Bombay High Court
M/S. Sagar Construction Co vs Manoharlal K. Gupta & Ors. And Anil C. ... on 31 October, 2014
Author: S.J. Kathawalla
Bench: S.J. Kathawalla
kpp 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS (L) NO. 228 OF 2014
IN
SUIT NO. 3463 OF 1987
Anil C. Gandhi,
Sole Proprietor of M/s. Ashapura Developers & Ors. ...Applicant
In the matter between
M/s. Sagar Construction Company ...Plaintiff
v/s.
Manoharlal Kishorilal Gupta HUF and others ...Defendants
Mr. Virag Tulzapurkar, Senior Advocate, along with Ms. Alpana Ghone, Ms.
Leena Mirasi and Ms. Tanmayee Salekar, instructed by M/s. Shah & Sanghavi,
for the Plaintiffs.
Mr. K. Munshi along with Mr. Nilesh Modi and Mr. Harshal Manik, instructed
by Mr. Hemangi Modi, for the Applicant.
CORAM: S.J. KATHAWALLA, J.
DATE: 31
October, 2014
st
JUDGMENT:
1. The Plaintiff has filed the above Suit against the Defendants, inter alia seeking specific performance of an Agreement for Sale dated 16 th October, 1985 (Exhibit-C to the Plaint) for sale of property situate at Mulund in the registration sub-district and suburban district at Bandra bearing Survey No. 315, Hissa No. 1 (p) admeasuring 8958.59 sq. mtrs. and Survey No. 316, Hissa 1/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 2 No. 1A (p) corresponding to CTS No. 844 admeasuring 83.6 sq.mtrs. or thereabouts, in all admeasuring 9042.17 sq. mtrs. along with the structures standing thereon (''the suit property'').
2. By an ad-interim order dated 15 th December, 1987, the Court Receiver, High Court, Bombay, was appointed as Receiver of the suit property. By an order dated 25th October, 1990, the ad-interim order dated 15 th December, 1987, was confirmed. It was further directed that the Court Receiver, High Court, Bombay, should not dispossess Defendant Nos. 1, 3 and 4 and the heirs of Defendant No.2 from the second floor premises but to continue them as the agents of the Court Receiver without any security or costs. The Court Receiver took possession of the suit property without dispossessing the aforesaid Parties from their premises.
3. The State Bank of India had filed a suit against the Defendants being Suit No. 199 of 1986 for recovery of its loan and to enforce an equitable mortgage on the suit property. A decree on admission was passed in the said Suit on 4th February, 1997. The Plaintiff was impleaded as Defendant No. 5 in the said Suit and the mortgage in respect of the suit property was redeemed by the Plaintiff herein. Thereafter the Plaintiff took out several proceedings seeking directions against the State Bank of India to hand over the title deeds in respect of the suit property to the Plaintiff. The title deeds were to be deposited by the State Bank of India with the Court Receiver, High Court, 2/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 3 Bombay, as per the directions of this Court. Though the State Bank of India contended that it has deposited all the title deeds/documents in their possession qua the suit property with the Court Receiver, the Plaintiff contended otherwise. In view thereof, by an order dated 16 th January, 2014, passed by this Court in Notice of Motion No. 1436 of 2010, this Court granted liberty to the Plaintiff to initiate appropriate proceedings in the matter for obtaining the title deeds in respect of the suit property.
4. According to the Plaintiff, during the pendency of the present Suit, the Plaintiff came across a Notice dated 18 th July, 2011, in the Free Press Journal.
The said Notice, inter alia, stated that the Applicant herein had agreed to purchase the suit property from Defendant Nos. 1, 2b (i) to (iii), 2c, 2e, 4 (a) to (c ) and 5 vide a Memorandum of Understanding ('MOU') dated 28 th April, 2010. After certain correspondence exchanged between the Advocates for the Applicant, the Plaintiff filed Notice of Motion No. 2436 of 2011 inter alia seeking the following reliefs against the Applicant herein (Respondent therein):
"(c) that pending the hearing and final disposal of the Suit, the Defendant Nos. 1, 2(b) (i) to 2 (b) (iii), 2 (c ) and 2 (e) and the Respondents Nos. 1 and 2 herein be restrained by an order and injunction of this Hon'ble Court from in any manner dealing with or alienating or disposing of or encumbering or alienating or creating any third party right or interest in favour of anyone 3/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 4 else in respect of, or inducting anyone into the said property described in Exhibit 'A' to the Plaint or any part thereof or acting upon or claiming or asserting any rights under the purported Memorandum of Understanding dated 28 th April 2010 referred to Exhibit E to the Affidavit in support of Notice of Motion and/or any other document/s."
5. The Respondent to the Notice of Motion i.e. Mr. Anil C. Gandhi, Sole Proprietor of M/s. Ashapura Developers (the Applicant herein) has filed the above Chamber Summons seeking his impleadment in the above Suit as Party Defendant No. 9.
6. The Plaintiff has filed an affidavit dated 18 th February, 2014, opposing the above Chamber Summons. In the said affidavit, the Plaintiff has denied that the Applicant is a necessary or a proper Party or that the Applicant is required to be impleaded as a Party Defendant to the Suit for proper adjudication of the Suit or to avoid multiplicity of proceedings or to meet the ends of justice as alleged, or at all. It is submitted in the said Affidavit on behalf of the Plaintiff that the purported MOU dated 28th April, 2010 executed in favour of the Applicant by Defendant Nos. 1, 2b (i) to (iii), 2c, 2e, 4 (a) to (c ) and 5 is merely executory in nature and under Section 54 of the Transfer of Property Act, no interest in the suit property is transferred to the Applicant pursuant to the purported MOU. It is submitted that only where the title to the 4/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 5 suit property has vested in the subsequent transferee, his presence would be necessary so that a decree in a proper form can be passed to vest a good title in the Plaintiff who succeeds in his suit for specific performance. It is pertinent to note that in the affidavit opposing the Chamber Summons, the Plaintiff has not even made a whisper that by executing the MOU dated 28 th April, 2010, the Applicant and/or the Defendants have committed a breach of the order appointing Court Receiver in respect of the suit property, which order includes an implied injunction against the parties from dealing with the same, and that the Chamber Summons therefore deserves to be dismissed. In any event, the Hon'ble Supreme Court in its judgment in The Thomson Press (India) Ltd. vs. M/s. Nanak Builders1 allowed M/s. Thompson Press, the party who had purchased the suit property, pending the suit proceedings and in violation of an order of injunction , to be impleaded as party defendant to the suit, of course keeping the issue of punishment for such breach, open.
7. In that case, the Plaintiff, M/s. Nanak Builders filed a suit on 1 st November, 1991 against the defendant-respondent Sawhneys' being Suit No. 3426 of 1991 for specific performance of an agreement to sell dated 29 th May, 1986. In that suit, the Advocate appearing for the defendant stated before the Court that the possession of the flat in question is not with the defendants but was with M/s. LMI and was delivered to them by virtue of a lease. The 1 AIR 2013 SC 2389 5/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 6 Advocate for the Defendant further made a statement that till disposal of the suit the property in question would not be transferred or alienated by the defendants. Thereafter five sale deeds were executed by the defendants-
Sawhneys' in favour of M/s. Thomson Press (India) Ltd. (the appellants). On the basis of those sale deeds, the appellant moved an application under Order 1 Rule 10 for impleadment as defendants in a suit for specific performance filed by M/s. Nanak Builders and Investors Pvt. Ltd. The learned Single Judge of the Delhi High Court after hearing the parties dismissed the application on the ground that sale deeds were executed in favour of the appellant in violation of the undertaking given by the respondents which was in the nature of an 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 an undertaking given by the respondents-
Sawhneys' and recorded in the suit proceedings, the property could not be purchased by the appellant in the year 2008. The appellant preferred a SLP in which after considering the entire law on the subject including the law on lis pendens, the Hon'ble Supreme Court allowed Thomson Press (India) Ltd. to be joined as a party defendant to the suit and the impugned orders passed by the High Court were set aside. Amongst others, paragraph 52 of the said judgment is relevant and reproduced hereunder :
6/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 7"52. 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".
8. The Learned Senior Advocate appearing for the Plaintiff has submitted that the Applicant is not entitled to be joined as party Defendant to the Suit since there is only a MOU executed by and between the parties which is only an Agreement to Purchase the suit property. The MOU is only an executory contract and therefore the title to the suit property has not been transferred to nor vested in the Respondents. Under Section 54 of the Transfer of Property Act, no interest in the suit property is transferred to the Applicant pursuant to the purported MOU dated 28 th April, 2010. It is further submitted that it is provided in clause 7 of the MOU that on execution of the MOU the Defendants shall provide photostat copies of the original documents pertaining to the suit property to the party of the second part i.e. the confirming party and shall 7/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 8 handover the original documents upon execution of conveyance to the party of the third part i.e. the Applicant/Purchaser. It is submitted that a reading of the said clause makes it clear that the title to the suit property has not vested in the Applicant upon execution of the MOU. In view thereof, the Applicants are not necessary parties for the effective adjudication of the present Suit.
9. In support of the contention that the Applicant is not entitled to be joined as a party to the Suit, since the title to the suit property has not been transferred to the Applicant, the Learned Senior Advocate appearing for the Plaintiff has laid great stress on paragraphs 37 and 42 of the decision of the Hon'ble Supreme Court in its judgment in the case of Durga Prasad and another vs. Deep Chand and others2 which are reproduced hereunder :
37. The practice of the courts in India has not been uniform and three distinct lines of thought emerge. (we are of course confining our attention to a purchaser's suit for specific performance).According to one point of view, the proper form of decree is to declare the subsequent purchase void as against the Plaintiff and direct conveyance by the vendor alone. A second considers that both vendor and vendee should join, while a third would limit execution of a conveyance to the subsequent purchaser alone.
42. In our opinion the proper form of decree is to direct specific performance of a contract between the vendor and the Plaintiff and direct the subsequent transferee to join in the conveyance so as to 2 AIR 1954 SC 75 8/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 9 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 and all he does is to pass on his title to the Plaintiff."
It is submitted that joinder of a subsequent transferee is thus on the footing that he ought to be made to join in the conveyance so as to pass proper title to the Plaintiff in the event of a decree. It is submitted that a mere agreement purchaser from the Defendant Vendor is not in the position of such subsequent transferee and need not be joined.
10. In my view, the judgment of the Hon'ble Supreme Court in Durga Prasad's case (supra) does not deal with the question as to whether and in what circumstances subsequent agreement purchaser from the Plaintiff's vendor can be joined as a party. A party can be joined if he is either a necessary or a proper party to a suit. An agreement purchaser may be a necessary party if the Plaintiff has any right of relief against such purchaser and which the Plaintiff actually want to assert. He may be a proper party if his rights are affected by any relief claimed in the Suit. This aspect has not been dealt with in Durga Prasad's case (supra).
11. The Learned Senior Advocate appearing for the Plaintiff has also referred to certain decisions wherein the principle of lis pendens and transfer 9/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 10 have been discussed. The same are general observations which do not lay down any test to be followed whilst dealing with the case of impleadment of a purchaser pendent lite and hence do not operate as a guide to decide the present matter.
12. The Advocate appearing for the Applicant has also relied on several decisions of the Hon'ble Supreme Court as well as of this Court in support of his case for impleadment as Party Defendant to the above Suit. The Applicant has also relied on the decision of the Hon'ble Supreme Court in the case of Amit Kumar Shaw vs. Farida Khatoon3. Paragraphs 10, 12, 14 and 16 are relevant in the present case and reproduced hereunder:
"10. The power of a Court to add a party to a proceeding cannot depend solely on the question whether he has interest in the suit property. The question is whether the right of a person may be affected if he is not added as a party. Such right, however, will necessarily include an enforceable legal right.
12. Under Order 22 Rule 10, no detailed inquiry at the stage of granting leave is contemplated. The court has only to be prima facie satisfied for exercising its discretion in granting leave for continuing the suit by or against the person on whom the interest has devolved by assignment or devolution. The question about the existence and validity of the assignment or devolution can be considered at the final hearing of the proceedings. The court has only to be prima facie satisfied for exercising its discretion in 3 2005 (11) SCC 403 10/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 11 granting leave for continuing the suit.
14. An alienee pendent lite is bound by the final decree that may be passed in the suit. Such an alienee can be brought on record both under this rule as also under Order 1 Rule 10. Since under the doctrine of his pendens a decree passed on the suit during the pendency of which a transfer is made binds the transferee, his application to be brought on record should ordinarily be allowed.
16. ... A transferee pendent 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 pendent lite may be joined as party. As already noticed, the court has discretion in the matter which must be judicially exercised and an alienee would ordinarily be joined as a party to enable him to protect his interests. The court has held that a transferee pendent 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 his predecessor-in-interest is made a party to the litigation; he is entitled to be heard in the matter on the merits of the case."
13. In the present case, pending the above Suit, the Applicant has agreed to purchase the entire suit property from the Defendants for a consideration fixed at Rs. 15 crores and on terms and conditions set out therein and has also 11/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 12 made certain payments as agreed. The Applicant may thus be affected by any relief that may be granted to the Plaintiff in the pending Suit. Besides, in the present Suit, the Plaintiff has actually taken out a Notice of Motion No. 2436 of 2011 seeking an injunction against the Applicant inter alia from creating any right or interest in the suit property or from acting upon or claiming or asserting any rights under the purported MOU dated 28 th April, 2010. In my view, the Plaintiff cannot seek reliefs by way of a Notice of Motion inter alia restraining the Applicant from creting any right or interest in the suit property or acting in any manner on the MOU, and at the same time oppose the Application filed by the Applicant seeking his impleadment in the Suit on the ground that the MOU is only executory, not valid, has not created any interest in favour of the Applicant and the alleged rights of the Applicant shall not be affected if he is not added as a party. Though no relief may be required to be granted in favour of the Applicant at the time of the hearing of the Suit, however the Applicant in my view is a proper party to the Suit and therefore needs to be impleaded as a Party Defendant to the Suit. As held by the Hon'ble Supreme Court in the above mentioned case of Amit Kumar Shah (supra), under Order 22 Rule 10, no detailed inquiry at the stage of granting leave is contemplated. The Court has only to be prima facie satisfied for exercising its discretion in granting leave for continuing the suit by or against the person on whom the interest has devolved by assignment or devolution. The question about the existence and validity of the assignment or devolution can be 12/13 ::: Downloaded on - 01/11/2014 23:48:07 ::: kpp 13 considered at the final hearing of the proceedings.
14. I am therefore of the view that the Applicant herein is justified in seeking his impleadment to the above Suit. His impleadment shall in no way prejudice any rights of the Plaintiff, but the rejection of his application may cause harm and/or prejudice him more so when the Plaintiff has sought reliefs against him qua the subject MOU dated 28 th April, 2010, by way of Notice of Motion No. 2436 of 2011. In view thereof, I pass the following Order :
(i) The Chamber Summons is allowed in terms of prayer clause (a) which is reproduced herein:
"That the Plaintiffs be directed to amend the Plaint and proceedings therein as set in the Schedule hereto:"
(ii) The amendment to be carried out on or before 10 th November,2014.
The Respondents to file their written statement, if any, within a period of two weeks thereafter.
(iii) All contentions of the parties are kept open.
Any observations made in this Order shall not affect the liberty granted to the Plaintiff to take out contempt proceedings against the Defendants/Respondents as sought in para 19 of the Affidavit-in-support of the Notice of Motion No. 2436 of 2011.
(S.J. KATHAWALLA, J.) 13/13 ::: Downloaded on - 01/11/2014 23:48:07 :::