CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 1 }: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 26.04.2011 A.B. Motions Pvt. Ltd., Amritsar ...Petitioner Versus Debt Recovery Appellate Tribunal, New Delhi etc. ...Respondents CORAM: HON'BLE MR. JUSTICE RANJIT SINGH Present: Mr. Ashok Aggarwal, Sr. Advocate with Mr. Rajesh Mahajan, Advocate, for the petitioner. Mr. H.C. Dhall, Advocate & Mr. Amit Dhall, Advocate. for respondent No. 2. Mr. Vivek Verma, Advocate for Mr. Sanjeev Bhandari, Advocate for respondent No. 3. Mr. Ashwani Chopra, Sr. Advocate with Mr. Umang K. Khosla, Advocate. for respondent No. 4. Mr. J.S. Toor, Advocate. for respondent No. 7. ******* RANJIT SINGH J. A simple and straight looking prayer in regard to right of being impleaded as a party respondent has led to considerably CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 2 }: lengthy debate. The issue is whether auction-purchaser, who has deposited the entire amount of auction money, would be a necessary or proper party in a suit or proceedings where the auction itself is under question. The present petitioner, A.B.Motions Private Limited has filed three separate Civil Writ Petitions i.e. Civil Writ Petition No. 3834 of 2009 (A.B. Motions Pvt. Ltd. Versus D.R.A.T. Etc.), Civil Writ Petition No. 3826 of 2009 (A.B. Motions Pvt. Ltd. Versus D.R.A.T. Etc.) and Civil Writ Petition No. 3844 of 2009 (A.B. Motions Pvt. Ltd. Versus D.R.A.T. Etc.)., challenging the order of Debt Recovery Appellate Tribunal (for short, “DRAT”), which has set- aside the order of Debt Recovery Tribunal, allowing the prayer of the petitioner to implead them as party respondent in an execution objection pending before it. Central Bank of India filed a civil suit against Fine Spinning and Weaving Mills Private Limited for recovery of Rs.25,65,397.58 alongwith interest @ 18% in the year 1980. The suit was decreed by Civil Judge (Junior Division) on 13.11.1987. An execution application was filed on 19.4.1988. On a request made by decree holder-Bank, one house No.30, Maqbool Road, Amritsar, standing in the name of Mr.D.P.Seth was ordered to be attached This attachment was effected on the spot on 8.6.1988. At that time, it was recorded that Mr.D.P.Seth was not residing in the house for last 30 years. Projecting himself as owner of the property, Mr.D.P.Seth filed objections before the Executing Court on 13.6.1988. He never made any mention to the fact that the property was of HUF, which is CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 3 }: now projected to be in existence since 1969. Mr.D.P.Seth has mainly filed objection on the ground that residential house is exempt from attachment under Section 60(ccc) and the interest charged was excessive. The Court, after considering the objection, closed the evidence of the objector by order on 13.10.1995. The objections, thus, were deemed to be dismissed. During this time, the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (for short, “the Act”) came into force. The execution application was then transferred to Debt Recovery Tribunal, Jaipur (for short, “DRT”). The DRT vide its order dated 11.9.2003 issued a recovery certificate on the basis of a civil court decree as per the provisions of the Act. The Recovery Officer thereafter went ahead with the execution and since the certificate debtors did not repay the amount despite being called to do so, further proceedings were initiated. It is stated that debtors did not file any appeal against the recovery certificate. During this time, Culture Clothing Private Limited, Mr.Dharam Pal Seth and Dharam Pal Seth (HUF) again filed objections before Recovery Officer, though the first objection had been filed by Mr.Dharam Pal Seth alone. Recovery process was put to challenge through these objections but the said objections were also dismissed on 28.4.2005. Thereafter the property was put to auction, which took place on 30.4.2005. The petitioner-Company participated in the auction and was declared the highest bidder for Rs.4.32 crores. The entire amount stands deposited but the sale in favour of the petitioner is yet to be confirmed on account of stay CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 4 }: granted by DRT, Chandigarh for confirmation of the sale. The three objectors referred above had filed separate appeals against the order, dismissing their objections by the Recovery Officer. The petitioner was not impleaded as a party respondent in these appeals. The petitioner accordingly moved separate applications for being impleaded as a respondent. The objectors, however, withdrew their appeals on 3.5.2005 because of certain objection and filed three fresh appeals on 8.5.2005. The applications for impleadment were duly considered and all the three applications were allowed by the Presiding Officer,D.R.T., by a common order dated 8.9.2006. Against this order, the objectors filed three separate appeals before DRAT, New Delhi. During the pendency of these appeals, DRAT required of the objectors to file an application, supported by an affidavit that they would confine the challenge to the pre-auction proceedings. Copy of this order dated 4.7.2008 is on record of the writ petition as Annexure P-7. After obtaining this application, DRAT has quashed the impugned order passed on 8.9.2006, whereby the petitioners were ordered to be impleaded as party respondents by DRT. This order dated 15.9.2008 has now been challenged through these three separate writ petitions, which are now being disposed of through this common order. Counsel for the petitioner would plead that the petitioner, being an auction purchaser, who has deposited the entire amount of Rs.4.32 crores since 2005 would be a necessary and proper party as his interest would be direct in the property, it being successful auction-purchaser thereof. CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 5 }: The respondents in their respective replies would dispute this assertion made on behalf of the petitioner. It is urged that challenge has been now confined to pre-auction proceedings and the matter has been remitted to DRT for that purpose and accordingly the petitioner, whose interest is subsequent on account of the auction of the property can neither be a necessary nor a proper party. It is stated that order under challenge before DRT is one which is passed by Recovery Officer, dismissing the pre-sale objection filed by the respondents and, thus, the petitioner had no right to be heard at pre- auction stage. As per the respondents, the interest of the petitioner would arise only after the auction and not any time prior thereto. The learned counsel appearing for parties in all the writ petitions have cited number of precedents in support of their respective pleas. The main argument of the counsel for the petitioner is that the petitioner has a vital interest, which is direct and, thus, his prayer for being impleaded as a party respondent was rightly allowed by DRT and has wrongly been rejected by the DRAT. Counsel submits that to avoid multiplicity of the proceedings is the object of any litigation and so would be a valid consideration for allowing the impleadment under Order 1 Rule 10 CPC. In this regard, counsel seeks support from Savitri Devi Vs. District Judge, Gurakpur and others, AIR 1999 Supreme Court 976. To urge that the auction purchaser is a necessary party, the counsel has placed reliance on S.V.Kanakraj and others Vs. Vijaya Bank and others, 1987 Civil Court Cases 118. Reference is made to The Tata Iron and Steel Co. CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 6 }: Ltd. Vs. Abdul Ahad and others, AIR 1970 Patna 338, to contend that subsequent event after filing of the suit has to be taken into consideration for final adjudication. For this proposition, reference is also made to M/s Laxmi & Co. Vs. Dr.Anant R. Deshpande and another, (1973) 1 Supreme Court Cases 37, where it is laid down as to when the Court can take note of subsequent event. The counsel for the respondents, on the other hand, have referred to Narayan Chandra Garai and others Vs. Matri Bhandar Pvt. Ltd. And another, AIR 1974 Calcutta 358. It is held in this case that a person is not to be added as defendant merely because he or she would be incidentally affected by the judgment. The main consideration is Whether or not the presence of such a person is necessary to enable the Court to effectually and completely adjudicate upon and settle the question involved in the suit. Reference is made to Pranakrushna and others Vs. Umakanta Panda and others, AIR 1989 Orissa 148 to submit that transferee from the defendant pendente-lite is neither necessary nor a proper party inasmuch as he would be bound by a decree in the suit in view of the principle contained in Section 52 of the Transfer of Property Act. The counsel would urge that no right vests with the auction purchaser to say that he be added as a party. Reference is also made to Razia Begum Vs. Sahebzadi Anwar Begum and others, AIR 1958 Supreme Court 886, wherein it is held that a person may be added as a party where he should have a direct interest as distinguish from commercial interest in the subject matter of litigation. In support of these submissions, the counsel has relied upon CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 7 }: Meenaben Vipeshbhai Doshi and 18 Ors. Vs. Shatrushalyasinhji Digvijaysinhji Jadeja and 2 others, Special Civil Application No.22581 of 2006 and Ashok Kumar Vs. K.Sabarinathan and others, (2008) 4 MLJ 762. There is some sort of contradiction noticed in the submissions made by the counsel appearing for different respondents in these writ petitions though they all are having similar interest. Mr.A.K.Chopra, learned senior counsel has urged that the principle of Order 1 Rule 10 CPC would not strictly apply to decide the issue in such like cases under the Act whereas Mr.H.C.Dhall, appearing for respondent No.2, would canvass to the contrary by saying that these principles have to be kept in view. In fact, the precedents cited by both sides are on the basis of principles underlying Order 1 Rule 10 CPC. It is also to be noticed that decree under execution was passed by Civil Court initially and had been transferred to DRT for execution, when the Act came into force. In this background, one may not be in a position to ignore the principles enunciated under Order 1 Rule 10 CPC. Order 1 Rule 10 (2) CPC is worded in a manner that it would leave sufficient discretion with the Court to add or strike out a party. It is provided that the Court may at any stage of the proceeding either upon or without the application of either party and on such terms as may appear to the Court to be just order that name of any party improperly joined whether as plaintiff or defendant be struck out and that name of any person who ought to have been joined whether as plaintiff or defendant or whose presence before the Court may be CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 8 }: necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit be added. It is this later part of the relevant rule, which has been invoked by the parties to substantiate their respective pleas. A name of a party can, thus, be added where the Court is of the view that his presence may be necessary to effectually and completely adjudicate upon and settle all questions involved in the suit. The party can be added where such persons ought to have been joined, which is considered to be proper for adjudication. This field has been widely covered by various authoritative pronouncements, some of which have now been placed before me by the respective parties. The Hon'ble Supreme Court in Kasturi Vs. Iyyamperumal and others, (2005) 6 Supreme Court Cases 733, has laid down a test as to who is necessary party. As is held in this case, necessary party is the one where there must be a right to some relief against such party in respect of controversy involved in the proceedings or where no effective decree can be passed in his absence. The Hon'ble Supreme Court has also observed that question of jurisdiction of the Court to invoke Order 1 Rule 10 CPC to add a party shall not arise unless a party proposed to be added has direct and legal interest in the controversy involved in the suit. A person is legally interested in the answer to the controversy only if he can satisfy the Court that it may lead to a result that will effect him legally. In Razia Begum's case (supra), the rule of direct interest was laid down by the Hon'ble Supreme Court. It is observed that question of adding of parties under Order 1 Rule 10 CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 9 }: CPC is not one of initial jurisdiction of the Court but a judicial discretion, which has to be exercised in view of all facts and circumstances of a particular case. It is also observed that in some cases it may raise controversies as to the power of the Court in contradistinction to its inherent jurisdiction or in other words, of jurisdiction in limited sense in which it is used in Section 115 of the Civil Procedure Code. In fact, the Court has also observed that where subject matter of litigation is declaration as regard status or legal character, the rule of present or direct interest may be relaxed in a suitable case where the Court is of the opinion that by adding that party, it would be in a better position effectually and completely to adjudicate upon the controversy. In Kancherla Lakshminarayana Vs. Mattaparthi Syamala and others, 2008(2) RCR (Civil) 767, it is observed that auction-purchaser gets no right till confirmation of the sale and acceptance of auction bid does not amount to confirmation of sale. This has been so held while interpreting word `sold' in Order 21 Rule 58 CPC. It is observed that Clause of the Rule means a complete sale, including confirmation of auction. On this basis, it is urged that the petitioner has no right or direct interest and hence, would not be a proper or necessary party. In Ramesh Hirachand Kundanmal Vs. Municipal Corporation of Grater Bombay and others, (1992) 2 Supreme Court Cases 524, the Hon'ble Supreme Court has observed that the Court has a judicial discretion for addition of necessary party, which it has to exercise having regard to the facts and circumstances of the CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 10 }: case. In exercise of this discretion, the Court can direct a plaintiff, though dominus litis to implead a person as a necessary party defendant. It is in these parameters that the prayer of the petitioner is required to be considered. Undoubtedly, the petitioner has purchased this property in auction and the confirmation of the auction sale has not taken place because of the stay granted by DRT. The petitioner has already deposited a huge sum of amount to the tune of Rs.4.32 crores since 2005. The initial challenge was also raised to the auction proceedings, apart from the pre-auction procedure as was followed. The petitioner was ordered to be impleaded as party respondent. Before the DRAT, the respondents gave up their challenge to the auction and have undertaken to confine their challenge to pre-auction sale. On this basis, it is urged that the petitioner is neither necessary nor a proper party. To an extent, the respondents may be justified in urging that the petitioner is not a necessary party at the stage of pre-auction but now it would be difficult to ignore the subsequent events that have taken place. The objection was filed at the execution stage by one of the respondents, who failed to bring out the interest of others, which subsequently has been raised by these respondents to challenge the execution and the resultant auction. Some right of the petitioner has come into play and if it is now viewed that there was some infirmity in the procedure adopted at the stage of pre-auction, then the resultant effect thereof would directly fall on the auction, which was subsequently held and the amount, which has since been deposited and is lying deposited CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 11 }: for the last six years. Here the observations of the Hon'ble Supreme Court may come into play. The petitioner has come to acquire some legal interest in the controversy and any decision is going to effect him vitally. In that event, it may be appropriate to hold that the petitioner would atleast be a proper party as his presence would enable the Court to completely and effectively adjudicate and settle all questions involved. As observed in Razia Begum's case (supra), the judicial discretion available with the Court has to be exercised in view of all facts and circumstances of a particular case. Even the rule of direct interest, which has been laid down by the Hon'ble the Supreme Court, could be relaxed in a suitable case, where the Court is of the opinion that by adding the party, the Court would be in a better position to effectually and completely adjudicate upon all the questions. Any decision taken, which would have effect on auction, would give a cause of grievance to the petitioner and to effectually adjudicate the controversy, its presence would be necessary, even if it does not have any direct interest in the issue now going to be raised by the respondents. The Hon'ble Supreme Court in M/s Neyvely Lignite Corpn. Ltd. Vs. Special Tehsildar (Land Acquisition), Neyvely and others, AIR 1995 Supreme Court 1004, has made some observations in regard to the person interested. A beneficiary, which was a company in this case, for whose benefit the land was acquired, was held to be person interested and proper party and when not impleaded was held entitled to file appeal or writ petition against the enhanced award. It is observed that if the compensation is enhanced, the beneficiary is entitled to canvass its CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 12 }: correctness by filing an appeal or to defend the award of the Collector. If it is not made a party, it is entitled to seek leave of the Court to file appeal. Auction purchaser, especially in the facts of the present case, would certainly be person interested, as any order passed, even on the basis of violation of pre-auction procedure would lead to his interest being put to prejudice. The observation made by Hon'ble Supreme Court and relied upon by the respondents in Kancherla Lakshminarayana's case (supra) appears to have been made in somewhat different context. In this case, the conflicting rights on the basis of agreement to sell and that of the wife of the seller who had a decree in her favour on the basis of suit filed to restrain the seller from alienating the suit land, pursuant to which the land was put to auction were under consideration. Locus of the purchaser on the basis of agreement to sell to be a party was under consideration. He was held to have locus. It was observed that under such circumstances there could be a cloud on the property and a person like the appellant in that case, who had the obligation qua the property in shape of agreement to sale could not be held to be an utter outsider having no locus-standi to take the objection. It is in this context that attention of the Hon'ble Supreme Court was drawn to the case of Desh Bandu Gupta Vs. N.L.Anand & Rajinder Singh, (1994) (1) SCC 131, where it is observed that auction purchaser gets a right only on confirmation of sale and till then his right is nebulous and has only right to consideration for confirmation of sale to highlight that person on the basis of agreement to sell would have locus. This case may CIVIL WRIT PETITION NO. 3834 OF 2009 :{ 13 }: not exactly apply to the facts in this case and it may not be possible to hold that auction purchaser would not have any right to be heard. In S.V.Kanakraj's case (supra), the Court was dealing with the objection that the auction purchaser was a necessary party but had not been impleaded. While dealing with this issue, the Court has observed that in such cases, the auction purchaser is not only a formal party but also absolutely a necessary party. The action of the office of the Registrar of the Court, whereby auction purchaser was asked to be deleted from the array of respondents was held improper. The subsequent events that have taken place can simply not be ignored on the basis as urged by the respondents. Faced with this difficulty, the counsel appearing for respondent No.2 had to concede that the petitioner could be given a right to be present and watch the proceedings but not to raise plea or pleadings and it would suffice the requirement. In fact, it was almost conceded before me that the auction purchaser can not be said to be a stranger to the suit to deny him right to be heard. I am, thus, of the view that the order passed by DRAT, allowing the appeals and to quash the order dated 8.9.2006 is not legally sustainable. The same is set-aside. The prayer of the petitioner for being impleaded as party respondent in an issue pending before DRT is allowed. There shall, however, be no order as to costs. The writ petitions are accordingly allowed. April 26, 2011 (RANJIT SINGH ) khurmi JUDGE