ASIAN HOTELS (NORTH) LTD. versus ALOK KUMAR LODHA & ORS
[2022] 12 S.C.R. 124, Supreme Court of India, 2022
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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ASIAN HOTELS (NORTH) LTD.
v.
ALOK KUMAR LODHA & ORS.
(Civil Appeal Nos. 3703-3750 of 2022)
JULY 12, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Civil Procedure Code, 1908 – Or.I, r.10 & Or.VI, r. 17 –
Amendment of Plaint – Joinder of Necessary and Proper Party –
The appellant granted licenses for individual shops to various
shopkeepers including respondent – Notice of revocation of license
was served by the appellant to the respondents – A suit for
declaration was instituted by the respondents for declaration that
the license granted in respect of shop/ premises is irrevocable and
perpetual – During the pendency of the aforesaid suit, the respondent
filed application for amendment of the plaint for challenging various
mortgages created by the appellant, in favour of certain banks –
Another application was also filed seeking to implead the Banks
and the Financial Institutions as defendant – Both the applications
were allowed by the High Court – On appeal, held: By the purported
amendment, the original plaintiffs have now prayed to declare that
all the mortgages/charges created on the premises as void ab-initio –
Even such a prayer can be said to be too vague – How the
respondents can now can be permitted to challenge various
mortgages/ charges created from time to time – Now after a number
of years, respondents cannot be permitted to challenge the
mortgages/charges created on the entire premises including shops –
The
High Court while allowing the amendment application has not
properly appreciated the fact and/or considered the fact that as
such, by granting such an amendment the nature of the suits will be
changed – It would also result in misjoinder of causes of action –
The principle that the plaintiffs is the dominus litus shall be applicable
only in a case where parties sought to be added as defendants are
necessary and/or proper parties – Plaintiffs cannot be permitted to
join any party as a defendant who may not be necessary and/or
proper parties – Therefore, in a suit challenging revocation of the
respective licenses, the plaintiffs cannot be permitted to challenge
[2022] 12 S.C.R. 124
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the respective mortgages/charges created on the entire premises as
void ab-initio.
Allowing the appeals, the Court
HELD: 1. At the outset, it is required to be noted that
mortgages have been created in favour of different mortgage
banks/financial institutions since 1982 onwards which have been
extended and/or rolled over, refinanced and replaced from time
to time. The mortgages are created not only with respect to the
shops/premises occupied by the original plaintiffs, but with respect
to the entire premises/Hyatt Residency Hotel. The respective
original plaintiffs are granted licenses for individual shops which
are part of entire premises. According to the appellant, first
mortgage was created in the year 1982. At that time, none of the
original plaintiffs were license holders. They have been granted
license for individual shops at the premises from 1983 onwards
to various shopkeepers including respondents-original plaintiffs.
The appellant, being owner – licensor, has terminated the
respective licenses granted in favour of respective license holders
– original plaintiffs. The revocation of the license is subject matter
of respective suits. Therefore, the only controversy/issue in the
respective suits is with respect to revocation of the respective
licenses. By way of an amendment of the plaint the plaintiffs now
want to challenge the mortgages/charges on the entire premises
created by the appellant. As such, the original plaintiffs are not at
all
concerned with the mortgages created by the appellant which
is required for the continuous development of the hotel. By the
purported amendment, the original plaintiffs have now prayed to
declare that all the mortgages/charges created on the premises
as void ab-initio. Even such a prayer can be said to be too vague.
How the original plaintiffs can now can be permitted to challenge
various mortgages/charges created from time to time. At this
stage, it is required to be noted that even under the License
Agreement (clause 13) the Licensor shall have the right to create
charges/mortgages as and by way of first charge on its land,
premises and the buildings (including shops) constructed and to
be constructed, in favour of financial institutions and banks as
security for their terms loan advanced/to be advanced to the
licensor for the completion of its hotel project. Therefore, in fact
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS.
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original plaintiffs being the licensee are aware that there shall be
charges/mortgages on the entire premises and the buildings
including the shops. In that view of the matter, now after a number
of years, plaintiffs cannot be permitted to challenge the
mortgages/charges created on the entire premises including
shops. [Para 7][136-E-H; 137-A-D]
2. The High Court while allowing the amendment
application in exercise of powers under Order 6 Rule 17 of the
Code of Civil Procedure has not properly appreciated the fact
and/or considered the fact that as such, by granting such an
amendment and permitting plaintiffs to amend the plaints
incorporating the prayer clause to declare the respective charges/
mortgages void ab-initio, the nature of the suits will be changed.
As per the settled proposition of law, if, by permitting plaintiffs
to amend the plaint including a prayer clause nature of the suit is
likely to be changed, in that case, the Court would not be justified
in allowing the amendment. It would also result in misjoinder of
causes of action. From the impugned order passed by the High
Court, it appears that what has weighed with the High Court is
that plaintiffs, is the dominus litus and heavy reliance is placed in
the case of Kasturi. However, the principle that the plaintiffs is
the dominus litus shall be applicable only in a case where parties
sought to be added as defendants are necessary and/or proper
parties.
Plaintiffs cannot be permitted to join any party as a
defendant who may not be necessary and/or proper parties at all
on the ground that the plaintiffs is the dominus litus. In view of
the above and for the reasons stated above, High Court has
committed serious error in allowing the application under Order
6 Rule 17 and under Order 1 Rule 10 of the Code of Civil
Procedure by permitting original plaintiffs to amend the plaint
including prayer clause by which, the plaintiffs have now prayed
to declare the charges/mortgages on the entire premises as void-
ab initio and permitting the original plaintiffs to join / implead the
respective banks/financial institutions as party defendant. The
alleged rights of the plaintiffs as perpetual license holders are
yet to be adjudicated upon. The licenses of the original plaintiffs
have been revoked. Therefore, in a suit challenging revocation
of the respective licenses, the plaintiffs cannot be permitted to
challenge the respective mortgages/charges created on the entire
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premises as void ab-initio. It is the case on behalf of the appellant
that apart from the fact that first charge was created in the year
1982, thereafter said mortgages have been rolled over, refinanced
and replaced from time to time for ensuring the continuous
development of the Hotel Project/premises which requires
consistent upkeep, renovation and upgradation from time to time.
Under the circumstances, the impugned orders passed by the
High Court allowing the application under Order 6 Rule 17 and
under Order 1 Rule 10 of the Code of Civil Procedure are
unsustainable, both on facts as well as on law. [Para 8-10][137-
E-H; 138-A-F]
Kasturi v. Iyyamperumal & Ors. (2005) 6 SCC 733 :
[2005] 3 SCR 864 - held inapplicable.
Revajeetu Builders and Developers v. Narayanaswamy
and Sons & Ors. (2009) 10 SCC 84 : [2009] 15 SCR
103; Ashutosh Chaturvedi v. Prano Devi (2008) 15 SCC
610 : [2008] 6 SCR 801; T. N. Alloy Foundry Co. Ltd v.
T. N. Electricity Board and Ors. (2004) 3 SCC 392 :
[2004] 2 SCR 352; L. J. Leach & Co Ltd v. M/s. Jardine
Skinner & Co. AIR 1957 SC 357 : [1957] SCR 438;
Rajesh Kumar Aggarwal & Ors v. K. K.Modi & Ors.
AIR 2006 SC 1647 : [2006] 3 SCR 175 - referred to.
Case Law Reference
[2005] 3 SCR 864
held inapplicable
Para 3.6
[2009] 15 SCR 103
referred to
Para 3.6
[2008] 6 SCR 801
referred to
Para 5.11
[2004] 2 SCR 352
referred to
Para 5.11
[1957] SCR 438
referred to
Para 5.11
[2006] 3 SCR 175
referred to
Para 6.3
CIVIL APPELLATE JURISDICTION:
Civil Appeal Nos. 3703-
3750 of 2022.
From the Judgment and Order dated 15.09.2021 of the High Court
of Delhi at New Delhi in I.A. No. 5173-5174 of 2021 in C.S. (Comm.)
No.189 of 2020.
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS.
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Mukul Rohatgi, Sr. Adv., Karan Bharihoke, Siddhant Kumar,
Ms. Misha Rohatgi, Siddhant Sharma, Ms. Akansha Kaul, Ms. Manya
Chandok, Advs. for the Appellant.
Avishkar Singhvi, Nipun Katyal, Naved Ahmed, Abhikalp Pratap
Singh, Rahul Gupta, Arav Kapoor, Shekhar Gupta, Nitin Saluja, Advs.
for the Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1.0.  As common question of law and facts arise in this group of
appeals and as such arise out of the impugned common judgment and
order passed by the High Court, all these appeals are decided and disposed
of together by this common judgment and order.
2.0. Feeling aggrieved and dissatisfied with the impugned common
judgment and order dated 15.09.2021 passed by the High Court of Delhi
in respective applications in respective Commercial Suits under Order 1
Rule 10 and Order 6 Rule 17 of the Code of Civil Procedure, by which,
all the aforesaid applications submitted on behalf of the original plaintiff,
the High Court has allowed the said applications and has permitted the
original plaintiff to amend the respective suits and has also ordered
impleadment of mortgagees (Banks), original defendant no.1 - Asian
Hotels (North) Limited has preferred the present appeals.
3.0. For the sake of convenience, the impugned order passed by
the High Court in IA No.5173-5174 of 2021 in Civil Suit (Commercial)
No.189 of 2020 shall be treated as the lead matter. Therefore, for the
sake of convenience and to avoid any repetition, facts arising out of Civil
Suit (Commercial) No.189 of 2020 leading to the present appeals are
narrated, which are as under:
3.1. That the appellant herein granted licenses for individual shops
at the premises from 1983 onwards to various shopkeepers including the
respondent herein – original plaintiff. On 29.5.2020 the original plaintiff
as a licensor served a revocation of license notice. Similar notices were
also served on other licensees. Therefore, the respective licensees had
instituted the respective suits before the Delhi High Court against the
appellant – licensor – Asian Hotels (North) Limited seeking a decree of
declaration that the license in favour of the plaintiff in respect of shop/
premises is irrevocable and perpetual and the purported revocation of
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the License by the defendant is illegal, void and bad in the eyes of law. A
decree is also sought for a declaration declaring that the plaintiff has
unfettered right to occupy and use the said premises/shop under the
irrevocable license till the documents of transfer/conveyance are executed
by the defendant.
3.2. That the appellant – defendant appeared before the High
Court. The defendant raised verbal objection that the suit is not
maintainable in view of Section 8 of the Arbitration and Conciliation
Act, 1996. The High Court vide order dated 21.07.2020 dismissed the
suits with liberty to the parties to avail remedy of arbitration in view of
the arbitration clause in the license agreement on the verbal plea. The
order passed by the High Court dismissing the suits with the above liberty
was a subject matter of appeal before the Division Bench. The Division
Bench allowed the said appeal and remanded the matter. Liberty was
granted to the defendant to prefer an application under Section 8 of the
Arbitration and Conciliation Act, 1996. It is reported that such an
application is filed by the defendant and is pending adjudication.
3.3. During the pendency of the aforesaid suit, the plaintiff filed
present IA No. 5174 of 2021 under Order 6 Rule 17 of the Code of Civil
Procedure seeking amendment of the plaint, by which, the plaintiff
proposed to amend the suit challenging various mortgages created by
the defendant hotel, in favour of certain banks. In the said
application, it
is the case on behalf of the plaintiff that the mortgages created by the
defendant in favour of the Financial Institutions/Banks are illegal and
void ab-initio to the extent it encumbers the interest held by the plaintiff
in the said premises from 2.9.1991. Therefore, consequential amendments
were sought to be made pertaining to the rights of the plaintiff. By the
said application, prayer clause is also sought to be amended seeking a
decree of declaration against the defendant that the mortgages including
the mortgage deeds which have been executed in favour of the Banks is
void and illegal to the extent it encumbers any right, title and interest of
the plaintiff in the subject premises.
3.4. Another application, being IA No.5173 of 2021 was also filed
by the plaintiff under Order 1 Rule 10 of the Code of Civil Procedure
seeking to implead the Banks and the Financial Institutions as defendant
nos. 2 to 7.
3.5. Both the aforesaid applications were opposed by the defendant
on the ground that (i) the mortgage in question was in 1980’s; there is no
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS. [M. R. SHAH, J.]
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challenge to the said mortgage in the present suit and therefore, the
same cannot be permitted now; (ii) the plaintiff has no right against the
banks and financial institutions and therefore, amendment application
does not lie; (iii) that the prayer of the plaintiff for the relief of declaration
and rights in the suit property have to first be adjudicated before any
relief can be claimed against the proposed defendants no.2 to 7 and it is
only after the plaintiff is successful in claiming any right in the property
that the issue of adjudication of the rights of the third parties would arise;
(iv) that in view of the arbitration clause in the agreement between the
parties, the suit is liable to be stayed for which an appropriate application
has been filed by the defendant, which is pending adjudication.
3.6. By the impugned common judgment  and  order  and mainly
relying upon the decision of  this  Court  in  the case of Kasturi v.
Iyyamperumal & Ors reported in (2005) 6 SCC 733 and in the
case of Revajeetu Builders and Developers vs. Narayanaswamy
and Sons & Ors reported in (2009) 10 SCC 85, the High Court has
allowed both the applications i.e. application under Order 6 Rule 17 of
the Code of Civil Procedure and application under Order 1 Rule 10 of
the Code of Civil Procedure.
3.7. Feeling aggrieved and dissatisfied with the impugned common
order passed by the High Court allowing applications under Order 6 Rule
17 of
the Code of Civil Procedure and under Order 1 Rule 10 of the
Code of Civil Procedure, original defendant no.1- licensor has preferred
present appeals.
4.0. Shri Mukul Rohatgi, learned Senior Advocate has appeared
on behalf of the appellant- original defendant and Shri Avishkar Singhvi,
learned counsel and Shri Rahul Gupta, learned counsel have appeared
on behalf of the respective respondents.
5.0. Shri Rohatgi, learned Senior Advocate appearing on behalf of
the appellant – original defendant has vehemently submitted that in the
facts and circumstances of the case High Court has committed a serious
error in allowing the applications under Order 6 Rule 17 of Code of
Civil Procedure and Order 1 Rule 10 of the Code of Civil Procedure
permitting the respondents to amend their respective plaints to declare
void ab initio all mortgages/charges on the entire premises and implead
the mortgagee banks/financial institutions.
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5.1. It is vehemently submitted by Shri Rohatgi, learned Senior
Advocate that appellant granted license for individual shops at the premises
from 1983 onwards to various shopkeepers including the respondents
herein. That prior thereto, on 23.09.1982 appellant created mortgages in
favour of financial institutions /banks. The said mortgages were rolled
over, refinanced and replaced from time to time for ensuring the continuous
development of the Hotel Projects / premises which requires consistent
upkeep, renovations, upgradation from time to time. It is contended that
clause 13 of the License Agreement recognizes and preserves the power
of the appellant (lessor) to create and continue mortgages. It is submitted
that clause 13 has been retained in every renewal (every five years) and
as such respondents who are licensees have continuously ratified all
mortgages from 1982 onwards by signing the License Agreement and
subsequent renewals. It is submitted that licenses have been revoked on
29.5.2020 by the appellant. It is urged that at this belated stage it is not
open for the respondents who are only licensees and whose licenses
have been revoked to challenge the mortgages created by the appellant
created in favour of various banks/ financial institutions which have been
continued since 1982 onwards.
5.2. It is further submitted by Shri Rohatgi, learned Senior Advocate
that as such in view of the arbitration clause in the license agreement,
suits are not
maintainable in view of Section 8 of the Arbitration and
Conciliation Act. That application filed by the appellant – original plaintiff
to stay the suits are pending adjudication. Therefore, as such the said
application/s under Section 8 of the Arbitration and Conciliation Act are
to be decided first. It is further submitted that while pleadings were
completed and Section 8 application was part-heard, respondents filed
the present applications in April 2020 to implead the Banks holding
mortgage over the premises and amend their plaints seeking to challenge
such mortgages. It is submitted that the learned Single Judge as such,
without issuing any notice or granting an opportunity to file reply, heard
arguments and reserved the judgment which has been pronounced on
15.09.2021.
5.3. Shri Rohatgi, learned Senior Advocate appearing for the
appellant – original defendant has assailed the impugned judgment and
order passed by the High Court mainly on the following grounds:
I.
Impugned judgment has resulted in mis-joinder of causes
of action and of parties;
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS. [M. R. SHAH, J.]
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II.
Respondents do not have the locus or right to challenge the
mortgages/charges;
III.
Challenge to mortgage/charges is barred by limitation, delay
and laches;
IV.
The impleadment and amendment applications are mala
fide filed only to circumvent adjudication pending Section 8
of the Act;
V.
Impugned judgment has been passed in violation of principles
of natural justice;
5.4. It is vehemently submitted by Shri Rohatgi, learned Senior
Advocate for the appellant that when the first License Agreement was
executed in 1983, the premises were already mortgaged and the
respondents were aware of the said fact, as is evident from Clause 13 of
the License Agreement. It is submitted that thus, the respondent’s rights,
even as a licensee, are subject to the pre-existing charge perfected
thereon with which the respondents have no concern.
5.5. It is submitted that the respondents – original plaintiffs are
strangers to the mortgage on the premises created by and between the
appellant and its lenders. Respondents – original plaintiffs have no privity
with the mortgagee banks/financial institutions. The suits themselves
are based on the License Agreement executed with the appellant and the
rights contained thereunder.
5.6. It is further submitted that the suits originally sought
declarations that the respondents are irrevocable licenses or alternatively
owners. Thus, the suits preferred by the plaintiffs only concern the inter-se
rights between the appellant and the respondent, with which the banks/
financial institutions impleaded by the impugned judgment have no
concern. But the impugned judgment has resulted in mis-joinder of parties
and causes of action which is incorrect in law.
5.7. It is further submitted by Shri Rohatgi, learned Senior Advocate
that the respondents have no semblance of right to sue the banks/ financial
institutions in the present case or challenge the mortgage.
5.8. It is further submitted that mortgage over the premises has
been created by and between the appellant and its lenders. Respondents-
original plaintiffs are not parties to said transaction. There is admittedly
no privity of contract between the respondents and original plaintiffs and
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its lenders. Therefore, the plaintiffs have no right to sue the lenders of
the appellant against whom reliefs are now sought by way of amendment
of the plaint.
5.9. It is further submitted that, even otherwise, respondents are
ascertaining their status as irrevocable licensees of the concerned shops.
Therefore, plaintiffs have not locus or cause to challenge mortgages/
charges, which have been created by the appellant from time to time for
ensuring continuing development of hotel project/premises.
5.10. It is further submitted by Shri Rohatgi, learned Senior
Advocate that challenge to mortgage/charges now is barred by limitation,
delay and laches. This is because the first mortgage was created on the
premises on 23.09.1982. By the amendment applications, the principal
relief sought to be added by the respondents is to assail any and all
charges/mortgages on the premises created since 1982 in favour of
any person. It is submitted that first mortgage on the premises was
registered on 23.09.1982 with the RoC as per Section 125 of the
Companies Act, 1956. Subsequent charges/mortgages were also
registered with the RoC. It is submitted that as per Section 126 of the
Companies Act, 1956 and Section 80 of the 2013 Act, the respondents
are deemed to have knowledge and constructive notice of the said
mortgage/charges and there exists a presumption in law that the
respondents had knowledge of the aforesaid charges.
5.11. It is submitted that clause 13 of the License
Agreements
expressly records the knowledge of the respondents of the existing
charges on the premises and also authorizes creation of further charges
in the future. It is submitted that this understanding has been renewed
and reaffirmed by the parties in the subsequent Renewal Agreements.
Therefore, the respondents have knowledge of the mortgages in view of
statutory presumption and express stipulation in Clause 13 of the License
Agreement since 1982, which negates the assertion that respondents
acquired knowledge by pleadings filed in the proceedings before the High
Court. It is further submitted that considering Article 58, Schedule I of
the Limitation Act, the prayer to challenge mortgages / charges would
be clearly barred by law of limitation and therefore, liable to be rejected.
In support of the above submission, reliance is placed on the decision of
this Court in the case of Ashutosh Chaturvedi v. Prano Devi (2008)
15 SCC 610, T.N. Alloy Foundry Co. Ltd vs. T.N. Electricity Board
and Ors (2004) 3 SCC 392 and L.J.Leach & Co Ltd vs. M/s.
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS. [M. R. SHAH, J.]
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Jardine Skinner & Co. AIR 1957 SC 357. Making above
submissions, it is prayed to allow the present appeals.
6.0. While opposing the present appeals and supporting the impugned
order passed by the High Court, allowing the applications under Order 6
Rule 17 of the Code of Civil Procedure and Order 1 Rule 10 of the Code
of Civil Procedure, learned counsel for the respondents have vehemently
submitted that in the facts and circumstances of the case. The impugned
order is just and proper. It is contended that it is necessary to implead
banks which are mortgagees of the suit property, while plaintiffs are
claiming ownership interest and that the trial has not yet commenced
and the suit is at preliminary stage where the defendant has even not
filed its written statement therefore, no prejudice can be said to be caused
to the defendant if the application for amendment as well as impleadment
applications are allowed. That no error has been committed by the High
Court in the peculiar facts and circumstances of the case.
6.1. It is vehemently submitted by the learned counsel for the
respondents that as such the plaintiff is the dominus litus in the suit.
That in view of the position in law, when the applications submitted by
the original plaintiffs under Order 1 Rule 10 of the Code of Civil Procedure
have been allowed, the same may not be interfered with by this Court.
Reliance is placed on the decision of this Court in the
case of Kasturi v.
Iyyamperumal & Ors. reported in (2005) 6 SCC 733.
6.2. It is further submitted by learned counsel for the respondents
-original plaintiffs that cogent reasons have been given by the High Court
while allowing the applications under Order 6 Rule 17 and Order 1 Rule
10 of the Code of Civil Procedure, which in a nutshell are as under:
I.
that it is necessary to implead the banks who are mortgagees
of the suit property wherein the Plaintiffs are claiming
ownership interest;
II.
the trial has not yet commenced and the suit is at the
preliminary stage where the Petitioner has not even filed its
written statement;
III.
no prejudice can be said to be caused to the Petitioner if
the abovesaid applications are allowed;
IV.
that the plaintiff is the dominus litus in the suit;
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VI.
the fact that the Petitioner themselves had pleaded before
the learned Single Judge of the Hon’ble High Court that
the suit was bad for non-joinder of parties without the banks
being parties;
VII.
at the stage of allowing the amendment the Court should
not be concerned with the merits and demerits of such
amendments;
VIII. it is imperative that the Hon’ble Courts are liberal in their
view of amendment of pleadings especially when the parties
are necessary and required to be present to protect the
subject matter of the relief;
6.3. Relying upon the decisions of this Court in the case of Rajesh
Kumar Aggarwal & Ors vs. K.K.Modi & Ors AIR 2006 SC 1647
and in the case of Revajeetu Builders and Developers Vs.
Narayanaswamy and Sons & Ors (2009) 10 SCC 84, it is vehemently
submitted by the learned counsel for the respondents – original plaintiffs
that as observed and held by this Court while considering whether an
application for amendment should or should not be allowed, Court should
not go into the correctness or falsity of the case in the amendment. It is
further observed and held that likewise, it should not record a finding
on the merits of the amendment and the merits thereof sought to be
incorporated by way of amendment are not to be adjudged at the stage
of allowing the prayer for amendment.
6.4. Learned counsel for the respondent no.1 has further submitted
that the amendments did not seek any direct injunctions against the banks
for creation of the
mortgage but has only sought reliefs against the
defendant hotel whose property is mortgaged to the banks. That the
mortgage has not been challenged by the respondents but only the
undeniable interest of the respondent is sought to be protected by having
mortgagees as a party to the suit. It is submitted that idea is to see that in
the event banks enforce the mortgage then they will step into the shoes
of the appellant.
6.5. It is further submitted by the learned counsel for the plaintiffs
that in the suit original plaintiffs are seeking perpetual ownership rights in
the premises of the appellant hotel. Therefore, if the mortgages with
respect to the very property are not challenged, in that case, in future
they may affect the rights of the plaintiffs and therefore, to protect their
rights, the impleadment of the mortgagee banks/financial institutions and
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the amendments are very much necessary. That as such, Banks/Financial
Institutions (mortgagees) can be said to be necessary and proper parties
for giving the ultimate effective relief in favour of plaintiffs. That
respondents – original plaintiffs after final adjudication of the suit may
be held to be owners as they are the perpetual lessee who hold irrevocable
licenses executed in their favour to operate their respective shops. It is
submitted that the plaintiffs have paid the premium at the time of
execution of the License Agreement and hence this is not a case of
mere license but it is a case of irrevocable and perpetual license.
Therefore, no error has been committed by the High Court while passing
the impugned orders and allowing the applications under Order 6 Rule
17 and Order 1 Rule 10 of the Code of Civil Procedure.
7.0. We have heard learned Senior Advocate appearing on behalf
of the appellant and learned counsel appearing on behalf of the respective
respondents - original plaintiffs at length.
7.1. By the impugned orders, the High Court has allowed the
applications filed by the original plaintiffs under Order 6 Rule 17 and
Order 1 Rule 10 of the Code of Civil Procedure permitting the original
plaintiffs to amend their respective plaints so as to declare void ab-initio
all the mortgages/charges on the entire premises in question and also
implead mortgagee banks/financial institutions for that purpose.
7.2.
At the outset, it is required to be noted that mortgages have
been created in favour of different mortgage banks/financial institutions
since 1982 onwards which have been extended and/or rolled over,
refinanced and replaced from time to time. The mortgages are created
not only with respect to the shops/premises occupied by the original
plaintiffs, but with respect to the entire premises/Hyatt Residency Hotel.
The respective original plaintiffs are granted licenses for individual shops
which are part of entire premises. According to the appellant, first
mortgage was created in the year 1982. At that time, none of the original
plaintiffs were license holders. They have been granted license for
individual shops at the premises from 1983 onwards to various
shopkeepers including respondents- original plaintiffs. The appellant, being
owner – licensor, has terminated the respective licenses granted in favour
of respective license holders – original plaintiffs. The revocation of the
license is subject matter of respective suits. Therefore, the only
controversy / issue in the respective suits is with respect to revocation
of the respective licenses. By way of an amendment of the plaint the
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plaintiffs now want to challenge the mortgages/charges on the entire
premises created by the appellant. As such, the original plaintiffs are not
at all concerned with the mortgages created by the appellant which is
required for the continuous development of the hotel. By the purported
amendment, the original plaintiffs have now prayed to declare that all
the mortgages/charges created on the premises as void ab-initio. Even
such a prayer can be said to be too vague. How the original plaintiffs
can now can be permitted to challenge various mortgages/charges created
from time to time. At this stage, it is required to be noted that even under
the License Agreement (clause 13) the Licensor shall have the right to
create charges/mortgages as and by way of first charge on its land,
premises and the buildings (including shops) constructed and to be
constructed, in favour of financial institutions and banks as security for
their terms loan advanced/to be advanced to the licensor for the
completion of its hotel project. Therefore, in fact original plaintiffs being
the licensee are aware that there shall be charges/mortgages on the
entire premises and the buildings including the shops. In that view of the
matter, now after a number of years, plaintiffs cannot be permitted to
challenge the mortgages /charges created on the entire premises including
shops.
8.0. The High Court while allowing the amendment application
in exercise of powers under Order 6 Rule 17 of the
Code of Civil
Procedure has not properly appreciated the fact and/or considered the
fact that as such, by granting such an amendment and permitting plaintiffs
to amend the plaints incorporating the prayer clause to declare the
respective charges/mortgages void ab-initio, the nature of the suits will
be changed. As per the settled proposition of law, if, by permitting
plaintiffs to amend the plaint including a prayer clause nature of the suit
is likely to be changed, in that case, the Court would not be justified in
allowing the amendment. It would also result in misjoinder of causes of
action.
9.0. From the impugned order passed by the High Court, it appears
that what has weighed with the High Court is that plaintiffs, is the dominus
litus and heavy reliance is placed in the case of Kasturi (supra). However,
the principle that the plaintiffs is the dominus litus shall be applicable
only in a case where parties sought to be added as defendants are
necessary and/or proper parties. Plaintiffs cannot be permitted to join
any party as a defendant who may not be necessary and/or proper parties
at all on the ground that the plaintiffs is the dominus litus.
ASIAN HOTELS (NORTH) LTD. v. ALOK KUMAR LODHA &
ORS. [M. R. SHAH, J.]
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SUPREME COURT REPORTS
[2022] 12 S.C.R.
9.1. Even otherwise, High Court has materially erred in relying
upon the decision in the case of Kasturi (supra).
In the case of Kasturi (supra) before this Court the suit was for
specific performance of the agreement to sell and the subsequent
purchasers purchased the very property for which decree for specific
performance was sought. Therefore, on facts said decision is not
applicable to the facts of the case on hand.
10. In view of the above and for the reasons stated above, High
Court has committed serious error in allowing the application under Order
6 Rule 17 and under Order 1 Rule 10 of the Code of Civil Procedure by
permitting original plaintiffs to amend the plaint including prayer clause
by which, the plaintiffs have now prayed to declare the charges/mortgages
on the entire premises as void-ab initio and permitting the original plaintiffs
to join/implead the respective banks/financial institutions as party
defendant. The alleged rights of the plaintiffs as perpetual license holders
are yet to be adjudicated upon. The licenses of the original plaintiffs
have been revoked. Therefore, in a suit challenging revocation of the
respective licenses, the plaintiffs cannot be permitted to challenge the
respective mortgages/charges created on the entire premises as void
ab-initio. It is the case on behalf of the appellant that apart from the fact
that first charge was created in the year 1982, thereafter said
mortgages
have been rolled over, refinanced and replaced from time to time for
ensuring the continuous development of the Hotel Project/premises which
requires consistent upkeep, renovation and upgradation from time to time.
Under the circumstances, the impugned orders passed by the High Court
allowing the application under Order 6 Rule 17 and under Order 1 Rule
10 of the Code of Civil Procedure are unsustainable, both on facts as
well as on law.
11. In view of above and for the reasons stated above, all these
appeals succeed. The impugned orders passed by the High Court allowing
the application under Order 6 Rule 17 and Order 1 Rule 10 of the Code
of Civil Procedure in respective suits preferred by the respondents herein
original plaintiffs are hereby quashed and set aside. Present appeals
are allowed accordingly,
However, there shall be no order as to costs.
Ankit Gyan
Appeals allowed.
(Assisted by : Rahul Rathi, LCRA)