FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 1 of 38 Unreportable * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO (OS) No. 400 of 2007 FAO (OS) No. 514 of 2007 and FAO (OS) No. 324 of 2008 % Reserved on : November 18, 2008 Pronounced on : February 20, 2009 1. FAO (OS) No. 400/2007 Luv Kumar Kaul . . . Appellant through : Mr. P.S. Patwalia, Sr. Advocate with Mr. Amit Kumar, Mr. Ritesh Ratnam and Mr. Sumesh C. Jha, Advocates. VERSUS Tosh Apartments Pvt. Ltd. & Ors. . . . Respondents through : Dr. A.M. Singhvi and Mr. Sanjay Jain, Sr. Advocates with Mr. Mahendra Rana and Mr. M.S. Vinayak, Advocates for the respondent No.1/Tosh. Mr. Yakesh Anand with Mr. Sanjeev Anand, Mr. Kajal Chandra and Mr. Murari Kumar, Advocates for respondent No.2. Mr. Arjun Pant, Advocate for the respondent No.3. 2. FAO (OS) No. 514/2007 M/s. Bhagwati Developers Pvt. Ltd. . . . Appellant through : Mr. C. Mukund with Mr. Shashank Sharma, Advocates. VERSUS Tosh Apartments Pvt. Ltd. & Ors. . . . Respondents through : Dr. A.M. Singhvi and Mr. Sanjay Jain, Sr. Advocates with Mr. Mahendra Rana and Mr. M.S. Vinayak, Advocates FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 2 of 38 for the respondent No.1/Tosh. Mr. Yakesh Anand with Mr. Sanjeev Anand, Mr. Kajal Chandra and Mr. Murari Kumar, Advocates for respondent No.2. Mr. Arjun Pant, Advocate for the respondent No.3. Mr. P.S. Patwalia, Sr. Advocate with Mr. Amit Kumar, Mr. Ritesh Ratnam and Mr. Sumesh C. Jha, Advocates for respondent No.4. 3. FAO (OS) No. 324/2008 Vidur Impex & Traders Pvt. Ltd. . . . Appellant through : Mr. Dushyant Dave with Mr. Sandeep Sethi, Sr. Advocates Mr. Ashok Jain and Mr. Amit Kasera, Advocates VERSUS Tosh Apartments Pvt. Ltd. & Ors. . . . Respondents through : Dr. A.M. Singhvi and Mr. Sanjay Jain, Sr. Advocates with Mr. Mahendra Rana and Mr. M.S. Vinayak, Advocates for the respondent No.1/Tosh. Mr. Yakesh Anand with Mr. Sanjeev Anand, Mr. Kajal Chandra and Mr. Murari Kumar, Advocates for respondent No.2. Mr. Arjun Pant, Advocate for the respondent No.3. Mr. P.S. Patwalia, Sr. Advocate with Mr. Amit Kumar, Mr. Ritesh Ratnam and Mr. Sumesh C. Jha, Advocates for respondent No.4. Mr. C. Mukund with Mr. Shashank Sharma, Advocates FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 3 of 38 for the respondent No.5. CORAM :- THE HON‟BLE MR. JUSTICE A.K. SIKRI THE HON‟BLE MR. JUSTICE MANMOHAN SINGH 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the Judgment should be reported in the Digest? A.K. SIKRI, J. 1. Against the order dated 3.9.2007 passed by the learned Single Judge, these appeals have been preferred by different parties, though their grievance is not the same. It is for this reason that these appeals were heard together, which we are deciding by this common judgment. 2. Before we mention the applications in which the impugned order is passed, it would be necessary to give the narration of the pleadings in the main suit and the manner it has progressed in the last 15 years, as the suit was filed way back in the year 1993. 3. M/s. Tosh Apartments Pvt. Ltd. (respondent No.1 in these appeals) is the plaintiff in the original Suit No. 425/1993. It has filed this suit for specific performance, damages and injunction. Specific performance of Agreement to Sell dated 13.9.1988 between the plaintiff and Shri Pradeep Khanna (defendant No.1 in the suit and since deceased) is sought. Other two persons arrayed as defendants in the said suit are Shri Arun Kumar Bhatia as the defendant No.2 and Shri Luv Kumar Kaul as the defendant No.3. For the sake of clarify and to avoid any confusion, we are maintaining the same nomenclature as appear in the suit by describing the aforesaid parties as plaintiffs, defendant FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 4 of 38 No.1, defendant No.2 and defendant No.3 respectively. We may, however, point out that the LRs of Shri Pradeep Khanna have been brought on record and the expression defendant No.1 would include reference to them as well. 4. As per the averments made in the plaint, vide aforesaid agreement dated 13.9.1988, property bearing No. 21, Aurangzeb Road, New Delhi, constructed on a plot of land measuring 0.91 acres, i.e. 4418 sq. yds., was agreed to be sold by the defendant No.1 to the plaintiff for a total consideration of Rs.2.5 crores. The plaint avers events anterior to the execution of the said agreement but it is not necessary to go into all those details. Suffice is to point out the basic facts pleaded by the plaintiff, as noted by the learned Single Judge, which are as under: The Pleadings (a) It is the case of the plaintiff that the aforesaid property had been previously let out to Sudan Embassy by the defendant No.1. Since the defendant No.1 wanted to sell this property, efforts had to be made to get back the possession of the property. A No-Objection Certificate was also to be obtained from Income-Tax Authorities, as required under Chapter XX-C of the Income Tax Act, 1961 coupled with few more sanctions and permissions from the competent authority for completion of the sales transactions. Defendant No.1 though assured the plaintiff that to obtain no objection and other permissions was his obligation, yet defendant No.1 advised the plaintiff that it would be better if the plaintiff, in order to have early FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 5 of 38 transfer of the property, hire the services of defendant No.3 for speedy permission and No Objection Certificate and also for vacant possession of the property. (b) It is further the case of the plaintiff that the defendant No.3 also represented that he was capable to execute the aforesaid jobs and for completion of the said task, he demanded Rs.1.25 crores as his service charges. Defendant No.3 also insisted on being inducted as Addl. Director in the plaintiff company as in that capacity he represented that he would be in a better position to operate for obtaining possession of the property from Sudan Embassy as well as other sanctions. (c) The plaintiff believed in such a representation and pursuant thereto the defendant No.3 agreed to render his services and confirmed so by writing a letter to the plaintiff on 30.9.1988. (d) Pursuant to the said arrangements, the plaintiff paid two cheques bearing No. 297959 and 297960 of Rs.5 lacs each to the defendant No.3. (e) As regards sales transactions between the plaintiff and the defendant No.1, the plaintiff paid a sum of Rs.25 lacs to defendant No.1 on 13.9.1978 by bankers‟ draft issued by the Dena Bank, Karol Bagh. Details of the terms of agreement to sell entered into between the plaintiff and the defendant No.1 find mention in para 15 of the plaint. FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 6 of 38 (f) As regards the arrangements done with defendant No.3, it was agreed that defendant No.3 shall do all acts, deeds and things necessary and shall obtain sanction as well as obtain vacation of the suit property from the Sudan Embassy. (g) Despite having paid the aforesaid amounts to defendant No.3, neither the defendant No.1 nor defendant No.3 took steps for necessary permission, sanctions, etc. (h) Later on, the plaintiff came to know that defendant No.1 had taken the vacant possession of the property from Sudan Embassy and was in actual and vacant possession thereof. The plaintiff, thereafter, immediately approached defendant Nos. 1 & 3 and asked defendant No.1 to execute sale deed in its favour, but defendant Nos. 1 & 3 represented that though vacant possession of the property had been taken from Sudan Embassy, but necessary permission/No Objection Certificate had not yet been obtained and assured the plaintiff that as soon as the same was obtained, the sale deed will be executed. (i) To the utter surprise of the plaintiff, he came to know that defendant No.1 & 3, with evil designs, were negotiating and making efforts to sell the suit property on a much higher price that it was agreed with the plaintiff. 5. Along with the plaint, the plaintiff also preferred an application for interim injunction under Order XXXIX Rule 1 & 2 of the CPC in which ex-parte order dated 18.2.1993 was passed restraining FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 7 of 38 defendant No.1 & 3 from transferring, alienating and parting with possession of the suit property. However, even when this injunction was operating, the defendant No.1 executed six sale deeds in favour of six purchasers on 20.5.1997. These six purchasers are the closely held limited companies of Shri Mahesh Sharma, M/s. Haldi Ram Bhujia Bhandar, M/s. Panchvati Plantation Pvt. Ltd and M/s. Convenient Tours & Travels Pvt. Ltd. The events that occurred thereafter can be stated in capsulated manner in chronological order as they have bearing insofar as the present appeals are concerned: The Events: (i) 29.05.1997 – Six sale deeds by defendant No.1 though the injunction orders were operating. (ii) 15.09.1998 - IA No. 8145/1998 filed by the plaintiff seeking restraint against defendant Nos. 1 & 3 from handing over and delivering possession of the suit property to the said purchasers. - Defendant No.1 filed reply to this application stating that he had not executed any such sale deeds nor created any third party rights. He rather blamed that it was the handy work of the plaintiff and the vendees in collusion with each other. Defendant No.2 in his reply stated that he had already parted possession to the defendant No.3 on 12.5.1992. (iii) CCP No. 118/1998 filed by the plaintiff. In reply to this CCP, defendant No.1 again reiterated that he had not executed any sale deed. He also stated that he had filed a suit in January 1999 seeking FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 8 of 38 declaration that alleged sale deeds were forged and fictitious documents. (This suit was, however, later withdrawn by him). (iv) 15.09.1998 – The plaintiff moved IA No. 8146/1998 under Order XXVI Rule 9 read with Order XXXIX Rule 7 and Section 151 of CPC in Suit No. 425/1993 seeking inspection of the suit premises by a Local Commissioner to ascertain as to whether defendant No.1 and 3 are in possession of the premises or not. (v) 15.09.1998 - IA No. 8147/1998 filed by the plaintiff under Order XL Rule 1 read with Section 151 of the CPC seeking appointment of a Receiver (vi) 31.01.2000 – Ad interim injunction granted on 18.2.1993 was confirmed and the defendant No.3 was restrained from creating any third party interest in the suit property. (vii) 08.02.2001 – One Mr. Lodha, Advocate declaring himself to be Receiver appointed by the Calcutta High Court, sought to dispossess the defendant No.3 on 2.2.2001. The defendant No.3 moved IA No. 1211/2001 in Suit No. 425/1993 seeking ex-parte injunction against the defendant Nos. 4 to 13 therein from dispossessing the defendant No.3. The learned Single Judge of this Court allowed the application of the defendant No.3 and restrained the defendants from disturbing the possession of the defendant No.3 from the suit property. Counsel for the plaintiff got the statement recorded in the order of the learned Single Judge stating that the defendant No.3 is in possession of the property only as a caretaker. FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 9 of 38 (viii) 31.01.2000 – The learned Single Judge passed orders dated 31.1.2000 in IA No. 8146/1998 appointing the Local Commissioner to submit his report with regard to the possession of the suit premises. The learned trial court also recorded in its order the statement of the counsel for the plaintiff that the possession of the suit premises was given to the defendant No.3 on 12.5.1992. (ix) 10.02.2000 – The Local Commissioner submitted his report dated 10.2.2000 recording that the defendant No.3 is in actual physical possession of the entire suit property. (x) 22.01.2001 – The plaintiff filed IA No. 625/2001 under Order XXXIX Rule 1 & 2 read with Section 151 CPC seeking order to restrain the defendant No.3 and defendant No.1 from delivering the possession of the suit property to six vendees. The learned trial court, on the same date, also referred to the statement of counsel for the defendant No.1 made on 31.1.2000 regarding handing over of the possession of the property to the defendant No.3. (xi) 18.03.1997 - Six purchasers/vendees entered into an agreement to sell the property with Bhagwati Developers, Kolkata (hereinafter referred to as „Bhagwati Developers‟). This agreement contained an arbitration clause. Purported disputes were referred to the Arbitrator named therein, namely, Shri Debashish Kundu, Advocate, Calcutta High Court. (xii) 07.01.1999 - Arbitrator gave consent award directing six purchasers to hand over peaceful and vacant possession of the suit FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 10 of 38 property to Bhagwati Developers on or before 31.1.1999. Bhagwati Developers was also directed to make payment of Rs.1,20,90,000/- to the six vendees. (xiii) 17.8.2000 - Bhagwati Developers filed execution petition under Section 36 of the Act seeking execution of the award. In this execution petition, the Calcutta High Court passed orders dated 17.8.2000 appointing a Receiver with a direction to take physical possession of the suit property. (xiv) 22.1.2001 - According to the plaintiff, agreement to sell in favour of Bhagwati Developers, arbitration proceedings and execution petition were also collusive and fraudulent, in conspiracy with the defendant No.3. The plaintiff, therefore, filed IA No. 621/2001 in the Calcutta High Court seeking injunction against all these parties from taking possession of the said property by force through court order or decree. In this application, ex-parte ad interim injunction was passed restraining the defendant Nos. 1 & 3 from delivering possession of the suit property to the six purchasers and Bhagwati Developers. Thereafter, on 15.2.2001, the Calcutta High Court adjourned the proceedings sine die observing that the orders passed by it shall be subject to the orders that may be passed by the Delhi High Court in the suit. (xv) 3.9.2007 - Impugned orders passed by the learned Single Judge allowing IA No. 8147/1998 of the plaintiff for appointment of a FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 11 of 38 Receiver and appointed Mr. Rajesh Gupta, Advocate, as the Receiver. By reason of the same order, IA No. 7373 preferred by the defendant No.3 for amendment of the written statement is dismissed. (xvi) 18.9.2007 - On the strength of the orders dated 3.9.2007, Receiver visited the suit property and took possession. 6. Defendant No.3 has filed FAO (OS) No. 400/2007 whereby he has challenged the order of appointment of Receiver as well as rejection of his application for amendment. 7. FAO (OS) No. 514/2007 is filed by Bhagwati Developers. This appellant is also aggrieved by the appointment of Receiver on the ground that in the proceedings taken out by it in the Calcutta High Court, Receiver has already been appointed and, therefore, there could not have been such order passed by the Trial Court appointing any Receiver disregarding the orders of the Calcutta High Court, that too in the absence of Bhagwati Developers, which is not a party in the suit filed in the Delhi High Court, as the order directly and adversely affects Bhagwati Developers. 8. The six vendees, in whose favour purported sale deeds were executed on 20.5.1997, had filed application under Order I Rule 10(2) of the CPC for their impleadment. This application has, however, been dismissed by the learned Single Judge vide orders FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 12 of 38 dated 3.9.2007. Assailing this order, FAO (OS) No. 324/2008 is filed. 9. These are, thus, the subject matters of the three appeals. With this background, we take up each appeal separately for consideration. 10. FAO (OS) No. 400/2007 & FAO (OS) No. 514/2007 The Arguments Mr. Patwalia, learned counsel appearing for the defendant No.3 (appellant in this appeal), submitted that the defendant No.3 was put in possession of the suit property on 12.5.1992 with the specific consent and permission of the original owner, namely, defendant No.1. He was, thus, in such possession even before the filing of the suit and remained in possession till he was evicted by the Receiver appointed vide impugned orders. In order to show his possession, learned counsel referred to the pleadings, namely, para (b) of prayer clause. He also submitted that at various places and in various pleadings, the defendant No.1 had admitted that he had given possession of the premises to the defendant No.3 on 12.5.1992. Even the Local Commissioner appointed by the Court had found defendant No.3 to be in possession. He also referred to orders dated 8.2.2001 passed by the learned Single Judge in IA No. 1211/2001 whereby the respondents in the said application were restrained from disturbing the possession of the defendant No.3 (applicant in the said application) from the suit property. He, thus, submitted that admitted position was that the possession of the FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 13 of 38 appellant/defendant No.3 was acknowledged and he was given possession by the owner. Thus, such a possession was legal possession. Mr. Patwalia also submitted that the defendant No.3 was put in possession by the defendant No.1 because of the reason that defendant No.1 owed substantial amounts to the defendant No.3. According to him, defendant No.1 had approached him in February 1992 seeking his services for getting the suit property vacated from the Embassy of Sudan. For rendering these services, it was agreed that defendant No.1 shall pay defendant No.3 a sum of Rs.4 crores towards service charges and expenses to be borne by the defendant No.3 in getting the suit premises vacated. These terms were duly recorded and signed by the defendant No.1 as well as defendant No.3. It was also agreed by the defendant No.1, as Karta of HUF, that in the event of non-payment of the service charges to the defendant No.3, after the suit property is vacated, the defendant No.1 would deliver peaceful vacant possession of the property to the defendant No.3 and the defendant No.3 would be entitled to retain its possession without any charges and by way of security for the payment of the dues until such time the dues of defendant No.3 are paid. The suit premises was vacated by the Embassy of Sudan on 12.5.1992 and since the defendant No.1 was not in a position to pay the service charges to the defendant No.3, he was put in possession by the defendant No.1 and simultaneously deposited the original FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 14 of 38 supplementary lease deed, along with other documents such as pro- note and letter confirming deposit of original supplementary lease deed, by way of an equitable mortgage. Further, the defendant No.3 advanced to defendant No.1 and his wife a sum of Rs.1,75,16,669/-, which included payments made to tax authorities, and the said fact has been admitted by the defendant No.1 in Suit No. 161/1999 filed by him before this Court. As the suit property was in a dilapidated condition, at the instance of defendant No.1, the defendant No.3 carried out extensive repair work in the said property. On this basis, it is claimed that not only defendant No.3 has to recover substantial amount, which adds up to Rs.200 crores, after including interest accumulated thereupon, the appellant/defendant No.3 is in fact the mortgagee in possession. On the aforesaid premise, right to remain in possession of the suit premises is claimed on the following basis: (a) Defendant No.3 was given the possession of the suit premises by the owner himself, which was legal possession, and, therefore, he was not a trespasser. Such a person in settled possession could not be ousted, except in due course of law, i.e. by filing a suit and obtaining decree of possession. (b) As the defendant No.3 was a mortgagee in possession, his possession could not be disturbed without clearing the mortgage, i.e. paying him the entire amount which was due to him. FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 15 of 38 (c) There was no occasion to appoint a Receiver in the year 2007 in an application which was filed almost 9 years ago in the year 1998. More so, when there was no allegation regarding danger to the property or it being frittered away. 11. As far as rejection of the application for amendment of the written statement is concerned, we may note that the defendant No.3 wanted to add certain facts in the written statement on the plea that these were relevant facts but could not be incorporated in the written statement filed in 1993-94 by his earlier lawyer. The plea which the defendant No.3 wants to add by amendment is that the defendant No.1 had agreed to pay a sum of Rs. 4 crores to the defendant No.3 and requested him to help seeking vacation of the said property from the Embassy of Sudan for a consideration of Rs.4 crores as service charges. According to him, it was further agreed that in the event defendant No.1 failed to pay the said amount, he would be liable to pay interest on that amount @ 2% p.m. It was further agreed that on failure to pay the amount, the defendant No.1 would deliver actual vacant and peaceful possession of the suit property to defendant No.3, who would be entitled to retain the same without any charges thereof, by way of security for payment of its dues. As defendant No.3 succeeded in getting the property vacated, but defendant No.1 expressed his inability to pay the service charges or part thereof, he handed over actual vacant peaceful possession of the suit property to defendant No.3 as security for FAO (OS) Nos. 400/07, 514/07 & 324/08 nsk Page 16 of 38 repayment of that amount. That is how defendant No.3 is in possession of the premises. 12. While dismissing the application and refusing the permission to the defendant No.3 to incorporate the aforesaid pleas, the learned Single Judge has given the following reasons:- “3. I have heard learned counsel for the parties on this application. True, law of amendment is quite liberal and Courts ordinarily permits amendment provided such amendments are not mischievous in nature with a view to delay the legal proceedings and setting up entirely new case than the one pleaded earlier but in this case, I may say that written statement was filed way back in 1993 and good number of years have passed, but it never struck the defendant to make such amendment simply by putting the blame on earlier lawyer. Even otherwise, amendment which is sought to be made was well within the knowledge of defendant No.3. During all these years when proceedings were continuing that he was being termed as trespasser. What prevented him to explain his true position at the earliest is not explained at all. To me it seems that when arguments were being heard and the counsel for the parties put up their respective claims then it has struck the mind of defendant No.3 to apply for such amendment as it might work to his advantages. If at all he was in possession because of defendant No.1‟s consent he should have pleaded so at the earliest. Such belated amendment which is otherwise totally inconsistent to the stand taken earlier in the written statement cannot be allowed as in that case it would amount to take the case back to the year 1993 when the suit was filed. Therefore, this application has no merit, it being full of malice, the same is dismissed.” 13. Mr. Patwalia submitted that the approach of the