Anant Raj Agencies P. Ltd. vs The Narang Industries Ltd.
2008 Latest Caselaw 696 Del

JUDGMENT

S. Ravindra Bhat, J.

IA Nos. 1042/2007 (under Order I Rule 10 CPC)

1. This is an application seeking impleadment of a subsequent purchaser of property in a suit for specific performance.

2. The plaintiff's case in the suit is that it entered into an agreement to purchase property through oral contract dated 29.5.2000. The ostensible consideration pleaded in the suit is Rs. 25,00,000/-. The court had at the stage of issuing summons not granted interim relief; after notice was issued a statement was made that the property was sold to Mr. Anil Karla through his attorney Sh. Vishal Gulati. This statement was made by counsel for the defendant on 10.1.2002. This is also mentioned in the written statement filed at that stage on 9.1.2002. In addition to contending about the same, the defendant in clear and unambiguous averments denied any concluded contract in respect of the suit property. It also specifically made mention to the concluded contract with regard to suit property before institution of the suit, when an agreement to sell was executed with the said Sh. Anil Karla through his attorney Sh. Vishal Gulati; the defendant also adverted to an indemnity bond dated 7.11.2000.

3. The plaintiff filed its replication dated 11.5.2004 It generally denied the averments in the written statement concerning the sale of the property to Mr. Anil Karla through his attorney Sh. Vishal Gulati. However, no steps were taken either to impeach the transaction or initiate appropriate proceedings to implead the said purchaser.

4. The present application under Order I Rule 10 CPC to implead Sh. Anil Karla and Sh. Vishal Gulati was filed on 22.1.2007.

5. I have heard counsel for the parties. It is contended by learned counsel that the proposed defendant i.e. Anil Karla and Vishal Gulati are necessary parties to the proceeding in view of Section 19(b) of the Specific Relief Act, 1963. Learned counsel relied upon a judgment of the Supreme Court reported as Kasturi v. Iyyamperumal and Ors. and submitted that in the event the purchaser obtained a decree for specific performance of the property, he has to put the decree into execution and that since the subsequent purchaser would not be a party to the proceedings, the decree would not per se bind them. In the event, counsel contended that for an effective adjudication of the disputes, the purchaser Anil Karla and Vishal Gulati should be imp leaded as parties. It was submitted that there is no period of limitation governing the application. He also submitted that although there is some delay in preferring the application, the same can be overlooked by the court and appropriate terms can be imposed in this regard. In support of this submission learned counsel relied upon the decision of Patna High Court reported as Birbal Yadav v. Suchan Thakur and Ors. .

6. Learned counsel for the proposed defendant, respondent resisted the application and contended that it has been filed after an inordinate delay. She relied upon the decision of the Supreme Court reported as State of Kerala v. Sridevi and Ors. in support of the contention that even applications to implead strangers to suits are governed by the residuary provision, namely, Article 137 of the Limitation Act. It was also contended that the plaintiff was all along aware about the transaction since it was disclosed in the written statement, yet it chose deliberately not to take any step to implead the proposed defendant. It was lastely contended that in any event the plaintiff is not admittedly impeaching the transaction between the defendant and the purchaser and its conduct in putting forward an oral agreement, should be taken into consideration while considering the feasibility of the present application.

7. The record discloses that this Court had not granted any interim order at the asking of the plaintiff; after the defendant was served on 10.1.2002 the court recorded its statement and prima facie found that the application for injunction had been rendered infructuous. However, no formal order dismissing the same was made. The record further shows that the written statement was filed on 9.1.2002 in which expressly the defendant's position that the property had been sold to Anil Kumar through attorney Vishal Gulati was revealed. The plaintiff generally denied this in the replication filed two years later, yet it chose not to take any steps to implead the said purchaser or even any steps to impeach the sale as coming in its way.

8. In Kasturi's case the Supreme Court dealt with as to who are necessary parties but at the same time it did not lay down a blanket proposition that every purchaser of a property which is subject matter of a suit for specific performance, claims title adverse to the vendor is a necessary party and has to be imp leaded. This appears from the following extracts in the judgment:

Para No. 7:

In our view, a bare reading of this provision, namely, second part of Order 1 Rule 10 Sub-rule (2) CPC would clearly show that the necessary parties in a suit for specific performance of a contract for sale are the parties to the contract or if they are dead, their legal representatives as also a person who had purchased the contracted property from the vendor. In equity as well as in law, the contract constitutes rights and also regulates the liabilities of the parties. A purhaser is a necessary party as he would be affected if he had purchased with or without notice of the contract, but a person who claims adversely to the claim of a vendor is, however, not a necessary party. From the above, it is now clear that two tests are to be satisfied for determining the question who is a necessary party. Tests are- (1) there must be a right to some relief against such party in respect of the controversies involved in the proceedings; (2) no effective decree can be passed in the absence of such party.

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Para No. 11:

As noted hereinearlier, two tests are required to be satisfied to determine the question who is a necessary party, let us now consider who is a proper party in a suit for specific performance of a contract for sale. For deciding the question who is a proper party in a suit for specific performance the guiding principle is that the presence of such a party is necessary to adjudicate the controversies involved in the suit for specific performance of the contract for sale. Thus, the question is to be decided keeping in mind the scope of the suit. The question that is to be decided in a suit for specific performance of the contract for sale is to be enforceability of the contract entered into between the parties to the contract. If the person seeking addition is added in such a suit, the scope of the suit for specific performance would be enlarged and it would be practically converted into a suit for title. Therefore, for effective adjudication of the controversies involved in the suit, presence of such parties cannot be said to be necessary at all. Lord Chancellor Cottenham in Tasker v. Small made the following observations: (ER pp. 850-51).

9. The provisions of Order I Rule 10 CPC or for that matter any other provision are to aid the effective adjudication of proceedings. The facts of each case have to be considered when an application seeking to implead a stranger to the transaction is made. In given cases such applications may be justified and the court would be within its right to implead such a third party regardless of the time, and delay if a proper case is made out. In yet other situations, the court after considering the circumstances may will rule that the conduct of the plaintiff or any other party seeking through him is such that the application would be unjustified.

10. In this case the plaintiff, who has set up an oral agreement of May, 2000 was made aware about the transaction with the proposed defendant/respondent sometime in January, 2002. Yet it chose not to take steps for impeaching the said transaction or to implead the said third party in the suit within reasonable time. After five long years the present application was filed. The only explanation furnished by counsel for the plaintiff here was that the plaintiff had to change its counsel and necessary averments had not been made. This explanation can hardly be called sufficient, muchless satisfactory. On an overall conspectus of these circumstances, the court is not satisfied that a case has been made out to grant the relief claimed in the application. The application IA No. 1042/2007 is accordingly rejected; the applicant shall also pay costs quantified at Rs. 25,000/- to the proposed respondent within four weeks.

IA No. 1043/07 (under Order VII Rule 14 CPC)

Allowed subject to just exceptions.

The parties shall file the original documents within two weeks.

IA No. 1008 (under Order XXXIX Rule 1 and 2 CPC)

In view of the order recorded on 10.1.2002 the reliefs claimed in the present application cannot be granted. This application is accordingly dismissed.

CS(OS) 2579/2000

List before the Joint Registrar for admission/denial on 15.7.2008.

List before the Court for framing of issues on 17.10.2008.