Phulgen and Others Vs Vinay Kumar Tiwari

Pankaj Mithal, J.@mdashIn this writ petition under Article 226 of the Constitution of India, I am to consider the right of the plaintiff/respondent to seek impleadment of subsequent purchasers, to be precise of transferee pendente lite as defendants in a suit for specific performance of an agreement to sell and the consequential amendment thereto in the plaint. The facts of the case in a capsule form are as under:

2. The plaintiff/respondent instituted Original Suit Mo. 466 of 2009 on 28.5.2009 for specific performance of an agreement to will dated 29.1.1991. The defendant/petitioners in the said suit filed their written statement an 30.8.2010 so as to contest the same and in one of the paragraphs of the written statement they pleaded that the property has been transferred by them on 12.4.2010 and 13.4.2010 by two sale-deeds in favour of Smt. Sheela Devi, Anita Gupta, Sangita Gupta, Krishnawati Devi, Anil Kumar and Dinesh Singh.

3. In view of the pleadings in the written statement, plaintiff/respondent moved application for impleadment of the aforesaid subsequent purchasers and for consequential amendment of the plaint seeking declaration of the aforesaid two sale-deeds as null and void. The applications were rejected by the Court of first instance vide order dated 15.11.2011 whereupon the plaintiff/respondent preferred civil revision No. 185 of 2011. The revision has been allowed and the impleadment with consequential amendments has been permitted by the impugned order dated 6.7.2012.

4. The defendants to the suit have invoked the writ jurisdiction of this Court challenging the aforesaid revisional order.

5. Sri Anil Kumar Aditya and Sri R.N. Singh, learned counsel for the parties were heard and they agreed for disposal of the writ petition on the averments in the petition without waiting for any counter-affidavit.

6. Sri Anil Kumar Aditya has raised two submissions that in a suit for specific performance subsequent purchasers are not necessary and property party. Secondly, against the rejection of the impleadment application the revision was not maintainable and, therefore, the revisional order is without jurisdiction.

7. Sri R.N. Singh in reply submitted that adding of the subsequent purchasers in the suit cause no prejudice to the defendant/petitioners. The plaintiff/respondent is the master of his suit and is the best person to decide about his adversaries and the defendant/petitioners have no concern with their addition. Therefore, no indulgence should be granted in exercise of writ jurisdiction.

8. In this petition I am concern only with the addition of parties as defendants in the suit for specific performance of an agreement to sell. Therefore, I would be referring to the addition of parry in context with a suit for specific performance instead of substitution and deletion of parties in general.

9. A person is a party to a suit if there is cause of action for him or against him. The First Schedule to the CPC in Order I provides for the parties to the suits to mean plaintiffs and defendants.

10. Order 1 Rule 10 CPC enables the Court to add any person as a party at any stage of the suit if his presence before the Court is necessary, in whose absence effective relief in the suit cannot be granted or to effectively and completely adjudicate upon and settle all the issues involved in the suit. Avoidance of multiplicity of proceedings may also be recognised as one of the objects enabling the Court to add any person as a party to a suit.

11. Order I Rule 10(2) CPC which is relevant for addition or deletion of parties to a suit 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 the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectively and completely to adjudicate upon and settle all the questions involved in the suit, be added.

12. Addition of the parties to a suit is dependent upon the fact as to whether the party sought to be added is a necessary or a proper party.

13. The necessary party is one whose presence is essential, against whom relief in the suit is sought and in whose absence no effective order/decree can be passed therein. On the other hand, the proper party is one in whose absence a decree can be passed but whose presence is needed for effective and complete adjudication of the subject-matter.

14. In Udit Narain Singh Malpaharia Vs. Additional Member, Board of Revenue, Bihar, , the five Judges Bench of the Supreme Court have observed as under:

The law as to who are necessary or proper parties to a proceeding is well-settled. 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.

15. In view of the above, the Court while adding a party as defendant in a suit is only required to see as to whether the said party is a necessary or a proper party.

16. In any suit plaintiff is dominus litis and it is upon him to chose his opponents or the persons from whom he wants to claim the relief. Normally, a Court has limited or no role in choosing the adversaries of the plaintiff or the persons from whom the plaintiff should fight. However, if the Court is satisfied that a person is a necessary or a proper party to the suit it may exercise its judicial discretion and direct for adding such a party to the suit. The power of the Court to add, substitute or strike out parties to a suit is discretionary which has to be exercised on the facts and circumstances of a particular case.

17. As the plaintiff in a suit is dominus litis and has a right to decide about his adversaries, the impleadment of parties on his application stands on a better and higher footing than that on an application, if any, filed by the defendant. A defendant to the suit cannot dictate the plaintiff as to who should be made a party alongwith him in the suit. The criteria for considering the impleadment application of a third party is altogether different but of course subject to the cardinal principle of being a necessary or proper party. A liberal approach is generally taken while considering the application moved by the plaintiff to add defendant, whereas it is not so while considering the application of the defendant or of a third party.

18. A subsequent purchaser in context with a suit for specific performance of an agreement to sell may fall in two categories. In the first category is a purchaser who purchases the property from the vendor after the earlier agreement/contract but before the institution of the suit for specific performance of that agreement. The other is where the purchase is made pendente lite.

19. All suits relating to specific performance of contracts including agreement to sell immovable property are governed by Chapter II of Specific Relief Act, 1963 (hereinafter as ''Act'' only). A reading of Sections 20 and 21 of the Act reveals that the jurisdiction of the Court to grant a decree of specific performance of an agreement is discretionary which has to be exercised on sound and reasonable judicial principles and in certain cases the Court instead of a decree of specific performance may award compensation. At the same time Section 19(b) of the Act stipulates that specific performance of a contract may be enforced against either party thereto or any other person claiming under them by a title arising subsequent to the contract, except a transferee for value who has paid money in good faith and without notice of the original contact.

20. Section 19(b) of the Act is quoted below:

19. Relief against parties and persons claiming under them by subsequent title.--"Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against:

(a) ----

(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without the original contract;"

(c) ----

21. In view of Section 19(b) of the Act an agreement to sell cannot be enforced against a transferee who has purchased the property bona fidely in good faith for value from the original owner in ignorance of a contract sought to be specifically performed. Even if it is enforceable, the Court is not bound to pass a decree for specific performance merely because it is lawful to do also. In other words, Court has a discretion to refuse a decree of specific performance or to award compensation.

22. In Vasantha Viswanthan and Others Vs. V.K. Elayalwar and Others, , it was observed that u/s 19(b) of the Act a specific performance of contract can be enforced not only against either party thereto but against any other person claiming under them by a title arising subsequent to the contract, except a transferee for value who had paid the money in good faith and without notice of original contract. It means that though a contract of specific performance can be enforced against a subsequent purchaser but not against a transferee for value who has paid money in good faith and without knowledge of the prior contract.

23. In what cases the Court in exercise of its judicial discretion refuse to pass a decree of specific performance or to what extent it should grant compensation to the party and whether the subsequent purchaser is a bona fide purchaser having no knowledge of the agreement/contract sought to be enforced or whether he is acting in good faith are all questions that generally crop up in a suit for specific performance where during the subsistence of the agreement but before the institution of the suit there is a transfer in favour of third party. These questions cannot be decided in the absence of the subsequent purchaser or without opportunity to him to adduce evidence on the above aspects though he may not be a relevant person for pleading or adducing evidence on the merits of the agreement/contract.

24. The subsequent purchasers falling in this class and not one who purchases after the institution of the suit, if given an opportunity can demonstrate and establish that they had no knowledge of the prior agreement and that they had purchased the property bona fidely in good faith for valuable consideration and as such are not bound by the earlier agreement or that they are entitle to damages and to be restituted the sale consideration paid by them. The subsequent purchasers who purchase property after the initial agreement to sell but before the institution of the suit subject to proving their bona fides, good faith and ignorance of the contract for value are clearly entitle to protection u/s 19 of the Act. They as such are undoubtedly, necessary and proper party to be joined as defendants to the suit for specific performance.

25. At the same time, one cannot afford to ignore the doctrine of lis pendens. Section 52 of the Transfer of Property Act, 1882 specifically provides that the property cannot be transferred or otherwise dealt with by any party to the suit or proceedings so as to affect the rights of the other parties thereto except without the authority of the Court. In view of the complete embargo upon the parties to the suit to transfer or deal with the property during its pendency, the any sale during the pendency of the suit would clearly be within the teeth of Section 52 of the T. P. Act.

26. The doctrine of lis pendens enshrined u/s 52 of the T.P. Act envisages that a person who purchases property during the pendency of the suit is bound by the decree that may be passed against the person from whom he drives title and the plaintiff is exempt from taking notice of such a subsequent sale or title so acquired by the third party.

27. The provision of Section 19(b) of the Act has no application in respect of cases covered by Section 52 of the Transfer of Property Act. A Full Bench of this Court in Smt. Ram Peary and Others Vs. Gauri and Others, , has clearly ruled that Section 52 of the T.P. Act is not subservient or subject to Section 19(b) of the Act.

28. In Sunil Gupta Vs. Kiran Girhotra and Others, , it has been observed by the Supreme Court that ordinarily a party purchasing property pendente lite without the leave of the Court cannot be impleaded in a suit without the permission of the Court.

29. In Sarvinder Singh Vs. Dalip Singh and Others, , their Lordships of the Supreme Court have observed that alienation of property having been made during pendency of the suit is hit by doctrine of lis pendens and the transferees are neither necessary nor proper party to be brought on record.

30. In view of the aforesaid legal position a transfer made during pendency of the suit without the leave of the Court may not be good and ordinarily such transferees may not be entitle to be impleaded but that has not been held to be an absolute rule. In certain cases, a transferee pendente lite may like to come forward and demonstrate that in reality there is no violation of Section 52 of the Act and that he had purchased the property with the leave of the Court or that the prior agreement which existed had failed for various reasons or has been revoked, cancelled or held to be illegal by the competent authority/Court.

31. Section 52 of the T.P. Act puts an embargo upon the transfer of the property during pendency of the suit without taking permission of the Court but it stops short of providing the effect of its violation. A consequence of a transfer which is hit by doctrine of lis pendens is that such a transaction is voidable at the option of the affected party. A person who actually purchases the property during pendency of the suit for specific performance without the leave of the Court does so at its own peril and the sale/transfer made in his favour is always in danger of being declared illegal, null and void by the competent Court. He purchases the property with open eyes presumably aware of the pendency of the suit and if not due to concealment on part of the vendor, his cause if any, would be against the vendor for damages and restitution of the sale consideration and not to defend the enforcement of the agreement to sell. Nevertheless, the sale-deed executed during pendency of the suit without the leave of the Court cannot be declared to be void in a suit for specific performance unless the party in whose favour the sale-deed exists is given an opportunity to participate in the same.

32. Apart from the above, in the absence of purchaser pendente lite on record, a decree of specific performance, if any, passed in the suit would not be effective and complete. The reason being that such a decree would provide for execution of sale-deed on behalf of the vendor only who ceases to have rights therein by virtue of sale made in favour of the transferee pendente lite. Therefore, to extinguish the rights of the transferee and to restore them in the vendor and then to make him transfer in favour of the plaintiff by means of a sale-deed it is imperative to direct the transferee to join the vendor in executing the sale-deed while decreeing the suit so that there may not remain any confusion about the title in future. Otherwise, there would be two sale-deeds and the person having the first sale-deed would always be claiming better and superior rights before all and sundry. Therefore, in suits for specific performance of an agreement to sell when the transfer lis pendens is brought to the notice of the Court the proper and the better course adopted by the Courts of law is to direct the subsequent purchaser to join the vendor in executing the sale-deed so that rights of the vendor stands duly and validly transferred in favour of the decree holder and at the same time those created in favour of the subsequent purchaser are extinguished.

33. The above principle had been well recognised by the Court in England more than a century ago. In Potter v. Sanders, (1846) 67 ER 1057, it was observed that if a vendor contract with two different persons to sale each of them, the same Estate, the Court will, prima facie, enforce the contract which was first made; and if party with whom the second contract was made is able to procure a conveyance on the basis of the second contract, the Court will, in a suit for specific performance by the first purchaser against the vendor decree the same to convey the estate to the plaintiff with the direction to the second purchaser to join the conveyance.

34. The practice of Indian Courts had not been uniform. According to one practice the proper form of decree was to declare the subsequent sale as void and direct the conveyance of the property by the vendor alone. The second option used to be to direct both the vendor and vendee to join and execute the sale-deed.

35. The three Judges Bench of the Supreme Court in Lala Durga Prasad and Another Vs. Lala Deep Chand and Others, , held that the proper from of the decree in a suit for specific performance of the contract is to direct the subsequent transferee to join the vendor in the conveyance so as to pass the title which is vested in him.

36. The above view has been followed by the Supreme Court in R.C. Chandiok and Another Vs. Chuni Lal Sabharwal and Others, . I have not been able to lay my hands on any contrary view on the subject.

37. In view of the above, it is settled that in a case of transfer of rights in the property during pendency of the suit for specific performance, at the time of decreeing the suit it is always better to direct the subsequent purchaser to join the vendor in executing the sale-deed in favour of the decree holder. This is essential to set at rest all future disputes relating to title of the suit property.

38. The above legal position which has been adopted by the English and the Indian Courts, makes it apparent that in a suit for specific performance of an agreement to sell an effective decree directing for execution of a sale in favour of a plaintiff cannot be passed until and unless the subsequent purchaser more precisely who has purchased rights during the pendency of the suit, is asked to join in the execution of the sale-deed. In this view of the matter, the subsequent purchaser becomes proper party in the absence of whom complete, effective and proper relief cannot be granted in the suit.

39. A Bench of three learned Judges of the Supreme Court in Kasturi Vs. Iyyamperumal and Others, , in considering a similar controversy in relation to a suit for specific performance of a contract observed that only the parties of the contract or parties claiming under them or a person who had purchased it from the vendor with or without notice of the contract alone are necessary parties and a person who claims independent title and possession adversely to the title of the vendor is not a necessary party.

The Court observed as under:

A bare reading of Order I Rule 10(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 form the vendor. In equity as well as in law, the contract constitutes right and also regulates the liabilities of the parties. A purchaser 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 the vendor is, however, not a necessary party.

40. Another Bench of three Judges of the Apex Court in Savitri Devi Vs. District Judge, Gorakhpur and Others, , considering that in a suit plaintiff is a dominus litis and is not bound to sue every possible adversary observed that the Court may at any stage of the suit in exercise of power under Order I Rule 10 CPC direct for addition of parties which is generally a matter of judicial discretion to be exercised keeping in view the facts and circumstances of the particular case. In the said case transferee pendente lite of interest in immovable property who claimed to be bona fide purchasers for value in good faith was held entitle to be impleaded not only to avoid multiplicity of proceedings but to decide whether the sale made in his favour created any interest in the property.

41. In one other case Dhanalakshmi and Others Vs. P. Mohan and Others, , the Apex Court in considering the matter of impleadment of a purchaser of the property during pendency of the suit for partition held that a purchaser pendente lite is a necessary and a proper party under Order 1 Rule 10 CPC and is entitle to be impleaded.

42. The impleadment of transferee pendente lite is also dependent upon host of other factors viz., the person who is seeking impleadment and the stage at which it is being sought.

43. An application of the plaintiff, as a general rule ought to be allowed depending upon other attending circumstances. In contrast, the application for the purpose moved by the defendant to the suit or the transferee himself has to be dealt with caution. The Court may consider the intention of the party in moving the application and the ground or purpose of impleadment as it may be with ulterior object to delay the proceedings etc. It may be refused at the sound judicious discretion of the Court.

44. Learned counsel for the petitioner has relied upon Sanjay Verma Vs. Manik Roy and Others, , wherein the Court refused to implead transferee pendente lite in a suit for specific performance in view of Section 52 of the Transfer of Property Act.

45. A careful reading of the above decision reveals that in the said case an application for impleadment was made by the transferees themselves on the ground that there was no body to represent and safeguard their interest. The order allowing the application was set aside and they were held not entitle for impleadment. It was not a case where the application was filed by the plaintiff. The application for impleadment of parties other than the plaintiff stand on a weaker note on a lower pedestal than that of the plaintiff to the suit. Moreover, it was also not a case where transferees were pleading that the transfer made in their favour was with the leave of the Court or that the agreement which is subject-matter of the suit for specific performance has been revoked or cancelled. The ground for seeking impleadment was not tenable. Therefore, the facts of the above case are distinguishable and would not stand in way of the plaintiff respondent herein to get the transferees pendente lite impleaded in the suit so that an effective executable decree is passed in their favour.

46. The apprehension that permitting impleadment of transfer pendente lite, may become a continuous and endless process as the possibility of further sale during the pendency of the suit cannot be ruled out is not well founded. It may not pose any danger as there is no necessity to indulge in the unending process of impleadment of successive transferees. Once the sale made in favour of the first transferee is rendered non est and useless, the subsequent sales would automatically fall and cease to be operative in law leaving no scope to take cognisance of the same.

47. In view of the legal position that has emerged above, depending upon the facts and circumstances of each case, the broad conclusions relating to impleadment/addition of defendants in a suit for specific performance of an agreement to sell can be summed up as under:

(i) a contract of specific performance is enforceable against the parties to the contract including those who are claiming under them;

(ii) It is not enforceable against a subsequent transferee for value who has paid money in good faith without notice of the earlier contract as contemplated u/s 19(b) of the Act;

(iii) the subsequent transferee covered u/s 19(b) of the Act is entitle to demonstrate his bona fides, good faith and that he has no knowledge of the earlier contract and for the purpose is a necessary and a proper party to the suit.

(iv) transfers pendente lite are hit by Section 52 of the T.P. Act and Section 19(b) of the Act has no application to such cases;

(v) transferee pendente lite cannot take shelter of Section 19(b) of the Act but may be a proper party where he pleads that he has purchased the property with the leave of the Court or that the earlier contract had been rescinded, revoked or cancelled and for passing an effective decree of specific performance;

(vi) It is always proper to implead transferee pendente lite on an application of the plaintiff who is dominus litis;

(vii) impleadment of transferee pendente lite on the application of the defendant or on his own application has to be examined more carefully and strictly and in case for some reason is turned down even then the Court should ensure to direct him to join the vendor in executing the sale-deed in favour of the decree holder while decreeing the suit for specific performance; and

(viii) It is not necessary to go on adding all subsequent transferees pendente lite as once the transfer made in favour of the first one fails all consequential transfers would automatically stand invalid.

48. In view of the aforesaid facts and circumstances in the instant case the subsequent purchasers who are actually transferee pendente lite are held to be proper party to the suit for specific performance of an agreement to sell and if the revisional Court below by the impugned order has permitted their impleadment that too on the application of the plaintiff respondent, no exception to it can be taken in law.

49. The order impugned suffers from no illegality or error of law which may require any intervention in this petition.

50. This apart, the petitioners are defendants in the suit. Their rights are not affected by the impleadment of the aforesaid subsequent purchasers. They do not suffer any prejudice or injustice on account of impleadment of the transferee pendente lite to give them any cause to invoke the extra-ordinary jurisdiction of this Court.

51. Accordingly, they are not entitle to any discretionary relief in this petition in exercise of writ jurisdiction.

52. The argument regarding maintainability of the revision is of no purpose. Once this Court has found and held that in the present case the subsequent purchasers are liable to be impleaded as defendants to the suit, the setting aside or quashing of the revisional order on any ground much less on the technical ground of maintainability of the revision or the revisional order being without jurisdiction would amount to reviving of an illegal order passed by the Court of first instance rejecting the impleadment application.

53. It has been well-settled that in exercise of writ jurisdiction it is not proper to undo an illegal order which may have an effect of reviving of another illegal order.

54. In Godde Venkateswara Rao Vs. Government of Andhra Pradesh and Others, , a challenge was made to the Government Order dated 18th April 1963 before the High Court which failed. The Supreme Court observed that if the High Court had quashed the said order, it would have restored an illegal order. Therefore, the High Court had rightly refused to exercise its extra-ordinary power in the circumstances of the case.

55. The above principle is being followed continuously and in State of Uttranchal through Collector, Dehradun and Another Vs. Ajit Singh Bhola and Another, , the Apex Court again reiterated that the Court will not exercise its discretion to quash an order which appears to be illegal but having effect of reviving another illegal order.

56. In Maharaja Chintamani Saran Nath Shahdeo Vs. State of Bihar and Others, , the Supreme Court observed where setting aside of an order on the ground of lack of jurisdiction results in revival of an illegal order, the order which lacks jurisdiction should not be set aside and the Court should refuse to interfere under Article 226 of the Constitution of India.

57. In Ramesh Hirachand Kundanmal Vs. Municipal Corporation of Greater Bombay and Others, , it has been laid down that it is always upon the Court to interfere with an order passed on an application for addition of parties when it is found that the Courts below have gone wrong in deciding the said application.

58. In the overall facts and circumstances of the case, without entering into the controversy of the maintainability of the revision before the Court below, since I am of the opinion that the plaintiff/respondent are entitle to implead transferee pendente lite in the instant case, I decline to exercise the discretionary jurisdiction in the matter for the above reason alone. In view of the aforesaid facts and circumstances, the writ petition fails and is dismissed with no orders as to costs.