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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 1518 of 2013
(Arising out of Special Leave Petition (Civil) No. 24159 of 2009)
Thomson Press (India) Ltd. …..Appellant (s)
Vs.
Nanak Builders & Investors P.Ltd. & Ors. …..Respondent(s)
J U D G M E N T
M.Y. EQBAL, J.
Leave granted.
2. This appeal is directed against the order passed by the
division bench of the High Court of Delhi in FAO No. 295 of 2008 affirmingPage 2
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the order of the Single Judge and rejecting the petition filed by the
appellant under Order 1 Rule 10 of CPC for impleadment as defendants in
a suit for specific performance of contract being Suit No. 3426 of 1991
filed by plaintiff-Respondent No.1.
3. Although the case has a chequered history, the brief facts of
the case can be summarized as under :-
4. Mrs. Lakhbir Sawhney, Respondent No. 2 and son Mr. H.S.
Sawhney, the predecessor of Respondent No. 3 (a) to (d) were the
owners of the property known as “Ojha House” / “Sawhney Mansion”, FBlock, Connaught Place, New Delhi. (These respondents shall be
referred as “the Sawhneys” for the sake of convenience). M/s Nanak
Builders and Investors Pvt. Ltd., Respondent No.1 is the plaintiff in the
Suit. The plaintiff-Respondent No.1 filed a suit in the High Court of Delhi
being Suit No. 3426 of 1991 against the defendants-respondents
Sawhneys’ for a decree for specific performance of agreement. The case
of the plaintiff-respondent is that on 29.05.1986 the defendant-respondent
entered into an agreement with the plaintiff-respondent for sale of an area
measuring about 4000 sq.ft. on the 1
st
Floor of F-26, Connaught Place,
New Delhi on the consideration of Rs. 50 lakhs. Out of the saidPage 3
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consideration, a sum of Rs. 1 lakh was paid by the plaintiffs to the
defendants vide cheque no. 0534224 drawn from Union Bank of India,
New Delhi. The aforesaid property shall be referred to as the “suit
property” which was in the tenancy of M/s Peerless General Finance
Company Limited. In the said agreement it was agreed inter alia that if
the premises is vacated 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. Plantiff’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 plaintiffs 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 notPage 4
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sell, transfer or alienate the said property to any other person. Lastly, it
was alleged by the plaintiff that despite being always ready and willing to
complete the transaction, the defendant avoided to obtain requisite
permission / sanction and clearance, hence the suit was filed. During the
intervening period some more development took place. One Living
Media India Limited, (in short LMI), said to be a group company of the
Appellant M/s Thomson Press (India) Limited offered the defendant
respondent to take the suit premises on lease, some time in the year
1988. The defendants Sawhneys’ assured the LMI that lease would be
granted after M/s Peerless vacated the suit property. LMI, accordingly,
sent a cheque to the defendants-Sawhneys’ as earnest money in respect
of the lease. However, when Sawhneys’ wanted to resile from the agreed
terms with LMI, a suit was filed by LMI being Suit No. 2872 of 1990
against Sawhneys’ in Delhi High Court for perpetual injunction restraining
the Sawhneys’ from parting with possession of the premises to any third
party. The High Court passed the restrain order on 19.09.1990 with
regard to the suit property and appointed a commissioner to report as to
who is in possession of suit premises.
It appears that the aforesaid suit filed by LMI was compromised and an
order was passed on 08.04.1991 whereby, as per the compromise, thePage 5
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suit property was leased out by defendant-Sawhneys’ in favour of LMI
and possession of the property was given to it.
5. On 01.11.1991, the plaintiff-M/s Nanak Builders in the
meantime filed a suit against the defendant-respondent Sawhneys’ being
suit no. 3426/1991 for specific performance of agreement to sell dated
29.05.1986. In the said suit pursuant to summons issued against the
defendants– Sawhneys’ one Mr. Raj Panjwani, Advocate accepted notice
on behalf of Sawhneys’ and stated before the Court that possession of
the flat in question is not with the defendants, rather with M/s LMI which
delivered to them by virtue of the lease. Mr. Panjwani further stated that
till disposal of the suit the property in question would not be transferred or
alienated by the defendants. The defendants- Sawhneys’ also filed a
written statement in the said suit. It appears that the defendantsSawhneys’ took loan from Vijaya Bank and to secure the loan, equitable
mortgage was created in respect of the suit property. In 1977 a suit was
filed by the Bank in Delhi High Court for recovery and redemption of the
mortgaged 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,Page 6
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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 CPC 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 appellant was in
violation of the undertaking given by the respondents which was in the
nature of injunction. Aggrieved by the said order, the appellant filed an
appeal being FAO No.295 of 2008 which was heard by a Division Bench.
The Division Bench affirmed the order of the Single Judge and held that
in view of the injunction in the form of undertaking given by the
respondents-Sawhneys’ and recorded in the suit proceedings, how thePage 7
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property could be purchased by the appellants in the year 2008. The
appellant aggrieved by the aforesaid orders filed this Special Leave
Petition.
7. Mr. Sunil Gupta, learned senior counsel appearing for the
appellant assailed the impugned orders as being illegal, erroneous in law
and without jurisdiction. Learned senior counsel firstly contended that the
appellant being the purchaser of the suit property is a necessary and
proper party for the complete and effective adjudication of the suit.
According to him, the denial of impleadment will be contrary to the
principles governing Order 1 Rule 10 (2) of the CPC though he submitted
that impleadment as a party is not a matter of right but a matter of judicial
discretion to be exercised in favour of a necessary and proper party. Ld.
Senior counsel further submitted that where a subsequent purchaser has
purchased a suit property and is deriving its title through the same vendor
then he would be a necessary party provided it has purchased with or
without notice of the prior contract. He further submitted that after one
transaction a pendency of the suit arising there from, Section 52 of the
Transfer of Property Act does not prohibit the subsequent transaction of
transfer of property nor even declares the same to be null and void. Ld.
Senior counsel, however, has not disputed the legal proposition that thePage 8
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court would be justified in denying impleadment at the instance of the
applicant who has entered a subsequent transaction knowing that there is
a court injunction in a pending suit restraining and prohibiting further
transaction or alienation of the property. Ld. Senior counsel put heavy
reliance on the decisions of the Supreme Court in Kasturi v.
Iyyamperumal & Ors. 2005(6) SCC 733, for the proposition that an
application by the subsequent purchaser for impleadment in a suit for
specific performance by a prior transferee does not alter the nature and
character 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 finalPage 9
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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 undertaking given by Sawhneys’ that the suit
property shall not be assigned or alienated during the pendency of the
suit. Learned counsel further contended that as a matter of fact the
vendor Sawhneys’ had committed fraud by incorporating in the sale deed
that there was no agreement or any injunction passed in any suit or
proceedings. In that view of the matter the application for impleadment
has been rightly rejected by the High Court. He placed reliance on
Vidhur Impex and Traders Pvt. Ltd. v. Tosh Apartments Pvt. Ltd. &
Ors. 2012 (8) SCC 384 and Surjit Singh and Others v. Harbans Singh
and Others (1995) 6 SCC 50.
10. Before discussing the decision of the Supreme Court relied
upon by the parties, we would like to highlight some of the important facts
and developments in the case which are not disputed by the parties.Page 10
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11. As noted above, plaintiff-respondent No.1 filed the suit for
specific performance on 01.11.1991 against the defendants Sawhneys for
the specific performance of the agreements dated 29.05.1986. In the said
suit, the defendants Sawhneys through Mr. Raj Panjwani, Advocate
accepted summons on their behalf and filed vakalatnama. The said
Advocate Mr. Panjwani, inter-alia, stated before the Court that the
defendants would not transfer or alienate the flat in question. The order
dated 04.11.1991 was incorporated in the order sheet as under:
“Mr. Panjwani accepts notice. Mr. Panjwani states
that the possession of the flat in question is not with the
defendants. The possession is with M/s. Living Media India
Limited which was delivered to them under the orders of
this Court. Mr. Panjwani states that till the disposal of this
application the defendants would not transfer or alienate
the flat in question. Let the reply be filed within 6 weeks
with advance copy to the counsel for the plaintiff, who may
file the rejoinder within 2 weeks thereafter. List this I.A. for
disposal on 10.3.1992.”
12. It is also not in dispute that before the institution of the suit the
plaintiff-respondent got a notice published in the newspaper on
12.02.1990 in Hindustan Times, Delhi Edition. When this came to the
notice of the appellant, the sister concern of the appellant, namely, M/s.Page 11
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Living Media India Limited sent a legal notice to the defendants
Sawhneys’ dated 24.06.1990 and called upon him to execute the lease
deed in respect of the suit property 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’.Page 12
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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 vs. Shivnath Mishra
alias Gadasa Guru (1995) 3 SCC 147, in a suit for specific performance
of contract a petition was filed under Order 6 Rule 17 CPC seeking leave
to amend the plaint by impleading the respondent as party defendant in
the suit. The contention of the petitioner was that the vendor had
colluded with his sons and wife and obtained a collusive decree in a suit
under the U.P. Zamindari Abolition and Land Reforms Act. It was
contended that by operation of law they became the co-sharers of the
property to be conveyed under the Agreement and, therefore, he is a
necessary party. The trial court dismissed the petition and on revision
the High Court of Allahabad affirmed the order. In an appeal this Court,
refused to interfere with the order and observed.
“In this case, since the
suit is based on agreement of sale said to have been
executed by Mishra, the sole defendant in the suit, the
subsequent interest said to have been acquired by the
respondent by virtue of a decree of the court is not a matter
arising out of or in respect of the same act or transaction or
series of acts or transactions in relation to the claim made
in the suit.”Page 13
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“The question is whether
the person who has got his interest in the property declared
by an independent decree but not a party to the agreement
of sale, is a necessary and proper party to effectually and
completely adjudicate upon and settle all the question
involved in the suit. The question before the court in a suit
for the specific performance is whether the vendor had
executed the document and whether the conditions
prescribed in the provisions of the Specific Relief Act have
been complied with for granting the relief of specific
performance.”
“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.”
16. In the case of Surjit Singh (Supra) a similar question arose
for consideration before this Court. In that case, on the death of one
Janak Singh, being the head of the family a suit for partition and separate
possession 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 orPage 14
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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 CPC 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 be registered. That has instantly been done. It is
per se property, for it relates to the immovable property
involved in the suit. It clearly and squarely fell within the
ambit of the restraint order. In sum, it did not make any
appreciable difference whether property per se had been
alienated or a decree pertaining to that property. 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 claimPage 15
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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. The principles of lis pendens are
altogether on a different footing. We do not propose to
examine their involvement presently. All what is emphasised
is that the assignees in the present facts and circumstances
had no cause to be impleaded as parties to the suit. On that
basis, there was no cause for going into the question of
interpretation of paragraphs 13 and 14 of the settlement
deed. The path treaded by the courts below was, in our view,
out of their bounds. Unhesitatingly, we upset all the three
orders of the courts below and reject the application of the
assignees for impleadment under Order 22 Rule 10 CPC.”
17. In the case of Savitri Devi v. District Judge, Gorakhpur
and Others (1999) 2 SCC 577, a 3 Judges’ Bench of this Court
considered a similar question under Order 1 Rule 10 CPC. The fact of
the case was that the appellant filed a suit for maintenance and for
creation of charge over the ancestral property. She also applied for an
interim order of injunction restraining her sons from alienating the
property during the pendency of the suit. But a vakalatnama was filed on
behalf of the defendants and 4
th
defendant also filed an affidavit
purporting to be on behalf of the 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 thePage 16
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defendants sold 1/4
th
share of the land to the 3
rd
respondent and 1/4
th
share in another land to the 4
th
respondent on 19.08.1992 and further
sold 1/4
th
share to the 5
th
respondent. On the basis of this transfer the
transferee-Respondent Nos.3-5 filed an application under Order 1 Rule
10 CPC 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
defendant had forged his signature and filed a bogus
vakalatnama. He had also alleged that the order of
injunction was obtained fraudulently on 18-8-1992. The trial
court has also referred to an application under Section 340
CrPC filed by the first defendant and observed that the
same had been dismissed by order dated 20-12-1992.
There is also a reference in the order of the trial court in the
High Court filed by the plaintiff for quashing orders dated
10-11-1995 and 19-4-1996 passed in the suit and a
miscellaneous civil appeal arising from the suit wherein
Respondents 3 to 5 had been impleaded as parties. It is
seen from the order of the trial court that certain
proceedings under Order XXXIX Rule 2-A CPC concerning
the question of attachment of the properties sold were also
pending. It is only after taking note of all those facts, thePage 17
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trial court allowed the application of Respondents 3 to 5 to
implead them as parties to the suit.”
18. This Court further noticed the point taken by the appellant
based on the principles laid down in Surjit Singh’s case (supra). Allowing
the application this Court held :-
“The facts set out by us in the earlier paragraphs
are sufficient to show that there is a dispute as to whether
the first defendant in the suit was a party to the order of
injunction made by the Court on 18-8-1992. The
proceedings for punishing him for contempt are admittedly
pending. The plea raised by him that the first respondent
had played a fraud not only against him but also on the
Court would have to be decided before it can be said that
the sales effected by the first defendant were in violation of
the order of the Court. The plea raised by Respondents 3
to 5 that they were bona fide transferees for value in good
faith may have to be decided before it can be held that the
sales in their favour created no interest in the property. The
aforesaid questions have to be decided by the Court either
in the suit or in the application filed by Respondents 3 to 5
for impleadment in the suit. If the application for
impleadment is thrown out without a decision on the
aforesaid questions, Respondents 3 to 5 will certainly come
up with a separate suit to enforce their alleged rights which
means a multiplicity of proceedings. In such circumstances,
it cannot be said that Respondents 3 to 5 are neither
necessary nor proper parties to the suit.”Page 18
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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 Others v. Sambhu Saran
Sinha and Others (1996) 10 SCC 53 a petition was filed under Order 1
Rule 10 of the CPC 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 relinquishment deed and the
signatures appended to it were not that of him. The deed of
relinquishment said to have been signed by the father of
the petitioners was not genuine. These questions are
matters to be taken into consideration in the suit before the
relinquishment deed and compromise memo between thePage 19
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other contesting respondents were acted upon and cannot
be done in the absence of the petitioners. The share of the
petitioners will be affected and, therefore, it would prejudice
their right, title and interest in the property. We cannot go
into these questions at this stage. The trial court has rightly
pointed that the petitioners are necessary and proper
parties so long as the alleged relinquishment deed said to
have been signed by the deceased father of the petitioners
is on record. It may not bind petitioners but whether it is
true or valid or binding on them are all questions which in
the present suit cannot be gone into. Under those
circumstances, the courts below were right in holding that
the petitioners are not necessary and proper parties but the
remedy is elsewhere. If the petitioners have got any
remedy it is open to them to avail of the same according to
law.”
21. In Kasturi’s case (supra) a three Judges’ Bench of this Court
said that in a suit for specific performance of contract for sale an
impleadment petition was filed for addition as party defendant on the
ground that the petitioners were claiming not under the vendor but
adverse to the title of the vendor. In other words, on the basis of
independent title in the suit property the petitioner sought to be added as
a necessary party in the suit. Rejecting the petition this Court held as
under :-
“As noted herein earlier, 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 forPage 20
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specific performance of contract for sale. For deciding the
question who is a proper party in the 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 1834 (40) English Report 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 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 aPage 21
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proceeding to enforce the execution of it as they
are to a proceeding to recover damages for the
breach of it.”
(Emphasis supplied)
………..
“Keeping the principles as stated above in mind, let
us now, on the admitted facts of this case, first consider
whether the respondent Nos.1 and 4 to 11 are necessary
parties or not. In our opinion, the respondent Nos. 1 and 4
to 11 are not necessary parties effective decree could be
passed in their absence as they had not purchased the
contracted property from the vendor after the contract was
entered into. They were also not necessary parties as they
would not be affected by the contract entered into between
the appellant and the respondent Nos. 2 and 3. In the case
of Anil Kumar Singh v. Shivnath Mishra alias Gadasa
Guru, 1995 (3) SCC 147, it has been held that since the
applicant who sought for his addition is not a party to the
agreement for sale, it cannot be said that in his absence,
the dispute as to specific performance cannot be decided.
In this case at paragraph 9, the Supreme Court while
deciding whether a person is a necessary party or not in a
suit for specific performance of a contract for sale made the
following observation:
“Since the respondent is not a party to the
agreement for 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.”
(Emphasis Supplied)Page 22
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22. In the case of Vidhur Impex (supra), the Supreme Court
again had the opportunity to consider all the earlier judgments. The fact
of the case was that a suit for specific performance of agreement was
filed. The appellants and Bhagwati Developers though totally strangers to
the agreement, came into picture only when all the respondents entered
into a clandestine transaction with the appellants for sale of the property
and executed an agreement of sale which was followed by sale deed.
Taking note all the earlier decisions, the Court laid down the broad
principles governing the disposal of application for impleadment.
Paragraph 36 is worth to be quoted hereinbelow:
“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.Page 23
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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.
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.”
23. It would also be worth to discuss some of the relevant laws in
order to appreciate the case on hand. Section 52 of the Transfer ofPage 24
24
Property Act speaks about the doctrine of lis pendens. Section 52 reads
as under:
“52. Transfer of property pending suit relating thereto. –
During the [pendency] in any Court having authority [within
the limits of India excluding the State of Jammu and
Kashmir] or established beyond such limits] by [the Central
Government] [***] of [any] suit or proceedings 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 any decree or order which may be made
therein, except under the authority of the Court and on
such terms as it may impose.
[Explanation – For the purposes of this section, the
pendency of a suit or proceeding shall be deemed to
commence from the date of the presentation of the plaint or
the institution of the proceeding in a Court of competent
jurisdiction, and to continue until the suit or proceeding has
been disposed of by a final decree or order and complete
satisfaction or discharge of such decree or order has been
obtained, or has become unobtainable by reason of the
expiration of any period of limitation prescribed for the
execution thereof by any law for the time being in force.”
24. 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 thePage 25
25
litigating parties but on those who derive title pendente lite. The provision
of this Section does not indeed annul the conveyance or the transfer
otherwise, but to render it subservient to the rights of the parties to a
litigation. Discussing the principles of lis pendens, the Privy Council in the
case of Gouri Dutt Maharaj v. Sukur Mohammed & 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 & Anr. v. Ganesh Ram &
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 vs. Monohar 15 I.A. 97 where the facts were almostPage 26
26
similar to those in the instant case. It is true that Section 52
strictly speaking does not apply to involuntary alienations
such as court sales but it is well-established that the
principle of lis pendens applies to such alienations.(See
Nilkant v. Suresh Chandra 12 I.A.171 and Moti Lal v.
Karrab-ul-Din 24 I.A.170.”
26. The aforesaid Section 52 of the Transfer of Property Act again
came up for consideration before this Court in the case of Rajender Singh
& Ors. v. Santa Singh & Ors. AIR 1973 SC 2537 and Their Lordship
with approval of the principles laid down in 1973 (1) SCR 139 reiterated:
“The doctrine of lis pendens was intended to strike
at attempts by parties to a litigation to circumvent the
jurisdiction of a court, in which a dispute on rights or
interests in immovable property is pending, by private
dealings which may remove the subject matter of
litigation from the ambit of the court’s power to decide a
pending dispute of frustrate its decree. Alienees acquiring
any immovable property during a litigation over it are held
to be bound, by an application of the doctrine, by the
decree passed in the suit even though they may not have
been impleaded in it. The whole object of the doctrine of
lis pendens is to subject parties to the litigation as well as
others, who seek to acquire rights in immovable property
which are the subject matter of a litigation, to the power
and jurisdiction of the Court so as to prevent the object of
a pending action from being defeated.”Page 27
27
27. In the light of the settled principles of law on the doctrine of lis
pendens, we have to examine the provisions of Order 1 Rule 10 of the
Code of Civil Procedure. Order 1 Rule 10 which empowers the Court to
add any person as party at any stage of the proceedings if the person
whose presence before the court is necessary or proper for effective
adjudication of the issue involved in the suit. Order 1 Rule 10 reads as
under:
“10. Suit in name of wrong plaintiff.-
(1) Where a suit has been instituted in the name of
the wrong person as plaintiff or where it is doubtful whether
it has been instituted in the name of the right plaintiff, the
Court may at any stage of the suit, if satisfied that the suit
has been instituted through a bona fide mistake, and that it
is necessary for the determination of the real matter in
dispute so to do, order any other person to be substituted
or added as plaintiff upon such terms a the Court thinks
just.
(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 andPage 28
28
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 added as defendant
shall be deemed to have begun only on the service of the
summons.”
28. From the bare reading of the aforesaid provision, it is manifest
that sub-rule (2) of Rule 10 gives a wider discretion to the Court to meet
every case or defect of a party and to proceed with a person who is a
either necessary party or a proper party whose presence in the Court is
essential for effective determination of the issues involved in the suit.Page 29
29
29. Considering the aforesaid provisions, this Court in the case of
Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater
Bombay & Ors. 1992 (2) SCC 524 held as under:
“It cannot be said that the main object of the rule is
to prevent multiplicity of actions though it may incidentally
have that effect. But that appears to be a desirable
consequence of the rule rather than its main objectives.
The person to be joined must be one whose presence is
necessary as a party. What makes a person a necessary
party is not merely that he has relevant evidence to give on
some of the questions involved; that would only make him
a necessary witness. It is not merely that he has an interest
in the correct solution of some questions involved and has
thought of relevant arguments to advance. The only reason
which make it necessary to make a person a party to an
action is that he should be bound by the result of the action
and the question to be settled, therefore, must be a
question in the action which cannot be effectually and
completely settled unless he is a party. The line has been
drawn on a wider construction of the rule between the
direct interest or the legal interest and commercial interest.
It is, therefore, necessary that the person must be directly
or legally interested in the action in the answer, i.e., he can
say that the litigation may lead to a result which will affect
him legally that is by curtailing his legal rights. It is difficult
to say that the rule contemplates joining as a defendant
whose only object is to prosecute his own cause of action.
Similar provision was considered in Amon v. Raphael Tuck
& Sons Ltd. (1956) 1 All E.R. 273, wherein after quoting the
observations of Wynn-Parry,J. in Dollfus Mieg et
Compagnie S.A. v. Bank of England (1950) 2 All E.R. 611,
that the true test lies not so much in an analysis of what are
the constituents of the applicants’ rights, but rather in whatPage 30
30
would be 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 thePage 31
31
purpose of the company and such contract is warranted by
the terms of the incorporation, the company;
Provided that the company has accepted the contract and
communicated such acceptance to the other party to the
contract.”
31. From the bare reading of the aforesaid provision, it is manifest
that a contract for specific performance may be enforced against the
parties to the contract and the persons mentioned in the said section.
Clause (b) of Section 19 makes it very clear that a suit for specific
performance cannot be enforced against a person who is a transferee
from the vendor for valuable consideration and without notice of the
original contract which is sought to be enforced in the suit.
32. In the light of the aforesaid discussion both on facts and law,
we shall now examine some of the relevant facts in order to come to right
conclusion.
33. As noticed above, even before the institution of suit for specific
performance when the plaintiff came to know about the activities of the
Sawhneys’ to deal with the property, a public notice was published at thePage 32
32
instance of the plaintiff in a newspaper “The Hindustan Times” dated
12.02.1990 (Delhi Edn.) informing the public in general about the
agreement with the plaintiffs. In response to the said notice the sister
concern of the appellant M/s Living Media India Limited served a legal
notice on the defendants- Sawhneys’ dated 24.06.1990 whereby he has
referred the ‘agreement to sell’ entered into between the plaintiffs and the
defendants- Sawhneys’.
34. Even after the institution of the suit, the counsel who appeared
for the defendants-Sawhneys’ gave an undertaking not to transfer and
alienate the suit property. Notwithstanding the order passed by the Court
regarding the undertaking given on behalf of the defendants- Sawhneys’,
and having full notice and knowledge of all these facts, the sister concern
of the appellant namely Living Media India Ltd. entered into series of
transaction and finally the appellant M/s. Thomson Press got a sale deed
executed in their favour by Sawhneys’ in respect of suit property.
35. Taking into consideration all these facts, we have no hesitation
in holding that the appellant entered into a clandestine transaction with the
defendants-Sawhneys’ and got the property transferred in their favour.Page 33
33
Hence the appellant – M/s Thomson Press 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 others vs. Samiraddin and others,
AIR 1931 Calcutta 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 :-Page 34
34
“Equity will enforce specific performance of the contract for
sale against the vendor himself and against all persons
claiming under him by a title arising subsequently to the
contract except purchaser for valuable consideration who
have paid their money and taken a conveyance without
notice to the original contract.”
Discussing elaborately, the Court finally observed:-
“The statement of the law is exactly what is meant by the
first two clauses of S.27, Specific Relief Act. It is not
necessary to refer to the English cases in which decrees
have been passed against both the contracting party and
the subsequent purchaser. It is enough to mention some
of them : Daniels v. Davison (2), Potters v. Sanders (3),
Lightfoot v. Heron(4). The question did not pertinently
arise in any reported case in India; but decrees in case of
specific performance of contract have been passed in
several cases in different forms. In Chunder Kanta Roy v.
Krishna Sundar Roy (5) the decree passed against the
contracting party only was upheld. So it was in Kannan v.
Krishan (6). In Himmatlal Motilal v. Basudeb(7) the
decree passed against the contracting defendant and the
subsequent purchaser was adopted. In Gangaram v.
Laxman(9) the suit was by the subsequent purchaser and
the decree was that he should convey the property to the
person holding the prior agreement to sale. It would
appear that the procedure adopted in passing decrees in
such cases is not uniform. But it is proper that English
procedure supported by the Specific Relief Act should be
adopted. The apparent reasoning is that unless both the
contracting party and the subsequent purchaser join in the
conveyance it is possible that subsequently difficulties may
arise with regard to the plaintiff’s title.”Page 35
35
39. The Supreme Court referred the aforementioned decision of the
Calcutta High Court in the case of Durga Prasad and Another v. Deep
Chand and others AIR (1954) SC 75, and finally held:-
“In our opinion, the proper form of decree is 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
convenants made between plaintiff and his vendor; all he
does is to pass on his title to the plaintiff. This was the
course followed by the Calcutta High Court in – Kafiladdin
v. Samiraddin, AIR 1931 Cal 67 (C) and appears to be the
English practice. See Fry on Specific Performance, 6
th
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 toPage 36
36
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
others vs. Harikant Prasad Singh and others (1973) SC 655 subscribed
its earlier view and held that in a suit for specific performance against a
person with notice of a prior agreement of sale is a necessary party.
42. Having regard to the law discussed hereinabove and in the
facts and circumstances of the case and also for the ends of justice the
appellant is to be added as party-defendant in the suit. The appeal is,
accordingly, allowed and the impugned orders passed by the High Court
are set aside.
43. Before parting with the order, it is clarified that the appellant
after impledment as party-defendant shall be permitted to take all such
defences which are available to the vendor Sawhneys’ as the appellant
derived title, if any, from the vendor on the basis of purchase of the suit
property subsequent to the agreement with the plaintiff and during the
pendency of the suit.
…………………………….J.Page 37
37
(T.S. Thakur)
……………………………..J.
(M.Y.Eqbal)
New Delhi
February 21, 2013Page 38
38
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1518 OF 2013
(Arising out of S.L.P (Civil) No.24159 of 2009)
Thomson Press (India) Ltd. …. Appellant (s)
Vs.
Nanak Builders & Investors P. Ltd. & Ors. ….Respondent (s)
J U D G M E N T
T.S. Thakur, J.
I have had the advantage of going through the order
proposed by my Esteemed Brother M.Y. Eqbal, J. While I
entirely agree with the conclusion that the appellant ought
to be added as a party-defendant to the suit, I wish to add a
few lines of my own.
There are three distinct conclusions which have been
drawn by Eqbal, J. in the judgment proposed by hisPage 39
39
Lordship. The first and foremost is that the appellant was
aware of the “agreement to sell” between the plaintiff and
the defendants in the suit. Publication of a notice in the
Hindustan Times, Delhi Edition, and the legal notice which
Living Media India Limited, appellant’s sister concern, sent
to the defendants indeed left no manner of doubt that the
appellant was aware of a pre-existing agreement to sell
between the plaintiff and the defendants. It is also beyond
dispute that the sale of the suit property in favour of the
appellant was in breach of a specific order of injunction
passed by the trial Court. As a matter of fact, the sale
deeds executed by the defendants falsely claimed that there
was no impediment in their selling the property to the
appellant even though such an impediment in the form of a
restraint order did actually exist forbidding the defendants
from alienating the suit property. The High Court was in that
view justified in holding that the sale in favour of the
appellant was a clandestine transaction which finding has
been rightly affirmed in the order proposed by my EsteemedPage 40
40
Brother, and if I may say so with great respect for good and
valid reasons.
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;Page 41
41
(c) xxxxxxxx
(d) xxxxxxxx
(e) xxxxxxxx
There is thus no gainsaying that the appellant was not
protected against specific performance of the contract in
favour of the plaintiff, for even though the transfer in favour
of the appellant was for valuable consideration it was not in
good faith nor was it without notice of the original contract.
The second aspect which the proposed judgment
succinctly deals with is the effect of a sale pendete lite. The
legal position in this regard is also fairly well settled. A
transfer pendete lite is not illegal ipso jure but remains
subservient to the pending litigation. In Nagubai Ammal &
Ors. v. B. Shama Rao & Ors. AIR 1856 SC 593, this
Court while interpreting Section 52 of the Transfer of
Property Act observed:
“…The words “so as to affect the rights of any other
party thereto under any decree or order which may
be made therein", make it clear that the transfer is
good except to the extent that it might conflict withPage 42
42
rights decreed under the decree or order. It is in this
view that transfers pendente lite have been held to
be valid and operative as between the parties
thereto.”
To the same effect is the decision of this Court in
Vinod Seth v. Devinder Bajaj (2010) 8 SCC 1 where
this Court held that Section 52 does not render transfers
affected during the pendency of the suit void but only render
such transfers subservient to the rights as may be
eventually determined by the Court. The following passage
in this regard is apposite:
“42. 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 decision of this Court in A. Nawab John & Ors. v.
V.N. Subramanyam (2012) 7 SCC 738 is a recentPage 43
43
reminder of the principle of law enunciated in the earlier
decisions. This Court in that case summed up the legal
position thus:
“18 ……..The mere pendency of a suit does not
prevent one of the parties from dealing with the
property constituting the subject-matter of the suit.
The section 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.”
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 thePage 44
44
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.”
There is, therefore, little room for any doubt that the
transfer of the suit property pendete lite is not void ab initio
and that the purchaser of any such property takes the
bargain subject to the rights of the plaintiff in the pending
suit. Although the above decisions do not deal with a fact
situation where the sale deed is executed in breach of an
injunction issued by a competent Court, we do not see any
reason why the breach of any such injunction should render
the transfer whether by way of an absolute sale or otherwise
ineffective. The party committing the breach may doubtless
incur the liability to be punished for the breach committed
by it but the sale by itself may remain valid as between the
parties to the transaction subject only to any directions
which the competent Court may issue in the suit against the
vendor. Page 45
45
The third dimension which arises for consideration is
about the right of a transferee pendete lite to seek addition
as a party defendant to the suit under Order I, Rule 10 CPC.
I have no hesitation in concurring with the view that no one
other than parties to an agreement to sell is a necessary and
proper party to a suit. The decisions of this Court have
elaborated that aspect sufficiently making any further
elucidation unnecessary. The High Court has understood and
applied the legal propositions correctly while dismissing the
application of the appellant under Order I, Rule 10 CPC.
What must all the same be addressed is
whether the prayer
made by the appellant could be allowed under Order XXII
Rule 10 of the CPC, which is as under:
“Procedure in case of assignment before final
order in suit. – (1) In other cases of an
assignment, creation or devolution of any interest
during the pendency of a suit, the suit may, by leave
of the court, be continued by or against the person
to or upon whom such interest has come or
devolved.
(2) The attachment of a decree pending an appeal
therefrom shall be deemed to be an interest entitlingPage 46
46
the person who procured such attachment to the
benefit of sub-rule (1).”
A simple reading of the above provision would show
that in cases of assignment, creation or devolution of any
interest during the pendency of a suit, the suit may, by
leave of the Court, be continued by or against the person to
or upon whom such interest has come or devolved. What
has troubled us is whether independent of Order I Rule 10
CPC the prayer for addition made by the appellant could be
considered in the 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 CPC but the enabling provision of Order XXII
Rule 10 CPC 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 requiredPage 47
47
to be examined is
whether a transferee pendete lite could in
a suit for specific performance be added as a party
defendant and, if so, on what terms.
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 pendete 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 position of a person on whom any
interest has devolved on account of a transfer during the
pendency of a suit or a proceeding is somewhat similar to
the position of an heir or a legatee of a party who dies
during the pendency of a suit or a proceeding. Any such
heir, legatee or transferee cannot be turned away when she
applies for being added as a party to the suit. The following
passage in this regard is apposite:Page 48
48
“6… Section 52 of the Transfer of Property Act no
doubt lays down that a transferee pendente lite of an
interest in an immovable property which is the
subject matter of a suit from any of the parties to
the suit will be bound in so far as that interest is
concerned by the proceedings in the suit. Such a
transferee is a representative in interest of the party
from whom he has acquired that interest. Rule 10 of
Order 22 of the Code of Civil Procedure clearly
recognises the right of a transferee to be impleaded
as a party to the proceedings and to be heard before
any order is made. It may be that if he does not
apply to be impleaded, he may suffer by default on
account of any order passed in the proceedings. But
if he applies to be impleaded as a party and to be
heard, he has got to be so impleaded and heard. He
can also prefer an appeal against an order made in
the said proceedings but with the leave of the
appellate court where he is not already brought on
record. The position of a person on whom any
interest has devolved on account of a transfer during
the pendency of any suit or a proceeding is
somewhat similar to the position of an heir or a
legatee of a party who dies during the pendency of a
suit or a proceeding, or an official receiver who takes
over the assets of such a party on his insolvency. An
heir or a legatee or an official receiver or a
transferee can participate in the execution
proceedings even though their names may not have
been shown in the decree, preliminary or final. If
they apply to the court to be impleaded as parties
they cannot be turned out.”
(emphasis supplied)
To the same effect is the decision of this Court in Amit
Kumar Shaw v. Farida Khatoon (2005) 11 SCC 403
where this Court held that a transferor pendente lite may
Page 49
49
not even defend the title properly as he has no interest in
the same or collude with the plaintiff in which case the
interest of the purchaser pendente lite will be ignored. To
avoid such situations 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, the court has discretion in the
matter which must be judicially exercised and an
alienee would ordinarily be joined as a party toPage 50
50
enable him to protect his interests. The Court has
held that a transferee pendente lite of an interest in
immovable property is a representative-in-interest of
the party from whom he has acquired that interest.
He is entitled to be impleaded in the suit or other
proceedings where the transferee pendente lite is
made a party to the litigation; he is entitled to be
heard in the matter on the merits of the case”
To the same effect is the decision of this Court in
Rikhu Dev, Chela Bawa Harjug Dass v. Som Dass
(deceased) through his Chela Shiama Dass, (1976) 1
SCC 103.
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 plaintiffs 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. Page 51
51
(3) Since the appellant has purchased the entire estate
that forms the subject matter of the suit, the appellant
is entitled to be added as a party defendant to the suit.
(4) The appellant shall as a result of his addition raise and
pursue only such defenses as were available and taken
by the original defendants and none other.
With the above additions, I agree with the order
proposed by my Esteemed Brother, M.Y. Eqbal, J. that this
appeal be allowed and the appellant added as party
defendant to the suit in question.
………………….……….…..…J.
(T.S. Thakur)
New Delhi
February 21, 2013
