. The observation reads thus: 115. Thus, in other words every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned. Similarly, orders passed by the trial Judge deciding question of admissibility or relevancy of a document also cannot be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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