Hindustan Housing Finance And ... vs Aspen Developers Pvt. Ltd.
2006 Latest Caselaw 1179 Del

JUDGMENT

Vikramajit Sen, J.

1. This application has been filed by Shri K.K.Modi praying for impleadment in the present Suit which is for Specific Performance of an Agreement for the transfer of shares by Aspen Developers Pvt. Ltd. (Defendant No. 1) to the Plaintiff; the shares are of Defendant No. 5, namely, Modipon Ltd. The Plaintiff has strenuously opposed the application whereas the other Defendants have pleaded as well as submitted before the Court that they have no objection if the Applicant is imp leaded as a Defendant.

2. The main crux of the argument of Mr.Ganesh, the learned Senior Counsel on behalf of the Applicant is that Myriad litigation is presently pending between his client, Shri K.N.Modi and other members of the family. These disputes had eventually reached the Supreme Court which had restrained both Shri K.K.Modi and Dr.M.K.Modi from acquiring directly or indirectly, any further shares of Modipon Ltd., and from taking any steps that would in any way directly or indirectly destabilize the control and management of the Fibre Division of Modipon Ltd. by Mr. K.K.Modi and of the Chemical Division of Modipon Ltd. by Dr.M.K. Modi. It is further submitted by Shri S.Ganesh, learned Senior counsel appearing for the Applicant that if the suit for Specific Performance is decreed, it will definitely disturb the balance that has been established by the Supreme Court. The contention is that the Plaintiff is not possessed of sufficient funds to buy 6,58,000 equity shares of Modipon Ltd. held by Defendant No. 1 and that the required funds have been made available by Dr.M.K.Modi in an attempt to surreptitiously circumvent the injunction order mentioned above. It is argued that this Court should not allow itself to be made a tool for violating and defeating the injunction Orders passed by the Apex Court.

3. It has already been noted that counsel for the Defendants had not opposed the impleadment application. Defendant No. 3 Shri Suresh Kumar Modi is the Promoter/Director of Defendant No. 1. In their joint Written Statement it has inter alia been asseverated that negotiations for the sale of the shareholding had broken down due to the recalcitrance and refusal of Dr.M.K.Modi to provide confirmation that the transactions for the proposed sale of the shares would not violate any aforementioned Court Orders. These Defendants have gone to the extent of pleading that Dr. M.K.Modi wanted them to assist him for overcoming/circumventing Court Orders which they decline to be privy to. It is, therefore, clear that the Suit is not a collusive one. Mr.S.Ganesh has, however, stated that if there was a reproachment between Shri Suresh Kumar Modi and Dr.M.K. Modi, the interests of the Applicant Shri K.K. Modi may be jeopardized. This speculation cannot obviously be taken into consideration.

4. Over half a century ago the Supreme Court has enunciated the contingencies in which Order 1 Rule 10 would come into play. In the celebrated judgment lifted Razia Begum v. Sahebzadi Anwar Begum , Razia Begum had prayed for two declarations in the suit: (1) that she was the legally wedded wife of the Defendant and (2) that she was entitled to Rs. 2000/- as maintenance. An application under Order I Rule 10 C.P.C. was filed by the applicants, claiming to be the lawful and legally wedded wife and son. It was, inter alia, pleaded that litigation was collusive.

As a result of these considerations, we have arrived at the following conclusions:

(1) That the question of addiction of parties under Rule 10 of Order 1 of the Code of Civil Procedure, is generally not one of initial jurisdiction of the court, but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case; but in some cases, it may raise controversies as to the power of the court, in contradistinction to its inherent jurisdiction, or, in other words, of jurisdiction in the limited sense in which it is used in Section 115 of the Code,

(2) That in a suit relating to property, in order that a person may be added as a party, he should have a direct interest as distinguished from a commercial interest, in the subject-matter of the litigation;

(3) Where the subject matter of a litigation, is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the court is of the opinion that by adding that party, it would be in a better position effectually and completely to adjudicate upon the controversy.

(4) The cases contemplated in the last proposition, have to be determined in accordance with the statutory provisions of Section 42 and 43 of the Specific Relief Act;

(5) In cases covered by those statutory provisions, the court is not bound to grant the declaration prayed for, on a mere admission of the claim by the defendant, if the court has reasons to insist upon a clear proof apart from the admission.

(6) The result of a declaratory decree on the question of status, such as in controversy in the instant case, affects not only the parties actually before the Court, but generations to come, and in view of that consideration, the rule of `present interest' as evolved by case law relating to disputes about property does not apply with full force; and

(7) The rule laid down in Section 43 of the Specific Relief Act, is not exactly a rule of res judicata. It is narrower in one sense and wider in another.

The second paragraph is directly relevant. The Applicant Shri K.K.Modi at the highest merely has a commercial interest in the subject matter of the litigation. No party should be permitted to upset the apple cart pertaining to the shareholding in Modipon Ltd. Mr.Ganesh's forceful argument that Shri K.K. Modi is in possession of necessary details to prove that the Plaintiff is only a front or a stooge of Dr.M.K.Modi would at best make Shri K.K.Modi an invaluable witness. However, neither of these factors would make him a necessary party to these proceedings. If Shri K.K.Modi is anxious that there may be connivance between the Plaintiff and Defendants No. 1 & 3 in the future and that the balance in Modipon Ltd. may be altered, contrary to the Orders passed by the Apex Court, he has his own remedies in law. It is for him to initiate such proceedings and not to force himself into a legal action instituted by another party with whom he has no direct connection. Assuming connivance, the commercial interest of the applicant may be affected.

5. For these reasons, I do not find merit in the application which is dismissed without any Order as to costs.

I.A. 7626/2006 in CS (OS) No. 261/2006

6. List the matter for consideration on 6.11.2006.