Bombay High Court
Vidya S. Seth vs Mah-Hill Properties Pvt. Ltd. And ... on 21 December, 2017
Bench: R.M. Savant
APPEAL-368&ors-17
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.368 OF 2017
IN
CHAMBER SUMMONS NO.55 OF 2015
IN
SUIT NO.783 OF 1987
1 Behram Nowrosji Gamadia )
a Parsi of Mumbai Indian Inhabitant )
residing at Gamadia Bungalow, 31, )
Napeansea Road, Mumbai 400 026 )
2 Jehangir Dhan Mistri )
a Parsi of Mumbai Indian Inhabitant )
residing at 1st floor Burhani Mahal, )
Mumbai 400 026 ) ..Appellants
(orig Plaintiffs)
Versus
1 Smt. Babli Samrathmal Seth )
of Mumbai Indian Inhabitant )
residing at 41/42 Purab Apartment )
16th floor, Ridge Road, Opp Jain Temple )
Malbar Hill, Mumbai 400 006 )
2 Shri Ramesh Samrathmal Seth )
of Mumbai Indian Inhabitant )
residing at Gondecha Chambers )
N. M. Road, Fort, Mumbai 400 023 )
3 Smt. Manju Dinesh Shah )
of Mumbai Indian Inhabitant )
residing at Jogani Apartment 11th floor )
Behind Elizabeth Nursing Home, )
Doongreshi Road, Malbar Hill )
Mumbai 400 006 )
4 Smt. Vidya S. Seth )
of Mumbai Indian Inhabitant )
residing at Shankar Mahal, 7th floor )
mmj 1 of 45
::: Uploaded on - 21/12/2017 ::: Downloaded on - 23/12/2017 02:25:15 :::
APPEAL-368&ors-17
Breach Candy, Sophia College Lane )
Warden Road, Mumbai 40006 )
5 Mah-Hill Properties Pvt Ltd. )
having its registered office address at )
601, 6th floor, Hallmark Business )
Plaza, Opp Guru Nanak Hospital )
Government Colony, Bandra (East) )
Mumbai 400 051 )
6 Vision Finstock Ltd. )
3, Narayan Building, 23 L. N. Road )
Dadar (East) Mumbai 400 014 ) ..Respondents
(orig. Defendants &
Applicants
WITH
APPEAL (L)NO.285 OF 2017
IN
CHAMBER SUMMONS NO.55 OF 2015
IN
SUIT NO.783 OF 1987
Shri Ramesh Samrathmal Seth )
Age 54 Years, Residing at )
41/42, Pural Apartment, 16th Floor )
Bridge Road, Opp Jain Mandir )
Malabar Hill, Mumbai 400 006 ) ..Appellant
Versus
1 Mah-Hill Properties Pvt Ltd. )
having its registered office address at )
601, 6th floor, Hallmark Business )
Plaza, Opp Guru Nanak Hospital )
Government Colony, Bandra (East) )
Mumbai 400 051 )
2 Vision Finstock Ltd. )
3, Narayan Building, 23 L. N. Road )
Dadar (East) Mumbai 400 014 )
3 Behram Nowrosji Gamadia )
a Parsi of Mumbai Indian Inhabitant )
residing at Gamadia Bungalow, 31, )
mmj 2 of 45
::: Uploaded on - 21/12/2017 ::: Downloaded on - 23/12/2017 02:25:15 :::
APPEAL-368&ors-17
Napeansea Road, Mumbai 400 026 )
4 Jehangir Dhan Mistri )
a Parsi of Mumbai Indian Inhabitant )
residing at 1st floorm Burhani Mahal, )
Mumbai 400 026 )
5 Smt. Babli Samrathmal Seth )
Age 78 years )
residing at 41/42 Purab Apartment )
16th floor, Ridge Road, Opp Jain Temple )
Malbar Hill, Mumbai 400 006 )
6 Smt. Manju Dinesh Shah )
Age 51 years )
residing at Jogani Apartment 11th floor )
Behind Elizabeth Nursing Home, )
Doongreshi Road, Malbar Hill )
Mumbai 400 006 )
7 Smt. Vidya S. Seth )
Age 50 years )
residing at Shankar Mahal, 7th floor )
Breach Candy, Sophia College Lane )
Warden Road, Mumbai 40006 ) ..Respondents
WITH
APPEAL (L) NO.289 OF 2017
IN
CHAMBER SUMMONS NO.55 OF 2015
IN
SUIT NO.783 OF 1987
Shri Babli Samrathmal Seth )
Age 78 Years, Residing at )
41/42, Pural Apartment, 16th Floor )
Bridge Road, Opp Jain Mandir )
Malabar Hill, Mumbai 400 006 ) ..Appellant
Versus
1 Mah-Hill Properties Pvt Ltd. )
mmj 3 of 45
::: Uploaded on - 21/12/2017 ::: Downloaded on - 23/12/2017 02:25:15 :::
APPEAL-368&ors-17
having its registered office address at )
601, 6th floor, Hallmark Business )
Plaza, Opp Guru Nanak Hospital )
Government Colony, Bandra (East) )
Mumbai 400 051 )
2 Vision Finstock Ltd. )
3, Narayan Building, 23 L. N. Road )
Dadar (East) Mumbai 400 014 )
3 Behram Nowrosji Gamadia )
a Parsi of Mumbai Indian Inhabitant )
residing at Gamadia Bungalow, 31, )
Napeansea Road, Mumbai 400 026 )
4 Jehangir Dhan Mistri )
a Parsi of Mumbai Indian Inhabitant )
residing at 1st floorm Burhani Mahal, )
Mumbai 400 026 )
5 Shri Ramshsaruara Thermal Seth )
Age 54 years residing at 309, )
Gundecha Chambers, N. M. Road, )
Fort Mumbai 400 023 )
6 Smt. Manju Dinesh Shah )
Age 51 years )
residing at Jogani Apartment 11th floor )
Behind Elizabeth Nursing Home, )
Doongreshi Road, Malbar Hill )
Mumbai 400 006 )
7 Smt. Vidya S. Seth )
Age 50 years )
residing at Shankar Mahal, 7th floor )
Breach Candy, Sophia College Lane )
Warden Road, Mumbai 40006 ) ..Respondents
WITH
APPEAL (L) NO.292 OF 2017
IN
CHAMBER SUMMONS NO.55 OF 2015
IN
mmj 4 of 45
::: Uploaded on - 21/12/2017 ::: Downloaded on - 23/12/2017 02:25:15 :::
APPEAL-368&ors-17
SUIT NO.783 OF 1987
Smt. Vidya S. Seth )
Age 50 years )
residing at Shankar Mahal, 7th floor )
Breach Candy, Sophia College Lane )
Warden Road, Mumbai 40006 ) ..Appellant
Versus
1 Mah-Hill Properties Pvt Ltd. )
having its registered office address at )
601, 6th floor, Hallmark Business )
Plaza, Opp Guru Nanak Hospital )
Government Colony, Bandra (East) )
Mumbai 400 051 )
2 Vision Finstock Ltd. )
3, Narayan Building, 23 L. N. Road )
Dadar (East) Mumbai 400 014 )
3 Behram Nowrosji Gamadia )
a Parsi of Mumbai Indian Inhabitant )
residing at Gamadia Bungalow, 31, )
Napeansea Road, Mumbai 400 026 )
4 Jehangir Dhan Mistri )
a Parsi of Mumbai Indian Inhabitant )
residing at 1st floorm Burhani Mahal, )
Mumbai 400 026 )
5 Smt. Babli Samrathmal Seth )
Age 78 years )
residing at 41/42 Purab Apartment )
16th floor, Ridge Road, Opp Jain Temple )
Malbar Hill, Mumbai 400 006 )
6 Smt. Manju Dinesh Shah )
Age 51 years )
residing at Jogani Apartment 11th floor )
Behind Elizabeth Nursing Home, )
Doongreshi Road, Malbar Hill )
Mumbai 400 006 )
mmj 5 of 45
::: Uploaded on - 21/12/2017 ::: Downloaded on - 23/12/2017 02:25:15 :::
APPEAL-368&ors-17
7 Ramesh Samrathmal Seth )
Age 54 years )
residing at 41/42 Purab Apartment )
16th floor, Ridge Road, Opp Jain Temple )
Malbar Hill, Mumbai 400 006 ) ..Respondents
Mr. Darius Khambata, Senior Advocate, a/w Mr. Snehal Shah,a/w Mr. S.V.
Doijode, a/w Ms. Falguni Thakkar, a/w Mr. Saurish Shetye, i/b. Doijode
Associates, for Appellant in Appeal No.368/2017 and for R.No.3 & 4 in
Appeal (L) No.285/2017.
Mr. P.S. Dani, Senior Advocate, i/b. Mr. A.I. Sheth, for Appellant in Appeal
(L) No. 285/2017 and for the Respondent No.2 in Appeal No.368 of 2017.
Mr.Vikram Nankani, Senior Advocate, a/w Ms. Rujuta Patil, i/b. Negandhi,
Shah & Himayatullah, for R.Nos. 5 & 6 in Appeal (L) No.285/17, 292/17
and for the Respondent No.6 in Appeal (L) 289 of 2017.
Mr. Mayur Khandeparkar a/w Ms Pooja Pandey i/b. Mr. A.A.Pandey, for
Appellant in Appeal (L) No.289/17 for the Respondent No.5 in Appeal (L)
No.285 of 2017 and (L) No.292 of 2017
Mr. Sidharth Samantaray, i/b. Mr. Y.K. Deshpande, for Appellant in Appeal
(L) No.292/17 for the Respondent No.4 in Appeal No.368 of 2017,
Respondent No.7 in Appeal (L) No.285 of 2017 and Appeal (L) No.289 of
2017.
CORAM :R. M. SAVANT, &
SARANG V KOTWAL, JJ
RESERVED ON: 28th NOVEMBER, 2017
PRONOUNCED ON : 21st DECEMBER, 2017
JUDGMENT (PER R.M.SAVANT J.)
1 All the above Appeals to stand "Admitted". By the consent of the
Learned Counsel for the parties are taken up for hearing forthwith.
mmj 6 of 45
APPEAL-368&ors-17
2 The above Appeals challenge the order dated 22-1-2017 passed by
a Learned Single Judge of this Court by which order the Chamber Summons
for impleadment being No.55 of 2015 filed by the Respondent Nos.5 and 6
herein came to be allowed and resultantly the said Respondent Nos.5 and 6
were directed to be impleaded as party Defendants to the Suit in question and
consequential amendments were directed to be carried out in the Plaint.
3 The above Appeals involve common facts and an identical
challenge. By the consent of the Learned Counsel for the parties the above
Appeal No.368 of 2017 is treated as the lead matter.
The Applicants who are the executors of the Will of the original
Plaintiff Nowrosji Jehangir Gamadia would be referred to as the original
Plaintiffs whereas the Respondent Nos.5 and 6 would be referred to as the
Applicants.
4 The facts giving rise to the filing of the above Appeal can in brief
be stated thus:
The Appellants herein as indicated above are the executors of the
Will of the original Plaintiff Nowrosji Jehangir Gamadia who had filed the Suit
in question for a declaration that the original partnership entered into between
the parties has been abandoned or is of no legal effect and that the Suit
property is not a partnership property of the firm but absolute property of the
mmj 7 of 45
APPEAL-368&ors-17
Plaintiff, and neither the original Defendant i.e. Samarathmal Seth or any
person claiming through him has any right or interest in the same. In the
alternative the Plaintiff had prayed for dissolution of the suit partnership and
accounts. In the context of the challenge raised in the above Appeal, it would
be apposite to refer to the reliefs sought in the Suit in question being Suit
No.783 of 1987. The gist of the same is as follows:-
By prayer clause (a) the Plaintiff was seeking a declaration that
the partnership constituted between the original Plaintiff and the original
Defendant by the said Deed of Partnership dated 30 th January, 1974 and as
modified by the said Deed of Retirement dated 2 nd August, 1976, has been
abandoned and is of no legal effect and further that the property in question is
not partnership property but the absolute property of the Plaintiff and that the
Defendant or Defendants do not have any right.
By prayer clause (b) the Plaintiff sought the dissolution of the suit
firm and the consequential reliefs thereto.
By way of interim reliefs the Plaintiff sought an injunction against
the Defendant from dealing with the suit property and for appointment of the
Court Receiver as Receiver of the suit property under Order 40 of the CPC.
4 In so far as the partnership is concerned, the same was constituted
mmj 8 of 45
APPEAL-368&ors-17
between the original Plaintiff [since deceased and now represented by the
Plaintiff Nos.1(a) and 1(b)] and the original Defendant [since deceased now
represented by the Defendant Nos.1(a) to 1(d)]. The said partnership was
originally between the Plaintiff and the Defendant and one Oomer Ahmed
which was in the name and style of M/s S. P. Building Corporation and which
came to be modified by a Deed of Retirement executed between Oomer Ahmed
(retiring partner) on one hand and the original Plaintiff and the original
Defendant (continuing partners) on the other hand. There is also a Deed of
Sub-Partnership dated 5-4-1984 between the original Defendant and 8 others
concerning the 75% share of the original Defendant in the suit partnership.
During the pendency of the Suit, by a Deed of Assignment dated 21-6-2008 the
original Defendant assigned the actionable claim and/or chose in action
including the right to contest the present Suit and all incidental benefits and
claims arising out of the subject matter of the Suit (including his share in the
suit partnership) in favour of one Housing Development and Infrastructure
Ltd. (HDIL) for valuable consideration and upon the terms and conditions
recorded in the Sub-Partnership Deed. The Deed of Assignment has been duly
registered with the Sub-Registrar of Assurances. The original Defendant also
executed an irrevocable Power of Attorney in favour of the HDIL. The said
Power of Attorney has also been duly registered. On 5-4-2010 the said HDIL
further assigned the actionable claim and/or chose in action including the
rights forming part of the Deed of Assignment dated 21-6-2008, referred to
mmj 9 of 45
APPEAL-368&ors-17
above in favour of one D. B. Properties Pvt Ltd. and Vision Finstock Ltd. The
latter assignors also executed an irrevocable Power of Attorney in favour of the
two assignee in respect of the subject matter of the Deed of Assignment. By
Share Sale Agreement dated 7-6-2011, shareholders of D. B. Properties Pvt
Ltd. sold and transferred their entire shareholding in D. B. Properties Pvt Ltd.
whereupon the name of the Company was changed to Mah-Hill Properties Pvt
Ltd., which is the Applicant No.1 in the above Chamber Summons. Hence by
the above Chamber Summons the Applicants have sought their impleadment
consequent upon the assignment of the beneficial interest of the original
Defendant in the suit firm including the right to contest the above Suit on
behalf of the deceased original Defendant Samarthmal Seth during the
pendency of the Suit. In support of their case for impleadment, the Applicants
have relied upon the registered Deeds of Assignment between (i) original
Defendant and HDIL, (ii) HDIL and D. B. Properties Pvt Ltd. and Vision
Finstock Ltd., (iii) Sub-Partnership in the share of the original Defendant in the
suit partnership and D. B. Properties Pvt Ltd. and Vision Finstok Ltd. The case
of the Applicants is therefore based on the interest in the subject matter of the
Suit devolving upon them pending the Suit. The Applicants have therefore
sought permission to defend the Suit under Order XXII Rule 10 of the Civil
Procedure Code.
5 To the said Chamber Summons, an Affidavit in Reply came to be
mmj 10 of 45
APPEAL-368&ors-17
filed by the Plaintiffs objecting to the impleadment as also questioning the
entitlement of the Applicants to such impleadment. In so far as the heirs of
the original Defendant are concerned, they have questioned the documents on
the basis of which the Applicants have sought their impleadment. In so far as
the Plaintiffs are concerned, they are objecting to the impleadment on the
ground that the Plaintiffs would have to face two sets of Defendants who claim
to represent the same estate and whose interests conflict with each other. It is
also sought to be contended in the Affidavit in Reply that the impleadment of
the Applicants would result in the Suit being diverted towards a different end,
namely the resolution of the dispute between the heirs of the original
Defendant and the Applicants which would be detrimental to the interest of
the Plaintiffs.
6 The heirs of the original Defendant who are brought on record
and who are the Defendant Nos.1(a) and 1(b) and who have filed the above
Appeals being Appeal (L) No.289 of 2017 and Appeal (L) No.285 of 2017
filed their Affidavits opposing the application i.e. the Chamber Summons filed
by the Applicants. The said objection was on the ground that the original
Defendant had not executed any document in favour of the HDIL they also
denied the execution of the Deed of Assignment dated 5-4-2010 and Deed of
Assignment dated 28-7-2010 and the Power Of Attorney dated 18-8-2010,
meaning thereby the heirs were questioning the assignment which was
mmj 11 of 45
APPEAL-368&ors-17
executed in favour of the Applicants by the original Defendant. The heirs also
opposed the application on the ground of delay.
7 The Learned Single Judge considered the said application i.e.
Chamber Summons and has by the impugned order dated 22-6-2017 allowed
the same. The gist of the reasoning of the Learned Single Judge as can be seen
from the impugned order is that Order XXII Rule 10 is merely an enabling
provision. It gives an assignee of a party's interest during the pendency of the
Suit an option to apply for leave to continue the Suit. It does not impose any
obligation on the assignee to come on record. He may not choose to come on
record and leave the prosecution of the Suit to his assignor in which case he is
bound by the result of the Suit. The Learned Single Judge further held that
the assignee at a proper juncture may seek leave to prosecute or defend the
Suit as the case may be, if he is of the view that his interest would be better
protected by taking over the conduct of the Suit. The Learned Single Judge
observed that the reliance placed on behalf of the Plaintiffs on the Judgment of
the Division Bench of the Karnataka High Court in Akka Bai Vs. Gowrawwa
was misplaced. The Learned Single Judge was of the view that the law cited
by the Learned Judges of the Karnataka High Court is contrary to the law laid
down by the Supreme Court not only in Khemchand Shankar's case but also in
various other cases. The Learned Single Judge further observed that whilst
considering the application under Order XXII Rule 10 a detailed inquiry is not
mmj 12 of 45
APPEAL-368&ors-17
contemplated and that the Court has only to be prima facie satisfied that the
interest has devolved by assignment or devolution and that the validity of the
assignment or devolution can be considered at the trial of the Suit on merits.
The Learned Single Judge was of the view that the said issue is rested finally
by the Supreme Court in the Judgment in Amit Kumar Shaw Vs. Farida
Khatoon, wherein it has been held that the Court has only to be prima facie
satisfied for exercising its discretion in granting leave to continue the Suit by
or against the person on whom the interest has devolved by assignment or
devolution. The Learned Single Judge rejected the submissions urged on
behalf of the Plaintiffs that they would have to defend the Suit against the two
sets of Defendants who claimed to represent the interest of the deceased
original Defendant and yet plead their case differently. The Learned Judge
observed that there was nothing unusual about such predicament. The
Learned Single Judge held that merely because the Defendant may in
accordance with Order VIII Rule 9 can seek leave of the Court to file his
Written Statement and which leave can be granted by the Court in appropriate
case upon such terms as it thinks fit, the said ground cannot be a ground for
not allowing the Defendant to take different stands. The learned Single Judge
also rejected the objection on the ground of delay by observing that the instant
application has been filed by the Applicants in close proximity of the death of
the original Defendant. The Learned Single Judge observed that if the
Applicants are of the view that the interest of the deceased are better protected
mmj 13 of 45
APPEAL-368&ors-17
by them as assignees rather than by legal heirs of the deceased Defendant,
they may very well choose to come before the Court and apply for
impleadment. As indicated above, the Learned Judge for the aforesaid reasons
deemed it appropriate to allow the above Chamber Summons filed by the
Applicants for their impleadment as Defendants in the Suit .
8 Heard the Learned Counsel for the parties.
9 Submissions of the Learned Senior Counsel Mr.D. J. Khambata
appearing for the Appellant
(i) The Learned Senior Counsel would re-urge the submissions made
before the Learned Single Judge namely that if the Applicants are impleaded
as party Defendants to the Suit, the Plaintiffs would have to face two different
sets of Defendants who claim to represent the same estate and whose interest
conflict with each other.
(ii) That the impleadment of the Applicants would entail an inquiry as
regards the devolution of the interest of the original Defendants in the subject
matter of the Suit which inquiry would be foreign to the Plaintiffs cause of
action.
mmj 14 of 45
APPEAL-368&ors-17
(iii) That if the Applicants claim to have any right on the documents
on the basis of which they seek impleadment, then they have to file their own
Suit against the legal heirs of the original Defendant for asserting their right.
iv) That having regard to Section 29 of the Indian Partnership Act,
the right if any of the Applicants is only to a share in the profits and the
Applicants cannot seek their impleadment. Reliance is placed on the Division
Bench Judgment of this Court reported in Dhanaji Jelaji Vs. Gulabchand
Pana & Ors.1 Full Bench judgment of the Lahore High Court in Ajudhina
Pershad Ram Pershad Vs. Sham Sunder & Ors. 2
(v) That in the instant case the application i.e. the Chamber Summons
filed by the Applicants is not for substitution of the heirs of the original
Defendant who are already brought on record but is an application for being
impleaded as the Defendants which would not be permissible whilst the heirs
are on record. Reliance is sought to be placed on the Judgment of the Apex
Court in the matter of Amit Kumar Shaw Vs. Farida Khatoon3
(vi) That the application suffers from delay and laches as the
assignment on the basis of which the Applicants claim their impleadment is of
the year 2010, whereas the application has been filed in the year 2015 and
1 AIR 1925 Bombay 347
2 AIR(34) 1947 Lahore 13 (Full Bench)
3 (2005) 11 SCC 403
mmj 15 of 45
APPEAL-368&ors-17
therefore cannot be allowed at this stage. Reliance is sought to be placed on
the judgment of the Apex Court in the matter of Vidur Impex & Traders Pvt
Ltd. & ors. Vs. Tosh Apartments Pvt Ltd., & Ors. 4
(vii) That implicit in the fact of the original Defendant filing a Suit in
the year 2013 against the Plaintiffs, the third partner Mr. Oomer Ahmed, is the
fact of there being a dispute as regards the devolution of interest in favour of
the Applicants.
(viii) That the Learned Single Judge has misinterpreted and
misconstrued the judgment of the Karnataka High Court in the matter of
Akkabai Vs. Gowrawwa. The Learned Single Judge has also not appreciated
the judgment of the Apex Court in Khemchand Vs. Vishnu Hari Patil in its
proper perspective.
(ix) That if the judgments on which reliance is sought to be placed on
behalf of the Applicants and the judgments on which reliance is sought to be
placed by the Appellants are harmonized, then what flows from a reading of
the said judgments is the fact that if there is a dispute as regards the
devolution of interest, then an application for impleadment cannot be
permitted.
4 (2012) 8 SCC 384
mmj 16 of 45
APPEAL-368&ors-17
10 Submissions of the Learned Senior Counsel Mr. P. S. Dani
appearing for the Appellant in Appeal (L) No.285 of 2017
(i) The Learned Senior Counsel Mr. Dani appearing for the Appellant
in Appeal (L) No.285 of 2017 adopted the submissions made by the Learned
Senior Counsel Mr. Khambata, but in addition would contend that an
application under Order XXII Rule 10 can only be filed whilst the person who
has executed the documents in favour of the Applicants as a result of which
there is a devolution of interest, is alive and cannot be filed after his demise.
(ii) That an application for impleadment after the demise of the
person who has executed the documents in favour of the Applicants is then
required to be filed under Order I Rule 10 of the CPC.
11 Submissions of the Learned Counsel Mr. Mayur Khandeparkar
appearing for the Appellant in Appeal (L)No.289 of 2017
(i) The Learned Counsel sought to question the documents on the
basis of which the application was founded and impleadment sought.
(ii) It was the submission of the Learned Counsel that since the heirs
of the original Defendant amongst whom is the Appellant represented by him
mmj 17 of 45
APPEAL-368&ors-17
is questioning the documents executed by the original Defendant Samarthmal
Sheth, the application for impleadment cannot be allowed.
12 Submissions of the Learned Senior Counsel Mr. Vikram
Nankani appearing for the Respondent Nos.1 and 2
(i) That the apprehension expressed on behalf of the Applicants that
the focus of the Suit would change to that of one of resolving the dispute
between the Applicants and the heirs of the Defendant is misfounded. The Suit
being one filed for a declaration and in the alternative for dissolution would
continue to remain so notwithstanding the inter se dispute between the heirs
of the original Defendant and the Applicants.
(ii) The contention urged on behalf of the Plaintiffs that they would
have to face two sets of Defendants who might be taking contrary stands is
only a bogey to stall the impleadment of the Applicants as Defendants in the
Suit.
(iii) That Order XXII Rule 10 confers a discretion on the assignee as to
whether he should seek his impleadment or allow the Suit to be prosecuted by
his assignors. In the instant case though the assignment was made in favour
of the Applicants in the year 2010, the assignees i.e. the Applicants had faith in
the original Defendant and therefore permitted him to prosecute the Suit till
mmj 18 of 45
APPEAL-368&ors-17
the year 2014 when he expired and it is on his demise that the instant
application was filed as the Applicants desire to protect their interest in the
Suit. Hence there is no delay in filing the application.
(iv) That an ostensible dispute between the heirs of the original
Defendant and the Applicants is sought to be propounded by the Plaintiffs
though the heirs of the original Defendant have not questioned the
intermediate transaction of the Sub-Partnership between the original
Defendant and eight others in respect of his 75% interest in the partnership
firm M/s S. P. Building Corporation and therefore the challenge to the
Assignment made in favour of the Applicants is hollow. The said fact is
required to be considered in the context of the fact that the said eight partners
have executed a Deed of Assignment in favour of the HDIL to which one of the
heirs of the Defendant is a confirming party.
(v) That the heirs of the original Defendant though are questioning
the Deed of Assignment executed by the original Defendant but have
significantly not filed any proceedings to question the said Deed of
Assignment.
(vi) That grave prejudice would be caused to the Applicants if they are
not impleaded, as in the event the heirs of the original Defendant act in a
mmj 19 of 45
APPEAL-368&ors-17
manner detrimental to the interest of the Applicants the same would lead to
complications and multiplicity of proceedings. Reliance is sought to be placed
on the judgment of the Apex Court in the matter of Suresh Kumar Bansal Vs.
Krishna Bansal and Anr.5
(vii) That it is well settled by the judgments of the Apex Court that a
third party in whose behalf there is devolution of interest is entitled to file an
application for impleadment. Reliance is sought to be placed on the judgments
of the Apex Court in Amit Kumar Shaw Vs. Farida Khatoon (supra) and
Thomson Press India Pvt Ltd Vs. Nanak Builders & Investors Pvt Ltd &
Ors6.
13 CONSIDERATION
Having heard the Learned Counsel for the parties, we have given
our anxious consideration to the rival contentions. The issue which arises is
whether the Applicants are entitled to be impleaded as party Defendants in the
Suit in question. In the context of the said issue, it would be appropriate to
reproduce the prayers in the Suit in verbatim:
(a)That this Hon'ble Court be pleased to declare
that the partnership constituted between the
original Plaintiff and the original Defendant by
the said Deed of Partnership dated 30 th January,
1974 and as modified by the said Deed of
5 (2010) 2 SCC 162
6 (2013) 5 SCC 397
mmj 20 of 45
APPEAL-368&ors-17
Retirement dated 2nd August, 1976, has been
abandoned and is of no legal effect whatsoever
from its very inception and the said property is
not partnership property of the suit firm but the
absolute property of the Plaintiffs and the original
Defendant and the Defendants or any other
person claiming through the original Defendant
and the Defendants do not have any right title
interest in the said property.
(b) that in the alternative to prayer (a)
hereinabove:
(i) this Hon'ble Court be pleased to declare that
the suit firm between the parties hereto stands
dissolved and
(ii) that this Hon'ble Court be pleased to order
and decree that the accounts of the suit firm be
taken and all the partnership properties
(including the said property) be disposed of in
accordance with the provisions of the Indian
Partnership Act, 1932 and the contracts between
the parties.
(c) that pending the hearing and final disposal of
the suit the Defendants their servants and agents
be restrained by an order and injunction of this
Hon'ble Court from transferring, selling,
assigning, disposing of or dealing with or parting
with possession of or creating any third party
interest in the said property or any part thereof;
(d) that pending the hearing and final disposal of
the Suit, Court Receiver, High Court, Bombay or
some other fit and proper person be appointed as
Court Receiver of the said property with full
powers under order 40 Rule 1 of the Code of Civil
Procedure, 1908.
A reading of the said prayers therefore discloses that the original
Plaintiffs have sought a declaration that the Deed of Partnership dated 30-1-
mmj 21 of 45
APPEAL-368&ors-17
1974 as modified by the Deed of Retirement dated 2-8-1976 have been
abandoned and is therefore of no legal effect whatsoever and therefore the
property in question is not a partnership property but the absolute property of
the Plaintiffs and that the original Defendant has no right, title or interest in
the said property. The Plaintiffs in the alternative have sought a declaration
that the suit firm stands dissolved and had sought reliefs based on such
declaration. Hence by the alternative prayer clause the Plaintiffs had sought
the dissolution of the suit firm i.e. M/s. S. P. Building Corporation.
14 It would also be relevant to refer to the documents on the basis of
which the Applicants i.e. the Respondent Nos.1 and 2 herein based their claim
for impleadment. As indicated earlier there is a Deed of Sub-Partnership
between the original Defendant i.e. Samarthmal Seth and 8 others concerning
the 75% share of the original Defendant in the suit partnership. Thereafter by
a Deed of Assignment dated 21-6-2008 the original Defendant assigned the
actionable claim and/or chose in action including the right to contest the
present Suit and all incidental benefits and claims arising out of the subject
matter of the Suit (including his share in the suit partnership) in favour of one
Housing Development and Infrastructure Ltd. (HDIL). The Deed of
Assignment has been duly registered with the Sub-Registrar of Assurances.
The original Defendant also executed an irrevocable Power of Attorney in
favour of the HDIL. Thereafter on 5-4-2010 the said HDIL further assigned
mmj 22 of 45
APPEAL-368&ors-17
the actionable claim and/or chose in action including the rights under the
Deed of Assignment dated 21-6-2008 in favour of one D. B. Properties Pvt Ltd.
and Vision Finstock Ltd. Similarly by Deed of Assignment executed on 28-7-
2010 the sub-partners in the said Sub-Partnership assigned, sold and
transferred unto the aforesaid two entities i.e. D. B. Properties Pvt Ltd. and
Vision Finstock Ltd. their respective right title and interest under the Deed of
Partnership for valuable consideration and on terms and conditions set out
therein. The said latter assignors also executed an irrevocable Power of
Attorney in favour of the two assignee entities in respect of the subject matter
of the Deed of Assignment. Thereafter by Share Sale Agreement dated 7-6-
2011, shareholders of D. B. Properties Pvt Ltd. sold and transferred their entire
shareholding in D. B. Properties Pvt Ltd. whereupon the name of the company
was changed to Mah-Hill Properties Pvt Ltd., which is the Applicant No.1 in
the above Chamber Summons.
15 Hence the perusal of the aforesaid documents would disclose that
the case of the Applicants is based on the assignment made by the original
Defendant in favour of the Applicants. However, it is required to be noted that
though the heirs of the original Defendant are seeking to question the
assignment made in favour of the Applicants, significantly the heirs do not
question the Sub-Partnership Agreement between the original Defendants and
7 others. It is required to be borne in mind that the Sub-Partnership
mmj 23 of 45
APPEAL-368&ors-17
agreement is an intermediary transaction which has taken place between the
original Defendant and 7 others, the said aspect in our view impacts the case
of the heirs in so far as the dispute relating to the assignment is concerned. It
is also required to be noted that though the heirs of the original Defendant
seek to question the assignment in favour of the Applicants they have not filed
any proceedings challenging the said assignment. In our view, it was for the
heirs to challenge the said assignment by filing appropriate proceedings and
the fact that the Applicants have not filed any proceedings to assert the rights
if any, they have under the assignment would not impact their case in so far as
their impleadment in the Suit is concerned.
16 Now whether the Suit filed for the reliefs claimed would on
impleadment of the Applicants be diverted to resolving the inter-se disputes
between the heirs and the Applicants, in our view the apprehension of the
Plaintiffs in that regard is misfounded. The Suit, even if the Applicants are
impleaded would continue to be a Suit revolving around the reliefs claimed in
respect of the partnership firm viz M/s. S. P. Building Corporation. It is in the
context of the reliefs sought in the Suit that the Applicants would have to take
a stand in the Written Statement that they would be entitled to file on their
impleadment. It is always for the Trial Court to keep the parties within the
bounds of the lis which is involved in the Suit, in our view therefore the
apprehension of the Plaintiffs is misfounded and can be said to be a red
mmj 24 of 45
APPEAL-368&ors-17
herring as rightly contended by the Learned Senior Counsel appearing for the
Applicants i.e. the Respondent Nos.5 and 6 to the above Appeal.
Reliance placed by the Learned Senior Counsel for the
Appellants / original Plaintiffs on the Judgment of the Division Bench of the
Karnataka High Court in Akkabai's case, in our view is misplaced. The said
judgment is sought to be relied upon to buttress the contention that only when
there is no dispute as regards the identity and the right which is devolved on
the legatee, transferee and/or an assignee as the case may be that an
application for his impleadment can be allowed. In so holding the Division
Bench of Karnataka High Court has relied upon the judgment of the Apex
Court in the case of Khemchand Shankar Choudhary Vs. Vishnu Hari Patil as
rightly held by the Learned Single Judge in the impugned order, the Apex
Court in Khemchand's case has not laid down the extreme proposition that the
hint of a dispute would disentitle a legatee, a transferee or an assignee to
being impleaded until the dispute is decided before another forum. In the said
case the partition of the properties under Section 54 of the CPC in terms of the
decree was in contention. The Apex Court held that the over arching factor in
so far as Section 54 was concerned is equitable partition. It is in the said
context that the Apex court held that if there is no dispute in case of
transferees pendente lite the Collector may proceed to make allotment of
properties in an equitable manner rather than rejecting their claim on the
mmj 25 of 45
APPEAL-368&ors-17
ground that they have no locus standi as the same would be in keeping with
the legislature intent. Hence the use of the word "no dispute" was in the said
context. We are therefore in respectful agreement with the view of the
Learned Single Judge expressed in the impugned order as regards the
application of the Judgment in Akkabai's case and his interpretation of the
judgment of the Apex Court in Khemchand's case.
17 The next issue is whether Section 29 of the Indian Partnership Act
impacts the right of the Applicants to seek impleadment. The said Section 29
of the Indian Partnership Act is therefore reproduced hereinunder for the sake
of ready reference:
29 Rights of transferee or a partner's interest:-
(1) A transfer by a partner of his interest in the
firm, either absolute or by mortgage, or by the
creation by him of a change on such interest, does
not entitle the transferee, during the continuance
of the firm, to interfere in the conduct of the
business, or to require accounts, or to inspect the
books of the firm, but entitles the transferee only
to receive the share of profits of the transferring
partner, and the transferee shall accept the
account of profits agreed to by the partners.
(2) If the firm is dissolved or if the transferring
partner ceases to be a partner the transferee is
entitled as against the remaining partners to
receive the share of the assets of the firm to
which the transferring partner is entitled, and for
the purpose of ascertaining that share, to an
account as from the date of the dissolution.
mmj 26 of 45
APPEAL-368&ors-17
18 Hence Section 29 of the Indian Partnership Act only regulates the
rights of a transferee of a partner of his interest in the firm.
In the context of Section 29 reliance is sought to be placed on
behalf of the Plaintiffs on the judgment of a Division Bench of this Court in
Dhanaji Jhelaji's case, the relevant extract of the said Judgment is reproduced
hereinunder :-
"Therefore at common law the assignment by one
of the partners of his share in the partnership
without the consent of the other partners did not
cause an immediate dissolution of the
partnership. It did not give the assignee a right to
an account of the profits. He had to accept the
account of the profits as agreed to by the
partners. And that must obviously be according
to the principles of commonsense, because when
there is a contract of partnership, one partner
cannot by his action introduce a third party
without the consent of the other partners, so as to
give the third party a right to interfere in the
management of the business or to ask for an
account. It is only when dissolution occurs that
the right of the assignee arises to take action in
the same way as his assignor could have done to
claim an account as from the date of the
dissolution.
The Plaintiffs also seek to rely upon the Full Bench of the Lahore
High Court in Ajudhina Pershad Ram Pershad (supra), the relevant extract of
the said judgment reads thus:
"25. (Extract): The Transfer of such an interest by
a partner to an outsider is provided for in S.29,
Partnership Act, and the terms of this section
mmj 27 of 45
APPEAL-368&ors-17
make it quite clear that the rights of the
transferee are on a distinctly lower place than
those of his transferor. Such a transferee is not
entitled to interfere in the conduct of the business
or to require accounts or to inspect the books of
the firm and he must be content to receive a
share of profits calculated on the basis of
accounts agreed to by the existing partners,
which he is bound to accept. It is only if the firm
is dissolved that he is entitled as against the
remaining partners to receive the share of the
partnership property to which his transferor was
entitled as well as to ask for an account, and that
only from the date of dissolution."
In our view the said judgments would not further the case of the
Plaintiffs in so far as the claim for impleadment of the Applicants is concerned.
The said cases dealt with the right of an assignee of the interest of a partner in
the affairs of the partnership firm and not a case where the assignee pendente
lite has applied for impleadment in a Suit by invoking Order XXII Rule 10 of
the CPC. Having regard to the principal relief sought in the Suit in our view
the said judgment (supra) would not come in the way of the Applicants from
seeking their impleadment in the Suit.
19 The application for impleadment filed by the Applicants is also
sought to be challenged by the Plaintiffs on the ground of delay. It is sought to
be contended against the Applicants that though the assignment in favour of
the Applicants was made in the year 2010, the application i.e. the Chamber
Summons was filed only in the year 2015 and after the original Defendant had
mmj 28 of 45
APPEAL-368&ors-17
expired in the year 2014. In support of the said contention reliance was
sought to be placed on the judgment of the Apex Court in Vidur Impex and
Indus Pvt Ltd. (supra) wherein the Apex Court had rejected the application for
impleadment on the ground of delay. The facts in the said case would have to
be noted. In the said case, Agreement for Sale and the Sale Deeds were
executed in favour of the Appellants who were the Applicants in a clandestine
manner and in violation of the injunction order granted by the Delhi High
Court. However, on account of suppression of material facts from the Calcutta
High Court on the basis of which the Calcutta High Court was persuaded to
pass orders in their favour, took the Appellants out of the category of bonafide
purchasers. The Apex Court held that their presence was therefore not
required to decide the controversy involved in the Suit filed by the Respondent
No.1 nor required to pass an effective order. The Learned Single Judge of the
High Court had also dismissed the application on the ground of there being
delay of 11 years, since the execution of the Agreement for Sale in their favour.
The Division Bench of the High Court had approved the said rejection by the
Learned Single Judge. In our view, the facts in Vidur Impex (supra) are clearly
distinguishable from the facts of the instant case. In the instant case, the
original Defendant was prosecuting the Suit whilst he was alive and the
Applicants can be said to have condescended to such prosecution. It is only
after the death of the original Defendant that the Applicants felt the need to
bring themselves on record as assignees of the original Defendant to protect
mmj 29 of 45
APPEAL-368&ors-17
their interest. Since under Order XXII Rule 10 such a discretion is vested with
the assignees, the fact that the Applicants had filed the application 5 years
after the assignment in their favour, cannot be held against them as the said
application has been filed in the immediate proximity of the death of the
original Defendant.
In so far as the judgment in Vidur Impex (supra) is concerned,
apart from the fact that the application was filed after 11 years, the Agreement
for Sale and the Sale Deeds were executed in a clandestine manner whilst
there was an injunction running and the transactions were therefore lacking in
bonafides. Hence the judgment in Vidur Impex (supra) would not support the
Plaintiffs to oppose the application for impleadment filed by the Applicants.
The broad principles laid down in the judgment of Vidur Impex
are also sought to be relied upon by the Plaintiffs to contend that the
Applicants being neither "necessary" nor "proper" parties their impleadment is
impermissible. The said broad principles laid down by the Apex Court in Vidur
Impex which are contained in paragraph 41 are reproduced hereinunder for
the sake of ready reference:
"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
mmj 30 of 45
APPEAL-368&ors-17
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.
41.4 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 decliming the prayer for
impleadment."
20 Hence a reading of the said broad principles discloses that the
Apex Court after explaining who is a "necessary" party and who is a "proper"
party laid down that if a person is not found to be a proper or necessary party,
the Court does not have the jurisdiction to order his impleadment. In the
mmj 31 of 45
APPEAL-368&ors-17
instant case, the application for impleadment as indicated above is founded on
the assignment made by the original Defendant in favour of the Applicants
during the pendency of the Suit. The Applicants as assignees have therefore
sought their impleadment to protect their interest. Once they are impleaded,
they would obviously want to say something about the reliefs sought in the
Suit. The Applicants can therefore surely qualify to be "proper parties", even
assuming for a moment that there is a genuine dispute between the heirs of
the original Defendant and the Applicants in respect of the assignment. In our
view therefore, the challenge to the impleadment of the assignee on the
ground that they are neither "necessary" nor "proper parties", is without merit.
A reference to the judgment of the Apex Court in Suresh Kumar
Bansal's case is required to be made. The said case concerned the application
made by the legatee of an unprobated Will of the deceased Plaintiff-landlord.
The Apex Court held that the legatee was entitled to be substituted /
impleaded in the Suit subject to grant of probate by the Competent Court,
along with the heirs of the Plaintiff-landlord. The Apex Court observed that if
such a course of action was not followed it would result in multiplicity of
proceedings as then the legatee would have to file proceedings against the
heirs for recovery of possession of the tenanted premises if the heirs succeed in
the Suit and obtain possession. The avoidance of multiplicity of proceedings is
therefore a factor which weighs in favour of the Applicants in so far their claim
mmj 32 of 45
APPEAL-368&ors-17
for impleadment is concerned. What is significant to note that even though in
the said case there was a dispute raised as regards the genuineness of the Will
the Apex Court deemed it appropriate to allow the Application by setting aside
the order of the High Court.
21 Now coming to the judgment of the Apex Court in Amit Kumar
Shaw (supra) and Thomson Press India Ltd. (supra) on which much store has
been laid on behalf of the Applicants.
In Amit Kumar's case the Apex Court was seized with the issue as
to whether the application for substitution by a subsequent transferee be
rejected and the subsequent purchaser be non suited altogether. The Apex
Court observed that power to add a party to a proceeding cannot solely
depend 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
party. The conclusions which are material in the context of the present case
are in Paragraphs 12 and 16 which for the sake of ready reference are
reproduced hereinunder:
12. Under Order XXII, 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
mmj 33 of 45
APPEAL-368&ors-17
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 granting leave for continuing the
suit.
16. The doctrine of lis pendens applies only
where the lis is pending before a Court. Further
pending the suit, the transferee is not entitled as
of right to be made a party to the suit, though the
Court has a discretion to make him a party. But
the transferee pendente lite can be added as a
proper party if his interest in the subject matter of
the suit is substantial and not just peripheral. A
transferee pendente lite to the extent he has
acquired interest from the defendant is vitally
interested in the litigation, whether 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 XXII Rule 10 an alienee
pendente lite may be joined as party. As already
noticed, the Court has discretion in the matter
which must be judicially exercised and an alienee
would ordinarily be joined as a party to enable
him to protect his interests. The Court has held
that a transferee pendente lite of an interest in
immovable property is a representative-in-interest
of the party from whom he has acquired that
interest. He is entitled to be impleaded in the suit
or other proceedings where the transferee
pendente lite is made a party to the litigation; he
is entitled to be heard in the matter on the merits
of the case.
Hence the Apex Court in Amit Kumar Shaw's case held that no
detailed enquiry was necessary whilst considering an application under Order
XXII Rule 10. The Apex Court also hypothetically considered the consequences
mmj 34 of 45
APPEAL-368&ors-17
flowing out of a transferee pendente lite not being impleaded and the Suit is
allowed to be prosecuted by the transferor who has lost all interest in the
property. The apprehension expressed by the Apex Court would equally apply
in the facts of the present case.
In Thomson Press India Ltd. (supra) the Apex Court was again
concerned with an application for impleadment filed by a purchaser pendent
lite in a Suit for specific performance of a prior Agreement to Sale / Contract
for Sale (CFS) filed by the buyer under the said CFS against the original
owner/transferor pendent lite. In the said case the transferee pendente lite
had purchased the entire property pending the Suit from the Respondent No.2
who had made a statement before the court that till disposal of the Suit the
property in question would not be transferred or alienated. However, whilst
the said Suit was pending, 5 Sale Deeds were executed by the Defendants i.e.
the Respondent No.2 in favour of Thomson Press India Ltd. The Apex Court
held that since the transferee was neither bonafide nor without notice of prior
CFS, the Appellant Thomson Press was not protected under Section 19 of the
Specific Relief Act against the specific performance of the prior Agreement
(CFS). The Apex Court further observed that if the purchaser pendente lite is
not made a party to the pending Suit, there may be a situation where the
transferor pendente lite may not defend the title properly as he has no interest
remaining or may collude with the Plaintiff in which case the interest of
purchaser pendente lite will be ignored. The Apex Court further held that
mmj 35 of 45
APPEAL-368&ors-17
purchaser pendente lite may be impleaded in such Suit as decree for specific
performance of prior CFS can only be enforced against him as he holds title /
interest which is the subject matter of the prior CFS and the original owner
does not hold it any more.
22 The Apex Court thereafter referred to the Judgment of the
Calcutta High Court in Kafiladdin Vs. Samiruddin (AIR 1931 Cal 67) and its
earlier judgments in Durga Prasad Vs. Deep Chand (AIR 1954 Sc 75), R. C.
Chandiok Vs. Chuni Lal Sabharwal ((1970) 3 SCC 140), Dwarka Prasad Singh
Vs. Harikant Prasad Singh ((1973) 1 SCC 179) and held that Thomson India
Ltd be added as party Defendant in the Suit. Paragraphs 37, 44, 45, 54, 55
and 56 of the said Judgment are material and are reproduced hereinunder:
37. Taking into consideration all these facts,
we have no hesitation in holding that the
appellant entered into a clandestine transaction
with the defendants-Sawhneys' and got the
property transferred in their favour. Hence the
appellant - M/s Thomson Press cannot be held to
be a bonafide purchaser, without notice.
44. Having regard to the law discussed
hereinabove and in the facts and circumstances of
the case and also for the ends of justice the
appellant is to be added as party-defendant in the
suit. The appeal is, accordingly, allowed and the
impugned orders passed by the High Court are
set aside.
mmj 36 of 45
APPEAL-368&ors-17
45. Before parting with the order, it is clarified
that the appellant after impleadment as party-
defendant shall be permitted to take all such
defences which are available to the vendor
Sawhneys' as the appellant derived title, if any,
from the vendor on the basis of purchase of the
suit property subsequent to the agreement with
the plaintiff and during the pendency of the suit.
54. The third dimension which arises for
consideration is about the right of a transferee
pendete lite to seek addition as a party defendant
to the suit under Order I, Rule 10 CPC. I have no
hesitation in concurring with the view that no
one other than parties to an agreement to sell is a
necessary and proper party to a suit. The
decisions of this Court have elaborated that
aspect sufficiently making any further elucidation
unnecessary. The High Court has understood and
applied the legal propositions correctly while
dismissing the application of the appellant under
Order I, Rule 10 CPC. What must all the same be
addressed is whether the prayer made by the
appellant could be allowed under Order XXII Rule
10 of the CPC, which is as under:
"10. Procedure in case of assignment
before final order in suit. - (1) In other
cases of an assignment, creation or
devolution of any interest during the
pendency of a suit, the suit may, by
leave of the court, be continued by or
against the person to or upon whom
such interest has come or devolved.
(2) The attachment of a decree
pending an appeal therefrom shall be
deemed to be an interest entitling the
person who procured such attachment
to the benefit of sub-rule (1)."
A simple reading of the above provision would
show that in cases of assignment, creation or
devolution of any interest during the pendency of
mmj 37 of 45
APPEAL-368&ors-17
a suit, the suit may, by leave of the Court, be
continued by or against the person to or upon
whom such interest has come or devolved. What
has troubled us is whether independent of Order
I Rule 10 CPC the prayer for addition made by
the appellant could be considered in the light of
the above provisions and, if so, whether the
appellant could be added as a party-defendant to
the suit. Our answer is in the affirmative. It is
true that the application which the appellant
made was only under Order I Rule 10 CPC but
the enabling provision of Order XXII Rule 10 CPC
could always be invoked if the fact situation so
demanded. It was in any case not urged by
counsel for the respondents that Order XXII Rule
10 could not be called in aid with a view to
justifying addition of the appellant as a party-
defendant. Such being the position all that is
required to be examined is whether a transferee
pendete lite could in a suit for specific
performance be added as a party defendant and,
if so, on what terms.
55. We are not on virgin ground in so far as
that question is concerned. Decisions of this
Court have dealt with similar situations and held
that a transferee pendete lite can be added as a
party to the suit lest the transferee suffered
prejudice on account of the transferor losing
interest in the litigation post transfer. In
Khemchand Shanker Choudhary v.
Vishnu Hari Patil (1983) 1 SCC 18, this
Court held that the position of a person on whom
any interest has devolved on account of a transfer
during the pendency of a suit or a proceeding is
somewhat similar to the position of an heir or a
legatee of a party who dies during the pendency
of a suit or a proceeding. Any such heir, legatee
or transferee cannot be turned away when she
applies for being added as a party to the suit. The
following passage in this regard is apposite:
"6... Section 52 of the Transfer of Property Act no
mmj 38 of 45
APPEAL-368&ors-17
doubt lays down that a transferee pendente lite of
an interest in an immovable property which is the
subject matter of a suit from any of the parties to
the suit will be bound in so far as that interest is
concerned by the proceedings in the suit. Such a
transferee is a representative in interest of the
party from whom he has acquired that interest.
Rule 10 of Order 22 of the Code of Civil
Procedure clearly recognises the right of a
transferee to be impleaded as a party to the
proceedings and to be heard before any order is
made. It may be that if he does not apply to be
impleaded, he may suffer by default on account
of any order passed in the proceedings. But if he
applies to be impleaded as a party and to be
heard, he has got to be so impleaded and heard.
He can also prefer an appeal against an order
made in the said proceedings but with the leave
of the appellate court where he is not already
brought on record. The position of a person on
whom any interest has devolved on account of a
transfer during the pendency of any suit or a
proceeding is somewhat similar to the position of
an heir or a legatee of a party who dies during
the pendency of a suit or a proceeding, or an
official receiver who takes over the assets of such
a party on his insolvency. An heir or a legatee or
an official receiver or a transferee can participate
in the execution proceedings even though their
names may not have been shown in the decree,
preliminary or final. If they apply to the court to
be impleaded as parties they cannot be turned
out." (emphasis supplied)
56. To the same effect is the decision of this
Court in Amit Kumar Shaw v. Farida Khatoon
(2005) 11 SCC 403 where this Court held that a
transferor pendente lite may not even defend the
title properly as he has no interest in the same or
collude with the plaintiff in which case the
interest of the purchaser pendente lite will be
ignored. To avoid such situations the transferee
pendente lite can be added as a party defendant
to the case provided his interest is substantial and
mmj 39 of 45
APPEAL-368&ors-17
not just peripheral. This is particularly so where
the transferee pendente lite acquires interest in
the entire estate that forms the subject matter of
the dispute. This Court observed:
"16... The doctrine of lis pendens applies only
where the lis is pending before a court. Further
pending the suit, the transferee is not entitled as
of right to be made a party to the suit, though the
court has a discretion to make him a party. But
the transferee pendente lite can be added as a
proper party if his interest in the subject-matter
of the suit is substantial and not just peripheral. A
transferee pendente lite to the extent he has
acquired interest from the Defendant is vitally
interested in the litigation, where the transfer is
of the entire interest of the Defendant; the latter
having no more interest in the property may not
properly defend the suit. He may collude with the
Plaintiff. Hence, though the Plaintiff is under no
obligation to make a lis pendens transferee a
party, under Order 22 Rule 10 an alienee
pendente lite may be joined as party. As already
noticed, the court has discretion in the matter
which must be judicially exercised and an alienee
would ordinarily be joined as a party to enable
him to protect his interests. The Court has held
that a transferee pendente lite of an interest in
immovable property is a representative-in-interest
of the party from whom he has acquired that
interest. He is entitled to be impleaded in the suit
or other proceedings where the transferee
pendente lite is made a party to the litigation; he
is entitled to be heard in the matter on the merits
of the case"
To the same effect is the decision of this Court in
Rikhu Dev, Chela Bawa Harjug Dass v. Som Dass
(deceased) through his Chela Shiama Dass,
(1976) 1 SCC 103.
23 On behalf of the Plaintiffs i.e. the Appellants herein the judgment
mmj 40 of 45
APPEAL-368&ors-17
in Amit Kumar Shaw and Thomson Press India Ltd are sought to be relied
upon to contend that the instant case is not a case of substitution of the heirs
of the original Defendant on account of devolution of interest, but is one for
impleadment in addition to the heirs who are already brought on record. The
judgment in Amit Kumar Shaw is also sought to be relied upon to contend that
the said judgment was rendered in the absence of any contest as inspite of
notice issued no appearance was entered on behalf of the Respondents. In our
view, the said fact namely the application not being for substitution and the
judgment in Amit Kumar Shaw being rendered in the absence of the
Respondents would not detract from what has been held by the Apex Court
and the proposition of law laid down therein. In our view, the proposition of
law laid down in the judgments (supra) cements the case of the Applicants for
impleadment.
24 It is now necessary to refer to the submission of the Learned
Senior Counsel Mr. P. S.Dani appearing for the Appellant in Appeal (L) No.285
of 2017, who is one of the heirs of the original Defendant. The said
submission is to the effect that the application filed invoking Order XXII Rule
10 of the CPC by the Applicants is not maintainable in view of the fact that the
application to be filed under Order XXII Rule 10 has to be in the life time of
the transferee. In the said context it would be necessary to refer to Order XXII
Rule 1 to 10. The gist of Rules 1 to 9 and full text of Rule 10 is reproduced
mmj 41 of 45
APPEAL-368&ors-17
hereinunder:
1. No abatement by party's death, if right to sue
survives
2. Procedure where one of several plaintiffs or
defendants dies and right to sue survives.
3. Procedure in case of death of one of several
plaintiffs or of sole plaintiff.
4. Procedure in case of death of one of several
defendants or of sole defendant.
4-A. Procedure where there is no legal
representative.
5. Determination of question as to legal
representative.
6. No abatement by reason of death after hearing.
7. Suit not abated by marriage of female party.
8. When plaintiff's insolvency bars suit.
9. Effect of abatement or dismissal
10. Procedure in case of assignment before final
order in suit. -
(1) In other cases of an assignment, creation or
devolution of any interest during the pendency of
a suit, the suit may, by leave of the court, be
continued by or against the person to or upon
whom such interest has come or devolved.
(2) The attachment of a decree pending an appeal
therefrom shall be deemed to be an interest
entitling the person who procured such
attachment to the benefit of sub-rule (1)."
Hence Rules 1 to 9 as above contemplate different situations in
mmj 42 of 45
APPEAL-368&ors-17
which the legal heirs and the representatives can be brought on record on the
death of the Plaintiff or the Defendant. In so far as Order XXII Rule 10 is
concerned, it covers the other cases of assignment or devolution or creation of
interest other than ones covered by Rules 1 to 9. To read Rule 10 so as to
mean that an application under the said Rule has to be filed in the life time of
the assignor would be reading into the said Rule something which the
legislature had not intended. The cases under the said Rule as the Rule itself
indicates are the cases not covered by Rules 1 to 9. Hence the application
under Rule 10 can therefore be made either in the life time of the assignor or
even after his death. The choice is obviously of the assignee. It is therefore
not possible to accept the contention urged on behalf of the said heir that
under Rule 10 the application has to be made in the life time of the assignor
and since in the instant case, the application is made after the death of the
assignor, the same is not maintainable.
In so far as the submission of the Learned Counsel Mr.
Khandeparkar is concerned, the said submission need not detain us, as it is
well settled by the judgments of the Apex Court that whilst considering an
application for impleadment of devolution of interest a detailed enquiry is not
contemplated.
25 On behalf of the Plaintiffs the factum of a Suit filed by the
Original Defendant against the Plaintiffs and third partner and others in
mmj 43 of 45
APPEAL-368&ors-17
respect of a plot of land which is one of the assets of the partnership firm was
sought to be relied upon to contend that even the original Defendant after
executing the assignment in the year 2010 has filed a Suit in the year 2013 in
respect of one of the partnership properties. In our view, the filing of the Suit
by the original Defendant would also not impact the claim of the Applicants
for impleadment in the present Suit as the assignees of the original Defendant.
If the Plaintiffs succeeds in the said Suit, the decree would obviously enure
either to the benefit of the Applicants or the heirs of the original Defendant,
as the case may be. Hence the reliance placed on the filing of the said Suit is
therefore misplaced.
26 Lastly to put the matter in perspective, having regard to the fact
that whilst considering an application under Order XXII Rule 10 a detailed
enquiry is not contemplated, the Court is therefore only required to see
whether there is a transfer or a devolution interest in favour of the Applicants,
once that be so the application for substitution / impleadment is required to be
allowed. Applying the said yardstick to the facts of the present case and
having regard to the law laid down by the Apex Court the impugned order
passed by the Learned Single Judge allowing the Chamber Summons filed by
the Applicants cannot be faulted with. To conclude, for the reasons
aforestated, there is no merit in the above Appeal and the companion Appeals
which are accordingly dismissed.
mmj 44 of 45
APPEAL-368&ors-17
27 In view of the dismissal of the above Appeals, Notice of Motion
(L) No.1557 of 2017 and Notice of Motion (L) No.1559 of 2017 do not survive
and to accordingly stand disposed of.
[SARANG V KOTWAL, J] [R.M.SAVANT, J]
After pronouncement
st
Date: 21 DECEMBER 2017
At the time of pronouncement, the Learned Counsel appearing for
the Appellant in Appeal No.368 of 2017, Mr. S. V. Doijode seeks extension of
time to carry out the amendment in terms of the order passed by the Learned
Single Judge. Time to carry out the amendment is accordingly extended by a
period of 6 weeks from date.
[SARANG V KOTWAL, J] [R.M.SAVANT, J]
mmj 45 of 45
