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Tuesday, August 21, 2012

Whether M/s. Vidur Impex and Traders Pvt. Ltd., and five other companies (hereinafter described as the appellants), who are said to have purchased the suit property, i.e. 21, Aurangzeb Road, New Delhi in violation of the order of injunction passed by the learned Single Judge of the Delhi High Court are entitled to be impleaded as parties to Suit No.425/1993 filed by respondent No.1 – M/s. Tosh Apartments Pvt. Ltd. is one of the two questions which arises for consideration in these appeals filed against judgment dated 20.2.2009 of the Division Bench of the Delhi High Court. The other question which needs consideration is whether the Delhi High Court was justified in appointing a receiver with a direction to take possession of the suit property despite the fact that the Calcutta High Court had already appointed a receiver at the instance of M/s. Bhagwati Developers Pvt. Ltd. (for short, ‘Bhagwati Developers’). In the result, the appeals are dismissed. For their contumacious conduct of suppressing facts from the Calcutta High Court and thereby prolonging the litigation, the appellants and Bhagwati Developers are saddled with cost of Rs.5 lakhs each. The amount of cost shall be deposited by them with the Supreme Court Legal Services Committee within a period of three months. 44. Since the proceedings pending before the Delhi High Court were stayed by this Court, we request the High Court to make an endeavour to dispose of the pending suit as early as possible.


                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 5918   OF 2012
                 (Arising out of SLP (C) No. 11501 of 2009)

Vidur Impex and Traders Pvt. Ltd. and others             … Appellants

                                   versus

Tosh Apartments Pvt. Ltd. and others                          … Respondents


                                    With

                        CIVIL APPEAL NO.5917  OF 2012
                 (Arising out of SLP (C) No. 17156 of 2009)

Bhagwati Developers Pvt. Ltd.                                 … Appellant

                                   versus

Tosh Apartments Pvt. Ltd. and others                          … Respondents


                               J U D G M E N T
G. S. Singhvi, J.

1.    Leave granted.

2.    Whether M/s. Vidur  Impex  and  Traders  Pvt.  Ltd.,  and  five  other
companies (hereinafter described as the appellants), who are  said  to  have
purchased  the  suit  property,  i.e.  21,  Aurangzeb  Road,  New  Delhi  in
violation of the order of injunction passed by the learned Single  Judge  of
the Delhi High Court are  entitled  to  be  impleaded  as  parties  to  Suit
No.425/1993 filed by respondent No.1 – M/s. Tosh  Apartments  Pvt.  Ltd.  is
one of the two questions which arises for  consideration  in  these  appeals
filed against judgment dated 20.2.2009 of the Division Bench  of  the  Delhi
High Court. The other question which  needs  consideration  is  whether  the
Delhi High Court was justified in appointing a receiver with a direction  to
take possession of the suit property despite  the  fact  that  the  Calcutta
High Court had  already  appointed  a  receiver  at  the  instance  of  M/s.
Bhagwati Developers Pvt. Ltd. (for short, ‘Bhagwati Developers’).

3.    The suit property was leased by the Secretary of State  for  India  to
Sidh Nath Khanna and Sukh Nath Khanna sometime in 1930. After 12 years,  the
Governor General in Council sanctioned  the  grant  of  perpetual  lease  in
favour of one of them, namely, Sidh Nath Khanna.  In  the  family  partition
which took place in December 1955, the suit property fell to  the  share  of
Shri Devi Prasad Khanna, who was one of the heirs of Sidh Nath  Khanna.   He
rented out the same to the Sudan Embassy on 12.9.1962. In October 1977,  the
name of respondent No.2-Pradeep Kumar Khanna (son of  Devi  Prasad  Khanna),
who died during the pendency of the litigation before the High Court and  is
represented by his legal representatives, was entered in the records of  the
Ministry of Works and Housing, Land and Development  Office  and  the  lease
was transferred in his name.

4.    In  March  1980,  respondent  No.2  mortgaged  the  suit  property  to
  Shri S.N.  Tondon.   After  5  years,  he  entered  into  a  collaboration
agreement with Shri Arun Kumar Bhatia (respondent No.3) for construction  of
a multi-storied building.  He also executed an agreement for sale in  favour
of respondent No.3.  In November 1987, respondent No.2 took loan  from  Shri
Avtar Singh and created an equitable mortgage in his favour.  On  13.9.1988,
respondent No.2 executed an agreement for sale in favour of respondent  No.1
for a consideration of Rs.2.5 crores.   After  some  time,  respondent  No.3
executed assignment deed dated 13.12.1988  in  favour  of  respondent  No.2.
Simultaneously, the parties cancelled the collaboration agreement.  After  3
months, respondent No.2 mortgaged the suit property in favour of  respondent
No.4.  In 1992, respondent Nos. 2 and 4 entered into  an  agreement  whereby
the latter agreed to provide various services  including  the  one  that  he
will get the suit property vacated from the Sudan Embassy and  for  that  he
will charge Rs.4 crores.

5.    The Sudan Embassy vacated the suit property on  12.5.1992  and  handed
over possession to respondent No.2, who is said  to  have  handed  over  the
same to respondent No.4. On coming to know about the proposed alienation  of
property by respondent No.2, respondent No.1 filed Suit No.425/1993  in  the
Delhi High Court for  specific  performance  of  agreement  for  sale  dated
13.9.1988, award of damages and injunction. It also  filed  IA  No.1947/1993
under Order 39 Rules 1 and 2 CPC. The  learned  Single  Judge  passed  order
dated 18.2.1993 and directed that defendant Nos. 1 and 3 (respondent Nos.  2
and 4 herein) shall not transfer, alienate or part with  possession  in  any
manner or create third party rights in respect of the suit  property.  After
receiving summons, respondent Nos.2 and 4  filed  IA  No.  10730/1993  under
Order 7 Rule 11 for rejection of the plaint on the ground that the same  was
barred by time. The learned Single  Judge  dismissed  the  application  vide
order dated 5.4.1994 and directed that interim order dated  18.2.1993  shall
continue.

6.    On 19.2.1997, respondent  No.2  executed  6  agreements  for  sale  in
favour of the appellants for a total consideration of  Rs.2.88  crores.   In
furtherance  of  those  agreements,  six  sale  deeds  were   executed   and
registered  on  30.5.1997.   In  the  meanwhile,  the  appellants   executed
agreement for sale dated 18.3.1997 in favour of Bhagwati  Developers  for  a
consideration of Rs.4.26 crores and received Rs.3.05 crores.

7.    At that stage, respondent No.1 filed IA No. 8145/1998 for  restraining
respondent Nos.2 and 4 from handing over possession of the suit property  to
any other person. Respondent No.2 contested  the  application  by  asserting
that he had not executed any sale deed in favour of the appellants and  that
possession of the suit property had already been handed over  to  respondent
No.4.  Thereupon, respondent No.1 filed CCP  No.  118/1998  under  Order  39
Rule 2A CPC with  the  allegation  that  the  non-applicants  including  the
appellants herein had entered into a conspiracy for the purpose of  grabbing
the property in violation of the order of  injunction  passed  by  the  High
Court.  The learned Single Judge entertained the contempt  petition  against
respondent Nos. 2 and 4  but  declined  to  do  so  qua  the  appellants  by
observing that no prima facie case had been made out against those who  were
not parties to the suit. Respondent No.1 also filed  IA  No.8146/1998  under
Order 26 Rule 9  read  with  Order  39  Rule  7  and  Section  151  CPC  for
appointment of Local Commissioner and IA No.8147/1998 under Order 40 Rule  1
read with Section  151  CPC  for  appointment  of  a  receiver.   The  Court
Commissioner appointed by the High Court  to  ascertain  whether  respondent
Nos. 2 and 4 were in possession  of  the  suit  property,  submitted  report
dated 10.2.2000  with  the  finding  that  respondent  No.4  was  in  actual
possession.

8.    Respondent  No.2  filed  application  dated  16.12.1998  for  vacating
interim order dated 18.2.1993.  He  pleaded  that  the  agreement  for  sale
executed in favour of respondent No.1 was, in fact,  a  loan  agreement  and
the same was violative of Section 24 read with  Section  23  of  the  Indian
Contract Act, 1872.  He further pleaded that  the  agreement  was  void  and
unenforceable because the requisite permission had not been  obtained  under
Section 269 UC of the Income-Tax Act.  Respondent No.2 also filed  Suit  No.
161/1999 for grant of a declaration that sale deeds executed  in  favour  of
the appellants were fictitious and were not binding on him.  After  about  2
years, Shri Bhupinder Singh, Advocate filed IA No. 255/2001  for  withdrawal
of the suit on the ground that  the  parties  have  amicably  settled  their
dispute. Soon thereafter, the advocate who had instituted  the  suit,  filed
IA  No.1537/2001  for  restoration  of  the  suit  by  asserting   that   IA
No.255/2001 had been filed by an advocate who was not authorised to  do  so.
The learned Single Judge directed that the application be listed only  after
filing of an affidavit by respondent No.2 that he had  not  authorised  Shri
Bhupinder Singh, Advocate to file I.A.  No.255/2001.   Respondent  No.2  did
not file the required affidavit  till  his  death  and  as  a  result,  I.A.
No.1537/2001 is said to be still pending.

9.    Another front of litigation was opened  by  Bhagwati  Developers  with
the allegation that the appellants have failed to execute the sale  deed  in
terms  of  agreement  dated  18.3.1997.   The   dispute   between   Bhagwati
Developers and the appellants was referred to the sole  arbitration  of  Dr.
Debasis Kundu, an Advocate of  the  Calcutta  High  Court.   The  Arbitrator
passed award dated 7.1.1999 and directed the appellants to hand over  vacant
possession of  the  suit  property  along  with  the  building  to  Bhagwati
Developers on or before 31.1.1999 and  also  execute  the  sale  deed  after
securing  requisite  permission  and  no  objection  certificate  from   the
competent authorities.  Simultaneously, Bhagwati Developers was directed  to
pay the balance amount of Rs.1,20,90,000/-.

10.   As the appellants failed  to  act  in  consonance  with  the  arbitral
award, Bhagwati Developers filed an application  under  Section  36  of  the
Arbitration and Conciliation Act, 1996 in the  Calcutta  High  Court,  which
was allowed by the learned Single Judge of that High Court vide order  dated
17.8.2000 and a direction was issued to the appellants to  comply  with  the
arbitral award.  The learned Single Judge also appointed  Shri  Nar  Narayan
Ganguli, Advocate as receiver and directed him to  take  possession  of  the
suit property. When the receiver came to Delhi for execution of  the  award,
respondent No.4 refused to hand over  possession.  Thereupon,  the  Calcutta
High Court directed the police authorities at Delhi to assist  the  receiver
for  ensuring  compliance  of  order  dated  17.8.2000.   Armed  with   that
direction, the receiver visited Delhi on 19.1.2001  and  5.2.2001  and  took
symbolic possession of the suit property by putting locks and seals  on  all
the inner and outer gates.

11.   When the representative of respondent No.1 learnt about the  award  of
the arbitrator and the order passed by the Calcutta High Court, he filed  IA
No.625/2001 in the Delhi High Court under Order 39 Rules 1 and 2  read  with
Section 151 CPC impleading respondent Nos.  2  and  4,  the  appellants  and
Bhagwati Developers as parties and prayed that respondent Nos. 2  and  4  be
restrained from handing over possession of the suit property  and  that  the
appellants be restrained from taking forcible  possession  in  the  garb  of
some order passed by the Calcutta High Court.  The learned Single  Judge  of
the Delhi High Court passed an ex-parte interim order  dated  22.1.2001  and
restrained respondent Nos. 2 and 4 from delivering possession  of  the  suit
property to the appellants  and  also  restrained  the  latter  from  taking
possession.  Bhagwati  Developers  challenged  that  order   in   FAO   (OS)
No.90/2001, which was dismissed by the Division Bench of the High  Court  on
2.3.2001 with liberty to approach the learned Single Judge  for  appropriate
order.

12.   Respondent No.4 also filed IA No. 1211/2001 in the  Delhi  High  Court
for grant of injunction by  alleging  that  an  attempt  is  being  made  to
dispossess him in the garb of an order passed by the  Calcutta  High  Court.
The learned Single Judge passed ex-parte interim order  dated  8.2.2001  and
restrained the appellants, Bhagwati Developers, the  receiver  appointed  by
the  Calcutta  High  Court  and  Delhi  Police  from  interfering  with  the
possession of respondent No.4. Some of the observations made in that  order,
which have bearing on the disposal of these appeals, are extracted below:

           “Quite clearly Respondents No.4 to 9 in  this  application  were
           aware of the fact that Defendant No.1 had filed Suit  No.161/99.
           A mention was made in the plaint in Suit  No.  161/99  that  the
           present suit, that is, Suit No.425/93 was pending in this Court.
           So, Respondents No.4 to in this application were also  aware  of
           the pendency of this suit. It appears that Respondents No.4 to 9
           in this application did not  bother  to  find  out  the  correct
           factual position with regard  to  the  possession  of  the  suit
           property or with regard to the interim  orders  passed  by  this
           Court.

           Well before all this, and apparently expecting Defendant No.1 to
           perform  the  Agreement  to  sell,  these  6  persons  who   are
           Respondents No.4 to  9  in  this  application  entered  into  an
           agreement to sell the suit property to Respondent No.10 in  this
           application.

           There appear to have been some disputes between Respondents No.4
           to 9 in this application and Respondent No.10 in the application
           in respect of the suit property. Since there was an  arbitration
           clause in the agreement between them, they referred  the  matter
           to arbitration. The learned Arbitrator gave an Award  dated  7th
           January, 1999 wherein he directed Respondents No. 4 to 9 in this
           application to hand over peaceful vacant possession of the  suit
           property to Respondent No.10 in this application. No  objections
           appear to have been filed to this Award  with  the  result  that
           Respondent No.10 in this application filed  proceedings  in  the
           Calcutta High Court praying for a direction for the  appointment
           of a Receiver to take physical possession of the suit  property.
           The Calcutta High Court passed an order apparently directing the
           Receiver to take  possession  of  the  suit  property.  On  13th
           December, 2000 the  Calcutta  High  Court  directed  the  police
           authorities to render all assistance to  the  Receiver  to  take
           steps in  accordance  with  the  earlier  order  passed  by  the
           Calcutta High Court.

           When the Receiver  and  the  police  authorities  came  to  take
           possession of the suit property, L.K. Kaul became aware  of  the
           proceedings in the Calcutta High Court.

           It is submitted  that  there  has  been  gross  concealment  and
           misrepresentation of facts by Defendant  No.1  in  the  suit  to
           Respondents No.4 to 9 in this application. There has  also  been
           gross misrepresentation and concealment of fact  by  Respondents
           No.4 to 9 in  this  application  to  Respondent  No.10  in  this
           application. It is also submitted that there  is  also  a  gross
           concealment and, therefore,  a  misrepresentation  of  facts  by
           Respondents No.4 to  10  in  this  application  insofar  as  the
           learned Arbitrator is concerned. Consequently,  there  has  also
           been a gross concealment and, therefore, a misrepresentation  of
           the facts so far as Calcutta High  Court  is  concerned.  It  is
           submitted that had all these facts been brought to the notice of
           the concerned parties as well as to the learned  Arbitrator  and
           the Calcutta High Court, there would have been  no  question  of
           any appointment of a Receiver in violation of the orders  passed
           by this Court on 18th February, 1993 read with order dated  31st
           January, 2000.

           I am prima facie satisfied that Defendant No.1  and  Respondents
           No.4 to 10 in this application are playing a cat and mouse  game
           with this Court.  There  has  been  a  serious  concealment  and
           misrepresentation of facts by Defendant No.1 in this suit. There
           has also been a serious  concealment  and  misrepresentation  of
           facts by Respondents No.4 to 9 in this  application  insofar  as
           Respondent No.10 in this application is  concerned.  Respondents
           No.4 to 10 are at fault in not  finding  out  what  the  correct
           facts are and making necessary enquiries in  this  regard.  They
           appear to have deliberately misled the  learned  Arbitrator  and
           the Calcutta High Court.”

                                        (emphasis supplied)


13.   Respondent No.4 filed  another  application  (IA  No.  9576/2001)  for
restraining the appellants  from  executing  the  sale  deed  in  favour  of
Bhagwati Developers. The learned Single Judge  entertained  the  application
and passed interim order in terms of the prayer made.  The  same  respondent
filed an application in EC  No.10/2000  pending  before  the  Calcutta  High
Court and brought to the notice of that High  Court,  order  dated  8.2.2001
passed  by  the  Delhi  High  Court  in  Suit  No.  425/1993.  After  taking
cognizance of the rival submissions, the learned Judge of the Calcutta  High
Court passed order dated 15.2.2001 and made it clear that the  order  passed
by that Court will be subject to the order which may be passed by the  Delhi
High Court. The relevant portions of that order are reproduced below:

           “The facts remain that these facts were neither disclosed to the
           decree-holder nor to the Arbitrator and this  question  was  not
           necessary to be gone into while executing  the  decree  and,  as
           such, it was also not placed before this Court  and  this  Court
           having not been apprised of such facts had passed an  order  for
           taking over possession of  the  property.  In  the  order  dated
           8.2.2001 the Delhi High Court had taken a note of this position.
           Be that as it may, it is not necessary to make  any  observation
           with regard to the findings made therein,  nor  this  Court  can
           comment on the order passed by another Court on the basis of the
           materials placed before it. But it appears that there  is  every
           possibility of conflicting orders being passed in respect of the
           self-same properties  between  the  parties  or  those  claiming
           through one or the other of them by two  High  Courts.  Judicial
           propriety demands that the court should maintain its decorum and
           dignity and should not pass any order which will lie in conflict
           with each other. It is the parties who may fight each other  but
           not the Courts. If some order is passed,  it  is  expected  that
           another Court should pay proper  regards  and  respect  to  such
           order. Since it  is  pointed  out  that  these  facts  were  not
           disclosed before this Court, therefore what would have been  the
           effect if these facts would  have  been  disclosed  before  this
           Court is a question which cannot now be  presumed,  but  in  all
           probabilities it sees that if these facts were disclosed  before
           this Court, this Court might have been slow in passing the order
           that had been passed earlier. Therefore,  the  order  passed  by
           this Court, if it is in conflict with the order  passed  by  the
           Delhi High Court, the same shall always be subject to the  order
           that might be passed by the Delhi High Court.

           Since Delhi High Court has also passed an order by which certain
           direction was given to the Receiver  appointed  by  this  Court,
           therefore, it is no more necessary to pass any further order. In
           my view, the decree-holder in this proceedings who is  added  as
           Defendant No.10 in the Delhi High Court suit should approach the
           Delhi High Court for obtaining the appropriate orders if  he  is
           so advised. If there is a conflict of decree which might  affect
           a proceeding in another High Court, in that event the  same  has
           to be thrashed out in an  appropriate  proceeding.  It  is  very
           difficult to enter into such question in an execution proceeding
           unless such question be raised in a proceeding under  Order  XXI
           Rule 97 C.P.C. From the records  of  this  Court,  it  does  not
           appear that any such application under Order  XXI  Rule  97  has
           ever been made in order  to  enable  the  parties  to  resisting
           possession in execution of the decree, so that they  would  have
           an opportunity to place their cases about the  executability  of
           the decree against them.”

                                              (emphasis supplied)


14.         Thereafter, Bhagwati Developers filed IA No. 2268/2003  in  Suit
No.425/1993 pending before the Delhi High Court with  the  prayer  that  the
receiver appointed by the Calcutta  High  Court  be  continued.   Respondent
No.1, who had already filed IA No.8147/1998  for  appointment  of  receiver,
contested the application of Bhagwati Developers by asserting  that  it  had
no locus standi in the matter because the agreement by  which  it  purchased
the property from the appellants was fraudulent in nature.  Respondent  No.1
also reiterated its prayer for appointment of a receiver by the  Delhi  High
Court by contending that respondent No.4 was a ranked trespasser  and  there
was every possibility of his entering into clandestine deals and  alienating
the property.  On his part, respondent No.4 pleaded that his possession  was
lawful because respondent No.2 had put him in possession in  furtherance  of
the agreement executed in 1992.

15.         At this stage, we may mention that respondent  No.4  also  filed
IA No.7373/2006 in Suit No.425/1993 for grant of leave to amend the  written
statement by incorporating the fact that respondent No.2 had agreed  to  pay
Rs.4 crores as service charges for getting the  property  vacated  from  the
Sudan Embassy with a stipulation that in the event  of  non-payment  of  the
amount, vacant and peaceful possession of the suit property will  be  handed
over to him; that even though he got the property  vacated  from  the  Sudan
Embassy, respondent No.2 did not pay the amount and handed  over  possession
of the property as security for  the  same.  Respondent  No.4  claimed  that
these facts could not be incorporated  in  the  original  written  statement
because his earlier lawyer thought that the  same  were  not  necessary  for
deciding the suit filed by respondent  No.1  for  specific  performance  and
permanent injunction. Respondent No.4 also sought incorporation of the  fact
that the property had been mortgaged to him and he was in  possession  as  a
mortgagee. Respondent No.1 opposed the prayer  for  amendment  by  asserting
that respondent No.4 was seeking to make out a new case which  was  contrary
to the defence set up in the original written statement.

16.         By an order dated 3.9.2007, the  learned  Single  Judge  of  the
Delhi High Court dismissed  IA  No.  2268/2003  and  IA  No.  7373/2006  and
allowed IA No.8147/1998. He  first  considered  the  applications  filed  by
respondent No.1 and Bhagwati Developers in  the  matter  of  appointment  of
receiver and held:

      “26.  Undoubtedly  the  initial  agreement  to  sell  is  between  the
      plaintiff and defendant No.l (since deceased) now being represented by
      his legal heirs. However, yet another  agreement  to  sell  come  into
      existence on 18th March,  1977  between  Bhagwati  Developers  Private
      Limited and respondents 4 to 9 by which 6 companies agreed to sell the
      said property in favour of Bhagwati Developers with arbitration clause
      contained in the agreement and that dispute shall be  subject  to  the
      jurisdiction of Calcutta High Court. The Court fails to understand  as
      to how the dispute relating to immovable property which is situated in
      Delhi could be taken to Calcutta for adjudication  by  completing  bye
      passing the provisions of Section 16 of the Code of  Civil  Procedure.
      It is also evident on record that defendant No. 3 who is currently  in
      possession does not enjoy the status either of licensee or  of  lessee
      nor he is there any other capacity with the consent of either  of  the
      parties. He is simply holding over the possession once open a time  he
      was given the task of getting of Sudan  Embassy  vacated.  This  Court
      really wonder about  the  sanctity  of  such  kind  of  agreements  as
      executed  between  the  plaintiff  and  defendant  No.3  and   between
      defendant No.l and defendant No. 3 for  the  purpose  of  getting  the
      Sudan Embassy vacated. Rent Control laws seem to have been  thrown  to
      the winds. Task is taken by individual to  get  the  premises  vacated
      from Sudan Embassy and that too for consideration. I am afraid if such
      an agreement has a legal sanctity. That being  so  the  possession  of
      defendant No.3 cannot be termed as legal in the suit property.  If  at
      all his services charges were not paid he has the legal remedy  either
      with the plaintiff or defendant No.l. Under no law he can be permitted
      to retain the possession of the property. Therefore in any case he has
      to go out of the property he  being  stranger  to  the  suit  property
      having no title or interest of any nature.  Learned  counsel  for  the
      plaintiff  has  also  been  able  to  establish  by  way  of   various
      authorities referred to above that it is a  fit  case  where  Receiver
      should be appointed for the management of the property who can  manage
      the affairs of the suit property under the supervision of the Court as
      there is every likelihood that in the eventuality  of  not  appointing
      the Receiver there is strong likelihood of the property being  usurped
      in a clandestine manner so as to frustrate the claims of the  rightful
      claimant. Even otherwise not appointing the Receiver at this  juncture
      might lead to multifarious litigation.


      27.   Therefore in order to prevent all these wrongs and further
      damage and waste to the property, appointment of Receiver
      has become essential so as to preserve the property.
      Therefore, Sh. Rajesh Gupta, Advocate is hereby appointed as
      Receiver. His fee is fixed at Rs.50,000/- initially subject to
      revision, depending on the quantum of work he might have to
      undertake while acting as Receiver to be paid by the plaintiff.
      He will manage the affairs of the suit property by removing
      defendant No.3 from the suit property. If need arise, he may
      take the assistance of the police to thwart any resistance and
      also may break open the locks of the property and make an
      inventory of the goods lying therein. If he required to do any
      work in respect of the property like maintenance, he shall seek
      prior permission from the Court. This application is accordingly
      allowed.


      28.   This order shall also take care of the application of
      Bhagwati Developers Pvt. Ltd. proposed defendant No. 10
      wherein while treating the possession of defendant No.3 as
      unlawful possession in the suit property has sought directions
      from this court that the Receiver appointed by the High Court
      of Calcutta be continued and the possession of the property be
      handed over to him who should retain the property in his
      possession as in the capacity of Receiver. I may state that
      when the matter was taken to Calcutta High Court between six
      alleged transferees and Bhagwati Developers Pvt. Ltd., the
      Calcutta High Court in its order dated  13th  February,  2001  clearly
      indicated that the decree passed by the Calcutta High Court  if  comes
      in conflict with the order passed by Delhi High Court, the same  shall
      always be subject to the order that might be passed by the Delhi  High
      Court.

      29.   In  view  of  the  fact  that  this  court  while  allowing  the
      application of the plaintiff has appointed Receiver for  managing  the
      control and supervision of the property in  question.  Therefore,  the
      order passed by the Calcutta High Court appointing Receiver has to  be
      kept in abeyance as Calcutta High Court itself stated that decision of
      Delhi High Court shall have precedence over their decision. This being
      so, plea of the proposed defendant No. 10 that Receiver  so  appointed
      by Calcutta High Court should continue, cannot be accepted.”




    The learned Single  Judge  then  considered  the  application  filed  by
respondent No.4 for amendment of the written  statement  and  dismissed  the
same by recording the following observations:

      “True, law of amendment is quite liberal and Courts ordinarily permits
      amendment provided such amendments are not mischievous in nature  with
      a view to delay the legal proceedings and setting up entirely new case
      than the one pleaded earlier but in this case, I may say that  written
      statement was filed way back in 1993 and good  number  of  years  have
      passed, but it never struck  the  defendant  to  make  such  amendment
      simply  by  putting  the  blame  on  earlier  lawyer.  Even  otherwise
      amendment which is sought to be made was well within the knowledge  of
      defendant  No.  3.  During  all  these  years  when  proceedings  were
      continuing that he was being termed as trespasser. What prevented  him
      to explain his true position at the earliest is not explained at  all.
      To me it seems that when arguments were being heard  and  the  counsel
      for the parties put up their respective claims then it has struck  the
      mind of defendant No. 3 to apply for such amendment as it  might  work
      to his advantages. If at all he was in possession because of defendant
      No.l's consent he should have pleaded so at the earliest. Such belated
      amendment which is otherwise totally inconsistent to the  stand  taken
      earlier in the written statement cannot be allowed as in that case  it
      would amount to take the case back to the year 1993 when the suit  was
      filed. Therefore this application has  no  merit,  it  being  full  of
      malice, the same is dismissed.”


 After about 11 years of the execution  of  agreements  for  sale  in  their
favour by respondent No.2, the appellants filed IA No.1861/2008 under  Order
1 Rule 10(2) CPC for impleadment as defendants in Suit  No.  425/1993.  They
pleaded that by virtue of  the  agreements  for  sale  and  the  sale  deeds
executed by respondent No.2, they have become absolute owners  of  the  suit
property and, as such, they are entitled to be impleaded  as  defendants  in
the suit  filed  by  respondent  No.1.   The  appellants  also  invoked  the
doctrine of lis pendens embodied in Section 52 of the Transfer  of  Property
Act, 1882  and  pleaded  that  having  purchased  the  property  during  the
pendency of the suit by respondent No.1, they have  acquired  the  right  to
contest the same. The appellants relied upon the orders passed by the  Delhi
High Court in IA  Nos.  625/2001,  1211/2001  and  9576/2001  to  show  that
respondent No.1 was very much aware of the agreements for sale and the  sale
deeds executed  in  their  favour  by  respondent  No.2  and  the  agreement
executed by them in favour of Bhagwati Developers and pleaded  that  it  was
the duty of respondent No.1 to have suo motu impleaded them  as  parties  to
the suit. In the reply filed on behalf of respondent No.1,  it  was  pleaded
that the suit for specific performance had  been  filed  because  respondent
No.2 did not execute the sale deed in  furtherance  of  agreement  for  sale
dated 13.9.1988 and the appellants who are not parties to that agreement  do
not have the locus to contest the suit.   Respondent  No.1  also  raised  an
objection of delay by asserting that the appellants had  sought  impleadment
after 11 years  of  having  entered  into  a  clandestine  transaction  with
respondent No.2. Respondent  No.  1  relied  upon  orders  dated  22.1.2001,
24.1.2001 and 8.2.2001 passed by the Delhi High Court and Suit No.  161/1999
field by respondent No.2 for grant of a  declaration  that  the  sale  deeds
allegedly executed in favour of the appellants were forged  and  fabricated,
to show that the appellants were very much aware  of  Suit  No.425/1993  and
pleaded that their assertion about lack of knowledge was false because  they
had been contesting Suit No.161/1999 for almost 7 years. Another plea  taken
by  respondent  No.1  was  that  the  transactions  entered   into   between
respondent No.2, the  appellants  and  Bhagwati  Developers  were  ex  facie
illegal and on the  basis  of  such  transactions  the  appellants  did  not
acquire any right or interest in the suit property.

The learned Single  Judge  dismissed  IA  No.  1861/2008  vide  order  dated
26.5.2008, relevant extracts of which are reproduced below:

      “The cumulative sequence of events noticed above leads this  Court  to
      conclude that the vendor P.K. Khanna allegedly sold the properties  in
      1997. The applicants also claim as such. They  were  aware  about  the
      existence of this suit if not in 1999 at least from 2001 onwards, when
      they were made parties in an application and subject to an injunction.
      Their conduct in approaching, for impleadment, now seven years  later,
      cannot be countenanced. That apart, as held in  Kasturi's  case  their
      impleadment would completely alter the nature of the  suit  which  was
      instituted in 1993 for specific performance of a contract, of 1988.


      There is no whisper of leave having been obtained by their vendor,  to
      this transaction. The record shows  that  the  vendor  was  admittedly
      restrained by an injunction from parting with possession  or  creating
      third party rights in respect of the suit property, on 18th  February,
      1993.  That  order  was  subsequently  confirmed  after  hearing   the
      vendor/P.K. Khanna i.e. first defendant on 5th April, 1994. In view of
      the principles spelt out in Bibi  Zubaida  Khatoon  and  Surjit  Singh
      accepting this application  would  defeat  the  ends  of  justice  and
      undermine public policy.”





20.   Bhagwati Developers challenged order dated 3.9.2007 in  FAO  (OS)  No.
514 of 2007. Respondent No.4 also challenged that order in FAO (OS) No.  400
of 2007. The appellants questioned order dated 26.5.2008  in  FAO  (OS)  No.
324 of 2008. The Division Bench of the High Court dismissed all the  appeals
and approved the orders passed by the learned  Single  Judge.  The  Division
Bench referred to order dated 15.2.2001 passed by the  Calcutta  High  Court
and the judgments in Surjit Singh v. Harbans Singh (1995) 6 SCC 50,  Jayaram
Mudaliar v. Ayyaswamia & Ors. (1972) 2 SCC 200, Rajender  Singh  &  Ors.  v.
Santa Singh & Ors. (1973) 2 SCC 705, Joginder Singh Bedi v. Sardar  Singh  &
Ors. 26 (1984) DLT 162 Del (DB) and Sanjay Gupta v. Kalawati &  Ors.  (1992)
53 DRJ 653  and  held  that  the  learned  Single  Judge  was  justified  in
appointing a receiver for protecting the suit  property  because  respondent
No.2 had flouted the injunction order with impunity and if the receiver  was
not appointed there was every possibility of further alienation of the  suit
property. Paragraph 26 of the impugned judgment in which the Division  Bench
of the High  Court  enumerated  the  factors  necessitating  appointment  of
receiver by the learned Single Judge and paragraph 33 are  extracted  below:


      “26.  Following developments and circumstances  in  this  behalf  need
      mention and/or reiteration:

      a) The suit filed by the plaintiff is predicated on agreement to  sell
         dated 13.9.1988 purportedly executed in its favour by the defendant
         No.l, owner of the suit property, which is earliest transaction  in
         point of time.

      b) Suit, on this basis, filed in April 1993  is  also  earliest  legal
         proceeding instituted by the plaintiff.  In this suit,  ad  interim
         injunction dated 18.2.1993 was passed restraining defendant Nos.1 &
         3 from transferring, alienating or parting with possession  of  the
         suit property in any manner or creating third party rights therein.

      c) The plaintiff also filed another IA No.9154/1993 seeking  restraint
         against the defendant No.l as well as defendant No.3 from  changing
         the nature of the  suit  property  by  making  structural  changes,
         additions or alterations therein. In this application  orders  were
         passed directing them not to carry out  any  structural  additions,
         alterations and  permitted  only  the  renovations  like  painting,
         polishing of the suit property.

      d) In spite of the restraint order dated 18.2.1993, the defendant No.l
         allegedly transferred the suit property by executing purported  six
         sale deeds on 28.5.1997 in favour of  Vidur  Impex  &  Traders  and
         others.


            It is the  submission  of  learned  counsel  appearing  for  the
      plaintiff that intentionally six  sale  deeds  were  executed  showing
      consideration of Rs.48 lacs each keeping the same below the prescribed
      limit of Rs.50 lacs with a fraudulent intent to avoid the  application
      of Chapter XX-C of the Income-Tax Act.


      (e)   On coming to know of the aforesaid sale
      transactions, the plaintiff filed application under Order
      XXXIX Rule 1 & 2 CPC for restraining the defendant
      Nos.1 & 2 from transferring possession of the suit
      property to the said six transferees under the alleged
      six sale deeds. Restraint order to this effect was passed
      by the learned Single Judge. Further orders were
      passed restraining these six transferees (defendant
      No.s 4 to 9) from acting upon the impugned sale
      deeds.


      (f)   Defendant No.l in his reply took the stand that
      impugned sale deeds were forged and fabricated and
      were not executed by him. He even filed suit No.
      161/1999 for declaration to this effect. However, this
      suit was withdrawn on 10.1.2001 vide application IA
      No. 255/2001 purported to have been moved by him
      through Shri Bhupinder Singh, Advocate, on the
      statement of Advocate without the presence of the
      defendant No.l or his statement. Thereafter, IA No.1537/2001 was moved
      by the defendant No.l stating that he had not authorized  any  counsel
      to make an application for  withdrawal  of  the  suit  and  the  whole
      proceedings were collusive, fraudulent and that  he  had  not  entered
      into   any    compromise    with    the    said    six    transferees.
                                                     Though   we   are   not
      concerned with these proceedings, this fact is mentioned to  highlight
      the manner in which the transactions are taking place, that too in the
      teeth  of  injunction  order  passed  in  Suit  No.425/1993  and   the
      vacillating attitude of the defendant No.l (since deceased).


      (g) Though there was restraint order against defendant Nos.  4  to  9,
      i.e. Vidur Impex & Traders and others, not to act  upon  the  impugned
      sale deeds, they entered into agreement dated 18.3.1997  for  transfer
      of their purported rights and interest in the suit property in  favour
      of  Bhagwati  Developers.  This  agreement  contained  an  arbitration
      clause, on the basis of which the Arbitrator was appointed and consent
      award passed. Again, without commenting upon the validity or otherwise
      of  such  proceedings,  which  would  naturally  be  thrashed  out  in
      appropriate proceedings, suffice it to state was  that  all  this  was
      happening in violation of the injunction order passed in  the  instant
      suit. Attempt was made to get the Receiver appointed from the Calcutta
      High   Court   and   take   possession   of   the    suit    property.


      33. In this behalf, we agree  with  the  submission  of  Mr.  Singhvi,
      learned senior counsel for the plaintiff, that in a suit for  specific
      performance, the court has ample power and jurisdiction to  appoint  a
      receiver, in Kerr on Receivers 16th  Edition (on page 58), it has been
      laid down that if a fair prima facie case for the specific performance
      of a contract is made to appear, the court may interfere  upon  motion
      and appoint receiver. In Foot Note No. 37, reference has been made  to
      case law including C. Kennedy v. Lee (1870)  3  MER  441,  M.  cloudy.
      Phelp  (1838)  2  JUR  962.  The  appointment  may  be  made  in  such
      circumstances before the order for  a  sale  is  made  absolute.  (Re:
      Stephard, (1892) 31 IR 95).”




 The Division Bench approved the rejection of  the  appellants’  prayer  for
impleadment as  parties  in  Suit  No.  425/1993  by  observing  that  after
executing the agreement for sale in favour of Bhagwati  Developers  they  do
not have any subsisting interest in the property.  The Division  Bench  also
agreed with the learned Single Judge  that  the  application  filed  by  the
appellants lacked bona fides because they purchased the suit  property  from
respondent No.2 despite the order of injunction passed  by  the  High  Court
and there was no tangible explanation for filing  the  application  after  a
long time gap of about 8 years.

Learned senior counsel for the appellants emphasised that his  clients  were
not aware of the agreement for sale executed by respondent  No.2  in  favour
of  respondent  No.1,  the  suit  for  specific  performance  and  permanent
injunction filed by respondent No.1 in the Delhi High Court  and  injunction
order dated 18.2.1993 till January,  2001  when  the  learned  Single  Judge
restrained respondent Nos.2 and 4 from transferring possession of  the  suit
property to the  appellants,  and  argued  that  the  High  Court  committed
serious error by declining their prayer for impleadment as  parties  to  the
suit. He  submitted  that  the  appellants  are  bona  fide  purchasers  for
consideration and are entitled to  contest  the  suit  filed  by  respondent
No.1, else their right in the suit property will  get  jeopardized.  Learned
senior counsel then argued that the  agreement  for  sale  executed  by  the
appellants in favour of Bhagwati Developers did not result in alienation  of
the suit property and the High Court committed an error in holding that  the
appellants had no subsisting right in the subject matter of  the  suit.   He
relied upon the judgments of this Court in Nagubai Ammal v. B Shama Rao  AIR
1956 SC 593, Khemchand S. Choudhari  v.  Vishnu  Hari  (1983)  1  SCC  18  ,
Savitri Devi v. DJ, Gorakhpur (1999) 2  SCC  577,  Kasturi  v.  Iyyamperumal
(2005) 6 SCC 733, Amit Kumar Shaw v.  Farida  Khatoon  (2005)  11  SCC  403,
Mumbai International Airport (P)  Ltd.  v.  Regency  Convention  Centre  and
Hotels (P) Ltd. (2010) 7 SCC 417 and Vinod Seth v. Devinder Bajaj  (2010)  8
SCC 1, and argued that respondent No.1 should be  directed  to  implead  the
appellants as parties to the suit because their  rights  will  be  adversely
affected if a decree is  passed  in  favour  of  respondent  No.1.   Learned
senior counsel submitted that impleadment of the appellants will enable  the
Court to comprehensively decide all the issues and  will  also  obviate  the
necessity of further litigation in the matter.

Learned senior  counsel  appearing  for  Bhagawati  Developers  invoked  the
doctrine of comity of jurisdiction of the Courts and argued that in view  of
the order passed by the Calcutta High Court for appointment of receiver  who
had already taken possession of the suit  property,  the  Delhi  High  Court
should have refrained from exercising its power to appoint receiver  with  a
direction to him to take over the property.

Learned senior counsel for respondent  No.  1  relied  on  Surjit  Singh  v.
Harbans Singh (supra) and argued that the appellants are  neither  necessary
nor proper parties because the  agreements  for  sale  and  the  sale  deeds
executed by respondent No.2 in their favour had no legal sanctity.   Learned
senior counsel submitted that the alienation of suit property by  respondent
No.2 in violation of the injunction granted by  the  Delhi  High  Court  was
nullity and such a transaction did not create any right  in  favour  of  the
appellants or Bhagwati Developers so as  to  entitle  them  to  contest  the
litigation pending between respondent Nos.1 and 2.  Learned  senior  counsel
submitted that in a suit for specific performance, any transfer which  takes
place in violation of an injunction granted by the Court  would  be  hit  by
the doctrine of lis pendens enshrined in  Section  52  of  the  Transfer  of
Property Act, 1882. Learned senior counsel further  submitted  that  on  the
date of filing IA No.1861/2008 the appellants did not  have  any  subsisting
interest  in  the  suit  property  because  they  had  already  executed  an
agreement  for  sale  in  favour  of  Bhagwati   Developers   and   received
substantial part of the consideration and the mere fact that they were  made
parties in the interlocutory applications filed before the Delhi High  Court
cannot entitle them to seek impleadment as defendants in the  pending  suit.
Learned senior counsel then argued  that  the  agreement  to  sell  executed
between  the  appellants  and  Bhagwati  Developers  and   the   proceedings
instituted before the Calcutta High Court were collusive and fraudulent  and
the appellants and Bhagwati Developers cannot  take  benefit  of  the  order
passed by that Court. He emphasized that  even  though  the  appellants  and
Bhagwati Developers had knowledge of the suit pending before the Delhi  High
Court, they deliberately suppressed this fact from the Calcutta  High  Court
and succeeded in persuading  the  Court  to  appoint  an  arbitrator  and  a
receiver. Learned senior counsel submitted that the doctrine  of  comity  of
jurisdictions cannot be invoked by Bhagwati  Developers  because  the  Delhi
High Court was already seized of the matter and  the  application  filed  by
respondent No.1 for appointment of receiver was pending since 1998.  Learned
senior counsel lastly argued that the Delhi High Court did  not  commit  any
error by appointing a receiver because respondent Nos.2, 4,  the  appellants
and Bhagwati Developers tried to grab the suit  property  by  entering  into
clandestine transactions.

We  have  considered  the  respective  arguments/submissions.    The   first
question that requires determination is whether the appellants are  entitled
to be impleaded as parties in Suit No. 425/1993 on the  ground  that  during
the pendency of the suit they had purchased  the  property  from  respondent
No.2.  Order 1 Rule 10(2) CPC which empowers the  Court  to  delete  or  add
parties       to        the        suit        reads        as        under:


      “10 (2) Court 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.”


In Ramesh Hirachand Kundanmal v. Municipal  Corporation  of  Greater  Bombay
(1992) 2 SCC 524, this Court interpreted the aforesaid provision  and  held:



      “Sub-rule (2) of Rule 10 gives a wide discretion to the Court to  meet
      every case of defect of parties and is not affected by the inaction of
      the plaintiff to bring the necessary parties on record.  The  question
      of impleadment of a party has to be decided on the touchstone of Order
      1 Rule 10 which provides that only a necessary or a proper  party  may
      be added. A necessary party is one without whom no order can  be  made
      effectively. A proper party is one in whose absence an effective order
      can be made but whose presence is necessary for a complete  and  final
      decision on the question involved in the proceeding. The  addition  of
      parties is generally not a question of  initial  jurisdiction  of  the
      Court but of a judicial discretion which has to be exercised  in  view
      of all the facts and circumstances of a particular case.”

                                        (emphasis supplied)



27.   In Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC 147, this Court
interpreted Order 1 Rule 10(2) in the following manner:

      “By operation of the above-quoted rule though the court may have power
      to strike out the name of a party improperly joined  or  add  a  party
      either on application or without application of either party, but  the
      condition precedent is that the  court  must  be  satisfied  that  the
      presence of the party to be added, would  be  necessary  in  order  to
      enable the court to effectually and  completely  adjudicate  upon  and
      settle all questions involved in the suit. To bring a person as party-
      defendant is not a substantive right but  one  of  procedure  and  the
      court has discretion in its proper exercise. The object of the rule is
      to bring on record all the persons who  are  parties  to  the  dispute
      relating to the subject-matter so that the dispute may  be  determined
      in  their  presence  at  the  same  time  without   any   protraction,
      inconvenience and to avoid multiplicity of proceedings.”

28.   In Mumbai International Airport (P) Ltd. v. Regency Convention  Centre
and Hotels (P) Ltd. (supra), this Court considered  the  scope  of  Order  1
Rule 10(2) CPC and observed:
      “ The general rule in regard to impleadment of  parties  is  that  the
      plaintiff in a suit, being  dominus  litis,  may  choose  the  persons
      against whom he wishes to litigate and cannot be compelled  to  sue  a
      person against whom he does  not  seek  any  relief.  Consequently,  a
      person who is not a party has no right to  be  impleaded  against  the
      wishes of the plaintiff. But this  general  rule  is  subject  to  the
      provisions of Order 1 Rule 10(2) of the Code of Civil Procedure  (“the
      Code”, for  short),  which  provides  for  impleadment  of  proper  or
      necessary   parties.   The   said   sub-rule   is   extracted   below:


      “10. (2) Court 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.”


      The said provision makes it clear that a court may, at  any  stage  of
      the proceedings (including suits  for  specific  performance),  either
      upon or even without any application, and on such terms as may  appear
      to it to be just, direct that any of  the  following  persons  may  be
      added as a party: (a) any person who ought  to  have  been  joined  as
      plaintiff or defendant,  but  not  added;  or  (b)  any  person  whose
      presence before the court may be necessary  in  order  to  enable  the
      court to effectively and completely adjudicate  upon  and  settle  the
      questions involved in the suit. In  short,  the  court  is  given  the
      discretion to add as a  party,  any  person  who  is  found  to  be  a
      necessary party or proper party.
      A “necessary party” is a person who ought to have  been  joined  as  a
      party and in whose absence no effective decree could be passed at  all
      by the court. If a “necessary party” is not impleaded, the suit itself
      is liable to be dismissed. A “proper party” is a party who, though not
      a necessary party, is a person whose presence would enable  the  court
      to completely, effectively and adequately adjudicate upon all  matters
      in dispute in the suit, though he need not be a person in favour of or
      against whom the decree is to be made. If a person is not found to  be
      a proper or necessary party, the court has no jurisdiction to  implead
      him, against the wishes of the plaintiff. The fact that  a  person  is
      likely to secure a right/interest in a suit property, after  the  suit
      is decided  against  the  plaintiff,  will  not  make  such  person  a
      necessary  party  or  a  proper  party  to  the  suit   for   specific
      performance.


      Let us consider the  scope  and  ambit  of  Order  1  Rule  10(2)  CPC
      regarding striking out or adding parties. The  said  sub-rule  is  not
      about the right of a non-party to be impleaded as a party,  but  about
      the judicial discretion of the court to strike out or add  parties  at
      any stage of a proceeding. The discretion under the  sub-rule  can  be
      exercised either suo motu or on the application of  the  plaintiff  or
      the defendant, or on an application of a person who is not a party  to
      the suit. The court can strike out any party who is improperly joined.
      The court can add anyone as a plaintiff or as a defendant if it  finds
      that he is a  necessary  party  or  proper  party.  Such  deletion  or
      addition can be without any conditions or subject to such terms as the
      court deems fit to impose. In exercising its judicial discretion under
      Order 1 Rule 10(2) of the Code, the court will of course act according
      to reason and fair play and not according to whims and caprice.”
                                                         (emphasis supplied)

29.    In  Kasturi  v.  Iyyamperumal  (supra),  this  Court  considered  the
question  whether  a  person  who  sets  up  independent  title  and  claims
possession of the suit property is entitled to be impleaded as  party  to  a
suit  for  specific  performance  of  contract  entered  into  between   the
plaintiff and the defendant.  In that case,  the  trial  Court  allowed  the
application for impleadment on the ground that respondent Nos.1 and 4 to  11
were  claiming  title  and  possession  of  the  contracted  property   and,
therefore, they will be deemed  to  have  direct  interest  in  the  subject
matter of the suit.  The High Court dismissed  the  revision  filed  by  the
appellant and confirmed the order of the trial Court.   While  allowing  the
appeal and setting aside the orders of the trial Court and the  High  Court,
this  Court  referred  to   Order   1   Rule   10(2)   CPC   and   observed:

      “In our view, a bare reading of this provision, namely, second part of
      Order 1 Rule 10 sub-rule (2) CPC would clearly show that the necessary
      parties in a suit for specific performance of a contract for sale  are
      the parties  to  the  contract  or  if  they  are  dead,  their  legal
      representatives as also a person  who  had  purchased  the  contracted
      property from the vendor. In equity as well as in  law,  the  contract
      constitutes rights and also regulates the liabilities of the  parties.
      A purchaser is a necessary party as he would be  affected  if  he  had
      purchased with or without notice of the contract,  but  a  person  who
      claims adversely to the claim of a vendor is, however, not a necessary
      party. From the above, it is now  clear  that  two  tests  are  to  be
      satisfied for determining the question who is a necessary party. Tests
      are — (1) there must be a right to some relief against such  party  in
      respect of the controversies  involved  in  the  proceedings;  (2)  no
      effective decree can be passed in the absence of such party.


      As noted hereinearlier, two tests are  required  to  be  satisfied  to
      determine the question who is a necessary party, let us  now  consider
      who is a proper party in a suit for specific performance of a contract
      for sale. For deciding the question who is a proper party  in  a  suit
      for specific performance the guiding principle is that the presence of
      such a party is necessary to adjudicate the controversies involved  in
      the suit for specific performance of the contract for sale. Thus,  the
      question is to be decided keeping in mind the scope of the  suit.  The
      question that is to be decided in a suit for specific  performance  of
      the contract for sale is to the enforceability of the contract entered
      into between 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 made the following observations:


      “It is not  disputed  that,  generally,  to  a  bill  for  a  specific
      performance of a contract of sale, the parties to  the  contract  only
      are the proper parties; and, when the ground of  the  jurisdiction  of
      Courts of Equity in suits of that kind  is  considered  it  could  not
      properly be otherwise. The Court assumes jurisdiction in  such  cases,
      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 at 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  be
      placed in. It is obvious that persons, strangers to the contract, and,
      therefore,  neither  entitled  to  the  right,  nor  subject  to   the
      liabilities which arise  out  of  it,  are  as  much  strangers  to  a
      proceeding to enforce the execution of it as they are to a  proceeding
      to recover damages for the breach of it.”


      The aforesaid decision in Tasker was noted with approval in De Hoghton
      v. Mone. Turner, L.J. observed:


      “Here again his case is met by Tasker in which case it was  distinctly
      laid down that a purchaser cannot, before his contract is carried into
      effect, enforce against strangers to the contract  equities  attaching
      to the property, a rule which, as it seems to me, is well  founded  in
      principle, for if it were otherwise, this Court might be  called  upon
      to adjudicate upon questions which might  never  arise,  as  it  might
      appear that the contract either ought not  to  be,  or  could  not  be
      performed.”
                                                         (emphasis supplied)

           30.   In Amit Kumar Shaw v. Farida Khatoon  (supra),  this  Court
examined the correctness of the order passed  by  the  Calcutta  High  Court
which had approved the dismissal of the application filed by the  appellants
for impleadment as parties to the suit filed by the  original  owner  Khetra
Mohan Das and the transferees, namely, Birendra Nath Dey  and  Smt.  Kalyani
Dey.  One Fakir Mohammad claimed right,  title  and  interest  in  the  suit
property by adverse possession.  The suit was decreed by  the  trial  Court.
On appeal, the same was remanded for fresh adjudication of the claim of  the
parties.  Fakir Mohammad challenged  the  order  of  remand  by  filing  two
second appeals.  During the pendency  of  the  appeals,  Birendra  Nath  Dey
assigned leasehold interest in respect of a portion of the suit property  to
the appellants.  Smt. Kalyani  Dey  sold  the  other  portion  of  the  suit
property to the appellants.   When  the  appellants  applied  for  recording
their names in the municipal records, they came to know about  the  pendency
of the appeals.  Immediately  thereafter,  they  filed  an  application  for
impleadment which was rejected by the High Court.  This  Court  referred  to
the provision of Order 1 Rule 10(2)  and  Order  22  Rule  10  CPC  as  also
Section 52 of the Transfer of Property Act, 1882 and observed:
      “Section 52 of the Transfer of Property Act is an  expression  of  the
      principle “pending a litigation nothing new should be introduced”.  It
      provides that pendente lite, neither party to the litigation, in which
      any right to immovable  property  is  in  question,  can  alienate  or
      otherwise deal with such property so as  to  affect  his  appointment.
      This section is based on equity and good conscience and is intended to
      protect  the  parties  to  litigation  against  alienations  by  their
      opponent during the pendency of the suit. In order to constitute a lis
      pendens, the following elements must be present:

      1. There must be a suit or proceeding pending in a court of  competent
      jurisdiction.

      2. The suit or proceeding must not be collusive.

      3. The litigation must be one in which right to immovable property  is
      directly and specifically in question.

      4. There must be a transfer of or otherwise dealing with the  property
      in dispute by any party to the litigation.

      5. Such transfer must affect the rights of the other  party  that  may
      ultimately  accrue  under  the  terms  of   the   decree   or   order.


      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, the  court  has  discretion  in  the  matter  which  must  be
      judicially exercised and an alienee would ordinarily be  joined  as  a
      party to enable him to protect his interests.”
                                                         (emphasis supplied)


31.   In Savitri Devi v. DJ, Gorakhpur (supra), this Court upheld the  order
passed by the trial Court for impleadment of respondent Nos.3 to 5, who  had
purchased the suit property without knowledge of the pending litigation,  as
parties.  On behalf of the appellant, it was argued that respondent  Nos.  3
to 5 cannot be treated as  necessary  parties  because  alienation  made  in
their favour was in violation of the injunction order passed by  the  Court.
In support of this argument, reliance was placed on the judgment  in  Surjit
Singh v. Harbans Singh (supra).  This Court distinguished that  judgment  by
observing that in that case the assignors and the  assignees  had  knowledge
of the injunction order passed by the Court and held that the  order  passed
by the trial Court which was affirmed by the District  Judge  and  the  High
Court does not call for interference.

32.   In Vinod Seth  v.  Devinder  Bajaj  (supra),  this  Court  interpreted
Section 52 of the Transfer of Property Act, 1882 and observed:

      “It is well settled that the doctrine of lis pendens  does  not  annul
      the conveyance by a party to the suit, but only renders it subservient
      to the rights of the other parties to the litigation. Section 52  will
      not therefore render a  transaction  relating  to  the  suit  property
      during  the  pendency  of  the  suit  void  but  render  the  transfer
      inoperative insofar as the other parties to the suit. Transfer of  any
      right, title or interest in the suit  property  or  the  consequential
      acquisition of any right, title or interest, during  the  pendency  of
      the  suit  will  be   subject   to   the   decision   in   the   suit.


      The principle underlying Section 52 of the TP Act is based on  justice
      and equity. The operation of the  bar  under  Section  52  is  however
      subject to the power of the court to exempt the suit property from the
      operation of Section 52 subject to such conditions it may impose. That
      means that the court in which the suit is pending, has the  power,  in
      appropriate cases, to permit a party to transfer the property which is
      the subject-matter of the suit without being subjected to  the  rights
      of any part to the suit, by imposing  such  terms  as  it  deems  fit.
      Having regard to the facts and circumstances, we are of the view  that
      this is a fit case where the suit property should be exempted from the
      operation of Section 52 of the TP Act, subject to a condition relating
      to reasonable security, so that the defendants will have  the  liberty
      to deal with the property in any manner they may deem fit, in spite of
      the pendency of the suit.”


33.     In Surjit Singh v. Harbans Singh (supra), this Court considered  the
question whether a person to whom  the  suit  property  is  alienated  after
passing of the preliminary decree by the trial Court, which  had  restrained
the parties from alienating or otherwise  transferring  the  suit  property,
has the right to be impleaded  as  party.   The  trial  Court  accepted  the
application filed by the transferees and the order of the  trial  Court  was
confirmed by the lower appellate Court and the High Court.   While  allowing
the appeal against the  order  of  the  High  Court,  this  Court  observed:

      “In defiance of the restraint  order,  the  alienation/assignment  was
      made. If we were to let it go as such, it would  defeat  the  ends  of
      justice and the prevalent public policy.  When  the  Court  intends  a
      particular state of affairs to exist while it is in seisin of  a  lis,
      that state of affairs is not only required to be maintained, but it is
      presumed to exist till the Court orders otherwise. The Court, in these
      circumstances  has  the  duty,  as  also  the  right,  to  treat   the
      alienation/assignment as  having  not  taken  place  at  all  for  its
      purposes. Once that is so, Pritam Singh and his assignees, respondents
      herein, cannot claim to be  impleaded  as  parties  on  the  basis  of
      assignment. Therefore, the assignees-respondents could not  have  been
      impleaded by the trial court as parties to the suit,  in  disobedience
      of its orders.”

34.   In Sarvinder Singh v.  Dalip  Singh  (1996)  5  SCC  539,  this  Court
considered the question whether the respondent who  purchased  the  property
during the pendency of a suit for declaration filed by the appellant on  the
basis of the registered Will executed  by  his  mother  is  entitled  to  be
impleaded as party and observed:
      “The respondents indisputably cannot challenge  the  legality  or  the
      validity of the Will executed and registered by  Hira  Devi  on  26-5-
      1952. Though it may be open to the legal heirs of Rajender  Kaur,  who
      was a party to the earlier suit, to resist the claim  on  any  legally
      available or tenable grounds, those grounds are not available  to  the
      respondents. Under those circumstances, the respondents cannot, by any
      stretch of imagination, be said  to  be  either  necessary  or  proper
      parties to the suit. A  necessary  party  is  one  whose  presence  is
      absolutely necessary and  without  whose  presence  the  issue  cannot
      effectually and completely be adjudicated upon and decided between the
      parties. A proper party is one whose presence would  be  necessary  to
      effectually and completely adjudicate upon  the  disputes.  In  either
      case the respondents cannot be said to be either necessary  or  proper
      parties to the suit in which the primary relief was found on the basis
      of the registered Will executed by the appellant's  mother,  Smt  Hira
      Devi. Moreover, admittedly the respondents claimed  right,  title  and
      interest pursuant to the registered  sale  deeds  said  to  have  been
      executed by the defendants-heirs of Rajender Kaur on 2-12-1991 and 12-
      12-1991, pending suit.


      Section 52 of the Transfer of Property Act envisages that:


      “During the pendency in any court having authority within  the  limits
      of India ... of any suit or proceeding which is not collusive  and  in
      which any right to immovable property is directly and specifically  in
      question, the property cannot be transferred or otherwise  dealt  with
      by any party to the suit or proceeding so as to affect the  rights  of
      any other party thereto under the decree or order which  may  be  made
      therein, except under the authority of the court and on such terms  as
      it may impose.”


      It would, therefore, be clear that the defendants  in  the  suit  were
      prohibited by operation of Section 52 to deal with  the  property  and
      could not transfer or otherwise deal with it in any way affecting  the
      rights of the appellant except with the  order  or  authority  of  the
      court. Admittedly, the authority or order of the court  had  not  been
      obtained for alienation of those properties. Therefore, the alienation
      obviously would be hit by the doctrine of lis pendens by operation  of
      Section 52. Under  these  circumstances,  the  respondents  cannot  be
      considered to be either necessary or proper parties to the suit.”
                                                         (emphasis supplied)



35.   In Bibi Zubaida Khatoon v. Nabi Hassan (2004) 1 SCC  191,  this  Court
was called upon to consider the  correctness  of  the  High  Court’s  order,
which declined to interfere  with  the  order  passed  by  the  trial  Court
dismissing the applications filed by the appellant for impleadment as  party
to the cross suits of which one was filed for  redemption  of  mortgage  and
the other was filed for specific performance  of  the  agreement  for  sale.
While dismissing the  appeal,  this  Court  referred  to  the  judgments  in
Sarvinder Singh v. Dalip Singh (supra) and Dhurandhar Prasad  Singh  v.  Jai
Prakash University (2001) 6 SCC 534 and observed that there is  no  absolute
rule that the transferee pendente lite shall be allowed to join as party  in
all cases without leave of the Court and contest the pending suit.

36.   Though there is apparent conflict in the observations made in some  of
the aforementioned judgments,  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  acquiring
      knowledge about the pending litigation.
6.    However, if the applicant is guilty  of  contumacious  conduct  or  is
      beneficiary of a clandestine transaction or a transaction made by  the
      owner of the suit property in violation of the restraint order  passed
      by the Court or the application is unduly delayed then the Court  will
      be fully justified in declining the prayer for impleadment.

37.   In the light of the above, we shall now consider whether  the  learned
Single Judge and the Division Bench of the High Court committed an error  by
dismissing the appellants’ application for impleadment as  parties  to  Suit
No.425/1993.   At the cost  of  repetition,  we  consider  it  necessary  to
mention that respondent No.1 had filed  suit  for  specific  performance  of
agreement dated 13.9.1988 executed by respondent No.1.  The  appellants  and
Bhagwati Developers are total strangers to that agreement.  They  came  into
the  picture  only  when  respondent  No.2  entered   into   a   clandestine
transaction with the appellants for sale of the suit property  and  executed
the agreements for sale, which were followed by registered  sale  deeds  and
the  appellants  executed  agreement  for  sale  in   favour   of   Bhagwati
Developers.  These transactions were in clear  violation  of  the  order  of
injunction passed by the Delhi High Court which  had  restrained  respondent
No.2 from alienating the suit property or  creating  third  party  interest.
To put it differently, the agreements for sale and the sale  deeds  executed
by respondent No.2 in favour of  the  appellants  did  not  have  any  legal
sanctity.  The status of the agreement for sale executed by  the  appellants
in favour of Bhagwati Developers was no different.  These  transactions  did
not confer any right upon the appellants or Bhagwati Developers.  Therefore,
their presence is not at all necessary  for  adjudication  of  the  question
whether respondent Nos.1 and 2 had entered  into  a  binding  agreement  and
whether respondent No.1 is entitled to a decree of specific  performance  of
the said agreement.  That apart, after executing agreement  for  sale  dated
18.3.1997 in favour of Bhagwati Developers, the appellants cannot  claim  to
have any subsisting legal or commercial interest in the  suit  property  and
they cannot take benefit of the order passed by the Calcutta High Court  for
appointment of an arbitrator which was followed by an order for  appointment
of receiver because the parties to the proceedings  instituted  before  that
Court  deliberately  suppressed  the  facts  relating  to  Suit  No.425/1993
pending before the Delhi High Court and the orders of injunction  passed  in
that suit.

38.   We are in complete agreement  with  the  Delhi  High  Court  that  the
application for impleadment filed by  the  appellants  was  highly  belated.
Although, the appellants have pleaded that at the time of execution  of  the
agreements for sale by respondent No.2 in their  favour  in  February  1997,
they did not know about the suit filed by respondent No.1, it is  difficult,
if not impossible, to accept their statement because the smallness  of  time
gap between  the  agreements  for  sale  and  the  sale  deeds  executed  by
respondent No.2 in favour of the appellants and the execution  of  agreement
for sale by the appellants in favour of Bhagwati Developers would  make  any
person of ordinary prudence to believe that respondent No.2, the  appellants
and Bhagwati Developers had entered into these transactions  with  the  sole
object of frustrating agreement for sale dated 13.9.1988 executed in  favour
of respondent No.1 and the suit pending before the  Delhi  High  Court.   In
any case, the appellants will be deemed to have become aware of the same  on
receipt of  summons  in  Suit  No.161/1999  filed  by  respondent  No.2  for
annulment of the agreements for sale and the sale deeds in which  respondent
No.2 had clearly made a mention of  Suit  No.425/1993  filed  by  respondent
No.1 for specific performance of agreement for  sale  dated  13.12.1988  and
injunction or at least when the learned  Single  Judge  of  the  Delhi  High
Court entertained IA No.625/2001 filed by  respondent  No.1  and  restrained
respondent Nos.2 and 4 from transferring possession of the suit property  to
the appellants.  However, in the application for impleadment filed by  them,
the appellants did  not  offer  any  tangible  explanation  as  to  why  the
application for impleadment was filed only on 4.2.2008 i.e.  after  7  years
of the passing of injunction order dated 22.1.2001 and,  in  our  considered
view, this constituted  a  valid  ground  for  declining  their  prayer  for
impleadment as parties to Suit No.425/1993.

39.   The ratio of the judgment  in  Kasturi  v.  Iyyamperumal  (supra),  on
which heavy reliance has been placed by the learned senior counsel  for  the
appellants, does not help his clients. In the present case,  the  agreements
for sale and the sale deeds were executed by respondent No.2  in  favour  of
the appellants in a clandestine manner and in violation  of  the  injunction
granted by the High Court. Therefore, it  cannot  be  said  that  any  valid
title or interest has been acquired by the appellants in the  suit  property
and the ratio of the judgment in  Surjit  Singh  v.  Harbans  Singh  (supra)
would squarely apply to the  appellants’  case  because  they  are  claiming
right on the basis of transactions made in defiance of the  restraint  order
passed by the High Court. The suppression  of  material  facts  by  Bhagwati
Developers and the appellants  from  the  Calcutta  High  Court,  which  was
persuaded to pass orders in their favour, takes the appellants  out  of  the
category of bona fide  purchaser.   Therefore,  their  presence  is  neither
required to decide the controversy involved in the suit filed by  respondent
No.1 nor required to pass an effective decree.

40.   The next question which merits  consideration  is  whether  the  Delhi
High Court was justified in appointing the receiver  and  directing  him  to
take possession of the property. Though, learned  senior  counsel  appearing
for Bhagwati Developers has sought to  invoke  the  doctrine  of  comity  of
jurisdictions of the Courts for continuance of  the  receiver  appointed  by
the Calcutta High Court, we do not find any merit in his submission.  It  is
not in dispute  that  respondent  No.1  had  filed  the  suit  for  specific
performance on 1.2.1993 and the learned  Single  Judge  of  the  Delhi  High
Court passed the order of injunction on 18.2.1993. The  arbitral  award  for
specific performance of the agreement for sale of the same property  entered
into between  the  appellants  and  Bhagawati  Developers  was  obtained  on
7.1.1999. The execution proceedings were instituted  in  the  Calcutta  High
Court in 2000 and the order  for  appointment  of  receiver  was  passed  on
12.8.2000. It is thus clear that when  Bhagwati  Developers  approached  the
Calcutta High Court, the Delhi High Court was already seized with  the  suit
involving the subject matter of the award. The contention of the  appellants
and Bhagawati Developers that they were unaware of  the  proceedings  before
the Delhi High Court cannot be accepted because in  Suit  No.161/1999  filed
by respondent No.2 for declaring that the agreements for sale and  the  sale
deeds relied upon by the appellants were false and  fabricated,  a  specific
reference was made to the suit filed by respondent No.1. That apart, in  its
order dated 15.2.2001 passed in the application filed by respondent No.4  in
EC  No.10/2000,  the  learned  Single  Judge  of  the  Calcutta  High  Court
categorically observed that the said Court had  not  been  apprised  of  the
facts relating to the suit pending before  the  Delhi  High  Court  and  the
injunction orders passed therein including order dated 8.2.2001  restraining
the receiver of the Calcutta  High  Court  from  taking  possession  of  the
property and that if these facts had been disclosed, the  Court  would  have
been slow in passing the order that it had  passed  earlier  and  hence  the
order passed by it, if it is in conflict with the order passed by the  Delhi
High Court, would be subject to that order and Bhagawati Developers  who  is
a party to the proceedings before the Delhi  High  Court  can  approach  the
said Court for obtaining  appropriate  orders.  This  shows  that  on  being
apprised of the correct facts, the learned  Single  Judge  of  the  Calcutta
High Court had shown due respect to the orders  passed  by  the  Delhi  High
Court and directed that the same should operate till they  are  modified  or
vacated at the instance  of  the  appellants  or  Bhagwati  Developers.  The
course of action adopted by the Calcutta High Court was in  consonance  with
the notion of judicial  propriety.  Therefore,  Bhagwati  Developers  cannot
invoke the doctrine of comity of jurisdictions of  the  Courts  for  seeking
continuance of the receiver appointed by the Calcutta High Court.

41.   The learned Single Judge and the Division  Bench  of  the  Delhi  High
Court have assigned detailed and cogent reasons for  appointing  a  receiver
to  take  care  of  the  suit  property.   The  clandestine  nature  of  the
transactions entered into between respondent No.2 and the appellants on  the
one hand and the appellants and Bhagwati Developers on the other would  give
rise to strong presumption that if a  receiver  is  not  appointed,  further
attempts would  be  made  to  alienate  the  property  in  similar  fashion.
Therefore, we do not find  any  valid  ground  much  less  justification  to
interfere with the impugned order or the one passed by  the  learned  Single
Judge of the Delhi High Court.

42.   In view of the above conclusions, we do not consider it  necessary  to
advert to the documents filed by respondent No.1 before this Court  for  the
first time and the additional affidavit filed by Smt.  Bhanwari  Devi  Lodha
on behalf of Bhagwati Developers.

43.   In the result, the  appeals  are  dismissed.  For  their  contumacious
conduct of suppressing facts  from  the  Calcutta  High  Court  and  thereby
prolonging the  litigation,  the  appellants  and  Bhagwati  Developers  are
saddled with cost  of  Rs.5  lakhs  each.   The  amount  of  cost  shall  be
deposited by them with the Supreme Court Legal Services Committee  within  a
period of three months.

44.   Since the proceedings pending before the Delhi High Court were  stayed
by this Court, we request the High Court to make an endeavour to dispose  of
the pending suit as early as possible.


                                                       …...……..….………………….…J.
                                        [G.S. Singhvi]




                                                         …………..….………………….…J.
                                           [Sudhansu Jyoti Mukhopadhaya]
New Delhi,
August 21, 2012.
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