IN THE HIGH COURT OF DELHI AT NEW DELHI C.R.P. No.749/2002 # R.K.K.R. Steel Ltd. ...Petitioner ! through: Mr.R.S.Endlaw, Adv. and Mr.Virendra Goswami, Adv. VERSUS $ Northern Steel & General Mills & Anr. ...Respondents ^ through: Mr.Harish Malhotra, Sr. Adv. with Mr.Rajat Singh Jain, Adv. and Mr.Tanuj Khurana, Adv. RESERVED ON : 19-03-2007 % D ATE OF DECISION: 22-03-2007 CORAM: * Hon'ble Mr.Justice Pradeep Nandrajog 1. Whether reporters of local papers may be allowed to see the judgment? Y 2. To be referred to the Reporter or not? Y 3. Whether judgment should be reported in Digest? Y : PRADEEP NANDRAJOG, J. 1. A short but interesting question of law arises for consideration in the present petition. 2. Whether a prospective purchaser claiming right under agreement to sell is entitled to be impleaded as a defendant in the suit filed by the registered owner for recovery of the tenanted premises against the tenant? Needless to state, the question has CRP No.749/2002 page 1 of 27 to be answered in light of the provisions of sub rule 2 of Rule 10 of Order 1 of the Code of Civil Procedure 1908. 3. A brief resume of the relevant facts is always handy before analyzing the legal position. 4. The impugned order is dated 30.4.2002. It has allowed an application filed by Shri Virendra Paul Daga (HUF) through its Karta Shri Krishan Kumar Daga for being impleaded as a defendant. 5. Petitioner's suit is for recovery of possession and mesne profits. The material allegations in the plaint are that the defendant 'Northern Steel & General Mills', a company registered under the Companies Act 1956 was inducted as a tenant for a period of one year with effect from 15.9.1985. That the tenant continued to occupy the tenanted property beyond the period of lease and vide notice dated 2.4.1998 tenancy was determined with effect from the midnight between 31.4.1998 and 1.5.1998. Rent being Rs.5,000/- per month, protection under the Delhi Rent Control Act 1958 was not available to the property. Since possession was not returned, plaintiff was entitled to recover possession. 6. In the written statement filed by the defendant it was pleaded that at one point of time, the defendant was a sole proprietory concern of M/s.Vikas Fittings Pvt. Ltd. It was denied that the defendant is a company registered under the Companies Act 1956. It was pleaded that currently the defendant is a sole CRP No.749/2002 page 2 of 27 proprietory firm of one Shri Sanjay Daga. It was further pleaded that the tenancy in question was a camouflage for payment of Rs.5,000/- per month to the plaintiff by M/s.Virendra Paul Daga (HUF) to whom plaintiff had agreed to sell the suit property for a consideration of Rs.4,50,000/- vide agreement to sell dated 25.9.1985. It was stated that M/s.Virendra Paul Daga (HUF) had paid a sum of Rs.50,000/- pursuant to the agreement to sell. 7. It was further pleaded that since execution of sale deed would have taken some time it was agreed that on the balance sale consideration, M/s.Virendra Paul Daga (HUF) would pay interest @15% per annum and would take over possession of the property. That, pursuant to the said oral understanding the tenancy was created in the name of the defendant, then a sole proprietory unit of M/s.Vikas Fittings Pvt. Ltd., which in turn was controlled by M/s.Virendra Paul Daga (HUF). 8. A specific defence was raised in the written statement predicated on clause 7 of the agreement to sell between the plaintiff and M/s.Virendra Paul Daga (HUF). It was specifically pleaded as under:- “The plaintiff had no right to seek possession of the defendant and in order to secure the right of M/s.Virendra Paul Daga (HUF), Clause 7 of the said Agreement provided as under:- “7. That the plot and the super-structure constructed thereupon is presently rented out by the First Party to M/s.Northern Steel & General Mills through its sole proprietor M/s.Vikas Fittings Pvt. Ltd. of New Delhi at a monthly rental of Rs.5,000/- Rs.Five thousand only). The First CRP No.749/2002 page 3 of 27 Party shall be entitled to realize this rental until the finalization of the sale in favour of the Second Party. However, in the event of the premises being vacated by M/s.Northern Steel & General Mills or its sole proprietor Vikas Fittings Pvt. Ltd. then the Second Party shall have the first option to become a tenant therein on similar terms and conditions.” 9. In the written statement filed, it was specifically pleaded as under:- “The aforesaid Clause 7 was inserted in the Agreement to Sell with the sole object that the possession should remain with Shri Virendra Paul Daga (HUF) either in the name of M/s.Northern Steel & General Mills or if it is vacated by the said M/s.Northern Steel & General Mills, the premises would be let out to M/s.Virendra Paul Daga (HUF) at the same rent. Later on, the defendant became the sole proprietorship concern of Shri Sanjay Daga and the amount was paid to the plaintiff at Rs.5,000/- per month on account of interest on the balance consideration of Rs.4,00,000/- which was payable by Shri Virendra Paul Daga (HUF) to the plaintiff. That after entering into the Agreement to Sell M/s.Virendra Paul Daga (HUF) got the plan sanctioned of construction of the building on the aforesaid plot of land and raised construction of a building at a huge cost on the said plot of land. The completion certificate was issued by the Municipal authorities in the name of the plaintiff M/s.Virendra Paul Daga (HUF) had been paying the house tax for the said building. The plaintiff has given a General Power of Attorney in favour of Shri Prabhat Kumar and Shri Raj Kumar Daga. Shri Raj Kumar Daga is a relation of Sh.Virendra Paul Daga being the brother-in-law of Shri Krishan Kumar Daga son of Sh.Virendra Paul Daga and Shri Prabhat Kumar is also the grand child of Shri Virendra Paul Daga being the son of the daughter of Sh.Virendra Paul Daga. Shri Prabhat Kumar and Raj Kumar Daga had been prosecuting all the proceedings on behalf of the plaintiff for the assessment of property in dispute before the Municipal Corporation of Delhi and also in appeals before the Addl. District Judge, Delhi. M/s. Virendra Paul Daga (HUF) had been paying the Municipal taxes in respect of the property in dispute. As a matter of CRP No.749/2002 page 4 of 27 fact, although, a tenancy was shown in the name of the defendants as a camouflage for the payment of Rs.5,000/- per month, actually, M/s.Virendra Paul Daga (HUF) remained in possession of the said property. The building constructed on the said plot of land is in possession of M/s.Virendra Paul Daga (HUF). In view of the terms of the agreement to sell executed between M/s.Virendra Paul Daga (HUF) and the plaintiff, M/s.Virendra Paul Daga (HUF) is a necessary party to the present proceedings. The rights of the parties cannot be effectually and finally disposed off in the absence of M/s.Virendra Paul Daga (HUF).” 10. Notwithstanding the defence taken in the written statement, brief contours whereof have been noted herein above, M/s.Virendra Paul Daga (HUF) filed an application through its Karta Shri Krishan Kumar Daga seeking impleadment by virtue of the provisions of sub-rule 2 of Rule 10 of Order 1 of the Code of Civil Procedure 1908. 11. Substantially, averments made in the said application are the same as the averments made by the defendant in its written statement. Clause 7 of the agreement to sell entered into between the plaintiff and M/s.Virendra Paul Daga (HUF) was relied upon. In para 3 and para 6 of the application it was pleaded as under:- “3. That the aforesaid Clause No.7 was inserted in the Agreement to Sell with the sole object that the possession should remain with the applicant either in the name of M/s.Northern Steel & General Mills or if it is vacated by the said M/s.Northern Steel & General Mills, the premises shall be let out to the applicant at the same rent. The property was to remain in possession of the applicant and is still in possession of the applicant. The intention of showing M/s.Northern Steel & General Mills as a tenant under the plaintiff was to secure payment of Rs.5,000/-. It is further submitted that a Rent Agreement was executed on CRP No.749/2002 page 5 of 27 25.9.85 but it was ante dated as 15.9.85. The plaintiff was entitled to a sum of Rs.5,000/- per month and was not liable to pay any amount such as is money and property taxes etc. which become the liability of the applicant/the tenant nominee of the applicant. Clause 3 was inserted in the following words: “That in addition to the rental reserved hereunder, the Tenant shall also pay annual lease money for this plot by depositing in the office of Mohan Cooperative Industrial Estate Ltd. New Delhi on behalf of the landlord and shall also pay the property taxes that may be claimed by the Municipal Corporation of Delhi from time to time against this property.” As stated above, M/s.Vikas Fittings Pvt. Ltd. was the family concern of the applicant. Later on, the defendant became the sole proprietorship of Shri Sanjay Daga one of the members of the applicant (HUF). xxx xxx xxx xxx xxx xxx 6. That it will not be out of place to mention here that it was the intention of the parties that the plaintiff was only entitled to a sum of Rs.4 lacs or till the payment of Rs.4 lacs is made an amount of Rs.5,000/- per month. With that view the plaintiff had also executed a Power of Attorney dated 25.9.1985 in favour of S/Shri Raj Kumar Daga and Prabhat Kumar at the instructions of the applicant. Shri Raj Kumar Daga is a relation of the applicant being the son of brother-in-law of Shri K.K.Daga (Krishan Kumar Daga) the Karta of the applicant and Shri Prabhat Kumar is also the nephew of Shri Krishan Kumar Daga being the son of the sister of the applicant. The said Shri Prabhat Kumar and Raj Kumar Daga had been prosecuting all the proceedings on behalf of the plaintiff for the assessment of the property in dispute before the Municipal Corporation of Delhi and also in appeals before the Addl. District Judge, Delhi.” 12. It was pleaded that the applicant was always ready and willing to perform its obligations under the contract and since plaintiff was in default a suit for specific performance was filed. CRP No.749/2002 page 6 of 27 13. Opposing the application seeking impleadment plaintiff stated that a simple recovery suit could not be converted into a title suit and that M/s.Virendra Paul Daga (HUF) has an independent right to enforce a claim, if any, against the plaintiff under clause 7 of the agreement to sell dated 25.9.1985. It was stated that in the suit filed by the plaintiff the main controversy and the focal point is whether a plaintiff is entitled to the possession of a suit property as owner thereof if lease is validly determined. It was stated that the applicant has no direct interest in the property. It was further stated that presence of the applicant was not necessary to enable the Court to completely and effectually adjudicate upon and settle all the questions involved in the suit. It was stated that M/s.Virender Paul Daga (HUF) can enforce Clause 7 of the agreement, if at all, in the suit filed by it seeking a decree for specific performance. 14. After hearing arguments, vide impugned order dated 30.4.2002, the learned Trial Judge has opined that the applicant has a legal as well as equitable interest in the suit property and is therefore entitled to be impleaded as a tenant. 15. Learned counsel for the petitioner and the respondents have substantially reiterated the respective versions and their viewpoints on the legal position as have been culled out herein above from their respective pleadings. Therefore, I need not reiterate what the submissions were. 16. Shri Rajiv Endlaw, learned counsel for the petitioner CRP No.749/2002 page 7 of 27 relied upon the following authorities:- 1. AIR 1977 Orissa 183, Pravat Kumar Misra vs. Prafulla Chandra Misra & Anr. 2. AIR 1981 Delhi 291, Jiwan Dass Rawal vs. Narain Dass & Ors. 3. AIR 1990 NOC 83 (P & H), Dharam Singh & Anr. vs. Addu Ram & Ors. 4. AIR 1992 Calcutta 283, Vithalbhai Pvt. Ltd. vs. Union Bank of India. 5. AIR 1994 Calcutta 85, Smt.Sukumari Debi & Anr. vs. Shri Ramdas Ganguli. 6. 1997 (40) DRJ 250, Evangelical Church of India vs. North India Outreach Society. 7. AIR 1998 Rajasthan 150, Talib Hussain vs. Peer Azhar Hussain & Ors. 8. 1999-CalLT-1-254, Rama Chatterjee vs. Somnath Ghosal. 17. Shri Harish Malhotra, learned senior counsel for the respondents relied upon the following authorities:- 1. AIR 2005 SC 2209, Amit Kumar Shaw & Anr. vs. Farida Khatoon & Anr. 2. 118 (2005) DLT 597, S.S.Bakshi vs. P.M.Mathrani. 3. 115 (2004) DLT 300, Jheel Kurenja Milk Producers' Cooperative Society Ltd. & Anr. vs. D.D.A. & Ors. 18. Before I proceed to discuss the legal position it would be important to revisit the statutory provision. Order 1 Rule 10(2) of CRP No.749/2002 page 8 of 27 the Code of Civil Procedure reads as under:- “(2) Court may strike out or add parties.- The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, 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 adjudicate upon and 'settle all the questions involved in the suit, be added.” 19. A reading of the statutory provision shows that the sweep of the legislative provision is controlled by the expression 'settle all the questions involved in the suit be added'. 20. Let me clarify. An inquiry under Order 1 Rule 10(2) is not to focus on whether the applicant is a person who ought to have been joined as a necessary party to the suit. The focus of inquiry is limited to the question whether the applicant could be impleaded as a party on the premise that his presence before the Court may be necessary in order to enable the Court to effectually and completely adjudicate upon and settle the questions involved in the suit. 21. Shri Rajiv Endlaw, learned counsel for the petitioner vehemently contended that the applicant was not a necessary nor a proper party, nor its presence before the Court was necessary in order to enable the Court to effectually and completely adjudicate upon and settle all the questions involved in the suit. Learned counsel urged that every plaintiff is a dominus litus and cannot be compelled to litigate against a person qua whom no relief has CRP No.749/2002 page 9 of 27 been prayed for. Counsel further urged that the expression 'all the questions involved in the suit' means only the questions or disputes between the parties to the litigation and do not include a question or dispute between one or more of the parties and a third party. Counsel further urged that the alleged agreement to sell in favour of the applicant does not create any interest in immovable property. It is a right in personam and remedy of the applicant is to enforce the rights in a suit of his own for specific performance, a right stated to have been already been exercised by the applicant 22. Rival submission of Shri Harish Malhotra, learned senior counsel was that by virtue of clause 7 of the agreement to sell, a right in presenti was created in favour of the applicant and since the stated tenancy was a mere device for the purchaser to enjoy possession of the suit property, applicant was entitled to bring to the notice of the Court its possessory rights under the agreement to sell so that in equity and in law, possession could be protected. Counsel further urged that matter in controversy in a suit has to be considered not only with reference to the case set up in the plaint but even the defence set up in the written statement. It was urged that the defendant had categorically pleaded that the rent agreement was a camouflage and real intention was to pay 15% interest per annum on the balance sale consideration by the applicant to the plaintiff with simultaneous enjoyment of possession by the purchaser. Even on said count, counsel urged CRP No.749/2002 page 10 of 27 that the applicant was entitled to be impleaded as a defendant, if not as a necessary party, as a proper party. 23. Turning to the authorities cited at the Bar by learned counsel, suffice would it be to note that in Pravat Kumar Misra's case (supra) a third party claiming rival title to the suit property was held not entitled to be impleaded as a defendant in a suit filed by the plaintiff for recovery of possession of the suit premises from the tenant, on the ground, that a simple suit for recovery of possession cannot be converted into a complex title suit. 24. In Jiwan Dass Rawal's case (supra) it was held that a party claiming right under an agreement to sell cannot claim any right, title or interest in the property till sale is finalized for the reason an agreement to sell does not create a right, title or interest in the property agreed to be sold. It is a right in personam against the seller. 25. In Dharam Singh's case (supra) applicants claimed certain rights along with the plaintiff. It was held that the applicants cannot be impleaded as defendants. 26. In Vithalbhai's case (supra) a learned Single Judge of the Calcutta High Court opined that different rights may arise amongst different parties based on relationships amongst the parties inter-se, and that in a suit for possession by the tenant against the sub-tenant, the sub-tenant cannot resist claim of possession by disputing title or right to possession of the tenant CRP No.749/2002 page 11 of 27 against the original landlord. 27. In Smt.Sukumari Debi's case (supra) it was held that in an eviction suit by a co-owner who was the landlord, other co- owners not being co-landlords cannot be arrayed as co-plaintiffs. 28. In Evangelical Church's case (supra) it was held that in an eviction suit by the landlord against the ex-employee for restoration of possession over premises allotted to the employee as a term of employment, person claiming to be the owner of the premises and disputing title of the plaintiff was not entitled to be impleaded as a party. Similar view was taken by the Rajasthan High Court in Talib Hussain's case (supra). 29. In the last authority cited by learned counsel for the petitioner, Rama Chatterjee's case (supra), in a suit filed by the plaintiff in his capacity as the managing trustee of a trust against a defendant alleging possession to be an act of trespass, applicant who questioned the right of the managing trustee to file the suit alleging that the property was not trust property was held not entitled to be impleaded as a defendant. 30. Turning to the decisions cited by learned counsel for the respondents, suffice would it be to note that in Amit Kumar Shaw's case, in a suit for partition, a transferee pendente lite who had acquired interest from a copartner was held entitled to be impleaded as a party in the partition suit inasmuch as it was held that such transferee has an interest in the subject matter of the litigation. It was held that addition of a party to a proceeding CRP No.749/2002 page 12 of 27 does not solely depend on the question whether he has interest in the suit property. The question to be addressed is, whether the right of such person may be affected. 31. In S.S.Bakshi's case (supra), a co-owner was held entitled to be impleaded as a party in a suit for specific performance of an agreement to sell. It may be noted that in the suit filed by the prospective purchaser it was stated that he had purchased a specific portion of the joint property from a co-owner, limited to the share of the co-owner in the property. Party seeking impleadment was denying any such arrangement inter se the co-owners. 32. In Jheel Kurenja's case (supra), in eviction proceedings initiated under the Public Premises (Eviction of Unauthorized Occupants) Act 1971 initiated by DDA against the person in possession of land, the person in possession of the land was a member of the cooperative society and therefore the society was held entitled to be impleaded as a party in the eviction proceedings on the ground that all persons who have an interest in the subject matter of the dispute should be impleaded as a party in one proceedings so that separate trials are avoided and all parties are bound by the decision. A caveat was recorded : a person cannot be impleaded at his asking. Bona fides of the applicant, the plausibility of the claim and genuineness of the interest in the litigation has to be prima facie seen. 33. It was additionally held that a party would be a proper CRP No.749/2002 page 13 of 27 party if it is interested in the result of the litigation and has the right to seek assistance of the Court in coming to a decision on the point in issue. It is not necessary that a relief is asked against said party. 34. Independent of the afore-noted decisions cited by learned counsel, a perusal of the commentaries under Order 1 Rule 10 of the Code of Civil Procedure reveal a plethora of decisions which have considered the ambit of the power of the Court in impleading a person as a proper party. The authorities have explained the meaning of the phrase 'all the questions involved in the suit'. 35. The decisions illustrate a wide spectrum of instances when intervention was allowed and when refused. 36. From the decisions, no discernible principle governing the discretionary power of the Court emerges, for the simple reason, the spectrum of claims is fairly wide and therefore it would be inadvisable to cast the discretionary power in a straight jacket of an inflexible formula. However, one principle emerges, that the language employed in the rule vests a very wide discretion in the Court. 37. Given for myself, I would follow the dictum of Jackson J. in Chidambaram Chettiar vs. Subramaniam Chettiar AIR 1927 Madras 834: 'Court should deprecate any attempt to diminish that discretion by substituting special pronouncements in special cases for the actual language of the rule.' CRP No.749/2002 page 14 of 27 38. Really speaking, submission of Shri Rajiv Endlaw, learned counsel for the petitioner is that the expression 'all the questions involved in the suit' in sub-rule 2 of rule 10 of Order 1 must have a narrow meaning i.e. questions as between the parties to the litigation and not questions between any of the parties to the suit and a third party, even though touching the property which is the subject matter of the suit. 39. On the other hand, submission of Shri Harish Malhotra, learned senior counsel for the respondents is that acceptance of the narrow view would mean the addition of words which are not found in the section, namely, 'between the parties to the suit'. 40. In the opinion reported as 1950-2 All ER 605 Dollfus Mieget Compagnie S.A. vs. Bank of England the precise nature of the interest of the party sought to be impleaded in the property in dispute