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TMI Blog2013 (2) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated and the Plaintiff did not complete the sale on the Defendant, getting all permissions, sanctions etc., the Defendant shall have the right to forfeit the money. Plaintiff's further case was that M/s Peerless General Finance Company Limited has given a security deposit of Rs. 25 lakhs approximately and did not vacate the premises and called upon the Defendants that they will vacate the premises only when the Defendants make the payment, that too on the expiry of the lease which expired around September, 1990. It is alleged by the Plaintiff that during the intervening period, it has been making part payments from time to time out of the said consideration amount. In May 1991, the Defendants got the said suit premises vacated from M/s Peerless General Finance Company Limited. The Plaintiff s have immediately approached the Defendants to receive the balance consideration but the same was avoided by the Defendant. A public notice was, therefore, issued in 'The Hindustan Times', New Delhi so that the Defendants 'Sawhneys' do not sell, transfer or alienate the said property to any other person. Lastly, it was alleged by the Plaintiff that despite being always read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged property. The said suit was decreed on 14.10.1998 and recovery certificate was issued by DRT, Delhi. LMI, a group of the Appellant Company intervened and settled the decree by agreeing to deposit the loan amount of Rs. 1.48 crores. The LMI cleared all the dues, income tax liability etc., of Sawhneys' for sale of the property in favour of LMI and its associates. Finally, in between 31.01.2001 and 03.04.2001 five sale deeds were executed by Defendants-Sawhneys' in favour of the present Appellant herein M/s Thomson Press India Limited. On the basis of those sale deeds the Appellant moved an application under Order 1 Rule 10 Code of Civil Procedure for impleadment as Defendants in a suit for specific performance filed by Respondent No. 1 herein M/s Nanak Builders and Investors Pvt. Ltd. 6. The learned Single Judge of the Delhi High Court after hearing the parties 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 App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the suit and such a transferee has a right and interest to be protected and deserves to be impleaded in the suit. 8. Mr. Gupta, strenuously argued that High Court has not considered the question whether the Appellant-purchaser had any knowledge of the order of injunction dated 04.11.1991 before entering the sale transaction in 2001. He has submitted that even assuming that Sawhneys' had such a knowledge, the same cannot be held as an objection to the exercise of judicial discretion in favour of the Appellant being impleaded in the suit on the application of the Appellant itself. 9. Per contra, Mr. Mahender Rana, learned Counsel appearing for Respondent No. 1 firstly contended that the suit is at the stage of final hearing and almost all the witnesses have been examined and at this stage the petition for impleadment cannot be and shall not be allowed. Ld. Counsel drew our attention to the legal notice dated 24.06.1990 and the notice dated 12.02.1990 published in the newspaper and submitted that not only the Sawhneys' but the Appellant and its sister concern had full notice and knowledge of the pendency of the suit and the order of injunction on the basis of the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty in terms of the agreement. In the said notice dated 24.06.1990 the sister concern of the Appellant in paragraph 8 stated as under: That a Public Notice appeared in the Hindustan Times Delhi Edition on 12.2.1990. As per this notice one M/s Nanak Buildings and Investor Pvt. Ltd. claim that you have entered into an Agreement to sell the premises in question to them. A copy of this notice is being endorsed to their counsel mentioned in the Public Notice. My client further learns that you have approached a number of property brokers also for the disposal of the property. 13. The question, therefore, that falls for consideration is as to 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'. 14. Before coming to the question involved in the case, we would like to discuss the decisions of this Court relied upon by the parties. 15. In the case of Anil Kumar Singh v. Shivnath Mishra alias Gadasa Guru (1995) 3 SCC 147, in a suit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion was filed by and between the parties. A preliminary decree was passed and while proceeding for final decree was pending, the trial court passed an order restraining all the parties from alienating or otherwise transferring in any manner any part of the property involved in the suit. In spite of the aforesaid order one of the party assigned the right under the preliminary decree involving wife of his lawyer. On the basis of the assigned deed the assignee made an application under Order 22 Rule 10 Code of Civil Procedure for impleadment as party to the proceeding. The petition was allowed by the trial court and affirmed in appeal by the Additional District Judge and then in revision by the High Court. The matter came before this Court allowing the appeal and set aside the orders passed by the courts below. This Court observed: As said before, the assignment is by means of a registered deed. The assignment had taken place after the passing of the preliminary decree in which Pritam Singh has been allotted 1/3rd share. His right to property to that extent stood established. A decree relating to immovable property worth more than hundred rupees, if being assigned, was required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Defendants, expressing their concern that during the pendency of the case the suit property will not be sold. In the light of consent of the counsel the Court passed an order on 18.08.1992 directing the parties not to transfer the disputed property till the disposal of the suit. In spite of the aforesaid order one of the Defendants sold 1/4th share of the land to the 3rd Respondent and 1/4th share in another land to the 4th Respondent on 19.08.1992 and further sold 1/4th share to the 5th Respondent. On the basis of this transfer the transferee-Respondent Nos. 3-5 filed an application under Order 1 Rule 10 Code of Civil Procedure for impleading them as parties to the suit. The application was allowed at all stages. This Court noticed the relevant facts which has been incorporated in paragraph 4 of the decision which is reproduced hereunder: The trial court passed a detailed order on 14-7-1997 granting the application of Respondents 3 to 5 and directed the Plaintiff to implead them as Defendants in the suit. In the order of the trial court, reference has been made to an application filed by the first Defendant to the effect that he was not earlier aware of the case and the 4th Def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties to the suit. 19. While referring Surjit Singh's case this Court noticed that in that case there was no dispute that the assignors and the assignees had knowledge of the order of injunction passed by the Court. On those facts, this Court held that the deed of assignment was not capable of conveying any right to the assignee and the order of impleadment of the assignees as parties was unsustainable. 20. In the case of Vijay Pratap and Ors. v. Sambhu Saran Sinha and Ors. (1996) 10 SCC 53 a petition was filed under Order 1 Rule 10 of the Code of Civil Procedure in suit for specific performance for impleading him as party in place of his father on the ground that the father during his lifetime alleged to have entered into a compromise. The trial court rejecting the petition held that the Petitioners are neither necessary or proper parties to the suit. On revision this Court dismissing the same held as under: The trial court accordingly held that the Petitioners are neither necessary nor proper parties to the suit. On revision, the High Court upheld the same. Shri Sanyal, the learned Counsel for the Petitioners contended that their father had not signed the relinquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the parties to the contract. If the person seeking addition is added in such a suit, the scope of the suit for specific performance would be enlarged and it would be practically converted into a suit for title. Therefore, for effective adjudication of the controversies involved in the suit, presence of such parties cannot be said to be necessary at all. Lord Chancellor Cottenham in Tasker v. Small 1834 (40) ER 848 made the following observations: It is not disputed that, generally, to a bill for specific performance of a contract for sale, the parties to the contract only are the proper parties; and, when the ground of this jurisdiction of Courts of Equity in suits of that kind is considered it could not properly be otherwise. The Court assumes jurisdiction in such case, because a Court of law, giving damages only for the non-performance of the contract, in many cases does not afford an adequate remedy. But, in equity, as well as in law, the contract constitutes the right and regulates the liabilities of the parties; and the object of both proceedings is to place the party complaining as nearly as possible in the same situation as the Defendant had agreed that he should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments, the broad principles which should govern disposal of an application for impleadment are: 1. The Court can, at any stage of the proceedings, either on an application made by the parties or otherwise, direct impleadment of any person as party, who ought to have been joined as Plaintiff or Defendant or whose presence before the Court is necessary for effective and complete adjudication of the issues involved in the Suit. 2. A necessary party is the person who ought to be joined as party to the Suit and in whose absence an effective decree cannot be passed by the Court. 3. A proper party is a person whose presence would enable the Court to completely, effectively and properly adjudicate upon all matters and issues, though he may not be a person in favour of or against whom a decree is to be made. 4. If a person is not found to be a proper or necessary party, the Court does not have the jurisdiction to order his impleadment against the wishes of the Plaintiff. 5. In a Suit for specific performance, the Court can order impleadment of a purchaser whose conduct is above board, and who files Application for being joined as party within reasonable time of his acquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sukur Mohammed and Ors. AIR (35) 1948, observed as under: The broad purpose of Section 52 is to maintain the status quo unaffected by the act of any party to the litigation pending its determination. The applicability of the section cannot depend on matters of proof or the strength or weakness of the case on one side or the other in bona fide proceedings. To apply any such test is to misconceive the object of the enactment and in the view of the Board, the learned Subordinate Judge was in error in this respect in laying stress, as he did, on the fact that the agreement of 8.6.1932, had not been registered. 25. In the case of Kedar Nath Lal and Anr. v. Ganesh Ram and Ors. AIR 1970 SC 1717, this Court referred the earlier decision (1967 (2) SCR 18) and observed: The purchaser pendente lite under this doctrine is bound by the result of the litigation on the principle that since the result must bind the party to it so it must bind the person driving his right, title and interest from or through him. This principle is well illustrated in Radhamadhub Holder v. Monohar 15 I.A. 97 where the facts were almost similar to those in the instant case. It is true that Section 52 strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt may strike out or add parties.-The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as Plaintiff or Defendant, be struck out, and that the name of any person who ought to have been joined, whether as Plaintiff or Defendant, or whose presence 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 suit, be added. (3) No person shall be added as a Plaintiff suing without a next friend or as the next friend of a Plaintiff under any disability without his consent. (4) Where Defendant added, plaint to be amended.-Where a Defendant is added, the plaint shall, unless the Court otherwise directs, be amended in such manner as may be necessary, and amended copies of the summons and of the plaint shall be served on the new Defendant and, if the Court thinks fit, on the original Defendant. (5) Subject to the provisions of the Indian Limitation Act, 1877 (15 of 1877), Section 22, the proceedings as against any person add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result on the subject matter of the action if those rights could be established, Devlin, J. has stated: The test is 'May the order for which the Plaintiff is asking directly affect the intervener in the enjoyment of his legal rights. 30. At this juncture, we would also like to refer Section 19 of the Specific Relief Act which reads as under: 19. Relief against parties and persons claiming under them by subsequent title. - Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against- (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract; (c) any person claiming under a title which, though prior to the contract and known to the Plaintiff, might have been displaced by the Defendant; (d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation; (e) when the promoters of a company have, before its incorporation, entered into a contract for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss cannot be held to be a bonafide purchaser, without notice. 36. On perusal of the two orders passed by the single judge and the Division Bench of the High Court, it reveals that the High Court has not gone into the question as to whether if a person who purchases the suit property in violation of the order of injunction, and having sufficient notice and knowledge of the Agreement, need to be added as party for passing an effective decree in the suit. 37. As discussed above, a decree for specific performance of a contract may be enforced against a person claimed under the Plaintiff, and title acquired subsequent to the contract. There is no dispute that such transfer made in favour of the subsequent purchaser is subject to the rider provided under Section 52 of the Transfer of Property Act and the restrain order passed by the Court. 38. The aforesaid question was considered by the Calcutta High Court in the case of Kafiladdin and Ors. v. Samiraddin and Ors. AIR 1931 Cal 67 where Lordship referred the English Law on this point and quoted one of the passage of the Book authored by Dart, on Vendors and Purchasers Edn. 8, Vol. 2, which reads as under: Equity will enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Kafiladdin v. Samiraddin AIR 1931 Cal 67 (C) and appears to be the English practice. See Fry on Specific Performance, 6th Ed. Page 90, paragraph 207; also - 'Potter v. Sanders', (1846) 67 ER. We direct accordingly. 40. Again in the case of Ramesh Chandra v. Chunil Lal (1971) SC 1238, this Court referred their earlier decision and observed: It is common ground that the plot in dispute has been transferred by the Respondents and therefore the proper form of the decree would be the same as indicated at page 369 in Lala Durga Prasad v. Lala Deep Chand 1954 SCR 360 : AIR 1954 SC 75 viz., to direct specific performance of the contract between the vendor and the Plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the Plaintiff. He does not join in any special covenants made between the Plaintiff and his vendor; all he does is to pass on his title to the Plaintiff . We order accordingly. The decree of the courts below is hereby set aside and the appeal is allowed with costs in this Court and the High Court. 41. This Court again in the case of Dwarka Prasad Singh and Ors. v. Harikant Prasad Singh an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with great respect for good and valid reasons. 46. In the light of the above finding it is futile to deny that the specific performance prayed for by the Plaintiff was and continues to be enforceable not only against the original owner Defendants but also against the Appellant their transferee. Sale of immovable property in the teeth of an earlier agreement to sell is immune from specific performance of an earlier contract of sale only if the transferee has acquired the title for valuable consideration, in good faith and without notice of the original contract. That is evident from Section 19(b) of the Specific Relief Act which is to the following effect: 19. Relief against parties and persons claiming under them by subsequent title - Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against - (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract; (c) xxx (d) xxx (e) xxx 47. There is thus no gainsaying that the Appellant was not protected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the court. 51. We may finally refer to the decision of this Court in Jayaram Mudaliar v. Ayyaswami and Ors. (1972) 2 SCC 200 in which were extracted with approval observations made on the doctrine of lis pendens in Commentaries of Laws of Scotland, by Bell . This Court said: 43...Bell, in his commentaries on the Laws of Scotland said that it was grounded on the maxim: Pendente lite nibil innovandum . He observed: It is a general rule which seems to have been recognised in all regular systems of jurisprudence, that during the pendence of an action, of which the object is to vest the property or obtain the possession of real estate, a purchaser shall be held to take that estate as it stands in the person of the seller, and to be bound by the claims which shall ultimately be pronounced. 52. There is, therefore, little room for any doubt that the transfer of the suit property pendente lite is not void ab initio and that the purchaser of any such property takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of the above provisions and, if so, whether the Appellant could be added as a party-Defendant to the suit. Our answer is in the affirmative. 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. 55. We are not on virgin ground in so far as that question is concerned. Decisions of this Court have dealt with similar situations and held that a transferee pendente lite can be added as a party to the suit lest the transferee suffered prejudice on account of the transferor losing interest in the litigation post transfer. In Khemchand Shanker Choudhary v. Vishnu Hari Patil (1983) 1 SCC 18, this Court held that the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons the transferee pendente lite can be added as a party Defendant to the case provided his interest is substantial and not just peripheral. This is particularly so where the transferee pendente lite acquires interest in the entire estate that forms the subject matter of the dispute. This Court observed: 16... The doctrine of lis pendens applies only where the lis is pending before a court. Further pending the suit, the transferee is not entitled as of right to be made a party to the suit, though the court has a discretion to make him a party. But the transferee pendente lite can be added as a proper party if his interest in the subject-matter of the suit is substantial and not just peripheral. A transferee pendente lite to the extent he has acquired interest from the Defendant is vitally interested in the litigation, where the transfer is of the entire interest of the Defendant; the latter having no more interest in the property may not properly defend the suit. He may collude with the Plaintiff. Hence, though the Plaintiff is under no obligation to make a lis pendens transferee a party, under Order 22 Rule 10 an alienee pendente lite may be joined as party. As already noticed, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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