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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5918   OF 2012 (Arising out of SLP (C) No. 11501 of 2009)

Vidur Impex and Traders Pvt. Ltd. and others  … Appellants

versus

Tosh Apartments Pvt. Ltd. and others … Respondents

With

CIVIL APPEAL NO.5917  OF 2012 (Arising out of SLP (C) No. 17156 of 2009)

Bhagwati Developers Pvt. Ltd.  … Appellant

versus

Tosh Apartments Pvt. Ltd. and others … Respondents

J U D G M E N T

G. S. Singhvi, J.

1. Leave granted.

2. Whether  M/s.  Vidur  Impex  and  Traders  Pvt.  Ltd.,  and  five  other  

companies  (hereinafter  described  as  the  appellants),  who  are  said  to  have  

purchased the suit property, i.e. 21, Aurangzeb Road, New Delhi in violation of  

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the order of injunction passed by the learned Single Judge of the Delhi High  

Court  are  entitled  to  be  impleaded  as  parties  to  Suit  No.425/1993  filed  by  

respondent No.1 – M/s. Tosh Apartments Pvt. Ltd. is one of the two questions  

which arises  for  consideration in these  appeals  filed against  judgment dated  

20.2.2009 of the Division Bench of the Delhi High Court. The other question  

which needs  consideration is  whether  the Delhi High Court  was  justified in  

appointing a receiver with a direction to take possession of the suit property  

despite the fact that the Calcutta High Court had already appointed a receiver at  

the  instance  of  M/s.  Bhagwati  Developers  Pvt.  Ltd.  (for  short,  ‘Bhagwati  

Developers’).

3. The suit property was leased by the Secretary of State for India to Sidh  

Nath Khanna and Sukh Nath Khanna sometime in 1930.  After 12 years,  the  

Governor General in Council sanctioned the grant of perpetual lease in favour of  

one of them, namely, Sidh Nath Khanna. In the family partition which took place  

in  December  1955,  the  suit  property  fell  to  the  share  of  Shri  Devi  Prasad  

Khanna, who was one of the heirs of Sidh Nath Khanna.  He rented out the same  

to the Sudan Embassy on 12.9.1962. In October 1977, the name of respondent  

No.2-Pradeep Kumar Khanna (son of Devi Prasad Khanna), who died during the  

pendency of the litigation before the High Court and is represented by his legal  

representatives,  was  entered  in  the  records  of  the  Ministry  of  Works  and  

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Housing, Land and Development Office and the lease  was transferred in his  

name.

4. In  March  1980,  respondent  No.2  mortgaged  the  suit  property  to  

Shri S.N. Tondon.  After 5 years, he entered into a collaboration agreement with  

Shri Arun Kumar Bhatia (respondent No.3) for construction of a multi-storied  

building.  He also executed an agreement for sale in favour of respondent No.3.  

In  November  1987,  respondent  No.2  took  loan  from Shri  Avtar  Singh and  

created an equitable mortgage in his favour.  On 13.9.1988, respondent No.2  

executed an agreement for sale in favour of respondent No.1 for a consideration  

of Rs.2.5 crores.  After some time, respondent No.3 executed assignment deed  

dated  13.12.1988  in favour  of  respondent  No.2.  Simultaneously,  the  parties  

cancelled  the  collaboration  agreement.  After  3  months,  respondent  No.2  

mortgaged the suit property in favour of respondent No.4.  In 1992, respondent  

Nos.  2 and 4 entered into an agreement whereby the latter agreed to provide  

various services including the one that he will get the suit property vacated from  

the Sudan Embassy and for that he will charge Rs.4 crores.

5. The Sudan Embassy vacated the suit property on 12.5.1992 and handed  

over possession to respondent No.2, who is said to have handed over the same to  

respondent No.4. On coming to know about the proposed alienation of property  

by respondent No.2, respondent No.1 filed Suit No.425/1993 in the Delhi High  

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Court for specific performance of agreement for sale dated 13.9.1988, award of  

damages and injunction. It also filed IA No.1947/1993 under Order 39 Rules 1  

and 2 CPC. The learned Single Judge passed order dated 18.2.1993 and directed  

that defendant Nos. 1 and 3 (respondent Nos. 2 and 4 herein) shall not transfer,  

alienate or part with possession in any manner or create third party rights in  

respect of the suit property.  After receiving summons, respondent Nos.2 and 4  

filed IA No. 10730/1993 under Order 7 Rule 11 for rejection of the plaint on the  

ground that the same was barred by time. The learned Single Judge dismissed the  

application vide  order  dated  5.4.1994  and  directed  that  interim order  dated  

18.2.1993 shall continue.

6. On 19.2.1997, respondent No.2 executed 6 agreements for sale in favour  

of the appellants for a total consideration of Rs.2.88 crores.  In furtherance of  

those agreements, six sale deeds were executed and registered on 30.5.1997.  In  

the meanwhile, the appellants executed agreement for sale dated 18.3.1997 in  

favour  of  Bhagwati  Developers  for  a  consideration  of  Rs.4.26  crores  and  

received Rs.3.05 crores.   

7. At that  stage,  respondent No.1  filed IA No.  8145/1998 for restraining  

respondent Nos.2 and 4 from handing over possession of the suit property to any  

other person. Respondent No.2 contested the application by asserting that he had  

not executed any sale deed in favour of the appellants and that possession of the  

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suit property had already been handed over to respondent No.4.   Thereupon,  

respondent No.1 filed CCP No. 118/1998 under Order 39 Rule 2A CPC with the  

allegation that the non-applicants including the appellants herein had entered into  

a conspiracy for the purpose of grabbing the property in violation of the order of  

injunction passed by the High Court.  The learned Single Judge entertained the  

contempt petition against respondent Nos. 2 and 4 but declined to do so qua the  

appellants by observing that no prima facie case had been made out against those  

who were not parties to the suit. Respondent No.1 also filed IA No.8146/1998  

under Order 26 Rule 9 read with Order 39 Rule 7 and Section 151 CPC for  

appointment of Local Commissioner and IA No.8147/1998 under Order 40 Rule  

1  read  with  Section  151  CPC  for  appointment  of  a  receiver.   The  Court  

Commissioner appointed by the High Court  to  ascertain whether  respondent  

Nos.  2 and 4 were in possession of the suit property, submitted report dated  

10.2.2000 with the finding that respondent No.4 was in actual possession.

8. Respondent No.2 filed application dated 16.12.1998 for vacating interim  

order  dated  18.2.1993.   He pleaded that  the agreement for sale  executed  in  

favour of respondent No.1 was,  in fact,  a  loan agreement and the same was  

violative of Section 24 read with Section 23 of the Indian Contract Act, 1872.  

He further pleaded that the agreement was void and unenforceable because the  

requisite permission had not been obtained under Section 269 UC of the Income-

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Tax  Act.   Respondent  No.2  also  filed  Suit  No.  161/1999  for  grant  of  a  

declaration that sale deeds executed in favour of the appellants were fictitious  

and were  not  binding on him.  After  about  2  years,  Shri  Bhupinder  Singh,  

Advocate filed IA No. 255/2001 for withdrawal of the suit on the ground that the  

parties have amicably settled their dispute. Soon thereafter, the advocate who  

had instituted  the  suit,  filed IA No.1537/2001  for  restoration of  the  suit  by  

asserting that  IA No.255/2001  had been filed by an  advocate  who was  not  

authorised to do so. The learned Single Judge directed that the application be  

listed  only  after  filing of  an  affidavit  by  respondent  No.2  that  he  had  not  

authorised  Shri  Bhupinder  Singh,  Advocate  to  file  I.A.  No.255/2001.  

Respondent No.2 did not file the required affidavit till his death and as a result,  

I.A. No.1537/2001 is said to be still pending.

9. Another front of litigation was opened by Bhagwati Developers with the  

allegation that the appellants have failed to execute the sale deed in terms of  

agreement dated 18.3.1997.  The dispute between Bhagwati Developers and the  

appellants  was  referred  to  the  sole  arbitration  of  Dr.  Debasis  Kundu,  an  

Advocate  of  the  Calcutta  High Court.   The  Arbitrator  passed  award  dated  

7.1.1999 and directed the appellants to hand over vacant possession of the suit  

property along with the building to Bhagwati Developers on or before 31.1.1999  

and  also  execute  the  sale  deed  after  securing  requisite  permission  and  no  

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objection certificate from the competent authorities.  Simultaneously, Bhagwati  

Developers was directed to pay the balance amount of Rs.1,20,90,000/-.

10. As the appellants  failed to  act  in consonance  with the arbitral  award,  

Bhagwati Developers filed an application under Section 36 of the Arbitration and  

Conciliation Act, 1996 in the Calcutta High Court, which was allowed by the  

learned  Single  Judge  of  that  High Court  vide  order  dated  17.8.2000  and  a  

direction was issued to the appellants to comply with the arbitral award.  The  

learned Single Judge also appointed Shri Nar Narayan Ganguli, Advocate  as  

receiver and directed him to take  possession of the suit  property.  When the  

receiver came to Delhi for execution of the award, respondent No.4 refused to  

hand over possession. Thereupon, the Calcutta High Court directed the police  

authorities at Delhi to assist the receiver for ensuring compliance of order dated  

17.8.2000.  Armed with that direction, the receiver visited Delhi on 19.1.2001  

and 5.2.2001 and took symbolic possession of the suit property by putting locks  

and seals on all the inner and outer gates.   

11. When the representative of respondent No.1 learnt about the award of the  

arbitrator  and  the  order  passed  by  the  Calcutta  High  Court,  he  filed  IA  

No.625/2001 in the Delhi High Court under Order 39 Rules 1 and 2 read with  

Section  151  CPC  impleading respondent  Nos.  2  and  4,  the  appellants  and  

Bhagwati Developers as  parties and prayed that respondent Nos.  2 and 4 be  

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restrained  from handing  over  possession  of  the  suit  property  and  that  the  

appellants  be restrained from taking forcible possession in the garb of some  

order passed by the Calcutta High Court.  The learned Single Judge of the Delhi  

High Court  passed  an ex-parte  interim order  dated  22.1.2001  and restrained  

respondent Nos. 2 and 4 from delivering possession of the suit property to the  

appellants  and  also  restrained  the  latter  from taking  possession.  Bhagwati  

Developers  challenged  that  order  in  FAO  (OS)  No.90/2001,  which  was  

dismissed by the Division Bench of the High Court on 2.3.2001 with liberty to  

approach the learned Single Judge for appropriate order.

12. Respondent No.4 also filed IA No. 1211/2001 in the Delhi High Court for  

grant of injunction by alleging that an attempt is being made to dispossess him in  

the garb of an order passed by the Calcutta High Court. The learned Single Judge  

passed  ex-parte  interim order  dated  8.2.2001  and  restrained  the  appellants,  

Bhagwati Developers,  the receiver appointed by the Calcutta High Court and  

Delhi Police from interfering with the possession of respondent No.4. Some of  

the observations made in that order, which have bearing on the disposal of these  

appeals, are extracted below:

“Quite clearly Respondents No.4 to 9 in this application  were aware of the fact that Defendant No.1 had filed Suit  No.161/99. A mention was made in the plaint in Suit No.  161/99 that the present suit, that is, Suit No.425/93 was  pending in this Court.  So,  Respondents  No.4 to in this  application were also aware of the pendency of this suit. It  

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appears that Respondents No.4 to 9 in this application did  not  bother  to  find out  the correct  factual position with  regard to the possession of the suit property or with regard  to the interim orders passed by this Court.  

Well before all this, and apparently expecting Defendant  No.1 to perform the Agreement to sell, these 6 persons  who are Respondents No.4 to 9 in this application entered  into an agreement to sell the suit property to Respondent  No.10 in this application.

There  appear  to  have  been  some  disputes  between  Respondents No.4 to 9 in this application and Respondent  No.10 in the application in respect of the suit property.  Since  there  was  an  arbitration clause  in the  agreement  between them, they referred the matter to arbitration. The  learned Arbitrator gave an Award dated 7th January, 1999  wherein  he  directed  Respondents  No.  4  to  9  in  this  application to hand over peaceful vacant possession of the  suit property to Respondent No.10 in this application. No  objections appear to have been filed to this Award with  the result that Respondent No.10 in this application filed  proceedings  in  the  Calcutta  High Court  praying for  a  direction  for  the  appointment  of  a  Receiver  to  take  physical  possession  of  the  suit  property.  The  Calcutta  High  Court  passed  an  order  apparently  directing  the  Receiver to take possession of the suit property. On 13th  December,  2000  the  Calcutta  High Court  directed  the  police authorities to render all assistance to the Receiver  to take steps in accordance with the earlier order passed  by the Calcutta High Court.

When the Receiver and the police authorities came to take  possession of the suit property, L.K. Kaul became aware  of the proceedings in the Calcutta High Court.

It is submitted that there has been gross concealment and  misrepresentation of facts by Defendant No.1 in the suit to  Respondents No.4 to 9 in this application. There has also  been gross misrepresentation and concealment of fact by  Respondents No.4 to 9 in this application to Respondent  No.10 in this application. It is also submitted that there is  

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also  a  gross  concealment  and,  therefore,  a  misrepresentation of facts by Respondents No.4 to 10 in  this  application  insofar  as  the  learned  Arbitrator  is  concerned.  Consequently,  there  has  also  been  a  gross  concealment  and,  therefore,  a  misrepresentation  of  the  facts  so  far as  Calcutta  High Court  is  concerned.  It  is  submitted  that  had  all  these  facts  been  brought  to  the  notice of the concerned parties as well as to the learned  Arbitrator and the Calcutta High Court, there would have  been no question of  any appointment of  a  Receiver  in  violation  of  the  orders  passed  by  this  Court  on  18  th    February, 1993 read with order dated 31  st   January, 2000  .

I  am  prima  facie  satisfied  that  Defendant  No.1  and  Respondents No.4 to 10 in this application are playing a  cat and mouse game with this Court.  There has been a  serious  concealment  and  misrepresentation  of  facts  by  Defendant No.1 in this suit. There has also been a serious  concealment  and  misrepresentation  of  facts  by  Respondents  No.4  to  9  in  this  application  insofar  as  Respondent  No.10  in  this  application  is  concerned.  Respondents  No.4 to  10 are  at  fault in not  finding out  what the correct facts are and making necessary enquiries  in this regard. They appear to have deliberately misled the  learned Arbitrator and the Calcutta High Court.”

(emphasis supplied)

13. Respondent  No.4  filed  another  application  (IA  No.  9576/2001)  for  

restraining the appellants from executing the sale deed in favour of Bhagwati  

Developers.  The learned Single Judge entertained the application and passed  

interim order  in  terms  of  the  prayer  made.  The  same  respondent  filed  an  

application  in  EC  No.10/2000  pending before  the  Calcutta  High Court  and  

brought to the notice of that High Court, order dated 8.2.2001 passed by the  

Delhi High Court in Suit No.  425/1993.  After taking cognizance of the rival  

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submissions, the learned Judge of the Calcutta High Court passed order dated  

15.2.2001 and made it clear that the order passed by that Court will be subject to  

the order which may be passed by the Delhi High Court. The relevant portions of  

that order are reproduced below:

“The facts remain that these facts were neither disclosed  to the decree-holder nor to the Arbitrator and this question  was  not necessary to  be gone into while executing the  decree and,  as  such,  it was  also not placed before this  Court  and this Court having not been apprised of such  facts had passed an order for taking over possession of the  property.  In  the  order  dated  8.2.2001  the  Delhi  High  Court had taken a note of this position. Be that as it may,  it is not necessary to make any observation with regard to  the findings made therein, nor this Court can comment on  the order  passed  by another  Court  on the basis  of the  materials  placed  before  it.  But  it  appears  that  there  is  every  possibility  of  conflicting  orders  being  passed  in  respect of the self-same properties between the parties or  those claiming through one or the other of them by two  High Courts.  Judicial  propriety demands that  the  court  should maintain its decorum and dignity and should not  pass any order which will lie in conflict with each other. It  is the parties who may fight each other but not the Courts.  If some order is passed, it is expected that another Court  should  pay  proper  regards  and  respect  to  such  order.  Since it is pointed out that these facts were not disclosed  before this  Court,  therefore what  would have been the  effect if these facts would have been disclosed before this  Court is a question which cannot now be presumed, but in  all probabilities it sees that if these facts were disclosed  before  this  Court,  this  Court  might have  been slow in  passing the order that had been passed earlier. Therefore,  the order passed by this Court, if it is in conflict with the  order  passed  by  the  Delhi  High Court,  the  same shall  always be subject to the order that might be passed by the  Delhi High Court.  

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Since Delhi High Court has also passed an order by which  certain direction was given to the Receiver appointed by  this Court, therefore, it is no more necessary to pass any  further  order.  In  my  view,  the  decree-holder  in  this  proceedings  who  is  added  as  Defendant  No.10  in  the  Delhi High Court  suit  should approach the Delhi High  Court  for  obtaining the  appropriate  orders  if  he  is  so  advised. If there is a conflict of decree which might affect  a proceeding in another High Court, in that event the same  has to be thrashed out in an appropriate proceeding. It is  very difficult to enter into such question in an execution  proceeding unless such question be raised in a proceeding  under Order XXI Rule 97 C.P.C. From the records of this  Court, it does not appear that any such application under  Order XXI Rule 97 has ever been made in order to enable  the  parties  to  resisting  possession  in  execution  of  the  decree, so that they would have an opportunity to place  their cases about the executability of the decree against  them.”

     (emphasis supplied)

14. Thereafter,  Bhagwati Developers filed IA No.  2268/2003 in Suit  

No.425/1993  pending before  the  Delhi High Court  with the  prayer  that  the  

receiver appointed by the Calcutta High Court be continued.  Respondent No.1,  

who had already filed IA No.8147/1998 for appointment of receiver, contested  

the application of Bhagwati Developers by asserting that it had no locus standi  

in the matter because the agreement by which it purchased the property from the  

appellants was fraudulent in nature.  Respondent No.1 also reiterated its prayer  

for  appointment  of  a  receiver  by  the  Delhi  High Court  by  contending that  

respondent No.4 was a ranked trespasser and there was every possibility of his  

entering  into  clandestine  deals  and  alienating  the  property.   On  his  part,  

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respondent No.4  pleaded that  his possession was  lawful because  respondent  

No.2 had put him in possession in furtherance of the agreement executed in  

1992.

15. At this stage, we may mention that respondent No.4 also filed IA  

No.7373/2006  in Suit  No.425/1993  for  grant  of  leave  to  amend the  written  

statement by incorporating the fact that respondent No.2 had agreed to pay Rs.4  

crores  as  service  charges  for  getting  the  property  vacated  from the  Sudan  

Embassy with a  stipulation that  in the event of non-payment of the amount,  

vacant and peaceful possession of the suit property will be handed over to him;  

that  even  though  he  got  the  property  vacated  from  the  Sudan  Embassy,  

respondent No.2 did not pay the amount and handed over possession of the  

property as  security for the same.  Respondent No.4  claimed that  these facts  

could not be incorporated in the original written statement because his earlier  

lawyer thought that the same were not necessary for deciding the suit filed by  

respondent No.1 for specific performance and permanent injunction. Respondent  

No.4 also sought incorporation of the fact that the property had been mortgaged  

to him and he was in possession as a mortgagee. Respondent No.1 opposed the  

prayer for amendment by asserting that respondent No.4 was seeking to make  

out a new case which was contrary to the defence set up in the original written  

statement.

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16. By an order dated 3.9.2007, the learned Single Judge of the Delhi  

High Court dismissed IA No. 2268/2003 and IA No. 7373/2006 and allowed IA  

No.8147/1998. He first considered the applications filed by respondent No.1 and  

Bhagwati Developers in the matter of appointment of receiver and held:  

“26. Undoubtedly the initial agreement to sell is between the plaintiff and defendant No.l (since   deceased) now being represented by his legal heirs. However, yet another agreement to sell come  into  existence  on  18th  March,  1977  between  Bhagwati  Developers  Private  Limited  and  respondents 4 to 9 by which 6 companies agreed to sell the said property in favour of Bhagwati   Developers with arbitration clause contained in the agreement and that dispute shall be subject   to the jurisdiction of Calcutta High Court. The Court fails to understand as to how the dispute  relating  to  immovable  property  which  is  situated  in  Delhi  could  be  taken  to  Calcutta  for   adjudication  by  completing  bye  passing  the  provisions  of  Section  16  of  the  Code  of  Civil  Procedure. It is also evident on record that defendant No. 3 who is currently in possession does   not enjoy the status either of licensee or of lessee nor he is there any other capacity with the   consent of either of the parties. He is simply holding over the possession once open a time he was  given the task of getting of Sudan Embassy vacated. This Court really wonder about the sanctity  of such kind of agreements as executed between the plaintiff  and defendant No.3 and between   defendant No.l and defendant No. 3 for the purpose of getting the Sudan Embassy vacated. Rent   Control  laws seem to have been thrown to the winds.  Task is  taken by individual  to get  the   premises vacated from Sudan Embassy and that  too for consideration.  I am afraid if  such an  agreement has a legal sanctity. That being so the possession of defendant No.3 cannot be termed   as legal in the suit property. If at all his services charges were not paid he has the legal remedy   either  with  the  plaintiff  or defendant  No.l.  Under  no law he  can be  permitted  to retain  the   possession of  the  property.  Therefore  in  any case  he  has  to go out of the  property he  being  stranger to the suit property having no title or interest of any nature. Learned counsel for the   plaintiff has also been able to establish by way of various authorities referred to above that it is a   fit  case  where  Receiver  should  be  appointed  for  the  management  of  the  property  who can  manage the affairs  of the suit  property under the supervision of the Court as  there  is  every  likelihood that in the eventuality of not appointing the Receiver there is strong likelihood of the   property being usurped in a clandestine  manner so as  to frustrate  the claims of the rightful   claimant. Even otherwise not appointing the Receiver at this juncture might lead to multifarious   litigation.

27. Therefore in order to prevent all these wrongs and further damage and waste to the property, appointment of Receiver has become essential so as to preserve the property. Therefore, Sh. Rajesh Gupta, Advocate is hereby appointed as Receiver. His fee is fixed at Rs.50,000/- initially subject to revision, depending on the quantum of work he might have to undertake while acting as Receiver to be paid by the plaintiff. He will manage the affairs of the suit property by removing defendant No.3 from the suit property. If need arise, he may take the assistance of the police to thwart any resistance and also may break open the locks of the property and make an inventory of the goods lying therein. If he required to do any work in respect of the property like maintenance, he shall seek prior permission from the Court. This application is accordingly allowed.

28. This order shall also take care of the application of Bhagwati Developers Pvt. Ltd. proposed defendant No. 10

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wherein while treating the possession of defendant No.3 as unlawful possession in the suit property has sought directions from this court that the Receiver appointed by the High Court of Calcutta be continued and the possession of the property be handed over to him who should retain the property in his possession as in the capacity of Receiver. I may state that when the matter was taken to Calcutta High Court between six alleged transferees and Bhagwati Developers Pvt. Ltd., the Calcutta High Court in its order dated 13th February,  2001 clearly indicated that the decree  passed by the Calcutta High Court if comes in conflict with the order passed by Delhi High Court, the   same shall always be subject to the order that might be passed by the Delhi High Court.

29. In  view  of  the  fact  that  this  court  while  allowing  the  application of the plaintiff has appointed Receiver for managing the  control and supervision of the property in question. Therefore, the  order passed by the Calcutta High Court appointing Receiver has to  be  kept  in  abeyance  as  Calcutta  High  Court  itself  stated  that  decision  of  Delhi  High Court  shall  have  precedence  over  their  decision. This being so, plea of the proposed defendant No. 10 that  Receiver  so  appointed  by Calcutta  High Court  should continue,  cannot be accepted.”

17.    The  learned  Single  Judge  then  considered  the  application  filed  by  

respondent No.4 for amendment of the written statement and dismissed the  

same by recording the following observations:

“True, law of amendment is quite liberal and Courts ordinarily permits amendment provided   such amendments are not mischievous in nature with a view to delay the legal proceedings and  setting up entirely new case than the one pleaded earlier but in this case, I may say that written   statement was filed way back in 1993 and good number of years have passed, but it never struck  the defendant to make such amendment simply by putting the blame on earlier  lawyer.  Even  otherwise amendment which is sought to be made was well within the knowledge of defendant   No. 3. During all  these years when proceedings were continuing that he was being termed as   trespasser. What prevented him to explain his true position at the earliest is not explained at all.   To me it seems that when arguments were being heard and the counsel for the parties put up  their  respective  claims  then  it  has  struck  the  mind  of  defendant  No.  3  to  apply  for  such   amendment  as  it  might  work  to  his  advantages.  If  at  all  he  was  in  possession  because  of  defendant  No.l's  consent  he should have pleaded so at  the earliest.  Such belated amendment  which is otherwise totally inconsistent to the stand taken earlier in the written statement cannot   be allowed as in that case it would amount to take the case back to the year 1993 when the suit   was filed. Therefore this application has no merit, it being full of malice, the same is dismissed.”

18. After about 11 years of the execution of agreements for sale in their favour  

by respondent No.2,  the appellants filed IA No.1861/2008 under Order 1  

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Rule 10(2) CPC for impleadment as defendants in Suit No. 425/1993. They  

pleaded that by virtue of the agreements for sale and the sale deeds executed  

by respondent No.2, they have become absolute owners of the suit property  

and, as such, they are entitled to be impleaded as defendants in the suit filed  

by respondent No.1.  The appellants also invoked the doctrine of lis pendens  

embodied in Section 52 of the Transfer of Property Act, 1882 and pleaded  

that  having  purchased  the  property  during  the  pendency  of  the  suit  by  

respondent  No.1,  they have  acquired  the  right  to  contest  the  same.  The  

appellants relied upon the orders passed by the Delhi High Court in IA Nos.  

625/2001, 1211/2001 and 9576/2001 to show that respondent No.1 was very  

much aware of the agreements for sale and the sale deeds executed in their  

favour by respondent No.2 and the agreement executed by them in favour of  

Bhagwati Developers and pleaded that it was the duty of respondent No.1 to  

have suo motu impleaded them as parties to the suit. In the reply filed on  

behalf  of  respondent  No.1,  it  was  pleaded  that  the  suit  for  specific  

performance had been filed because respondent No.2 did not execute the sale  

deed in furtherance of agreement for sale dated 13.9.1988 and the appellants  

who are not parties to that agreement do not have the locus to contest the suit.  

Respondent  No.1  also  raised  an  objection  of  delay  by  asserting that  the  

appellants had sought impleadment after 11 years of having entered into a  

clandestine transaction with respondent No.2. Respondent No. 1 relied upon  

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orders dated 22.1.2001, 24.1.2001 and 8.2.2001 passed by the Delhi High  

Court  and  Suit  No.  161/1999  field  by  respondent  No.2  for  grant  of  a  

declaration that the sale deeds allegedly executed in favour of the appellants  

were  forged and fabricated,  to  show that  the  appellants  were  very much  

aware of Suit No.425/1993 and pleaded that their assertion about lack of  

knowledge was false because they had been contesting Suit No.161/1999 for  

almost  7  years.  Another  plea  taken  by  respondent  No.1  was  that  the  

transactions  entered  into  between  respondent  No.2,  the  appellants  and  

Bhagwati  Developers  were  ex  facie  illegal  and  on  the  basis  of  such  

transactions the appellants did not acquire any right or interest in the suit  

property.

19.The  learned  Single  Judge  dismissed  IA No.  1861/2008  vide  order  dated  

26.5.2008, relevant extracts of which are reproduced below:

“The cumulative sequence of events noticed above leads this Court to conclude that the vendor  P.K. Khanna allegedly sold the properties in 1997. The applicants also claim as such. They were   aware about the existence of this suit if not in 1999 at least from 2001 onwards, when they were   made parties in an application and subject to an injunction. Their conduct in approaching, for  impleadment, now seven years later,  cannot be countenanced. That apart,  as held in Kasturi's   case their  impleadment would completely alter the nature of the suit  which was instituted in  1993 for specific performance of a contract, of 1988.

There is no whisper of leave having been obtained by their vendor,  to this transaction. The record shows that the vendor was admittedly  restrained by an injunction from parting with possession or creating  third party rights in respect of the suit property, on 18th February,  1993.  That  order  was  subsequently confirmed after  hearing the  vendor/P.K. Khanna i.e. first defendant on 5th April, 1994. In view  of the principles spelt out in Bibi Zubaida Khatoon and Surjit Singh  

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accepting this  application  would  defeat  the  ends  of  justice  and  undermine public policy.”

20. Bhagwati Developers challenged order dated 3.9.2007 in FAO (OS) No.  

514 of 2007. Respondent No.4 also challenged that order in FAO (OS) No. 400  

of 2007. The appellants questioned order dated 26.5.2008 in FAO (OS) No. 324  

of 2008. The Division Bench of the High Court dismissed all the appeals and  

approved the orders passed by the learned Single Judge. The Division Bench  

referred to order dated 15.2.2001 passed by the Calcutta High Court and the  

judgments in Surjit Singh v. Harbans Singh (1995) 6 SCC 50, Jayaram Mudaliar  

v. Ayyaswamia & Ors.  (1972) 2 SCC 200,  Rajender Singh & Ors.  v. Santa  

Singh & Ors. (1973) 2 SCC 705, Joginder Singh Bedi v. Sardar Singh & Ors. 26  

(1984) DLT 162 Del (DB) and Sanjay Gupta v. Kalawati & Ors. (1992) 53 DRJ  

653 and held that the learned Single Judge was justified in appointing a receiver  

for  protecting  the  suit  property  because  respondent  No.2  had  flouted  the  

injunction order with impunity and if the receiver was not appointed there was  

every possibility of further alienation of the suit property. Paragraph 26 of the  

impugned judgment in which the Division Bench of the High Court enumerated  

the factors necessitating appointment of receiver by the learned Single Judge and  

paragraph 33 are extracted below:     

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“26.  Following  developments  and  circumstances  in  this  behalf  need  mention  and/or   reiteration:

(a) The suit filed by the plaintiff is predicated on agreement  to sell dated 13.9.1988 purportedly executed in its favour  by the defendant No.l, owner of the suit property, which  is earliest transaction in point of time.

(b) Suit, on this basis, filed in April 1993 is also earliest legal  proceeding instituted by the plaintiff.  In this  suit,  ad interim  injunction  dated  18.2.1993  was  passed  restraining  defendant  Nos.1  &  3  from  transferring, alienating or parting with possession of the suit property in any manner or  creating third party rights therein.

(c) The plaintiff also filed another IA No.9154/1993 seeking  restraint against the defendant No.l as well as defendant  No.3  from changing the nature of the suit  property by  making  structural  changes,  additions  or  alterations  therein. In this application orders were passed directing  them not to carry out any structural additions, alterations  and permitted only the renovations like painting, polishing  of the suit property.

(d) In  spite  of  the  restraint  order  dated  18.2.1993,  the  defendant No.l allegedly transferred the suit property by  executing  purported  six  sale  deeds  on  28.5.1997  in  favour  of  Vidur  Impex  &  Traders and others.

It is the submission of learned counsel appearing for the plaintiff that intentionally  six  sale  deeds were executed showing consideration of Rs.48 lacs each keeping the same   below the prescribed limit of Rs.50 lacs with a fraudulent intent to avoid the application of  Chapter XX-C of the Income-Tax Act.

(e) On coming to know of the aforesaid sale transactions, the plaintiff filed application under Order XXXIX Rule 1 & 2 CPC for restraining the defendant Nos.1 & 2 from transferring possession of the suit property to the said six transferees under the alleged six sale deeds. Restraint order to this effect was passed by the learned Single Judge. Further orders were passed restraining these six transferees (defendant No.s 4 to 9) from acting upon the impugned sale deeds.

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(f) Defendant No.l in his reply took the stand  that impugned sale deeds were forged and fabricated and were not executed by him. He even filed suit No. 161/1999 for declaration to this effect. However, this suit was withdrawn on 10.1.2001 vide application IA No. 255/2001 purported to have been moved by him through Shri Bhupinder Singh, Advocate, on the statement of Advocate without the presence of the defendant  No.l  or  his  statement.  Thereafter,  IA  No.1537/2001 was moved by the defendant No.l stating that  he had not authorized any counsel to make an application for  withdrawal  of  the  suit  and  the  whole  proceedings  were  collusive,  fraudulent and that  he had not  entered  into any  compromise with the said six transferees.  

Though we are not concerned with these proceedings, this fact is   mentioned to highlight the manner in which the transactions are taking place, that too in the   teeth  of injunction  order  passed  in  Suit  No.425/1993  and  the  vacillating  attitude  of the   defendant No.l (since deceased).

(g) Though there was restraint order against defendant Nos. 4  to 9, i.e. Vidur Impex & Traders and others, not to act upon  the impugned sale deeds, they entered into agreement dated  18.3.1997 for transfer of their purported rights and interest in  the suit  property  in  favour  of Bhagwati  Developers.  This  agreement  contained  an  arbitration clause,  on the basis  of which the Arbitrator  was appointed  and consent  award  passed.  Again,  without  commenting  upon  the  validity  or  otherwise  of such  proceedings,   which would naturally be thrashed out in appropriate proceedings, suffice it to state was that   all this was happening in violation of the injunction order passed in the instant suit. Attempt   was made to get the Receiver appointed from the Calcutta High Court and take possession of  the suit property. 33.  In  this  behalf,  we  agree  with  the  submission of  Mr.  Singhvi,  learned senior  counsel  for  the  plaintiff,  that  in  a  suit  for  specific  performance, the court has ample power and jurisdiction to appoint a receiver, in Kerr on  Receivers 16th  Edition (on page  58), it has been laid down that if a fair  prima facie  case for the specific performance of a contract is made to appear,  the court may interfere   upon motion and appoint receiver. In Foot Note No. 37, reference has been made to case law  including C. Kennedy v. Lee (1870) 3 MER 441, M. cloudy. Phelp (1838)  2 JUR 962. The appointment may be made in such circumstances before the order for a sale   is made absolute. (Re: Stephard,  (1892) 31 IR 95).”

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21. The Division Bench approved the rejection of the appellants’  prayer for  

impleadment as parties in Suit No. 425/1993 by observing that after executing  

the agreement for sale in favour of Bhagwati Developers they do not have any  

subsisting interest in the property.  The Division Bench also agreed with the  

learned Single Judge that the application filed by the appellants lacked bona  

fides because they purchased the suit property from respondent No.2 despite  

the order of injunction passed by the High Court and there was no tangible  

explanation for filing the application after a long time gap of about 8 years.

22.Learned senior counsel for the appellants emphasised that his clients were not  

aware of the agreement for sale executed by respondent No.2 in favour of  

respondent No.1, the suit for specific performance and permanent injunction  

filed by respondent No.1 in the Delhi High Court and injunction order dated  

18.2.1993  till  January,  2001  when  the  learned  Single  Judge  restrained  

respondent Nos.2 and 4 from transferring possession of the suit property to  

the appellants, and argued that the High Court committed serious error by  

declining their prayer for impleadment as parties to the suit. He submitted  

that the appellants are bona fide purchasers for consideration and are entitled  

to  contest  the  suit  filed  by  respondent  No.1,  else  their  right  in  the  suit  

property will get jeopardized. Learned senior counsel then argued that the  

agreement  for  sale  executed  by  the  appellants  in  favour  of  Bhagwati  

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Developers did not result in alienation of the suit property and the High Court  

committed an error in holding that the appellants had no subsisting right in the  

subject matter of the suit.  He relied upon the judgments of this Court in  

Nagubai  Ammal  v.  B  Shama  Rao  AIR  1956  SC  593,  Khemchand  S.  

Choudhari v. Vishnu Hari (1983) 1 SCC 18 , Savitri Devi v. DJ, Gorakhpur  

(1999) 2 SCC 577,  Kasturi v.  Iyyamperumal   (2005) 6 SCC 733,  Amit  

Kumar Shaw v. Farida Khatoon (2005) 11 SCC 403, Mumbai International  

Airport (P) Ltd. v. Regency Convention Centre and Hotels (P) Ltd. (2010) 7  

SCC 417 and Vinod Seth v. Devinder Bajaj (2010) 8 SCC 1, and argued that  

respondent No.1 should be directed to implead the appellants as parties to the  

suit because their rights will be adversely affected if a decree is passed in  

favour  of  respondent  No.1.   Learned  senior  counsel  submitted  that  

impleadment  of  the  appellants  will  enable  the  Court  to  comprehensively  

decide all the issues and will also obviate the necessity of further litigation in  

the matter.

23.Learned  senior  counsel  appearing for  Bhagawati  Developers  invoked  the  

doctrine of comity of jurisdiction of the Courts and argued that in view of the  

order passed by the Calcutta High Court for appointment of receiver who had  

already taken possession of the suit property, the Delhi High Court should  

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have refrained from exercising its power to appoint receiver with a direction  

to him to take over the property.

24.Learned senior counsel for respondent No. 1 relied on Surjit Singh v. Harbans  

Singh (supra) and argued that the appellants are neither necessary nor proper  

parties  because  the  agreements  for  sale  and  the  sale  deeds  executed  by  

respondent No.2 in their favour had no legal sanctity.  Learned senior counsel  

submitted that the alienation of suit property by respondent No.2 in violation  

of the injunction granted by the Delhi High Court was  nullity and such a  

transaction did not create any right in favour of the appellants or Bhagwati  

Developers so as  to entitle them to contest  the litigation pending between  

respondent Nos.1 and 2. Learned senior counsel submitted that in a suit for  

specific  performance,  any  transfer  which  takes  place  in  violation  of  an  

injunction granted by the Court would be hit by the doctrine of lis pendens  

enshrined in Section 52 of the Transfer of Property Act, 1882. Learned senior  

counsel  further  submitted  that  on the  date  of  filing IA No.1861/2008  the  

appellants did not have any subsisting interest in the suit property because  

they  had  already  executed  an  agreement  for  sale  in  favour  of  Bhagwati  

Developers and received substantial part of the consideration and the mere  

fact that they were made parties in the interlocutory applications filed before  

the Delhi High Court cannot entitle them to seek impleadment as defendants  

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in the pending suit. Learned senior counsel then argued that the agreement to  

sell  executed  between  the  appellants  and  Bhagwati  Developers  and  the  

proceedings instituted  before  the  Calcutta  High Court  were  collusive and  

fraudulent and the appellants and Bhagwati Developers cannot take benefit of  

the  order  passed  by  that  Court.  He  emphasized  that  even  though  the  

appellants  and  Bhagwati  Developers  had  knowledge  of  the  suit  pending  

before the Delhi High Court, they deliberately suppressed this fact from the  

Calcutta High Court and succeeded in persuading the Court to appoint an  

arbitrator and a receiver. Learned senior counsel submitted that the doctrine of  

comity of jurisdictions cannot be invoked by Bhagwati Developers because  

the Delhi High Court was already seized of the matter and the application  

filed by respondent No.1 for appointment of receiver was pending since 1998.  

Learned senior counsel lastly argued that the Delhi High Court did not commit  

any error by appointing a receiver because respondent Nos.2, 4, the appellants  

and Bhagwati  Developers  tried to  grab the suit  property by entering into  

clandestine transactions.

25.We have considered the respective arguments/submissions.  The first question  

that  requires  determination  is  whether  the  appellants  are  entitled  to  be  

impleaded as  parties  in Suit No.  425/1993 on the ground that  during the  

pendency of the suit they had purchased the property from respondent No.2.  

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Order 1 Rule 10(2) CPC which empowers the Court to delete or add parties  

to the suit reads as under:

“10 (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 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  adjudicate  upon and  settle  all  the  questions  involved in the  suit,  be  added.”

26.In  Ramesh  Hirachand  Kundanmal  v.  Municipal  Corporation  of  Greater  

Bombay (1992) 2 SCC 524, this Court interpreted the aforesaid provision  

and held:  

“Sub-rule (2) of Rule 10 gives a wide discretion to the Court  to meet every case of defect of parties and is not affected by  the inaction of the plaintiff to bring the necessary parties on  record.  The question of impleadment of a  party has to be  decided on the touchstone of Order 1 Rule 10 which provides  that  only a  necessary or  a  proper  party may be  added.  A  necessary party is one without whom no order can be made  effectively.  A  proper  party  is  one  in  whose  absence  an  effective order can be made but whose presence is necessary  for a complete and final decision on the question involved in  the  proceeding.  The addition of  parties  is  generally not  a  question of initial jurisdiction of the Court but of a judicial  discretion which has to be exercised in view of all the facts  and circumstances of a particular case.”

(emphasis supplied)

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27. In Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC 147, this Court  

interpreted Order 1 Rule 10(2) in the following manner:   

“By operation of the above-quoted rule though the court may  have  power  to  strike  out  the  name of  a  party improperly  joined  or  add  a  party  either  on  application  or  without  application of either party, but the condition precedent is that  the court must be satisfied that the presence of the party to be  added, would be necessary in order to enable the court to  effectually  and  completely  adjudicate  upon  and  settle  all  questions involved in the suit. To bring a person as party- defendant is not a substantive right but one of procedure and  the court has discretion in its proper exercise. The object of  the rule is to bring on record all the persons who are parties  to the dispute relating to the subject-matter so that the dispute  may be determined in their presence at the same time without  any protraction, inconvenience and to avoid multiplicity of  proceedings.”

28. In Mumbai International Airport (P) Ltd. v. Regency Convention Centre  

and Hotels (P) Ltd. (supra), this Court considered the scope of Order 1 Rule  

10(2) CPC and observed:

“ The general rule in regard to impleadment of parties is that  the plaintiff in a suit, being    dominus litis  ,  may choose the    persons against  whom he wishes to litigate and cannot be  compelled to sue a person against whom he does not seek  any relief. Consequently, a person who is not a party has no  right to be impleaded against the wishes of the plaintiff. But  this general rule is subject to the provisions of Order 1 Rule  10(2) of the Code of Civil Procedure (“the Code”, for short),  which  provides  for  impleadment  of  proper  or  necessary  parties. The said sub-rule is extracted below:

“10. (2) Court may strike out or add parties.—The court may  at any stage of the proceedings, either upon or without the  

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application of either party, and on such terms as may appear  to  the  court  to  be  just,  order  that  the  name of any 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 adjudicate upon and  settle all the questions involved in the suit, be added.”

The said provision makes it clear that a court may, at any  stage  of  the  proceedings  (including  suits  for  specific  performance), either upon or even without any application,  and on such terms as may appear to it to be just, direct that  any of the following persons may be added as a party: (  a  ) any    person  who  ought  to  have  been  joined  as  plaintiff  or  defendant, but not added; or (  b  ) any person whose presence    before the court may be necessary in order to enable the court  to effectively and completely adjudicate upon and settle the  questions involved in the suit. In short, the court is given the  discretion to add as a party, any person who is found to be a  necessary party or proper party. A “necessary party” is  a  person who ought to  have been  joined as a party and in whose absence no effective decree  could be passed at all by the court. If a “necessary party” is  not  impleaded,  the  suit  itself is  liable  to  be  dismissed.  A  “proper party” is a party who, though not a necessary party,  is  a  person  whose  presence  would  enable  the  court  to  completely,  effectively and adequately adjudicate  upon all  matters in dispute in the suit, though he need not be a person  in favour of or against whom the decree is to be made. If a  person is not found to be a proper or necessary party, the  court has no jurisdiction to implead him, against the wishes  of the plaintiff. The fact that a person is likely to secure a  right/interest  in  a  suit  property,  after  the  suit  is  decided  against the plaintiff, will not make such person a necessary  party or a proper party to the suit for specific performance.

Let us consider the scope and ambit of Order 1 Rule 10(2)  CPC regarding striking out or adding parties. The said sub- rule is not about the right of a non-party to be impleaded as a  party, but about the  judicial discretion of the court to strike  

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out or add parties at any stage of a proceeding. The discretion  under the sub-rule can be exercised either suo motu or on the  application  of  the  plaintiff  or  the  defendant,  or  on  an  application of a person who is not a party to the suit. The  court can strike out any party who is improperly joined. The  court can add anyone as a plaintiff or as a defendant if it finds  that he is a necessary party or proper party. Such deletion or  addition can be  without any conditions or  subject  to  such  terms  as  the  court  deems  fit  to  impose.  In  exercising its  judicial discretion under Order 1 Rule 10(2) of the Code, the  court will of course act according to reason and fair play and  not according to whims and caprice.”

(emphasis supplied)

29. In Kasturi v. Iyyamperumal (supra),  this Court considered the question  

whether a person who sets up independent title and claims possession of the suit  

property is entitled to be impleaded as party to a suit for specific performance of  

contract entered into between the plaintiff and the defendant.  In that case, the  

trial  Court  allowed  the  application  for  impleadment  on  the  ground  that  

respondent  Nos.1  and  4  to  11  were  claiming  title  and  possession  of  the  

contracted property and, therefore, they will be deemed to have direct interest in  

the subject matter of the suit.  The High Court dismissed the revision filed by the  

appellant and confirmed the order of the trial Court.   While allowing the appeal  

and setting aside the orders of the trial Court and the High Court, this Court  

referred to Order 1 Rule 10(2) CPC and observed:     

“In our view, a bare reading of this provision, namely, second  part of Order 1 Rule 10 sub-rule (2) CPC would clearly show  that the necessary parties in a suit for specific performance of  a contract for sale are the parties to the contract or if they are  

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dead,  their legal representatives as  also a  person who had  purchased the contracted property from the vendor. In equity  as  well as  in law,  the contract  constitutes  rights  and also  regulates  the  liabilities  of  the  parties.  A  purchaser  is  a  necessary party as he would be affected if he had purchased  with or  without  notice  of  the  contract,  but  a  person who  claims adversely to the claim of a vendor is, however, not a  necessary party. From the above, it is now clear that two tests  are  to  be  satisfied  for  determining the  question  who is  a  necessary party. Tests  are — (  1  )  there must be a  right to    some relief against such party in respect of the controversies  involved in the proceedings; (  2  ) no effective decree can be    passed in the absence of such party.

As noted hereinearlier, 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 a contract for sale. For deciding the question  who is a proper party in a 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 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  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. Small made the following observations:

“It  is  not  disputed  that,  generally,  to  a  bill  for  a  specific  performance of a contract of sale, the parties to the contract  only are  the  proper  parties;  and,  when the  ground of  the  jurisdiction  of  Courts  of  Equity  in  suits  of  that  kind  is  considered  it  could not  properly be  otherwise.  The Court  assumes jurisdiction in such cases,  because a court of law,  giving damages only for the non-performance of the contract,  

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in many cases does not afford an adequate remedy.  But, in  equity, as well as at law, 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  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 recover damages for the breach  of it.”

The aforesaid decision in Tasker was noted with approval in  De Hoghton v. Mone. Turner, L.J. observed:

“Here again his case is met by Tasker in which case it was  distinctly  laid  down  that  a  purchaser  cannot,  before  his  contract is carried into effect, enforce against strangers to the  contract equities attaching to the property, a rule which, as it  seems to  me,  is  well  founded in principle,  for  if  it  were  otherwise, this Court might be called upon to adjudicate upon  questions which might never arise, as it might appear that the  contract either ought not to be, or could not be performed.”

(emphasis supplied)   

30. In Amit Kumar Shaw v. Farida Khatoon (supra), this Court examined the  

correctness of the order passed by the Calcutta High Court which had approved  

the dismissal of the application filed by the appellants for impleadment as parties  

to the suit filed by the original owner Khetra Mohan Das and the transferees,  

namely,  Birendra Nath Dey and Smt.  Kalyani Dey.   One Fakir  Mohammad  

claimed right, title and interest in the suit property by adverse possession.  The  

suit was decreed by the trial Court.  On appeal, the same was remanded for fresh  

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adjudication of the claim of the parties.  Fakir Mohammad challenged the order  

of remand by filing two second appeals.  During the pendency of the appeals,  

Birendra Nath Dey assigned leasehold interest in respect of a portion of the suit  

property to the appellants.  Smt. Kalyani Dey sold the other portion of the suit  

property to  the  appellants.   When the  appellants  applied  for  recording their  

names in the municipal records, they came to know about the pendency of the  

appeals.  Immediately thereafter, they filed an application for impleadment which  

was rejected by the High Court.  This Court referred to the provision of Order 1  

Rule 10(2) and Order 22 Rule 10 CPC as also Section 52 of the Transfer of  

Property Act, 1882 and observed:

“Section 52 of the Transfer of Property Act is an expression  of the principle “pending a litigation nothing new should be  introduced”.  It provides that  pendente lite,  neither party to  the litigation, in which any right to immovable property is in  question, can alienate or otherwise deal with such property so  as to affect his appointment. This section is based on equity  and good conscience and is intended to protect the parties to  litigation  against  alienations  by  their  opponent  during the  pendency of the suit. In order to constitute a lis pendens, the  following elements must be present:

1. There must be a suit or proceeding pending in a court of  competent jurisdiction.

2. The suit or proceeding must not be collusive.

3.  The litigation must be one in which right to immovable  property is directly and specifically in question.

4. There must be a transfer of or otherwise dealing with the  property in dispute by any party to the litigation.

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5. Such transfer must affect the rights of the other party that  may ultimately accrue under the terms of the decree or order.

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 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 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 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.”

(emphasis supplied)

31. In Savitri Devi v.  DJ,  Gorakhpur (supra),  this Court  upheld the order  

passed by the trial Court for impleadment of respondent Nos.3 to 5, who had  

purchased  the  suit  property  without  knowledge  of  the  pending litigation,  as  

parties.  On behalf of the appellant, it was argued that respondent Nos. 3 to 5  

cannot be treated as necessary parties because alienation made in their favour  

was in violation of the injunction order passed by the Court.  In support of this  

argument, reliance was placed on the judgment in Surjit Singh v. Harbans Singh  

(supra).  This Court distinguished that judgment by observing that in that case  

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the assignors and the assignees had knowledge of the injunction order passed by  

the Court and held that the order passed by the trial Court which was affirmed by  

the District Judge and the High Court does not call for interference.  

32. In Vinod Seth v. Devinder Bajaj (supra), this Court interpreted Section 52  

of the Transfer of Property Act, 1882 and observed:  

“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  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 acquisition of any right, title or interest, during the  pendency of the suit will be subject to the decision in the suit.

The principle underlying Section 52 of the TP Act is based on  justice and equity. The operation of the bar under Section 52 is  however subject to the power of the court to exempt the suit  property  from the  operation  of  Section  52  subject  to  such  conditions it may impose. That means that the court in which the  suit is pending, has the power, in appropriate cases, to permit a  party to transfer the property which is the subject-matter of the  suit without being subjected to the rights of any part to the suit,  by imposing such terms as it deems fit. Having regard to the  facts and circumstances, we are of the view that this is a fit case  where the suit property should be exempted from the operation  of Section 52 of the TP Act, subject to a condition relating to  reasonable security, so that the defendants will have the liberty  to deal with the property in any manner they may deem fit, in  spite of the pendency of the suit.”

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33.   In Surjit  Singh v.  Harbans  Singh (supra),  this  Court  considered the  

question whether a person to whom the suit property is alienated after passing of  

the preliminary decree by the trial Court, which had restrained the parties from  

alienating  or  otherwise  transferring  the  suit  property,  has  the  right  to  be  

impleaded  as  party.   The  trial  Court  accepted  the  application  filed  by  the  

transferees and the order of the trial Court was confirmed by the lower appellate  

Court and the High Court.  While allowing the appeal against the order of the  

High Court, this Court observed:

“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 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 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.”

34. In  Sarvinder  Singh  v.  Dalip  Singh  (1996)  5  SCC  539,  this  Court  

considered the question whether  the  respondent  who purchased  the property  

during the pendency of a suit for declaration filed by the appellant on the basis of  

the registered Will executed by his mother is entitled to be impleaded as party  

and observed:

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“The respondents indisputably cannot challenge the legality  or the validity of the Will executed and registered by Hira  Devi on 26-5-1952. Though it may be open to the legal heirs  of Rajender Kaur, who was a party to the earlier suit, to resist  the claim on any legally available or tenable grounds, those  grounds are  not  available to  the respondents.  Under those  circumstances,  the  respondents  cannot,  by  any  stretch  of  imagination, be said to be either necessary or proper parties  to  the  suit.  A  necessary  party  is  one  whose  presence  is  absolutely necessary and without whose presence the issue  cannot effectually and completely be adjudicated upon and  decided between the parties.  A proper party is one whose  presence would be necessary to effectually and completely  adjudicate upon the disputes. In either case the respondents  cannot be said to be either necessary or proper parties to the  suit in which the primary relief was found on the basis of the  registered Will executed by the appellant's mother, Smt Hira  Devi.  Moreover,  admittedly the respondents  claimed right,  title and interest pursuant to the registered sale deeds said to  have been executed by the defendants-heirs of Rajender Kaur  on 2-12-1991 and 12-12-1991, pending suit.

Section 52 of the Transfer of Property Act envisages that:

“During the pendency in any court having authority within  the limits of India ... of any suit or proceeding which is not  collusive and in which any right to immovable property is  directly and specifically in question, the property cannot 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 the decree or order which may be made therein, except  under the authority of the court and on such terms as it may  impose.”

It would, therefore, be clear that the defendants in the suit  were prohibited by operation of Section 52 to deal with the  property and could not transfer or otherwise deal with it in  any way affecting the rights of the appellant except with the  order or authority of the court. Admittedly, the authority or  order of the court had not been obtained for alienation of  

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those properties.  Therefore,  the alienation obviously would  be hit by the doctrine of lis pendens by operation of Section  52.  Under  these  circumstances,  the respondents  cannot be  considered to  be  either  necessary or  proper  parties  to  the  suit.”

(emphasis supplied)

35. In Bibi Zubaida Khatoon v. Nabi Hassan (2004) 1 SCC 191, this Court  

was called upon to consider the correctness of the High Court’s order, which  

declined to  interfere with the order  passed  by the trial Court  dismissing the  

applications filed by the appellant for impleadment as party to the cross suits of  

which one was filed for redemption of mortgage and the other was filed for  

specific performance of the agreement for sale.  While dismissing the appeal, this  

Court referred to the judgments in Sarvinder Singh v. Dalip Singh (supra) and  

Dhurandhar  Prasad  Singh v.  Jai  Prakash  University (2001)  6  SCC  534  and  

observed that there is no absolute rule that the transferee pendente lite shall be  

allowed to join as party in all cases without leave of the Court and contest the  

pending suit.

36. 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:  

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  

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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.

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.

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.

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.

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.

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 passed by the Court  

or the application is unduly delayed then the Court will be fully justified in  

declining the prayer for impleadment.

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37. In the light of the above, we shall now consider whether the learned Single  

Judge  and  the  Division  Bench  of  the  High  Court  committed  an  error  by  

dismissing  the  appellants’  application  for  impleadment  as  parties  to  Suit  

No.425/1993.   At the cost of repetition, we consider it necessary to mention that  

respondent  No.1  had  filed suit  for  specific  performance of  agreement dated  

13.9.1988  executed  by  respondent  No.2.   The  appellants  and  Bhagwati  

Developers are total strangers to that agreement. They came into the picture only  

when respondent No.2 entered into a clandestine transaction with the appellants  

for sale of the suit property and executed the agreements for sale, which were  

followed by registered sale deeds and the appellants executed agreement for sale  

in favour of Bhagwati Developers.  These transactions were in clear violation of  

the order of injunction passed by the Delhi High Court which had restrained  

respondent No.2 from alienating the suit property or creating third party interest.  

To put it differently, the agreements for sale and the sale deeds executed by  

respondent No.2 in favour of the appellants did not have any legal sanctity.  The  

status of the agreement for sale executed by the appellants in favour of Bhagwati  

Developers was no different. These transactions did not confer any right upon  

the appellants or Bhagwati Developers. Therefore, their presence is not at all  

necessary for adjudication of the question whether respondent Nos.1 and 2 had  

entered into a binding agreement and whether respondent No.1 is entitled to a  

decree of specific performance of the said agreement.  That apart, after executing  

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agreement  for  sale  dated  18.3.1997  in  favour  of  Bhagwati  Developers,  the  

appellants cannot claim to have any subsisting legal or commercial interest in the  

suit property and they cannot take benefit of the order passed by the Calcutta  

High Court for appointment of an arbitrator which was followed by an order for  

appointment of receiver because the parties to the proceedings instituted before  

that Court deliberately suppressed the facts relating to Suit No.425/1993 pending  

before the Delhi High Court and the orders of injunction passed in that suit.  

38. We  are  in  complete  agreement  with  the  Delhi  High  Court  that  the  

application  for  impleadment  filed  by  the  appellants  was  highly  belated.  

Although,  the  appellants  have  pleaded  that  at  the  time of  execution  of  the  

agreements for sale by respondent No.2 in their favour in February 1997, they  

did  not  know about  the  suit  filed by respondent  No.1,  it  is  difficult,  if  not  

impossible, to accept their statement because the smallness of time gap between  

the agreements for  sale  and the sale  deeds  executed  by respondent  No.2  in  

favour of the appellants and the execution of agreement for sale by the appellants  

in favour of Bhagwati Developers would make any person of ordinary prudence  

to believe that respondent No.2,  the appellants and Bhagwati Developers had  

entered into these transactions with the sole object of frustrating agreement for  

sale dated 13.9.1988 executed in favour of respondent No.1 and the suit pending  

before the Delhi High Court.  In any case, the appellants will be deemed to have  

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become aware of the same on receipt of summons in Suit No.161/1999 filed by  

respondent No.2 for annulment of the agreements for sale and the sale deeds in  

which respondent No.2 had clearly made a mention of Suit No.425/1993 filed by  

respondent  No.1  for  specific  performance  of  agreement  for  sale  dated  

13.12.1988 and injunction or at least when the learned Single Judge of the Delhi  

High Court entertained IA No.625/2001 filed by respondent No.1 and restrained  

respondent Nos.2 and 4 from transferring possession of the suit property to the  

appellants.   However,  in the application for  impleadment filed by them, the  

appellants did not offer any tangible explanation as to why the application for  

impleadment was  filed only on 4.2.2008 i.e.  after  7  years  of the passing of  

injunction order dated 22.1.2001 and, in our considered view, this constituted a  

valid  ground  for  declining  their  prayer  for  impleadment  as  parties  to  Suit  

No.425/1993.   

39. The ratio of the judgment in Kasturi v. Iyyamperumal (supra), on which  

heavy reliance has been placed by the learned senior counsel for the appellants,  

does not help his clients. In the present case, the agreements for sale and the sale  

deeds  were  executed  by  respondent  No.2  in  favour  of  the  appellants  in  a  

clandestine manner and in violation of the injunction granted by the High Court.  

Therefore, it cannot be said that any valid title or interest has been acquired by  

the appellants in the suit property and the ratio of the judgment in Surjit Singh v.  

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Harbans Singh (supra) would squarely apply to the appellants’ case because they  

are claiming right on the basis of transactions made in defiance of the restraint  

order passed by the High Court. The suppression of material facts by Bhagwati  

Developers  and  the  appellants  from  the  Calcutta  High  Court,  which  was  

persuaded to pass orders in their favour, takes the appellants out of the category  

of bona fide purchaser.  Therefore, their presence is neither required to decide  

the controversy involved in the suit filed by respondent No.1 nor required to pass  

an effective decree.

40. The next question which merits consideration is whether the Delhi High  

Court  was  justified  in  appointing  the  receiver  and  directing  him  to  take  

possession  of  the  property.  Though,  learned  senior  counsel  appearing  for  

Bhagwati Developers has sought to invoke the doctrine of comity of jurisdictions  

of the Courts for continuance of the receiver appointed by the Calcutta High  

Court,  we do not find any merit in his submission.  It  is  not  in dispute  that  

respondent No.1 had filed the suit for specific performance on 1.2.1993 and the  

learned Single Judge of the Delhi High Court passed the order of injunction on  

18.2.1993. The arbitral award for specific performance of the agreement for sale  

of  the  same  property  entered  into  between  the  appellants  and  Bhagawati  

Developers  was  obtained  on  7.1.1999.  The  execution  proceedings  were  

instituted in the Calcutta High Court in 2000 and the order for appointment of  

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receiver  was  passed  on  12.8.2000.  It  is  thus  clear  that  when  Bhagwati  

Developers  approached  the  Calcutta  High Court,  the  Delhi High Court  was  

already seized  with the  suit  involving the  subject  matter  of  the  award.  The  

contention of the appellants and Bhagawati Developers that they were unaware  

of the proceedings before the Delhi High Court cannot be accepted because in  

Suit No.161/1999 filed by respondent No.2 for declaring that the agreements for  

sale and the sale deeds relied upon by the appellants were false and fabricated, a  

specific reference was made to the suit filed by respondent No.1. That apart, in  

its order dated 15.2.2001 passed in the application filed by respondent No.4 in  

EC  No.10/2000,  the  learned  Single  Judge  of  the  Calcutta  High  Court  

categorically observed that the said Court had not been apprised of the facts  

relating to the suit pending before the Delhi High Court and the injunction orders  

passed  therein including order  dated  8.2.2001 restraining the receiver of the  

Calcutta High Court from taking possession of the property and that if these facts  

had been disclosed, the Court would have been slow in passing the order that it  

had passed earlier and hence the order passed by it, if it is in conflict with the  

order  passed  by  the  Delhi  High Court,  would  be  subject  to  that  order  and  

Bhagawati Developers who is a party to the proceedings before the Delhi High  

Court can approach the said Court for obtaining appropriate orders. This shows  

that  on being apprised  of  the  correct  facts,  the  learned Single Judge of  the  

Calcutta High Court had shown due respect to the orders passed by the Delhi  

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High Court and directed that the same should operate till they are modified or  

vacated at the instance of the appellants or Bhagwati Developers. The course of  

action adopted by the Calcutta High Court was in consonance with the notion of  

judicial propriety. Therefore, Bhagwati Developers cannot invoke the doctrine of  

comity of jurisdictions of the Courts  for seeking continuance of the receiver  

appointed by the Calcutta High Court.

41. The learned Single Judge and the Division Bench of the Delhi High Court  

have assigned detailed and cogent reasons for appointing a receiver to take care  

of the suit  property.   The clandestine nature of the transactions entered into  

between respondent No.2 and the appellants on the one hand and the appellants  

and Bhagwati Developers on the other would give rise to strong presumption that  

if a receiver is not appointed, further attempts would be made to alienate the  

property in similar fashion.  Therefore, we do not find any valid ground much  

less justification to interfere with the impugned order or the one passed by the  

learned Single Judge of the Delhi High Court.  

42. In view of the above conclusions,  we  do not consider it  necessary to  

advert to the documents filed by respondent No.1 before this Court for the first  

time and the additional affidavit filed by Smt. Bhanwari Devi Lodha on behalf of  

Bhagwati Developers.

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43. In the result, the appeals are dismissed. For their contumacious conduct of  

suppressing facts  from the  Calcutta  High Court  and  thereby prolonging the  

litigation, the appellants and Bhagwati Developers are saddled with cost of Rs.5  

lakhs each.  The amount of cost shall be deposited by them with the Supreme  

Court Legal Services Committee within a period of three months.

44. Since the proceedings pending before the Delhi High Court were stayed  

by this Court, we request the High Court to make an endeavour to dispose of the  

pending suit as early as possible.

…...……..….………………….…J. [G.S. Singhvi]

…………..….………………….…J.           [Sudhansu Jyoti Mukhopadhaya]

New Delhi, August 21, 2012.

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