Supreme Court of India
THOMSON PRESS (INDIA) LTD.versusNANAK BUILDERS & INVESTORS P. LTD. & ORS.
- Citation
- 2013 INSC 118
- Decided
- 21 February 2013
- Disposal
- Appeal(s) allowed
- Bench
- T S THAKUR
Holding
A transferee pendente lite who is not a bona‑fide purchaser and has notice of the pending suit may be impleaded as a necessary or proper party under Order 1 Rule 10 CPC (and Order 22 Rule 10), and the specific‑performance decree is enforceable against him subject to the plaintiff’s rights.
Summary
Nanak Builders sued the Sawhneys for specific performance of a 1986 sale agreement. While the suit was pending, the Sawhneys transferred the suit property to Thomson Press (India) Ltd. despite a court injunction and public notice of the dispute. Thomson Press applied under Order 1 Rule 10 CPC to be impleaded as a defendant, but the Delhi High Court rejected the application. The Supreme Court held that although Thomson Press was not a bona‑fide purchaser (it had notice of the contract and injunction), it was a necessary and proper party for effective adjudication of the suit. Accordingly, the Court exercised its discretion under Order 1 Rule 10 (and the enabling provision of Order 22 Rule 10) to add Thomson Press as a party‑defendant, allowing it to raise only the defenses available to the original defendants. The specific‑performance decree can be enforced against the transferee, subject to the plaintiff’s rights and any court directions.
Issues considered
- The appellant, a transferee pendente lite with notice of the pending specific‑performance suit and injunction, can be impleaded as a party under Order 1 Rule 10 CPC (or Order 22 Rule 10).
- Whether the appellant is a bona‑fide purchaser for value without notice, thereby exempt from specific‑performance relief under Section 19 of the Specific Relief Act.
- Effect of Section 52 of the Transfer of Property Act (lis pendens) on the validity of the transfer and the rights of the plaintiff.
Legislation cited
- Code of Civil Procedure, 1908s. Order 1 Rule 10, s. Order 22 Rule 10
- Specific Relief Act, 1963s. Section 19
- Transfer of Property Act, 1882s. Section 52
Subjects
specific performanceimpleadmentOrder 1 Rule 10Order 22 Rule 10lis pendenstransfer of propertybona fide purchaserinjunctioncivil procedure
Judgment
[2013] 2 S.C.R. 74
A THOMSON PRESS (INDIA) LTD.
v.
NANAK BUILDERS & INVESTORS P. LTD. & ORS.
(Civil Appeal No. 1518 of 2013)
FEBRUARY 21, 2013
B
[T.S. THAKUR AND M.Y. EQBAL, JJ.]
Code of Civil Procedure, 1908:
c 0. 1, r.10, 0.22, r.10 - Suit for specific performance of
contract - During pendency of the suit defendant transferring
the property - Application by appellant-transferee for
impleadment as defendant - HELD: Appellant entered into
a clandestine transaction with the defendants and got the
0 property transferred in its favour - Therefore, the appellant
cannot be held to be a bonafide purchaser, without notice - It
is true that the application which the appellant made was only
under 0. I r.10 CPC but the enabling provision of 0.22, r. 10
CPC could always be invoked if the fact situation so
E demanded - In the facts and circumstances of the case and
also for the ends of justice, the appellant is to be added as
party-defendant in the suit -Specific Relief Act, 1963- s. 19
- Transfer of Property Act, 1882 - s.52 - Doctrine of /is
pendens.
F The plaintiff-respondent no. 1 filed a suit on 1.11.1991
against the defendants-respondents for specific
performance of the agreement dated 29.5.1986,
whereunder the defendants had agreed to sell the suit
property to the plaintiff-respondent no. 1. Appearance
G was put on behalf of the defendants and on the basis of
the statement made on their behalf court on 4.11.1991
passed an interim order not to alienate the suit property.
However, between 31.1.2001 and 3.4.2001 five sale deeds
were executed by the defendants in favour of the
H 74
THOMSON PRESS (INDIA) LTD. v. NANAK 75
BUILDERS & INVESTORS P.LTD.
appellant. On the basis of these sale deeds the appellant A
moved an application under 0.1, r.10. CPC, for
impleadment as defendant in the suit for specific
performance filed by the plaintiff-respondent no. 1. The
Single Judge of the High Court rejected the application.
The FAO filed by the appellant was also dismissed by the B
Division Bench of the High Court.
In the instant appeal, the question for consideration
before the Court was: "whether the appellant who is the
transferee pendente lite having notice and knowledge C
about the pendency of the suit for specific performance
and order of injunction can be impleaded as party under
Order 1 Rule 10 on the basis of sale deeds executed in
/ its favour by the defendants"
Allowing the appeal, the Court D
HELD: (Per M.Y. Eqbal, J.)
1.1 Order 1 Rule 10 of the Code of Civil Procedure,
1908 which empowers the court to add any person as
party at any stage of the proceedings if the presence of E
such person before the court is necessary or proper for
effective adjudication of the issue involved in the suit.
Sub-rule (2) of Rule 10 gives a wider discretion to the
court to meet every case or defect of a party and to
proceed with a person who is either a necessary party F
or a proper party whose presence in the court is essential
for effective determination of the issues involved in the
suit. [para 27 & 28] [100-8-C; 101-D-E]
Ramesh Hirachand Kundanmal v. Municipal Corporation G
of Greater Bombay & Ors. 1992 (2) SCR 1=1992 (2) SCC
- 524 • referred to. •
1.2 From a bare reading of s.19 of the Specific Relief
AGt1 it is manifest that a Gontract for lipecific perform1mce
H
76 SUPREME COURT REPORTS (2013) 2 S.C.R.
A may be enforced against the parties to the contract and
the persons mentioned in the said section. Clause (b) of
s.19 makes it very clear that a suit for specific
performance cannot be enforced against a person who
is a transferee from the vendor for valuable consideration
B and without notice of the original contract which is
sought to be enforced in the suit. [para 31] [103-E-F]
1.3 In the instant case, even before the institution of
suit for specific performance when the plaintiff came to
know about the activities of the defendants to deal with
C the property, a public notice was published at the
instance of the plaintiff in a newspaper on 12.02.1990
informing the public in general about the agreement with
the plaintiffs. In response to the said notice the sister
concern of the appellant served a legal notice dated
'D 24.06.1990 on the defendants referring to the 'agreement
to sell' entered into between the plaintiffs and the
defendants. Even after the institution of the suit, the
counsel who appeared for the defendants gave an
undertaking not to transfer and alienate the suit property.
E Notwithstanding the order passed by the court regarding
the undertaking given on behalf of the defendants, and
having full notice and knowledge of all these facts, the
sister concern of the appellant entered into series of
transactions and finally the appellant got the sale deeds
F executed in its favour by the defendants in respect of suit
property. Taking into consideration all these facts, this
Court holds that the appellant entered into a clandestine
transaction with the defendants and got the property
transferred in their favour. Therefore, the appellant
G cannot be held to be a bonafide purchaser, without
notice. [para 33, 34 and 35] [103-D-H; 104-A-E]
1.4 A decree for specific performance of a contract -
may be enforced against a person claiming under the
H plaintiff, and title acquired subsequent to the contract.
THOMSON PRESS (INDIA) LTD. v. NANAK 77
BUILDERS & INVESTORS P.LTD.
There is no dispute that such transfer made in favour of A
the subsequent purchaser is subject to the rider provided
u/s 52 of the Transfer of Property Act and the restrain order
passed by the court. Section 52 of the Transfer of Property
Act, 1882 speaks about the doctrine of lis pendens. The
doctrine is based on the ground that it is necessary for B
the administration of justice that the decision of a court in
a suit should be binding not only on the litigating parties
but on those who derive title pendente lite. The provision
of this Section does not indeed annul the conveyance or
the transfer otherwise, but renders it subservient to the c
rights of the parties to a litigation. [Para 23-24 and 37] [97-
G; 98-E-F; 104-G-H; 105-A]
Kasturi v. lyyamperumal & Ors. 2005 (3) SCR 864
= 2005(6) SCC 733; Vidhur lmpex and Traders Pvt. Ltd. v. D
Tosh Apartments Pvt. Ltd. & Ors. 2012 (8) SCC 384; Surjit
Singh and Others v. Harbans Singh and Others 1995
=
(3) Suppl. SCR 354 (1995) 6 SCC 50; Anil Kumar Singh
vs. Shivnath Mishra alias Gadasa Guru 1994 (5) Suppl.
SCR 135 = (1995) 3 SCC 147; Savitri Devi v. District Judge,
Gorakhpur and Others 1999 (1) SCR 725 = (1999) 2 SCC E
577; Vijay Pratap and Others v. Sambhu Saran Sinha and
Others 1996 (4) Suppl. SCR 173 = (1996) 10 SCC 53; Gouri
Dutt Maharaj v. Sukur Mohammed & Ors. AIR (35) 1948;
Kedar Nath Lal & Anr. v. Ganesh Ram & Ors. 1970
(2) SCR 204 =AIR 1970 SC 1717; and Rajender Singh & F
Ors. v. Santa Singh & Ors. 1974 (1) SCR 381 =AIR 1973 SC
2537; Kafiladdin and Others vs. Samiraddin and Others, AIR
1931 Calcutta 67; Durga Prasad and Another v. Deep
Chand and Others 1954 SCR 360 = AIR (1954) SC 75
Ramesh Chandra v. Chunil Lal 1971 (2) SCR 573 =AIR G
(1971) SC 1238; Dwarka Prasad Singh and Others vs.
Harikant Prasad Singh and Others (1973) SC 655 - referred
to.
1.5 In the facts and circumstances of the case and H
78 SUPREME COURT REPORTS (2013] 2 S.C.R.
•
A also for the ends of justice, the appellant is to be added
as party-defendant in the suit. The impugned orders
passed by the High Court are set aside. It is clarified that
the appellant after impledment as party-defendant shall
be permitted to take all such defences which are available
B to the vendors as the appellant derived title, if any, from
the vendor on the basis of purchase of the suit property
subsequent to the agreement with the plaintiff and during
the pendency of the suit. [para 42-43] [107-C-EJ
Per T.S. Thakur. J. <Concurring)
c
1.1 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
D consideration, in good faith and without notice of the
original contract. In the instant case, the appellant was
not protected against specific performance of the
contract in favour of the plaintiff, for even though the
transfer in favour of the appellant was for valuable
E consideration it was not in good faith nor was it without
notice of the original contract. The appellant is not a
bona fide purchaser and is, therefore, not protected
against specific performance of the contract between the
plaintiffs and the owner defendants in the suit. [para 3, 4
F and 14(1)] [108-E-F; 109-C-D; 115-C]
Nagubai Ammal & Ors. v. B. Shama Rao & Ors. AIR
1856 SC 593; Vinod Seth v. Devinder Bajaj 2010 (7)
=
SCR 424 (2010) 8 SCC 1; Nawab John & Ors. v. V.N.
=
Subramanyam 2012 (6) SCR 369 (2012) 7 SCC 738;
G Jayaram Mudaliar v. Ayyaswami and Ors. 1973 (1) SCR 139 =
(1972) 2 sec 200 - referred to.
1.2 Therefore, the transfer of the suit property
pendete lite is not void ab initio and that the purchaser
H of any such property takes the bargain subject to the
THOMSON PRESS (INDIA) LTD. v. NANAK 79
BUILDERS & INVESTORS P.LTD.
rights of the plaintiff in the pending suit. Even where the A
sale deed is executed in breach of an injunction issued
by a competent court, there is no reason why the breach
of any such injunction should render the transfer whether
by way of an absolute sale or otherwise ineffective. The
party committing the breach may doubtless incur the B
liability to be punished for the breach committed by it but
the sale by itself may remain valid as between the parties
to the transaction subject only to any directions which the
competent court may issue in the suit against the vendor.
The transfer in favour of the appellant pendente lite is c
effective in transferring title to the appellant but such title
shall remain subservient to the rights of the plaintiff in the
suit and subject to any direction which the Court may
eventually pass therein. [para 9 and 14] [111-C-E; 115-D]
1.3 As regards the right of a transferee pendete lite, D
to seek addition as a party defendant to the suit under 0.
I, r.10 of the Code of Civil Procedure, 1908, it is well settled
that no one other than parties to an agreement to sell is
a necessary and proper party to a suit. [para 1O] [111-F]
E
1.4 However, the prayer made by the appellant can be
allowed under 0. 22, r. 10 CPC. A simple reading of 0.22, r.10
would show that in cases of assignment, creation or
devolution of any interest during the pendency of a suit, the
suit may, by leave of the court, be continued by or against F
the person to or upon whom such interest has come or
devolved. It is true that the application which the appellant
made was only under 0. I r.10 CPC but the enabling
provision of 0.22, r. 10 CPC could always be invoked if the
fact situation so demanded. [para 11] [112-C-E] G
1.5 This Court has held that a transferee pendete lite
can be added as a party to the suit lest the transferee
suffered prejudice on account of the transferor losing
interest in the litigation post transfer. [para 12] [112-G-H]
I H
80 SUPREME COURT REPORTS [2013) 2 S.C.R.
A Khemchand Shanker Choudhary v. Vishnu Hari Patil
=
1983 (1) SCR 898 (1983) 1 SCC 18; and Amit Kumar Shaw
=
v. Farida Khatoon 2005 (3) SCR 509 (2005) 11 SCC 403;
Rikhu Dev, Che/a Bawa Harjug Dass v. Som Dass
(deceased) through his Che/a Shiama Dass, 1976 (1)
=
B SCR 487 (1976) 1 sec 103 - relied on.
1.6 Since the appellant has purchased the entire
estate that forms the subject matter of the suit, the
appellant is entitled to be added as a party defendant to
the suit. The appellant shall as a result of his addition
C raise and pursue only such defenses as were available
and taken by the original defendants and none other.
[para 14] [115-E-F]
Case Law Reference:
D
As per M.Y. Eqbal, J.
2005 (3) SCR 864 referred to para 7
2012 (8) sec 384 referred to para 9
E 1995 (3) Suppl. SCR 354 referred to para 10
1994 (5) Suppl. SCR 135 referred to para 15
1999 (1) SCR 725 referred to para 17
F 1996 (4) Suppl. SCR 173 referred to para 20
AIR (35) 1948 referred to para 24
1970 (2) SCR 204 referred to para 25
1974 (1) SCR 381 referred to para 26
G
1992 (2) SCR 1 referred to para 29
AIR 1931 Calcutta 67 referred to para 38
1954 SCR360 referred to para 39
H
THOMSON PRESS (INDIA) LTD. v. NANAK 81
BUILDERS & INVESTORS P.LTD.
1971 (2) SCR 573 referred to para 40 A
As per T.S. Thakur, J.
AIR 1986 SC 593 referred to para 5
2010 (7) SCR 424 referred to para 6 B
2012 (6) SCR 369 referred to para 7
1973 (1) SCR 139 referred to para 8
1983 (1) SCR 898 relied on para 12
c
2005 (3) SCR 509 relied on para 13
1976 (1) SCR 487 relied on para 14
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1518 of 2013. D
From the Judgment & Orders dated 15.12.2008 of the
High Court of Delhi at New Delhi in FAO (OS) No. 295 of 2008.
Sunil Gupta, Pramod Dayal, Nikuknj Dayal, S.D. Salwan,
Aditya Garg for the Appellant. E
Mahender Rana, Ramesh N. Keshwani, Ram Lal Roy,
Deevesh Nagrath, Utkarsha Kohli, Nitish K. Sharma, Dr. Vipin
Gupta for the Respondents.
F
The Judgments of the Court were delivered by
. M.Y. EQBAL, J. 1. Leave granted.
2. This appeal is directed against the order passed by the
division bench of the High Court of Delhi in FAQ No. 295 of G
2008 affirming the order of the Single Judge and rejecting the
petition filed by the appellant under Order 1 Rule 10 of CPC
for impleadment as defendants in a suit for specific
performance of contract being Suit No. 3426 of 1991 ffied by
plaintiff-Respondent No.1. H
82 SUPREME COURT REPORTS (2013] 2 S.C.R. ·
A 3. Although the case has a chequered history, the brief
facts of the case can be summarized as under :-
4. Mrs. Lakhbir Sawhney, Respondent No. 2 and son Mr.
H.S. Sawhney, the predecessor of Respondent No. 3 (a) to (d)
B were the owners of the property known as "Ojha House" I
"Sawhney Mansion", F-Block, Connaught Place, New Delhi.
(These respondents shall be referred as "the Sawhneys" for the
sake of convenience). M/s Nanak Builders and Investors Pvt.
Ltd., Respondent No.1 is the plaintiff in the Suit. The plaintiff-
C Respondent No.1 filed a suit in the High Court of Delhi being
Suit No. 3426 of 1991 against the defendants-respondents
Sawhneys' for a decree for specific performance of agreement.
The case of the plaintiff-respondent is that on 29.05.1986 the
defendant-respondent entered into an agreement with the
plaintiff-respondent for sale of an area measuring about 4000
D sq.ft. on the 1st Floor of F-26, Connaught Place, New Delhi on
the consideration of Rs. 50 lakhs. Out of the said
consideration, a sum of Rs. 1 lakh was paid by the plaintiffs to .
the defendants vide cheque no. 0534224 drawn from Union
Bank of India, New Delhi. The aforesaid property shall be
E referred to as the "suit property" which was in the tenancy of
M/s Peerless General Finance Company Limited. In the said
agreement it was agreed inter alia that if the premises is
vacated and the plaintiff did not complete the sale on the
defendant, getting all permissions, sanctions etc., the defendant
F shall have the right to forfeit the money. Plantiffs further case
was that Mis Peerless General Finance Company Limited has
given a security deposit of Rs. 25 lakhs approximately and did
not vacate the premises and called upon the defendants that
they will vacate the premises only when the defendants make
G the payment, that too on the expiry of the lease which expired
around September, 1990. It is alleged by the plaintiff that during
the intervening period, it has been making part payments from
time to time out of the said consideration amount. In May 1991,
the defendants got the said suit premises vacated from M/s
H Peerless General Finance Company Limited. The plaintiffs
THOMSON PRESS (INDIA) LTD. v. NANAK 83
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
have immediately approached the defendants to receive the A
balance consideration but the same was avoided by the
defendant. A public notice was, therefore, issued in 'The
Hindustan Times', New Delhi so that the defendants
'Sawhneys' do not sell, transfer or alienate the said property
to any other person. Lastly, it was alleged by the plaintiff that B
despite being always ready and willing to complete the
transaction, the defendant avoided to obtain requisite
permission I sanction and clearance, hence the suit was filed.
During the intervening period some more development took
place. One Living Media India Limited, (in short LMI), said to c
be a group company of the Appellant M/s Thomson Press
(India) Limited offered the defendant-respondent to take the suit
premises on lease, some time in the year 1988. The
defendants Sawhneys' assured the LMI that lease would be
granted after M/s Peerless vacated the suit property. LMI, D
accordingly, sent a cheque to the defendants-Sawhneys' as
earnest money in respect of the lease. However, when
Sawhneys' wanted to resile from the agreed terms with LMI, a
suit was filed by LMI being Suit No. 2872 of 1990 against
Sawhneys' in Delhi High Court for perpetual injunction
restraining the Sawhneys' from parting with possession of the E
premises to any third party. The High Court passed the restrain
order on 19.09.1990 with regard to the suit property and
appointed a commissioner to report as to who is in possession
of suit premises. It appears that the aforesaid suit filed by LMI
was compromised and an order was passed on 08.04.1991 F
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 it.
5. On 01.11.1991, the plaintiff-Mis Nanak Builders in the G
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 H
84 SUPREME COURT REPORTS [2013] 2 S.C.R.
A on behalf of Sawhneys' and stated before the Court that
possession of the flat in question is not with the defendants,
rather with Mis 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
B by the defendants. The defendants- Sawhneys' also filed a
wr'itten 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
c 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 ORT, 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'
0
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 Mis Thomson Press India Limited. On
the basis of those sale deeds the appellant moved an
E application under Order 1 Rule 10 CPC for impleadment as
defendants in a suit for specific performance filed by
Respondent No.1 herein Mis Nanak Builders and Investors Pvt.
Ltd.
F 6. 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
G 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.
H The Division Bench affirmed the order of the Single Judge and
THOMSON PRESS (INDIA) LTD. v. NANAK 85
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
held that in view of the injunction in the form of undertaking A
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.
7. Mr. Sunil Gupta, learned senior counsel appearing for B
the appellant assailed the impugned orders as being illegal,
erroneous in law and without jurisdiction. Learned senior
counsel firstly contended that the appellant being the purchaser
. of the suit property is a necessary and proper party for the
complete and effective adjudication of the suit. According to c
him, the denial of impleadment will be contrary to the principles
governing Order 1Rule10 (2) of the CPC though he submitted
that impleadment as a party is not a matter of right but a matter
of judicial discretion to be exercised in favour of a necessary ·
and proper party. Ld. Senior counsel further submitted that D
where a subsequent purchaser has purchased a suit property
and is deriving its title through the same vendor then he would
be a necessary party provided it has purchased with or without
notice of the prior contract. He further submitted that after one
transaction a pendency of the suit arising there from, Section· E
52 of the Transfer of Property Act does not prohibit the
_. subsequent transaction of transfer of property nor even
dedares the same to be null and void. Ld. Senior counsel,
however, has not disputed the legal proposition that the court
would be justified in denying impleadment at the instance of the F
applicant who ·has entered a subsequent transaction knowing
that there is a court injunction in a pending suit restraining and
prohibiting further transaction or alienation of the property.. Ld.
Senior counsel put heavy reliance on the decisions of the
Supreme Court in Kasturi v. /yyamperumal & Ors. 2005(6)
SCC 733, for the proposition that an application by the G
, subsequent purchaser for impleadment in a suit for specific
performance by a prior transf~ree does not alter the nature and
character of the ~uit and such a transferee has a right and -
interest to be protected and deserves to be impleaded in the
suit. H
86 SUPREME COURT REPORTS [2013) 2 S.C.R.
A 8. Mr. Gupta, strenuously argued that High Court has not
considered the question whether the appellant-purchaser had ,
any knowledge of the order of injunction dated 04.11.1991
before entering the sale transaction in 2001. He has submitted
that even assuming that Sawhneys' had such a knowledge, the
8 same cannot be held as an objection to the exercise of judicial
discretion in favour of the appellant being impleaded in the suit
on the application of the appellant itself.
9. Per contra, Mr. Mahender Rana, learned counsel
appearing for Respondent No.1 firstly contended that the suit
C is at the stage of final hearing and almost all the witnesses have
been examined and at this stage the petition for impleadment
· cannot be and shall not be allowed. Ld. Counsel drew our
attention to the legal notice dated 24.06.1990 and the notice
dated 12.02.1990 published in the newspaper and submitted
D that not only the Sawhneys' but the appellant and its sister
concern had full notice and knowledge of the pendency of the
suit and the order of injunction on the basis of the undertaking
given by Sawhneys' that the suit property shall not be assigned
or alienated during the pendency of the suit. Learned counsel
E further contended that as a matter of fact the vendor Sawhneys'
had committed fraud by incorporating in the sale deed that there
was no agreement or any injunction passed in any suit or
proceedings. In that view of the matter the application for
impleadment has been rightly rejected by the High Court. He
F placed reliance on Vidhur /mpex and Traders Pvt. Ltd. v. Tosh
Apartments Pvt. Ltd. & Ors. 2012 (8) SCC 384 and Surjit
Singh and Others v. Harbans Singh and Others (1995) 6 SCC
50.
10. Before discussing the decision of the Supreme Court
G relied upon by the parties, we would like to highlight some of
the important facts and developments in the case which are not
disputed by the parties .
.11. As noted above, plaintiff-respondent No.1 filed the suit
H for specific performance on 01.11.1991 against the defendants
THOMSON PRESS (INDIA) LTD. v. NANAK 87
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
Sawhneys for the specific performance of the agreements A
dated 29.05.1986. In the said suit, the defendants Sawhneys
through Mr. Raj Panjwani, Advocate accepted summons on
their behalf and filed vakalatnama. The said Advocate Mr.
Panjwani, inter-alia, stated before the Court that the defendants
would not transfer or alienate the flat in question. The order B
dated 04.11.1991 was incorporated in the order sheet as
under:
"Mr. Panjwani accepts notice. Mr. Panjwani states that the
possession of the flat in question is not with the C
defendants. The possession is with Mis. Living Media
India Limited which was delivered to them under the orders
of this Court. Mr. Panjwani states that till the disposal of
this application the defendants would not transfer or
alienate the flat in question. Let the reply be filed within 6
weeks with / advance copy to the counsel for the plaintiff, D
who may.file the rejoinder within 2 weeks thereafter._ List
this I.A. for disposal on 10.3.1992."
12. It is also not in dispute that before the institution of the
suit the plaintiff-respondent got a notice published in the E
newspaper on 12.02.1990 in Hindustan Times, Delhi Edition.
When this came to the notice of the appellant, the sister
concern of the appellant, namely, M/s. Living Media India
Limited sent a legal notice to the defendants Sawhneys' dated
24.06.1990 and called upon him to execute the lease deed in F
respect of the suit property in terms of the agreement. In the
said notice dated 24.06.1990 tl)e sister concern of the
appellant in paragraph 8 stated as under:
"That a Public Notice appeared in the Hindustan Times
Delhi Edition on 12.2.1990. As per this notice one M/s G
Nanak Buildings and Investor Pvt.Ltd. claim that you have
entered into an Agreement to sell the premises in question
to them. A copy of this notice is being endorsed to their
counsel.mentioned in the Public Notice. My client further
learns that you have approached a number of property H
88 SUPREME COURT REPORTS [2013] 2 S.C.R.
A brokers also for the disposal of the property."
13. The question, therefore, that falls for consideration is
as to whether if the appellant who is the transferee pendente
lite having notice and knowledge about the pendency of the suit
for specific performance and order of injunction can be
8
impleaded as party under Order 1 Rule 10 on the basis of sale
deeds executed in their favour by the defendants Sawhneys'.
14. Before coming to the question involved in the case, we
would like to discuss the decisions of this Court relied upon by
C the parties.
15. In the case of Anil Kumar Singh ·vs. Shivnath Mishra
alias Gadasa Guru (1995) 3 SCC 147, in a suit for specific
performance of contract a petition was filed under Order 6 Rule
0 17 CPC seeking leave to amend the plaint by impleading the
respondent as party defendant in the suit. The contention of
the petitioner was that the vendor had colluded with his sons
and wife and obtained a collusive decree in a suit under the
U.P. Zamindari Abolition and Land Reforms Act. It was
E contended that by operation of law they became the co-sharers
of the property to be conveyed under the Agreement and,
therefore, he is a necessary party. The trial court dismissed
the petition and on revision the High Court of Allahabad -
affirmed the order. In an appeal this Court, refused to interfere
with the order and observed.
F
"In this case, since the suit is based on agreement
of sale said to have been executed by Mishra, the sole
defendant in the suit, the subsequent interest said to have
been acquired by the respondent by virtue of a decree of
G the court is not a matter arising out of or in respect of the
same act or transaction or series of acts or transactions
in relation to the claim made in the suit."
"The question is whether the person who has got his
interest in the property declared by an independent decree
H
THOMSON PRESS (INDIA) LTD. v. NANAK 89-
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.)
but not a party to the agreement of sale, is a necessary A
and proper party to effectually and completely adjudicate
upon and settle all the question involved in the suit. The
question before the court in a suit for the specific
performance is whether the vendor had executed the
document and whether the conditions prescribed in the B
provisions of the Specific Relief Act have been complied
with for granting the relief of specific performance."
"Sub-rule(2) of Rule 10 of Order 1 provides that the
Court may either upon or without an application of either C
party, add any party whose presence before the Court may
be necessary in order to enable the Court effectually and
completely to adjudicate upon and settle all questions
involved in the suit. Since the respondent is not a party to
the agreement of sale, it cannot be said that without his
presence the dispute as to specific performance cannot D
be determined. Therefore, he is not a necessary party."
16. In the case of Surjit Singh (Supra) a similar question
arose for consideration before this Court. In that case, on the
death of one Janak Singh, being the head of the family a suit E
for partition and separate possession was filed by and between
the parties. A preliminary decree was passed and while
proceeding for final decree was pending, the trial court passed
an order restraining all the parties from alienating or otherwise
transferring in any manner any part of the property involved in F
the suit. In spite of the aforesaid order one of the party assigned
the right under the preliminary decree involving wife of his
lawyer. Ori the basis of the assigned deed the assignee made
an application under Order 22 Rule 10 CPC for impleadment
as party to the proceeding. The petition was allowed by the trial G
court and affirmed in appeal by the Additional District Judge
and then i~ revision by the High Court. The matter came before
this Court allowing the appeal and set aside the order's passed
by the courts below. This Court observed :-
"As said before, the assignment is by means of a H
90 SUPREME COURT REPORTS [2013) 2 S.C.R.
A registered deed. The assignment had taken place after
the passing of the preliminary decree in which Pritam
Singh has been allotted 1/3rd share. His right to property
to that extent stood established. A decree relating to
immovable property worth more than hundred rupees, if
B being assigned, was required to be registered. That has
instantly been done. It is per se property, for it relates to
the immovable property involved in the suit. It clearly and
squarely fell within the ambit of the restraint order. In sum,
it did not make any appreciable difference whether
c property per se had been alienated or a decree pertaining
to that property. In defiance of the restraint order, the
alienation/assignment was made. If we were to let it go
as such, it would defeat the ends of justice and the
prevalent public policy. When the Court intends a particular
state of affairs to exist while it is in seisin of a lis, that state
D
of affairs is not only required to be maintained, but it is
presumed to exist till the Court orders otherwise. The
Court, in these circumstances has the duty, as also the
right, to treat the alienation/assignment as having not taken
place at all for its purposes. Once that is so, Pritam Singh
E and his assignees, respondents herein, cannot claim to
be impleaded as parties on the basis of assignment.
Therefore, the assignees-respondents could not have
been impleaded by the trial court as parties to the suit, in
disobedience of its orders. The principles of lis pendens
F are altogether on a different footing. We do not propose
to examine their involvement presently. All what is
emphasised is that the assignees in the present facts and
circumstances had no cause to be impleaded as parties
to the suit. On that basis, there was no cause for going
G into the question of interpretation of paragraphs 13 and
14 of the settlement deed. The path treaded by the courts
below was, in our view, out of their bounds. Unhesitatingly,
we upset all the three orders of the courts below and reject
the application of the assignees for impleadment under
H Order 22 Rule 10 CPC."
THOMSON PRESS (INDIA) LTD. v. NANAK 91
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
17. In the case of Savitri Devi v. District Judge, A
Gorakhpur and Others (1999) 2 SCC 577, a 3 Judges' Bench
of this Court considered a similar questio.n under Order 1 Rule
10 CPC. The fact of the case was that the appellant filed a suit
for maintenance and for creation of charge over the ancestral
property. She also applied for an interim order of injunction B
restraining her sons from alienating the property during the
pendency of the suit. But a vakalatnama was filed on behalf of
the defendants and 4th defendant also filed an affidavit
purporting to be on behalf of the defendants, expressing their
concern that during the pendency of the case the suit property c
will not be sold. In the light of consent of the counsel the Court
passed an order on 18.08.1992 directing the parties not to
transfer the disputed property till the disposal of the suit. In spite
of the aforesaid order one of the defendants sold 1/4th share
of the land to the 3rd respondent and 1/4th share in another D
land to the 4th respondent on 19.08.1992 and further sold 1/
4th share to the 5th respondent. On the basis of this transfer
the transferee-Respondent Nos.3-5 filed an application under
Order 1 Rule 10 CPC for impleading them as parties to the suit.
The application was allowed at all stages. This court noticed
the relevant facts which has been incorporated in paragraph 4 E
of the decision which is reproduced hereunder :-
"The trial court passed a detailed order on 14-7-1997
granting the application of Respondents 3 to 5 and directed
the plaintiff to implead them as defendants in the suit. In F
the order of the trial court, reference has been made to an ·
application filed by the first defendant to the effect that he
was not earlier aware of the case and the 4th defendant
had forged his signature and filed a bogus vakalatnama.
He had also alleged that the order of injunction was G
obtained fraudulently on 18-8-1992. The trial court has also
referred to an application under Section 340 CrPC filed by
the first defendant and observed that the same had been ·
dismissed by order dated 20-12-1992, There is also a
reference in the order of the trial court in the High Court H
92 SUPREME COURT REPORTS (2013] 2 S.C.R.
A filed by the plaintiff for quashing orders dated 10-11-1995
and 19-4-1996 passed in the suit and a miscellaneous civil
appeal arising from the suit wherein Respondents 3 to 5
had been impleaded as parties. It is seen from the order
of the trial court that certain proceedings under Order
B XXXIX Rule 2-A CPC concerning the question of
attachment of the properties sold were also pending. It is
only after taking note of all those facts, the trial court
allowed the application of Respondents 3 to 5 to implead
them as parties to the suit."
c 18. This Court further noticed the point taken by the
appellant based on the principles laid down in Su!jit Singh's
case (supra). Allowing the application this Court held :-
"The facts set out by us in the earlier paragraphs are
D sufficient to show that there is a dispute as to whether the
first defendant in the suit was a party to the order of
injunction made by the Court on 18-8-1992. The
proceedings for punishing him for contempt are admittedly
pending. The plea raised by him that the first respondent
E had played a fraud not only against him but also on the
Court would have to be decided before it can be said that
the sales effected by the first defendant were in violation
of the order of the Court. The plea raised by Respondents
3 to 5 that they were bona fide transferees for value in good
faith may have to be decided before it can be .held that
F
the sales in their favour created no interest in the property.
The aforesaid questions have to be decided by the Court
either in the suit or in the application filed by Respondents
3 to 5 for impleadment in the suit. If the application for
impleadment is thrown out without a decision on the
G
aforesaid questions, Respondents 3 to 5 will certainly
come up with a separate suit to enforce their alleged rights
which means a multiplicity of proceedings. In such
circumstances, it cannot be said that Respondents 3 to 5
are neither necessary nor proper parties to the suit."
H
THOMSON PRESS (INDIA) LTD. v. NANAK 93
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
19. While referring Surjit Singh's case this Court noticed A
that in that case there was no dispute that the assignors and
the assignees had knowledge of the order of injunction passed
by the Court. On those facts, this Court held that the deed of
assignment was not capable of conveying any right to the
assignee and the order of impleadment of the assignees as B
parties was unsustainable. ·
20. In the case of Vijay Pratap and Others v. Sambhu
Saran Sinha and Others (1996) 10 SCC 53 a petition was
filed under Order 1 Rule 10 of the CPC in suit for specific
performance for impleading him as party in place of his father C
on the ground that the father during his lifetime alleged to have
entered into a compromise. The trial court rejecting the petition
held that the petitioners are neither necessary or proper parties
to the suit. On revision this Court dismissing the same held
as under:- D
"The trial court accordingly held that the petitioners are
neither necessary nor proper parties to the suit. On
revision, the High Court upheld ·the same. Shri Sanyal, the
learned counsel for the petitioners contended that their E
father had not signed the relinquishment deed and the
signatures appended to it were not that of him. The deed
of relinquishment said to have been signed by the father
of the petitioners was not genuine. These questions are
matters to be taken into consideration in the suit before F
the relinquishment deed and compromise memo between
the other contesting respondents were acted upon and
cannot be· done in the absence of the petitioners. The
share of the petitioners will be affected and, therefore, it
would prejudice their right, title and interest in the property. G
We cannot go into these questions at this stage. The trial
court has rightly pointed that the petitioners are necessary
and proper parties so long as the alleged relinquishment
deed said to have been signed by the deceased father of
the petitioners is on record. It may not bind petitioners but H
94 SUPREME COURT REPORTS [2013) 2 S.C.R.
A whether it is true or valid or binding on them are all
questions which in the present suit cannot be gone into.
Under those circumstances, the courts below were right in
holding that the petitioners are not necessary and proper
parties but the remedy is elsewhere. If the petitioners have
B got any remedy it is open to them to avail of the same
according to law."
21. In Kasturi's case (supra) a three Judges' Bench of this
Court said that in a suit for specific performance of contract
C for sale an impleadment petition was filed for addition as party
defendant on the ground that the petitioners were claiming not
under the vendor but adverse to the title of the vendor. In other
words, on the basis of independent title in the suit property the
petitioner sought to be added as a necessary party in the suit.
Rejecting the petition this Court held as under :-
D
"As noted herein earlier, two tests are required to be
satisfied to determine the question who is a necessary
party, let us now consider who is a proper party in a suit
for specific performance of contract for sale. For deciding
·E the question who is a proper party in the suit for specific
performance the guiding principle is that the presence of
such a party is necessary to adjudicate the controversies
involved in the suit for specific performance of the contract
for sale. Thus, the question is to be decided keeping in
F mind the scope of the suit. The question that is to be
decided in a suit for specific performance of the contract
for sale is to the enforceability of the contract entered into
between the parties to the contract. If the person seeking
addition is added in such a suit, the scope of the suit for
specific performance would be enlarged and it would be
G
practically converted into a suit for title. Therefore, for
effective adjudication of the controversies involved in the
suit, presence of such parties cannot be said to be
necessary at all. Lord Chancellor Cottenham in Tasker .
v. Smal/ 1834 (40) English Report 848 made the following
H
THOMSON PRESS (INDIA) LTD. v. NANAK 95
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.\
observations : A
"It is not disputed that, generally, to a bill for
specific performance of a contract for sale, the
parties to the contract only are the proper parties;
and, when the ground of this jurisdiction of Courts
8
of Equity in suits of that kind is considered it could
not properly be otherwise. The Court assumes
jurisdiction in such case, because a Court of law,
giving damages only for the non-performance of the
contract, in many cases does not afford an
adequate remedy. But, in equity, as well as in Jaw, C
the contract constitutes the right and regulates the
liabilities of the parties; and the object of both
proceedings is to place the party complaining as
nearly as possible in the same situation as the
defendant had agreed that he should be placed D
in. It is obvious that persons, strangers to the
contract, and, therefore, neither entitled to the right,
nor subject to the liabilities which arise out of it,
are as much strangers to a proceeding to enforce
the execution of it as they are to a proceeding to E
recover damages for the breach of it."
(Emphasis supplied)
F
"Keeping the principles as stated above in mind, let
us now, on the admitted facts of this case, first consider
whether the respondent Nos.1 and 4 to 11 are necessary
parties or not. In our opinion, the respondent Nos. 1 and
4 to 11 are not necessary parties effective decree could G
be passed in their absence as they had not purchased the
contracted property from the vendor after the contract was
entered into. They were also not necessary parties as they
would not be affected by the contract entered into between
the appellant and the respondent Nos. 2 and 3. In the case H
96 SUPREME COURT REPORTS (2013] 2 S.C.R.
A of Anil Kumar Singh v. Shivnath Mishra alias Gadasa
Guru, 1995 (3) SCC 147, it has been held that since the
applicant who sought for his addition is not a party to the
agreement for sale, it cannot be said that in his absence,
the dispute as to specific performance cannot be decided.
B In this case at paragraph 9, the Supreme Court while
deciding whether a person is a necessary party or not in
a suit for specific performance of a contract for sale made
the following observation:
"Since the respondent is not a party to the
c agreement for sale, it cannot be said that without
his presence the dispute as to specific
performance cannot be determined. Therefore, he
is not a necessary party."
D (Emphasis Supplied)
22. In the case of Vidhur /mpex (supra), the Supreme
Court again had the opportunity to consider all the earlier
judgments. The fact of the case was that a suit for specific
performance of agreement was filed. The appellants and
E Bhagwati Developers though totally strangers to the agreement,
came into picture only when all the respondents entered into a
clandestine transaction with the appellants for sale of the
property and executed an agreement of sale which was
followed by sale deed. Taking note all the earlier decisions,
F the Court laid down the broad principles governing the disposal
of application for impleadment. Paragraph 36 is worth to be
quoted hereinbelow:
"Though there is apparent conflict in the observations
G made in some of the aforementioned judgments, the broad
principles which should govern disposal of an application
for impleadment are:
1. The Court can, at any stage of the proceedings,
either on an application made by the parties or otherwise,
H
THOMSON PRESS (INDIA) LTD. v. NANAK 97
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
direct impleadment of any person as party, who ought to A
have been joined as Plaintiff or Defendant or whose
presence before the Court is necessary for effective and
complete adjudication of the issues involved in the Suit.
2. A necessary party is the person who ought to be 8
joined as party to the Suit and in whose absence an
effective decree cannot be passed by the Court.
3. A proper party is a person whose presence would
enable the Court to completely, effectively and properly
adjudicate upon all matters and issues, though he may not C
be a person in favour of or against whom a decree is to
be made.
4. If a person is not found to be a proper or
necessary party, the Court does not have the jurisdiction D
to order his impleadment against the wishes of the Plaintiff.
5. In a Suit for specific performance, the Court can
order impleadment of a purchaser whose conduct is
above board, and w~o files Application for' being joined
as party within reasonable time of his acquiring knowledge E
about the pending litigation.
However, if the applicant is guilty of contumacious conduct
or is beneficiary of a clandestine transaction or a
transaction made by the owner of the suit property in F
violation of the restraint order passed by the Court or the
Application is unduly delayed then the Court will be fully
justified in declining the prayer for impleadment."
23. It would also be worth to discuss some of the relevant
laws in order to appreciate the case on hand. Section 52 of G
, the Transfer of Property Act speaks about the doctrine of lis
pendens. Section 52 reads as under:
"52. Transfer of property pending suit relating thereto. -
During the [pendency] in any Court having authority [within H
98 SUPREME COURT REPORTS [2013] 2 S.C.R.
A the limits of India excluding the State of Jammu and
Kashmir] or established beyond such limits] by [the Central
Government) [***] of [any] suit or proceedings which is
not collusive and in which any right to immovable property
is directly and specifically in question, the property cannot
B be transferred or otherwise dealt with by any party to the
suit or proceeding so as to affect the rights of any other
party thereto under any decree or order which may be
made therein, except under the authority of the Court and
on such terms as it may impose.
c [Explanation - For the purposes of this section, the
pendency of a suit or proceeding shall be deemed to
commence from the date of the presentation of the plaint
or the institution of the proceeding in a Court of competent
jurisdiction, and to continue until the suit or proceeding has
D been disposed of by a final decree or order and complete
satisfaction or discharge of such decree or order has been
obtained, or has become unobtainable by reason of the
expiration of any period of limitation prescribed for the
execution thereof by any law for the time being in force."
E
24. It is well settled that the doctrine of lis pendens is a
doctrine based on the ground that it is necessary for the
administration of justice that the decision of a court in a suit
should be binding not only on the litigating parties but on those
F who derive title pendente lite. The provision of this Section
does not indeed annul the conveyance or the transfer otherwise,
but to render it subservient to the rights of the parties to a
litigation. Discussing the principles of lis pendens, the Privy
Council in the case of Gouri Dutt Maharaj v. Sukur
G Mohammed & Ors. AIR (35) 1948, observed as under:
"The broad purpose of Section 52 is to maintain the
status quo unaffected by the act of any party to the litigation
pending its determination. The applicability of the section
cannot depend on matters of proof or the strength or
H weakness of the case on one side or the other in bona fide
THOMSON PRESS (INDIA) LTD. v. NANAK 99
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.}
proceedings. To apply any such test is to misconceive the A
object of the enactment and in the view of the Board, the
learned Subordinate Judge was in error in this respect in
laying stress, as he did, on the fact that the agreement of •
8.6.1932, had not been registered."
B
25. In the case of Kedar Nath Lal & Anr. v. Ganesh Ram
& Ors. AIR 1970 SC 1717, this Court referred the earlier
decision (1967 (2) SCR 18) and observed:
"The purchaser pendente lite under this doctrine is
bound by the result of the litigation on the principle that c
since the result must bind the party to it so it must bind the
person driving his right, title and interest from or through
him. This principle is well illustrated in Radhamadhub
Holder vs. Monohar 15 I.A. 97 where the facts were almost
similar to those in the instant case. It is true that Section D
52 strictly speaking does not apply to involuntary
alienations such as court sales but it is well-established
that the principle of lis pendens applies to such
alienations.(See Nilkant v. Suresh Chandra 12 l.A.171
and Moti Lal v. Karrab-ul-Din 24 l.A.170." E
26. The aforesaid Section 52 of the Transfer of Property
~
Act again came up for consideralion before this Court in the
case of Rajender Singh & Ors. v. Santa Singh & Ors. AIR 1973
SC 2537 and Their Lordship with approval of the principles laid
F
down in 1973 (1) SCR 139 reiterated:
"The doctrine of /is pendens was intended to strike
at attempts by parties to a litigation to circumvent the
jurisdiction of a court, in which a dispute on rights or
interests in immovable property is pending, by private G
dealings which may remove the subject matter of litigation
from the ambit of the court's power to decide a pending
dispute of frustrate its decree. Alienees acquiring any
immovable property during a litigation over it are held to
be bound, by an application of the doctrine, by the decree H
100 SUPREME COURT REPORTS (2013] 2 S.C.R.
A passed· in the suit even though they may not have been
impleaded in it. The whole object of the doctrine of lis
pendens is to subject parties to the litigation as well as
others, who seek to acquire rights in immovable property
which are the subject matter of a litigation, to the power
B and jurisdiction of the Court so as to prevent the object of
a pending action from being defeated."
27. 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
C 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 suit. Order 1 Rule 10 reads as under:
D "10. Suit in name of wrong plaintiff.-
(1) Where a suit has been instituted in the name of
the wrong person as plaintiff or where it is doubtful whether
it has been instituted in the name of the right plaintiff, the
Court may at any stage of the suit, if satisfied that the suit
E
has been instituted through a bona fide mistake, and that
it is necessary for the determination of the real matter in
dispute so to do, order any other person to be substituted
or added as plaintiff upon such terms a the Court thinks
just.
F
(2) Court may strike out or add parties.-The Court
may at any stage of the .proceedings, either upon or without
the application of either party, and on such terms as may
appear to the Court to be just, order that the name of any
G party improperly joined, whether as plaintiff or defendant,
be struck out, and that the name of any person who ought
to have been joined, whether as plaintiff or defendant, or
whose presence before the Court may be necessary in
order to enable the Court effectually and completely to
H adjudicate upon and settle all the questions involved in the
THOMSON PRESS (INDIA) LTD. v. NANAK 101
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
suit, be added. A
(3) No person shall be added as a plaintiff suing
without a next friend or as the next friend of a plaintiff under
any disability without his consent.
(4) Where defendant added, plaint to be amended.- B
Where a defendant is added, the plaint shall, unless the
Court otherwise directs, be amended in such manner as
may be necessary, and amended copies of the summons
and of the plaint shall be served on the new defendant and,
if the Court thinks fit, on .the original defendant. c
(5) Subject to the provisions of the Indian Limitation
Act, 1877 (15 of 1877), section 22, the proceedings as
against any person added as defendant shall be deemed
to have begun only on the service of the summons."
D
28. From the bare reading of the aforesaid provision, it is
manifest that sub-rule (2) of Rule 10 gives a wider discretion
to the ColJrt to meet every case or defect of a party and to
proceed with a person who is a either necessary party or a
proper party whose presence in the Court is essential for E
effective determination of the issues involved in the suit.
29. Considering the aforesaid provisions, this Court in the
case of Ramesh Hirachand Kundanma/ v. Municipal
Corporation of Greater Bombay & Ors. 1992 (2) SCC 524 held F
as under:
"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 objectives. The G
person to be joined must be one whose presence is
necessary 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 H
102 SUPREME COURT REPORTS [2013) 2 S.C.R.
A interest in the correct solution of some questions involved ·
and has thought of relevant arguments to advance. The only
reason which make it necessary 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
B 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 commerc;ial interest. It is,
therefore, necessary that the person must be directly or
c 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
whose only object is to prosecute his own cause of action.
Similar provision was considered in Amon v. Raphael
D
Tuck & Sons Ltd. (1956) 1 All E.R. 273, wherein after
quoting the observations of Wynn-Parry,J. in Do//fus
Mieget Compagnie S.A. v. Bank of England (1950) 2 All
E.R. 611, that the true test lies not so much in ari analysis
of what are the constituents of the applicants' rights, but
E rather in what would be the result on the subject matter of
the action if those rights could be established, Devlin,J. has
stated:
The test fis 'May the order for which the plaintiff is
F asking directly affect the intervener in the enjoyment of his
legal rights."
30. At this juncture, we would also like to refer Section 19
of the Specific Relief Act which reads as under:
G "19. Relief against parties and persons claiming under
them by subsequent title. - Except as otherwise provided
by this Chapter, specific performance of a contract may
be enforced against-
H (a) either party thereto;
"
THOMSON PRESS (INDIA) LTD. v. NANAK 103
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.]
(b) any other person claiming under him by a title A
arising subsequently to the contract, except a transferee
for value who has paid his money in good faith and without
notice of the original contract;
(c) any.person claiming under a title which, though
B
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 C
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 D
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."
E
31. From the bare reading of the aforesaid provision, it is
manifest that a contract for specific performance may be
enforced against the parties to the contract and the persons
mentioned in the said section. Clause (b) of Section 19 makes
it very clear that a suit for specific performance cannot be F
enforced against a person who is a transferee from the vendor
for valuable consideration and without notice of the or~ginal
contract which is sought to be enforced in the suit.
32. In the light of the aforesaid discussion both on facts
and law, we shall now examine some of the relevant facts in G
order to come to right conclusion.
33. As noticed above, even before the institution of suit for
specific performance when the plaintiff came to know about the
activities of the Sawhneys' to deal with the property, a public H
104 SUPREME COURT REPORTS [2013) 2 S.C.R.
A notice was published at the instance of the plaintiff in a
newspaper "The Hindustan Times" dated 12.02.1990 (Delhi
Edn.) informing the public in general about the agreement with
the plaintiffs. In response to the said notice the sister concern
of the appellant Mis Living Media India Limited served a legal .
B notice on the defendants- Sawhneys' dated 24.06.1990
whereby he has referred the 'agreement to sell' entered into
between the plaintiffs and the defendants- Sawhneys'.
34. Even after the institution of the suit, the counsel who
appeared for the defendants-Sawhneys' gave an undertaking
c not to transfer and alienate the suit property. Notwithstanding
the order passed by the Court regarding the undertaking given
on behalf of the defendants- Sawhneys', and having full notice
and knowledge of all these facts, the sister concern of the
appellant namely Living Media India Ltd. entered into series of
D transaction and finally the appellant Mis. Thomson Press got a
sale deed executed in their favour by Sawhneys' in respect of
suit property.
-
35. Taking into consideration all these facts, we have no
E hesitation in holding that the appellant entered into a clandestine ·
transaction with the defendants-Sawhneys' and got the property
transferred in their favour. Hence the appellant - Mis Thomson
Press cannot be held to be a bonafide purchaser, without
notice.
-
F 36. On perusal of the two orders passed by the single
judge and the Division Bench of the High Court, it reveals that
the High Court has not gone into the question as to whether if
a person who purchases the suit property in violation of the
order of injunction, ·and having sufficient notice and knowledge
G of the Agreement. need to be added as party for passing an
effective decree in the suit.
37. As discussed above, a decree for specific
performance of a contract may be enforced against a person
H claimed under the plaintiff, and title acquired subsequent to the
THOMSON PRESS (INDIA) LTD. v. NANAK 105
BUILDERS & INVESTORS P.LTD. [M.Y. EQBAL, J.)
contract. There is no dispute that such transfer made in favour A
of the subsequent purchaser is subject to the rider provided
under Section 52 of the Transfer of Property Act and the restrain
order passed by "the Court.
38. The aforesaid question was considered by the Calcutta B
High Court in the case of Kafiladdin and Others vs.
Samiraddin and Others, AIR 1931 Calcutta 67 where Lordship
referred the English Law on this point and quoted one of the
passage of the Book authored by Dart, on "Vendors and
Purchasers" Edo.8, Vol.2, which reads as under :-
c
· "Equity will enforce specific performance of the contract for
sale against the vendor himself and against all persons
claiming under him by a title arising subsequently to the
contract except purchaser for valuable consideration who
have paid their money and taken a conveyance without D
notice to the original contract."
Discussing elaborately, the Court finally observed:-
"The statement of the law is exactly what is meant by the
first two clauses of S.27, Specific Relief Act. It is not E
necessary to refer to the English cases in which decrees
have been passed against both the contracting party and
the subsequent purchaser. It is enough to mention some
of them : Daniels v. Davison (2), Potters v. Sanders (3),
Lightfoot v. Heron(4). The question did not pertinently F
arise in any reported case in India; but decrees in case
of specific performance of contract have been passed in
several cases in different forms. In Chunder Kanta Roy
v. Krishna Sundar Roy (5) the decree passed against
the contracting party only was upheld. So it was in Kannan G
v. Krishan (6). In Himmatlal Motilal v. Basudeb(7) the
decree passed against the contracting defendant and the
subsequent purchaser was adopted. In Gangaram v.
Laxman(9) the suit was by the subsequent purchaser and
the decree was that he should convey the property to the H
106 SUPREME COURT REPORTS [2013] 2 S.C.R.
A person holding the prior agreement to sale. It would
appear that the procedure adopted in passing decrees in
such cases is not uniform. But it is proper that English
procedure supported by the Specific Relief Act should be
adopted. The apparent reasoning is that unless both the
B contracting party and the subsequent purchaser join in the
conveyance it is possible that subsequently difficulties may
arise with regard to the plaintiffs title."
39. The Supreme Court referred the aforementioned
C decision of the Calcutta High Court in the case of Durga
Prasad and Another v. Deep Chand and Others AIR (1954)
SC 75, and finally held:-
"In our opinion, the proper form of decree is to direct
specific performance of the contract between the vendor
D 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
convenants made between plaintiff and his vendor; all he
does is to pass on his title to the plaintiff. This was the
E course followed by the Calcutta High Court in - Kafiladdin
v. Samiraddin, AIR 1931 Cal 67 (C) and appears to be
the English practice. See Fry on Specific Performance,
6th Ed. Page 90, paragraph 207; also - 'Potter v.
Sanders', (1846) 67 ER. We direct accordingly."
F 40. Again in the case of Ramesh Chandra v. Chunil Lal
(1971) SC 1238, this Court referred their earlier decision and
observed:- -
"It is common ground that the plot in dispute has been
G transferred by the respondents and therefore the proper
form of the decree would be the same as indicated at
page 369 in Lala Durga Prasad v. Lala Deep Chand,
1954 SCR 360 =(AIR 1954 SC 75) viz., "to direct specific
performance of the contract between the vendor and the
H plaintiff and direct the subsequent transferee to join in the
THOMSON PRESS (INDIA) LTD. v. NANAK 107
BUILDERS & INVESTORS P.LTD.
conveyance so as to pass on the title which resides in him A
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'. We order accordingly.
The decree of the courts below is hereby set aside and
the appeal is allowed with costs in this court and the High B
c;ourt."
41. This Court again in the case of Dwarka Prasad Singh
and Others vs. Harikant Prasad Singh and Others (1973)
SC 655 subscribed its earlier view and held that in a suit for
specific performance against a person with notice of a prior C
agreement of sale is a necessary party.
42. Having regard to the law discussed hereinabove and
in the facts and circumstances of the case and also for the ends
of justice the appellant is to be added as party-defendant in the D
suit. The appeal is, accordingly, allowed and the impugned
orders passed by the High Court are set aside.
43. Before parting with the order, it is clarified that the
appellant after impledment as party-defendant shall be
permitted to take all such defences which are available to the E
vendor Sawhneys' as the appellant derived title, if any, from the
vendor on the basis of purchase of the suit property subsequent
to the agreement with the plaintiff and during the pendency of
the suit.
F
T.S. THAKUR, J.
1. I have had the advantage of going through the order
proposed by my Esteemed Brother M.Y. Eqbal, J. While I
entirely agree with the conclusion that the appellant ought to be G
added as a party-defendant to the suit, I wish to add a few lines
of my own.
2. There are three distinct conclusions which have been
drawn by Eqbal, J. in the judgment proposed by his Lordship.
H
\
108 SUPREME COURT REPORTS (2013] 2 S.C.R.
A 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,
appellant's sister concern, sent to the defendants indeed left
8 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
C 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
D 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 reasons.
3. In the light of the above finding it is futile to deny that
E 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
F of sale only if the transferee has acquired the title for valuable
consideration, in good faith and without notice of the original
contract. That is evident from Section 19(b) of the Specific
Relief Act which is to the following effect:
"19.Relief against parties and persons claiming under
G them by subsequent title - Except as otherwise
provided by this Chapter, specific performance of a
contract may be enforced against -
(a) either party thereto;
H
THOMSON PRESS (INDIA) LTD. v. NANAK 109
BUILDERS & INVESTORS P.LTD. [T.S. THAKUR, J.]
(b) any other person claiming under him by a title arising A
subsequently to the contract, except a transferee for value
who has paid his money in good faith and without notice
of the original contract;
(c) xxxxxxxx B
(d) xxxxxxxx
(e) xxxxxxxx
4. There is thus no gainsaying that the appellant was not c
protected against specific performance of the contract in favour
of the plaintiff, for even though the transfer in favour of the
appellant was for valuable consideration it was not in good faith
nor was it without notice of the original contract.
D
5. The second aspect which the proposed judgment
succinctly deals with is the effect of a sale pendete lite. The legal
position in this regard is also fairly well settled. A transfer
pendete lite is not illegal ipso jure but remains subservient to
the pending litigation. In Nagubai Ammal & Ors. v. B. Shama
Rao & Ors. AIR 1856 SC 593, this Court while interpreting E
Section 52 of the Transfer of Property Act observed:
" ... The words "so as to affect the rights of any other party
thereto under any decree or order which may be made
therein", make it clear that the transfer is good except to F
the extent that it might conflict with rights decreed under
the decree or order. It is in this view that transfers pendente
lite have been held to be valid and operative as between
the parties thereto." ·
G
6. To the same effect is the decision of this Court in Vinod
Seth v. Devinder Bajaj (2010) 8 SCC 1 where this Court held
that Section 52 does not render transfers affected during the
pendency of the suit void but only render such transfers
suhseruient to the rights as may be eventually determined by H
110 SUPREME COURT REPORTS (2013] 2 S.C.R.
A the Court. The following passage in this regard is apposite:
"42. It is well settled that the doctrine of lis pendens does
not annul the conveyance by a party to the suit, but only
renders it subservient to the rights of the other parties to
B the litigation. Section 52 will not therefore render a
transaction relating to the suit property during the pendency
of the suit void- but render the transfer inoperative insofar
as the other parties to the suit. Transfer of any right, title
or interest in .the suit property or the consequential
C acquisition of any right, title or interest, during the pendency
of the suit will be subject to the decision in the suit."
7. The decision of this Court in A. Nawab John & Ors. v.
V.N. Subramanyam (2012) 7 SCC 738 is a recent reminder
0 of the principle of law enunciated in the earlier decisions. This
Court in that case summed up the legal position thus:
"18 ........The mere pendency of a suit does not prevent
one of the parties from dealing with the property constituting
the subject-matter of the suit. The section only postulates
E
a condition that the alienation will in no manner affect the
rights of the other party under any decree which may be
passed in the suit unless the property was alienated with
the permission of the court."
F 8. We may finally refer to the decision of this Court in
Jayaram Mudaliar v. Ayyaswami and Ors. (1972) 2 SCC 200
in which were extracted with approval observations made on
the doctrine of lis pendens in "Commentaries of Laws of
G Scotland, by Bell". This Court said:
"43 ........... Bell, in his commentaries on the Laws of
Scotland said that it was grounded on the maxim:
"Pendente lite nibil innovandum". He observed:
H It is a general rule which seems to have been·
THOMSON PRESS (INDIA) LTD. v. NANAK 111
BUILDERS & INVESTORS P.LTD. [T.S. THAKUR, J.]
recognised in all regular systems of jurisprudence, A
that during the pendence of an action, of which the
object is to vest the property or obtain the
possession of real estate, a purchaser shall be held
to take that estate as it stands in the person of the
seller, and to be bound by the claims which shall B
ultimately be pronounced."
9. There is, therefore, little room for any doubt that the
transfer of the suit property pendete lite is not void ab initio and
that the purchaser of any such property takes the bargain subject C
to the rights of the plaintiff in the pending suit. Although the
above decisions do not deal with a fact situation where the sale
deed is executed in breach of an injunction issued by a
competent Court, we do not see any reason why the breach of
any such injunction should render the transfer whether by way
of an absolute sale or otherwise ineffective. The party D
committing the breach may doubtless incur the liability to be
punished for the breach committed by it but the sale by itself
may remain valid as between the parties to the transaction
subject only to any directions which the competent Court may
issue in the suit against the vendor. E
10. The third dimension which arises for consideration is
about the right of a transferee pendete lite to seek addition as
a party defendant to the suit under Order I, Rule 10 CPC. I have
no hesitation in concurring with the view that no one other than F
parties to an agreement to sell is a necessary and proper party
to a suit. The decisions of this Court have elaborated that
aspect sufficiently making any further elucidation unnecessary.
The High Court has understood and applied the legal
propositions correctly while dismissing the application of the G
appellant under Order I, Rule 10 CPC. What must all the same
be addressed is whether the prayer made by the appellant
could be allowed under Order XXll Rule 10 of the CPC, which
is as under:
H
'
112 SUPREME COURT REPORTS [2013] 2 S.C.R.
A "Procedure in case of assignment before final order
in suit. • (1) In other cases of an assignment, creation or
devolution of any interest during the pendency of a suit, the
suit may, by leave of the court, be continued by or against
the person to or upon whom such interest has come or
B devolved.
(2) The attachment of a decree pending an appeal
therefrom shall be deemed to be an interest entitling the
person who procured such attachment to the benefit of sub-
rule (1)."
c
11. A simple reading of the above provision would show
that in cases of assignment, creation or devolution of any
interest during the pendency of a suit, the suit may, by leave of
the Court, be continued by or against the person to or upon
D whom such interest has come or devolved. What has troubled
us is whether independent of Order I Rule 10 CPC the prayer
for addition made by the appellant could be considered in the
light of the above provisions and, if so, whether the appellant
could be added as a party-defendant to the suit. Our answer
E is in the affirmative. It is true that the application which the
appellant made was only under Order I Rule 10 CPC but the
enabling provision of Order XXll Rule 10 CPC could always be
invoked if the fact situation so demanded. It was in any case
not urged by counsel for the respondents that Order XX.II Rule
F 10 could not be called in aid with a view to justifying addition
of the appellant as a party-defendant. Such being the position
all that is required to be examined is whether a transferee
pendete lite could in a suit for specific performance be added
as a party defendant and, if so, on what terms.
G 12. We are not on virgin ground in so far as that question
is concerned. Decisions of this Court have dealt with similar
situations and held that a transferee pendete lite can be added
as a party to the suit lest the transferee suffered prejudice on
account of the transferor losing interest in the litigation post
H transfer. In Khemchand Shanker Choudhary v. Vishnu Hari
THOMSON PRESS (INDIA) LTD .. v. NANAK 113
BUILDERS & INVESTORS P.LTD. [T.S. THAKUR, J.]
Patil (1983) 1 SCC 18, this Court held that the position of a A
person on whom any interest has devolved on account of a
transfer during the pendency of a suit or a proceeding is
somewhat similar to the position of an heir or a legatee of a
party who dies during the pendency of a suit or a proceeding.
Any such heir, legatee or transferee cannot be turned away B
when she applies for being added as a party to the suit. The
following passage in this regard is apposite:
"6 ... Section 52 of the Transfer of Property Act no doubt
lays down that a transferee pendente lite of an interest in •
an immovable property which is the subject matter of a C
suit from any of the parties to the suit will be bound in so
far as that interest is concerned by the proceedings in the
suit. Such a transferee is a representative in interest of
the party from whom he has acquired that interest. Rule
1O of Order 22 of the Code of Civil Procedure clearly D
recognises the right of a transferee to be impleaded as
a party to the proceedings and to be heard before any
order is made. It may be that if he does not apply to be
impleaded. he may suffer by default on account of any
order passed in the proceedings. But if he applies to be E
impleaded as a party and to be heard. he has got to be
so impleaded and heard. He can also prefer an appeal
against an order made in the said proceedings but with
the leave of the appellate court where he is not already
brought on record. The position of a person on whom any F
interest has devolved on account of a transfer during the
pendency of any suit or a proceeding is somewhat similar
to the position of an heir or a legatee of a party who dies
during the pendency of a suit or a proceeding, or an
official receiver who takes over the assets of such a party G
on his insolvency. An heir or a legatee or an official
receiver or a transferee can participate in the execution
proceedings even though their names may not have been
shown in the decree, preliminary or final. If they apply to
H
114 SUPREME COURT REPORTS [2013] 2 S.C.R.
A the court to be impleaded as parties they cannot be turned
out."
(emphasis supplied)
13. To the same effect is the decision of this Court in Amit
B Kumar Shaw v. Farida Khatoon (2005) 11 SCC 403 where this
Court held that a transferor pendente lite may not even defend
the title properly as he has no interest in the same or collude
with the plaintiff in which case the interest of the purchaser
• pendente lite will be ignored. To avoid such situations the
C transferee pendente lite can be added as a party defendant to
the case provided his interest is substantial and not just
peripheral. This is particularly so where the transferee pendente
ljte acquires interest in the entire estate that forms the subject
matter of the dispute. This Court observed:
D
"16 ... The doctrine of lis pendens applies only where the
lis is pending before a court. Further pending the suit, the
transferee is not entitled as of right to be made a party to
the suit, though the court has a discretion to make him a
party. But the transferee pendente lite can be added as a
E
proper party if his interest in the subject-matter of the suit
is substantial and not just peripheral. A transferee
pendente lite to the extent he has acquired interest from
the Defendant is vitally interested in the litigation. where
the transfer is of the entire interest of the Defendant: the
F latter having no more interest in the property may not
properly defend the suit.He may collude with the Plaintiff.
Hence, though the Plaintiff is under no obligation to make
a lis pendens transferee a party, under Order 22 Rule 10
an alienee pendente lite may be joined as party. As already
G noticed. the court has discretion in the matter which must
be judicially exercised and an alienee would ordinarily be
joined as a party to enable him to protect his interests. The
Court has held that a transferee pendente lite of an interest
in immovable property is a representative-in-interest of the
H
THOMSON PRESS (INDIA) LTD. v. NANAK 115
BUILDERS & INVESTORS P.LTD. [T.S. THAKUR, J.]
party from whom he has acquired that interest. He is A
entitled to be impleaded in the suit or other proceedings
where the transferee pendente lite is made a party to the
litigation; he is entitled to be heard in the matter on the
merits of the case"
B
14. To the same effect is the decision of this Court in Rikhu
Dev, Che/a Bawa Harjug Dass v. Som Dass (deceased)
through his Che/a Shiama Dass, (1976) 1 SCC 103.
To sum up:
c
(1) The appellant is not a bona fide purchaser and is,
therefore, not protected against specific
performance of the contract between the plaintiffs
and the owner defendants in the suit.
(2) The transfer in favour of the appellant pendente lite D
is effective in transferring title to the appellant but
such title shall remain subservient to the rights of
the plaintiff in the suit and subject to any direction
which the Court may eventually pass therein.
E
(3) Since the appellant has purchased the entire estate
that forms the subject matter of the suit, the
appellant is entitled to be added as a party
defendant to the suit.
F
(4) The appellant shall as a result of his addition raise
and pursue only such defenses as were available
and taken by the original defendants and none
other.
15. With the above additions, I agree with the order G
proposed by my Esteemed Brother, M.Y. Eqbal, J. that this
appeal be allowed and the appellant added as party defendant
to the suit in question.
RP. Appeal allowed. H
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