V.N.Verma vs Smt.Veena Mahajan
2012 Latest Caselaw 337 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                      Judgment Reserved on : 4th January, 2012
                    Judgment Pronounced on: 18th January, 2012

+                       RFA(OS) 86/1998

       V.N.VERMA                               ..... Appellant
            Through:    Mr.Rana Ranjit Singh, Advocate and
                        Mr.Jaswant Singh, Advocate.

                             versus

       SMT.VEENA MAHAJAN                  ....Respondent
            Through: Mr.P.S.Bindra, Advocate for the
                     respondent.
                     Mr.Ashok Gurnani, Advocate and
                     Mr.Abhay Kumar, Advocate for
                     Applicant of CM No.2058/1998.


        CORAM:
        HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
        HON'BLE MS. JUSTICE PRATIBHA RANI

PRADEEP NANDRAJOG, J.

CM No.2058/1998

1. While admitting the appeal on September 23, 1999 it was directed that CM No.2058/1998 would be taken up for hearing at the time of final hearing of the appeal.

2. Arguments were heard in the appeal and the application, on January 04, 2012.

3. We decide CM No.2058/1998 first.

4. The respondent Veena Mahajan filed a suit on 29.04.1988 seeking specific performance of an agreement to sell dated February 14, 1986 alleging that she had paid the

appellant Sh.V.N.Verma a sum of `40,000/- under the agreement to sell where under the appellant was obliged to sell plot bearing No.40, Chitra Vihar to her for a total sale consideration of `1,50,000/- and that the balance sale consideration in sum of `1,10,000/- had to be paid when the appellant was in a position to deliver vacant possession of the plot to her. That thereafter, on January 21, 1987 she paid a further sum of `10,000/- to the appellant. She received a letter dated August 25, 1987 from the appellant informing her that the appellant was in a position to discharge his contractual obligations within seven days and thus called upon her to pay the balance consideration and get the transfer affected. Since the plot in question had only been allotted to the appellant and formal document conveying title to him by DDA had not been executed, it was agreed that after the lease deed was executed by DDA in favour of the appellant, necessary payment would be made by her to the appellant. Thereafter, at the request of appellant, she paid further sum of `15,000/- to him on September 29, 1987 and on November 20, 1987 she paid further sum of `5,000/-. Thus, balance amount payable was `70,000/- which had to be paid after perpetual lease deed was executed in favour of the appellant. On November 30, 1987 the perpetual lease deed was executed in favour of the appellant, but the appellant started resiling and did not come forward to execute the necessary documents transferring title to her and receive balance sale consideration. On January 24, 1988 she served a telegraphic notice upon the appellant requiring him to accept the balance sale consideration in sum of `70,000/- and execute the necessary

documents. In response, vide reply dated January 29, 1988, the appellant alleged that the balance sale consideration had to be paid within seven days of the allotment of the plot to him, which allotment was made on August 25, 1987, and since it was alleged that she did not do so, an allegation which was wrong, and for which proof was the two payments received by the appellant on September 29, 1987 and November 20, 1987, averring that she was always ready and willing to perform her obligations under the agreement to sell, the suit was filed praying specific performance of the agreement to sell.

5. Vide CM No.2058/1998 applicants Meena Rani Gupta and Nalini Gupta seek impleadment as respondents in the appeal urging that before CS(OS) No.553/1988 was filed by the respondent Veena Mahajan on 29.04.1988, the appellant V.N.Verma entered into an agreement to sell the suit property to one Kamlesh Gupta on 21.01.1988 and having received full sale consideration handed over possession of the property to her. On 26.11.1990 Kamlesh Gupta handed over possession of the property to the applicants under an agreement to sell of even date and since then the applicants are in possession of the property. Applicants claim knowledge of the suit filed by the respondent for the first time on 07.12.1998. It is asserted that the presence of the applicants is necessary to decide all issues which arise in the suit. Applicants state that they have paid `3,60,000/- to Kamlesh Gupta. Applicants also claim benefit under a Will executed by Kamlesh Gupta as also claim that Kamlesh Gupta executed a power of attorney in favour of one Vinod Kumar Gupta. It is alleged in the application that the applicants were in the process of constructing a boundary

wall and a caretaker room on the plot, when at site the applicants were served with a copy of the decree passed against the appellant. The date being 06.12.1998.

6. On the strength of the under-noted decisions, where the nature of claim seeking impleadment is briefly noted by us, the issue of impleadment was argued. i. Panne Khushali & Anr v Jeewanlal Mathoo Khatik & Anr AIR 1976 MP 148 (FB) : In said case, it was held that the strangers to the contract making a claim adverse to the title of the defendant (vendor) contending that they are the co- owners of the contracted property are neither necessary nor proper party and are therefore not entitled to be joined as parties to the suit.

ii. Ram Bilash Pandey & Ors v Jai Narayan Gupta & Ors AIR 1984 Pat 218 : In the said case, a suit for specific performance of contract for sale entered into by certain members of a joint Hindu family was filed. Other members of the family claimed to be impleaded on the ground that the property which was sought to be sold was joint family property and that it was acquired with joint family funds. Noting the decision in Panne Kushali's case (supra) and the fact result of the decree even if adverse to intervenors shall not bind the intervenors, it was held that the members claiming to be impleaded were neither necessary party nor proper party to the suit and could not be given benefit of Order I Rule 10(2) of the CPC.

iii. Anil Kumar Singh v Shivnath Mishra (1995) 3 SCC 147 and Kasturi v Iyyamperumal AIR 2005 SC 2813 : In said cases, it was held that the intervenors who are not party to the

agreement of sale are not necessary party to the suit for specific performance for the reason their presence is not necessary in order to determine the dispute as to specific performance.

iv. Pravat Kumar Misra vs. Prafulla Chandra Misra & Anr. AIR 1977 Orissa 183 : A third party claiming rival title to the suit property was held not entitled to be impleaded as a defendant in a suit filed by the plaintiff for recovery of possession of the suit premises from the tenant, on the ground, that a simple suit for recovery of possession cannot be converted into a complex title suit.

v. Jiwan Dass Rawal vs. Narain Dass & Ors. AIR 1981 Delhi 291 : It was held that a party claiming right under an agreement to sell cannot claim any right, title or interest in the property till sale is finalized for the reason an agreement to sell does not create a right, title or interest in the property agreed to be sold. It is a right in personam against the seller. vi. Dharam Singh & Anr. Vs. Addu Ram & Ors. AIR 1990 NOC 83 (P&H) : Applicants claimed certain rights along with the plaintiff. It was held that the applicants cannot be impleaded as defendants.

vii. Vithalbhai Pvt. Ltd. vs. Union Bank of India AIR 1992 Calcutta 283 : A learned Single Judge of the Calcutta High Court opined that different rights may arise amongst different parties based on relationships amongst the parties inter-se, and that in a suit for possession by the tenant against the sub- tenant, the sub-tenant cannot resist claim of possession by disputing title or right to possession of the tenant against the original landlord.

viii. Smt.Sukumari Debi & Anr. vs. Shri Ram Dass Ganguly AIR 1994 Calcutta 85 : It was held that in an eviction suit by a co-owner who was the landlord, other co-owners not being co-landlords cannot be arrayed as co-plaintiffs. ix. Evangelical Church of India vs. North India Outreach Society 1997 (40) DRJ 250 : It was held that in an eviction suit by the landlord against the ex-employee for restoration of possession over premises allotted to the employee as a term of employment, person claiming to be the owner of the premises and disputing title of the plaintiff was not entitled to be impleaded as a party. Similar view was taken by the Rajasthan High Court in the decision reported as Talib Hussain vs. Peer Azhar Hussain & Ors. AIR 1998 Rajasthan 150.

x. Rama Chatterjee vs. Somnath Ghosal 1999 Cal.L.T. (1) 254 : In a suit filed by the plaintiff in his capacity as the managing trustee of a trust against a defendant alleging possession to be an act of trespass, applicant who questioned the right of the managing trustee to file the suit alleging that the property was not trust property was held not entitled to be impleaded as a defendant.

xi. Sumtibai & Ors v Paras Finance Co. JT 2007 (11) SC 749 : In said case, noting the decision in Kasturi's case (supra), the Supreme Court has observed as under :-

"9. Learned counsel for the respondent relied on a three-Judge Bench decision of this Court in Kasturi v. Iyyamperumal and Ors.. He has submitted that in this case it has been held that in a suit for specific performance of a contract for sale of property a stranger or a third party to the contract cannot be added as

defendant in the suit. In our opinion, the aforesaid decision is clearly distinguishable. In our opinion, the aforesaid decision can only be understood to mean that a third party cannot be impleaded in a suit for specific performance if he has no semblance of title in the property in dispute. Obviously, a busybody or interloper with no semblance of title cannot be impleaded in such a suit. That would unnecessarily protract or obstruct the proceedings in the suit. However, the aforesaid decision will have no application where a third party shows some semblance of title or interest in the property in dispute.........."

14. In view of the aforesaid decisions we are of the opinion that Kasturi's case (supra) is clearly distinguishable. In our opinion it cannot be laid down as an absolute proposition that whenever a suit for specific performance is filed by A against B, a third party C can never be impleaded in that suit. In our opinion, if C can show a fair semblance of title or interest he can certainly file an application for impleadment. To take a contrary view would lead to multiplicity of proceedings because then C will have to wait until a decree is passed against B, and then file a suit for cancellation of the decree on the ground that A had no title in the property in dispute. Clearly, such a view cannot be countenanced."

xii. Savitri Devi vs. District Judge Gorakhpur & Ors. 1999 (2) SCC 577 : in a suit filed by Savitri Devi against her sons claiming decree for maintenance and a charge over ancestral property, the applicant who was a transferee pendente lite was held to be a necessary party since charge, if granted on the properties would have affected his title.

xiii. Amit Kumar Shaw & Anr. vs. Farida Khatoon & Ors. 2005 (11) SCC 403 : a transferee pendente lite was held entitled to be substituted under Order 22 Rule 10 in a pending suit in place of the existing defendants.

xiv. S.S.Bakshi Vs. P.M.Mathrani 118 (2005) DLT 597: A co- owner was held entitled to be impleaded as a party in a suit seeking specific performance of an agreement to sell relatable to the claim by the prospective purchaser that as per the agreement a specified portion of the joint property was agreed to be sold by a co-owner, notwithstanding the property not being formally partitioned between the co-owners.

7. The decisions afore-noted have proceeded to discuss the legal position with reference to the language of Order I Rule 10(2) of the Code of Civil Procedure which reads as under :-

"(2) Court may strike out or add parties: The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and 'settle all the questions involved in the suit, be added'."

8. The authorities have explained the meaning of the phrase „settle all the questions involved in the suit‟ . Indeed, a reading of the statutory provision shows that the sweep of the legislative provision is controlled by the expression ' settle all the questions involved in the suit, be added'. Meaning thereby, an inquiry under Order I Rule 10(2) is not to focus on whether

the applicant is a person who ought to have been joined as a necessary party to the suit. The focus of inquiry is limited to the question whether the applicant could be impleaded on the premise that his presence before the Court may be necessary in order to enable the Court to effectually and completely adjudicate upon and settle the questions involved in the suit.

9. The decisions illustrate a wide spectrum of instances when intervention was allowed and when refused. From the decisions, regretfully no discernible principle governing the discretionary power of the Court emerges, for the simple reason, the spectrum of claims is fairly wide and therefore it would be inadvisable to cast the discretionary power in a straitjacket of an inflexible formula. However, one principle emerges, that the language employed in the rule vests a very wide discretion.

10. Given for ourselves, we would follow the dictum of Jackson J. in Chidambaram Chettiar vs. Subramaniam Chettiar AIR 1927 Madras 834: 'Court should deprecate any attempt to diminish that discretion by substituting special pronouncements in special cases for the actual language of the rule.'

11. But, every judicial discretion needs to be informed by reason and guided by some legal principle even if it may be stated very widely for the reason an unguided discretion is an anathema to law.

12. We therefore, in our humble endeavour, attempt to identify a few decisions, which do guide us on a semblance of a legal principle which emerges.

13. In the decision reported as Razia Begum v Anwar Begum AIR 1958 SC 886, the Supreme Court had laid down the following principles regarding the power of the Court to implead parties by virtue of Rule 10(2) of the Code of Civil Procedure :-

"20. As a result of these considerations, we have arrived at the following conclusions :-

(1) That the question of addition 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 sections 42 and 43 of the Specific Relief Act; .............."

14. A reference may also be made to the decision of the Supreme Court reported as Ramesh Hirachand Kundanmal v Municipal Corporation of Greater Bombay 1992 (2) SCC 224. In the said case, the plaintiff was a dealer on the land held by the Hindustan Petroleum Corporation and was in possession of a service station. The Municipal Corporation issued a notice to the plaintiff for demolition of a certain construction alleging that it was unauthorized. The plaintiff filed a suit for permanent injunction against the Municipal Corporation. Hindustan Petroleum applied for being impleaded as a defendant on the ground that it had material to show that the structure was unauthorized. The prayer was granted by the Courts below. The plaintiff approached the Supreme Court. Allowing the appeal and setting aside the order, the Supreme Court held that the Hindustan Petroleum Corporation was neither necessary nor proper party to the proceedings. It was held that the person to be joined must be one whose presence is necessary as a party. The test is not whether his presence is necessary for the correct solution of the dispute before the Court but whether the order would affect him or his interest would be prejudiced. Relevant discussion is being noted herein below:-

"6. Sub-rule(2) of Rule 10 gives a wide discretion to the Court to meet every case of defect of parties and is not affected by the

inaction of the plaintiff to bring the necessary parties on record. The question of impleadment of a party has to be decided on the touch stone of Order I Rule 10 which provides that only a necessary or a proper party may be added. A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. The addition of parties is generally not a question 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.

xxx xxx

8. The case really turns on the true construction of the Rule in particular the meaning of the words "whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit." The Court is empowered to join a person whose presence is necessary for the prescribed purpose and cannot under the Rule direct the addition of a person whose presence is not necessary for that purpose. If the intervener has a cause of action against the plaintiff relating to the subject-matter of the existing action, the Court has power to join intervener so as to give effect to the primary object of the order which is to avoid multiplicity of actions.

xxx xxx

14. It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may incidentally have that effect.

But that appears to be a desirable consequence of the rule rather than its main objectives. The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some questions involved and has thought of relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e. , he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. Similar provision was considered in Amon v. Raphael Tuck & Sons Ltd. (1956) 1 All E.R. 273, wherein after quoting the observations of Wynn-Parry, J. in Dollfus Mieg et Compagnie S.A. v. Bank of England (1950) 2 All E.R. 611, that the true test lies not so much in an analysis of what are the constituents of the applicants' rights, but rather in what would be the result on the subject-matter of the action if those rights could be established, Devlin, J. has stated:

The test is 'May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights.'

15. The test which is to be applied, while considering an application under Order I Rule 10(2) of the Code of Civil Procedure for impleadment of a party has been summarised in the decision of the Madhya Pradesh High Court reported as Sampatbai v Madhusingh Gambhirji AIR 1960 MP 84 as under:-

"The test is not whether the joinder of the person proposed to be added as a defendant would be according to or against the wishes of the plaintiff or whether the joinder would involve an investigation into a question not arising on the cause of action averred by the plaintiff. It is whether the relief claimed by the plaintiff will directly affect the intervener in the enjoyment of his rights. It is not enough that the plaintiff's rights, and rights which the person desiring to be made a defendant wishes to assert should be connected with the same subject-matter. The intervener must be directly and legally interested in the answers to the questions involved in the case. A person is legally interested in the answer only if he can say that it may lead to a result that will affect him legally -- that is by curtailing his legal rights. This is the test which has been applied in Amon v. Raphael Tuck and Sons Ltd., 1956-1 All ER 273, in connection with R.S.C. Order 16, Rule 11 which is similar to Order 1, Rule 10, C. P. C. Again as pointed out in Dollfus Mieg et Compagnie S.A.V. Bank of England, 1950-2 All ER 605 at p. 611, in determining whether or not an applicant has a proprietary right in the subject matter of an action sufficient to entitle him to be joined as a defendant the true test lies not so much in an analysis of what are the constituents of the applicant's rights, but rather in what

would be the result on the subject-matter of the action if those rights could be established".

16. It is apparent that a party claiming impleadment must have an interest in the pending litigation if the party has to be impleaded, but the interest must be of a kind that the presence of the party is necessary to settle all the questions involved in the suit.

17. The decision reported as Dollfus Mieg et Compagnie S.A.V. Bank of England, 1950-2 All ER 605 cited in the aforesaid decision of the Madhya Pradesh High Court, illuminates us a lot on the subject of impleadment of a third party in a pending legal proceedings on the subject as to what kind of precise nature of the interest of the party sought to be impleaded in the property in dispute needs to be identified.

18. The said decision was dealing with Order 16 Rule 11 RSC corresponding to Order 1 Rule 10 in India.

19. In said case 64 identifiable gold bars belonging to a French company were looted by the Germans during the war on their occupation of France and were later seized by the allied armies. The custody of the gold bars was acquired by a tripartite commission, consisting of the representatives of the Government of UK, USA and France for the purposes of eventually distributing, in accordance with the provisions of the Treaty, the gold and treasure looted by the Germans. The gold bars were conveyed to England and deposited by the Commission with the Bank of England. The French company instituted an action against the bank claiming delivery of the gold bars. The bank applied for an order to set aside the writ

on the ground that the 2 foreign Government, USA and France had declined to submit to the jurisdiction of the English Courts. The claim of the company was upheld and leave was given to the bank to appeal to the House of Lords. At that stage the two governments, USA and France applied to be added as defendant to the action.

20. It is significant to note that in the application the applicants did not assert a title to the bars but they urged that if they should establish that they have possession of control of the bars through the bank the French company would fail to obtain an order from the Court in its favour by reason of the doctrine of immunity applicable to foreign sovereign states and therefore the applicants, the Government of USA and France would be entitled to retain possession and control over the bars and thus be able to dispose them of.

21. It was held that whether or not the applicants had a proprietary right in the subject matter of the action sufficient to entitle them to be joined as defendants, the true test lay not so much on an analysis of what were the constituents of the rights, but rather in what would be the result on the subject matter of the action if their rights could be established. It was held that the applicants had a direct interest in the subject matter of the action which was similar to a proprietary right and was of such a nature as would entitle them to be joined as defendants as in their absence their claim could not be eventually put forward.

22. After referring to the decision in Moser vs. Marsden, 1892-1 Ch 487 in which it was held that the fact that the person's interest would be commercially affected by a

judgment would be insufficient to make the person a party and that that person should be directly interested in the subject matter in dispute, Wynn Parry, J. observed as follows at pages 611-612:-

"On the other side of the line in Vavassur vs. K.Krupp, (1878) 9 Ch D 351 to which I had already referred, which established that a proprietary right of the proposed defendant in the subject matter of the action is sufficient. The question here is; on which side of the line does this case fall? For the purposes of this application, the applicants do not assert a title to the property in question, and, therefore it cannot be asserted that they have a proprietary right as the phrase is used in (1878) 9 Ch D 351. What they assert is that if they can establish that they have possession or control of the property in question through the defendant bank, then, by virtue of the doctrine of immunity which apply to foreign sovereign states, 2 results might well follow (i) the plaintiffs must fail to obtain any order from this Court in their favour and (ii) the applicants will retain the possession and control over the remaining bars of gold and will be able to dispose of them. In other words, although the applicants do not assert title to the bars of the gold, the result of a successful intervention by them would be that as between the plaintiffs and themselves, they would for all practical purposes, be the owners. It seems to me that true test lies not so much in an analysis of what are the constituents of the applicant's rights but rather in what would be the result on the subject matter of the action if those rights could be established. That is the approach which I have made. Viewing the matter in this way, it is impossible, in my judgment, to say that the applicant have only an indirect interest of the nature which fell to be considered in 1892-1 Ch 487. They appear to me to have something more namely, a right which although may arise indirectly, viz. by the invocation of the doctrine of immunity and through the

defendant bank as bailee nevertheless results in a direct interest in the subject matter of this action and is a right merely akin to the proprietary right which was under consideration in (1878) 9 Ch D

351. There is no authority directly bearing on the point but, on the analysis which I have made of the nature of the applicant's interest in the matter, I have come to the conclusion that I ought not to say that I have no jurisdiction to entertain the application on the short ground which counsel for the plaintiff puts forward, viz. that the applicants could not show a proprietary right, and, therefore did not come within the second of the three classes of cases to which I have referred but that I am dealing with right of such a nature as, on an application by the applicants in the position of the present applicants should result in an order that they be joined as defendants, provided it can be shown that in their absence the claim to the right will not effectually be put forward."

23. The decision brings out that the true test lies not so much in an analysis of what are the constituents of the applicant's rights but rather in what would be the result on the subject matter of the action if those rights could be established.

24. In the decision reported as 1956-1 All ER 273 Amon vs. Raphael Tuck & Sons Ltd., the aforesaid view was followed. In said case the plaintiff filed an action against the defendants for damages and injunction on the ground that the plaintiff was the first inventor of a new design of adhesive dispenser in the shape of a pen, that the plaintiff disclosed to the defendant the details of the invention in the course of negotiations with the defendant for marketing the pen and that the defendant had wrongfully made use of the information by manufacturing an adhesive dispenser of the same design as invented by the

plaintiff. The defendant, while resisting the claim applied under Order XVI Rule 11 R S C to join as defendant a third party, urging amongst other things that the third party was the first inventor of the adhesive dispenser. It was held that the presence of the third party was necessary to enable the court to adjudicate completely the subject matter in dispute as the enjoyment of the legal right of the third party would be curtailed by the relief asked for by the plaintiff in the action.

25. Delvin, J. explained the scope of the rule in these terms at page 279.

"It is not I think disputed that 'the cause or matter' is the action as it stands between the existing parties. If it were otherwise then anybody who showed a cause of action against either a plaintiff or defendant could of course say that the question involved in his cause of action could not be settled unless he was made a party. Counsel for the defendant does not contend for so wide a construction as that: but he submits that, if the intervener has a cause of action against the plaintiff relating to the subject matter of existing action the Court has power to join the intervener so as to give effect to the primary object of the order, which is to avoid multiplicity of actions. In the present case he submits that the subject matter of the dispute between the existing parties is the "ownership". If I may so put it, of an invention: the plaintiff claims that he is the owner of it and the intervener alleges that he is, and both disputes ought to be determined at the same time. This construction stresses the amplitude of the closing words of the passage which I have just cited from Order 16 Rule 11 'all the questions involved in the cause or matter.' The alternative construction treats the opening words as dominant. 'All the questions involved' is a phrase that unless it is cut down would be impossibly wide. It is cut down, the plaintiff submits by the opening words of

the passage which I have cited. The intervener must be a party whose presence is necessary to enable all questions in the action to be adjudicated on and settled, but the question must be one which has to be adjudicated on in the issue between the existing parties and not in any new issue raised by an intervener. The criticism that at once suggests itself of this construction is that it is impossible narrow. If the adjudication is limited to something that lies between the plaintiff and the defendant what parties can be necessary to it except the plaintiff and the defendant? The court is for this purpose concerned only with action "in person and in such actions either the necessary defendant is sued or the action fails. If all the parties who ought to have been joined, under the first limb of the rule are joined, who are the necessary parties contemplated by the second limb"

26. Answering the question, Delvin, J. further observed as follows at pages 289-290:-

"Counsel for the plaintiff next submits that the intervener's interests cannot be affected anyway because if the plaintiff is wrong, there will be no injunction: and if he is right, the injunction can be granted only on the basis that the duty of confidence was owed to the plaintiff and not to the intervener. This argument in my opinion, misconceives the point. Whenever a plaintiff seeks to restrain a defendant from dealing with his property and an intervener claims that the property is his, the plaintiff can say 'If I am wrong I shall not get an injunction and the intervener's right will not be affected: if I am right the intervener has no rights to be affected anyway.' The point is that the intervener is entitled to be heard on the issue whether the plaintiff is right or wrong so that he may be bound by the order made.

The final submission of counsel for the plaintiff is more far-reaching than the others. He submits

that the action an the intervener's claim are concerned with rights in contract and not rights of property and therefore the case does not come within the term "proprietary right"as set out in the note in Annual Practice 1995 at page 232. I am not of course required to construe the phrase as if it were contained in a statute. If I were I should see no reason why rights under a contract should not be called proprietary rights just as much as rights to physical property. The phrase, however, is not used definitely. The three categories formulated in the note are not exhaustive. Indeed, I do not think that they should be treated as having been formulated independently. There is one common principle running through them all, and, for my part, I should prefer to apply a test based on that principle rather than to enquire whether the case to be determined falls into one or other of the three classes. There is not, for example any real distinction between the cases which related to specific performance and those which related to proprietary rights. As Wynn Parry, J. said in 1950- 2 All ER 605 at page 611.

It seems to me that the true test lies not so much in any analysis of what are the constituents of the appellant's rights, but rather in what would be the result on the subject matter of the action if those rights could be established.

I respectfully agree with that. I think that the test is May the Order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights?

It may be true as counsel for the plaintiff submits that the authorities so far have been dealing with rights to physical property, but in my judgment the principle applies equally to contractual rights. I think that in this case the test is satisfied that I have jurisdiction to make the Order and that is one which having regard to the

question involved in the action, it is proper that in the exercise of my discretion I should make."

27. Decision brings out that the principle relating to impleadment in decisions involving rights to physical properties are equally capable of being applied to contractual rights.

28. We have troubled ourselves and also the reader of the present decision to traverse a long journey for the reason we thought it advisable to illustrate the legal principle with reference to the two aforesaid decisions pronounced by Courts in England since we find the legal principle brought out with great clarity therein.

29. Applying the aforesaid principle of the nature of interest which has to be considered as likely to be affected in a suit for specific performance of an agreement to sell, where a subsequent purchaser seeks to intervene, suffice would it be to state an agreement for sale does not create any right, title or interest in the property and the action is one in personam against the seller and thus the presence of a person who claims to have entered into a subsequent agreement to sell with the seller, would not be a necessary party as his presence is not necessary to settle all the questions which arise in the suit.

30. Besides, the applicant admits that as of 07.12.1998, the applicant was in the process of erecting a boundary wall and constructing a chowkidar room on the plot. It assumes importance that the applicant claims to have purchased the plot under an Agreement to Sell on 26.11.1990. The applicant pleads having acquired knowledge of the decree on

07.12.1998, a fact which is difficult to believe inasmuch as it does not stand to logic and reason that having purchased a plot, the applicant would not construct thereon for eight years. It is apparent that the applicant knew of the pending suit and when the decree was passed, attempted to alter the status at site.

31. CM No.2058/1998 is accordingly dismissed.

RFA(OS) No.86/1998

32. Briefly stated, the facts leading to the filing of the above captioned appeal are that the respondent filed a suit seeking specific performance of an Agreement to Sell Ex.P-1 dated 14.02.1986, pleading therein that the mother of the appellant i.e. Smt.Sushila Verma was a member of Bhatnagar Co-operative House Building Society, Chitra Vihar, New Delhi and was entitled to be allotted a plot by the society. It was pleaded that the mother of the appellant expired on 25.04.1980 leaving behind the appellant as her sole legal heir and that the appellant became entitled to the allotment of a plot by the society after the death of his mother. On 14.02.1986 an Agreement to Sell was executed between the appellant and the respondent, where-under the appellant agreed to sell the plot which would be allotted to him by the society to the respondent for a consideration of `1,50,000/- (Rupees one lakh and fifty thousand only), out of which `40,000/- (Rupees forty thousand only) was paid by the respondent towards part sale consideration when the agreement was executed. Vide clauses 1, 2 and 5 of the

Agreement to Sell, the respondent was under an obligation to pay balance sale consideration within 7 days of the receipt of information from the appellant of the factum of allotment of the plot to the appellant and that the appellant was to deliver vacant possession of the plot to the respondent at the time when the respondent makes payment of balance sale consideration to him. On 21.01.1987 and 26.04.1987, the respondent paid a further sum of `10,000/- (Rupees ten thousand only) each to the appellant towards part sale consideration. On 26.04.1987, the appellant wrote a letter to the respondent wherein it was stated that he has received a sum of `60,000/- from the respondent towards sale consideration of the plot and that he has learnt that the office of the society has asked the DDA to allot plot bearing Municipal No.40 to him. On 25.08.1987 the appellant wrote a letter to the respondent wherein it was stated that he has received a letter dated 25.08.1987 from the DDA informing him that plot bearing Municipal No.40 has been allotted to him. It was further stated in the said letter that since the appellant has informed the respondent about the factum of allotment of plot to him the respondent should make the payment of balance sale consideration to him within 7 days of the receipt of the said letter i.e. letter dated 25.08.1987. Along with the letter dated 25.08.987 the appellant had enclosed a copy of the letter dated 25.08.1987 received by him from the DDA, perusal whereof reveals that the appellant was only allotted a plot by the society and that right, title or interest was to be created in favor of the appellant in respect of the plot on the execution of a perpetual lease-deed in respect of the plot by

the DDA in his favor. Such being the position, the appellant requested the respondent to give him some time to enable him to get executed from the DDA a lease deed in respect of the plot in his favor. It was agreed between the parties that the appellant would first get executed from DDA a lease deed in respect of the plot in his favor and thereafter get the same transferred in the name of the respondent by submitting necessary applications to DDA and the society. On 29.09.1987, the respondent paid a further sum of `15,000/- (Rupees fifteen thousand only) to the appellant towards part sale consideration, the receipt of which payment was acknowledged by the appellant vide receipt dated 29.09.1987 issued by him to the respondent. On 20.11.1987, the respondent paid a further sum of `5,000/- (Rupees five thousand only) to the appellant towards part sale consideration, the receipt of which payment was acknowledged by the appellant vide receipt dated 20.11.1987 issued by him to the respondent. After sometime the respondent learnt that on 30.11.1987 a perpetual sub-lease deed was executed by DDA in respect of the plot in favor of the appellant and the same was got registered on 10.12.1987. After the execution and registration of the aforesaid perpetual sub-lease deed, the respondent called upon the appellant to honor the Agreement to Sell dated 14.02.1986, but he failed to do so. On 24.01.1988 the respondent sent a notice by way of a telegram to the appellant informing him that she would be constrained to file a suit for specific performance in case the appellant failed to honor the Agreement to Sell dated 14.02.1986. In response to the said notice, the appellant wrote

a letter dated 29.01.1988 to the respondent wherein it was stated that the Agreement to Sell dated 14.02.1986 stood terminated on account of failure of the respondent to make payment of balance sale consideration within 7 days of the receipt of letter dated 25.08.1987 written by him informing her about the factum of allotment of plot to him. It was pleaded that the aforesaid stand taken by the appellant was totally false inasmuch a conjoint reading of clauses 1, 2 and 5 of the Agreement to Sell dated 14.02.1986 brings out that the respondent was required to make payment of balance sale consideration to the appellant within 7 days from the creation of right, title or interest of the appellant in the plot, which was not the case when she received letter dated 25.08.1987 for till that date only a plot was allotted to the appellant but no right, title or interest in respect of the plot was created in his favor. Since the appellant had breached the Agreement to Sell dated 14.02.1986, the respondent who was always ready and willing to perform her part of the Agreement to Sell dated 14.02.1986 was entitled to a decree for specific performance of the Agreement to Sell dated 14.02.1986. In the alternative, a sum of `6,00,000/- (`80,000/- towards sale consideration paid by the respondent to the appellant + `5,20,000/- towards damages) together with interest @ 18% per annum was claimed from the appellant.

33. In the written statement filed, the appellant admitted the execution of the Agreement to Sell dated 14.02.1986 and that he had received the sums of `40,000/-, `10,000/-, `10,000/-, `15,000/- and `5,000/- from the appellant on 14.02.1986, 21.01.1987, 26.04.1987, 29.09.1987 and

20.11.1987 respectively towards part sale consideration of the plot. It was pleaded that the respondent is not entitled for a decree of specific performance since the respondent did not perform her obligations under the Agreement to Sell dated 14.02.1986. It was pleaded that the Agreement to Sell dated 14.02.1986 stood terminated for the reason the respondent violated clauses 1 and 5 of the Agreement to Sell dated 14.02.1986 by not making the payment of balance sale consideration within 7 days of the receipt of the letter dated 25.08.1987 written by the appellant informing her about the factum of allotment of the plot to him. In view of termination of the Agreement to Sell dated 14.02.1986 the appellant sold the plot to a third party in the month of January, 1988.

34. In the replication filed, the respondent reiterated the case pleaded by her in the plaint.

35. On the basis of the pleading of the parties, following issues were settled by the learned Single Judge:-

"1. Whether the plaintiff is entitled to specific performance of the agreement dated 14.02.1986 with regard to plot No.40 in Chitra Vihar, as pleaded in the plaint?

2. If the plaintiff is not entitled to specific performance, whether the plaintiff is entitled to the refund of the part payment made by her?

3. To what amount of damages, if any, is the plaintiff entitled?

4. Relief."

36. In support of her case, the respondent examined herself, Mr.Ashok Kumar, Special Assistant, Punjab National Bank and Bharat Bhushan, Assistant Manager, Indian Bank as PW-3, PW-1 and PW-2 respectively.

37. In her testimony, the respondent deposed facts in harmony with her pleadings and not only proved the agreement to sell, which was an admitted document, but also the five receipts under which part sale consideration was received by the appellant, which receipts being executed was otherwise an admitted fact. Additionally, she deposed that she was always in a position to pay the balance sale consideration of `70,000/- to the appellant inasmuch her father-in-law Hans Raj Mahajan had the amount of balance sale consideration i.e. `70,000/- (Rupees seventy thousand only) in his bank account as on 30.12.1989 and that he was ready and willing to give the said amount to her. She further deposed that she is in a position to pay the balance sale consideration to the appellant at the time of recording of her evidence inasmuch as an amount of `82,000/- stands deposited in her bank account with Punjab National Bank as on 29.02.1996. Ashok Kumar PW-1, Special Assistant, Punjab National Bank deposed that an amount of `82,000/- stands deposited in the bank account of the respondent as on 29.02.1996. Bharat Bhushan PW-3, Assistant Manager, Indian Bank deposed that an amount more than `70,000/- stood deposited in the bank account of the father-in-law of the respondent as on 30.12.1989.

38. The appellant examined himself as his sole witness and deposed facts in harmony with the defence set up by him.

39. Certain portions of the testimony of the appellant are relevant, and we note the same as under:-

"......

Q:4 Tell us when you were supposed to be paid the balance sale consideration? A: It is clearly agreed in the agreement that the day, I will informed by the Registered A.D. and the moment they will receive my registered A.D. within seven days, they had to clear the balance sale consideration amount.

Q:5 What was the letter that was supposed to be informed?

A: It was the allotment of the plot from the D.D.A. as per the terms of the agreement. The letter dtd. 25.8.87 alongwith a letter which was issued by D.D.A. to the Cooperative Society, is marked as Ex.D-3.

Q:6 Did they pay that amount within 7 days?

              A:    No.

              Q:7 Did they refuse to pay?
              A:    They never came to me, I repeatedly

requested them to kindly pay the balance amount, but they always tried to make false statements saying that we are trying okay, we are trying. In all, the payments were not made.

Q:8 What was the effect of your notice?

A: I have already mentioned in my notice that I am not going to terminate this agreement. Now our conditions are changed. By that notice dtd. 25.8.1987 the balance consideration was not paid the agreement would stand terminated and the agreement would be signed. It is exhibited as Ex.D.4. The same was sent by registered letter, the receipt issued the registered letter is marked as Ex.P-5 and it is marked as Ex.P-6.

....

Q:15 After the cancellation of the agreement, did you enter into any agreement with any other person?

A: YES. I entered into an agreement with Mr.Kamlesh Gupta, dtd. 29th January, 1988. Agreement is exhibited as Ex.D-7.

....."

40. Certain answers given by the appellant during cross-examination are relevant and we note the same as under:-

"Q:17 After 25.8.1987 the serving of notice dtd. 25th, you received two payments?

A: YES.

Q:18 The last payment was received in the month of November, 1987?

A: YES.

Q:19 The lease deed was executed in your favor and registered on 12.1.1988?

A: I have no idea regarding the date.

Q:20 Prior to 12.1.1988, you were not in a position to deliver the possession in terms of the agreement executed between you?

A: No, that is incorrect.

Q:21 According to clause 2, you were to get the balance amount of `1,10,000/- only on registration and delivering the possession?

A: It is not correct.

Q:22 Please read out the clause 1 and 5 and then answer? Para 1 & 5?

A: It is stated that the balance consideration was to be paid in the allotment.

Q.23 Did in clause 2, you were to receive the amount on handing over of the vacant possession?

A: That is not correct." (Emphasis Supplied)

41. With regard to documentary evidence, amongst other documents, the respondent produced the Agreement to Sell dated Ex.14.02.1986 executed between the parties, the letter Ex.P-7 dated 25.08.1987 written to her by the appellant and the letter dated Ex.-7A addressed by the DDA to the appellant.

42. Before proceeding further, it would be apposite to note clauses 1, 2, 5 and 6 of the Agreement to Sell Ex.P-1 dated 14.02.1986 which read as under:-

"1. That the entire consideration amount of the said plot of land is fixed between the parties at `1,50,000/- (Rs. One lakh and fifty thousand only) out of which the first party has received the sum of `40,000/- (Rupees Forty thousand only) from the second party, under legal separate receipt, at the time of execution of this agreement, the first party both hereby acknowledge the receipt of the same and the balance sum of `1,10,000/- (Rupees One lakh and ten thousand only) shall be paid by the second party to the first party at the time of receipt of the letter of the Allotment of the particular number of plot from the office of the Registrar of Society, as per intimation received from the first party under Registered A/D, without any hitch or delay.

2. That the first party shall deliver the vacant possession of the said plot of land to the second party at the time of receipt of the

balance consideration of `1,10,000/- (Rupees one Lakh and ten thousand only).

...........

5. That the second party has assured the first party that the balance consideration amount of the said plot of land shall be paid by the second party to the first party within seven days from the date of receipt of the information as stated above.

6. That if the first party infringes the terms and conditions of this agreement, then the second party shall be entitled to get the completion of the sale of the said plot of land through the Court of law at the cost of the first party and if the second party fails to pay the said balance consideration amount of `1,10,000/- within the time stipulated above or refuses in writing to purchase the said plot of land from the first party within the time stipulated above, then the said sum of `40,000/- shall be forfeited and the first party shall be at liberty to resell the said plot to whom the first party wishes."

43. It is also relevant to note the contents of the letter Ex.P-7 dated 25.08.1987 written by the appellant to the respondent:-

"Respected Madam,

This has reference to para No.1 of our agreement dated 14.2.86.

I take this opportunity to inform you that I have been allotted plot No.40 in Bhatnagar‟s House Building Society Chitra Vihar, behind Radhu Palace, Delhi, vide D.D.A., letter

No.F.28(115)/83/CS/DDA dated 25.8.87. The copy of the letter is attached herewith.

You may now please take necessary steps to discharge your contractual obligation within the specified time of seven days agreed in the above said agreement dated 14.2.86."

44. It would be useful to note the contents of the letter Ex.P-7A dated 25.08.1987 addressed by the DDA to the appellant:-

"Sir, With reference to your letter No.BCHBS/(Draw of lots)/87 dated 14.6.87 on the above noted subject, I am directed to inform you that consequent upon the clearance of membership of Shri V.N. Verma by the Office of the Registrar (CS) and on the basis of availability report of plot No.40 under category "B", furnished by you the said plot has been allotted to Shri V.N. Verma s/o late Shri A.N. Verma.

You are, requested to submit the lease papers in respect of the said plot so that the sub-lease deed could be executed by this office." (Emphasis Supplied)

45. Vide impugned judgment and decree dated 29.04.1998 the learned Single Judge has decreed the suit and directed specific performance of the Agreement to Sell dated 14.02.1986.

46. Briefly stated, the reasoning of the learned Single Judge is that: - (i) the evidence adduced by the respondent shows that the respondent was always ready and willing to perform her part of the contract and was in a position to pay

balance sale consideration to the appellant at all material points of time; (ii) nothing could be elicited by the appellant in the cross-examination of the respondent to show that the respondent was not ready and willing to perform her part of the contract; (iii) the ipsi-dixit stand taken by the appellant in his testimony goes to show that it was the respondent who failed to honor the Agreement to Sell dated 14.02.1986; (iv) the stand taken by the appellant that the respondent has committed breach of the Agreement to Sell dated 14.02.1986 by not making payment of balance sale consideration within seven days from the receipt of the letter dated 25.08.1987 written by him informing her about the factum of allotment of the plot to him is incorrect in view of clause 2 of the Agreement to Sell dated 14.02.1986 which provided that the respondent was to make payment of balance sale consideration on delivery of vacant possession of the plot to her, and (v) a reading of the Agreement to Sell dated 14.02.1986 in its entirety makes it very clear that the intention of the parties was that the respondent was obliged to pay the balance sale consideration only when the appellant acquires title in the plot and is in a position to deliver the vacant possession of the plot to the respondent.

47. Aggrieved by the impugned judgment and decree dated 29.04.1998 passed by the learned Single Judge, the appellant has filed the present appeal under Section 96 of the Code of Civil Procedure.

48. In support of the present appeal, learned counsel for the appellant has advanced following two submissions:-

I. That the learned Single Judge failed to appreciate that vide clauses 2 and 5 of the Agreement to Sell dated 14.12.1986 the respondent was under an obligation to pay the balance sale consideration within seven days from the receipt of the information about the factum of allotment of the plot to the appellant. The learned Single Judge failed to appreciate that in view of the fact that the time was of the essence of the contract between the parties the Agreement to Sell dated 14.02.1986 stood terminated on the failure of the respondent to make payment of the balance sale consideration within seven days of the receipt of the letter dated 25.08.1988 written by the respondent informing her about the factum of allotment of the plot to him.

II. That it has been enunciated by the Supreme Court in the decisions reported as Nirmala Anand v Advent Corporation (P) Ltd AIR 2002 SC 2290 and Gobind Ram v Gian Chand AIR 2000 SC 3016 that in cases where a decree for specific performance of an Agreement to Sell of a property has not been executed for a long time, having regard to the escalation in price of the property the appellate courts dealing with the appeals challenging the said decree should refuse to affirm the said decree or direct the plaintiff to pay higher sale consideration than what was agreed between the parties while affirming the said decree. In the instant case, the impugned judgment and decree was passed in the year 1998. Between the periods from the passing of the impugned decree till the

adjudication of the present appeal the prices of the property have increased manifold and thus this Court should refuse to affirm the impugned decree or at least direct the respondent to pay higher sale consideration than what was agreed between the parties while affirming the impugned decree.

49. That the parties entered into the Agreement to Sell dated 14.02.1986 is not in dispute. The fact that the appellant received sums of `40,000/-, `10,000/-, `10,000/-, `15,000/- and `5,000/- from the appellant on 14.02.1986, 21.01.1987, 26.04.1987, 29.09.1987 and 20.11.1987 towards part sale consideration of the plot is also not in dispute. The question of controversy in the present case is that who had breached the Agreement to Sell dated 14.02.1986. Whether it was the appellant who had breached the Agreement or was it the respondent who failed to perform her obligations under the Agreement, is the question we are required to answer in the present case.

50. As evident from the factual matrix noted above, the stand taken by the appellant before the learned Single Judge was that the respondent had committed the breach of the Agreement to Sell dated 14.02.1986 by not making payment of the balance sale consideration within 7 days of the receipt of the letter dated 25.08.1987 written by him informing her about the factum of allotment of the plot to him. Whereas clauses 1 and 5 of the Agreement to Sell stipulate that the respondent is required to pay the balance sale consideration within seven days from the receipt of information from the

appellant about the factum of the allotment of the plot to him clause 2 of the Agreement stipulates that the appellant shall be required to hand over the vacant possession of the plot at the time of receiving the balance sale consideration from the respondent. On 25.08.1987 the DDA had addressed a letter to the appellant and the society informing them that plot No.40 has been allotted in favor of the appellant. It was further stated in the said letter that the necessary documents be furnished by the society to the DDA so that the sub-lease deed in respect of the plot can be executed in favor of the appellant. Meaning thereby, that on 25.08.1987 the appellant became entitled to get a sub-lease deed executed in respect of the plot in his favor from the DDA. On 25.08.1987 the appellant did not acquire any possessory rights in respect of the plot in question and would have acquired such rights only on execution of sub- lease deed in respect of the plot in his favor by the DDA. The appellant was not in a position to deliver the vacant possession of the plot to the respondent within a period of 7 days from the delivery of the letter dated 25.08.1987 by him to the respondent. Such being the position, the respondent was well within her rights to not make payment of the balance sale consideration within 7 days from the receipt of the letter dated 25.08.1987 in view of clause 2 of the Agreement to Sell dated 14.02.1986 which stipulates that that the appellant shall be required to hand over the vacant possession of the plot at the time of receiving the balance sale consideration from the respondent. In these circumstances, particularly the stipulation contained in clause 2 of the Agreement to Sell dated 14.02.1986, the stand taken by the appellant to contend that

the respondent has committed the breach of the Agreement is not correct.

51. The matter can also be looked at from another angle. Assuming the appellant is correct in contending that the respondent was required to pay the balance sale consideration within 7 days from the receipt of the letter dated 25.08.1987 written by him, the question which arises is that whether the failure of the respondent to make the payment of the balance sale consideration within the said period would result in termination of the Agreement.

52. The law is well settled that ordinarily in transactions of sale of immovable properties, time is not the essence of the contract. (See the decisions of the Supreme Court reported as Indira Kaur v Sheo Lal Kapoor AIR 1988 SC 1074 and Chand Rani v Kamal Rani AIR 1993 SC 1742.) In the present case, it is an admitted fact that the appellant had received sums of `15,000/- and `5,000/- from the respondent towards part sale consideration of the plot on 29.09.1987 and 20.11.1987 respectively, i.e. after the expiry of period of 7 days from the receipt of the letter dated 25.08.1987 by the respondent. If the Agreement to Sell dated 14.02.1986 had terminated due to failure of the respondent to make payment of the balance sale consideration within 7 days from the receipt of the letter dated 25.08.1987 as contended by the appellant where was the occasion for the appellant to receive a sum of `20,000/- towards part sale consideration of the plot after the expiry of the said period of 7 days. No satisfactory explanation has been furnished by the appellant in his pleadings or in the evidence

adduced by him for having accepted the sum of `20,000/- towards part sale consideration of the plot after the expiry of the said period of 7 days. The conduct of the appellant of having accepted the sum of `20,000/- towards part sale consideration of the plot after the expiry of period of 7 days from the receipt of the letter dated 25.08.1987 by the respondent nullifies the stand taken by him that the time was of the essence of the contract and that the Agreement to Sell dated 14.02.1986 stood terminated the failure of the respondent to make the payment of the balance sale consideration within 7 days from the receipt of the letter dated 25.08.1987.

53. Having repelled the first submission advanced by the learned counsel for the appellant, we proceed to deal with the second submission advanced by him, for which purpose we need to note the judicial decisions relied upon by him.

54. In Nirmala‟s case (supra), in February 1962 the respondent No. 1 advertised in newspapers thereby calling upon the public to apply for flats in the building sought to be constructed and named as "Divya Prabha". Various agreements with bona fide flat purchasers including the appellant were entered into during the time. The consideration amount to be paid by the appellant was `60,000/-. The building was to be completed and possession of flats was to be handed over on 30.6.1969. On 27.6.1969 Bombay Municipal Corporation served notices on the lessees thereby terminating the lease of the plot of land on which "Divya Prabha" was constructed. The noticee, inter-alia, claimed that the

termination was done as the lessees have committed defaults in payment of the lease rent and have also violated other terms of the lease. The stage of the construction of 'Divya Prabha' at that time was incomplete. In the year 1969, the appellant along with seven other similar purchasers instituted a suit for specific performance of their respective flat purchase agreements. Be it noted here that the construction of the building at the time of filing of the suit was incomplete. However, when the suit was finally adjudicated upon by the learned single Judge of the Bombay High Court, all the plaintiffs except the appellant and plaintiff No. 7 had settled their disputes with respondent Nos. 1 and 2. The Single Judge came to factual conclusion that the appellant had always been and is ready and willing to carry out her part of the agreement. The agreement was still valid and subsisting and respondent No.1 had committed breach of the agreement. The learned Single Judge did not grant the specific performance of the agreement for the reasons that a Court ought not to grant a decree of specific performance in circumstances when the lease of the land on which the building stood terminated and the building was incomplete. The order of the Single Judge was affirmed by the Division Bench in appeal. In appeal, the Supreme Court reversed the decision of the Single Judge and held that the appellant is entitled to decree of specific performance. However there was a difference of opinion between the two judges of the Supreme Court on the issue whether while granting decree of specific performance she should be directed to pay sale consideration to the respondent No.1 at a sum higher than what was agreed between the

parties. Whereas Doraiswamy Raju, J. held that the appellant should pay sale consideration to the respondent No.1 at a sum higher than what was agreed between the parties Ashok Bhan J. opined to the contrary. The relevant portion of the opinion of Doraiswamy Raju, J. is being extracted herein under:-

"The subsequent developments and events noticed above and brought on record, even dehors the legal principles considered above belies, at least for the present, the claim of total impossibility of performance of the agreement entered with the appellant by the respondents 1 and 2. At the same time, the entire fault for the delay or default cannot be squarely attributed solely to 1stand 2ndrespondents since the volition and positive role of others as well as some public authorities were found required to have the agreed things to be done, really fulfilled and carried out. Certain lapses in carrying out the developmental activities in accordance with the arrangements made and agreements entered into with other parties and court proceedings also had their inevitable impact. Consequently, while insisting upon the enforcement of her rights under the suit agreement, the plaintiff/appellant also should be prepared to share a portion of the expenses, monetary commitments and obligations to be satisfied in securing the renewal of the lease and the revalidation of the building plan proportionate to and commensurate with her share qua the flat No. 71 agreed to be sold...... Specific performance being an equitable relief, balance of equities have also to be struck taking into account all these relevant aspects of the matter, including the lapses which occurred and parties respectively responsible therefore. Before decreeing specific performance, it is obligatory for courts to consider whether by doing so any unfair advantage would result for the plaintiff over the defendant, the extent of hardship that may be caused to the defendant and if it would render such enforcement inequitable, besides taking into the totality of circumstances of each case. The

parties, while availing of the opportunities given by this court to settle the matter, appear to have, so far as respondents No. 1 and 2 were concerned, prepared to pay upto sixty lakhs as against the demand of the appellant to the tune of one and half crores, and subsequently, reduced upto 120 lakhs. Seeking to place reliance upon the details of consideration found mentioned in the assignment deed dated 14.10.94, it has been stated in the written submissions on behalf of the appellant that even a sum to the tune of `1,81,63,534/-, if paid, will be of some recompense only. Keeping in view, all these aspects, in my view, interests of justice would be better served, dictates of reason could be satisfied, and equities could, to some extent, be balanced only if as a condition for decreeing specific performance or allowing the plaintiff to avail of such relief, the appellant is directed to pay at least a sum of rupees forty lakhs to the respondents No. 1 and 2, in addition to the amount already paid. The appellant shall be entitled to have a decree for specific performance, only subject to satisfaction/compliance with the said condition of further payment, as a compensatory measure for the respondents No. 1 and 2." (Emphasis Supplied)

55. It would also be useful to extract the following portion of the opinion of Ashok Bhan, J.:-

"Escalation of price during the period may be a relevant consideration under certain circumstances for either refusing to grant the decree of specific performance or for decreeing the specific performance with a direction to the plaintiff to pay an additional amount to the defendant and compensate him. It would depend on the facts and circumstances of each case.

.....

It would be seen in none of the above noted cases this Court has laid an absolute rule that the proposed vendee would be required to compensate the

proposed vendor for the escalation of price of the land and building during the pendency of the proceeding in Court at different level.

46. The appellant has always been ready and willing to perform her part of contract at all stages. She has not taken any advantage of her own wrong. The appellant is in no way responsible for the delay at any stage of the proceeding. It is the respondents who have always been and are trying to wriggle out of the contract. The respondents cannot take advantage of their own wrong and then plead that the grant of decree of specific performance would amount to an unfair advantage to the appellant.

47. Requiring the appellant to pay further sum of `40 Lakhs would/may amount of frustrating the agreement itself as the appellant may not be in a position to pay the sum of `40 lakhs. Respective counsel for the parties had quoted the figure of a particular sum which could be paid to the appellant in lieu of avoiding the decree of specific performance. The appellant had not made an offer to pay any additional sum over and above the quoted price to sell by way of compensation. It does not indicate the financial position of the appellant to pay the additional sum of `40 lakhs. With due respect, in my view, it would be unfair to grant the decree of specific performance by one hand and take it back by the other."

56. It can be noticed from the afore-noted portion extracted from the opinion of Doraiswamy Raju, J. that one major factor which weighed in directing the appellant to pay the sale consideration to the respondent No.1 at a sum higher than what was agreed between the parties was that the respondent No.1 was not entirely blameworthy for the non- performance of the Agreement to Sell entered into the parties.

57. The aforesaid decision in Nirmala‟s case (supra) was considered by a three-Judge Bench of the Supreme Court in the decision reported as Nirmala Anand v Advent (P) Corporation Ltd (2002) 8 SCC 146. The relevant portion of the decision of the three-Judge Bench is being reproduced herein under:-

"We have heard learned counsel for the parties. The only question to determine is as to whether the appellant shall be directed to pay to respondents 1 and 2 any additional sum and if so what amount.

5. The appellant is prepared and willing to take possession of the incomplete flat without claiming any reduction in the purchase price and would not hold respondent Nos. 1 and 2 responsible for anything incomplete in the building. It has been concurrently held that she did not commit breach of the agreement to sell. She has always been ready and willing to perform her part of the agreement. The appellant is ready and willing to pay to respondents 1 and 2 interest on sum of `25,000/-. The breach was committed by respondents 1 and 2 as noticed hereinbefore. It is evident that the appellant is ready to take incomplete flat and pay further sum as noticed, most likely on account of phenomenal increase in the market price of the flat during the pendency of this litigation for over three decades. We see no reason why the appellant cannot be allowed to have, for her alone, the entire benefit of manifold mega increase of the value of real estate property in the locality. In our view, it would not be unreasonable and inequitable to make the appellant the sold beneficiary of the escalation of real estate price and the enhanced value of the felt in question. There is no reason why the appellant, who is not a defaulting party, should not be allowed to reap to herself the fruits of increase in value.

6. It is true that grant of decree of specific performance lies in the discretion of the court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree or specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the consideration besides many others to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her along, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the consideration to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing the specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen.

7. In the present case, the suit was filed by the plaintiff within a month of the date when the possession under the agreement was to be delivered to her. By that time, she had already paid more than 50% of the sale consideration. There was no occasion for her to pay the balance consideration to the seller. The courts have concurrently found that the appellant has always been ready and willing to perform her part of the contract and the seller committed breach is not carrying out the terms of the agreement. While others left, the appellant has

been single handedly fighting for her rights under the agreement. She has agreed to take the flat on as-is- where-is basis without claiming any reduction in purchase price and without making the seller liable for anything incomplete in the building. Further the building except the flat in question has been sold by respondents 1 and 2 to the 7th respondent. For the revival of the building plans, revival of lease and other such steps, the sellers and/or their assignees may have to take steps as per agreement between them but to ask the appellant to pay to respondent Nos. 1 and 2, a sum of `40,00,000/- would be too onerous and would almost amount to denying her specific performance. It would also amount to putting a premium on the breach committed by respondents 1 and 2. Along with the remaining amount of the sale consideration, the appellant can also be directed to pay to respondents 1 and 2 some reasonable additional amount they having been deprived of that amount of `25,000/- during all these years.

8. Having regard to the totality of circumstances, we would direct the appellant to pay to respondents 1 and 2 a sum of `6,25,000/- instead of `25,000/-. the amount of `40,00,000/-, wherever it appears in the opinion of Justice Doraiswamy Raju, would be read as `6,25,000/-. All other conditions will remain." (Emphasis Supplied)

58. The aforesaid decision of three-Judge Bench in Nirmala‟s case (supra) was subsequently considered in the decision reported as P.D‟ Souza v Shondrilo Naidu (2004) 6 SCC 649 wherein it was observed as under:-

"The decision of this Court in Nirmala Anand (supra) may be considered in the aforementioned context.

....

The said decision cannot be said to constitute a binding precedent to the effect that in all cases

where there had been an escalation of prices, the court should either refuse to pass a decree on specific performance of contract or direct the plaintiff to pay a higher sum. No law in absolute terms to that effect has been laid down by this Court nor is discernible from the aforementioned decision."

(Emphasis Supplied)

59. In Gobind Ram‟s case (supra) relied upon by the appellant, the vendor who was appellant had agreed to sell the disputed property situated at Lajpat Nagar IV, New Delhi, for a consideration of `16,000/- to the vendee, who was the respondent On 24.1.1973 a sum of `1,000/- was paid as earnest money. As the appellant did not execute the sale deed in spite of the time granted, the respondent filed the suit for specific performance of the contract which was decreed. The vendee filed the appeal in the High Court which was dismissed.

The vendor came up in an appeal before the Supreme Court by way of special leave petition. Counsel who appeared for the vendor offered to pay a sum of `1,16,000/- to the vendee to cancel the contract and get out of the decree. While holding that the vendor was trying to wriggle out of the contract due to escalation in prices of real estate properties and therefore the vendee is entitled to get a decree of specific performance the Supreme Court directed the vendee to pay an additional amount as compensation to the vendor, on the reasoning:-

"In view of the above clear finding of the High Court that the appellant tried to wriggle out of the contract between the parties because of escalation in prices of real estate properties, we hold that the respondent is entitled to get a decree as he had not taken any undue or unfair advantage over the appellant. It will be inequitable and unjust at this point of time to

deny the decree to the respondent after two courts below had decided in favour of the respondent. While coming to the above conclusion we have also taken note of the fact that the respondent deposited the balance of the consideration in the trial court and also the amount in the High Court, as directed. On the other hand the appellant, as held by the High Court, tried to wriggle out of the contract in view of the tremendous escalation of prices of real estate properties. However, to mitigate the hardship to the appellant we direct the respondent to deposit a further sum of `3,00,000/- within 4 months from today with the Registry of this Court and the amount shall be kept in short term deposit in a nationalised bank. While giving the above direction we have taken note of the offer made to us on behalf of the respondent. This amount is to be paid to the appellant on his giving possession of the suit property to the respondent within 6 months from the date of the deposit of the above amount. The appellant shall also be entitled to withdraw the amount already deposit in the trial court and the amount of `1,00,000/- which has been kept in interest-bearing fixed deposit in the Registry of the High Court." (Emphasis Supplied)

60. It would be seen from the perusal of the afore- noted portion of the decision in Gobind Ram‟s case (supra) that the Supreme Court had ordered the vendee to pay an amount by way of compensation to the vendor on a concession made by the vendee.

61. From the afore-noted decisions, the legal principle which emerges is that the court, in its discretion, can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or

converse would depend upon the facts and circumstances of a case. While balancing equities in adjudicating cases relating to specific performance of Agreement to Sell of the property the consideration required to be kept in mind by the Courts is that who is the defaulting party. There is no binding precedent to the effect that in all cases where there had been an escalation of prices, the court should either refuse to pass a decree on specific performance of contract or direct the plaintiff to pay a higher sum.

62. Relevant would it be to highlight that Courts exercise equitable discretion in matters pertaining to specific performance and thus conduct of a party would always be relevant.

63. In the instant case, the appellant is wholly responsible for the non-performance of the Agreement to Sell dated 14.02.1986. The stand taken by the appellant that the Agreement to Sell dated 14.02.1986 stood terminated when the respondent did not make payment of the balance sale consideration within 7 days of the receipt of the letter dated 25.08.1987 written by him is wholly fallacious particularly in the light of the fact that the appellant had accepted from the respondent a sum of `20,000/- towards part sale consideration of the plot after the expiry of the said period of 7 days. The aforesaid fallacious stand taken by the appellant is a very strong pointer to the fact that the appellant turned dishonest after having received more than half of the sale consideration of the plot from the respondent. The refusal to grant decree of specific performance of the Agreement to Sell of the property

and granting compensation to the seller while granting decree of specific performance to the buyer on account of escalation in the price of the property is a principle rooted in equity that no party should have an undue advantage over the other. There can be no equity in favor of a dishonest person. We thus find no merit in the second submission advanced by the learned counsel for the appellant.

64. In view of the above discussion, the appellant would not be entitled to the impugned decree being set aside and thus we uphold the decree and dismiss the appeal.

65. However, we leave the parties to bear their own costs.

(PRADEEP NANDRAJOG) JUDGE

(PRATIBHA RANI) JUDGE JANUARY 18, 2012 dkb