Case: Thomson Press (India) Ltd Vs. Nanak Builders &amp; Investors P.Ltd. &amp; Others

It appears that the aforesaid suit filed by LMI was compromised and an order was passed on 08.04.1991 whereby, as per the compromise, the suit property was leased out by defendant-Sawhneys in favour of LMI and possession of the property was given to it5. On 01.11.1991, the plaintiff-M/s Nanak Builders in the meantime filed a suit against the defendant-respondent Sawhneys being suit no. 3426/1991 for specific performance of agreement to sell dated 29.05.1986. In the said suit pursuant to summons issued against the defendants– Sawhneys one Mr. Raj Panjwani, Advocate accepted notice on behalf of Sawhneys and stated before the Court that possession of the flat in question is not with the defendants, rather with M/s LMI which delivered to them by virtue of the lease. Mr. Panjwani further stated that till disposal of the suit the property in question would not be transferred or alienated by the defendants. The defendants- Sawhneys also filed a written statement in the said suit. It appears that the defendants-Sawhneys took loan from Vijaya Bank and to secure the loan, equitable mortgage was created in respect of the suit property. In 1977 a suit was filed by the Bank in Delhi High Court for recovery and redemption of the mortgaged property. The said suit was decreed on 14.10.1998 and recovery certificate was issued by DRT, Delhi. LMI, a group of the appellant Company intervened and settled the decree by agreeing to deposit the loan amount of Rs.1.48 crores. The LMI cleared all the dues, income tax liability etc., of Sawhneys for sale of the property in favour of LMI and its associates. Finally, in between 31.01.2001 and 03.04.2001 five sale deeds were executed by defendants-Sawhneys in favour of the present appellant herein M/s Thomson Press India Limited. On the basis of those sale deeds the appellant moved an application under Order 1 Rule 10 CPC for impleadment as defendants in a suit for specific performance filed by Respondent No.1 herein M/s Nanak Builders and Investors Pvt. Ltd6. The learned Single Judge of the Delhi High Court after hearing the parties dismissed the application on the ground that there was an injunction order passed way back on 04.11.1991 in the suit for specific performance restraining the defendants-Sawhneys from transferring or alienating the suit property passed, the purported sale deeds executed by the defendants in favour of the appellant was in violation of the undertaking given by the respondents which was in the nature of injunction. Aggrieved by the said order, the appellant filed an appeal being FAO No.295 of 2008 which was heard by a Division Bench. The Division Bench affirmed the order of the Single Judge and held that in view of the injunction in the form of undertaking given by the respondents-Sawhneys and recorded in the suit proceedings, how the property could be purchased by the appellants in the year 2008. The appellant aggrieved by the aforesaid orders filed this Special Leave Petition.

Court's reasoning:
In the light of the settled principles of law on the doctrine of lis pendens, we have to examine the provisions of Order 1 Rule 10 of the Code of Civil Procedure. Order 1 Rule 10 which empowers the Court to add any person as party at any stage of the proceedings if the person whose presence before the court is necessary or proper for effective adjudication of the issue involved in the suitThere are three distinct conclusions which have been drawn by Eqbal, J. in the judgment proposed by his Lordship. The first and foremost is that the appellant was aware of the agreement to sell between the plaintiff and the defendants in the suit. Publication of a notice in the Hindustan Times, Delhi Edition, and the legal notice which Living Media India Limited, appellants sister concern, sent to the defendants indeed left no manner of doubt that the appellant was aware of a pre-existing agreement to sell between the plaintiff and the defendants. It is also beyond dispute that the sale of the suit property in favour of the appellant was in breach of a specific order of injunction passed by the trial Court. As a matter of fact, the sale deeds executed by the defendants falsely claimed that there was no impediment in their selling the property to the appellant even though such an impediment in the form of a restraint order did actually exist forbidding the defendants from alienating the suit property. The High Court was in that view justified in holding that the sale in favour of the appellant was a clandestine transaction which finding has been rightly affirmed in the order proposed by my Esteemed Brother, and if I may say so with great respect for good and valid reasonsIn the light of the above finding it is futile to deny that the specific performance prayed for by the plaintiff was and continues to be enforceable not only against the original owner defendants but also against the appellant their transferee. Sale of immovable property in the teeth of an earlier agreement to sell is immune from specific performance of an earlier contract of sale only if the transferee has acquired the title for valuable consideration, in good faith and without notice of the original contract