Supreme Court of India
VIDUR IMPEX AND TRADERS PVT. LTD. AND OTHERSversusTOSH APARTMENTS PVT. LTD. AND OTHERS
- Citation
- 2012 INSC 344
- Decided
- 21 August 2012
- Disposal
- Dismissed
- Bench
- G S SINGHVI
Holding
A purchaser who acquires property in violation of an injunction and engages in a clandestine transaction is neither a necessary nor a proper party for impleadment, and the Delhi High Court was rightly empowered to appoint a receiver, rendering the doctrine of comity of jurisdictions inapplicable.
Summary
The Delhi High Court entertained a suit for specific performance of an agreement dated 13‑9‑1988 and restrained the vendor from alienating the property. The vendor later sold the suit property to six companies (the appellants) who, in turn, sold it to Bhagwati Developers, all in violation of the injunction. The appellants sought to be impleaded in the original suit and to continue a receiver appointed by the Calcutta High Court. The Supreme Court held that the appellants were neither necessary nor proper parties because their transactions were clandestine and contravened the injunction, and that the Delhi High Court was justified in appointing its own receiver, rejecting the doctrine of comity of jurisdictions. The appeals were dismissed and the appellants and developers were each ordered to pay Rs. 5 lakhs costs.
Issues considered
- Whether the appellants and Bhagwati Developers are necessary or proper parties for impleadment in a suit for specific performance pending before the Delhi High Court.
- Whether the Delhi High Court was justified in appointing a receiver despite an earlier appointment by the Calcutta High Court.
- Whether the doctrine of comity of jurisdictions can be invoked to give effect to the Calcutta High Court's receiver order.
Legislation cited
- Arbitration and Conciliation Act, 1996s. Section 36
- Code of Civil Procedure, 1908s. Order 22, s. Order 26, s. Order 39, s. Order I Rule 10(2), s. Order XL
- Income Tax Act, 1961s. Section 269
- Indian Contract Act, 1872s. Section 23, s. Section 24
- Transfer of Property Act, 1882s. Section 52
Subjects
specific performanceimpleadmentnecessary partyproper partyinjunctionreceivercomity of jurisdictionslis pendensCPC Order I Rule 10Transfer of Property ActArbitration and Conciliation Act
Judgment
[2012] 10 S.C.R. 307
VIDUR IMPEX AND TRADERS PVT. LTD. AND OTHERS A
v.
TOSH APARTMENTS PVT. LTD. AND OTHERS
(Civil appeal No. 5918 of 2012 etc.)
AUGUST 21, 2012
8
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
Code of Civil Procedure, 1908 - Or. I r. 10(2) and Or. XL
- Agreement for sale in respect of suit property by R-2 in C
favour of R-1 - Thereafter R-2 giving possession of property
to R-4 - Suit for specific performance by R-1, before Delhi
High Court - Interim injunction by Delhi High Court from
transferring or alienating the property - R-2 in violation of
interim order executed sale deeds in favour of appellants - D
The appellants further executing agreement for sale in favour
of Developers - Delhi High Court appointing Receiver -
Developers filing case against the appellants in Calcutta for
execution of sale deed in their favour - Calcutta High Court
directing the appellants to execute sale deed in favour of E
Developers and also appointed a Receiver- Delhi High Court
restraining the appellants, the Developer and the Receiver
appointed by Calcutta High Court from taking possession of
the property - Calcutta High Court when came to know about
the pending litigation before Delhi High Court, made its order F
subject to the order of Delhi High Court - Appellant's
application for impleadment in the suit filed by R-1 dismissed
by Delhi High Court - The application of Developer seeking
continuation of Receiver appointed by Calcutta High Court
also dismissed - By impugned order Division Bench of Delhi G
High Court upheld the three orders of Single Judge of Delhi
High Court in rejecting the application for impleadment and
the application for continuation of Receiver appointed by
Calcutta High Court and in appointing the Receiver - On
307 H
308 SUPREME COURT REPORTS [2012] 10 S.C.R.
A appeal, held: The impleadment df appellant and Developers
in the suit was rightly rejected - Court can implead a
'necessary party' or a 'proper p~rty' - In a suit for specific
performance, a purchaser can be impleaded, if his conduct
is above board and whose application for impleadment is filed
B within reasonable time - The appellants and the Developers
were neither necessary nor proper parties - They were
strangers to the agreement for sale deed executed in favour
of R-1 - Sale was executed in favour of the appellants and
further by appellants in favour of Developers in violation of
C interim injunction in the suit - The application was also highly
belated - Delhi High Court was right in appointing the
Receiver and in rejecting the continuation of the Receiver
appointed by Calcutta High Court - In the instant case,
doctrine of comity of jurisdictions of courts, cannot be invoked
as the order of Calcutta High Court was obtained by
D concealing the fact of pending litigation before Delhi High
Court - The appellants and the Developers imposed with cost
of Rs. 5 lakhs each for the conduct of suppressing facts from
Calcutta High Court - Doctrine of comity of jurisdiction of
courts.
E
Words and Phrases :
'Necessary party' and 'Proper party' - Meaning of, in the
context of Code of Civil Procedure, 1908.
F Respondent No. 2 (owner of the suit property)
executed an agreement for sale in favour of respondent
No. 1 on 13.9.1988. In 1992 respondent No. 2 handed over
the possession of the suit property to respondent No. 4.
Respondent No. 1 on coming to know about the
G alienation for the property to respondent No. 4, filed suit
No. 42511993 in Delhi High Court for specific performance
of agreement for sale dated 13.9.1988. The High Court by
interim order dated 18.2.1993 restrained respondent Nos.
2 and 4 from transferring, alienating or part with
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 309
APARTMENTS PVT. LTD.
possession or create third party interest in the suit A
property.
On 19.2.1997, respondent No. 2 executed 6
agreements for sale in favour of the 6 appellant-
Companies (in Civil Appeal No. 5918/12) and executed 6 B
sale-deeds in their favour on 30.5.1997. In the meantime,
the appellant-Companies executed agreement for sale in
favour of the Developers (appellant in Civil Appeal No.
5917/12) by agreement dated 18.3.1997. Thereupon,
respondent No. 1 filed contempt petition against C
respondent Nos. 2 and 4 and the appellants. High Court
entertained the petition against respondent Nos. 2 and 4
but declined to do so qua the appellants observing that
case was not made out against them. Delhi High Court
appointed Receiver.
D
The Developers opened another front of litigation in
Calcutta against the appellant-companies, alleging that
they failed to execute the sale-deed in terms of the
agreement dated 18.3.1997. The dispute was referred for
arbitration. The sole Arbitrator passed award directing E
the appellant-companies to hand-over the possession of
the property to the Developers and to execute sale-deed
in its favour. As the appellant-companies failed to comply
with the award, Calcutta High Court, in application of the
Developers, directed the appellant-companies to comply F
with the award. Calcutta High Court also appointed a
Receiver to take possession of the suit property. The
Receiver (appointed by Calcutta High Court), took
symbolic possession of the suit property.
Respondent No. 1 filed application, irhpleading G
respondent Nos. 2 and 4, appellant-companies and the
Developers and prayed for order restraining respondent
Nos. 2 and 4 from handing-over possession and
restraining the appellants from taking possession in the
garb of order passed by Calcutta High Court. H
310 SUPREME COURT REPORTS (2012] 10 S.C.R.
A Respondent No. 4 also filed application seeking
injunction against dispossession. Delhi High Court
passed interim order in favour of the applicants.
Respondent No. 4 also approached Calcutta High
B Court and brought to the notice of the Court, the order
of Delhi High Court restraining the appellants and
Developers from interfering with his possession. Calcutta
High Court ordered that any order passed by it, if is in
conflict with the order of Delhi High Court, it would be
C subject to the order of Delhi High Court.
In 2008, the appellant-companies filed application for
their impleadment as defendants in the Suit No. 425/1993.
Single Judge of High Court dismissed the application.
o The Developers, respondent No. 4 and the appellants
filed 3 appeals challenging different orders. Division
Bench of High Court dismissed all the appeals and held
that Single Judge of Delhi High Court was right in
appointing a Receiver and also approved rejection of the
E applications for impleadment and also the application for
continuation of the Receiver appointed by Calcutta High
Court. Hence the present appeals by the appellant-
Companies and also the Developers.
The questions for consideration before this Court
F were whether the appellants were entitled to be
impleaded as parties in Suit No. 425/1993 on the ground
that during the pendency of the suit, they had purchased
the suit property; and whether the Delhi High Court was
justified in appointing the Receiver and directing him to
G take possession of the property in dispute.
Dismissing the appeals, the Court
HELD: 1.1 The broad principles which should govern
disposal of an application for impleadment are: The court
H can, at any stage of the proceedings, either on an
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 311
APARTMENTS PVT. LTD.
application made by the parties or otherwise, direct A
impleadment of any person as party, who ought to have
been joined as plaintiff or defendant or whose presence
before the court is necessary for effective and complete
adjudication of the issues involved in the suit. A
necessary party is the person who ought to be joined as B
party to the suit and in whose absence an effective
decree cannot be passed by the court. A proper party is
a person whose presence would enable the court to
completely, effectively and properly adjudicate upon all
matters and issues, though he may not be a person in c
favour of or against whom a decree is to be made. If a
person is not found to be a proper or necessary party,
the court does not have the jurisdiction to order his
impleadment against the wishes of the plaintiff. In a suit
for specific performance, the court can order D
impleadment of a purchaser whose conduct is above
board, and who files application for being joined as party
within reasonable time of his acquiring knowledge about
the pending litigation. However, if the applicant is guilty
of contumacious conduct or is beneficiary of a E
clandestine transaction or a transaction made by the
owner of the suit property in violation of the restraint
order passed by the court or the application is unduly
delayed then the court will be fully justified in declining
the prayer for impleadment. [Para 36] [350-B-H; 351-A-B]
F
Ramesh Hirachand Kundanmal v. Municipal
Corporation of Greater Bombay (1992) 2 SCC 524: 1992 (2)
SCR 1; Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC
147: 1994 (5) Suppl. SCR 135; Mumbai International
Airport (P) Ltd. v. Regency Convention Centre and Hotels (P) G
Ltd. (2010) 7 SCC 417: 2010 (7) SCR 790; Kasturi v.
lyyamperumal (2005) 6 SCC 733: 2005 (3) SCR 864; Amit
Kumar Shaw v. Farida Khatoon (2005) 11 SCC 403: 2005
(3) SCR 509; Savitri Devi v. DJ, Gorakhpur (1999) 2 SCC
577: 1999(1) SCR 725; Vinod Seth v. Devinder Bajaj (2010) H
312 SUPREME COURT REPORTS [2012] 10 S.C.R.
A 8 SCC 1: 2010 (7) SCR 424; Surjit Singh v. Harbans Singh
(1995) 6 SCC 50: 1995 (3) Suppl. SCR 354 ; Sarvinder
Singh v. Dalip Sisngh (1996) 5 SCC 539: 1996 (4)
Suppl. SCR 271 ; Bibi Zubaida Khatoon v. Nabi Hassan
(2004) 1 SCC 191: 2003 (5) Suppl. SCR 290 - relied on.
B
1.2 Respondent No.1 had filed suit for specific
performance of agreement dated 13.9.1988 executed by
respondent No.2. The appellants and the Developers are
total strangers to that agreement. They came into the
picture only when respondent No.2 entered into a
C clandestine transaction with the appellants for sale of the
suit property and executed the agreements for sale,
which were followed by registered sale deeds and the
appellants executed agreement for sale in favour of the
Developers. These transactions were in clear violation of
D the order of injunction passed by the Delhi High Court
which had restrained respondent No.2 from alienating the
suit property or creating third party interest. The
agreements for sale and the sale deeds executed by
respondent No.2 in favour of the appellants did not have
E any legal sanctity. The status of the agreement for sale
executed by the appellants in favour of the Developers
was no different. These transactions did not confer any
right upon the appellants or the Developers. Therefore,
their presence is not at all necessary for adjudication of
F the question whether respondent Nos.1 and 2 had
entered into a binding agreement and whether
respondent No.1 is entitled to a decree of specific
performance of the said agreement. That apart, after
executing agreement for sale dated 18.3.1997 in favour
G of the Developers, the appellants cannot claim to have
any subsisting legal or commercial interest in the suit
property and they cannot take benefit of the order
passed by the Calcutta High Court for appointment of an
arbitrator which was followed by an order for
H appointment of receiver because the parties to the
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 313
APARTMENTS PVT. LTD.
proceedings instituted before that court deliberately A
suppressed the facts relating to Suit No.425/1993
pending before the Delhi High Court and the orders of
injunction passed in that suit. [Para 37] (351-D-H; 352-A-
B]
1.3 The application for impleadment filed by the B
appellants was highly belated. Although, the appellants
have pleaded that at the time of execution of the
agreements for sale by respondent No.2 in their favour
in February 1997, they did not know about the suit filed
by respondent No.1, it is difficult, if not impossible, to C
accept their statement because the smallness of time
gap between the agreements for sale and the sale deeds
executed by respondent No.2 in favour of the appellants
and the execution of agreement for sale by the appellants
in favour of the Developers would make any person of D
ordinary prudence to believe that respondent No.2, the
appellants and the Developers had entered into these
transactions with the sole object of frustrating agreement
for sale dated 13.9.1988 executed in favour of respondent
No.1 and the suit pending before the Delhi High Court. E
In the application for impleadment filed by them, the
appellants did not offer any tangible explanation as to
why the application for impleadment was filed only on
4.2.2008 i.e. after 7 years of the passing of injunction
order dated 22.1.2001 and, this constituted a valid ground F
for declining their prayer for impleadment as parties to
Suit No.425/1993. [Para 38] (352-C-H; 353-A-B]
Surjit Singh v. Harbans Singh (1995) 6 SCC 50 - relied
on.
G
Kasturi v. lyyamperumal (2005) 6 SCC 733: 2005 (3)
SCR 864 - held inapplicable.
Nagubai Ammal v. B Shama Rao AIR 1956 SC 593:
1956 SCR 451 ;Khemchand S. Choudhari v. Vishnu Hari H
314 SUPREME COURT REPORTS [2012) 10 S.C.R.
A (1983) 1 SCC 18: 1983 (1 )SCR 898 - referred to.
2.1 Delhi High Court was justified in appointing the
receiver and directing him to take possession of the
property. The plea of the Developers to invoke the
doctrine of comity of jurisdictions of the court~ for
8
continuance of the receiver appointed by the Calcutta
High Court has no merit. When the Developers
approached the Calcutta High Court, the Delhi High Court
was already seized with the suit involving the subject
C matter of the award. The contention of the appellants and
the Developers that they were unaware of the
proceedings before the Delhi High Court cannot be
accepted because in Suit No.161/1999 filed by
respondent No.2 for declaring that the agreements for
sale and the sale deeds relied upon by the appellants
D were false and fabricated, a specific reference was made
to the suit filed by respondent No.1. That apart, in its
order dated 15.2.2001 passed in the application filed by
respond9nt No.4 in EC No.10/2000, the Single Judge of
the Calcutta High Court categorically observed that the
E said court had not been apprised of the facts relating to
the suit pending before the Delhi High Court and the
injunction orders passed therein including order dated
8.2.2001 restraining the receiver of the Calcutta High
· Court from taking possession of the property and that if
F these facts had been disclosed, the Court would have
been slow in passing the order that it had passed earlier
and hence the order passed by it, if it is in conflict with
the order passed by the Delhi High Court, would be
subject to that order and the Developers who is a party
G to the proceedings before the Delhi High Court can
approach the said court for obtaining appropriate orders.
This shows that on being apprised of the correct facts,
the Single Judge of the Calcutta High Court had shown
due respect to the orders passed by the Delhi High Court
H and directed that the same should operate till they are
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 315
APARTMENTS PVT. LTD.
modified or vacated at the instance of the appellants or A
the Developers. The course of action adopted by the
Calcutta High Court was in consonance with the notion
of judicial propriety. Therefore, the Developers cannot
invoke the doctrine of comity of jurisdictions of the courts
for seeking continuance of the receiver appointed by the B
Calcutta High Court. [Para 40) [353-F-H; 354-A-H; 355-A]
2.2 The Single Judge and the Division Bench of the
Delhi High Court have assigned detailed and cogent
reasons for appointing a receiver to take care of the suit C
property. The clandestine nature of the transactions
entered into between respondent No.2 and the appellants
on the one hand and the appellants and the Developers
on the other, would give rise to strong presumption that
if a receiver is not appointed, further attempts would be
made to alienate the property in similar fashion. D
Therefore, there is no justification to interfere with the
impugned order or the one passed by the Single Judge
of the Delhi High Court. [Para 41) [355-B-D]
Jayaram Mudaliar v. Ayyaswamia and Ors. (1972) 2 E
SCC 200: 1973(1) SCR 139 ; Rajender Singh and Ors. v.
Santa Singh and Ors.(1973) 2 SCC 705: 1974 (1) SCR
381 ; Joginder Singh Bedi v. Sardar Singh and Ors. 26 (1984)
DLT 162 Del (DB); Sanjay Gupta v. Kalawati and Ors. (1992)
53 DRJ 653 - referred to. F
3. For the contumacious conduct of suppressing
facts from the Calcutta High Court and thereby
prolonging the litigation, the appellants and the
Developers are saddled with cost of Rs.5 lakhs each. The
amount of cost shall be deposited by them with the G
Supreme Court Legal Services Committee. [Para 43) [355-
E-F]
Case Law Reference:
1973 (1) SCR 139 Referred to Para 20 H
316 SUPREME COURT REPORTS [2012] 10 S.C.R.
A 1974 (1) SCR 381 Referred to Para 20
26 (1984) DLT 162 Del (DB) Referred to Para 20
(1992) 53 DRJ 653 Referred to Para 20
1956 SCR 451 Referred to Para 22
B
1983 (1) SCR 898 Referred to Para 22
1992 (2) SCR 1 Relied on Para 26
1994 (5) Suppl. SCR 135 Relied on Para 27
c
2010 (7) SCR 790 Relied on Para 28
2005 (3) SCR 864 Relied on Para 29
Held inapplicable Para 39
D 2005 (3) SCR 509 Relied on Para 30
1999 (1) SCR 725 Relied on Para 31
2010 (7) SCR 424 Relied on Para 32
E 1995 (3) Suppl. SCR 354 Relied on Paras 33
and 39
1996 (4) Suppl. SCR 271 Relied on Para 34
2003 (5) Suppl. SCR 290 Relied on Para 35
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5918 of 2012.
From the Judgment & Order dated 20.02.2009 of the High
Court "Of Delhi at New Delhi in FAO (OS) No. 324 of 2008.
G
WITH
C.A. No. 5917 of 2012.
Sunil Gupta, Dr. Abhishek Manu Singhvi, Sanjay Jain,
H Manoj, Aparna Sinha, Bijoy Kumar Jian, C. Mukund. P.V.
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 317
APARTMENTS PVT. LTD.
Saravana Raja, Dr. Kailash Chand, Mandeep Singh Vinaik, A
Rohan Thawani, Vandana Sehgal, Hardeep Singh Anand, D.K.
Thakur, Anil Katiyar, Sanjeev Anand, Yakesh Anand, Murari
Kumar, Prateek K., Nimit Mathur for the appearing parties.
The Judgment of the Court delivered by
B
G.S. SINGHVI, J. 1. Leave granted.
2. Whether M/s. Vidur lmpex and Traders Pvt. Ltd., and five
other companies (hereinafter described as the appellants), who
c
are said to have purchased the suit property, i.e. 21, Aurangzeb
Road, New Delhi in violation of the order of injunction passed
by the learned Single Judge of the Delhi High Court are entitled
to be impleaded as parties to Suit No.425/1993 filed by
respondent No.1 - M/s. Tosh Apartments Pvt. Ltd. is one of the
two questions which arises for consideration in these appeals D
filed against judgment dated 20.2.2009 of the Division Bench
of the Delhi High Court. The other question which needs
consideration is whether the Delhi High Court was justified in
appointing a receiver with a direction to take possession of the
suit property despite the fact that the Calcutta High Court had E
already appointed a receiver at the instance of M/s. Bhagwati
Developers Pvt. Ltd. (for short, 'Bhagwati Developers').
3. The suit property was leased by the Secretary of State
for India to Sidh Nath Khanna and Sukh Nath Khanna sometime
in 1930. After 12 years, the Governor General in Council F
sanctioned the grant of perpetual lease in favour of one of them,
namely, Sidh Nath Khanna. In the family partition which took
place in December 1955, the suit property fell to the share of
Shri Devi Prasad Khanna, who was one of the heirs of Sidh
Nath Khanna. He rented out the same to the Sudan Embassy G
on 12.9.1962. In October 1977, the name of respondent No.2-
Pradeep Kumar Khanna (son of Devi Prasad Khanna), who died
during the pendency of the litigation before the High Court and
is represented by his legal representatives, was entered in the
records of the Ministry of Works and Housing, Land and H
318 SUPREME COURT REPORTS [2012] 10 S.C.R.
A Development Office and the lease was transferred in his name.
4. In March 1980, respondent No.2 mortgaged the suit
property to Shri S.N. Tondon. After 5 years, he entered into a
collaboration agreement with Shri Arun Kumar Bhatia
(respondent No.3} for construction of a multi-storied building. He
8
also executed an agreement for sale in favour of respondent
No.3. In November 1987, respondent No.2 took loan from Shri
Avtar Singh and created an equitable mortgage in his favour.
On 13.9.1988, respondent No.2 executed an agreement for sale
in favour of respondent No.1 for a consideration of Rs.2.5
C crores. After some time, respondent No.3 executed assignment ·
deed dated 13.12.1988 in favour of respondent No.2.
Simultaneously, the parties cancelled the collaboration
agreement. After 3 months, respondent No.2 mortgaged the suit
property in favour of respondent No.4. In 1992, respondent Nos.
D 2 and 4 entered into an agreement whereby the latter agreed
to provide various services including the one that he will get the
suit property vacated from the Sudan Embassy and for that he
will charge Rs.4 crores.
E 5. The Sudan Embassy vacated the suit property on
12.5.1992 and handed over possession to respondent No.2,
who is said to have handed over the same to respondent No.4.
On coming to know about the proposed alienation of property
by respondent No.2, respondent No.1 filed Suit No.425/1993
F in the Delhi High Court for specific performance of agreement
for sale dated 13.9.1988, award of damages and injunction. It
also filed IA No.1947/1993 under Order 39 Rules 1 and 2 CPC.
The learned Single Judge passed order dated 18.2.1993 and
directed that defendant Nos. 1 and 3 (respondent Nos. 2 and
G 4 herein) shall not transfer, alienate or part with possession in
any manner or create third party rights in respect of the suit
property. After receiving summons, respondent Nos.2 and 4
filed IA No. 10730/1993 under Order 7 Rule 11 for rejection of
the plaint on the ground that the same was barred by time. The
learned Single Judge dismissed the application vide order
H dated 5.4.1994 and directed that interim order dated 18.2.1993
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 319
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
shall continue. A
6. On 19.2.1997, respondent No.2 executed 6 agreements
for sale in favour of the appellants for a total consideration of
Rs.2.88 crores. In furtherance of those agreements, six sale
deeds were executed and registered on 30.5.1997. In the
8
meanwhile, the appellants executed agreement for sale dated
18.3.1997 in favour of Bhagwati Developers for a consideration
of Rs.4.26 crores and received Rs.3.05 crores.
7. At that stage, respondent No.1 filed IA No. 8145/1998
for restraining respondent Nos.2 and 4 from handing over C
possession of the suit property to any other person. Respondent
No.2 contested the application by asserting that he had not
executed any sale deed in favour of the appellants and that
possession of the suit property had already been handed over
to respondent No.4. Thereupon, respondent No.1 filed CCP No. D
118/1998 under Order 39 Rule 2A CPC with the allegation that
the non-applicants including the appellants herein had entered
into a conspiracy for the purpose of grabbing the property in
violation of the order of injunction passed by the High Court.
The learned Single Judge entertained the contempt petition E
against respondent Nos. 2 and 4 but declined to do so qua the
appellants by observing that no prima facie case had been
made out against those who were not parties to the suit.
Respondent No.1 also filed IA No.8146/1998 under Order 26
Rule 9 read with Order 39 Rule 7 and Section 151 CPC for F
appointment of Local Commissioner and IA No.8147/1998
under Order 40 Rule 1 read with Section 151 CPC for
appointment of a receiver. The Court Commissioner appointed
by the High Court to ascertain whether respondent Nos. 2 and
4 were in possession of the suit property, submitted report G
dated 10.2.2000 with the finding that respondent No.4 was in
actual possession.
8. Respondent No.2 filed application dated 16.12.1998 for
vacating interim order dated 18.2.1993. He pleaded that the
agreement for sale executed in favour of respondent No.1 was, H
320 SUPREME COURT REPORTS (2012] 10 S.C.R.
A in fact, a loan agreement and the same was violative of Section
24 read with Section 23 of the Indian Contract Act, 1872. He
further pleaded that the agreement was void and unenforceable
because the requisite permission had not been obtained under
Section 269 UC of the Income-Tax Act. Respondent No.2 also
B filed Suit No. 16111999 for grant of a declaration that sale
deeds executed in favour of the appellants were fictitious and
were not binding on him. After about 2 years, Shri Bhupinder
Singh, Advocate filed IA No. 255/2001 for withdrawal of the suit
on the ground that the parties have amicably settled their
c dispute. Soon thereafter, the advocate who had instituted the
suit, filed IA No.1537/2001 for restoration of the suit by
asserting that IA No.255/2001 had been filed by an advocate
who was not authorised to do so. The learned Single Judge
directed that the application be listed only after filing of an
D affidavit by respondent No.2 that he had not authorised Shri
Bhupinder Singh, Advocate to file I.A. No.255/2001.
Respondent No.2 did not file the required affidavit till his death
and as a result, I.A. No.1537/2001 is said to be still pending.
9. Another front of litigation was opened by Bhagwati
E Developers with the allegation that the appellants have failed
to execute the sale deed in terms of agreement dated
18.3.1997. The dispute between Bhagwati Developers and the
appellants was referred to the sole arbitration of Dr. Debasis
Kundu, an Advocate of the Calcutta High Court. The Arbitrator
F passed award dated 7.1.1999 and directed the appellants to
hand over vacant possession of the suit property along with the
building to Bhagwati Developers on or before 31.1.1999 and
also execute the sale deed after securing requisite permission
and no objection certificate from the competent authorities.
G Simultaneously, Bhagwati Developers was directed to pay the
balance amount of Rs.1,20,90,000/-.
10. As the appellants failed to act in consonance with the
arbitral award, Bhagwati Developers filed an application under
Section 36 of the Arbitration and Conciliation Act, 1996 in the
H Calcutta High Court, which was allowed by the learned Single
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 321
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
Judge of that High Court vide order dated 17.8.2000 and a A
direction was issued to the appellants to comply with the arbitral
award. The learned Single Judge also appointed Shri Nar
Narayan Ganguli, Advocate as receiver and directed him to
take possession of the suit property. When the receiver came
to Delhi for execution of the award, respondent No.4 refused B
to hand over possession. Thereupon, the Calcutta High Court
directed the police authorities at Delhi to assist the receiver for
ensuring compliance of order dated 17.8.2000. Armed with that
direction, the receiver visited Delhi on 19.1.2001 and 5.2.2001
and took symbolic possession of the suit property by putting c
locks and seals on all the inner and outer gates.
11. When the representative of respondent No.1 learnt
about the award of the arbitrator and the order passed by the
Calcutta High Court, he filed IA No.625/2001 in the Delhi High
Court under Order 39 Rules 1 and 2 read with Section 151 D
CPC impleading respondent Nos. 2 and 4, the appellants and
Bhagwati Developers as parties and prayed that respondent
Nos. 2 and 4 be restrained from handing over possession of
the suit property and that the appellants be restrained from
taking forcible possession in the garb of some order passed E
by the Calcutta High Court. The learned Single Judge of the
Delhi High Court passed an ex-parte interim order dated
22.1.2001 and restrained respondent Nos. 2 and 4 from
delivering possession of the suit property to the appellants and
also restrained the latter from taking possession. Bhagwati F
Developers challenged that order in FAO (OS) No.90/2001,
which was dismissed by the Division Bench of the High Court
on 2.3.2001 with liberty to approach the learned Single Judge
for appropriate order.
G
12. Respondent No.4 also filed IA No. 121112001 in the
Delhi High Court for grant of injunction by alleging that an
attempt is being made to dispossess him in the garb of an
order passed by the Calcutta High Court. The learned Single
Judge passed ex-parte interim order dated 8.2.2001 and
restrained the appellants, Bhagwati Developers, the receiver H
322 SUPREME COURT REPORTS [2012] 10 S.C.R.
A appointed by the Calcutta High Court and Delhi Police from
interfering with the possession of respondent No.4. Some of
the observations made in that order, which have bearing on the
disposal of these appeals, are extracted below:
8 "Quite clearly Respondents No.4 to 9 in this application
were aware of the fact that Defendant No. 1 had filed Suit
No.161199. A mention was made in the plaint in Suit No.
161199 that tne present suit, that is, Suit No.425193 was
pending in this Court. So, Respondents No.4 to in this
c application were also aware of the pendency of this suit.
It appears that Respondents No.4 to 9 in this application
did not bother to find out the correct factual position with
regard to the possession of the suit property or with regard
to the interim orders passed by this Court.
D Well before all this, and apparently expecting Defendant
No.1 to perform the Agreement to sell, these 6 persons
who are Respondents No.4 to 9 in this application entered
into an agreement to sell the suit property to Respondent
No.10 in this application.
E
There appear to have been some disputes between
Respondents No.4 to 9 in this application and Respondent
No.10 in the application in respect of the suit property.
Since there was an arbitration clause in the agreement
F between them, they referred the matter to arbitration. The
learned Arbitrator gave an Award dated 7th January, 1999
wherein he directed Respondents No. 4 to 9 in this
application to hand over peaceful vacant possession of the
suit property to Respondent No.10 in this application. No
objections appear to have been filed to this Award with the
G
result that Respondent No.10 in this application filed
proceedings in the Calcutta High Court praying for a
direction for the appointment of a Receiver to take physical
possession of the suit property. The Calcutta High Court
passed an order apparently directing the Receiver to take
H possession of the suit property. On 13th December, 2000
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 323
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
the Calcutta High Court directed the police authorities to A
render all assistance to the Receiver to take steps in
accordance with the earlier order passed by the Calcutta
High Court.
When the Receiver and the police authorities came to take
8
possession of the suit property, L.K. Kaul became aware
of the proceedings in the Calcutta High Court.
It is submitted that there has been gross concealment
and misrepresentation of facts by Defendant No. 1 in the
suit to Respondents No.4 to 9 in this application. There C
has also been gross misrepresentation and concealment
of fact by Respondents No.4 to 9 in this application to
Respondent No.10 in this application. It is also submitted
that there is also a gross concealment and, therefore, a
misrepresentation of facts by Respondents No.4 to 10 in D
this application insofar as the learned Arbitrator is
concerned. Consequently, there has also been a gross
concealment and, therefore, a misrepresentation of the
facts so far as Calcutta High Court is concerned. It is
submitted that had all these facts been brought to the E
notice of the concerned parties as well as to the teamed
Arbitrator and the Calcutta High Court, there would have
been no question of any appointment of a Receiver in
violation of the orders passed by this Court on 18th
February, 1993 read with order dated 31st January, 2000. F
I am prima facie satisfied that Defendant No. 1 and
Respondents No.4 to 10 in this application are playing
a cat and mouse game with this Court. There has been
a serious concealment and misrepresentation of facts by
Defendant No. 1 in this suit. There has also been a G
serious concealment and misrepresentation of facts by
Respondents No. 4 to 9 in this application insofar as
Respondent No. 10 in this application is concerned.
Respondents No. 4 to 10 are at fault in not finding out
what the correct facts are and making necessary H
324 SUPREME COURT REPORTS [2012] 10 S.C.R.
A enquiries in this regard. They appear to have
deliberately misled the learned Arbitrator and the
Calcutta High Court."
(emphasis supplied)
B 13. Respondent No.4 filed another application (IA No.
9576/2001) for restraining the appellants from executing the
sale deed in favour of Bhagwati Developers. The learned
Single Judge entertained the application and passed interim
order in terms of the prayer made. The same respondent filed
C an application in EC No.10/2000 pending before the Calcutta
High Court and brought to the notice of that High Court, order
dated 8.2.2001 passed by the Delhi High Court in Suit No. 425/
1993. After taking cognizance of the rival submissions, the
learned Judge of the Calcutta High Court passed order dated
D 15.2.2001 and made it clear that the order passed by that
Court will be subject to the order which may be passed by the
Delhi High Court. The relevant portions of that order are
reproduced below:
"The facts remain that these facts were neither disclosed
E
to the decree-holder nor to the Arbitrator and this question
was not necessary to be gone into while executing the
decree and, as such, it was also not placed before this
Court and this Court having not been apprised of such
facts had passed an order for taking over possession of
F the property. In the order dated 8.2.2001 the Delhi High
Court had taken a note of this position. Be that as it may,
it is not necessary to make any observation with regard
to the findings made therein, nor this Court can comment
on the order passed by another Court on the basis of the
G materials placed before it. But it appears that there is
every possibility of conflicting orders being passed in
respect of the self-same properties between the parties
or those claiming through one or the other of them by two
High Courts. Judicial propriety demands that the court
H should maintain its decorum and dignity and should not
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 325
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
pass any order which will lie in conflict with each other. It A
is the parties who may fight each other but not the Courts.
If some order is passed, it is expected that another Court
should pay proper regards and respect to such order.
Since it is pointed out that these facts were not disclosed
before this Court, therefore what would have been the B
effect if these facts would have been disclosed before
this Court is a question which cannot now be presumed,
but in all probabilities it sees that if these facts were
disclosed before this Court, this Court might have been
slow in passing the order that had been passed earlier. c
Therefore, the order passed by this Court, if it is in conflict
with the order passed by the Delhi High Court, the same
shall always be subject to the order that might be passed
by the Delhi High Court.
Since Delhi High Court has also passed an order by which D
certain direction was given to the Receiver appointed by
this Court, therefore, it is no more necessary to pass any
further order. In my view, the decree-holder in this
proceedings who is added as Defendant No.10 in the
Delhi High Court suit should approach the Delhi High E
Court for obtaining the appropriate orders if he is so
advised. If there is a conflict of decree which might affect
a proceeding in another High Court, in that event the
same has to be thrashed out in an appropriate
proceeding. It is very difficult to enter into such question F
in an execution proceeding unless such question be raised
in a proceeding under Order XXI Rule 97 C.P.C. From the
records of this Court, it does not appear that any such
application under Order XXI Rule 97 has ever been made
in order to enable the parties to resisting possession in G
execution of the decree, so that they would have an
opportunity to place their cases about the executability of
the decree against them."
(emphasis supplied) H
326 SUPREME COURT REPORTS [2012] 10 S.C.R.
A 14. Thereafter, Bhagwati Developers filed IA No. 2268/
2003 in Suit No.425/1993 pending before the Delhi High Court
with the prayer that the receiver appointed by the Calcutta High
Court be continued. Respondent No.1, who had already filed
IA No.8147/1998 for appointment of receiver, contested the
B application of Bhagwati Developers by asserting that it had no
locus standi in the matter because the agreement by which it
purchased the property from the appellants was fraudulent in
nature. Respondent No.1 also reiterated its prayer for
appointment of a receiver by the Delhi High Court by contending
c that respondent No.4 was a ranked trespasser and there was
every possibility of his entering into clandestine deals and
alienating the property. On his part, respondent No.4 pleaded
that his possession was lawful because respondent No.2 had
put him in possession in furtherance of the agreement executed
D in 1992.
15. At this stage, we may mention that respondent No.4
also filed ~A No.7373/2006 in Suit No.425/1993 for grant of
leave to amend the written statement by incorporating the fact
that respondent No.2 had agreed to pay Rs.4 crores as service
E charges for getting the property vacated from the Sudan
Embassy with a stipulation that in the event of non-payment of
the amount, vacant and peaceful possession of the suit property
will be handed over to him; that even though he got the property
vacated from the Sudan Embassy, respondent No.2 did not
F pay the amount and handed over possession of the property
as security for the same. Respondent No.4 claimed that these
facts could not be incorporated in the original written statement
because his earlier lawyer thought that the same were not
necessary for deciding the suit filed by respondent No.1 for
G specific performance and permanent injunction. Respondent
No.4 also sought incorporation of the fact that the property had
been mortgaged to him and he was in possession as a
mortgagee. Respondent No.1 opposed the prayer for
amendment by asserting that respondent No.4 was seeking to
H make out a new case which was contrary to the defence set
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 327
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
up in the original written statement. A
16. By an order dated 3.9.2007, the learned Single Judge
of the Delhi High Court dismissed IA No. 2268/2003 and IA No.
7373/2006 and allowed IA No.8147/1998. He first considered
the applications filed by respondent No.1 and Bhagwati
8
Developers in the matter of appointment of receiver and held:
"26. Undoubtedly the initial agreement to sell is between
the plaintiff and defendant No.I (since deceased) now being
represented by his legal heirs. However, yet another
agreement to sell come into existence on 18th March, C
1977 between Bhagwati Developers Private Limited and
respondents 4 to 9 by which 6 companies agreed to sell
the said property in favour of Bhagwati Developers with
arbitration clause contained in the agreement and that
dispute shall be subject to the jurisdiction of Calcutta High D
Court. The Court fails to understand as to how the dispute
relating to immovable property which is situated in Delhi
could be taken to Calcutta for adjudication by completing
bye passing the provisions of Section 16 of the Code of
Civil Procedure. It is also evident on record that defendant E
No. 3 who is currently in possession does not enjoy the
status either of licensee or of lessee nor he is there any
other capacity with the consent of either of the parties. He
is simply holding over the possession once open a time
he was given the task of getting of Sudan Embassy F
vacated. This Court really wonder about the sanctity of such
kind of agreements as executed between the plaintiff and
defendant No.3 and between defendant No.I and defendant
No. 3 for the purpose of getting the Sudan Embassy
vacated. Rent Control laws seem to have been thrown to
the winds. Task is taken by individual to get the premises G
vacated from Sudan Embassy and that too for
consideration. I am afraid if such an agreement has a legal
sanctity. That being so the possession of defendant No.3
cannot be termed as legal in the suit property. If at all his
services charges were not paid he has the legal remedy H
328 SUPREME COURT REPORTS . [2012) 10 S.C.R.
A either with the plaintiff or defendant No.I. Under no law he
can be permitted to retain the possession of the property.
Therefore in any case he has to go out of the property he
being stranger to the suit property having no title or interest
of any nature. Learned counsel for the plaintiff has also
B been abie to establish by way of various authorities
referred to above that it is a fit case where Receiver should
be appointed for the management of the property who can
manage the affairs of the suit property under the
supervision of the Court as there is every likelihood that
in the eventuality of not appointing the Receiver there is
c strong likelihood of the property being usurped in a
clandestine manner so as to frustrate the claims of the
rightful claimant. Even otherwise not appointing the
Receiver at this juncture might lead to multifarious
litigation.
D
27. Therefore in order to prevent all these wrongs and
further damage and waste to the property, appointment of
Receiver has become essential so as to preserve the
property. Therefore, Sh. Rajesh Gupta, Advocate is hereby
E appointed as Receiver. His fee is fixed at Rs.50,000/-
initially subject to revision, depending on the quantum of
work he might have to undertake while acting as Receiver
to be paid by the plaintiff. He will manage the affairs of
the suit property by removing defendant No.3 from the suit
F property. If need arise, he may take the assistance of the
police to thwart any resistance and also may break open
the locks of the property and make an inventory of the
goods lying therein. If he required to do any work in respect
of the property like maintenance, he shall seek prior
G permission from the Court. This application is accordingly
allowed.
28. This order shall also take care of the application of
Bhagwati Developers Pvt. Ltd. proposed defendant No.
10 wherein while treating the possession of defendant
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 329
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
No.3 as unlawful possession in the suit property has A
sought directions from this court that the Receiver
appointed by the High Court of Calcutta be continued and
the possession of the property be handed over to him who
should retain the property in his possession as in the
capacity of Receiver. I may state that when the matter was B
taken to Calcutta High Court between six alleged
transferees and Bhagwati Developers Pvt. Ltd., the
Calcutta High Court in its order dated 13th February, 2001
clearly indicated that the decree passed by the Calcutta
High Court if comes in conflict with the order passed by C
Delhi High Court, the same shall always be subject to the
order that might be passed by the Delhi High Court.
29. In view of the fact that this court while allowing the
application of the plaintiff has appointed Receiver for D
managing the control and supervision of the property in
question. Therefore, the order passed by the Calcutta High
Court appointing Receiver has to be kept in abeyance as
Calcutta High Court itself stated that decision of Delhi High
Court shall have precedence over their decision. This
being so, plea of the proposed defendant No. 1O that E
Receiver so appointed by Calcutta High Court should
continue, cannot be accepted."
17. The learned Single Judge then considered the
application filed by respondent No.4 for amendment of the F
written statement and dismissed the same by recording the
following observations:
"True, law of amendment is quite liberal and Courts
ordinarily permits amendment provided such amendments
are not mischievous in nature with a view to delay the legal G
proceedings and setting up entirely new case than the one
pleaded earlier but in this case, I may say that written
statement was filed way back in 1993 and good number
of years have passed, but it never struck the defendant to
make such amendment simply by putting the blame on H
330 SUPREME COURT REPORTS [2012] 10 S.C.R.
A earlier lawyer. Even otherwise amendment which is sought
to be made was well within the knowledge of defendant
No. 3. During all these years when proceedings were
continuing that he was being termed as trespasser. What
prevented him to explain his true position at the earliest is
B not explained at all. To me it seems that when arguments
were being heard and the counsel for the parties put up
their respective claims then it has struck the mind of
defendant No. 3 to apply for such amendment as it might
work to his advantages. If at all he was in possession
c because of defendant No.l's consent he should have
pleaded so at the earliest. Such belated amendment
which is otherwise totally inconsistent to the stand taken
earlier in the written statement cannot be allowed as in that
case it would amount to take the case back to the year
1993 when the suit was filed. Therefore this application has
D
no merit, it being full of malice, the same is dismissed."
18. After about 11 years of the execution of agreements
for sale in their favour by respondent No.2, the appellants filed
IA No.186112008 under Order 1 Rule 10(2) CPC for
E impleadment as defendants in Suit No. 425/1993. They
pleaded that by virtue of the agreements for sale and the sale
deeds executed by respondent No.2, they have become
absolute owners of the suit property and, as such, they are
entitled to be impleaded as defendants in the suit filed by
F respondent No.1. The appellants also invoked the doctrine of
lis pendens embodied in Section 52 of the Transfer of Property
Act, 1882 and pleaded that having purchased the property
during the pendency of the suit by respondent No.1, they have
acquired the right to contest the same. The appellants relied
G upon the orders passed by the Delhi High Court in IA Nos. 625/
2001, 1211/2001 and 9576/2001 to show that respondent No.1
was very much aware of the agreements for sale and the sale
deeds executed in their favour by respondent No.2 and the
agreement executed by them in favour of Bhagwati Developers
H and pleaded that it was the duty of respondent No.1 to have
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 331
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
suo motu impleaded them as parties to the suit In the reply filed A
on behalf of respondent No.1, it was pleaded that the suit for
specific performance had been filed because respondent No.2
did not execute the sale deed in furtherance of agreement for
sale dated 13.9.1988 and the appellants who are not parties
to that agreement do not have the locus to contest the suit. B
Respondent No.1 also raised an objection of delay by asserting
that the appellants had sought impleadment after 11 years of
having entered into a clandestine transaction with respondent
No.2. Respondent No. 1 relied upon orders dated 22.1.2001,
24.1.2001 and 8.2.2001 passed by the Delhi High Court and c
Suit No. 161/1999 field by respondent No.2 for grant of a
declaration that the sale deeds allegedly executed in favour of
the appellants were forged and fabricated, to show that the
appellants were very much aware of Suit No.425/1993 and
pleaded thaf their assertion about lack of knowledge was false D
because they had been contesting Suit No.161/1999 for almost
7 years. Another plea taken by respondent No.1 was that the
transactions entered into between respondent No.2, the
appellants and Bhagwati Developers were ex facie illegal and
on the basis of such transactions the appellants did not acquire E
any right or interest in the suit property.
19. The leacned Single Judge dismissed IA No. 1861/2008
vide order dated 26.5.2008, relevant extracts of which are
reproduced below:
F
"The cumulative sequence of events noticed above leads
this Court to conclude that the vendor P.K. Khanna
allegedly sold the properties in 1997. The applicants also
claim as such. They were aware about the existence of this
suit if not in 1999 at Jeast from 2001 onwards, when they G
were made parties i"ll an application and subject to an
injunction. Their conduct in approaching, for impleadment,
now seven years later, -cannot be countenanced. That
apart, as held in Kasturi's case their impleadment WOllld
completely alter the nature of the suit which was instituted
H
332 SUPREME COURT REPORTS [2012] 10 S.C.R.
A in 1993 for specific performance of a contract, of 1988.
There is no whisper of leave having been obtained by their
vendor, to this transaction. The record shows that the
vendor was admittedly restrained by an injunction from
B
parting with possession or creating third party rights in
respect of the suit property, on 18th February, 1993. That
order was subsequently confirmed after hearing the
vendor/P.K. Khanna i.e. first defendant on 5th April, 1994.
In view of the principles spelt out in Bibi Zubaida Khatoon
and Surjit Singh accepting this application would defeat
c the ends of justice and undermine public policy."
20. Bhagwati Developers challenged order dated 3.9.2007
in FAQ (OS) No. 514 of 2007. Respondent No.4 also
challenged that order in FAQ (OS) No. 400 of 2007. The
D appellants questioned order dated 26.5.2008 in FAO (OS) No.
324 of 2008. The Division Bench of the High Court dismissed
all the appeals and approved the orders passed by the learned
Single Judge. The Division Bench referred to order dated
15.2.2001 passed by the Calcutta High Court and the
E judgments in Surjit Singh v. Harbans Singh (1995) 6 SCC 50,
Jayaram Mudaliar v. Ayyaswamia & Ors. (1972) 2 SCC 200,
Rajender Singh & Ors. v. Santa Singh & Ors. (1973) 2 SCC
705, Joginder Singh Bedi v. Sardar Singh & Ors. 26 (1984)
DLT 162 Del (DB) and Sanjay Gupta v. Kalawati & Ors. (1992)
F 53 DRJ 653 and held that the learned Single Judge was justified
in appointing a receiver for protecting the suit property because
respondent No.2 had flouted the injunction order with impunity
and if the receiver was not appointed there was every possibility
of further alienation of the suit property. Paragraph 26 of the
G impugned judgment in which the Division Bench of the High
Court enumerated the factors necessitating appointment of
receiver by the learned Single Judge and paragraph 33 are
extracted below:
"26. Following developments and circumstances in this
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 333
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
behalf need mention and/or reiteration: A
(a) The suit filed by the plaintiff is predicated on
agreement to sell dated 13.9.1988 purportedly
executed in its favour by the defendant No.I, owner
of the suit property, which is earliest transaction in
8
point of time.
(b) Suit, on this basis, filed in April 1993 is also earliest
legal proceeding instituted by the plaintiff. In this suit,
ad interim injunction dated 18.2.1993 was passed
restraining defendant Nos.1 & 3 from transferring, c
alienating or parting with possession of the suit
property in any manner or creating third party rights
therein.
(c) The plaintiff also filed another IA No.9154/1993 D
seeking restraint against the defendant No.I as well
as defendant No.3 from changing the nature of the
suit property by making structural changes,
additions or alterations therein. In this application
orders were passed directing them not to carry out
E
any structural additions, alterations and permitted
only the renovations like painting, polishing of the
suit property.
(d) In spite of the restraint order dated 18.2.1993, the
defendant No.I allegedly transferred the suit F
property by executing purported six sale deeds on
28.5.1997 in favour ofVidur lmpex & Traders and
others.
It is the submission of learned counsel appearing for G
the plaintiff that intentionally six sale deeds were executed
showing consideration of Rs.48 lacs each keeping the
same below the prescribed limit of Rs.SO lacs with a
fraudulent intent to avoid the application of Chapter XX-C
of the Income-Tax Act.
H
334 SUPREME COURT REPORTS [2012] 10 S.C.R.
A (e) On coming to know of the aforesaid sale
transactions, the plaintiff filed application under
Order XXXIX Rule 1 & 2 CPC for restraining the
defendant Nos.1 & 2 from transferring possession
of the suit property to the said six transferees under
B the alleged six sale deeds. Restraint order to this
effect was passed by the learned Single Judge.
Further orders were passed restraining these six
transferees (defendant No.s 4 to 9) from acting
upon the impugned sale deeds.
c (f) Defendant No.I in his reply took the stand that
impugned sale deeds were forged and fabricated
and were not executed by him. He even filed suit
No. 161/1999 for declaration to this effect. However,
this suit was withdrawn on 10.1.2001 vide
D application IA No. 255/2001 purported to have
been moved by him through Shri Bhupinder Singh,
Advocate, on the statement of Advocate without the
presence of the defendant No.I or his statement.
Thereafter, IA No.1537/2001 was moved by the
E defendant No.I stating that he had not authorized
any counsel to make an application for withdrawal
of the suit and the whole proceedings were
collusive, fraudulent and that he had not entered into
any compromise with the said six transferees.
F Though we are not concerned with these
proceedings, this fact is mentioned to highlight the
manner in which the transactions are taking place,
that too in the teeth of injunction order passed in Suit
No.425/1993 and the vacillating attitude of the
G defendant No.I (since deceased).
(g) Though there was restraint order against defendant
Nos. 4 to 9, i.e. Vidur lmpex & Traders and others,
not to act upon the impugned sale deeds, they
entered into agreement dated 18.3.1997 for
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 335
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
transfer of their purported rights and interest in the A
suit property in favour of Bhagwati Developers. This
agreement contained an arbitration clause, on the
basis of which the Arbitrator was appointed and
consent award passed. Again, without commenting
upon the validity or otherwise of such proceedings, B
which would naturally be thrashed out in appropriate
proceedings, suffice it to state was that all this was
happening in violation of the injunction order
passed in the instant suit. Attempt was made to get
the Receiver appointed from the Calcutta High c
Court and take possession of the suit property.
33. In this behalf, we agree with the submission of Mr.
Singhvi, learned senior counsel for the plaintiff, that in a suit
for specific performance, the court has ample power and
jurisdiction to appoint a receiver, in Kerr on Receivers 16th D
Edition (on page 58), it has been laid down that if a fair
prima facie case for the specific performance of a contract
is made to appear, the court may interfere upon motion
and appoint receiver. In Foot Note No. 37, reference has
been made to case law including C. Kennedy v. Lee E
(1870) 3 MER 441, M. cloudy. Phelp (1838) 2 JUR 962.
The appointment may be made in such circumstances
before the order for a sale is made absolute. (Re:
Stephard, (1892) 31 IR 95)."
F
21. The Division Bench approved the rejection of the
appellants' prayer for impleadment as parties in Suit No. 425/
1993 by observing that after executing the agreement for sale
in favour of Bhagwati Developers they do not have any
subsisting interest in the property. The Division Bench also G
agreed with the learned Single Judge that the application filed
by the appellants lacked .bona fides because they purchased
the suit property from respondent No.2 despite the order of
injunction passed by the High Court and there was no tangible
explanation for filing the application after a long time gap of H
about 8 years.
336 SUPREME COURT REPORTS [2012] 10 S.C.R.
A 22. Learned senior counsel for the appellants emphasised
that his clients were not aware of the agreement for sale
executed by respondent No.2 in favour of respondent No.1, the
suit for specific performance and permanent injunction filed by
respondent No.1 in the Delhi High Court and injunction order
B dated 18.2.1993 till January, 2001 when the learned Single
Judge restrained respondent Nos.2 and 4 from transferring
possession of the suit property to the appellants, and argued
that the High Court committed serious error by declining their
prayer for impleadment as parties to the suit. He submitted that
c the appellants are bona fide purchasers for consideration and
are entitled to contest the suit filed by respondent No.1, else
their right in the suit property will get jeopardized. Learned
senior counsel then argued that the agreement for sale
executed by the appellants in favour of Bhagwati Developers
D did not result in alienation of the suit property and the High Court
committed an error in holding that the appellants had no
subsisting right in the subject matter of the suit. He relied upon
the judgments of this Court in Nagubai Ammal v. B Shama
Rao AIR 1956 SC 593, Khemchand S. Choudhari v. Vishnu
E Hari (1983) 1 sec 18 Savitri Devi v. DJ, Gorakhpur (1999)
I
2 SCC 577, Kasturi v. lwamperumal (2005) 6 SCC 733, Amit
Kumar Shaw v. Farida Khatoon (2005) 11 SCC 403, Mumbai
International Airport (P) Ltd. v. Regency Convention Centre
and Hotels (P) Ltd.. (2010) 7 SCC 417 and Vinod Seth v.
Devinder Bajaj (2010) 8 SCC 1, and argued that respondent
F No.1 should be directed to implead the appellants as parties
to the suit because their rights will be adversely affected if a
decree is passed in favour of respondent No.1. Learned senior
counsel submitted that impleadment of the appellants will
enable the Court to comprehensively decide all the issues and
G will also obviate the necessity of further litigation in the matter.
23. Learned senior counsel appearing for Bhagawati
Developers invoked the doctrine of comity of jurisdiction of the
Courts and argued that in view of the order passed by the
H Calcutta High Court for appointment of receiver who had already
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 337
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
taken possession of the suit property, the Delhi High Court A
should have refrained from exercising its power to appoint
receiver with a direction to him to take over the property.
24. Learned senior counsel for respondent No. 1 relied on
Surjit Singh v. Harbans Singh (supra) and argued that the 8
appellants are neither necessary nor proper parties because
the agreements for sale and the sale deeds executed by
respondent No.2 in their favour had no legal sanctity. Learned
senior counsel submitted that the alienation of suit property by
respondent No.2 in violation of the injunction granted by the C
Delhi High Court was nullity and such a transaction did not
create any right in favour of the appellants or Bhagwati
Developers so as to entitle them to contest the litigation
pending between respondent Nos.1 and 2. Learned senior
counsel submitted that in a suit for specific performance, any
transfer which takes place in violation of an injunction granted D
by the Court would be hit by the doctrine of lis pendens
enshrined in Section 52 of the Transfer of Property Act, 1882.
Learned senior counsel further submitted that on the date of
filing IA No.1861/2008 the appellants did not have any
subsisting interest in the suit property because they had already E
executed an agreement for sale in favour of Bhagwati
Developers and received substantial part of the consideration
and the mere fact that they were made parties in the
interlocutory applications filed before the Delhi High Court
cannot entitle them to seek impleadment as defendants in the F
pending suit. Learned senior counsel then argued that the
agreement to sell executed between the appellants and
Bhagwati Developers and the proceedings instituted before the
Calcutta High Court were collusive and fraudulent and the
appellants and Bhagwati Developers cannot take benefit of the G
order passed by that Court. He emphasized that even though
the appellants and Bhagwati Developers had knowledge of the
suit pending before the Delhi High Court, they deliberately
suppressed this fact from the Calcutta High Court and
succeeded in persuading the Court to appoint an arbitrator and H
338 SUPREME COURT REPORTS [2012] 10 S.C.R.
A a receiver. Learned senior counsel submitted that the doctrine
of comity of jurisdictions cannot be invoked by Bhagwati
Developers because the Delhi High Court was already seized
of the matter and the application filed by respondent No.1 for
appointment of receiver was pending since 1998. Learned
B senior counsel lastly argued that the Delhi High Court did not
commit any error by appointing a receiver because respondent
Nos.2, 4, the appellants and Bhagwati Developers tried to grab
the suit property by entering into clandestine transactions.
25. We have considered the respective arguments/
C submissions. The first question that requires determination is
whether the appellants are entitled to be impleaded as parties
in Suit No. 425/1993 on the ground that during the pendency
of the suit they had purchased the property from respondent
No.2. Order 1 Rule 10(2) CPC which empowers the Court to
D delete or add parties to the suit reads as under:
"10 (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
E appear to the Court to be just, order that 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
F order to enable the Court effectually and completely to
adjudicate upon and settle all the questions involved in the
suit, be added."
26. In Ramesh Hirachand Kundanmal v. Municipal
Corporation of Greater Bombay (1992) 2 SCC 524, this Court
G interpreted the aforesaid provision and held:
"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
H necessary parties on record. The question of impleadment
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 339
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
of a party has to be decided on the touchstone of Order 1 A
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 B
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. n c
(emphasis supplied)
27. In Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC
147, this Court interpreted Order 1 Rule 10(2) in the following
manner: D
"By operation of the abov~uoted rule though the court may
have power to strike out the name of a party improperly
joined or add a party either on application or without
application of either party, but the condition precedent is E
that the court must be satisfied that the presence of the
party to be added, would be necessary in order to enable
the court to effectually and completely adjudicate upon and
settle all questions involved in the suit. To bring a person
as party-defendant is not a substantive right but one of F
procedure and the court has discretion in its proper
exercise. The object of the rule is to bring on record all the
persons who are parties to the dispute relating to the
subject-matter so that the dispute may be determined in
their presence at the same time without any protraction,
inconvenience and to avoid multiplicity of proceedings.• G
28. In Mumbai International Airport (P) Ltd. v. Regency
Convention Centre and Hotels (P) Ltd. (supra), this Court
considered the scope of Order 1 Rule 10(2) CPC and
observed: H
340 SUPREME COURT REPORTS [2012] 10 S.C.R.
A • The general rule in regard to impleadment of parties is
that the plaintiff in a suit, being dominus litis, may choose
the persons against whom he wishes to litigate and
cannot be compelled to sue a person against whom he
does not seek any relief. Consequently, a person who is
B not a party has no right to be impleaded against the wishes
of the plaintiff. But this general rule is subject to the
provisions of Order 1 Rule 10(2) of the Code of Civil
Procedure ("the Code", for short), which provides for
impleadment of proper or necessary parties. The said
c sub-rule is extracted below:
"10. (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
D 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 effectually and completely to
E adjudicate upon and settle all the questions involved in the
suit, be added."
The said provision makes it clear that a court may, at any
stage of the proceedings (including suits for specific
F performance), either upon or even without any
application, and on such terms as may appear to it to be
just, direct that any of the following persons may be
added as a party: (a) any person who ought to have been
joined as plaintiff or defendant, but not added; or (b) any
person whose presence before the court may be
G
necessary in order to enable the court to effectively and
completely adjudicate upon and settle the questions
involved in the suit. In short, the court is given the
discretion to add as a party, any person who is found to
be a necessary party or proper party.
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 341
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
A "necessary party" is a person who ought to have been A
joined as a party and in whose absence no effective
decree could be passed at all by the court. If a "necessary
party" is not impleaded, the suit itself is liable to be
dismissed. A "proper party" is a party who, though not a
necessary party, is a person whose presence would enable B
the court to completely, effectively and adequately
adjudicate upon all matters in dispute in the suit, though
he need not be a person in favour of or against whom the
decree is to be made. If a person is not found to be a
proper or necessary party, the court has no jurisdiction to c
implead him, against the wishes of the plaintiff. The fact
that a person is likely to secure a righUinterest in a suit
property, after the suit is decided against the plaintiff, will
not make such person a necessary party or a proper party
to the suit for specific performance.
D
Let us consider the scope and ambit of Order 1 Rule 10(2)
CPC regarding striking out or adding parties. The said
sub-rule is not about the right of a non-party to be
impleaded as a party, but about the judicial discretion of
the court to strike out or add parties at any stage of a E
proceeding. The discretion under the sub-rule can be
exercised either suo motu or on the application of the
plaintiff or the defendant, or on an application of a person
who is not a party to the suit. The court can strike out any
party who is improperly joined. The court can add anyone F
as a plaintiff or as a defendant if it finds that he is a
necessary party or proper party. Such deletion or addition
can be without any conditions or subject to such terms as
the court deems fit to impose. In exercising its judicial
discretion under Order 1 Rule 10(2) of the Code, the court G
will of course act according to reason and fair play and not
according to whims and caprice."
(emphasis supplied)
29. In Kasturi v. Jyyamperuma/ (supra), this Court H
342 SUPREME COURT REPORTS [2012] 10 S.C.R.
A considered the question whether a person who sets up
independent title and claims possession of the suit property is
entitled to be impleaded as party to a suit for specific
performance of contract entered into between the plaintiff and
the defendant. In that case, the trial Court allowed the
B application for impleadment on the ground that respondent
Nos.1 and 4 to 11 were claiming title and possession of the
contracted property and, therefore, they will be deemed to have
direct interest in the subject matter of the suit. The High Court
dismissed the revision filed by the appellant and confirmed the
c order of the trial Court. While allowing the appeal and setting
aside the orders of the trial Court and the High Court, this Court
referred to Order 1 Rule 10(2) CPC and observed:
"Jn our view, a bare reading of this provision, namely,
second part of Order 1 Rule 10 sub-rule (2) CPC would
D clearly show that the necessary parties in a suit for
specific performance of a contract for sale are the parties
to the contract or if they are dead, their legal
representatives as also a person who had purchased the
contracted property from the vendor. In equity as well as
E in Jaw, the contract constitutes rights 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 a vendor is, however, not a
F necessary party. From the above, it is now clear that two
tests are to be satisfied for determining the question who
is a necessary party. Tests are- (1) there must be a right
to some relief against such party in respect of the
controversies involved in the proceedings; (2) no
G effective decree can be passed in the absence of such
party.
As noted hereinearlier, two tests are required to be
satisfied to determine the question who is a necessary
party, let us now consider who is a proper party in a suit
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 343
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
for specific performance of a contract for sale. For A
deciding the question who is a proper party in a suit for
specific performance the guiding principle is that the
presence of such a party is necessary to adjudicate the
controversies involved in the suit for specific performance
of the contract for sale. Thus, the question is to be decided B
keeping in mind the scope of the suit. The question that is
to be decided in a suit for specific performance of the
contract for sale is to the enforceability of the contract
entered into between the parties to the contract. If the
person seeking addition is added in such a suit, the scope c
of the suit for specific performance would be enlarged and
it would be practically converted into a suit for title.
Therefore, for effective adjudication of the controversies
involved in the suit, presence of such parties cannot be said
to be necessary at all. Lord Chancellor Cottenham in D
Tasker v. Small made the following observations:
"It is not disputed that, generally, to a bill for a specific
performance of a contract of sale, the parties to the contract
only are the proper parties; and, when the ground of the
jurisdiction of Courts of Equity in suits of that kind is E
considered it could not properly be otherwise. The Court
assumes jurisdiction in such cases, because a court of law,
giving damages only for the non-performance of the
contract, in many cases does not afford an adequate
remedy. But, in equity, as well as at law, the contract F
constitutes the right, and regulates the liabilities of the
parties; and the object of both proceedings is to place the
party complaining as nearly as possible in the same
situation as the defendant had agreed that he should be
placed in. It is obvious that persons, strangers to the G
contract, and, therefore, neither entitled to the right, nor
subject to the liabilities which arise out of it, are as much
strangers to a proceeding to enforce the execution of it as
they are to a proceeding to recover damages for the
breach of it." H
344 SUPREME COURT REPORTS [2012] 10 S.C.R.
A The aforesaid decision in Tasker was noted with approval
in De Hoghton v. Mone. Turner, L.J. observed:
"Here again his case is met by Tasker in which case it was
distinctly laid down that a purchaser cannot, before his
contract is carried into effect, enforce against strangers to
B
the contract equities attaching to the property, a rule which,
as it seems to me, is well founded in principle, for if it were
otherwise, this Court might be called upon to adjudicate
upon questions which might never arise, as it might
appear that the contract either ought not to be, or could
c not be performed."
(emphasis supplied)
30. In Amit Kumar Shaw v. Farida Khatoon (supra), this
D Court examined the correctness of the order passed by the
Calcutta High Court which had approved the dismissal of the
application filed by the appellants for impleadment as parties
to the suit filed by the original owner Khetra Mohan Das and
the transferees, namely, Birendra Nath Dey and Smt. Kalyani
E Dey. One Fakir Mohammad claimed right, title and interest in
the suit property by adverse possession. The suit was decreed
by the trial Court. On appeal, the same was remanded for fresh
adjudication of the claim of the parties. Fakir Mohammad
challenged the order of remand by filing two second appeals.
During the pendency of the appeals, Birendra Nath Dey
F assigned leasehold interest in respect of a portion of the suit
property to the appellants. Smt. Kalyani Dey sold the other
portion of the suit property to the appellants. When the
appellants applied for recording their names in the municipal
records, they came to know about the pendency of the appeals.
G Immediately thereafter, they filed an application for impleadment
which was rejected by the High Court. This Court referred to
the provision of Order 1 Rule 10(2) and Order 22 Rule 10 CPC
as also Section 52 of the Transfer of Property Act, 1882 and
observed:
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 345
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
"Section 52 of the Transfer of Property Act is an expression A
of the principle "pending a litigation nothing new should be
introduced". It provides that pendente lite, neither party to
the litigation, in which any right to immovable property is
in question, can alienate or otherwise deal with such
property so as to affect his appointment. This section is B
based on equity and good conscience and is intended to
protect the parties to litigation against alienations by their
opponent during the pendency of the suit. In order to
constitute a tis pendens, the following elements must be
present: c
1. There must be a suit or proceeding pending in a court
of competent jurisdiction.
2. The suit or proceeding must not be collusive.
D
3. The litigation must be one in which right to immovable
property is directly and specifically in question.
4. There must be a transfer of or otherwise dealing with
the property in di~pute by any party to the litigation.
E
5. Such transfer must affect the rights of the other party that
may ultimately accrue under the terms of the decree or
order.
The doctrine of tis pendens applies only where the /is is F
pending before a court. Further pending the suit, the
transferee is not entitled as of right to be made a party to
the suit, though the court has a discretion to make him a
party. But the transferee pendente lite can be added as a
proper party if his interest in the subject-matter of the suit G
is substantial and not just peripheral. A transferee
pendente lite to the extent he has acquired interest from
the defendant is vitally interested in the litigation, where the
transfer is of the entire interest of the defendant; the latter
having no more interest in the property may not properly H
346 SUPREME COURT REPORTS [2012] 10 S.C.R.
A defend the suit. He may collude with the plaintiff. Hence,
though the plaintiff is under no obligation to make a /is
pendens transferee a party, under Order 22 Rule 1O an
alienee pendente lite may be joined as party. As already
noticed, the court has discretion in the matter which must
s be judicially exercised and an alienee would ordinarily be
joined as a party to enable him to protect his interests."
(emphasis supplied)
31. In Savitri Devi v. DJ, Gorakhpur (supra), this Court
C upheld the order passed by the trial Court for impleadment of
respondent Nos.3 to 5, who had purchased the suit property
without knowledge of the pending litigation, as parties. On
behalf of the appellant, it was argued that respondent Nos. 3
to 5 cannot be treated as necessary parties because alienation
D made in their favour was in violation of the injunction order
passed by the Court. In support of this argument, reliance was
placed on the judgment in Surjit Singh v. Harbans Singh
(supra). This Court distinguished that judgment by observing that
in that case the assignors and the assignees had knowledge
E of the injunction order passed by the Court and held that the
order passed by the trial Court which was affirmed by the
District Judge and the High Court does not call for interference.
32. In Vinod Seth v. Devinder Bajaj (supra), this Court
F interpreted Section 52 of the Transfer of Property Act, 1882 and
observed:
"It is well settled that the doctrine of lis pendens does not
annul the conveyance by a party to the suit, but only renders
it subservient to the rights of the other parties to the
G litigation. Section 52 will not therefore render a transaction
relating to the suit property during the pendency of the suit
void but render the transfer inoperative insofar as the other
parties to the suit. Transfer of any right, title or interest in
the suit property or the consequential acquisition of any
H right, title or interest, during the pendency of the suit will
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 347
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
be subject to the decision in the suit. A
The principle underlying Section 52 of the TP Act is based
on justice and equity. The operation of the bar under
Section 52 is however subject to the power of the court to
exempt the suit property from the operation of Section 52
8
subject to such conditions it may impose. That means that
the court in which the suit is pending, has the power, in
appropriate cases, to permit a party to transfer the property
which is the subject-matter of the suit without being
subjected to the rights of any part to the suit, by imposing C
such terms as it deems fit. Having regard to the facts and
circumstances, we are of the view that this is a fit case
where the suit property should be exempted from the
operation of Section 52 of the TP Act, subject to a
condition relating to reasonable security, so that the
defendants will have the liberty to deal with the property in D
any manner they may deem fit, in spite of the pendency of
the suit."
33. In Surjit Singh v. Harbans Singh (supra), this Court
considered the question whether a person to whom the suit E
property is alienated after passing of the preliminary decree by
the trial Court, which had restrained the parties from alienating
or otherwise transferring the suit property, has the right to be
impleaded as party. The trial Court accepted the application
filed by the transferees and the order of the trial Court was F
confirmed by the lower appellate Court and the High Court.
While allowing the appeal against the order of the High Court,
this Court observed:
"In defiance of the restraint order, the alienation/
assignment was made. If we were to let it go as such, it G
would defeat the ends of justice and the prevalent public
policy. When the Court intends a particular state of affairs
to exist while it is in seisin of a lis, that state of affairs is
not only required to be maintained, but it is presumed to
exist till the Court orders otherwise. The Court, in these H
348 SUPREME COURT REPORTS [2012] 10 S.C.R.
A circumstances has the duty, as also the right, to treat the
alienation/assignment as having not taken place at all for
its purposes. Once that is so, Pritam Singh and his
assignees, respondents herein, cannot claim to be
impleaded as parties on the basis of assignment.
B Therefore, the assignees-respondents could not have
been impleaded by the trial court as parties to the suit, in
disobedience of its orders."
34. In Sarvinder Singh v. Dalip Singh (1996) 5 SCC 539,
this Court considered the question whether the respondent who
C purchased the property during the pendency of a suit for
declaration filed by the appellant on the basis of the registered
Will executed by his mother is entitled to be impleaded as party
and observed:
D 'The respondents indisputably cannot challenge the legality
or the validity of the Will executed and registered by Hira
Devi on 26-5-1952. Though it may be open to the legal
heirs of Rajender Kaur, who was a party to the earlier suit,
to resist the claim on any legally available or tenable
E grounds, those grounds are not available to the
respondents. Under those circumstances, the respondents
cannot, by any stretch of imagination, be said to be either
necessary or proper parties to the suit. A necessary party
is one whose presence is absolutely necessary and
F without whose presence the issue cannot effectually and
completely be adjudicated upon and decided between the
parties. A proper party is one whose presence would be
necessary to effectually and completely adjudicate upon
the disputes. In either case the respondents cannot be said
to be either necessary or proper parties to the suit in
G
which the primary relief was found on the basis of the
registered Will executed by the appellant's mother, Smt
Hira Devi. Moreover, admittedly the respondents claimed
right, title and interest pursuant to the registered sale
deeds said to have been executed by the defendants-heirs
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 349
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
of Rajender Kaur on 2-12-1991and12-12-1991, pending A
suit.
Section 52 of the Transfer of Property Act envisages that:
"During the pendency in any court having authority within
the limits of India ... of any suit or proceeding which is not 8 •
collusive and in which any right to immovable property is
directly and specifically in question, the property cannot be
transferred or otherwise dealt with by any party to the suit
or proceeding so as to affect the rights of any other party
thereto under the decree or order which may be made C
therein, except under the authority of the court and on such
terms as it may impose."
It would, therefore, be clear that the defendants in the suit
were prohibited by operation of Section 52 to deal with D
the property and could not transfer or otherwise deal with
it in any way affecting the rights of the appellant except
with the order or authority of the court. Admittedly, the
authority or order of the court had not been obtained for
alienation of those properties. Therefore, the alienation E
obviously would be hit by the doctrine of /is pendens by
operation of Section 52. Under these circumstances, the
respondents cannot be considered to be either necessary
or proper parties to the suit."
(emphasis supplied) F
35. In Bibi Zubaida Khatoon v. Nabi Hassan (2004) 1
sec 191, this Court was called upon to consider the
correctness of the High Court's order, which declined to interfere
with the order passed by the trial Court dismissing the G
applications filed by the appellant for impleadment as party to
the cross suits of which one was filed for redemption of
mortgage and the other was filed for specific performance of
the agreement for sale. While dismissing the appeal, this Court
referred to the judgments in Sarvinder Singh v. Dalip Singh H
350 SUPREME COURT REPORTS [2012] 10 S.C.R.
A (supra) and Dhurandhar Prasad Singh v. Jai Prakash
University (2001) 6 SCC 534 and observed that there is no
absolute rule that the transferee pendente lite shall be allowed
to join as party in all cases without leave of the Court and
contest the pending suit.
B
36. Though there is apparent conflict in the observations
made in some of the aforementioned judgments, the broad
principles which should govern disposal of an application for
impleadment are:
c 1. The Court can, at any stage of the proceedings,
either on an application made by the parties or
otherwise, direct impleadment of any person as
party, who ought to have been joined as plaintiff or
defendant or whose presence before the Court is
D necessary for effective and complete adjudication
of the issues involved in the suit.
2. A necessary party is the person who ought to be
joined as party to the suit and in whose absence
an effective decree cannot be passed by the Court.
E
3. A proper party is a person whose presence would
enable the Court to completely, effectively and
properly adjudicate upon all matters and issues,
though he may not be a person in favour of or
F against whom a decree is to be made.
4. If a person is not found to be a proper or necessary
party, the Court does not have the jurisdiction to
order his impleadment against the wishes of the
G plaintiff.
5. In a suit for specific performance, the Court can
order impleadment of a purchaser whose conduct
is above board, and who files application for being
joined as party within reasonable time of his
H
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 351
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
acquiring knowledge about the pending litigation. A
6. However, if the applicant is guilty of contumacious
conduct or is beneficiary of a clandestine
transaction or a transaction made by the owner of
the suit property in violation of the restraint order
8
passed by the Court or the application is unduly
delayed then the Court will be fully justified in
declining the prayer for impleadment.
37. In the light of the above, we shall now consider whether
the learned Single Judge and the Division Bench of the High C
Court committed an error by dismissing the appellants'
application for impleadment as parties to Suit No.425/1993. At
the cost of repetition, we consider it necessary to mention that
respondent No.1 had filed suit for specific performance of
agreement dated 13.9.1988 executed by respondent No.2. The D
appellants and Bhagwati Developers are total strangers to that
agreement. They came into the picture only when respondent
No.2 entered into a clandestine transaction with the appellants
for sale of the suit property and executed the agreements for
sale, which were followed by registered sale deeds and the E
appellants executed agreement for sale in favour of Bhagwati
Developers. These transactions were in clear violation of the
order of injunction passed by the Delhi High Court which had
restrained respondent No.2 from alienating the suit property or
creating third party interest. To put it differently, the agreements F
for sale and the sale deeds executed by respondent No.2 in
favour of the appellants did not have any legal sanctity. The
status of the agreement for sale executed by the appellants in
favour of Bhagwati Developers was no different. These
transactions did not confer any right upon the appellants or G
Bhagwati Developers. Therefore, their presence is not at all
necessary for adjudication of the question whether respondent
Nos.1 and 2 had entered into a binding agreement and whether
respondent No.1 is entitled to a decree of specific performance
of the said agreement. That apart, after executing agreement H
352 SUPREME COURT REPORTS [2012] 10 S.C.R.
A for sale dated 18.3.1997 in favour of Bhagwati Developers, the
appellants cannot claim to have any subsisting legal or
commercial interest in the suit property and they cannot take
benefit of the order passed by the Calcutta High Court for
appointment of an arbitrator which was followed by an order
B for appointment of receiver because the parties to the
proceedings instituted before that Court deliberately
suppressed the facts relating to Suit No.425/1993 pending
before the Delhi High Court and the orders of injunction passed
in that suit.
c 38. We are in complete agreement with the Delhi High
Court that the application for impleadment filed by the
appellants was highly belated. Although, the appellants have
pleaded that at the time of execution of the agreements for sale
by respondent No.2 in their favour in February 1997, they did
D not know about the suit filed by respondent No.1, it is difficult,
if not impossible, to accept their statement because the
smallness of time gap between the agreements for sale and
the sale deeds executed by respondent No.2 in favour of the
appellants and the execution of agreement for sale by the
E appellants in favour of Bhagwati Developers would make any
person of ordinary prudence to believe that respondent No.2,
the appellants and Bhagwati Developers had entered into these
transactions with the sole object of frustrating agreement for
sale dated 13.9.1988 executed in favour of respondent No.1
F and the suit pending before the Delhi High Court. In any case,
the appellants will be deemed to have become aware of the
same on receipt of summons in Suit No.161/1999 filed by
respondent No.2 for annulment of the agreements for sale and
the sale deeds in which respondent No.2 had clearly made a
G mention of Suit No.425/1993 filed by respondent No.1 for
specific performance of agreement for sale dated 13.12.1988
and injunction or at least when the learned Single Judge of the
Delhi High Court entertained IA No.625/2001 filed by
respondent No.1 and restrained respondent Nos.2 and 4 from
H transferring possession of the suit property to the appellants.
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 353
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
However, in the application for impleadment filed by them, the A
appellants did not offer any tangible explanation as to why the
application for impleadment was filed only on 4.2.2008 i.e. after
7 years of the passing of injunction order dated 22.1.2001 and,
in our considered view, this constituted a valid ground for
declining their prayer for impleadment as parties to Suit No.425/ B
1993.
39. The ratio of the judgment in Kasturi v. /yyamperumal
(supra), on which heavy reliance has been placed by the learned
senior counsel for the appellants, does not help his clients. In C
the present case, the agreements for sale and the sale deeds
were executed by respondent No.2 in favour of the appellants
in a clandestine manner and in violation of the injunction granted
by the High Court. Therefore, it cannot be said that any valid
title or interest has been acquired by the appellants in the suit D
property and the ratio of the judgment in Surjit Singh v. Harbans
Singh (supra) would squarely apply to the appellants' case
because they are claiming right on the basis of transactions
made in defiance of the restraint order passed by the High
Court. The suppression of material facts by Bhagwati
Developers and the appellants from the Calcutta High Court, E
which was persuaded to pass orders in their favour, takes the
appellants out of the category of bona fide purchaser. Therefore,
their presence is neither required to decide the controversy
involved in the suit filed by respondent No.1 nor required to pass
an effective decree. F
40. The next question which merits consideration is
whether the Delhi High Court was justified in appointing the
receiver and directing him to take possession of the property.
Though, learned senior counsel appearing for Bhagwati G
Developers has sought to invoke the doctrine of comity of
jurisdictions of the Courts for continuance of the receiver
appointed by the Calcutta High Court, we do not find any merit
in his submission. It is not in dispute that respondent No.1 had
filed the suit for specific performance on 1.2.1993 and the H
354 SUPREME COURT REPORTS [2012) 10 S.C.R.
A learned Single Judge of the Delhi High Court passed the order
of injunction on 18.2.1993. The arbitral award for specific
performance of the agreement for sale of the same property
entered into between the appellants and Bhagawati
Developers was obtained on 7.1.1999. The execution
B proceedings were instituted in the Calcutta High Court in 2000
and the order for appointment of receiver was passed on
12.8.2000. It is thus clear that when Bhagwati Developers
approached the Calcutta High Court, the Delhi High Court was
already seized with the suit involving the subject matter of the
C award. The contention of the appellants and Bhagawati
Developers that they were unaware of the proceedings before
the Delhi High Court cannot be accepted because in Suit
No.161/1999 filed by respondent No.2 for declaring that the
agreements for sale and the sale deeds relied upon by the
appellants were false and fabricated, a specific reference was
D made to the suit filed by respondent No.1. That apart, in its
order dated 15.2.2001 passed in the application filed by
respondent No.4 in EC No.10/2000, the learned Single Judge
of the Calcutta High Court categorically observed that the said
Court had not been apprised of the facts relating to the suit
E pending before the Delhi High Court and the injunction orders
passed therein including order dated 8.2.2001 restraining the
receiver of the Calcutta High Court from taking possession of
the property and that if these facts had been disclosed, the
Court would have been slow in passing the order that it had
F passed earlier and hence the order passed by it, if it is in conflict
with the order passed by the Delhi High Court, would be subject
to that order and Bhagawati Developers who is a party to the
proceedings before the Delhi High Court can approach the said
Court for obtaining appropriate orders. This shows that on being
G apprised of the correct facts, the learned Single Judge of the
Calcutta High Court had shown due respect to the orders
passed by the Delhi High Court and directed that the same
should operate tili they are modified or vacated at the instance
of the appellants or Bhagwati Developers. The course of action
H adopted by the Calcutta High Court was in consonance with
VIDUR IMPEX AND TRADERS PVT. LTD. v. TOSH 355
APARTMENTS PVT. LTD. [G.S. SINGHVI, J.]
the notion of judicial propriety. Therefore, Bhagwati Developers A
cannot invoke the doctrine of comity of jurisdictions of the Courts
for seeking continuance of the receiver appointed by the
Calcutta High Court.
41. The learned Single Judge and the Division Bench of
8
the Delhi High Court have assigned detailed and cogent
reasons for appointing a receiver to take care of the suit
property. The clandestine nature of the transactions entered into
between respondent No.2 and the appellants on the one hand
and the appellants and Bhagwati Developers on the other would
give rise to strong presumption that if a receiver is not C
appointed, further attempts would be made to alienate the
property in similar fashion. Therefore, we do not find any valid
ground much less justification to interfere with the impugned
order or the one passed by the learned Single Judge of the Delhi
High Court. D
42. In view of the abcwe conclusions, we do not consider it
necessary to advert to the documents filed by respondent No.1
before this Court for the first time and the additional affidavit
filed by Smt. Bhanwari Devi Lodha on behalf of Bhagwati E
Developers.
43. In the result, the appeals are dismissed. For their
contumacious conduct of suppressing facts from the Calcutta
High Court and thereby prolonging the litigation, the appellants F
and Bhagwati Developers are saddled with cost of Rs.5 lakhs
each. The amount of cost shall be deposited by them with the
Supreme Court Legal Services Committee within a period of
three months.
44. Since the proceedings pending before the Delhi High G
Court were stayed by this Court, we request the High Court to
make an endeavour to dispose of the pending suit as early as
possible.
K.K.T. Appeals dismissed.
H
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