Ajmera
Housing Corporation Vs. Amrit M.Patel & Ors [1998] INSC 377 (3 August 1998)
S.B.
Majmudar, M. Jagannadha Rao. M. Jagannadha Rao. J.
ACT:
HEAD NOTE:
Leave
granted.
This
is an appeal against the judgment of the Gujarat High Court dated 2.3.1998 dismissing C.R.A. No. 1342/96 filed under
section 115 of the code of Civil Procedure. By that judgment, the order of the
trial Court dated 1.8.1996, dismissing an application filed by the appellant
under Order 1 Rule 10, section 146 and Order 22 Rule 10 C.P.C. for impleadment
as a plaintiff in the suit was confirmed.
For
the purpose of appreciating the questions raised before us, it is necessary to
state the following facts:
The
appellant is a third party to the Suit No.1761 of 1988 which was pending before
the City Civil Judge, Ahmedabad. The suit was filed by a builder, one Amrit M. Patel,
who was the predecessor-in-interest of respondents 1A to 1C, against three
defendants, viz
(1) Arujn
Bhai Jayanti Lal Parikh
(2) Nirmalaren
Arjunbhai Parikh and
(3) Irajit
Arjunlal Bhai Parikh (predecessors-in-interest of Respondents 2A to 4).
The
relief claimed was for specific performance of an agreement dated 4.2.1982
executed by the three defendants - owners of the property (hereinafter called
the 'owners') in favour of the said Amrit Mohan Lal Patel (plaintiff)
(hereinafter called the 'Builder'). The said builder was the sole proprietor of
a firm called 'Star Builders'. The plaintiff entered into the above-said
agreement with the defendants for the purpose of development of the defendants'
property by construction of flats.
Ultimately,
after the land was developed and the flats were constructed, the owners and the
builder were to join in the Sale deeds to
be executed in favour of the purchasers of the flats. Under the agreement, it
was also agreed that the defendants-owners would get Rs.400/- sq.ft. of built
up area as mentioned in clause 15 of the agreement. Further, the builder was to
pay Rs. 3 lakhs on or before the execution of the agreement, Rs. 21 lakhs
within 3 months from date of agreement and 22 lakhs from the date of payment of
Rs. 21 lakhs. The builder paid Rs. 3 lakhs as aforesaid and, according to defendants,
he committed default in payment of Rs. 21 lakhs as well as of the further
amount of Rs. 22 lakhs. simultaneously with the above-said agreement the three
owners executed an irrevocable General Power of Attorney dated 4.2.1982 in favour
of the builder.
Six
years later, the plaintiff-builder entered into an agreement dated 26.2.1988
with the appellant, Ajmera housing Corporation (hereinafter called the
developer') under which the appellant was to undertake the development of the
property. On the same day, the plaintiff executed an irrevocable Power of
Attorney in favour of the appellant.
The
points that arise in the revision mainly turn upon the interpretation of the
clauses in this agreement dated 26.2.1988 by the builder in favour of the
appellant- developer.
On the
ground that the defendants-owners did not allow the plaintiff-builder to
develop the property, the builder filed the present suit on 8.4.1988 impleading
the owners as defendants No.1 to 3 and claiming various reliefs, i.e. specific
performance of the agreement dated 4.2.1982, certain injunctions in regard to
the property and possession of that part of the property which was in the
possession of the owners. An alternative prayer was also made for damages in a
sum of Rs.81 lakhs against the owners. Pending the suit, one of the owners Arjun
Bhai Jayanti Lal Parikh died and his legal representatives were brought on
record.
After
the filing of the suit, the plaintiff - builder, Sri Amrit Mohan Patel died on
18.4.1995 and his legal representatives were also brought on record. During the
pendency of the suit, a deposit of Rs.21 lakhs was made by the plaintiff-builder
into Court. There is a dispute between the plaintiff's legal representatives
and the appellant - developer in regard to the said amount of Rs.21 lakhs. The
legal representatives of the plaintiff-builder contend that the said amount of
Rs.21 lakhs belongs to their father late Amrit Mohan Lal Patel and that he had
deposited the said amount in the Court from his funds. But the contention of
the appellant-developer is that it was he who gave the said amount to the
builder for such deposit. The said amount of Rs. 21 lakhs was invested by the
trial Court in a fixed deposit.
The
present proceedings arise in the following manner:
During
the pendency of the suit, the legal representatives of the plaintiff filed
Interlocutory application (Ex.125) seeking to withdraw the suit under Order 23
Rule 1 CPC and in that application they naturally impleaded only the
owners-defendants as respondents. It appears that the said respondents had no
objection for the withdrawal of the suit.
In the
said suit, the appellant - developer filed the present application (Ex.136)
under Order 1 Rule 10, section 146 and Order 22 Rule 10 C.P.C. for being impleaded
and for "substituting" himself as a plaintiff in the place of
deceased builder late Amrit Mohan Lal Patel, notwithstanding that the legal
representatives of the original plaintiff were already brought on record and
they had desired to withdraw the suit. The appellant claimed in his application
that he was an "assignee" of the interest of the plaintiff- builder
in view of the agreement dated 26.2.88 executed by the plaintiff in his favour
and he, therefore, wanted to continue the said suit for specific performance of
the agreement dated 4.2.1982 against the owners.
The
earned trial Judge by his order dated 1.8.1996 permitted withdrawal of the suit
by the legal representatives of the plaintiff-builder and rejected the
application of the appellant-developer for being substituted as a plaintiff in
the suit. He initially rejected the contention of the defedants' counsel, Sri Vakil
that the plaintiff-builder could not have assigned his rights without the
consent of the owners and also the further contention for the owners that the
agreement dated 4.2.82 was based upon the special skill of Sri Amrit Mohal Lal
Patel and was of a personal nature and therefore not assignable. Having
rejected the above contention of the owners, the trial Judge, however, felt
that the language of the agreement dated 26.2.88 by the builder in favour of
the developer showed that under the latter agreement the development rights
were merely "entrusted" to the developer by the builder and that
there was no "assignment" of the rights which the builder got under
the first agreement of 4.2.82 in favour of the developer. According to him, the
second agreement dated 26.2.1988 was an independent agreement by the builder in
favour of the developer. The learned Judge rejected the contention of Sri Shelat
on behalf of the appellant-developer that section 146 of Order 22 Rules 9, 10
were attracted to the facts of the case According to him, 'entrustment' of
development work by the builder to the developer could not be equated with
'assignment' of his rights under the earlier contract. The learned Judge also
held that in any event, as it was not a case of assignment of "all the
rights" of the builder, the developer could not be treated as a assignee
and, therefore, the appellant could not be treated as a legal representative of
the deceased plaintiff. The subsequent transaction dated 26.2.88 was only a
'part' of the transaction covered by the earlier agreement dated 4.2.82.
Further, the plaintiff could not be said to be a necessary party to the suit
inasmuch as he did not have any direct interest in the property. The developer
was not a party to the agreement dated 4.2.82 sought to be anforced.
The
Court relied upon Anil Kumar Singh vs. Shivnath Mishra [1995 (3) SCC 147]
where, in the context of Order 1 Rule 10(2) CPC and Order 22 Rule 10 it was
held that a person who claimed to have subsequently acquired interest as a
co-owner was neither a necessary nor a proper party and could not be impleaded
even as a defendant. For the above reasons, the application of the plaintiff's
legal representatives for withdrawal of the suit was allowed and the
application of the appellant for being substituted as a plaintiff was
dismissed.
In the
revision filed by the appellant in the High Court, it was held while dismissing
the revision, that there was no clause in the agreement dated 26.2.88 which
provided or which could be construed as a transfer of rights by the plaintiff
in favour of the appellant with respect to the suit property. Hence there was
no "assignment". The High Court, however, differed from the trial
Court on the question as to whether the plaintiff-builder could assign the
benefits or liabilities under the agreement dated 4.2.1982 to the appellant,
without the consent of the original owners. The court held that such consent of
the owners was indeed necessary for the assignment. The court held that the
agreement dated 26.2.88 was an independent agreement between the builder and
the developer. It was contended in the High Court by the learned counsel for
the appellant that inasmuch as the appellant had deposited Rs.21 lakhs before
the trial Court (a contention disputed by the plaintiff's legal
representatives), the said fact coupled with the execution of Power of Attorney
by the builder in favour of the developer on 26.2.88 amounted to an
'assignment'. This contention was also not accepted by the High court. The
Court held that neither Order 22 rule 10, nor section 146 nor Order 1 Rule 10
CPC applied. Order 22 Rule 10 did not apply because there was no assignment and
even if there was one, it was not during the pendency of the suit but before
suit. Again, Section 146 did not apply because there was no
"assignment" and the purpose of section 146 was different. Order 1
Rule 10 did not apply as the appellant was a third party to the agreement dated
4.2.82.
For
the above reasons, the revision was dismissed.
In
this appeal, the learned senior counsel for the appellant Sri S.K. Dholakia
contended that the agreement dated 26.2.88 amounted at least to an assignment
of the 'development' rights if not of other rights of the builder and that was
sufficient to bring the case under section 146 or Order 1 Rule 10 CPC. Learned
counsel fairly conceded that Order 22 Rule 10 CPC did not apply because the
agreement dated 26.2.88 was not one entered into pending suit but was one
entered into before suit. The clauses in the agreement dated 26.2.88 and the
power of attorney of the same date were explained for contending that it was
not a case of 'entrustment' but a case of 'assignment'. It was contended that
the view of the High Court that consent of the owners was necessary before the
builder could enter into an agreement with the appellant-developer was not
correct. It was argued that the trial court was right in this behalf in holding
that such consent was not necessary and in also holding that the contract with
the plaintiff was not one based on the special qualifications or skills of the
plaintiff-builder. So far as this aspect as to the personal nature of the
contract was concerned, the High Court referred to the same in its judgment but
did not express any opinion. Counsel for appellant submitted that the appellant
need not go for a suit but could be allowed to be substituted as a plaintiff to
continue the present suit in the place of the original plaintiff. It was also
argued that the deceased plaintiff had executed a separate agreement dated
29.8.1989 in favour of appellant that he would not 'settle' the matter with the
defendants without the appellant's consent.
On the
other hand, learned senior counsel for the owners-defendants Sri Ramesh P. Bhat
argued that his clients have nothing to do with the appellant. The defendants
have no connection whatsoever with the appellant because the appellant was not
a party to the agreement dated 4.2.82. Nor were the defendants parties to the
agreement dated 26.2.1988. Further the original plaintiff when he filed the
suit on 8.4.88 did not think of impleading the appellant as a co-plaintiff even
though the plaintiff had by that time entered into the agreement dated 26.2.88
with the appellant before suit. Nor did the appellant think of joining in the
suit which was filed in 1988 if he had acquired some rights by
"assignment" before suit. Even after the death of the plaintiff in
1995, the appellant did not wake up but filed the application only after delay
of one year. The defendants-owners could not be compelled to defend a suit-
which the plaintiffs did not want to pursue - merely because a third party
claiming that he had acquired certain rights against the original plaintiff
under an agreement dated 26.2.1988, wants to continue the suit. The appellant
has to first establish his rights against the plaintiff's legal representatives
and then only can he have locus standi to proceed against the owners. The
defendants have no privity of contract with the appellants. It was urged that
the special qualifications and silks of Sri Amrit Mohan Lal Patel the original
Plaintiff. Therefore, the said amrit Mohan Lal Patel had no right to entrust
his duties to a third party for development purposes without the consent of the
owners and the owners were satisfied that the appellant was an equal to the
original plaintiff in his skills an capacity. The owners have no idea of the
capacity or skills of the appellant. The rights and duties which were
absolutely personal to late Amrit Mohan Lal Patel could not have been assigned
to the appellant. It was true that in the preamble to the agreement dated
4.2.82. the word 'assigns' was used while describing the original Builder as
including "his heirs, executors, administrators and assigns of the OTHER
PART". Learned counsel argued that if the rights or duties of the Builder
were personal to the builder and were not assignable, then the mere use of the
builder and were not assignable, then the mere use of the word 'assigns' cold
not be of any help to the appellant. The interest created must be an assignable
interest. The owners had also confidence in the financial capacity of Sri Amrit
Mohan Lal Patel, the builder and that was also another reason for holding that
the contract dated 4.2.82 was one of a personal nature. Thus there was no
assignment in fact or in law and there was no consent of the owners. The
original plaintiff had defaulted. So far as the legal representatives of the
builder were concerned, they were entitled to say that they had neither the
capacities nor the special skills of the original plaintiff. Therefore, the
legal representatives of the original plaintiff were, for good reasons, not
interested in seeking the specific performance of their development agreement
against the owners. Thus they were entitled to withdraw the suit and plead that
this was not a contract they could perform.
The
learned senior counsel, Sri Maganbhai Barat for the plaintiff's legal
representatives adopted the above contentions of Sri Ramesh P. Bhat and
contended that there were no merits in the appeal.
We
have set out the respective contentions of the parties in sufficient detail. We
may state that the learned senior counsel for the appellant has, and in our
view, rightly not relied upon Order 22 Rule 10 CPC as it is nobody's case that
there is an assignment or devolution of interest during the pendency of the
suit. So far as the reasons given by the trial Court and the High Court for
rejecting the case of the appellant under order 1 Rule 10 and section 146 c.p.c.
are concerned, we do not think it proper to go into them in detail inasmuch as,
in our opinion, the above issues have to be thrashed ut in a properly
constituted suit. We think it neither desirable not in the interests of
parties, to go into the above questions in an appeal arising ut of an
interlocutory application. the problem is that if we interpret the agreements,
for the purpose of the application under Order 1 Rule 10 or section 146 c.p.c.,
our review is likely to prejudice any decision on the same questions if taken
up either in this suit or in any separate suit that may be filed by the
appellant. The reason is this. any decision in favour of the appellant to implead
him as a plaintiff would necessarily require us to go into the rights of the
appellant-developer visa-vis the original plaintiff-builder and vis-a-vs the
defendants, owners - under the two agreements. This may prejudice the case of
the owners and the legal representatives of the builder in this very suit,
similarly, any decision against the appellant will prejudice the appellant's
case if he files an independent suit. In the above-said peculiar circumstances
of the case we are of the view that this is not a fit case to go into the
merits and no interference is called for under Article 136 of the Constitution
of India. The plaintiff, if he is so advises, may pursue his remedies by way of
a fresh suit. The observations or findings of the trial court or of the High
Court in the impugned judgments as to the rights of the plaintiff under the
agreements dated 26.2.88 - whether the observations or findings are in favour
or against the plaintiff - are kept open for adjudication in such a suit.
We are
not to be under stood as having said anything upon the maintainability or
non-maintainability of any such suit or about the rights of any of the parties
who may be impleaded therein.
We
have stated earlier that Rs.21 lakhs deposited by the original plaintiff in
this suit are kept in fixed deposit. As stated earlier there is a dispute
between the parties in regard to this amount. The appellant says that he provided
these monies to the deceased plaintiff but the legal representatives of the
deceased plaintiff contend that these monies were not provided by the appellant
but were the monies belonging to the deceased plaintiff himself. As this is a
dispute which cannot be resolved in these proceedings without taking evidence,
we are of the view that the trial Court should be directed to keep the said
amount of Rs. 21 lakhs and interest thereon in its control for a period of
eight weeks from today so as to enable the appellant to seek appropriate relief
in a duly constituted suit. We order accordingly. If no orders are obtained by
the appellant within the above said period in his favour, it shall be open to
the trial Court to dispose of any application for withdrawal of the said monies
which may be filed by the plaintiff's legal representatives, in accordance with
law.
We are
not to be understood as deciding anything in favour or against the appellant or
other parties to the suit in regard to the said amount and interest thereon,
lying in deposit in the trial Court.
Subject
to the above, this appeal is dismissed. in the circumstances, there will be no
order as to costs.
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