CA NO. ...... OF 2017 @ SLP (C) NO. 614 OF 2015

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.                  OF 2017 [Arising out of SLP(C) No.614 of 2015]

LIFE INSURANCE CORPORATION OF INDIA         …Appellant

Versus

SANJEEV BUILDERS PVT. LTD.  AND ORS.         ....Respondents

J U D G M E N T

R. BANUMATHI, J.

Leave granted.

2. This  appeal  arises out  of  the judgment  of  the High Court  of

Judicature  at  Bombay  dated  22.08.2014,  in  and  by  which,  the

Division Bench dismissed the appeal filed by the appellant thereby

affirming the order of the Single Judge in Chamber Summons No.187

of  2014 by which the respondent  No.3 was impleaded as Plaintiff

No.3 in Suit No.894 of 1986.

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3. The  respondent  No.1  filed  suit  No.894  of  1986  against  the

appellant  for  specific  performance of  the agreement  of  sale dated

08.06.1979 by which the appellant is said to have agreed to sell the

suit property to respondent No.1 and in the alternative directing the

appellant to pay a sum of Rs.10,75,021.05  with further interest on

the sum of Rs.4,52,778/- at the rate of 18% per annum from the date

of the suit till payment or realization.  According to the appellant, the

said agreement has been rescinded on 28.11.1984. The respondent

No.1 is said to have assigned the interest to respondent No.2, their

sister concern.

4. In  the  year  2014,  respondent  No.3-Kedia  Construction

Company Limited filed Chamber Summons No. 187/2014 stating that

subsequent to the filing of the suit, with the consent of respondent

No.2,  Plaintiff  No.1/respondent  No.1  had  assigned  its  interest  to

respondent  No.3  for  a  consideration  of  Rs.23,31,000/-  by  an

agreement for sale dated 24.08.1987. The Chamber Summons was

filed  to  implead  respondent  No.3  as  Plaintiff  No.3  and  praying  to

amend the suit pursuant to the agreement of sale in its favour.  The

appellant  opposed the Chamber Summons on the ground that the

respondent No.3 was not a bona fide assignee or a necessary party

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and that the issues in the suit were framed on 31.01.2014 and that

there has been an inordinate delay of 27 years in filing the application

which  has  not  been  explained.   It  was  also  contended  that  the

agreement dated 08.06.1979 in favour of respondent No.1 itself was

terminated  on  28.11.1984  and  the  respondent  No.1/Plaintiff  No.1

could not have transferred any right to the respondents.

5. The Single Judge held that the issue as to whether the interest

of respondent Nos.1 and 2 can be transferred to respondent No.3 has

to be tried in the suit  and not at that stage and delay in filing the

application cannot  be a ground for  not  impleading the respondent

No.3.   The chamber judge held that the agreement dated 08.06.1979

permits assignment of rights and there is no requirement therein for

permission being taken from the appellant. The court relied on the

Madras High Court judgment in  Mrs. Saradambal Ammal v. E. R.

Kandasamy Goundar and Others (1947) 2 MLJ 374 wherein it was

held that such assignment of contractual rights was permissible under

Order  XXII  Rule  10  CPC.  The Single  Judge also  relied  upon the

judgment  of  the  Bombay  High  Court  in  Jawaharlal  v.  Smt.

Saraswatibai  Babulal  Joshi  and  Others  AIR  1987  Bom.  276,

wherein it was held that the detailed enquiry was not needed under

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Order XXII Rule 10 CPC and that there need be only a  prima facie

satisfaction that the interest has been assigned and the grounds on

merits need not be considered.  The court noted that though the suit

was filed in 1986, the same was listed for the first time only in 2000

and then in  2007,  in  2008 and later  in  2014.   Observing  that  no

prejudice will  be caused to the appellant,  the Chamber Summons

was allowed  vide order dated 16.04.2014 and costs of Rs.10,000/-

was  directed  to  be  paid  to  the  appellant.  Being  aggrieved,  the

appellant  preferred  the  Letters  Patent  Appeal  which  came  to  be

dismissed holding that the proposed amendment did not affect the

case of the appellant on merits and that the appellant could challenge

the assignment in favour of respondent No.3 after the final decree.

Being  aggrieved  by  the  dismissal  of  Letters  Patent  Appeal,  the

appellant has preferred this appeal.

6. Mr. Goburdhan,  learned counsel  for  the appellant  contended

that when the suit for specific performance was pending from 1986

and the same was well  within  the knowledge of  respondents,  the

amendment made in the year 2014 impleading respondent No.3 as

Plaintiff No.3 under the guise of application under Order XXII Rule 10

CPC, is a sheer abuse of law.  Counsel further submitted that there

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was a gross delay of 27 years in filing the impleadment application

and  the  High  Court  glossed over  the  law and  facts  and  erred  in

allowing the application without keeping in view an inordinate delay of

27 years in filing the application.  

7. Per  contra,  learned  Senior  Counsel  for  the  respondents

Mr.  Shekhar  Naphade  submitted  that  the  order  allowing  the

application in Order XXII Rule 10 CPC is in the nature of an interim

order and not finally determined the rights of the parties and hence no

Letters Patent Appeal will lie.   The learned Senior Counsel further

submitted that respondent No.3 claims as an assignee of the rights of

the respondent Nos.1 and 2 and has the right to continue the suit and

the order allowing impleading application does not affect the rights of

the parties.  It  was further contended that the rights of respondent

No.1 under the agreement of sale is a transferable right to sue and

the assignee having acquired the right during the pendency of the suit

for  specific  performance.   It  was  submitted  that  the  provisions  of

Order XXII Rule 10 CPC enables the assignee to make an application

to the court to implead as party to continue the suit  for which the

provisions  of  Limitation  Act  do  not  apply.   It  was  submitted  by a

well-reasoned order that learned Single Judge allowed the Chamber

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Summons and the Division Bench rightly dismissed the appeal and

the impugned order does not suffer from any error of law warranting

interference.

8. We have carefully considered the rival contentions and perused

the impugned judgment and materials on record.  

9. First  contention is  that  the order  of  Single Judge was not  a

'judgment'  finally  affecting  the  rights  of  the  parties  and  the

non-maintainability  of  Letters  Patent  Appeal.  Clause  15  of  Letters

Patent provides for intra-court appeals against the judgment of Single

Judge of the High Court.  The right of the Letters Patent Appeal to the

High Court depends upon whether or not the decision of the Single

Judge appealed from affects the merits of the question between the

parties and their valuable rights.  Whether an order is a 'judgment' or

an 'interlocutory order'  depends upon whether or not,  it  has finally

decided  the  rights  of  the  parties  and  whether  it  has  the  effect  of

affecting the rights of the parties. For an order to be a ' judgment',  it is

not always necessary that it should put an end to the controversy or

terminate the suit.  An 'interlocutory order'  determining the rights of

the parties in one way or other is also a 'judgment'.  

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10. Elaborating upon nature of  'interlocutory order' or  "judgment"

and  observing  that  the  Letters  Patent  Appeal  would  lie  from  the

judgment  which  would  affect  the  vital  and  valuable  rights  of  the

parties and which work serious injustice to the parties concerned, in

Shah Babulal Khimji v. Jayaben D. Kania and Anr. (1981) 4 SCC

8, it was held as under:-

"106. Thus, the only point which emerges from this decision is that whenever  a  trial  Judge  decides  a  controversy  which  affects valuable rights of  one of  the parties,  it  must  be treated to  be a judgment within the meaning of the letters patent. ...... 114. In the course of the trial, the trial Judge may pass a number of orders  whereby  some  of  the  various  steps  to  be  taken  by  the parties in prosecution of the suit may be of a routine nature while other orders may cause some inconvenience to one party or the other, e.g., an order refusing an adjournment, an order refusing to summon an additional witness or documents, an order refusing to condone delay in filing documents, after the first date of hearing an order  of  costs  to  one  of  the  parties  for  its  default  or  an  order exercising discretion in respect of a procedural matter against one party or the other. Such orders are purely interlocutory and cannot constitute  judgments  because  it  will  always  be  open  to  the aggrieved party to make a grievance of the order passed against the  party  concerned  in  the  appeal  against  the  final  judgment passed by the trial Judge.

115. Thus,  in  other  words  every  interlocutory  order  cannot  be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of  the  parties  and  which  work  serious  injustice  to  the  party concerned.  Similarly,  orders  passed  by  the  trial  Judge  deciding question of admissibility or relevancy of a document also cannot be treated as judgments because the grievance on this score can be corrected  by  the  appellate  court  in  appeal  against  the  final judgment.

116. We might give another instance of an interlocutory order which amounts to an exercise of discretion and which may yet amount to

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a judgment within the meaning of the letters patent. Suppose the trial Judge allows the plaintiff to amend his plaint or include a cause of action or a relief as a result of which a vested right of limitation accrued to the defendant is taken away and rendered nugatory. It is manifest that in such cases, although the order passed by the trial Judge  is  purely  discretionary  and  interlocutory,  it  causes  gross injustice to the defendant  who is deprived of a valuable right  of defence to the suit. Such an order, therefore, though interlocutory in nature  contains  the  attributes  and  characteristics  of  finality  and must be treated as a judgment within the meaning of the letters patent. This is what was held by this Court in    Shanti Kumar case (1974) 2 SCC 387  , as discussed above.

117. Let us take another instance of a similar order which may not amount to a judgment. Suppose, the trial Judge allows the plaintiff to  amend  the  plaint  by  adding  a  particular  relief  or  taking  an additional ground which may be inconsistent with the pleas taken by him but is not barred by limitation and does not work serious injustice to  the  defendant  who would  have ample  opportunity  to disprove the amended plea taken by plaintiff at the trial. In such cases,  the  order  of  the  trial  Judge  would  only  be  a  simple interlocutory  order  without  containing  any  quality  of  finality  and would therefore not be a judgment within the meaning of clause 15 of the letters patent." [Underlining added]

11. Applying the above principle to the case in hand, we find that

the  order  allowing  the  application  impleading  respondent  No.3  as

assignee (Order XXII Rule 10 CPC) after 27 years of filing of the suit

vitally affects the valuable rights of the appellant. The order allowing

amendment of plaint by impleading respondent No.3 as 'Plaintiff No.3'

on the basis of alleged assignment of agreement dated 24.08.1987

decides a vital question which concerns the rights of the parties and

hence is a 'judgment'  to maintain the Letters Patent Appeal. In our

view,  allowing  of  such  application  after  27  years  of  filing  suit  for

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specific  performance  would  cause  serious  prejudice  to  the

appellant-defendant depriving valuable right of defence available to

the  appellant  and  hence  the  order  of  Single  Judge  allowing  the

Chamber Summons is  a 'judgment' within the meaning of Clause 15

of the Letters Patent Appeal.

12. The stand of respondent No.3 is that it claims as an assignee of

the rights  of  respondent  Nos.1  and  2  and that  it  has  the  right  to

continue the suit under Order XXII Rule 10 CPC and the provisions of

limitation, do not apply to such an application.  To appreciate merits of

this contention, we may usefully refer to Order XXII Rule 10 CPC,

which reads as under:-

ORDER XXII: DEATH, MARRIAGE AND INSOLVENCY OF PARTIES ...........  10.  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 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).

Under Order XXII Rule 10 CPC, when there has been an assignment

or devolution of interest during the pendency of a suit, the suit may,

by leave of the Court, be continued by or against person to or upon

whom such interest has been assigned or devolved and this entitles

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the person who has acquired an interest in the subject-matter of the

litigation  by  an  assignment  or  creation  or  devolution  of  interest

pendente lite or suitor or any other person interested, to apply to the

Court  for  leave  to  continue  the  suit.  When  the  plaintiff

assigns/transfers  the  suit  during  the  pendency  of  the  suit,  the

assignee is entitled to be brought on record and continue the suit.

Order XXII Rule 10 CPC enables only continuance of the suit by the

leave of the court.  It is the duty of the court to decide whether leave

to be granted or not to the person or to the assignee to continue the

suit.  The discretion to implead or not to implead parties who apply to

continue the suit must be exercised judiciously and not arbitrarily.   

13. The  High  Court  was  not  right  in  holding  that  mere  alleged

transfer/assignment  of  the  agreement  would  be  sufficient  to  grant

leave to respondent No.3 to continue the suit.  From the filing of the

suit in 1986, over the years, valuable right of defence accrued to the

appellant;  such  valuable  right  of  defence  cannot  be  defeated  by

granting  leave  to  the  third  respondent  to  continue  the  suit  in  the

application filed under Order XXII Rule 10 CPC after 27 years of filing

of  the suit.  The learned Single Judge was not right  in saying that

impleading  respondent  No.3  as  Plaintiff  No.3  would  cause  no

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prejudice to the appellant and that the issues can be raised at the

time of trial.   

14. In a suit for specific performance, application for impleadment

must be filed within a reasonable time.  Considering the question of

impleadment of party in a suit for specific performance after referring

to various judgments, in Vidur Impex and Traders Private Limited

and  Others  v.  Tosh  Apartments  Private  Limited  and  Others

(2012) 8 SCC 384 summarized the principles as under:-

"41. Though there is apparent conflict in the observations made in some of the aforementioned judgments, the broad principles which should govern disposal of an application for impleadment are: 41.1. The court can, at any stage of the proceedings, either on an application made by the parties or otherwise, direct impleadment of any person as party, who ought to 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. 41.2. A necessary party is the person who ought to be joined as party to the suit and in whose absence an effective decree cannot be passed by the court. 41.3. 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 be a person in favour of or against whom a decree is to be made. 41.4. If a person is not found to be a proper or necessary party, the court  does  not  have  the  jurisdiction  to  order  his  impleadment against the wishes of the plaintiff. 41.5. In  a  suit  for  specific  performance,  the  court  can  order impleadment of a purchaser whose conduct is above board, and who files  application  for  being joined as  party within  reasonable time of his acquiring knowledge about the pending litigation. 41.6. 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  violation  of  the  restraint  order

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passed by the court or the application is unduly delayed then the court will be fully justified in declining the prayer for impleadment."

In light of the above principles, considering the case in hand, in our

view, the application filed for impleading respondent No.3 as Plaintiff

No.3 was not filed within reasonable time.  No explanation is offered

for such an inordinate delay of 27 years, which was not kept in view

by the High Court.  

15. Be it noted that an application under Order XXII Rule 10 CPC

seeking leave of the court to continue the suit by the assignee/third

respondent  was  not  actually  filed.  Chamber  Summons  No.187  of

2014 was straight away filed praying to amend the suit which would

have been the consequential amendment, had the leave to continue

the suit been granted by the court.

16. As pointed out earlier, the application was filed after 27 years of

filing of the suit.  Of course, the power to allow the amendment of suit

is wide and the court should not adopt hyper technical approach. In

considering  amendment  applications,  court  should  adopt  liberal

approach and amendments are to be allowed to avoid multiplicity of

litigations.   We are conscious that  mere delay is not  a ground for

rejecting the amendment.  But in the case in hand, the parties are not

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rustic litigants;  all  the respondents are companies and the dispute

between  the  parties  is  a  commercial  litigation.  In  such  facts  and

circumstances,  the  amendment  prayed in  the  Chamber  Summons

filed under Order XXII Rule 10 CPC ought not to have been allowed,

as the same would cause serious prejudice to the appellant.  In our

view, the impugned order, allowing Chamber  Summons No.187 of

2014 filed after 27 years of the suit would take away the substantial

rights of defence accrued to the appellant and the same cannot be

sustained.

17. In  the  result,  the  impugned  judgment  is  set  aside  and  the

appeal  is  allowed.   Chamber  Summons  No.187  of  2014  in  Suit

No.894 of 1986 stands dismissed.  No order as to costs.

     …….…………...………J. [KURIAN JOSEPH]

…………….……………J. [R. BANUMATHI]

New Delhi; October 24, 2017  

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