Madras High Court
M.P. Kanoi And 4 Others vs Mr. Palani Prop. M.P. Builders, ... on 15 December, 1997
ORDER
1. These three applications have been filed by third party / applicants with prayer to implead themselves as defendants, to set aside the ex-parte decree dated 3.3.1997 and also to stay the execution of the decree respectively.
2. The averments made in the applications briefly stated are as follows :-
The applicants R. Subramanian, R. Gopalan, U.P. Suresh Babu and Hemavathi arc third parties to the suit. The suit has been filed by the respondents 1 to 5 as plaintiffs impleuding the 6th defendant alone as defendant in the suit. The suit is tor specific performance of an agreement of sale in favour of the plaintiffs and the only defendant, namely the 6th respondent remained ex-parte and the suit has been decreed on 3.3.1997 by the judgment of this Court, decreeing that the 6th respondent/defendant shall execute the sale deed in favour of respondents 1 to 5 / plaintiffs in the suit.
3. The suit properly is comprised in Survey Nos.361/1 (part) and 361/2 part in Zamin Pallavaram village having a total extent of 5 grounds 1860 sq.ft. The suit property includes vacant land and premises bearing Door No.191. Durga Road, Pallavaram, Chennai. The suit properly originally belonged to one Basherunnisa and 7 others. The owners of the land, namely Basherunnisa and 7 others entered into an agreement with the 6th respondent Palani for joint promotion and for construction of flats by said Palani in the suit property. The owners also executed a power of attorney in favour of the said Palani on 17.5.93. The said Palani has put up four storeyed building with a ground floor plus three-floors, each floor consisting of 7 flats. All these applicants have entered into sale agreement with Palani, who has executed the sale on behalf of the owners as their power of attorney. The applicants agreed to purchase various flats which are specifically described as 'B' schedule in the suit C.S.No.359 of 1996. The applicants have paid 90% of the sale consideration to the 6th respondent Palani. The applicants also have subsequently taken sale deeds in respecl of the suit property from Palani in the year 1995-96. While so, on 30.12.1995 the respondents 1 to 5 issued a notice to these applicants slating that they have obtained a sale agreement even in the year 1993 from Palani and they intend to enforce the same. Since the applicants have already taken sale deeds in respect of the same properly from the said Palani himself, these applicanis did not care to send any reply to the notice. While so, on 6.7.97 the applicants were shocked and surprised when the first respondent handed over a copy of the decree obtained by him in C.S.No.359 of 1996 of this Court dated 3.3.1997, as per which he has obtained a decree of specific performance directing the 6th respondent to execute the sale deeds in respect of the suit properly in favour of these respondents, failing which the Asst. Registrar, High Court, Madras, has been directed to execute the sale deeds. The applicants came to know that the respondents 1 to 5 knowing fully well that already sale deeds have been executed in favour of these applicants have chosen to file the suit without impleading them as parties and the decree has been passed ex-parte, since 6th respondent, the only defendant in the suit has chosen to remain ex-parte for the reasons known to himself. Since these applicanis have already become owners of the suit property they are necessary parties to the suit and the respondents 1 to 5 have filed the suit fraudulently without impleading them as parties. In pursuance of the ex-parte decree granted in favour of respondents 1 to 5 the applicants now understand that the said respondents have deposited the balance of sale consideration in the Court on 19.6.97.
As soon as the ex-parte decree came to the knowledge of these applicants, they have filed these applications immediately without any delay to set aside the ex-parte decree and to implead them as parties and also to stay the execution because the said decree directly affects the interest of these persons and also to avoid multiplicity of proceedings. These applicants would like to point out that they have purchased the suit property paying valuable consideration and if the 6th respondent is allowed to take the money deposited by the other respondents, these applicants will Act have no remedy for recovery of consideration paid by them for taking the sale deeds from the 6th respondent. Since the ex parte decree is obtained behind the back of these applicants, it will cause hardship and injustice, they are filing these applications and they are necessary parties to the suit and therefore they have to be impleaded as defendants, ex parte decree has to be set aside and the execution of the said decree has to be stayed.
4. The respondents 1 to 5, who are the plaintiffs in the suit have filed a common counter and in the supporting affidavit filed by the first respondent following averments are made :
The applications filed by the applicants are not maintainable since they have no locus standi to get impleaded in the suit and they are not parties to the suit. Sixth respondent is the power agent of the owners and he has executed agreements of sale in respect of the suit property in favour of these respondents / plaintiffs. The agreements in favour of the plaintiffs are earlier in point of lime and therefore, they must be preferred to the alleged agreements or sale deed in favour of the applicants. Even according to the applicants they have paid only 90% of the sale consideration and therefore they have not become lawful owners. The applicants have prior knowledge of the agreements in favour of these plaintiffs / respondents. The applicants have no: acquired title to the suit property. There could be no agreements in favour of these applicants prior to the sale deeds because the sale deeds in their favour do not even refer to any such agreement. Infact the applicants and 6th respondent colluded with each other and these applications have been filed to defeat the lawful rights of the respondents. The sale deeds relied upon by the applicants have no effect in law and they are not binding upon the respondents. The 6th respondent does not file any application to set aside the ex-parte decree. These respondents 1 to 5 as plaintiffs are entitled for getting the sale deeds executed by the 6th respondent failing which the Court is liable to execute the sale deeds in favour of these respondents. The applicants are not necessary parties and non-impleading them is therefore justified. Even if the applicants had got any case, it is for them to work out their remedies in separate proceedings and they cannot be heard to contend against the decree obtained by the plaintiffs in the suit. It is open to the applicants to proceed against the 6lh respondent for appropriate remedies. Therefore these applications are liable to be dismissed.
5. Both sides have made their submissions. The applicants have filed typed set of documents, which has been exchanged with the respondents parties.
6. The points tor consideration are: As to whether these applications are maintainable and whether the applicants are entitled to the reliefs sought for in these applications ?
7. The points :- These three applications have been filed by third party interveners to the suit C.S.No. 359 of 1996. C.S.No, 359 of 1996 was filed by the respondents 1 to 5 as plaintiffs impleading the 6th respondent as the sole defendant The suit has been filed for specific performance of the agreement of sale entered between the respondents 1 to 5 on the one hand and 6th respondent on the other hand. It is not in dispute that the suit property originally belonged to one Basherunnisa and 7 others. There is no dispute with regard to the original title of the landlords. These plaintiffs, namely the respondents 1 to 5 have entered into agreement of sale with 6th respondent / defendant for purchase of the suit building flats and suit has been filed for specifically enforcing the agreement of sale. 6th respondent / defendant remained ex-parte and by judgment and decree dated 3.3.1997, the applicants have been granted a decree for specific performance. The main contention of these applicants are that they have become lawful owners of the suit property and 6th respondent Palani has no subsisting right in the suit property since as power agent of Basherunnisa and 7 others he has executed sale deeds in favour of these applicants f to 4 between 1994 and 1995. The sale deed in favour of the second respondent R. Gopal is found in page 8 of the typed set of documents filed on behalf of these applicants. As seen from pages 1,3 and 5 the second applicant has paid various sums amounting to Rs.3.30,800 towards consideration of the sale deed. The receipts have been issued by the 6th respondent for having received the said amounts on four occasions on different dates between June, 1994 and April, 1995. The execution of the sale deeds in favour of the second applicant R. Gopalan was on 31.12.1994. The 6th respondent as power agent of Basheerunnisu and 7 others has executed [he sale deed in favour of the second applicant R. Gopalan.
8. Similarly a sale deed dated 17.6.95 has been executed on behalf of Basheerunnisa and 7 others by their power of attorney holder Palani in favour of the first applicant R. Subramanian and the copy of the sale deed is found in page 53 of the typed set of documents. The said Subramanian also has paid a total sum of Rs. 1 ,50,000 for which he has obtained receipts, which are found in page 27 and 29 of the typed set of papers. Similarly the third applicant Suresh Babu has paid Rs.2,40,000 as seen from the receipt which are found in pages 73 and 75 of the typed set of papers, issued by said M. Palani. Subsequently on 12.3.1996 the 6th respondent as power agent of Basherunnisa and 7 others has executed sale deed in favor of the 3rd applicant Suresh Babu a copy of which is found in page 79 of the typed set of papers. The 4th applicant Hemavathy has paid a sum of Rs.2,00,000 on 1.2.95 and 28.3.95 and the receipts are produced and they are found in pages 109, 111 and 115 of the typed -set of papers. On 10.10.1994 the 6th respondent Palani has executed sale deed in favour of Hemavathy in respect of a portion of the suit property. The encumbrance certificate taken before filing of the suit would show the encumbrances made in favour of these applicants and the copy of the sane is furnished in page 135 of the typed, set of papers.
9. It is not disputed by the respondents 1 to 5 / decree holders that the suit property belongs to Basherunnisa and 7 others on behalf of whom and as power agent, 6th respondent Palani has only executed the agreements in favour of these respondents/ plaintiffs. The suit itself has been filed for specific performance of those agreements and an ex-parte decree has been obtained by the respondents 1 to 5. To give effect to decree and by way of execution these plaintiff's have ultimately to get sale deeds executed by the defendant M.Palani or on his refusal by this Court in execution of the decree. But the fact remains that the said Palani has already executed sale deeds as power agent of original owners under sale deeds mentioned above in favour of these applicants. Since the original title of Basherunnisa and 7 others is not disputed, since the relief is sought for against the defendant / 6th respondent, namely M.Palani only in his capacity as power agent for the real owners, the inescapable fact is that the 6th respondent has no title to the suit property since he has already transferred the title in favour of these applicants. If is strange that that the respondents 1 to 5/decree holders have chosen to oppose the applications tiled by these applicants to get impleaded in the suit itself. In a suit for specific performance the necessary parties arc the owner or owners and if they are any subsequent purchasers ihey must also be necessary parties so that they can also be directed to join with the real owner to execute the sale deed in favour of the plaintiffs in execution of a decree for specific performance. Unless and until such a sale deed is executed in favour of the successful plaintiff, the decree will remain only a paper decree incapable of conferring real title to the agreement holder, namely the plaintiff. This is a fundamental requisite in a suit for specific performance. So the fact remains that the only defendant who has been impleaded in the suit hat, already divested himself of the title and he would not be in a position to convey effective title to these plaintiffs who have no doubl obtained an ex-parte decree for specific performance of the contract. The Court cannot remain a silent spectator and cannot be a party for execution of such a sale deed to the successful decree holder when obviously it cannot convey any real title to the decree holder.
10. The agreement of sale does not confer any interest or title in respect of subject matter of the agreement and the only remedy for the person holding such an agreement is to file a suit for a specific performance of the agreement and to have executed by gelling a sale deed from the seller or in case seller declines from the Court. Then only the decree holder will get title to the suit property.
11. Notwithstanding the fact that the 6th respondent has executed agreement in favour of these plaintiffs he has chosen to execute sale deeds and since his title to the suit property is not disputed, the title has already been passed in favour of the present applicants. Even according to the plaintiffs these applicants are subsequent purchasers and therefore preference must be given for the agreements which they have entered with the 6th respondent. That can be seen only if these subsequent purchasers are impleaded as parties and the agreement holder, namely the plaintiffs have to prove that these sale deeds have been obtained by the applicants with full knowledge or notice of the earlier agreement in their favour. Intact these applicants have not only obtained valid sale deeds transferring title in respect of the suit property in favour of themselves, they also set up earlier agreement's of sale and would also deny any knowledge about the alleged agreements obtained by these decree holders from the 6th respondent. So the plaintiffs can only get an effective decree if these subsequent purchasers are impleaded as parties to the suit and thereafter the plaintiffs will be able to prove that their sale deeds cannot be given effect to put preference must be given for enforcing their agreements of sale. The mere execution of an agreement of sale does not preclude the seller from executing sale deeds in favour of third parties and notwithstanding the agreements such transfer or sale would necessarily and automatically transfer title to alinees. It is only to get an effective decree such subsequent purchasers are to be impleaded as necessary panics along with the vendor. In a suit for specific performance plaintiffs must pray for execution of the sale deed by the original vendor who executed the agreement and must also seek a direction against the subsequent purchasers also to join in execution of the sale deed along with the original owner.
12. It is mainly contended by the respondents 1 to 5 that the present application are not maintainable since the applicants are not parties to the suit and the suit has ended in passing a decree for specific performance. It is true that only parties to the decree can seek set aside the ex-parte decree normally. But this is not an absolute rule that third parties to the proceedings cannot seek to implead themselves and have the suit, re-opened or restored. If a party to the suit suffers an ex-parte decree he can file a petition to set aside the ex parte decree under the specific Order and Rule of Code of Civil Procedure. But these applications are filed under Section 151 of the Code of Civil .Procedure by the third party / applicants / interveners for getting them impleaded in the suit to contest the suit after setting asiding the ex parte decree obtained by the respondents 1 to 5. It cannot be denied that the applicants have got valid interest in the subject matter of the suit. Intact they have validly obtained sale deeds in respect of the very same property from the competent person, namely the 6th respondent under whom only the plaintiffs have also claim to have obtained agreements of sale.
13. The learned counsel for the applicants relics upon a ruling reported in Rameshwar Bhagat and another v. Thakur Veban Narayan Singh, A.I.R. 1937 Pat. 49. That was also a case were a third party / intervener sought to set aside the ex-parte decree to which he was not a party. A preliminary objection was taken that the application has become infructuous as the suit has already been decreed ex parte against the existing respondents. The Court rejected the plaintiffs contenting observing that it does not find any substance in this objection. The court observed as follows :
" The circumstances were similar in Nilaabar Jha v. Chandradhari Singh, 10 P L T 442 in which the order was that if the Munsif found that the petitioner were entitled to be added as panics he should give them an opportunity to set aside the ex-parte order, that is to say, if these petitioners ought to have been added us parties, the fact that since the disposal of their application the suit has been decreed ex-parte will not stand in their way.
.... The question then arises whether in such a case as the present it was proper to join the interveners as parties. The petitioners rely on Order 1, Rule 10, Civil Procedure Code and contend that they are persons who ought to have been joined. The opposite party contends that the petitioners were not necessary parlies at the time of the institution of the suit and that the question of who are proper parties should be determined with reference to the state of things at the institution of the suit and not at a later date. However Order 1, Rule 10, Clause (2) authorises adding the name as a party of any one .....
whose presence before the Court may be necessary in order to enable the Court effectively and completely to adjudicate upon and settle all the questions involved in the suit.
This power is given to the Court "at any siage of the proceeding"; and therefore in my opinion the power may be exercised in order to bring on the record persons who are found to be proper parties at any stage, not necessarily only those who were proper parlies on the date of the in stitution of the suit.
.... It has been held in more than one decision of this Court that where an intervening third parly alleges his purchase of the holding and alleges recognition of that transfer by the landlord the trial Court must add the intervener as a party. "
14. In Surajdeo v. Board of Revenue U.P. Allahabad & others A.I.R. 1982 All. 25 the High Court held that the main grievance of the contesting party before the Court was that the petitioner was not a Party to the suits in which ex-parte decree has been passed in favour of the contesting opposite parties, hence he had no right to make an application to set aside the ex-parte decrees. The objection was brushed aside and the Court held as follows :-
" There may be cases where a third person can bring correct facts to the notice of the courts concerned and the courts concerned will be fully justified in acting upon the information received and in exercising powers under Section 151 of the Code of Civil Procedure.
..... Thus in my opinion having some right in the nature of eascmentary right, the petitioner was fully entitled to bring correct facts to the notice of the courts concerned which had passed decrees in favour of the con its ting opposite parties without looking to the relevant provisions of law, ...... I do not agree that a person, not parties to suit, cannot apply for restoration of the suit or setting aside the ex-parte decree. The true test is that the person applying for restoration of the suit or for setting aside the decree should have some interest in the subject matter of the litigation.
......The application being one under Section 151, Code of Civil Procedure invoking the inherent powers of the Court to make an order necessary in the ends of justice the question as to the locus standi of the applicant can hardly arise. The petitioner was no doubt not a party to the mortgage suit but it cannot be urged for a moment thai he is not vitaly interested in the order which had been passed and which he seeks 10 be vacated.
His Lordship also approving question a earlier ruling reported in Mahmud Ismail Salehji v. Ahmad Ismail Salehji, 1LR (1949) I Cal. 155 wherein it has been held :-
"... there is inherent jurisdiction to set aside ex-parte order against persons whose rights have been affected by such orders although they are not parties to the proceedings in which such orders are made. "
In view of the authorities cited and in view of the admitted facts of this case, the objection raised on behalf of the respondents 1 to 5 with regard to the maintainability of these applications and question of locus standi have to be rejected.
15. It is also significant to note that it is not as if the respondents 1 to 5 plaintiffs were not aware of the sale deeds in favour of these applicants. Even before filing of the suit, these plaintiffs themselves have issued notice to these applicants stating that they have got a prior right by virtue of their agreements of sale to take sale deeds from the 6th respondent and that the sale deeds taken by these applicants cannot take precedents. It does not matter that these applicants did not send any reply to the notice. As correctly contended by them since these applicants have taken sale deeds from a person having tide they just kept quite thinking that if and when the plaintiffs file the suit they will be made parlies to the same and they could contest the relief's sought for.
Therefore the mere fact that these applicants have not replied to the notice could not stand in the way of now having the decree set aside. Moreover a duty cast upon the plaintiffs in a suit for specific performance to implead the subsequent purchasers and since he has got only a right to enforce the agreement, the passing off title is not prevented and if the title has already passed me plaintiffs ought to implead the subsequent purchasers also as defendants, besides the original vendor to get an effective decree. The plaintiff in a suit for specific performance must obtain encumbrance certificate to find out whether anybody has taken subsequent sale deeds and if encumbrance reveals such transactions they must necessarily implead such subsequent purchasers. A copy of the encumbrance certificate is also found in the typed set of papers and if only the plaintiffs have been vigilant and looked into the encumbrance certificate before filing the present suit, they should have necessarily made these applicants as defendants also.
16. I have already indicated that without the present applicants as parties to the suit no effective decree can be obtained or given to the plaintiffs because the 6th respondent, namely the defendant in the suit has already transferred his title in favour of these applicants and sale deeds even if executed by him will not confer any title to the present plaintiffs. Moreover the plaintiffs can always contend and succeed if they are able to prove that the sale deeds in favour of ihese applicants are with notice of earlier agreements in favour of them and therefore they must be also directed to join in execution of the sale deed in their favour. In case the present applicants failed in the suit they will be atleast entitled to recover the money already paid to the 6th respondent. Suppose if these applications are dismissed, since the plaintiffs have already deposited the sale consideration nothing can prevent the 6th respondent, who remains ex-parte till now to file an application for payment out and draw the money in which case the Court would be allowing to unlawfully enrich himself because he has already received, sale consideration from these applicants in respect of the very same property. Moreover even if plaintiffs succeeds after allowing these applicants to be made as parties to the suit, the later atleast can withdraw the monied deposited by the plaintiffs because they have to ulliinately execute sale deeds in favour of these plaintiffs since the title has been already transferred to them. Rejecting the applications will cause injustice to the parties and they will have to be unnecessarily forced to file another out of litigation. So to avoid multiplicity of proceedings, it is also necessary to implcad the present applicants as defendants in the suit. So in any view of the matter the present applicants are necessary parties and to secure complete justice they have to he made as defendants, The present plaintiffs after knowing the sale deeds in favour of these applicants have purposely and wantonly not impleaded them and therefore they are also guilty of suppression of material facts known to them and in this way also the third parties are necessary parlies and shall not be allowed to suffer unnecessarily. Therefore, in any view of the matter, the present application have to be allowed.
17. In the result, the ex-parte decree passed in C.S.No..359 of 1996 is set aside. The plaintiff are directed to implead these applicants as additional defendants in the suit and since the ex parte decree is set aside, the Execution Petition will automatically stand dismissed. So all these applications are allowed and ordered accordingly in favour of the applicants /third party interveners.