Civil Revision No.2190 of 2010 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Civil Revision No.2190 of 2010 (O&M) Date of Decision: July 27, 2011 Randhir Singh .....Petitioner v. Karnail Singh and another .....Respondents CORAM: HON'BLE MR.JUSTICE RAM CHAND GUPTA Present: Mr.Deipa Asdhir Dubey, Advocate for the petitioner. Mr.Saurabh Garg, Advocate for the respondents. ..... RAM CHAND GUPTA, J. The present revision petition has been filed under Article 227 of the Constitution of India for setting aside order dated 25.2.2010, passed by learned Civil Judge, Senior Division, Kaithal, Annexure P4, vide which application under Order 1 Rule 10 of the Code of Civil Procedure (hereinafter to be referred as the `Code') filed by respondent no.2- Saheb Singh for impleading him as a defendant in the present suit was allowed. I have heard learned counsel for the parties and have gone through the whole record carefully including the impugned order passed by learned trial Court. Brief facts are that a suit for possession by way of specific performance of agreement to sell dated 4.2.2008 was filed by present petitioner-plaintiff against respondent no.1-defendant on the ground that he executed an agreement in his favour for a total consideration of Rs.13,00,000/- per acre and that Rs.5,00,000/- was received by him as Civil Revision No.2190 of 2010 (O&M) -2- earnest money and the sale deed was to be executed and registered on or before 16.5.2008. As petitioner-plaintiff was ready to perform his part of the contract, however, on refusal of respondent no.1-defendant to get the sale deed executed on receipt of remaining sale consideration, the present suit has been filed. Vide order dated 12.12.2008, respondent no.1- defendant was also restrained from further alienating the land in dispute. In the written statement filed by respondent no.1-defendant he admitted the execution of the agreement to sell in favour of petitioner-plaintiff, however, plea was taken that though he was ready to perform his part of the contract, but it was petitioner-plaintiff, who was not willing and ready to perform his part of the contract. Issues were framed. Part evidence of petitioner-plaintiff was also recorded when the present application was filed by respondent no.2- applicant on 9.1.2010 under Order I Rule 10 of the Code for impleading him as a party on the ground that respondent no.1-defendant had executed agreement to sell in his favour dated 18.1.2008 for a consideration of Rs.13 lacs per acre and also taken Rs.10 lacs from him as earnest money and that date of execution of sale deed was fixed as 17.6.2008. Further plea has been taken that respondent no.1-defendant in collusion with the present petitioner-plaintiff has forged and fabricated the alleged agreement dated 4.2.2008 and hence, he is a necessary party to be impleaded in this case. The application has been contested by present petitioner- plaintiff on the plea that the alleged agreement in favour of applicant is a forged one as the applicant is first cousin of respondent no.1-defendant and hence, the same is a result of collusion between both, i.e., respondent no.1- defendant and respondent no.2-applicant just to defeat the rights of present Civil Revision No.2190 of 2010 (O&M) -3- petitioner-plaintiff. Learned trial Court allowed application filed by respondent no.2-applicant for impleading him as a party by observing that though the suit of the plaintiff can be decided in the absence of the applicant but if the applicant is not arrayed as a party, as he is claiming prior agreement in his favour, the same would lead to multiplicity of litigation. Law is well settled that Court is having wide power to add any person as a party if it finds it necessary for any effective determination of the matter in dispute. For a person to be impleaded as a necessary party, he must be having right to some relief against such party in respect of the controversies involved in the proceedings. He can be impleaded as a party if no effective decree can be passed in the absence of a such party. Law on the point has been settled by a Bench consisting of three Hon'ble Judges of Hon'ble Apex Court in Kasturi v. Iyyamperumal and others, 2005(4) JT 565: 2005(2) RCR (Civil) 691: 2005(3) PLR 326: 2005(2) Civ.C.C.379: 2005 AIR (SC) 2813: 2005(6) SCC 733, wherein while dealing with the question of proper and necessary party in a suit for specific performance in terms of Section 19 of the Specific Relief Act, 1963, it was observed that necessary parties are those persons in whose absence no decree can be passed and proper parties are those persons whose presence before the Court would be necessary in order to enable the Court for effectually and completely adjudicate upon and settle all the questions involved in the suit. It has also been observed that persons stranger to the contract are neither necessary nor proper parties. Relevant paragraphs of the judgment read as under:- 5. Let us therefore confine ourselves to the Civil Revision No.2190 of 2010 (O&M) -4- provision of Order 1 Rule 10 sub-rule (2) of CPC which has already been quoted hereinabove. From a bare perusal of sub-rule (2) of Order 1 Rule 10 of the CPC, we find that power has been conferred on the Court to strike out the name of any party improperly joined whether as plaintiff or defendant and also when the name of any person ought to have been joined as plaintiff or defendant or in a case where a person 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. In the present case, since we are not concerned with striking out the name of any plaintiff or defendant who has been improperly joined in the suit, we will therefore only consider whether the second part of sub-rule(2) Order 1 Rule 10 of the CPC empowers the Court to add a person who ought to have been joined 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. 6. In our view, a bare reading of this provision namely, second part of Order 1 Rule 10 sub-rule (2) of the 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 Civil Revision No.2190 of 2010 (O&M) -5- constitutes rights and also regulates the liabilities of the parties. A purchaser is a necessary party as he would be affected if he had purchased with 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. 7. We may look to this problem from another angle. Section 19 of the Specific Relief Act provides relief against parties and persons claiming under them by subsequent title. Except as otherwise provided by Chapter II, specific performance of a contract may be enforced against :- (a) either party thereto; (b) 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; (c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant; (d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation; Civil Revision No.2190 of 2010 (O&M) -6- (e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company; Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract. 8. We have carefully considered sub-sections (a) to (e) of Section 19 of the Act. From a careful examination of the aforesaid provisions of sub-sections (a) to (e) of the Specific Relief Act we are of the view that the persons seeking addition in the suit for specific performance of the contract for sale who were not claiming under the vendor but they were claiming adverse to the title of the vendor do not fall in any of the categories enumerated in sub-sections (a) to (e) of section 19 of the Specific Relief Act. 9. That apart, from a plain reading of section 19 of the Act we are also of the view that this section is exhaustive on the question as to who are the parties against whom a contract for specific performance may be enforced. 10. As noted hereinearlier, two tests are required to be satisfied to determine the question who is a necessary party, let us now consider who is a proper party in a suit for specific performance of a contract for sale. For deciding the question who is a proper party in a suit for specific performance the guiding principle is that the presence of such Civil Revision No.2190 of 2010 (O&M) -7- a party is necessary to adjudicate the controversies involved in the suit for specific performance of the contract for sale. Thus, the question is to be decided keeping in mind the scope of the suit. The question that is to be decided in a suit for specific performance of the contract for sale is to the enforceability of the contract entered into between the parties to the contract. If the person seeking addition is added in such a suit, the scope of the suit for specific performance would be enlarged and it would be practically converted into a suit for title. Therefore, for effective adjudication of the controversies involved in the suit, presence of such parties cannot be said to be necessary at all. Lord Chancellor Cottenham in Tasker Vs. Small 1834 (40) English Report 848 made the following observations: "It is not disputed that, generally, to a bill for a specific performance of a contract for sale, the parties to the contract only are the proper parties; and, when the ground of the jurisdiction of Courts of Equity in suits of that kind is considered it could not properly be otherwise. The Court assumes jurisdiction in such cases, because a Court of law, giving damages only for the non-performance of the contract, in many cases does not afford an adequate remedy. But, in equity, as well as in law, the contract constitutes the right and regulates the liabilities of the parties; and the object of both proceedings is to place the party complaining as nearly as Civil Revision No.2190 of 2010 (O&M) -8- possible in the same situation as the defendant had agreed that he should be placed in. It is obvious that persons, strangers to the contract, and, therefore, neither entitled to the right, nor subject to the liabilities which arise out of it, are as much strangers to a proceeding to enforce the execution of it as they are to a proceeding to recover damages for the breach of it."[Emphasis supplied ] 11. The aforesaid decision in 40 E.R. 848 was noted with approval in (1886 ) 2 Ch. 164 (De Hogton v. Money ) at page 170 Turner, L.J. observed:"Here again his case is met by (1834) 40 E.R. 848 in which case it was distinctly laid down that a purchaser cannot, before his contract is carried into effect, enforce against strangers to the contract equities attaching to the property, a rule which, as it seems to me, is well founded in principle, for if it were otherwise, this Court might be called upon to adjudicate upon questions which might never arise, as it might appear that the contract either ought not to be, or could not be performed." 12. From the aforesaid discussion, it is pellucid that necessary parties are those persons in whose absence no decree can be passed by the Court or that there must be a right to some relief against some party in respect of the controversy involved in the proceedings and proper parties are those whose presence before the Court would be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit although Civil Revision No.2190 of 2010 (O&M) -9- no relief in the suit was claimed against such person.” A Division Bench of this Court in Krishan Lal and others v. Tek Chand and others, 1987 RLR 79: 1986 RRR 30, while dealing with a similar matter as to whether in a suit for specific performance, application filed for being impleaded as a party by persons, in whose favour there was a prior agreement to sell, can be allowed to be impleaded as a party. It was observed as under:- “The crucial test is that the presence of such a person should be necessary to settle the questions involved in the suit. In a suit for specific performance the questions involved in the suit are the execution of the contract for sale, the readiness and willingness of the plaintiff to perform his part of the contract and the refusal or inability of the defendant to execute the contract. For settling these questions the presence of strangers who are not parties to the contract is not necessary. It is not even proper. A person who claims title adverse to the parties to the contract is not a necessary or proper party. No relief is sought against such a person.” This Court in a subsequent judgment rendered in Saudagar Singh v. Harnek Singh, 1988(2) PLR 181, while placing reliance upon Krishan Lal's case (supra) held that a person in whose favour there was prior agreement to sell is not a necessary or proper party in a suit filed on the basis of subsequent agreement to sell as his rights would not be effected by subsequent agreement to sell. In the present case as well, petitioner-plaintiff who is dominus litis has filed a suit for specific performance of agreement to sell dated Civil Revision No.2190 of 2010 (O&M) -10- 4.2.2008 allegedly executed in his favour by respondent no.1-defendant, who had admitted execution of the said agreement. Respondent no.2- applicant is not a party to the said agreement. He is claiming prior agreement to sell in his favour allegedly executed by respondent no.1- defendant. Though he may take any legal proceedings, if so advised, against respondent no.1-defendant and, however, he is not at all a necessary party to be impleaded in the present suit for specific performance of agreement to sell filed by present petitioner-plaintiff against respondent no.1-defendant. Hence, learned trial Court has committed illegality and material irregularity in allowing application filed by respondent no.2-applicant for impleading him as a party merely on the ground that if he is not added as a party, it would lead to multiplicity of litigation. Hence, the impugned order cannot be sustained in the eyes of law. The present revision petition is accepted and impugned order passed by learned trial Court is set aside. 27.7.2011 (Ram Chand Gupta) meenu Judge Note: Whether to be referred to Reporter? Yes/No.