Calcutta High Court (Appellete Side)
Smt. Durga Das & Ors vs M/S Solace And Associates on 30 April, 2012
Author: Soumen Sen
Bench: Soumen Sen
1
THE HIGH COURT AT CALCUTTA
Civil Revisional Jurisdiction
APPELLATE SIDE
Present :
The Hon'ble Justice Soumen Sen
C.O. No.213 of 2012
Smt. Durga Das & Ors.
Versus
M/S Solace and Associates.
For the Petitioner : Mr. Aniruddha Chatterjee
Mr. Kushal Chatterjee
Heard on : 25.01.2012 08.02.2012, 09.02.2012
Judgment on : 30th April, 2012
Soumen Sen,J.:- The rejection of an application filed under Order 1 Rule
10(2) of the Code of Civil Procedure, is a subject-matter of challenge in this
revisional application.
The learned Court below, by an order dated 14th March, 2011, rejected the
said application filed by the plaintiff on the ground that from the plaint it does
not suggest that Uco Bank, Dum Dum Branch is a necessary party or a proper
party. Accordingly, the learned Judge did not find any cogent ground to allow
such prayer "at this stage".
2
The plaintiff instituted a suit against the defendants praying, inter alia, for
declaration and injunction. The prayer for permanent injunction is limited to
defendant Nos.7 and 8. It is alleged in the plaint that the defendant Nos. 2 to 6
by practising fraud upon the plaintiffs sold away Schedule B Property to the
defendant No.7. It is further alleged that the Schedule B Property was mortgaged
in favour of the defendant No.8 i.e., Honkong and Shanghai Banking
Corporation. The plaintiffs were surprised to find on 21st May, 2007, that some
unknown persons visited the said property with a view to take possession thereof
due to failure of the defendant No.7 to pay off the mortgage debts to the
defendant No.8 in whose favour the defendant No.7 claimed to have created
mortgage for availing certain credit facilities.
The said suit was filed sometimes in November, 2007.
In or about June 2010, the plaintiff filed an application under Order 1 Rule
10(2) of the Code of Civil Procedure. The plaintiff alleged in the said application
that the defendant Nos. 1 to 6 by practising fraud managed to have registered a
General Power of Attorney on 5th May, 2004 in their favour by presenting some
fictitious persons instead of the plaintiffs (suggesting impersonation) and on the
basis of such alleged power of attorney, the said defendant Nos. 1 to 6 sold away
the flat in question in favour of the defendant No.7.
3
The defendant No.7 appears to have taken some loan from the defendant
No.8 by mortgaging the suit property, but failed to repay the loan amount. In
view thereof, the plaintiffs were being harassed regularly by the men and agent of
the defendant No.8 in respect of the suit property. The plaintiff, finding no other
alternative, instituted the suit.
Subsequently, in or about March, 2009, some unknown persons claiming
to be employees of Uco Bank, Dum Dum Branch, pasted a notice under Section
13(2) of Securitization and Reconstruction of Financial Assets and Enforcement
of Security Interest Ordinance Act, 2002 (hereinafter referred to as SARFAESI
Act, 2002) from which it was revealed that the defendant No.7 took a loan
amounting to Rs.8,90,582/- after mortgaging the suit property and upon an
enquiry being made, it was further revealed that the defendant No.2 to 6
executed and registered a Deed of Conveyance in favour of the defendant No.7 on
the basis of a forged and fictitious Power of Attorney being No.2442 executed in
or about 5th May, 2004 and registered at the Registrar of Assurance-II. In
Paragraph 6 to the said application for addition of party, following averment is
made:-
"6. That the said Uco Bank, Dum Dum Branch and its men and agent
has been regularly disturbing the peaceful possession of the plaintiff in
respect of the suit property and the said bank is going to sell out the property
according to Section 13(4) of the SARFAESI Act, 2002."
4
Mr. Aniruddha Chatterjee, the learned Counsel appearing on behalf of the
petitioner, submits that the learned Judge has completely misdirected its mind in
deciding the said application under Order 1 Rule 10(2) of the Code of Civil
Procedure. It was submitted that the application under Order 1 Rule 10(2) of the
Code of Civil Procedure is for addition and/or striking of a party and the power to
strike out as well as to add parties, may be exercised at any stage of the
proceedings and even without any application by a party. He further submitted
that the power of Court under the sub-rule (2) is one of discretion which is to be
exercised judiciously, keeping in mind that one of its objects is to prevent
multiplicity of suits and conflict of decisions.
It was submitted that the plaintiff prayed for declaration of their rights as
joint owners in respect of the suit property and such declaration, if allowed,
would operate as a judgment in rem. In this regard he had relied upon the
judgment of the Hon'ble Supreme Court reported in AIR 1958 SC 886 (Razia
Begum v. Sahebzadi Anwar Begum & Ors.).
In the case of Razia Begum, it appears that one Sahebzadi claiming herself
to be the "lawfully and legally wedded wife" of the son of Nizam of Hyderabad
(hereinafter referred to as "Prince") filed a petition under Order 1 Rule 10(2) of the
Code of Civil Procedure, claiming addition of party in the suit instituted by Razia
Begum in which Razia Begum alleged that she is the lawfully married wife of the
Prince.
5
The suit was instituted by Razia Begum against the second son of the
Nizam of Hyderabad (hereinafter referred to as Prince) alleging that she is lawfully
married wife of the Prince and the marriage ceremony was duly solemnized in
accordance with the Shia Law. It was averred that three daughters were born of
the wedlock and the fact of the said marriage was known to all persons
acquainted with the Prince. There was a pre-nuptial agreement where the Prince
agreed to pay Rs.2000 per month to the plaintiff as kharch-e-pandan which
allowance the Prince stopped since January, 1953. The suit was for declaration
of the status of Razia as wife of the Prince and her entitlement to receive the said
allowance of Rs.2000 per month. The suit was filed on 22nd April, 1957. On that
very date, Sahebzadi filed an application under Order 1 Rule 10 of the Code of
Civil Procedure along with her minor son, praying for addition of party on the
ground that the said Sahebzadi is the lawfully and legally wedded wife of the
Prince and the son born of the said wedlock is the son of the said Prince. In the
said application it was averred that Razia asserted her right as the wife of the
Prince which status the Prince is denying or interested to deny and the
petitioners, namely, Sahebzadi are being joined as parties to the suit would be
equally interested in denying the marriage of the plaintiff and her rights and
status. In fact, by the said application Sahebzadi wants to establish her status
as wife of the Prince and denying the marriage of the plaintiff with Razia.
6
In the said petition, Sahebzadi further alleged that they have reasons to
believe that the above suit was a result of collusion and the object and motive of
the plaintiff in instituting the suit is to adversely affect the relationship of the
petitioners and the defendant and also to deprive the rights and interests of the
petitioners (Sahebzadi) in the defendant's (Prince) estate. The said claim was
resisted by Razia Begum on the ground that the said application for addition was
mala fide and malicious and she further asserted that the "possibility of the
rights of the petitioners being infringed are very remote, contingent upon their or
plaintiff surviving the defendant or other circumstances which may or may not
arise."
The plaintiff referred to the admission of the defendant (Prince) in the
written statement and asserted that the petitioners were neither necessary nor
proper parties to the suit. The Prince in his answer to the application admitted
that the first respondent is his wife and the second respondent is his son and
also repeated his admission of marriage to the plaintiff in October, 1948, and the first respondent in December, 1952. The Prince contended that when he married the first respondent, he had already three daughters by the plaintiff, which fact was known to the first respondent at the time of her marriage with him. The Prince supported the plaintiff in her objection to the intervention by asserting that the rights of the respondents 1 and 2 would not be affected in any way, and by insisting upon his Muslim right of having four wives living at the same time. The Prince also supported the plaintiff in her denial of the allegation of collusion. 7 On these allegations and counter-allegations, the Trial Judge allowed the application of intervention, and directed the addition of the respondents 1 and 2. The reasons for allowing such addition of parties was that the record of the proceedings suggest of a possible collusion between the plaintiff and the defendant and that the relief claimed under Section 42 of the Specific Relief Act, being discretionary, could not be granted as of right. It was further held that the presence of the interveners would help the court in unraveling the mysteries of litigation and that there was force in the contention put forward on behalf of the interveners that under Section 43 of the Specific Relief Act, any declaration given in favour of the plaintiff, would be binding upon the interveners. It was further held that for the purpose of effectual and complete adjudication of the issues involved and to settle the present controversy, the presence of the interveners was necessary.
The Hon'ble Supreme Court in such factual background construed Order 1 Rule 10(2) of the Code of Civil Procedure and laid down the law in paragraphs 12, 13 and 14 which are reproduced hereinbelow:-
"12. When a declaratory judgment has been given, by virtue of S. 43, it is binding not only on the persons actually parties to the judgment but their privies also, using the term 'privy' not in its restricted sense of privy in estate, but also privy in blood. Privity may arise (1) by operation of law, for example, privity of contract; (2) by creation of subordinate interest in property, for example, privity in estate as between a landlord and a tenant, or a mortgagor and a morgagee; and (3) by blood, for example, privity in 8 blood in the case of ancestor and heir. Otherwise, in some conceivable cases, the provisions of S. 43, quoted above, would become otiose. The contention raised on behalf of the appellant, which was strongly supported by the third respondent through Mr. Pathak, as stated above, is that a declaratory judgment would not bind anyone other than the party to the suit unless it affects some property, in other words, unlees the parties were privy in estate. But such a contention would render the provisions of S. 43 aforesaid, applicable only to declarations in respect of property and not declarations in respect of status. That could not have been the intendment of the statutory rule laid down in S. 43. Sections 42 and 43, as indicated above, go together, and are meant to be co-extensive in their operation. That being so, a declaratory judgment in respect of a disputed status, will be binding not only upon the parties actually before the Court, but also upon persons claiming through them respectively. The use of the word 'only' in S. 43, as rightly contended on behalf of the appellant, was meant to emphasize that a declaration in Chap. VI of the Specific Relief Act, is not a judgment in rem. But even through such a declaration operates only in personam, the section proceeds further to provide that it binds not only the parties to the suit, but also persons claiming through them, respectively. The word 'respectively' has been used with a view to showing that the parties arrayed on either side, are really claiming adversely to one another, so far as the declaration is concerned. This is an other indication of the sound rule that the Court, in a particular case where it has reasons to believe that there is no real conflict, may, in exercise of a judicial discretion, refuse to grant the declaration asked for oblique reasons.
13. As a result of these considerations, we have arrived at the following conclusions:
(1) That the question of addition of parties under R.10 of O.1 of the Code of Civil Procedure, is generally not one of initial jurisdiction of the Court, but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case; but in 9 some cases, it may raise controversies as to the power of the court, in contradistinction to its inherent jurisdiction, or, in other words, of jurisdiction in the limited sense in which it is used in S. 115 of the Code;
(2) That in a suit relating to property, in order that a person may be added as a party, he should have a direct interest as distinguished from a commercial interest, in the subject-matter of the litigation; (3) Where the subject-matter of a litigation, is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the court is of the opinion that by adding that party, it would be in a better position effectually and completely to adjudicate upon the controversy; (4) The cases contemplated in the last proposition, have to be determined in accordance with the statutory provisions of Ss.42 and 43 of the Specific Relief Act;
(5) In cases covered by those statutory provisions, the court is not bound to grant the declaration prayed for, on a mere admission of the claim by the defendant, if the court has reasons to insist upon a clear proof apart from the admission;
(6) The result of a declaratory decree on the question of status, such as in controversy in the instant case, affects not only the parties actually before the Court, but generations to come, and in view of that consideration, the rule of 'present interest', as evolved by case law relating to disputes about property does not apply with full force; and (7) The rule laid down in S. 43 of the Specific Relief Act, is not exactly a rule of res judicata. It is narrower in one sense and wider in another.
14. Applying the propositions enunciated above to the facts of the instant case, we have come to the conclusion that the courts below did not exceed their power in directing the addition of the respondents 1 and 2 10 as parties-defendants in the action. Nor can it be said that the exercise of the discretion was not sound. Furthermore, this case comes before us by special leave, and we do not consider that it is a fit case where we should interfere with the exercise of discretion by the courts below. The appeal is, accordingly, dismissed. As regards the question of costs, we direct that it will abide the ultimate result of the litigation, and will be disposed of by the trial court."
It has been stated that necessary party was one without whom no decree can be made effectively and proper party was one in whose absence, an effective order can be made, but whose presence is necessary for a complete and final decision on the question involved in the proceeding.
The said decision in Razia Begum was considered in H.M. Kassim Vs. South Indian Bank reported in AIR 1991 Kerala 221. In the said decision it was held that the petitioners have no claim that they are necessary parties to the suit. They seek to come on record only as proper parties. A person may be impleaded as a defendant in a suit, though no relief may be claimed against him, if his presence is necessary for a complete and final adjudication of the questions involved in the suit. It is well established that questions involved in the suit are those which arise between the parties to the suit. (Vaithilinga v. Sadasiva AIR 1926 Mad. 836, Somiah v. Amina Begum, AIR 1976 AP 182, among others). Only a person, who has a direct interest in the subject matter of the litigation, 11 whether it raises questions relating to moveable or immoveable property, can however be impleaded as a party.
The learned single Judge in paragraphs 6 to 8 of the said report summarized the law in the manner following: -
"6. A person may be impleaded as a defendant in a suit, though no relief may be claimed against him, if his presence is necessary for a complete and final adjudication of the questions involved in the suit. It is well established that questions involved in the suit are those which arise between the parties to the suit. Only a person, who has a direct interest in the subject matter of the litigation, whether it raises questions relating to moveable or immovable property, can however be impleaded as a party. Razia Begum v. Anwar Begum, AIR 1958 SC
886. What is this "direct interest" Lindley LJ has explained it in Moser v. Marsden (1892) Ch. 487 as a direct interest in the issues between the plaintiff and the defendant. Only a person who is so interested can be impleaded as a defendant. Lord Greene M.R. has further explained the nature of this interest in re I.G. Farbenindustrie A.G. Agreement (1943) 2 All ER 525 where he stated that in order that a party may be added as a defendant in the suit, he should have a legal interest in the subject matter of the litigation - legal interest not as distinguished from an equitable interest, but an interest which the law recognizes. The learned Judge went on to state that the court had no jurisdiction to add a person as a party to the litigation if he had no legal interest in the issue involved in the case. The matter was elaborately dealt with again by Devlin J. (as the learned Judge then was in the Queen's Bench Division) in Amon v. Raphael Tuck & Sons Ltd., (1956) 1 All ER 273. The learned Judge reiterated that it was not enough that the intervener was commercially or indirectly interested; he must be directly or legally interested. A person is legally interested 12 in the question involved in the suit only if he can say that it may lead to a result that may affect him legally, that is by curtailing his legal rights."
7. The ratio of the decided cases is that a proper party is one who has a defined, subsisting, direct and substantive interest in the issues arising in the litigation, an interest which will be cognizable in the court of law. That is, an interest which the law recognizes and which the court will enforce. A person who is only indirectly or commercially interested in the proceedings, is not entitled to be added as a party. If he is a person who is not interested in the questions which arise between the parties to the litigation, that is, a question with regard to the right set up and the relief claimed by one side, and withheld by the other, he cannot be impleaded as a party, The raison d'etre is that the trial of the suit will be embarrassed and considerable prejudice caused to the contesting parties, if irrelevant matters are allowed to be agitated or considered, by adding a new party whose interest in the litigation has no nexus to the subject matter of the suit. (Mahadave Rice and Oil Mills v. Chennimalai Goundar, AIR 1968 Mad.
287).
8. The position of the petitioners vis-à-vis the first respondent Bank is such that they have no claim as against the Bank. There is no interest liable to be agitated or adjudicated upon, between them and the Bank. They are not directly interested in the issues arising between the plaintiff bank and its debtors, the defendants. If at all, their right is only against their own establishment represented by respondents 2 and 3, the defendants in the suit. The presence of these petitioners who do not owe or own up any liability to the plaintiff and who do not 13 undertake to discharge the loan amount due to the plaintiff, is not required for the purpose of adjudicating the dispute between the plaintiff and their debtors namely the defendants. The court can effectively and completely dispose of the suit even without the petitioners on record. The petitioners do not have any right which they could enforce against the plaintiff in law. In that event, their presence in the suit is unnecessary, and they are not entitled to be added as parties to the suit. Their petition for being impleaded was, therefore, misconceived and was rightly rejected by the court below." The said rule provides for addition of proper or necessary parties and the striking out of improper and unnecessary parties. Addition of parties should not be made merely to avoid multiplicity of suits if their presence is not necessary for determining the real questions ILR 1946 (1) Cal 656 (Gosto Vs. Sur's Estate Ltd).
The procedure prescribed under Order 1 Rule 10 of the Code of Civil Procedure would apply to implead a necessary or proper party to effectuate complete adjudication of all the disputes that have arisen between all the necessary or proper parties who may be bound by the decision.
The question of addition of parties under Order 1 Rule 10 of the Code of Civil Procedure is generally not one of initial jurisdiction of the Court, but of judicial discretion which has to be exercised in view of the facts and circumstances of a particular case. In a suit relating to property in order that a 14 person may be added as a party, he should have a direct interest as distinguished from a commercial interest in the subject-matter of the litigation. Where the subject-matter of the litigation, is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the Court is of the opinion that by adding that party, it would be in a better position effectually and completely to adjudicate upon the controversy. In Razia Begum (supra) the rule was relaxed since a declaratory decree on the question of status, such as in controversy in the said case, affects not only the parties actually before the Court but generations to come, and in view of that consideration, the rule of present interest, as evolved by case law relating to disputes about property does not apply with full force. The rule laid down in Section 43 of the Specific Relief Act is not exactly a rule of res judicata. It is narrower in one sense and wider in another. Applying such propositions and having arrived at a conclusion that the Courts below did not exceed their power in directing the respondent Nos.1 and 2 as parties defendants in the action nor could it be said that such exercise of discretion was not sound the Hon'ble Supreme Court refused to interfere with the said order of the Courts below having not found it to be a fit case for interference by special leave.
The primary object of Order 1 Rule 10(2) of the Code of Civil Procedure is to bring before the Court at one and the same time of the persons interested in the dispute so that all the controversies in the suit may be finally determined once and for all in the presence of the parties without delay, inconvenience and expenses of several actions, trials and inconclusive adjudication. 15 Notwithstanding the fact that the said provision confers wide discretion but such discretion has to be exercised judicially and on sound legal principle. In Anil Kumar v. Shivnath reported in 1995 (3) SCC 147, considering the provisions of Order 1 Rule 10(2), the Supreme Court observed that "though the court may have power to strike out the name of a party improperly joined or add a party either on application or without application of either party, the condition precedent is that the court must be satisfied that the presence of such party would be necessary in order to enable the court to effectually and completely adjudicate upon and settle all questions involved in the suit..... The object of the rule is to bring on record all the persons who are parties to the dispute relating to the subject-matter so that the dispute may be determined in their presence at the same time without any protraction, inconvenience and to avoid multiplicity of proceedings."
The said power can be exercised on either of the two grounds:-
(a) Such person ought to have been joined, either as a plaintiff or as a defendant, but is not so joined; or
(b) Without his presence, the question involved in the suit cannot be decided finally and effectively.
In Ramesh v. Municipal Corpn. Of Greater Bombay reported in 1992(2) SCC 524 to be joined as a party to the suit, the person must have a direct or legal interest in the action. In other words, he must show that the litigation may 16 lead to a result which would affect him legally by interfering or adversely affecting his legal right or legally protected interest.
In Ramesh v. Municipal Corpn. Of Greater Bombay (supra), the Hon'ble Supreme Court held as follows:-
"It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may have incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objective. 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 question involved and has thought of arguments to advance. The only reason which makes it necessary to make a person a party to an action is so 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 right. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action."17
In Razia Begum v. Anwar Begum (supra), the Supreme Court noted "two currents of judicial opinion", one taking what may be called the narrower view, and the other, the wider view. Then referring to several English and Indian decisions on the point, the majority observed:-
"It is no use multiplying references bearing on the construction of the relevant rule of the Code relating to addition of parties. Each case has to be determined on its own facts, and it has to be recognized that no decided cases have been brought to our notice, which can be said to be on all fours with the facts and circumstances of the present case. There cannot be the least doubt that it is firmly established as a result of judicial decisions that in order that a person may be added as a party to a suit, he should have a direct interest in the subject-matter of the litigation whether it raises questions relating to movable or immovable property."
Under sub-rule(2) of Rule 10,only two classes of persons may be added as parties to a suit: (I) necessary party, i.e. a person who ought to have been joined as a party and in whose absence no decree or order can be passed; or (ii) proper party, i.e. a person, whose presence is necessary for complete and effectual adjudication of the questions involved in the suit. If a person is neither a necessary nor a proper party, he cannot be impleaded in a suit.
A person cannot be impleaded merely because he would be incidentally affected by the judgment, or is interested in the fruits of the litigation, or his presence may enable the court to come to a correct solution of the dispute before 18 the court. What is to be seen in allowing or disallowing an application for addition of a party is whether such addition would be consistent with the scope of the inquiry necessitated in the pending suit and in the absence of such a party it would not be possible to completely and effectively adjudicate the controversy raised before the court. The main object of the rule is not to prevent multiplicity of actions or avoid fresh litigation, but to consider whether the person is directly or legally in the action.
The High Court of Madras in Mahadeva Rice & Oil Mills v. Chennimalai Gounder reported in AIR 1968 Mad 287, laid down the following principles:-
"1. If, for the adjudication of the real controversy between the parties on record, the presence of a third party is necessary, then he can be impleaded;
2. It is imperative to note that by such impleading of the proposed party, all controversies arising in the suit and all issues arising thereunder may be finally determined and set at rest, thereby avoiding multiplicity of suits over a subject-matter which could still have been decided in the pending suit itself;
3. The proposed party has a defined, subsisting, direct and substantive interest in the litigation, which interest is either legal or equitable and which right is cognizable in law;
4. Meticulous care should be taken to avoid the adding of a party if it is intended merely as a ruse to ventilate certain other grievances of 19 one or the other of the parties on record which is neither necessary or expedient to be considered by the Court in the pending litigation; and
5. It should always be remembered that considerable prejudice would be caused to the opposite party when irrelevant matters are allowed to be considered by Courts by adding a new party whose interest has no nexus to the subject-matter of the suit."
The Court would also not permit the addition of party where it would result in introducing a new cause of action with which the plaintiff has nothing to do. The Court would also not permit addition of a party which would alter the nature and character of a suit. Thus, a simple suit for arrears of rent cannot, by granting application to implead a party, be converted into a suit for title, even if the question of title may have to be incidentally investigated in a suit for recovery of rent. (Bhagirathmall v. Ramricklal, AIR 1977 Cal 346).
The Court would also decline addition if it appears that the addition of a new party would necessitate the commencement of the proceeding de novo.
In Antony Devaraj v. Aralvaimozhi (Kurusadi) Devasahayam Mount Oor and Thuya Viagula, Annai Church rep by the Trustee, reported in 2004(2) C.T.C. 183 the Madras High Court considered the right of a third party to claim addition of party. It was held as follows:-
20
"(iii). The person to be added as one of the parties 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 given on some of the questions involved, but it should make him as necessary witness.
(iv). The third party cannot be considered to be a necessary party for deciding the main issue framed in the suit. Mere ground that inclusion of the proposed third party would not alter the structure of the suit may not entitle the party to ask the Court to implead the third party as a defendant.
(v). The Court may upon an application or suo motu, in a fit and proper case, implead a new party as defendant, even against the plaintiff's consent under certain circumstances. The discretion vested with the Court though wide is however circumscribed by the limitations which are built in the provisions contained in Order 1 Rule 10(2), C.P.C.
Where a person is neither necessary nor proper party, the Court has no jurisdiction to add him as a party. If the question at issue between the parties can be worked out without anyone else being brought in, the stranger should not be added as a party.
(vii) A person is not to be added as a defendant merely because he or she would be incidentally affected by the judgment. The main consideration is whether or not the presence of such a person is necessary to enable the Court to effectually and completely adjudicate upon and settle the questions involved in the suit.
(viii) Persons whose interest would be affected by the litigation are entitled to come on record to protect their interest when those are jeopardized by the persons already on record."
21On the aspect of the jurisdiction of the Court to allow addition of party after steps have been taken under Section 13 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, it was submitted that a Civil Court has jurisdiction to grant declaratory reliefs as claimed in the suit unless the same is ousted expressly by a statute or by necessary implication therefrom. Mr. Chatterjee has relied upon the case of Nahar Industrial Enterprises Ltd. Vs. Hong Kong & Shanghai Banking Corporation reported in 2009(8) SCC 646.
Now let us examine the averments made in the application for addition of party. There is no averment in the application that the plaintiff is seeking to claim a declaratory relief against the proposed defendant. In fact, no such declaratory relief has been claimed against the defendant No.8. In view of Sections 13, 14 and Section 34 of the Securitization Act, 2002, the plaintiff can only have relief against the Uco Bank in a forum constituted under the Securitization Act, 2002 for action initiated under the provisions of the Securitization Act. Section 34 starts with a non-obstante clause and is a clear bar to the jurisdiction of the Civil Court to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken in 22 pursuance of any power conferred by or under the Securitization Act or under the provisions of DRT Act, 1993.
It is an admitted position that measures under Section 13(4) had been initiated and the plaintiff would not be permitted to seek any injunction in respect of the action taken by the Uco Bank in view of Section 34 of the Securitization Act, 2002. Moreover, Section 17 of the said Act made it clear that any person including borrower being aggrieved by any of the measures referred to in sub-section 4 of Section 13, could initiate a proceeding before the Debts Recovery Tribunal having jurisdiction in the matter within 45 days from the date on which such measures had been taken.
In Nahar Industrial(supra), the Hon'ble Supreme Court was considering the effect of Sections 17, 20 and 31 of the Recovery of Debts due to banks and Financial Institutions Act 1993 (hereinafter referred to as the R.D.B. Act) vis-à- vis Sections 9 and 22 to 25 of the Civil Procedure Code, 1908.
Nahar filed a suit in the Civil Court of Ludhiana seeking certain declaratory reliefs. In the said proceeding on an application for injunction, the learned Civil Judge passed an order of status quo till 16th of April, 2008. Subsequent thereto on 15th April, 2008, Honkong Bank filed an application under Section 19 of the R.D.B. Act along with some interim applications. The order of status quo passed 23 by the Civil Judge was extended till 23rd April, 2008, however the tribunal also in the proceeding initiated under the R.D.B.I. by an order dated 27th April, 2008 restrained the Nahar from alienating or creating any interest in the fixed assets in relation to the transactions which were not the subject matter of the suit. Some applications were filed for clarification or modification of the order of 5th April 2008, however, the bank filed a transfer application before the Punjab and Hariyana on 27th May, 2008 seeking transfer of proceedings pending before the Civil Judge, Ludhiana to the Debt Recovery Tribunal-III, Mumbai. The Punjab and Hariyana High Court allowed the application for transfer of the suit by Nahar to the D.R.T. Mumbai in the form of counter claim.
This exercise of jurisdiction has been the subject matter before the Hon'ble Supreme Court in which the Hon'ble Supreme Court in Paragraph 14 of the said report indicated the questions that had fallen for consideration, which are as follows:-
"14. In the background of these facts, the following questions that arise for our consideration are:
(I) whether the High Court/Supreme Court has the power to transfer a suit from a civil court to DRT, keeping in mind,
(a) The effect of a transfer from the civil court to DRT is to oust the jurisdiction of the civil court which cannot be done without express statutory provisions.24
(b) Proceedings before DRT is sui generis and totally different from the procedure in a civil court.
(c) Power of transfer under CPC (Sections 22,23, 24 and 25) is inapplicable as these sections apply in a case where the transfer is from one court to another and DRT being not a court.
(d) The power to transfer under the DRT Act is restricted to cases filed by banks that were pending on the date when the Act came into force and in respect of those cases n which DRT has jurisdiction. (II) whether the decision of this Court in Indian Bank v. ABS Marine Products (P) Ltd. Is applicable in the case of transfer of a suit from the civil court to DRT to be tried as a counterclaim, and could coordinate two-Judge Bench in SBI v. Ranjan Chemicals Ltd. Have departed from the ratio thereof after noticing it and without referring the matter to a larger Bench of three Judges?
(III) Even if the power to transfer exists, in the facts and circumstances of the case, whether it ou8ght to have been exercised. (IV) Whether Article 142 is applicable to direct a transfer from a civil court to DRT, especially when:
(i) The DRT Act does not bar the jurisdiction of the civil court to entertain a suit against a bank and therefore powers under Article 142 ought not to be exercised to have such an effect.
(ii) Article 142 is not applicable where a statute occupies the field.
(iii) Power under Article 142 should be exercised only to prevent injustice and to do complete justice between the parties. (V) Whether in the exercise of powers under Article 142, transfer of case ought to be refused to do complete justice between the parties and the proceedings before DRT be stayed pending disposal of the suit."
In the said judgement in Paragraphs 61 to 64 the scope of Section 31 of R.D.B. Act was considered by which all suits and proceedings by or bank and 25 financial institutions for recovery of a debt stands transferred to the DRT on an from the appointed date. The power of a civil court to transfer cases under Section 23, 24 and 25 of the CPC was considered in Paragraphs 65 and 66 of the said report. A debtor having a right to counterclaim or to maintain an action by way of declaration was considered in Paragraph-85.
In answering to the said issues, it was, inter alia, held as follows:-
" 85. If the Tribunal was to be treated to be a civil court, the debtor or even a third party must have an independent right to approach it without having to wait for the bank or financial institution to approach it first. The continuance of its counterclaim is entirely dependent on the continuance of the applications filed by the bank. Before it no declaratory relief can be sought for by the debtor. It is true that claim for damages would be maintainable but the same have been provided by way of extending the right to counterclaim."
The right of a debtor was also considered in Paragraphs 96 and 97 which are reproduced herein below:-
"96. The Tribunal was constituted with a specific purpose as is evident from its Statement of Objects. The Preamble of the Act also is a pointer to that too. We have also noticed the scheme of the Act. It has a limited jurisdiction. Under the Act, as it originally stood, it did not even 26 have any power to entertain a claim of set-off or counterclaim. No independent proceedings can be initiated before it by a debtor.
"97. A debtor under the common law of contract as also in terms of the loan agreement may have an independent right. No forum has been created for endorsement of that right. Jurisdiction of a civil court as noticed hereinbefore is barred only in respect of the matters which strictly come within the purview of Section 17 thereof and not beyond the same. The Civil Court, therefore, will continue to have jurisdiction."
In considering the exclusion of jurisdiction it was held that the R.D.B. Act although was enacted for a specific purpose but having regard to the exclusion of jurisdiction expressly provided for in Sections 17 and 18 of the said Act, it is difficult to hold that a Civil Court's jurisdiction is completely ousted. The Hon'ble Supreme Court noticed that it is only the claims of the banks and financial institutions that can be adjudicated upon by the Tribunal. The debtors can file their claims of set off or counter-claims only when a claim application is filed and not otherwise and for such continuation, the consent of the bank or the financial institution would be necessary. The liabilities and rights of the parties have not been created under the Act. Only a new forum has been created. In paragraph 118 of the said report, the Hon'ble Supreme Court noticed that there could be a possibility that a debtor may file preemptive suits and obtain orders of injunction, but that by itself could not be held to be a ground to completely oust 27 the jurisdiction of the civil court in the teeth of Section 9 of the Code of Civil Procedure.
In the said decision, the Hon'ble Supreme Court recognized the substantive right of debtor to institute even a preemptive civil proceeding which cannot be transferred to the DRT on the basis of Section 31. The said decision, however, does not assist the plaintiff/petitioner.
In considering an application under Order 1 Rule 10(2) of the C.P.C., the court can refuse to exercise discretion in the event if it is found that a step has been taken under a statute which provides for a complete remedy and having regard to the fact that a financial institution has already initiated a proceeding under the SARFAESI Act, which is a complete code in itself, the court can refuse to exercise such discretion. The application for addition of party does not make out a case for addition of UCO Bank as a party in the pending lis. The dispute essentially is between two groups concerning an agreement and at this stage, it cannot be said that UCO Bank is necessary or a proper party. The attempted introduction of UCO Bank is sudden and the pleading is vague. The relevant paragraphs in the application for addition are as follows:-
"4. That recently on March 9, 2009 some unknown person pausing themselves to be the employee of UCO Bank, Dum Dum Branch pasted a Notice under Section 13(2) of Securitisation and Reconstruction of 28 Financial Assets and Enforcement of Security Interest Ordinance, 2002.
6. That the said UCO Bank, Dum Dum Branch and its men and agent has been regularly disturbing the peaceful possession of the plaintiff in respect of the suit property and the said bank is going to set out the property according to Section 13(4) of SARFAESI Act, 2002."
In considering the said application for addition of party regard as to have under Sections 34 and 35 of the SARFAESI Act which are reproduced hereinbelow:-
"34. Civil Court not to have jurisdiction - No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).
35. The provisions of this Act to override other laws - The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law."
It appears from the averment that UCO Bank has already initiated a proceeding and any measure taken under the SARFAESI Act can be questioned under Section 17 of the said Act.
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The judgment in Razia Begum, in my mind, has no manner of application in the facts and circumstances of the case. In that case, it was an application filed by the second wife whose marriage was not in dispute since it relates to the declaration as regards of status or a legal character. The rule of present or direct interest was relaxed since the Court arrived at an opinion that by adding the said party, it would be in a better position to effectually and completely adjudicate upon the controversy. In this case, the declaration is limited to the plaintiffs and the defendant Nos. 1 to 6. The measures sought to be taken, are against the property of which the defendant No.7 claims to be the mortgagor. It does not appear from the record "at this stage" that UCO Bank is either a necessary party or a proper party in the proceeding. Accordingly, the application fails. There shall be no order as to costs.
Urgent xerox certified copy, if applied for, be given to the parties on usual undertaking.
(Soumen Sen,J.)