THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR C.R.P Nos.1113 & 1114 of 2008 Date: 10.2.2011 Between: Indusind Bank Limited, having its office at Secunderabad Rep by its Asst.Vice President and Authorized Signatory Sri G.U.B Sharma, Secnderabad. ……….. Petitioner/proposed implead party And Smt. Gaddam Veena and K.Vijayakumar Chankaya. ……. Respondents. THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR C.R.P Nos.1113 & 1114 of 2008 COMMON ORDER: Since both these matters are connected and the parties are one and the same, they are being disposed of by this common order. The brief facts of the case are as follows: The 1st respondent herein Smt.Gaddam Veena is the owner and possessor of the house baring No.8-2-293/82/A/854-F on Plot No.854-F, Block-II, forming part of Sy.No.403/1 (old) and 120 (new) of Shaikpet Village and Sy.No.102/1 of Hakeempet Village, admeasuring 1035 square yards, consisting of ground, I and II floors, comprising of 12,000 square feet, situated in the approved layout of the Jubilee Hills Cooperative House Buildings Society Ltd., Road No.44, Jubilee Hills, Hyderabad, within the limits of Municipal Corporation of Hyderabad. Admittedly, the property has been situated in the heart of the city in a prime locality. Then Smt. Gaddam Veena executed a sale deed in favour of the 2nd respondent herein i.e., K. Vijayakumar Chankya in respect of the said property herein referred to as the suit schedule property on 7.12.2006 and registered sale deed vide document No.6113/2006 for a consideration of Rs.2.5 crores drawn on HDFC Bank Limited, Jubillee Hills Branch, Hyderabad from the 2nd respondent. Then K. Vijayakumar Chankya, the 2nd respondent herein, who is the Chairman and Managing Director of the Company of M/s. Digital P.C Technologies Limited, approached the petitioner i.e., Indusind Bank Limited, represented by its Assistant Vice President and Authorized Signatory, Sri G.U.B.Sharma for sanctioning a medium term loan of Rs.2.5 crores and offered to create an equitable mortgage of the suit schedule property along with another property. Accordingly, the petitioner-Bank sanctioned the loan amount and the 2nd respondent had withdrawn the same from the bank. Thus, within four days from the date of purchase of the property under a registered sale deed, dated 7.12.2006, the 2nd respondent was sanctioned a loan of Rs.2.5 crores by the bank and which he had withdrawn the same from the bank. Then the respondents 1 & 2 had entered into an agreement on 31.3.2007, whereby and whereunder the 2nd respondent herein agreed to reconvey the property to the 1st respondent on the ground that though K. Vijaya Kumar Chanakya, the 2nd respondent herein agreed to pay the total sale consideration amount to Smt.Gaddam Veena and prepared a cheque No.422651 for Rs.2.5 crores drawn on HDFC Bank, Jubillee Hills Barnch, Hyderabd, but subsequently, in spite of granting time by the 1st respondent, necessary amount could not be arranged and an option was given to the 1st respondent herein Smt. Gaddam Veena to cancel the registered sale deed as document No.6113/2006, dated 7.12.2006, after the expiry of the fifteen days time. Then, the 1st respondent herein filed a suit in O.S.No.305 of 2007 on the file of the Court of III Additional Chief Judge, City Civil Court, Hyderabad contending that the cheque issued by K. Vijaya Kumar Chankaya, the 2nd respondent herein was dishonored, though it was presented even after the expiry of the extension of time granted to the 2nd respondent herein. The said suit was filed seeking a direction to the 2nd respondent to execute a registered sale deed in favour of the 1st respondent in respect of the suit schedule property in terms of the suit agreement dated 31.3.3007. While the said suit was pending, the petitioner herein filed I.A.No.3918 of 2007 to implead it as a party in the suit. Similarly, I.A.No. 3919 of 2007 to implead them as parties in I.A.No.2209 of 2007 in O.S.No.305 of 2007. The learned III Additional Chief Judge, City Civil Court, Hyderabad through the impugned orders and by observing that the petitioner is a third party to the agreement and that the third party is not a necessary party in a suit for specific performance and that the mortgage of rights over the property would run with the land irrespective of the sale by the mortgager to any third person, dismissed the application. The main contention of the learned counsel for the petitioner- Bank is that the lower Court failed to see that there is a collusion between the respondents 1 & 2 and that the alleged sale deed dated 7.12.2006 was executed only for the purpose of cheating the petitioner-Bank. It is further observed that the petitioner is a necessary party to the suit and the petitioner can only appraise the trial Court about the collusion between the respondents 1 and 2 herein. It is further argued that the lower Court erred in not appreciating the fact that the 2nd respondent has validly credited mortgage in favour of the petitioner and that agreement of understanding dated 31.3.2007 for reconvening the property is executed with a malafied intention to defraud and to defeat the claim of the petitioner. The learned counsel for the 1st respondent submitted that the sale deed executed between the respondents 1 & 2 has become final because even a sale deed can be executed not only for the consideration, but if there is a promise to pay the consideration. Smt. Manijri S. Ganu, the learned counsel for the 1st respondent relied on the judgment of the Apex Court in case between KASTURI, APPELLANT V. IYYAMPERUMAL AND OTHERS, RESPONDENTS[1], submitted that the petitioner is not a necessary party and the bank cannot be allowed to come on record since it can pursue the matter independently on the equitable mortgage. The only point that arises for consideration is whether the petitioner is a necessary party or not and whether the impugned orders are sustainable? The facts are not in dispute. It is not in dispute that the schedule property originally belongs to the 1st respondent herein. It is also not in dispute that the 1st respondent executed the sale deed in favour of the 2nd respondent on 7.12.2006 after receiving a cheque bearing No.422651 for Rs.2.5 crores. Admittedly, within four days, the 2nd respondent basing on the sale deed executed by the 1st respondent approached the petitioner-Bank and obtained huge amount as loan. The recitals of agreement, dated 31.12.2007, go to show that if the cheque issued by the 2nd respondent is not realized, the 2nd respondent shall reconvey the property to the 1st respondent which was sold under the sale deed dated 7.12.2006. Alleging that the cheque issued by the 2nd respondent was bounced, the 1st respondent filed a suit seeking a direction to the 2nd respondent to execute a sale deed reconveying the property to her. There appears to be some force in the contention of the petitioner-Bank that the sale deed dated 7.12.2006 was obtained only for the purpose of cheating the petitioner- Bank for obtaining huge loan from the Bank and that there is collusion between the respondents 1 & 2 and when there is a collusion between the parties, the suit filed by the 1st respondent herein also appears to be collusive suit. Anyhow those facts have to be determined by the trial Court. The learned counsel for the petitioner-Bank has relied upon the judgment of the Madras High Court in case between A. V. K. MAYAPPA CHETTIAR V. N. K. L. KOLANDAIVELU CHETTIAR[2], wherein it was held as follows: “If in a suit for specific performance of a contract for sale it is found that the property agreed to be sold is mortgaged but the vendor contends that the mortgage is not binding on him being without consideration the just and proper course will be to implead the person who claims to be a mortgagee and to adjudicate on all questions of the validity of the mortgage in the suit itself so as to enable the purchaser to be free from all future risk and liability of the property so agreed to be bought from the person agreeing to sell, although there can be no objection to the general rule that persons who do not claim under the parties to a contract and are strangers to it should not be made parties and there is also the other rule that persons claiming adversely to both the parties to a suit for specific performance or for redemption of a mortgage ought not to be made parties.” The Apex Court in case between RAZIA BEGUM APPELLANT V. SAHEBZADI ANWAR BEGUM AND OTHERS, RESPONDENTS[3], while dealing with the application under Order 1, Rule 10 (2) of CPC observed that Judicial discretion has to be exercised in view of all the facts and circumstances of the case. In view of the above discussion, it is clear that the petitioner is a necessary party for adjudicating the dispute between the parties. All the connected issues such as whether there was collusion between the respondents 1 & 2 in executing the sale deed and subsequently entering into an agreement for reconveying the property and whether the sale deed dated 7.12.206 was executed without receiving the actual consideration for the purose of cheating the Bank can be decided if the petitioner is impleaded as a party. The main question whether the sale deed dated 7.12.2006 was executed without actually receiving sale consideration only for the purose of cheating the petitioner-Bank cannot be decided in the absence of the petitioner. Where in a case, it appears that there is a collusion between the parties by playing fraud to defeat the rights of a third party or for cheating third parity create documents and subsequently file collusive suits, I am of the considered view that the third party, which is going to be ultimately affected is a necessary party. Even if the petitioners have some other remedy of initiating independent proceedings it will not come in the way of allowing the petitioner to come on record. Merely because alternate remedy is there, it does not mean that the petitioner cannot be impleaded as a party to the suit. In view of the above discussion, the Civil Revision Petition is allowed with costs consequently, both the Interlocutory Applications filed by the petitioner before the lower Court to implead it as a party to the suit stands allowed. No order as to costs. Having regard to the facts and circumstances of the case, the lower Court is directed to take all necessary steps and to see that the trial is concluded as early as possible, preferably within nine months from the date of the receipt of a copy of this order. The parties are also directed to cooperate with the lower Court in disposing of the suit within the time fixed by this Court. ______________________ Justice B.Chandra Kumar Date:10.2.2011 mrb [1] AIR 2005 SUPREME COURT 2813 (1) [2] AIR 1926 Madras 597 [3] AIR 1958 SUPREME COURT 886