Bharat
Karsondas Thakkar Vs. M/S Kiran Construction Co. & Ors [2008] INSC 604 (9 April
2008)
A.K. MATHUR & ALTAMAS KABIR
CIVIL APPEAL NO. 2573 OF 2008 (@ SPECIAL LEAVE PETITION (C) NO.2328 of 2007)
ALTAMAS KABIR,J.
1. Leave granted.
2. On 27.5.1949 one Sowar Ramji Vaity was given a grant by the Collector of
Thane, which entitled him to lease of the lands in Serial Nos.83-91 in village
Mulund for a term of 999 years. Sowar Ramji Vaity died in 1965 leaving behind
him four legal representatives, namely, Jagannath, Babu, Vishnu and Bhaskar. On
1.10.1973 the Vaitys entered into an Agreement with one K.L. Danani to sell
their rights and interests in the said land for a total consideration of Rs.2
lakhs. In between April and June 1974, Mr. K.L. Danani constituted a
partnership firm with one Mr. K.B. Thakkar and S.S.
Thakkar under the name of M/s Swas Construction Company. B.K. Thakkar, the
appellant herein, who was then a minor, was also admitted to the benefits of
the partnership firm. As his contribution towards the partnership firm K.L.
Danani brought the benefits of the said Agreement dated 1.10.1973 to the
partnership firm. In 1976, with the enactment of the Urban Land (Ceiling and
Regulation) Act, 1976, K.L. Danani claiming to be in possession of the lands in
question under the Agreement dated 1.10.1973 filed a statement as required
under Section 6(1) of the aforesaid Act.
On 12.6.1979 the Government of Maharashtra executed a lease in favour of the
Vaitys for a total term of 60 years.
3. Soon, thereafter, on 18.6.1979 the Vaitys entered into another Agreement
with M/s Modern Development Corporation granting them development rights over
the same properties. Clause 14 of the Agreement mentioned the fact that the
Vaitys had entered into an Agreement to sell the said lands to M/s Thakkar and
Associates. M/s Modern Development Corporation, in their turn entered into an
Agreement with Kiran Construction Company, the respondent No.1 herein, to
transfer its beneficial interest in the suit land, except for Sl.No.91, in favour
of the said respondent No.1. Clause 12 of the said Agreement required Modern
Development Corporation to obtain confirmation from M/s Thakkar and Associates
that there was no subsisting Agreement for sale in their favour in respect of
the property agreed to be sold.
4. On 18.2.1980 the present appellant Bharat K.
Das Thakkar and K.B. Thakkar filed Suit No.252 of 1980 in the Bombay High
Court against K.L. Danani and S.S. Thakkar seeking a declaration that a
partnership had subsisted between them and that K.L. Danani and S.S. Thakkar
have retired from Swas Construction Company, and, in the alternative, for an
order of dissolution of partnership, accounts, costs and other reliefs. On
Notice of Motion No.283 of 1980 filed by the appellant and K.B.Thakkar in Suit
No.252 of 1980, K.L. Danani gave an undertaking not to part with the possession
of the suit land pending disposal of the Notice of Motion.
The said Notice of Motion No.283 of 1980 was finally disposed of on
9.10.1980 and a Court Receiver was appointed by the Bombay High Court and put
into possession of the suit lands.
5. On 15.5.1981 the Vaitys terminated the Agreement dated 18.6.1979 with M/s
Modern Development Corporation Limited. Such termination was followed by Suit
No.1578 of 1981 instituted by the respondent No.1 on 7.9.1981 against the
Vaitys and the partners of M/s Modern Development Corporation Limited for
specific performance of the Agreements allegedly executed on 18.6.1979 and
24.8.1979. On 14.9.1981 the Bombay High Court restrained the Vaitys and the
partners of M/s Modern Development Corporation Limited from selling,
transferring or further parting with possession of the suit lands. Notice of
Motion No.1271 of 1981 on which the above restraint order was passed was heard
on 1.7.1982 and the Vaitys were restrained during the pendency of the Suit No.
1578 of 1981 from selling, transferring, encumbering the suit property
forming the subject matter of the Agreement dated 18.6.1979 entered into by the
Vaitys with M/s. Modern Development Corporation Limited.
6. During pendency of the said suit for specific performance filed by
respondent No.1, all the parties to Suit No.252 of 1980 arrived at a
comprehensive settlement which was reduced into consent terms which were filed
in the said suit pending before the Bombay High Court. By its order dated
6.5.1998 the Bombay High Court passed a decree in Suit No.252 of 1980 on the
basis of the consent terms filed by the parties to the suit. By virtue of the
said decree, the Vaitys, inter alia, admitted that an Agreement had been
executed on 1.10.1973 in favour of K.L. Danani and that M/s Swas Construction
Company was placed in possession of the suit lands on 3.8.1975.
7. Under the consent decree the Court Receiver was entrusted to discharge
certain functions which had been agreed upon and recorded in the consent
decree. Pursuant thereto in January 1999 the Court Receiver took out a Notice
of Motion No.140 of 1999 in Suit No.1578 of 1981 filed by the Respondent No.1
praying that the order of injunction made on 1.7.1982 be vacated. On 25.8.1999
the Vaitys also took out Notice of Motion No.2700 of 1999 in the aforesaid suit
for the same relief. During the pendency of the suit the respondent No.1 took
out Chamber Summons No.1203 of 2000 in his suit seeking to amend the plaint by
joining the respondent No.13 to 19 as defendants and to also challenge the
consent decree passed by the Bombay High Court in Suit No.252 of 1980 on
6.5.1998. The High Court dismissed the Chamber Summons No.1203 of 2003 filed by
the respondent No.1 in his suit and also vacated the injunction granted on
1.7.1982. As a consequence the other two notices of Motion for vacating the
order of injunction dated 1.7.1982 were allowed. Aggrieved by the said order of
the learned Single Judge dated 21.6.2001, the respondent No.1 filed Appeal No.
745 of 2001 before the Division Bench of the High Court. On 16.11.2006 the High
Court allowed the aforesaid appeal, thereby allowing the amendment of the
plaint and directed that the amendment to the plaint be effected accordingly.
8. It is the said order of the Division Bench which is the subject matter of
challenge in the present appeal and raises the question as to whether in a suit
for specific performance of an agreement for sale of immovable property
instituted by the beneficiary of the agreement against the vendor, a stranger
or a third party to the agreement who had acquired an interest in the same
property is either a necessary or a proper party to the suit. In other words,
could the appellant herein, who had acquired an independent right in the suit
property by way of a separate decree but was not a party to the agreement
between the respondent No.1 and M/s Modern Development Corporation, be added as
a party in the suit for specific performance filed by respondent No.1 and
whether the decree passed in his favour could be assailed by the respondent
No.1 in his suit for specific performance.
9. Although, we have set out the facts which are relevant for an
understanding of the circumstances in which the order impugned in this appeal
came to be passed, the scope of the appeal is confined to the question whether
the Division Bench of the High Court had exercised its jurisdiction correctly
by allowing the amendment to implead the appellant as a party to the suit for specific
performance filed by respondent No.1 and also by allowing the amendment to the
pleadings and the prayer in the plaint to include the following prayers:
"a(i) that this Hon'ble Court be pleased to declare that the decree
passed on 6th May 1998 in Suit No.252 of 1980 in so far as it relates to the
Suit Property more particularly described in Exhibit 'A' hereto is illegal,
null and void and is liable to be quashed and set aside;
a(ii) that it may be declared that the decree dated 6th May 1998 passed in Suit
No.252 of 1980 in so far as it relates to the Suit Property more particularly
described in Exhibit A hereto is not binding upon the Plaintiffs herein;
a(iii) that the Court Receiver, High Court, Bombay appointed Receiver in the
Suit property more particularly described in the Exhibit A hereto be
discharged;
b(iii) that the Defendant Nos. 1 to 4(c), and 13 to 18 and herein be ordered
and decreed to pay to the Plaintiffs as and by way of exemplary/punitive
damages the sum of Rs.50 crores together with interest thereon at the rate of
18% per annum from 6th May 1998 till payment or realisation.
d(i) that pending hearing and final disposal of the Suit operation of Order
dated 6th May 1998 passed in Suit No.252 of 1980 in so far as it relates to the
Suit property more particularly described in Exhibit 'A' hereto be
stayed."
10. Appearing in support of the appeal, Mr.F. De'Vitre, Senior Advocate, submitted that the learned Single Judge of the
Bombay High Court had dismissed Chamber Summons No.1203 of 2000 filed by the
respondent No.1 herein in Suit No.1578 of 1981, mainly on the ground of
limitation holding that the relief claimed by way of amendment of the plaint
for setting aside the consent decree had its origin in the Agreement dated
1.10.1973 executed by the Vaitys in favour of K.L. Danani and that the same had
not been challenged earlier by the respondent No.1 despite having knowledge
thereof.
11. Mr. De'Vitre, submitted that apart from the above, the fact relating to
the earlier Agreement and the filing of Suit No.252 of 1980 and the appointment
of the Court Receiver and his taking possession of the suit properties were
intimated to the learned advocate for the Respondent No.1 by the learned
advocate for the petitioner and K.B. Thakkar by letter dated 27.3.1984 and at least since that date the
respondent No.1 had knowledge of the earlier Agreement and the consent decree,
but he did not take any steps to amend the plaint of the suit filed by him on
7.9.1981 for specific performance of the Agreement said to have been executed
between the Vaitys and the partners of M/s Modern Development Corporation and
between M/s Modern Development Corporation and the respondent No.1. Such
amendment was sought to be made only on 5.10.2000 by way of Chamber Summons
No.1203 of 2000. Mr. De'Vitre submitted that even if the date of intimation of
the filing of Suit No. 252 of 1980 on 27.3.1984 is taken to be starting point
of limitation, even then the later suit filed by respondent had stood barred by
limitation, and it was so held by the learned Single Judge of the Bombay High
Court while rejecting the Chamber Summons No.1203 of 2000 filed by the
respondent No.1.
12. In addition to the above, Mr. De'Vitre submitted that by allowing the
amendment sought for by the respondent No.1 of his plaint, the Division Bench
of the Bombay High Court had allowed the respondent No.1 to completely change
the nature and character of his suit from one for specific performance of an
agreement to one for declaration of title against a third party to the agreement
for which specific performance had been claimed. It was submitted that the
suit, as amended, was no longer maintainable as one under Section 19 of the Specific Relief
Act, 1963.
13. In support of his aforesaid submission, Mr. De'Vitre referred to and relied on a decision of a three Judge Bench of this
Court in Kasturi vs.
Iyyamperumal and others [(2005) 6 SCC 733] where an identical question arose
in almost identical circumstances, as to whether a third party or stranger to
the contract could be added in a suit for specific performance merely in order
to find out who is in possession of the contracted property or to avoid
multiplicity of suits and such question was answered in the negative.
14. Mr. De'Vitre also referred to another decision of this Court in Anil
Kumar Singh vs. Shivnath Mishra (1995 3 SCC 147) where also, in an almost
identical fact situation, this Court held that having regard to the provisions
of Sections 15 and 16 of the Specific Relief
Act, 1963, the respondent in the said case was neither a necessary nor a
proper party to adjudicate upon the dispute arising in the suit since he was
not a party to the agreement of sale in respect of which specific performance
had been prayed.
15. Relying on the said decisions, Mr. De'Vitre urged that the decision of
the Division Bench of the Bombay High Court impugned in the present appeal was
liable to be set aside.
16. The submissions made on behalf of the appellant was strongly opposed by
Mr. Buddy A. Ranganadhan, learned advocate appearing for the respondents. It was
submitted by him that no prejudice could be caused to the appellant by the
amendment of the pleadings in the respondent's suit since filing of a separate
suit for setting aside the consent decree would only lead to multiplicity of
proceedings. In fact, in order to avoid such multiplicity of proceedings, the
High Court had very pragmatically allowed the amendments so that the said
question could also be decided in the suit filed by the respondent No.1,
inasmuch as, the subject matter of the suit of the respondent No.1 and the
consent decree was one and the same. It was urged that having regard to the
nature of the claim of the respondent No.1, the High Court had on 1st July,
1982, restrained the Vaitys from selling, tranferring, encumbering, alienating
or further parting with the suit property during the pendency of the suit filed
by the respondent No.1.
17. Mr. Ranganadhan submitted that in the interest of justice and for a
complete adjudication of the rights of the parties inter-se in respect of the
suit property, the amendment of the plaint allowed by the High Court should not
be disturbed and the interim order of injunction passed on 1.7.1982 should be
allowed to continue.
18. Mr. Ranganadhan referred to the decision of a Bench of three Judges of
this Court in Durga Prasad vs. Deep Chand (AIR 1954 SC 75) which also involved
a suit for specific performance by a prior purchaser against his vendor and a
subsequent purchaser who had paid the purchase money to the vendor. In the said
context, this Court held that in case the suit filed by the prior purchaser is
decreed, then the form of decree should be such as to direct specific
performance of the contract between the vendor and the prior transferee and to
direct the subsequent transferee to join in the conveyance so as to pass on the
title which resides in him to the prior transferee. It was observed that the
only work required to be performed by the subsequent transferee was to pass on
his title to the prior transferee. Mr. Ranganadhan submitted that in this case
also, all that the appellant was required to do in the present suit was to pass
on his title, obtained on the basis of the consent decree, to the respondent
No.1 as plaintiff.
Accordingly, in view of the aforesaid decision, it could not be said that
the High Court committed any error in allowing the impleadment of the appellant
in the suit or in allowing the prayers in the plaint to be amended to include a
declaration for declaring the consent decree to be not binding on the
plaintiffs.
19. Reliance was also placed on another decision of this Court in Sampath
Kumar vs. Ayyakannu and Anr. (2002 (7) SCC 559) wherein while considering the
provisions of Order 6 Rule 17 of the Code of Civil Procedure, hereinafter
referred to as the "Code", this Court observed that amendment of
pleadings at a pre-trial stage should be liberally allowed.
20. It was lastly submitted that even on the question of bar of limitation,
the Division Bench of the High Court had erred in holding that the suit was not
barred particularly when the amendment, which was necessitated by the consent
decree, related back to the agreement dated 1st October, 1973. As a
consequence, the limitation would run from the date of the consent decree and
not from the date of the agreement dated 1st October, 1973, although, the
effect of the decree would relate back to the agreement of 1st October, 1973.
21. Having carefully considered the submissions made on behalf of the
respective parties, and the decisions cited on their behalf, we are of the view
that the Division Bench of the High Court erred in law in allowing the
amendment of the plaint sought for by the respondent No.1 herein as the
plaintiff in the suit. Even if the bar of limitation is not taken into account,
the plaintiff, namely, the respondent No.1 herein, is faced with the ominous
question as to whether the amendment of the pleadings could have at all been
allowed by the High Court since it completely changed the nature and character
of the suit from being a suit for specific performance of an agreement to one
for declaration of title and possession followed by a prayer for specific performance
of an agreement of sale entered into between its assignee and the vendors of
the assignees. Along with that is the other question, which very often raises
its head in suits for specific performance, that is, whether a stranger to an
agreement for sale can be added as a party in a suit for specific performance
of an agreement for sale in view of Section 15 of the Specific Relief
Act, 1963. The relevant provision of Section 15 with which we are concerned
is contained in clause (a) thereof and entitles any party to the contract to
seek specific performance of such contract. Admittedly, the appellant herein is
a third party to the agreement and does not, therefore, fall within the category
of "parties to the agreement". The appellant also does not come
within the ambit of Section 19 of the said Act, which provides for relief
against parties and persons claiming under them by subsequent title.
This aspect of the matter has been dealt with in detail in Kasturi's case
(supra). While holding that the scope of a suit for specific performance could
not be enlarged to convert the same into a suit for title and possession, Their
Lordships observed that a third party or a stranger to the contract could not
be added so as to convert a suit of one character into a suit of a different
character.
22. In the instant case, the appellant obtained the consent decree on the
strength of an agreement said to have been entered into between the Vaitys and
K.L. Danani who brought the said agreement to the partnership which was formed
by him with two other persons. Although, this fact was brought to the notice of
the learned advocates for the respondent No.1 on 27th March, 1984, no steps
were taken by the said respondent to amend the plaint at that stage. Instead,
the respondent No.1 waited till a consent decree was passed before applying for
amendment of the plaint. The proper course of action for the respondent No.1
would have been to challenge the consent decree not in its suit for specific
performance, but in a separate suit for declaration that the consent decree
ought not to have been passed and the same was not binding on the respondent.
By seeking amendment of the plaint in its suit for specific performance, the
respondent No.1 has created its own difficulties by substantially changing the
nature and character of the original suit, which is not permissible in law.
If, as was held in Durga Prasad's case (supra), the impleadment of the
appellant was only for the purpose of joining him in the conveyance if the
respondent No.1's suit ultimately succeeded, the ratio of the said decision
would possibly have been applicable to the facts of this case.
Unfortunately, that is not the case here, since the respondent No.1 has by
amending the plaint prayed for a declaration that the consent decree obtained
by the appellant was not binding on him and also for a declaration that the
consent decree was null and void and was liable to be quashed.
23. In our view, the decision of this Court in Durga Prasad's case (supra),
cannot be brought to the aid of the case made out by respondent No.1.
Furthermore, the Division Bench of the High Court also appears to have
committed an error in observing that the decision in Anil Kumar Singh's case
(supra) was not applicable to the facts of this case, despite the fact that on
a consideration of the provisions of Order 1 Rule 10 and Order 22 Rule 10 of
the Code, this Court held that since the plaintiff in the said matter was
merely seeking the specific performance of an agreement of sale, any attempt to
implead a third party to the contract in the suit would be hit by the
provisions of Section 15 (a) of the Specific Relief
Act, 1963. In fact, in Anil Kumar Singh's case (supra) in a suit for
specific performance, the respondent, who was not a party to the contract but
wanted to be impleaded as a defendant on the ground that he had acquired
subsequent interest as a co-owner by virtue of a decree obtained from the
court, was held not entitled to be joined as defendant either under Order 1
Rule 3 or under Order 1 Rule 10(ii) of the Code having regard to the provisions
of Sections 15 and 6 of the Specific Relief
Act, 1963.
24. As it appears the respondent No.1, was proceeding before a wrong forum
to establish its stand that the decree obtained by the appellant was a nullity
and was not binding on it.
25. In that view of the matter, although, we are setting aside the order of
the Division Bench of the High Court impugned in this appeal, the respondent
No.1 may, if so advised, file a separate suit to challenge the consent decree
in view of the fact that he had been pursuing his claim before the wrong forum.
26. We, therefore, allow the appeal and set aside the impugned order of the
Division Bench of the High Court in Appeal No. 745 of 2001 in Chamber Summons
No. 1203 of 2000 in Suit No. 1578 of 1981, pending in the Bombay High Court.
The respondent No.1 may file a separate suit to challenge the consent decree
obtained by the appellant on 6th May, 1998 in Suit No. 252 of 1980 filed by the
appellant herein and one K.B. Thakkar against K.L. Danani and S.S. Thakkar and
invoke the relevant provisions of the Limitation Act,
1963, for the period during which he was pursuing his relief against the
consent decree in his suit and the appeals arising therefrom.
27. There will be no order as to costs.
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