Case: ASIAN HOTELS (NORTH) LTD Vs. ALOK KUMAR LODHA &amp; ORS

3. 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 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 1980s; there is no 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.

Court's reasoning:
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 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. 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. 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.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.