Brokers And Brokers Pvt. Ltd. vs Mr. Om Prakash Bhola And Anr.
2007 Latest Caselaw 2451 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. This is an application for impleadment. The applicant (Mr S.N. Arora) seeks impleadment on the ground that he is both a necessary and proper party. According to the applicant, he entered into a Collaboration Agreement with the defendant No. 2 on 13.09.2005. Pursuant to the Collaboration Agreement, the applicant was put in possession of the suit property being H-1481, Chittaranjan Park, New Delhi. When the applicant was about to raise the construction on the said property, objection was allegedly raised by the plaintiff herein and consequently, the applicant filed a suit being CS(OS)1194/2007 against the Managing Director of the plaintiff in the present suit and the defendant No. 1 herein as well as the Residents Welfare Association of C.R. Park. That suit was filed on 30.06.2007. The present suit had been filed earlier on 05.10.2005.

2. In the present suit, the plaintiff has alleged that the defendant No. 2 is the owner of the suit property, having acquired title of the same through his father. Earlier, the defendant No. 2 had entered into an agreement to sell dated 20.04.2001 with the defendant No. 1. There were also two supplementary agreements executed between the defendant No. 2 and the defendant No. 1 on 24.05.2002 and 23.08.2002. Thereafter, since the plaintiff was interested in purchasing the property and certain rights had accrued in favor of the defendant No. 1, the plaintiff entered into an agreement with both defendant No. 2 and defendant No. 1 on 01.07.2004 for purchasing the entire property. Though, it is stated by the learned Counsel for the defendant No. 2 that the agreement dated 01.07.2004 was signed by the defendant No. 2 only as a confirming party. It is also stated by the learned Counsel for the plaintiff that on 21.10.2005, when the suit came up for hearing, this Court had directed that any transfer of the suit property would be governed by the principle of lis pendens. The learned Counsel further submitted that the defendant No. 2 violated this order and entered into the said collaboration agreement and purported to transfer the property in question to the present applicant. He submitted that though the collaboration agreement was entered into on 13.09.2005, the power of attorney in favor of the applicant is dated 21.12.2006. It is under this power of attorney, which is a registered document, that the applicant has been given wide ranging rights, including the right to sell the property. In this context, the learned Counsel for the plaintiff submitted that this application ought to be rejected because the applicant is neither a necessary nor a proper party. For this proposition, he placed reliance on the decision of the Supreme Court in the case of Raj Kumar v. Sardari Lal and Ors. . He also placed reliance on the case of Sarvinder Singh v. Dalip Singh and Ors. and Bibi Zubaida Khatoon v. Nabi Hassan Saheb and Anr. . He submitted that all these decisions indicate that the persons, such as the applicant, would have no right to be imp leaded as a party under Order 1 Rule 10 of CPC.

3. The learned Counsel appearing for the applicant submitted that since the applicant has a substantial interest in the property, he is both a necessary as well as a proper party. He placed reliance on the decision of the Supreme Court in the case of Amit Kumar Shaw and Anr. v. Farida Khatoon and Anr. and submitted that a transferee pendente lite can be added as a proper party if his interest in the suit is substantial and not just peripheral. The learned Counsel submits that, in any event, the question of the applicant violating the doctrine of lis pendens does not arise because the collaboration agreement was entered into on 13.09.2005 Along with a registered Special Power of Attorney of the same date enabling the applicant to take possession of the property as well as carry on construction on the property. He submits that the order in the present suit was passed only on 21.10.2005, i.e., after the collaboration agreement and the Special Power of Attorney had been executed. Therefore, on facts, the transfer of the property had already taken place and the doctrine of lis pendens would not be attracted.

4. I have considered the arguments advanced by the counsel for the parties. There appears to be an apparent conflict between the Supreme Court decisions in the cases of Sarvinder Singh (supra) and Amit Kumar Shaw (supra). But, before I take up the discussion of the said two decisions, it would be necessary to examine the ratio in Raj Kumar (supra). In this decision, the Supreme Court was concerned with the interplay of Section 52 of the Transfer of Property Act, 1882 and Order 22 Rule 10, CPC. In this context, the Supreme Court was of the view that in case of an assignment, creation or devolution of any interest during the pendency of any suit, Order 22 Rule 10 of the CPC conferred a discretion on the court hearing the suit to grant leave to the person in or upon whom such interest has come to vest or devolved to be brought on record. The court further observed that bringing of a lis pendens transferee on record is not as of right but in the discretion of the court. It further observed that though not brought on record the lis pendens transferee remains bound by the decree. The court also observed that a lis pendens transferee from the defendant, though not arrayed as a party in the suit, would still be a person claiming under the defendant.

5. Since the decision in Raj Kumar (supra) was only concerned about the provisions of Order 22 Rule 10, CPC, the learned Counsel for the plaintiff had placed reliance on the decision in the case of Sarvinder Singh (supra). In that decision, the Supreme Court was concerned with an application under Order 1 Rule 10, CPC made by a lis pendens transferee. The exact question had been raised before the Supreme Court. After considering the provisions of Section 52, the Supreme Court observed as under:

...It would, therefore, be clear that the defendants in the suit were prohibited by operation of Section 52 to deal with the property and could not transfer or otherwise deal with it in any way affecting the rights of the appellant except with the order or authority of the Court. Admittedly, the authority or order of the Court had not been obtained for alienation of those properties. Therefore, the alienation obviously would be hit by the doctrine of lis pendens by operation of Section 52. Under these circumstances, the respondents cannot be considered to be either necessary or proper parties to the suit.

6. From the above extract, it is apparent that the Supreme Court was of the view that where an alienation of the property is hit by the doctrine of lis pendens, the alienee cannot be considered to be either a necessary or a proper party to the suit. The Supreme Court dismissed the application under Order 1 Rule 10, CPC which had been initiated by the alienee during the pendency of the suit. However, in Amit Kumar Shaw (supra), a decision strongly relied upon by the learned Counsel for the applicant, the Supreme Court seems to have taken a contrary view. In that case also, the Supreme Court was concerned with the provisions of Order 1 Rule 10 as also Order 22 Rule 10, CPC in conjunction with Section 52 of the Transfer of Property Act, 1882. One of the specific questions raised before the Supreme Court was whether, on a combined reading of Order 1 Rule 10, Order 22 Rule 10 of the Code of Civil Procedure, 1908 and Section 52 of the Transfer of Property Act, 1882, an application for substitution by a subsequent transferee can be rejected and he be non-suited altogether? The Supreme Court, while considering the said question, observed that an alienee pendente lite is bound by the final decree that may be passed in the suit. The court specifically observed that such an alienee can be brought on record both under Order 22 Rule 10 as also under Order 1 Rule 10 of the Code of Civil Procedure, 1908. It further held that since under the doctrine of lis pendens a decree passed in the suit during the pendency of which a transfer is made binds the transferee, his application to be brought on record should ordinarily be allowed. The Supreme Court then went on to observe that pending the suit, a 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. It specifically held that the transferee pendente lite can be added as a 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. Under these circumstances, the Supreme Court was of the view that the transferee pendente lite has an interest in immovable property and that he would be entitled to be imp leaded in the suit or other proceedings where his predecessor-in-interest is made a party to the litigation and he would also be entitled to be heard in the matter on the merits of the case.

7. Thus, we have two decisions of the Supreme Court; one decision says that a transferee pendente lite is neither a necessary nor a proper party, whereas the other decision says that a transferee pendente lite is a proper party and is entitled to be heard on the merits of the case.

8. Coming to the decision of the Supreme Court in the case of Bibi Zubaida Khatoon (supra), I find that it has discussed several decisions, including the case of Sarvinder Singh (supra). The said decision in the case of Bibi Zubaida Khatoon (supra) is by a Bench of two Hon'ble Judges of the Supreme Court as was the case in Sarvinder Singh (supra) and Amit Kumar Shaw (supra). The decision in the case of Bibi Zubaida Khatoon (supra) endorses the view taken in the case of Sarvinder Singh (supra). While approving the decision in Sarvinder Singh (supra), the Supreme Court in Bibi Zubaida Khatoon (supra) held as under:

There is no absolute rule that the transferee pendente lite without leave of the court should in all cases be allowed to join and contest the pending suits. The decision relied on behalf of the contesting respondents of this Court in the case of Sarvinder Singh (supra) fully supports them in their contentions.

In Bibi Zubaida Khatoon (supra), the Supreme Court also noted the decision in Dhurandhar Prasad Singh v. Jai Prakash University and Ors. wherein it was observed in para 11 as under:

Where a party does not ask for leave, he takes the obvious risk that the suit may not be properly conducted by the plaintiff on record, yet he will be bound by the result of the litigation even though he is not represented at the hearing unless it is shown that the litigation was not properly conducted by the original party or he colluded with the adversary.

9. It would be pertinent to note that Amit Kumar Shaw (supra), though it is later in point of time, does not have any reference to either the decision in Sarvinder Singh (supra) or Bibi Zubaida Khatoon (supra). In this context, it was submitted by the learned Counsel for the plaintiff that the decision in Amit Kumar Shaw (supra) would be per incuriam.

10. At the end of the hearing, the learned Counsel for the applicant also handed over a copy of the decision of the Supreme Court in the case of Dhanalakshmi and Ors. v. P. Mohan and Ors. AIR 2007 SC 1062. In that case, an application had been filed on behalf of the purchasers of the suit property for impleading themselves in the suit. It was contended on their behalf that they are bona fide purchasers for value and are entitled to the alienors' shares in equity and, therefore, they were necessary parties for effective adjudication of the dispute in the pending suit. The district court had come to the conclusion that since the sales in favor of the applicants were covered by the doctrine of lis pendens and since they can only have whatever rights their transferors had, it would not be necessary to deal with their rights separately. The application for impleadment was dismissed. The revision petition filed before the High Court was also dismissed on the ground that the applicants were not entitled to be imp leaded since the rights that they may have cannot be larger than the rights of their vendors, assuming that they were bona fide purchasers. In this factual background, the Supreme Court, in Dhanalakshmi (supra), after referring to the provisions of Section 52 of the Transfer of Property Act, 1882 observed as under:

Admittedly, the appellants, having purchased the property from the other co-sharers, in our opinion, are entitled to come on record in order to work out the equity in their favor in the final decree proceedings. In our opinion, the appellants are necessary and proper parties to the suit, which is now pending before the Trial Court. We also make it clear that we are not concerned with the other suit filed by the mortgagee in these proceedings.

11. Consequently, the Supreme Court set aside the order passed by the High Court and the district court and allowed the application for impleadment. This decision also appears to be in the same line as Amit Kumar Shaw (supra). It is pertinent to note that, as in Amit Kumar Shaw (supra), so too, in Dhanalakshmi (supra), there is no reference to the earlier decisions of the Supreme Court in the case of Sarvinder Singh (supra) and Bibi Zubaida Khatoon (supra). As noted above, there appears to be a conflict between the two sets of decisions. While one set indicates that a transferee pendente lite is neither a necessary nor a proper party, the other set expresses the view that a transferee pendente lite would ordinarily be entitled to be heard on the merits of the case. Without going into the controversy of whether the later decisions in Amit Kumar Shaw (supra) and Dhanalakshmi (supra) are per incuriam, this application can be disposed of by noting that all the decisions are agreed that a transferee pendente lite is not entitled to be imp leaded as a party as of right. It is, therefore, in the discretion of the court to allow a transferee pendente lite to be added as a party in a pending suit or not. In Bibi Zubaida Khatoon (supra), the Supreme Court categorically observed that there is no absolute rule that the transferee pendente lite, without leave of the court should in all cases be allowed to join and contest the pending suits. In the present case, the facts disclose that there was a specific order passed by this Court on 21.10.2005 that any transfer of the suit property would be governed by the principle of lis pendens. While it is true that the collaboration agreement was entered into on 13.09.2005 and that the Special Power of Attorney is also of the same date, it is also true that a subsequent Power of Attorney was executed in favor of the applicant on 21.12.2006. Section 52 of the Transfer of Property Act, 1882 carries the expression "cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto...except under the authority of the court...." Therefore, what is covered under Section 52 of is not just the transfer of the property in question, but also any dealing in respect of the same which includes construction etc. It is because the applicant was about to construct on the said property that the plaintiff raised objections and that led to the applicant filing the suit being CS(OS) 1194/2007 against the Managing Director of the plaintiff in the present suit and the defendant No. 1 herein as well as the Residents Welfare Association of C.R. Park. That is an independent action which the applicant has taken and the applicant's rights would be examined in that suit. Insofar as the present suit is concerned, it is obvious that no leave of the court was taken and the property was sought to be transferred and / or dealt with by a party to the suit. Thus, invoking the principles of equity and justice, it would not be proper for this Court to exercise its discretion in such a manner so as to allow the applicant to be imp leaded in the present suit.

Consequently, the application is dismissed.