1 chs-1051-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION jmi CHAMBER SUMMONS NO. 1051 OF 2011 IN SUIT NO. 3056 OF 2010. Bina Coatings Private Limited. ..Plaintiff. vs. Madhuri Milap Joshi & Ors. ..Defendants. And M/s. Trisuil Developers & Ors. ..Respondents. .... Mr. P.N. Vohra, a/w. Mr. M.P. Vohra, i/b. Pramod Kumar & Co., for Plaintiff. Mr. Praveen Samdhani, Senior Counsel, a/w. Mr. T.N. Tripathi and Sapana Rachuri, i/b. T.N. Tripathi & Co., for Defendant No.1. Mr. Sanjay, i/b. V.N. Ajit Kumar, for Defendant Nos. 2 to 5. Mr. Rohan Cama, i/b. Kapil Shetye, for Defendant No.6. Mr.D.H. Mehta, i/b. Kunal Bange, for Respondents. .... CORAM : S.J. KATHAWALLA, J. RESERVED ON : 13TH JULY 2011. PRONOUNCED ON : 11TH OCTOBER 2011. P.C. : This Chamber Summons is taken out by the Plaintiff to join/add Respondent Nos. 1 to 7 as Party Defendant Nos. 7 to 13 in the above suit and to allow the Plaintiff to carry out amendments as per Schedules 1 and 2 annexed to the Chamber Summons with all other necessary and consequential amendments therein. 2. The Plaintiffs, Bina Coatings Pvt. Ltd. have on 25th November 2010 filed a Suit seeking an order and decree against the Defendant Nos. 1 to 5 inter alia for the following reliefs : (a) that this Hon’ble Court be pleased to declare that the Agreement dated 24th February, 2005 2 chs-1051-11 (Exhibit “B” hereto), and Power of Attorney dated 24th February 2005 (Exhibit “C” hereto) are valid, subsisting and binding upon the Defendants; (b) that it be declared that the purported termination of the said Agreement dated 24th February, 2005 and Power of Attorney dated 24th February 2005 by the Defendant Nos. 1 to 5 is illegal, null, void, not valid and not binding upon the Plaintiff; (c). That the Defendant Nos. 1 to 5 be jointly and severally be ordered and decreed to specifically perform the said Agreement dated 24th February 2005 (Exhibit “B”) and to do and perform all such acts, deeds, things and matters in respect of the suit property described in the Ex. “A” hereto as may be necessary. In the Suit, the Plaintiff also took out a Notice of Motion being No. 3398 of 2010 and applied for ad interim reliefs on 20th December, 2010 which was declined. An appeal was filed by the Plaintiff against the said order of rejection dated 20th December 2010. The Defendants stated before the Appeal Court that as soon as the ad interim order was declined, the Defendant Nos. 1 to 5 have entered into a Development Agreement dated 23rd March 2011 with the Respondent No.1 of which Respondent Nos. 2 to 7 are Partners. The Hon’ble Division Bench after hearing the Advocates for the Parties by its Order dated 13th June 2011 set aside the Order of the Learned Single Judge dated 20th December 2010 and requested the Learned Single Judge to hear and dispose of the Notice of Motion as expeditiously as possible and in any case within a period of 8 weeks from 13th June, 2011. The Division Bench has further ordered that pending the hearing and disposal of the Notice of Motion by the Learned Single Judge the Defendants and any persons claiming through them shall not raise any construction on the suit property. 3 chs-1051-11 3. The Plaintiff has therefore taken out the present Chamber Summons to join Respondent Nos. 1 to 7 as Defendant Nos. 7 to 13 in the above Suit. By prayer clause (a) in the Suit which is set out hereinabove, the Plaintiff has already sought a declaration against the Defendants that the Agreement dated 24th February 2005 (Exhibit “B” to the Plaint) and the Power of Attorney dated 24th February 2005 (Exhibit “C” to the Plaint) are valid, subsisting and binding upon the Defendants. The Plaintiff has also sought specific performance of the said Agreement dated 24th February 2005 against Defendant Nos. 1 to 5. The Plaintiff are now seeking to amend the Plaint and inter alia pray for a declaration that the purported Development Agreement dated 23rd March 2011 and other documents, if any, between the Defendant Nos. 1 to 6 and Defendant Nos. 7 to 13 are sham, bogus, illegal, colourable, got up and Defendant Nos. 7 to 13 have no right title or interest of any nature whatsoever under the same and/or the said purported Development Agreement and that the other documents are not binding upon the Plaintiff, and/or are subject to the suit agreement and the rights of the Plaintiff under the Suit Agreement. 4. The Learned Advocate appearing for the Plaintiff has drawn my attention to recital (r) and clause 29 of the purported Development Agreement dated 23rd March, 2011, and has pointed out that Respondent Nos. 1 to 7 have entered into the purported Development Agreement with complete knowledge of the above Suit filed between the Plaintiff and the Defendant Nos. 1 to 6. He has further submitted that the Defendant Nos. 1 to 6 have entered into the purported Development Agreement dated 23rd March 2011 with the Respondent Nos. 1 to 7 in active collusion with one another and 4 chs-1051-11 with an ulterior and malafide motive to hamper and prejudice the right, title and interest of the Plaintiff in respect of the suit property. It is submitted that the purported Development Agreement dated 23rd March 2011 is sham and bogus and Defendant No. 7 has no rights based on the same and the same is not binding upon the Plaintiff or in any event the same is subject to the Plaintiff‘s right, title and interest under the agreement dated 24th February 2005. It is therefore submitted that the Plaintiff is entitled to the necessary declaration as sought by way of the present amendment and that this Court be pleased to allow the amendment since Respondent Nos. 1 to 7 are necessary and/or proper parties to the suit and by joining them as party to the suit the scope and the character of the suit will not be enlarged in any manner. The Learned Advocate for the Plaintiff has further submitted that if the amendment is not allowed, it will not be possible for this Court to pass a decree in the present suit in the absence of Respondent Nos. 1 to 7, who are claiming to have obtained development rights in respect of the same property from the same Vendors in respect of which there already exists a prior and binding Agreement dated 24th February 2005 executed by and between the same Vendors and the Plaintiff. It is submitted that though Section 15 of the Specific Relief Act, 1963 provides that in a Suit for specific performance only the parties to the agreement of sale would be necessary parties, Section 19(b) of the said Act has carved out an exception to the said Rule by allowing enforcement of specific performance against any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. It is submitted that if the amendment is not allowed it will result into grave hardship, injustice and multiplicity of proceedings as far as the Plaintiff is concerned, whereas no such 5 chs-1051-11 hardship or injustice will be caused to the Defendants and/or the Respondents if the amendment is allowed. In support of his contention, the Learned Advocate appearing for the Plaintiff has relied on the decision of the Hon’ble Supreme Court in Amit Kumar, Shaw and Anr. Vs. Farida Khatoon and Or. reported in 2005 11SCC 403. 5. The Learned Advocates appearing for the Defendants have vehemently opposed the above Chamber Summons. They have submitted that joining of Respondent Nos. 1 to 7 as Defendant Nos. 7 to 13 is not required nor necessary. They have submitted that keeping in mind the scope of the suit, joining Respondents as Defendants will enlarge the scope and character of the suit which cannot be allowed. It is submitted that there is no privity of contract between the Plaintiffs and the Respondents and therefore the Respondents are not required for adjudication of the issues in the present suit. It is submitted that in view of Section 15 of the Specific Relief Act, 1963 in a suit for specific performance, only the parties to the agreement of sale would be necessary parties. It is submitted that the Respondents are third parties/strangers to the suit agreement dated 24th February 2005 and therefore they are neither necessary nor proper parties to the present suit, by which the Plaintiff has sought specific performance of the Agreement for Sale dated 24th February 2005. In support of their contentions the Defendants have relied on the decisions of the Hon’ble Supreme Court in the case of Kasturi Vs. Iyyamperumal and Ors. (2005) 6 SCC 733 and Bharat Karsondas Thakkar Vs. Kiran Constructions Co. and Ors. (2008) 13 SCC 658. 6. I have considered the facts of the case, the submissions 6 chs-1051-11 advanced and the case law cited on behalf of the parties. In the case of Kasturi (Supra) the Supreme Court considered whether in a suit for specific performance of a contract for sale of property, instituted by a purchaser against the vendor, a stranger or a third party to the contract claiming to have an independent title/possession over the contracted property, is entitled to be added as a party defendant in the suit. While considering the question the Supreme Court expressly held that a person who claims “adversely to the claim of the vendor” is not a necessary party. However, the Hon’ble Supreme Court has in the said Judgment laid down the tests for deciding whether a party is a necessary or proper party in such cases The two tests to be satisfied for determining the said question are - (a) There must be a right of relief against such party in respect of the controversies involved in the proceedings; and (b) No effective decree can be passed in the absence of such party. The Supreme Court has in the said judgment, in the very context of a suit for specific performance, considered these tests and the crucial discussion is to be found in Paragraphs 7 and 15 of the judgment which read as under :- “7. In our view, a bare reading of this provision, namely, second part of Order 1 Rule 10 sub-rule (2) CPC would clearly show that the necessary parties in a suit for specific performance of a contract for sale are the parties to the contract or if they are dead, their legal representatives as also a person who had purchased the contracted property from the vendor. In equity as well as in law, the contract constitutes rights and also regulates 7 chs-1051-11 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 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 effective decree can be passed in the absence of such party.” “15. As discussed hereinearlier, whether Respondents 1 and 4 to 11 were proper parties or not, the governing principle for deciding the question would be that the presence of Respondents 1 and 4 to 11 before the Court would be necessary to enable it effectually and completely to adjudicate upon and settle all the questions involved in the suit. As noted hereinearlier, in a suit for specific performance of a contract for sale, the issue to be decided is the enforceability of the contract entered into between the appellant and Respondents 2 and 3 and whether contract was executed by the appellant and Respondents 2 and 3 for sale of the contracted property, whether the plaintiffs were ready and willing to perform their part of the contract and whether the appellant is entitled to a decree for specific performance of a contract for sale against Respondents 2 and 3. It is an admitted position that Respondents 1 and 4 to 11 did not seek their addition in the suit on the strength of the contract in respect of which the suit for specific performance of the contract for sale has been filed. Admittedly, they based their claim on independent title and possession of the contracted property. It is, therefore, obvious as noted hereinearlier that in the event, Respondents 1 and 4 to 11 are added or impleaded in the suit, the scope of the suit for specific performance of the contract for sale shall be enlarged from the suit for specific performance to a suit for title and possession which is not permissible in law. In the case of Vijay Pratap v. Sambhu Saran Sinha, this Court had taken the same view which is being taken by us in this judgment as 8 chs-1051-11 discussed above. This Court in that decision clearly held that to decide the right, title and interest in the suit property of the stranger to the contract is beyond the scope of the suit for specific performance of the contract and the same cannot be turned into a regular title suit. Therefore, in our view, a third party or a stranger to the contract cannot be added so as to convert a suit of one character into a suit of different character. As discussed above, in the event any decree is passed against Respondents 2 and 3 and in favour of the appellant for specific performance of the contract for sale in respect of the contracted property, the decree that would be passed in the said suit, obviously, cannot bind Respondents 1 and 4 to 11. It may also be observed that in the event, the appellant obtains a decree for specific performance of the contracted property against Respondents 2 and 3, then, the Court shall direct execution of deed of sale in favour of the appellant in the event Respondents 2 and 3 refusing to execute the deed of sale and to obtain possession of the contracted property he has to put the decree in execution. As noted hereinearlier, since Respondents 1 and 4 to 11 were not parties in the suit for specific performance of a contract for sale of the contracted property, a decree passed in such a suit shall not bind them and in that case, Respondents 1 and 4 to 11 would be at liberty either to obstruct execution in order to protect their possession by taking recourse to the relevant provisions of CPC, if they are available to them, or to file an independent suit for declaration of title and possession against the appellant or Respondent 3. On the other hand, if the decree is passed in favour of the appellant and sale deed is executed, the stranger to the contract being Respondents 1 and 4 to 11 have to be sued for taking possession if they are in possession of the decretal property.” 7. In my view the ratio of this judgment would clearly apply to the case on hand. Here a third party is making a claim (a) through the vendor against whom the right for specific performance is claimed by the Plaintiff, and (b) in respect of the property which is 9 chs-1051-11 the subject matter of such right of specific performance. It is the case of the Plaintiff that the vendor has done some act in breach of an obligation owed by him to the Plaintiff, i.e. to specifically perform their inter se contract, then surely the Plaintiff has a cause of action to challenge such act and join the third party whose alleged right arises out of such act. The right to relief arises against the third party in respect of the same cause of action, namely, the breach of an obligation owed by the vendor to the Plaintiff. To put it differently, the alleged right of the third party, which is sought to be challenged, arises out of this very breach. If such act had taken place prior to the suit, surely the Plaintiff could have arraigned the third party and challenged the agreement between the vendor and the third party. This is not a case where the third party claims independently and adversely to the vendor as in the case of Kasturi (Supra). Here the third party claims through the vendor. Any decree that may be passed in the suit against the vendor necessarily binds the third party who claims through the vendor and affects the third party’s alleged right. Similarly, the assertion of the third party’s alleged right directly affects the effectiveness of the decree in a suit as originally framed. That is one more reason why the third party can and ought to be joined as a party in the instant case. 8. As held by the Supreme Court in the case of Amit Kumar Shaw (Supra) the question is whether the right of a person may be effected if he is not added as a party. Alienee Pendente Lite has always been considered a necessary party to a suit because he is bound by the final decree that may be passed in the suit. Here the third party’s position can certainly be compared to Alienee Pendente Lite. It is also pertinent to note that the discussions of law as to the joinder of parties in both Kasturi (Supra) and Amit Kumar Shaw (Supra) are in 10 chs-1051-11 a context of an application by the third party. In the instant case the Plaintiff, who, in any event is the dominus litus, should have no difficulty in impleading the third party. 9. The facts in the case of Bharat K. Thakkar (Supra) are completely different from the facts of the case in hand. The facts of the case of Bharat K. Thakkar (Supra) need to be noticed carefully. In 1981, the Plaintiff (“Kiran Construction”) filed a Suit for specific performance of an agreement for development rights (“the Development Agreement”) against one Modern Development Corporation (“Modern”) and Jagannath Vaity and others (“Vaitys”). It was the case of Kiran Construction that Vaitys had entered into the Development Agreement with Modern, who, in turn, had transferred their rights thereunder and beneficial interest in the Suit land to Kiran Construction. The Development Agreement was subsequently terminated by Vaitys. The termination was challenged by Kiran Construction, who claimed specific performance of the Development Agreement. It appears that prior to the Development Agreement, Vaitys had entered into an Agreement for Sale of the Suit land (“Agreement for Sale”) with one K.L. Danani (“Danani”). Danani had in turn brought the benefits of the Agreement for Sale into a partnership firm called Swas Construction Co. (“Swas”). One Bharat Thakkar, a partner of Swas, who claimed to be admitted to the benefits of Swas originally as a minor, brought a suit against Danani and other partners seeking a declaration regarding the subsistence of Swas, retirement of Danani and other partners and in the alternative, for dissolution of partnership and accounts. It appears that Vaitys were also party to this suit, which was filed in 1980 i.e. prior to the Plaintiff’s Suit. During the pendency of Kiran Constructions’ Suit, the parties to the partners’ suit entered into a 11 chs-1051-11 comprehensive settlement which was reduced into consent terms and a consent decree was passed by the Court. By virtue of the consent decree so passed, Vaitys, inter alia, admitted execution of the Agreement for Sale with Danani and possession of the Suit property being with the firm of Swas. Kiran Construction thereafter filed Chamber Summons for amendment of their Suit by joining the partners of Swas and challenging the consent decree passed by the Court in favour of the continuing partners. Kiran Construction, thus, sought to challenge the title of the continuing partners of Swas, who were not concerned with the Development Agreement between Modern and Vaitys. It is pertinent to note that partners of Swas claimed an independent title and right to the Suit land, which had come into existence prior to the Development Agreement, the specific performance of which was sought by Kiran Construction. This independent title and possession were sought to be challenged by Kiran Construction in their Suit for specific performance against Modern and Vaitys by adding the partners of Swas as party Defendants. The Hon’ble Supreme Court was, therefore, pleased to hold that the amendments to the pleadings could not be allowed since the scope of a suit for specific performance could not be enlarged to convert the same into a suit for title and possession. The Hon’ble Supreme Court further observed that a third party or a stranger to the contract could not be added so as to completely change the nature and character of the suit. 10. The aforesaid observations of the Hon’ble Supreme Court shall not be applicable to the facts of the present case. 11. In the circumstances, I am of the view that the Respondent Nos. 1 to 7 are necessary parties to the suit and by joining them as 12 chs-1051-11 party defendant Nos. 7 to 13 the nature and character of the suit will not change in any manner as alleged by the Defendants. The Chamber Summons is therefore made absolute in terms of prayer clauses (a) and (b). The Plaintiffs to carry out amendments within a period of two weeks from today and serve an amended copy of the plaint to the newly added defendants within a week thereafter. All rights and contentions of the parties in Notice of Motion No.3398 of 2010 as well as in the suit are kept open. Place the Notice of Motion No. 3398 of 2010 for hearing and final disposal on 14th November 2011. [ S.J. KATHAWALLA, J. ]