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2014 DIGILAW 71 (GUJ)

Parul Jaykantbhai Shal Poa Snehalbhai Jaykantbhai Shah v. New India Industries

2014-01-21

R.D.KOTHARI

body2014
Judgment R.D. Kothari, J.—In a suit for specific performance, if the third party claims to have title or interest in suit property and applies for impleading it / him as party, then whether the said third party can be impleaded as party to the suit or not, is the question arises in this petition. Seemingly simple question is fiercely litigated issue, as it would appear from more than couple of recent judgments by the Supreme Court referred and relied on at the time of hearing by the learned advocates for the parties. 2. First about facts. Relevant facts for the purpose of present discussion are thus; the petitioner is the original plaintiff in Special Civil Suit No. 514 of 2007. The petitioner has instituted the said suit before the learned Senior Civil Judge, Vadodara. The said suit came to be instituted in pursuance to the agreement to sell entered into between defendant No. 1 and the petitioner on 9.9.2004. During the pendency of the said suit, present Respondent No. 3 – Oil and Natural Gas Corporation (for short ‘ONGC’) filed an application (Exh.22) to implead it as a party in the said suit. The said application came to be allowed by the trial court by passing short order. It is this order of the learned trial court which is under challenge in this petition. 3. ONGC had earlier instituted a suit against Defendant Nos.1 and 2 i.e. Special Civil Suit No. 275 of 1994 and in the said suit, the learned trial court had granted injunction directing the defendants not to alienate, sale or dispose of the property in any manner. Entering into transaction by the defendants qua that property i.e. suit property had led the ONGC to file an application to join it as a party. Pendency of the earlier suit i.e. Special Civil Suit No. 275 of 1994 and particularly granting of injunction in favour of ONGC had led the learned trial court to hold that ONGC had interest in the suit property and holding so, the court had allowed the application, (Exh. 22), seeking impleadment as party in Civil Suit No. 504 of 2007. 4. Heard learned advocate Shri Parthiv B. Shah for the petitioner, learned advocate Shri R.D. Dave for Respondent Nos.1 and 2 and learned advocate Shri K.B. Naik for M/s. Trivedi & Gupta for the Respondent No. 3 - ONGC. 5. 22), seeking impleadment as party in Civil Suit No. 504 of 2007. 4. Heard learned advocate Shri Parthiv B. Shah for the petitioner, learned advocate Shri R.D. Dave for Respondent Nos.1 and 2 and learned advocate Shri K.B. Naik for M/s. Trivedi & Gupta for the Respondent No. 3 - ONGC. 5. Learned advocate Shri Shah for the petitioner, after referring to the facts of the case and drawing attention to the impugned order, has submitted that the learned Judge has virtually given no reason in his order. Learned advocate has drawn attention to relevant case laws – Kasturi’s case [ (2005) 6 SCC 733 , Anil Kumar Singh’s case – [ (1995) 3 SCC 147 ] and Mumbai International Airport Pvt. Ltd.’s case – AIR 2010 SC 3109 . Relying on these case laws, it was submitted that the order of the learned trial court may be quashed and set aside. 6. On the other hand, learned advocate Shri Naik for Respondent No. 3 – ONGC, referring to the facts that had led the ONGC to file an application to implead it as party, has drawn attention to affidavit-in-reply filed by the ONGC in the present petition. It was pointed out that ONGC had filed a suit against the Respondent Nos. 1 and 2 herein to recover Rs. 1,15,41,961,72 ps. The said amount is for supply of gas by ONGC and transportation charges. It was also submitted that price rise in the gas supplied had led the Association to move the Court and the said litigation had reached upto the Supreme Court. Before the Supreme Court, different companies including the present Respondent No. 1 had filed an undertaking to the effect that without the leave of the Court, they would not create any charge or any encumbrance on any of the immovable properties and that they would not alienate the immovable asset. It is no in dispute that the undertaking includes the suit property. Learned advocate has also drawn attention to agreement to sell wherein there is a reference to dues of ONGC. Learned advocate for the ONGC has distinguished the Kasturi’s case and other cases relied upon by the petitioner and has drawn attention to decision in the case of Sumtibai’s case [ (2007) 10 SCC 82 ] and Thomson Press (India) Ltd.’s case [ (2013) 5 SCC 397 ]. 7. Learned advocate for the ONGC has distinguished the Kasturi’s case and other cases relied upon by the petitioner and has drawn attention to decision in the case of Sumtibai’s case [ (2007) 10 SCC 82 ] and Thomson Press (India) Ltd.’s case [ (2013) 5 SCC 397 ]. 7. As observed above, the question of impleading party in a suit for specific performance has come up before the Supreme Court in recent past on more than couple of occasions. In recent case of Thomson Press (India) Ltd. (Supra), referring and relying on the test laid down in Vidhur Impex and Traders (P) Ltd.’s case [ (2012) 8 SCC 384 ] in this regard, in Para.25 held, thus; “25. 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 41 is worth to be quoted herein below: “41. 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: 41.1 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. 41.2 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. 41.3 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. 41.3 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. 41.4 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. 41.5 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. 41.6 However, if the applicant is guilty of contumacious conduct or is beneficiary of a clandestine transaction or a transaction made by the owner of the suit property in violation of the restraint order passed by the Court or the Application is unduly delayed then the Court will be fully justified in declining the prayer for impleadment.” 6. Learned advocate Shri Shah for the petitioner, referring the above test, has submitted that on careful reading of the above test, the application filed by the ONGC should be rejected. Shri Shah also submitted that it cannot be said that in the suit for specific performance, ONGC ought to have been joined as a proper party nor it can be said that in absence of ONGC suit could not be decided nor the ONGC can be said to be necessary party. 8.1 Learned advocate Shri Naik for Respondent No. 3 – ONGC, however, submitted that on the basis of above test, the application of ONGC should be allowed. 9. Learned advocate Shri Shah has placed strong reliance on Kasturi’s case (Supra). The question of impleading third party as a party to the suit – in suit for specific performance – was considered in detail by the Court. Learned advocate has drawn attention to Para 6 to 11, 13 and 15. 10. In Kasturi’s case (Supra), the question arose for consideration was, thus: “2. The question of impleading third party as a party to the suit – in suit for specific performance – was considered in detail by the Court. Learned advocate has drawn attention to Para 6 to 11, 13 and 15. 10. In Kasturi’s case (Supra), the question arose for consideration was, thus: “2. The only question that needs to be decided in this case is whether in a suit for specific performance of contract for sale of a property instituted by a purchaser against the vendor, a stranger or a third party to the contract, claiming to have an independent title and possession over the contracted property, is entitled to be added as a party/defendant in the said suit.” 11. Learned advocate Shri Naik for Respondent No. 3 – ONGC has pointed out that ONGC is not claiming to have any independent title and possession over the suit property. The claim of ONGC is limited qua its dues. Therefore, it cannot be said that in the present case, impleading ONGC as party, the suit would be converted from suit for specific performance into suit for title. 12. Referring to written statement which is filed by the ONGC before the learned trial court pursuant to the order of allowing application passed below Exh.22, learned advocate Shri Shah has pointed out that ONGC has not only disputed the petitioner’s case on merits but, has also contended that the petitioner has no cause of action. Referring to written statement, it was also submitted that nature of suit is likely to be changed and the scope of suit is likely to be widened unnecessarily and therefore, the present application should not be allowed. 13. Learned advocate Shri Shah has drawn attention to a decision in the case of Mumbai International Pvt. Ltd. (Supra) wherein appellant’s application in a suit for specific performance to implead it as a party came to be rejected. Reliance was placed, inter alia, on Para.12.4, which reads as under : “12.4 If an application is made by a plaintiff for impleading someone as a proper party, subject to limitation, bonfides etc., the court will normally implead him, if he is found to be a proper party. Reliance was placed, inter alia, on Para.12.4, which reads as under : “12.4 If an application is made by a plaintiff for impleading someone as a proper party, subject to limitation, bonfides etc., the court will normally implead him, if he is found to be a proper party. On the other hand, if a non-party makes an application seeking impleadment as a proper party and court finds him to be a proper party, the court may direct his addition as a defendant; but if the Court finds that his addition will alter the nature of the suit or introduce a new cause of action, it may dismiss the application even if he is found to be a proper party, if it does not want to widen the scope of the specific performance suit; or the court may direct such applicant to be impleaded as a proper party, either unconditionally or subject to terms. For example, if `D’ claiming to be a co-owner of a suit property, enters into an agreement for sale of his share in favour of `P’ representing that he is the co-owner with half share, and `P’ files a suit for specific performance of the said agreement of sale in respect of the undivided half share, the court may permit the other co-owner who contends that `D’ has only one-fourth share, to be impleaded as an additional defendant as a proper party, and may examine the issue whether the plaintiff is entitled to specific performance of the agreement in respect of half a share or only one-fourth share; alternatively the court may refuse to implead the other co-owner and leave open the question in regard to the extent of share of the vendor-defendant to be decided in an independent proceeding by the other co-owner, or the plaintiff; alternatively the court may implead him but subject to the term that the dispute, if any, between the impleaded co-owner and the original defendant in regard to the extent of the share will not be the subject matter of the suit for specific performance, and that it will decide in the suit, only the issues relating to specific performance, that is whether the defendant executed the agreement/contract and whether such contract should be specifically enforced. In other words, the court has the discretion to either to allow or reject an application of a person claiming to be a proper party, depending upon the facts and circumstances and no person has a right to insist that he should be impleaded as a party, merely because he is a proper party.” (emphasis supplied) 14. Learned advocate Shri K.B. Naik for Respondent No. 3 – ONGC has rightly pointed out that in Mumbai International Airport Pvt. Ltd. (Supra), the land in issue i.e. 31,000 sq. mtrs. was excluded from the agreement. In that case, first respondent had instituted suit against Airport Authority of India (AAI). AAI had leased out Mumbai Airport premises to appellant for development and modernization etc. on certain conditions. It was say of appellant that it was directly affected if relief is granted in favour of first respondent in suit instituted by said first respondent. The said application was opposed also on the ground that suit plot i.e. 31,000 sq. mtrs. land was not leased out to the appellant. That since the land in issue was not forming part of the agreement, has materially weighed with the Court in deciding the appellant’s application. Unlike the said case, it was urged, in the present the petitioner has given undertaking in respect of suit land and injunction is operative qua suit land. Learned advocate has then drawn attention to Para 14 which reads, thus; “14. On a careful examination of the facts of this case, we find that the appellant is neither a necessary party nor a proper party. As noticed above, the appellant is neither a purchaser nor the lessee of the suit property and has no right, title or interest therein. First respondent - plaintiff in the suit has not sought any relief against the appellant. The presence of the appellant is not necessary for passing an effective decree in the suit for specific performance. Nor is its presence necessary for complete and effective adjudication of the matters in issue in the suit for specific performance filed by the first respondent-plaintiff against AAI. A person who expects to get a lease from the defendant in a suit for specific performance in the event of the suit being dismissed, cannot be said to be a person having some semblance of title, in the property in dispute.” 15. A person who expects to get a lease from the defendant in a suit for specific performance in the event of the suit being dismissed, cannot be said to be a person having some semblance of title, in the property in dispute.” 15. Learned advocate Shri K.B. Naik for Respondent No. 3 – ONGC submitted that presence of ONGC is very much necessary in considering the petitioner’s claim for decree for specific performance. It was also submitted that the decree for specific performance is discretionary remedy. In a sense, it is equitable remedy. Though in the agreement to sell itself, there is a reference to the dues of the ONGC, the party has audacity not to refer about pendency of the civil suit. Such reference was expected since the suit of ONGC is instituted prior to the execution of the agreement to sell. Further, the party has not cared to apply to modify the injunction. On the face of filing of undertaking by the Respondent Nos. 1 and 2 qua suit land and operation of injunction in respect of suit property, passing of the decree by the learned trial court for specific performance would have effect of multiplicity of suit proceedings as ONGC in that case would require to proceed against the decree holder despite undertaking and injunction. That apart, in the circumstances of the case, granting of specific performance which is a discretionary and equitable relief necessitates the presence of the ONGC. It is proper party. 16. Learned advocate Shri R.D. Dave for Rrespondent Nos. 1 and 2 – original defendant Nos.1 and 2 has drawn attention of the Court to the fact that respondent Nos.1 and 2 have already deposited the suit amount before the learned trial court on 15.9.2008 and the ONGC had applied for withdrawal of the suit amount (Exh. 91). 16.1 Learned advocate Shri Naik for Respondent No. 3 – ONGC submitted that the Respondent Nos.1 and 2 herein have deposited only the principal amount and interest is yet to be adjusted. It was further submitted that overall dues are of Rs. 5 crores. On this, it was submitted by other side that in the suit claim is advanced of at Rs. 1,15,00,000/- and odd. Be that as it may. It cannot be disputed that ONGC is interested only for its dues. 17. It was further submitted that overall dues are of Rs. 5 crores. On this, it was submitted by other side that in the suit claim is advanced of at Rs. 1,15,00,000/- and odd. Be that as it may. It cannot be disputed that ONGC is interested only for its dues. 17. Learned advocate Shri Naik for Respondent No. 3 – ONGC has drawn attention to Sumtibai’s case (Supra). In that case, Kasturi’s case (Supra) was considered by the Supreme Court. The principle laid down for impleading the party is considered in Para.9, which reads as under : “9. Learned counsel for the respondent relied on a three-Judge Bench decision of this Court in Kasturi vs. Iyyamperumal and others, (2005) 6 SCC 733 . He has submitted that in this case it has been held that in a suit for specific performance of a contract for sale of property a stranger or a third party to the contract cannot be added as defendant in the suit. In our opinion, the aforesaid decision is clearly distinguishable. In our opinion, the aforesaid decision can only be understood to mean that a third party cannot be impleaded in a suit for specific performance if he has no semblance of title in the property in dispute. Obviously, a busybody or interloper with no semblance of title cannot be impleaded in such a suit. That would unnecessarily protract or obstruct the proceedings in the suit. However, the aforesaid decision will have no application where a third party shows some semblance of title or interest in the property in dispute. In the present case, the registered sale deed dated 12.8.1960 by which the property was purchased shows that the shop in dispute was sold in favour of not only Kapoor Chand, but also his sons. Thus prima facie it appears that the purchaser of the property in dispute was not only Kapoor Chand but also his sons. Hence, it cannot be said that the sons of Kapoor Chand have no semblance of title and are mere busybodies or interlopers.” (emphasis supplied) 17.1 It’s clear conclusion is recorded in Para 14, which reads as under : “14. In view of the aforesaid decisions we are of the opinion that Kasturi’s case (Supra) is clearly distinguishable. Hence, it cannot be said that the sons of Kapoor Chand have no semblance of title and are mere busybodies or interlopers.” (emphasis supplied) 17.1 It’s clear conclusion is recorded in Para 14, which reads as under : “14. In view of the aforesaid decisions we are of the opinion that Kasturi’s case (Supra) is clearly distinguishable. In our opinion it cannot be laid down as an absolute proposition that whenever a suit for specific performance is filed by A against B, a third party C can never be impleaded in that suit. In our opinion, if C can show a fair semblance of title or interest he can certainly file an application for impleadment. To take a contrary view would lead to multiplicity of proceedings because then C will have to wait until a decree is passed against B, and then file a suit for cancellation of the decree on the ground that A had no title in the property in dispute. Clearly, such a view cannot be countenanced.” (emphasis supplied) 18. It is true that in fairly short order, the learned trial court has not given reasons for allowing the application. All the same, the conclusion drawn by the learned trial court is correct and legal. The said conclusion does not call for any interference. Present petition, therefore, fails and is dismissed. Rule is discharged. Interim relief, if any, granted earlier stands vacated.