- 1 - VPH IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS No. 853 OF 2008 IN SUIT No. 2873 OF 2007 M/s. Rukhana Enterprises ... Plaintiffs Vs. M/s. Ashoka Marketing Ltd. & Ors. ... Defendants And M/s. Swastik Realtors ... Respondents Mr. H. Toor a/w Ms. Sudedha Sawant i/b Nainesh Amin, for the Plaintiff. Mr. Arif Doctor a/w C. D. Patel & Mr. S. Srisrishna i/b Kanga & Co. a/w Mr. Amit Jamsandekar i/b Kanga & Co., for Defendant No. 1. Mr. Vishal Kanade i/b N. Raja, for defendant Nos. 2 to 4. Mr. Snehal Shah a/w Mr. Jignesh Gor i/b Narayan & Narayan, for the respondent. CORAM : S. J. VAZIFDAR, J. DATE : NOVEMBER 3, 2009. ORAL JUDGMENT :- 1. This is the plaintiff’s Chamber Summons to amend the plaint by impleading the respondent as defendant No.5 and seeking - 2 - various reliefs against the respondent, including a declaration that a deed of conveyance dated 31st October 2007 executed between defendant No.1 and the respondent in respect of the suit property is null and void and not binding on the plaintiff and an order directing the respondent to carry out all acts for the transfer and vesting of the suit property, mentioned in the plaint and handing over possession of the suit property to the plaintiff. 2. The suit is filed for specific performance of an alleged agreement dated 28th July 2005 entered into between the plaintiff and defendant No.1, as allegedly modified. Defendant No.1 is the owner of the suit property. Defendant Nos. 2 to 4 are the heirs of the person in possession of the suit property. In this Chamber Summons it is not necessary to consider merits of the rival contentions of the parties. Suffice it to say that according to the plaintiff, the agreement between defendant No.1, one K.P. Subhash, the predecessor of defendant nos. 2 to 4 and the plaintiff for the sale of the suit property namely land admeasuring 3592 sq. yards area was modified on 20th July 2005 in a meeting in the office of the solicitors of defendant No.1. Pursuant thereto a draft agreement was prepared and finalized on 24th October 2005. A copy of the - 3 - alleged final agreement is annexed as Exhibit “A” to the plaint. It is the plaintiff’s case that the same was e-mailed to the Solicitors of defendant No.1 and was accepted by the defendants with minor changes as set out in the e-mail, annexed at Exhibit “B” to the plaint. After the alleged finalization of the agreement the said K. P. Subhash expired on 17th November 2005. Thereafter the defendants refused to perform the alleged agreement. 3. For the purpose of this Chamber Summons, I have proceeded on the basis that the plaintiff’s case for specific performance is that there was an alleged agreement for sale of the suit property entered into between the plaintiff, defendant no.1 and the predecessor of defendant nos. 2, 3 and 4, although the plaint, to say the least, lacks clarity. 4. The suit was filed on 20th September 2007. The plaintiffs took out Notice of Motion No. 4014 of 2007 for the usual interim reliefs in a suit for specific performance. By an affidavit-in- reply dated 12th March 2008, served on the plaintiffs on 28th March 2008, the defendants disclosed a purported deed of conveyance dated 31st October 2007 by which the property was transferred to - 4 - the respondent/proposed defendant No. 5, M/s. Swastik Realtors. It is contended that defendant nos. 2 and 4 being partners in the respondent firm, the respondent had knowledge of the suit agreement, and the said conveyance dated 31st October 2007 is therefore mala fide and entered into with an intention to defeat the plaintiff’s rights. By the proposed amendment the plaintiffs have therefore, challenged the deed of conveyance, contending the same to be null and void and not binding on them and have prayed for the cancellation thereof. 5. The question that falls for consideration in this Chamber Summons is whether the respondents being strangers to the suit transaction can be impleaded in this suit for specific performance thereof and whether the agreement, entered into by them with the defendants can be challenged in this suit. The question to my mind admits of any easy and an obvious answer in the affirmative. I however intend dealing with the question in some detail as I find a contention to the contrary being raised often in this Court based inter-alia on a misconstruction of the judgments of the Supreme Court and of this Court. 6. It was submitted on behalf of the defendants and the - 5 - respondent that the respondents cannot be impleaded in this suit as they were strangers to the suit transaction. It was submitted that the plaintiff must first obtain a decree for specific performance in this suit and thereafter file proceedings against the respondent. 7. I have answered the question in the affirmative both on precedent and on principle. As I will demonstrate, if the defendant’s submission is accepted it would virtually render the right to seek specific performance in such cases nugatory. At the very least it would involve a party seeking specific performance having to resort to an extraordinarily cumbersome and an unnecessarily complicated process which would be detrimental even to the defendants and the subsequent purchasers. 8. I considered this question in similar circumstances in Haroon Rashid Nizamuddin Umatiya Vs. Jivatlal Purtapshi [(2002)12 LJSOFT = (2003) 4 Bom. C. R. 346]. In that case too the suit was filed for specific performance of an agreement to sell property. The plaintiff took out a Chamber Summons for impleading the respondent who had purported to purchase the same property from the defendant by a subsequent agreement. In that case too reliance was placed on behalf of the defendant and the - 6 - respondent on the judgment of the Supreme Court in – Anil Kumar Singh Vs. Shivnath Mishra @ Gadasa Guru [1995 (3) SCC 147]. I distinguished the judgment on the ground that in the case before the Supreme Court the amendment sought to be introduced by the plaintiff, was only to implead the respondent as a party to the suit. No further reliefs were sought. In other words, the only relief which the plaintiff sought even after impleading the respondent, was a decree for specific performance of the agreement to sell. Referring to the judgment of the Supreme Court in Durga Prasad and Anr. Vs. Dipchand & Ors, [ 1954 SC 75] I observed that the only point at issue in a long line of judgments had been the nature of the decree that the plaintiff has to seek or be granted in the event of the defendant having entered into an agreement with another party in respect of the property which is the subject matter of the suit. Paragraph 7 of my judgment reads as under:- “7. Indeed Anil Singh's case itself indicates that it is permissible, in a suit for specific performance to add a subsequent purchaser and seek relief against him. This course has been adopted throughout. The only point at issue in a long line of judgments had been the nature of the decree that the Plaintiff ought to seek or be granted in - 7 - the event of the defendant having entered into an agreement with another party in respect of the property which is the subject matter of the suit. This controversy was resolved by the Supreme Court in Durga Prasad and another versus Deep Chand and others, AIR 1954 S.C. 75. In paragraph 42, the Supreme Court held thus:- "42. In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the Plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the Plaintiff and his vendor; all he does is to pass on his title to the plaintiff. This was the course followed by the Calcutta High Court in - Kafiladdin v. Samirddin, A.I.R. 1931 Cal. 67 (C) and appears to be the English practice. See Fry on Specific Performance, 6th Edn. page 90, paragraph 207; also - Potter v. Sanders, (1846) 67 ER 1057 (D). we direct accordingly". 9. I held that it cannot be said that a subsequent purchaser is not a necessary or a proper party in a suit for specific performance. The plaintiff may choose to adopt independent proceedings against a subsequent purchaser simultaneously or later but that would not disentitle the plaintiff from joining a subsequent - 8 - purchaser in a suit for specific performance. I further held that it would be appropriate in most cases to bring a composite suit as the same would avoid multiplicity of proceedings and unnecessary additional expenses. In paragraph 11, I held:- “11. The question therefore is whether the proposed amendment alters the real matter in controversy. It does not. In view of the Defendant having entered into an agreement subsequent to the Plaintiffs agreement, the Plaintiff has sought to obtain complete and effectual relief qua his agreement which continues to be the real matter in controversy. This he seeks to do by adding the Respondent as a Defendant and seeking certain reliefs qua the alleged subsequent agreement. If the Plaintiff succeeds it will be open to the Court not only to grant the reliefs specifically sought in the amendment but, either in exercise of its power under the omnibus prayer "(i) such other and further reliefs as the nature and circumstances as the case may require and (be) deemed, just and necessary ......." or even otherwise decree the suit in accordance with the judgment of the Supreme Court in Dugra Prasad's case. The amendment is a necessary consequence of the Defendant and the Respondents conduct. There is no change in the fundamental character of the suit. The basic foundation on which the suit was filed remains the same. Nor does the amendment seek to - 9 - substitute an existing cause of action or the subject matter of the suit.” 10. I would venture to amplify and illustrate what I held in that case. Inherent in a suit for specific performance of an agreement to sell, is the plea that the defendant is bound to sell the property only to the plaintiff. If it were not so, the relief of specific performance would not and could not be sought in the plaintiff’s favour. This I think is axiomatic. There may well be cases where the plaintiff may seek damages either in lieu of or in the alternative to specific performance. Specific performance however could never be sought if the plaintiff did not contend that the property can only be sold to him. This plea though directed against the vendor/defendant is with respect to his dealings with any party qua the property which is the subject matter of the suit for specific performance. Now, when the defendant contrary to his obligation which the plaintiff says he must perform, enters into an agreement with another, this very plea is also in effect directed against such other party/subsequent purchaser. Indeed, if the plaintiff is to succeed in obtaining specific performance, he must succeed in establishing the plea also against the subsequent purchaser. A mere - 10 - declaration or decision on the issue that the plaintiffs’ agreement is valid and subsisting, is not sufficient to obtain complete relief. The plaintiffs agreement may be valid and subsisting. A subsequent agreement by the vendor with another party may also be valid. The plaintiff must necessarily therefore, also establish that his agreement is entitled to priority over that of the subsequent purchaser in order to obtain the relief of specific performance. Whether he does so in an action brought by him or in an action by the subsequent purchaser is a different matter. Also whether he does so in the same suit filed against the defendant/vendor or in a separate action is another matter. The fundamental plea namely that the defendant having entered into a valid agreement with the plaintiff which is subsisting is not entitled to deal with another, is common to the plaintiffs’ case qua the defendant/vendor and such other/subsequent purchaser. This in fact is one of the essential matters in controversy. It is not altered by impleading the subsequent purchaser. 11. In contrast where the other party claims adversely to the vendor such a common issue or question does not and cannot arise. That is a dispute not between the plaintiff and such other - 11 - party but between the vendor and such other party. There is nothing common between the two disputes. That the plaintiff must, if granted specific performance, succeed in an action by or against such person claiming adversely to the vendor is another matter altogether. 12. In paragraph 12 of the said judgment I held that:- “12. As I have already held, it would have been open for the Plaintiff, in view of the long line of cases including the judgment of the Supreme Court in Durga Prasad's case to seek such reliefs in the plaint as filed. The Plaintiff was however not aware of the subsequent agreement dated 8th November, 2001 when the suit was filed on 24th November, 2001. It would be inequitable and improper then to deny the Plaintiff leave to amend. I have no hesitation in rejecting Mr .Shah's submission that the Plaintiff must in these circumstances first obtain a decree in this suit and thereafter file a suit against the Respondent on the basis thereof. Such a course would not only be contrary to law and result in multiplicity of proceedings but would make a mockery of the process of law.” 13. It was suggested that this is of no concern to the Court. If the plaintiff must adopt a multiplicity of proceedings, he must do so. It was submitted that the Plaintiff must first obtain a decree for - 12 - specific performance and only thereafter adopt separate proceedings against the subsequent purchaser. 14. I do not agree. Let me amplify the point I made about multiplicity of proceedings if the plaintiff is compelled to file an independent action in respect of the agreement between the vendors and the subsequent purchaser. In such an action too the plaintiff would first have to establish the validity of his agreement with the vendor before establishing that his agreement is entitled to priority over the agreement between his vendor and the subsequent purchaser. In other words, the plea that I referred to earlier as inherent in a suit for specific performance of an agreement to sell namely that the defendant is bound to sell the property only to the plaintiff, would have to be established yet again. This is for the obvious reason that while the decision in this regard in the suit against the vendor may operate as res judicata or issue estoppel against the vendor in the subsequent suit, the finding would not bind the subsequent purchaser who was not a party to the previous suit. The plaintiff would thus be subjected not merely to adopting a multiplicity of proceedings but to a multiplicity of occasions when he must establish the very same facts and issues in his favour. That - 13 - this must be avoided if possible is held by the judgment of the Supreme Court in Sumatibai & Ors. Vs. Paras Finance Co. [(2007) 10 SCC 85] (paragraph 14) which I will refer to later. 15. If the Plaintiff is compelled to adopt the course suggested by the Defendant namely of first obtaining a decree for specific performance and thereafter proceeding against the subsequent purchaser, it would render the provisions of the Specific Relief Act entitling a purchaser to seek specific performance of an agreement nugatory, lead not merely to multiplicity of proceedings but unnecessarily complicate and confuse the entire dispute and possibly result in the dispute having to be litigated in eternity. Take for instance a case where a suit for specific performance is filed and thereafter the Defendant enters into a further agreement. It surely cannot be suggested that the Plaintiff has no remedy against the third party unless he first obtains a decree for specific performance against the vendor. I say so on principle and not merely because of the laws delays. Even if the suit were to be heard in the minimum possible time, the Plaintiff’s rights could be frustrated by the vendor/Defendant merely entering into an agreement with a third party even before an - 14 - injunction may be sought against him. If the Defendant’s submissions were to be accepted, by the time the Plaintiff obtains a decree for specific performance and on the basis thereof files an action against the subsequent purchaser, the subsequent purchaser may well frustrate the action at any stage in turn by entering into an agreement assigning his rights in favour of other parties who in turn could do the same. If the Defendant’s submission is to be accepted the Plaintiff would of necessity have to keep filing suits ad-infinitum. The Plaintiff must obviously have a remedy. If he is not entitled to implead the subsequent purchaser in the suit for specific performance, his only other option would be to apply for a Court Receiver in his suit for specific performance with a direction to the Court Receiver to file a suit against the subsequent purchaser. In such a suit, the Plaintiff would have to establish yet again his rights against the vendor who is a party Defendant to the prior suit. I see therefore no reason to compel such litigation which would only burden the parties to the litigations in every manner and can have no benefit whatsoever. - 15 - 16. In Kasturibai Vs. Iyyamperumal & Ors. [(2005) 6 SCC 733], a Bench of three learned judges of the Supreme Court considered whether in a suit for specific performance of a contract for sale of property, instituted by a purchaser against a vendor, a stranger or a third party to the contract, claiming to have an independent title and 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 purchaser is a necessary party as he would be affected if he had purchased with or without notice of the contract. The Supreme Court, however, held that a person who claims “adversely to the claim of the vendor” is not a necessary party. For this reason the Supreme Court held that respondent nos. 1 and 4 to 11 were not necessary parties as they purchased the property from the vendor after the suit contract was entered into and had based their claim on an independent title and possession, albeit, in respect of the suit property. In paragraph 7, 8 and 9 the Supreme Court held :- “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 - 16 - 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 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 contro- versies involved in the proceedings; (2) no effective decree can be passed in the absence of such party. (emphasis supplied) 8. 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 en- forced against: “19. (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a trans- feree for value who has paid his money in good faith - 17 - 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; (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.” 9. We have carefully considered sub-sections (a) to (e) of Section 19 of the Act. From a careful examination of the aforesaid provisions of clauses (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 - 18 - Act.” Paragraph 7 clearly establishes that the purchaser is a necessary party. This is clear also from section 19(b) of the Specific Relief Act. There is no dispute that in the present case the respondent claims a right or title arising subsequent to the contract “under” the vendor/defendant. While commenting on paragraph 11 of the judgment in Haroon Rashid’s case (supra), I amplified the need to distinguish the case of a subsequent purchaser from the vendor and a person claiming adverse to the vendor. 17. It was submitted that the Supreme Court had held as an absolute proposition of law that a subsequent purchaser can never be impleaded in a suit for specific performance. The submission is not well founded. In fact the Supreme Court has clearly held the contrary in paragraph 7 of the judgment in Kasturi’s case. This is further clear from the judgment of a Bench of two learned judges of the Supreme Court in Sumtibai & Ors. Vs. Paras Finance Co. [(2007) 10 SCC 82] which considered the judgment in Kasturi’s case. In this case the parties who sought to implead themselves as defendants in the place of their deceased father had in fact been shown to be co-owners on - 19 - the record. They therefore, fell within the ambit of Order 22, Rule 4(2) of C.P.C. Further the registered sale-deed in respect of the property in favour of their father also showed their names. Although the facts in this case are different, it is important to note the following observations of the Supreme Court- “9. Learned counsel for the respondent relied on a three- Judge Bench decision of this Court in Kasturi v. Iyyamperumal [(2005) 6 SCC 733]. He has submitted that in this case it has been held that in a suit for specific performance of a contract for sale of property a stranger or a third party to the contract cannot be added as defendant in the suit. In our opinion, the aforesaid