Holding

A party may be added as a defendant only if it is a necessary or proper party, and the lessee was neither, so the order directing its impleadment was set aside.

Summary

Ramesh H. Kundanmal, a dealer operating a service station under a lease with Hindustan Petroleum Corporation Ltd (HPCL), challenged a demolition notice issued by the Municipal Corporation of Greater Bombay under section 351 of the Municipal Corporation Act. HPCL applied to be impleaded as an additional defendant, claiming it was a necessary party. The trial court and the High Court ordered its addition, but the Supreme Court held that HPCL had no direct legal interest in the disputed chattels and its presence was not required to adjudicate the matter. Consequently, the Court ruled that a party may be added only if it is a necessary or proper party under Order I Rule 10 of the CPC, and HPCL did not satisfy either criterion. The appeal was allowed, setting aside the order directing HPCL’s impleadment.

Issues considered

Whether the lessee (HPCL) is a necessary party under Order I Rule 10 of the CPC in a suit challenging a municipal demolition notice.
Whether the lessee is a proper party whose presence is required for a complete adjudication of the dispute.

Legislation cited

Code of Civil Procedure, 1908s. Order I Rule 10
Municipal Corporation Acts. 351

Subjects

impleadmentnecessary partyproper partyOrder I Rule 10civil proceduredominant litismunicipal demolition noticelesseeparty addition

Judgment

RAMESH HIRANAND KUNDANMAL A
...A... v.
MUNICIPAL CORPORATION OF GREATER BOMBAY AND ORS.

MARCH 4, 1992

fM. FATHIMA BEEVI AND S.C. AGRAWAL, JJ.] B
'>-
Civil Procedure Code, 1908:

Order 1, Rule lo-lmpleadment of party by Court to a suit as necessary
party-Necessary or proper party-Wlzo is-Distinction between necessary and c
proper partJSuit filed by a plaintiff, in possession of service station under
an agreement, with lessee thereof challenging validity of notice issued by
Municipal Corporation, for demolition of stntctures raised by plaintiff as
unauthorised-Lessee seeking impleadment as additional defendant as neces-
sary party-Wlzether Court could direct plaintiff to add lessee as defendant in
suit-Wlzether Court has discretion to direct a plaintiff, though dominus litis, D
to implead a person as a necessary party.

Words and Phrases : Necessary or proper party-Meaning of.

Under a Dealership Agreement, the appellant was in possessio~ of a
E
service station erected on the land held by the second r~spondent-the
y Hindustan Petroleum Corporation Limited, as lessee. The service station
consisted of a petrol pump in the ground floor and a structure with an
open terrace for parking of vehicles. The first respondent, Municipal
Corporation issued notice under section 351 of the Municipal Corporation
Act to the appellant for demolition of two chattels on the terrace on the F
ground that these were unauthorised constructions.
)-
The appellant instituted a suit before the City Civil Court, challeng-
~
ing the validity of the notice and for injunction restraining the Municipal
Corporation from demolishing the structures. The· Court granted an in-
terim injunction.
G

Thereafter, on an application filed by. the second respondent for
being impleaded as additional defendant in the suit on the ground that it
:-.;~
. had materials to show that the constructions were unauthorised, and it
was a necessary party to the litigation, the court directed the appellant to H
1
.
2 SUPREME COURT REPORTS (1992] 2 S.C.R.

A add the second respondent as defendant and amend the plaint suitably
rejecting the appellant's contention that the second respondent was neither
a necessary nor a proper party to be impleaded in the suit. The appellant's
' writ petition challenging the aforesaid order was dismissed by the High
Court.

B In the appeal, by special leave, before this Court, on behalf of the
appellant-plaintiff it was contended that the appellant-plaintiff was
dominus litis and, therefore, could not be forced to join the second respon-
dent Corporation as defendant, that second respondent was neithe~ a
necessary nor a proper party to the suit and had no interest in the
c subject-matter of the1 litigation and its presence was not required to
adjudicate upon the issue involved in the suit or for the purpose of
deciding the real matter and on the contrary, its addition would enlarge
the issue in the suit, and that the Court could not direct addition of parties
against the wishes of the plaintiff, who could not be compelled to proceed
against a person against whom he did not claim any relief.
D
On behalf of the respondent it was contended that the second respon-
dent had a right to be heard in the suit inasmuch as the respondent was
the lessee, who was not answerable for the illegal actions of the appellant.

E Allowing the appeal, this Court,

HELD : 1.1 Plaintiff is no doubt dominus litis and is not bound to
su~ every possible adverse claimant in the same suit. He may choose to
implead only those persons as defendants against whom he wishes to
proceed. However, the Court may at any stage of the suit direct addition
F of parties. A party can be joined as defendant even though the plaintiff
does not think that he has any cause of action against him. The question
of impleadment of a party has to be decided on the touch stone of Order
I Rule 10 of the Code of Civil Procedure, 1908, which provides that only a
necessary or a proper party may be added. In the light of the clear
G language of the Rule, it cannot be said that a person cannot be added as
defendant even in a case where his presence is necessary to enable the
Court to decide the matter effectively. [6E-F, 7A-D]

1.2 A necessary party is one without whom no order can be made
effectively. A proper party is one in whose absence an effective order can
H be made but whose presence is necessary for a complete and final decision
RAMESH H. KUNDANMAL v. MUNICIPAL CORP. 3

on the question involved in the proceeding. The addition of parties is A
generally not a question of initial jurisdiction of the Court but of a judicial
discretion which has to be exercised in view of all the facts and circumstan-
ces of a particular case. [7A-B]

1.3 The Court is empowered to join a person whose presence is
necessary for the prescribed purpose and cannot under the Rule direct the B
addition of a person whose presence is not necessary for that purpose. If
the intervener· has a cause of action against the plaintiff relating to the
subject-matter of the existing action, the Court has power to join the
intervener so as to give effect to the primary object of the order, which is
to avoid multiplicity of actions. [7E-F] C

1.4 A clear distinction has been drawn between suits relating to
-\.
property and those in which the subject-matter of litigation is a declaration
-,
as regards status or legal character. In the former category, the rule of
present interest as distinguished from the commercial interest is required D
to be shown before a person may be added as a party. [9EJ

1.5 It cannot be said that the main object of the rule is to prevent
multiplicity of actions though it may incidentally have that effect. But that
appears to be a desirable consequence of the rule rather than its main
objective. The person to be joined must be one whose presence is necessary E
) as a party. What makes a person a necessary party is not merely that he
has relevant evidence to give on some of the questions involved that would
only make him a necessary witness-and not merely that he has an interest
in the correct solution of some question involved and has thought of
relevant arguments to advance. The only reason which makes it necessary F
to make a person a party to an action is that he should be bound by the
) result of the action and the question to be settled therefore, must be a
~ question in the action which cannot be effectually and completely settled
unless he is a party. The line has been drawn on a wider construction of
the rule between the direct interest or the legal interest and commercial
interest. It is, therefore, necessary that the person must be directly or G
legally interested in the action in the answer, i.e., he can say that the
litigation may lead to a result which will affect him legally, that is, by
x cum\Uug his legal rights. It is difficult to say that the rule contemplates
joining as a defendant a person whose only object is to prosecute his own
cause of action. [9F-H, lOA-B] H
4 SUPREME COURT REPORTS [1992} 2 S.C.R.

A Razia Begum v. Anwar Begum, [1959) SCR 1111, relied on.

Amon v. Raphael Tuck & Sons Ltd., (1956) 1 All E.R. 273 and Dollfus
Mieg et Compagnie SA. v. Bank of England, (1950) 2 All E.R. 611, referred
to.

B 2.1 In the instant case, the courts below have assumed that the
subject-matter of the litigation is the structure erected by the respondent
or, in other words, the 8ervice station which has been allowed to be
operated upon by the appellant-plaintiff under the terms of the dealership
agreement. The notice does not relate to that structure but is in relation
c to the two chattels stated to have been erected by the appellant un-
authoriseclly. The second respondent has no interest in these c~attels, and
the demolition of the same in pursuance to the notice is not a matter which
afiects the legal rights of the respondent. [llG-H, 12A]

National Textile Workers' Union, etc. v; P.R. Ramakrishnan and Ors.,
D (1983) 1 SCR 922, distinguished.

2.2 It is true that being lessee of the premises, second respondent-
Corporation has an answer for the action proposed by the first respon-
dent-Municipal Corporation against the appellant but for the pUI'J>OSe of
granting the relief sought for by the appellant by examining the justifica-
E tion of the notice issued by the Municipal Corporation, it is not necessary
for the Court to consider that answer. Hence the presence of the respon- y
dent cannot be considered as necessary for the purpose of enabling the
Court to effectually and completely adjudicate upon and settle all the
questions involved in the suit. The appellant is proceeded against by the
F first respondent-Corporation for the alleged action in violation of the
municipal laws. The grievance of the second respondent against the appel-
lant, if any, could only be for violation of the agreement and that is based
on a different cause of action. The consolidation of these two in the same
suit is neither contemplated nor permissible. [lOF-H, llA]
G 2.3 The courts below failed to note that the second respondent has
no direct interest in the subject-matter of the i~tigation and the addition
of the respondent would result in causing serious prejudice to the appel-
lant and the substitution or the addition of a new cause of action would
only widen the issue which is required to be adjudicated and settled. By
H the joining of the party would embarrass the appellant-plaintiff and issues
RAMESH H. KUNDANMAL v. MUNICTPAL CORP. [FATHIMA BEEVI, J.] 5

not germane to the suit would be required to be raised. The mere fact that A
a fresh litigation can be avoided is no ground to invoke the power under
the Rule in such cases. [12B-C]

National Textile Worker's Union, etc. v. P.R. Ramakrishnan and Ors.,
[1983) 1 SCR 922, distinguished.
B
2.4 Therefore, the courts below were wrong in concluding that the
second respondent was a necessary or a proper party to be added as a
defendant in the suit instituted by the appellant.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3570 of
1991.
c
~
From the Order dated 13.10.1989 of the Bombay High Court in Writ
Petition No. 4229 of 1989.

K. Parasaran, Joquium Reis and Kailash Vasdev for the Appellants.
D
D.N. Mishra (for J.B.D. & CO.) and M.S. Ganesh for the Respon-
dents.

The Judgement of the Court was delivered by

FATHIMA BEEVI, J. We have to consider in this appeal the question
E
whether the second respondent is a necessary or proper party to be joined
~

'f as defendant under Order I Rule 10 of the Code of Civil Procedure, in the
suit instituted by the appellant against the first respondent.

Under the Dealership Agreement of 1974, the appellant is in posses- F
sion of the service station erected on the land held by the second respon-
dent herein, the Hindustan Petroleum Corporation Limited as lessee. The
service station consists of a petrol pump in the ground floor and a structure
J
,,_ with an oiren terrace for parking of vehicles. The first respondent, the
Municipal Corporation of Greater Bombay issued notice dated 5.8.1988
under section 351 of the Municipal Corporation Act to the appellant for G
demolition of two chattles on the terrace on the ground that these were
unauthorised constructions. The appellant instituted the suit No. 6181 of
1988 before the City Civil Court, Bombay, challenging the validity of the
~
.., notice and for injunction restraining the Municipal Corporation from
':\ dein.olishing the structures. Interim injunction was granted by the court. H
6 SUPREME COURT REPORTS [1992] 2 S.C.R.

A On 9.9.1988, the second respondent applied for being impleaded as
additional defendant in the suit on the ground that they have materials to
show that the constructions are unauthorised, and they are necessary
parties to the litigation. The Court by order dated 22.8.1989 directed the
appellant to add the second respondent as defendant and amend the plaint
suitably rejecting the contentions of the appellant that the second respon-
B dent was neither a necessary nor a proper party to be irnpleaded in the
suit. The appellant filed writ petition No. 4229 of 1989 under Article 227
of the Constitution of India in the High Court of Bombay challenging the
correctness of the order. The High Court by the impugned judgment
dismissed the writ petition. This appeal by special leave is directed against
C the judgement of the High Court dated 13.10.1989.

Three grounds have been urged by the learned counsel for the
appellant against the sustainability of the order. The plaintiff was dominus
litis and, therefore, cannot be forced to join the second respondent as
D defendant. The second respondent is neither a necessary nor a proper
party to the swt. The addition of the respondent would enlarge the issue
in the suit. Reliance was placed on the decision of this Court in Razia
Begum v. Anwar Begum, [1959] SCR 1111.

It was argued that the Court cannot direct addition of parties against
E the wishes of the plaintiff who cannot be compelled to proceed against a
person against whom he does not claim any relief. Plaintiff is no doubt
dominus litis and is not bound to sue every possible adverse claimant In y
the same suit. He may choose to implead only those persons as defendants
against whom he wishes to proceed though under Order I Rule 3, to avoid
F multiplicity of suit and needless expenses, all persons against whom the
right to relief is alleged to exist may be joined as defendants. However, the
Court may at any stage of the suit direct addition of parties. A party can..
be joined as defendant even though the plaintiff does not think that he has
any cause of action against him. Rule 10 spe~ifically provides that it is o?en -l
to the Court to add at any stage of the suit a necessary party or a person
G whose presence before the Court may be necessary in order to enable the
Court to effectually and completely adjudicate upon and settle all the
questions involved in the suit.

Sub-rule(2) of Rule 10 gives a wide discretion to the Court to meet ';I
H every case of defect of parties and is not affected by the inaction of the
RAMESH H. KUNDANMAL v. MUNICIPAL CORP. [FA1HIMA BEEVI, J.} 7

plaintiff to bring the necessary parties on record. The question of implead- A
ment of a party has to be decided on the touch stone of Order I Rule 10
which provides that only a necessary or a proper party may be added. A
necessary party is one without whom no order can be made effectively. A
proper party is one in whose absence an effective order can be made but
whose presence is necessary for a complete and final decision on tpe
question involved in the proceeding. The addition of parties is generally
B
not a question of initial jurisdiction of the Court but of a judicial discretion
\
which has to be exercised in view of all the facts and circumstances of a
particular case.

The respondents do not seriously dispute the position that the second c
respondent is not a necessary party to the suit in the sense that without
. their presence an effective order cannot be passed. However, they support
the view that respondent No. 2 is a proper party whose presence is
-{
necessary for a complete adjudication on the controversy. In the light of

-
the clear language of the Rule, it is not open to the appellant to con~nd
that a person cannot be added as defendant even in a case where his D
presence is necessary to enable the Court to decide the matter effectively.

The case really turns on the true construction of the Rule in par-
ticular the meaning of the words "whose presence before the Court may be
necessary in order to enable the Court effectually and completely to E
adjudicate upon and settle all the questions involved in the suit." The Court
y is empowered to join a person whose presence is necessary for the
prescribed purpose and cannot under the Rule direct the addition of a
person whose presence is not necessary for that purpose. If the intervener
has a cause of action against lhe plaintiff relating to the subject-matter of
F
the existing action, the Court has power to join intervener so as to give
effect to the primary object of the order which is to avoid multiplicity of
actions.
f-
In the present case, the subject-matter of the dispute between the
appellant and the first respondent is the demolition of the unauthorised G
construction in pursuance to the notice under section 351 of the Bombay
Municipal Act. The second respondent, the lessee, in possession of the
service station asserts that the appellant has made an unauthorised con-
struction and the second respondent is in possession of material evidence
\
to that effect. No notice has been issued to the second respondent by the H
8 SUPREME COURT REPORTS [1992] 2 S.C.R.

A Municipal Corporation and no case of any collusion between the appellant
and the Municipal Corporation is alleged. On the other hand, it is the case ~.
of the appellant that the second respondent is instrumental in the initiation
of the proceedings by the Municipal Corporation against the appellant and
the present application is for collateral purposes. In the light of such
B .averments, it has to be considered whether the second respondent is a
necessary or proper party in the present action.
___.(.

The:: power of the Court to add parties under Order I Rule 10, C.P.C,
came up for consideration before this Court in Razia Begum (supra). In
that case it was pointed out that the Courts in India have not treated the
c matter of addition of parties as raising any question of the initial jurisdic- __,......
\.
tion of the Court and that it is firmly established as a result of judicial
decisions that in order that a person may be added as a party to a suit, he
should have a direct interest in the subject-matter of the litigation whether >--
it be the questions relating to moveable or immoveable property.
D
In that case the appellant instituted a case against the third respon-
dent inter. alia for a declaration that she was his lawfully married wife. The
third respondent filed his written statement admitting the claim but on the
same date respondents 1 and 2 made an application under Order I Rule
10(2) of C.P.C., for being impleaded in the suit as defendants on the
E grounds that they were respectively the wife and son of the third respon-
dent and that they were interested in denying the appellant's status as wife
and the status of children as the legitimate children of the third respondent; 'Y
that the suit was the result of the collusion between the appellant and the
third respondent and that if the appellant was declared to be lawfully
F wedded to the third respondent, the rights and interests of respondents 1
and 2 in the estate of the third respondent would be affected. The applica-
-
tion was contested by both the appellant and the third respondent. The
trial court allowed the application and the order was confirmed by the High
{
Court in its revisional jurisdiction. The question in the appeal before this -1..

Court was whether the lower court did not exceed their powers in directing
G the addition of respondents 1 and 2 as parties defendants in the action.

Sinha, J. speaking for the majority said that a declaratory judgment
in respect of a disputed status will be binding not only upon parties actually
before the Court but also upon persons claiming through them respectively. y
H The Court laid down the law that in a suit relating to property in order
RAMESH H. KUNDANMAL v. MUNICIPAL CORP. (FATIIIMA BEEVI, J.) 9

that a person may be added as a party, he should have a direct interest as A
distinguished from a commercial interest in the subject-matter of the
litigation. Where the subject-matter of a litigation is a declaration as
regards status or a legal character, the rule of presence of direct interest
may be relaxed in a suitable case where the Court is of the opinion that by

- I
~
adding that party it would be in a better position effectually and completely
to adjudicate upon the controversy. In cases covered by the statutory
provisions of sections 42 and 43 of the Specific Relief Act, the Court is not
bound to grant the declaration prayed for on a mere admission of the claim
B

by the defendant. If the Court has reasons to insist upon a clear proof apart
from the admission, the result of a declaratory decree on the question of
status such as the controversy in that suit affects not only the parties c
actually before the Court but generation to come and in view of that
consideration, the rule of present interest as evolved by case law relating
to disputes about property does not apply with full force. Applying the
~
propositions enunciated to the facts of the case, the Court came to the

.... conclusion that the courts below did not exceed their power in directing
the addition of respondents 1 and 2 as parties defendants in the action nor
D
it could be said that the exercise of the discretion was not bound.

- A clear distinction has been drawn between suits re~ating to property
and those in which the subject-matter of litigation is a declaration as
regards status or legal character. In the former category, the rule of present E
interest as distinguished from the commercial interest is required to be
) shown before a person may be added as a party.
;

It cannot be said that the main object of the rule is to preveht
multiplicity of actions though it may incidentally have that effect. But that F
appears to be a desirable consequence of the rule rather than its main
" objectives. The person to be joined must be one whose presence is neces-
sary as a party. What makes a person a necessary party is not merely that
?-- he has relevant evidence to give on some of the questions involved; that

.. would only make him a necessary witness. It is not merely that he has an
interest in the correct solution of some questions involved and has thought G
of relevant arguments to advance. The only reason which makes it neces-
sary to make a person a party to an action is that he should be bound by
the result of the action and the question to be settled, therefore, must be
'X a question in the action which cannot be effectually and completely settled
unless he is a party. The line has been drawn on a wider construction of H
10 SUPREME COURT REPORTS (1992) 2 S.C.R.

A the rule between the direct interest or the legal interest and commercial -
interest. It is, therefore, necessary that the person must be directly or
legally interested in the action in the answer, i.e., he can say that the
litigation may lead to a result which will affect him legally that is by
curtailing his legal rights. It is difficult to say that the rule contemplates
joining as a defendant a person whose only object is to prosecute his own
B cause of action. Similar provision was considered in Amon v. Raphael Tuck
& Sons Ltd., (1956) 1 All E.R. 273, wherein after quoting the observations
-~
of Wynn-Parry, J. in Dollfus Mieg et Compagnie SA. v. Bank of England,
(1950) 2 All E.R.611, that the true test lies not so much in an analysis of
what are the constituents of the applicants' rights, but rather in what would
c· be the result on the subject-matter of the action if those rights could be
established, Devlin, J. has stated:- -r-
"The test is 'May the order for which the plaintiff is asking
)...
directly affect the intervener in the enjoyment of his legal
D rights."'
....
It has been strenuo~ly contended before us that the second respon-
dent has no interest in the subject-matter of the litigation and the presence
of the respondent is not required to adjudicate upon the issue involved in
the suit or for the purpose of deciding the real matter involved. It is pointed
E out that the subject-matter in the suit is the notice issued by the Municipal
-
Corporation to the appellant and the issue is whether it is justified or not.
~--(
The Hindustan Petroleum Corporation Limited is interested in supporting
the Municipal Corporation and sustaining the action taken against the
appellant. But that does not amount to any legal interest in the subject-
F matter in the sense that the order, if any, either in favour of the appellant
or against the appellant would be binding on this respondent. It is true that
being lessee of the premises, the Hindustan Petroleum Corporation "
Limited has an answer for the action proposed by the Municipal Corpora- -~

tion against the appellant, but for the purpose of granting the relief sought -J...
for by the appellant by examining the justification of the notice issued by
G ~ Municipal Corporation, it is not necessary for the Court to consider ....
that answer. If that be so, the presence of the respondent cannot be
considered as necessary for the purpose of enabling the Court to effectually
and completely adjudicate upon and settle all the questions involved in the
suit. The appellant is preceeded against by the Municipal Corporation for v.
H the allqed action in violation of the municipal laws. The grievance of the
RAMESH H KUNDA.i'\/MAL v. MUNICIPAL CORP. [FATHIMA BEEVI, J.) 11

respondent against the appellant, if any, could only be for violation of the A
,,). agreement and that is based on a different cause of action. The consolida-
tion of these two in the same suit is neither contemplated nor permissible.

The learned counsel for the respondent on a reference to the broad
principles laid down in National Textiles v. P.R.Ramakrishnan, [1983] 1
~ SCR 922, maintained that the second respondent has a right to be heard B
')..
in the suit filed by the appellant against the Municipal Corporation inas-
much as the respondent is the lessee who is not answerable for the illegal
actions of the appellant. It was held in that case that the workers of a
company are entitled to appear at the hearing of the winding up petition
whether to support or oppose it. The court considered wider public interest c
involved and said that in winding up of a company or changing its manage-
ment, the Court must take into consideration not only the interest of the
shareholders, creditors but also amongst other things the interest of the
~.
workers and that the workers must have an opportunity of being heard for
projecting and safeguarding their interest before a winding up order is
~ D
made by the Court. That principal has no application in a civil litigation
where licensee questions the action of the legal authority and the lessee
would not be affected in whatever way the decision is rendered.

The City Civil Judge in para 32 of the order said that the Hindustan
Petroleum Corporation Limited are the lessees of the plot as also the E
premises, the plaintiff is merely their dealer; they have a right, title and
r interest in the suit premises and the applicants are proper and necessary
parties as they have interest in the subject-matter of the litigation and their
presence will be necessary and proper to effectively adjudicate upon and

- determine the cause of action in the suit. The High Court also in confirm-
ing the order said that the notice which is challenged is in respect of
structure which belongs to the second respondent and the respondent's
F

~ presence is necessary for effective adjudication.
;...
The courts below have assumed that the subject-matter of the litiga-
T tion is the structure erected by the respondent or in other words the service G
station which has been allowed to be operated upon by the plaintiff under
the terms of dealership agreement. The notice does not relate to that
structure but is in relation to the two chattles stated to have been erected
.'.'< by the present appellant unauthorisedly. According to the appellant these
chatttles/structures are moveables on wheels and plates where servicing H
12 SUPREME COURT REPORTS [1992] 2 S.C.R.

A and/or repairs are done and used for storing implements of the mechanics.
The second respondent has no interest in these chattels and the demolition
of the same in pursuance to the notice is not a matter which affects the
legal rights of the respondent. The courts below, therefore, failed to note
that the second respondent has no direct interest in the subject-matter of

-
the litigation and the addition of the respondent would result in causing
B serious ·prejudice to the appellant and the substitution or the addition of a
new ca'use of action would only widen the issue which is required to be
adjudicated and settled. By the joining of the party Would embarass the
plaintiff and issues not germane to the suit would be required to be raised.
The mere fact that a fresh litigation can be avoided is no ground to invoke
C the power under the Rule in such cases.

We are, therefore, of the view that the courts below were wrong in
concluding that the second respondent is a necessary or a proper party to
be added as a defendant in the present suit instituted by the appellant.

D We accordingly allow the appeal and set aside the· impugned judg-
ment. No order as to costs.

N.P.V. Appeal allowed.

. ...,
'

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