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                        IN THE SUPREME COURT OF INDIA   CIVIL APPELLATE JURISDICTION

Civil Appeal No. 1518 of 2013

(Arising out of Special Leave Petition (Civil) No. 24159 of 2009)

Thomson Press (India) Ltd.                                        …..Appellant  (s)

Vs.

Nanak Builders & Investors P.Ltd. & Ors.                …..Respondent(s)

J U D G M E N T

M.Y. EQBAL, J.

Leave granted.

2. This  appeal  is  directed  against  the  order  passed  by  the  

division bench of the High Court of Delhi in FAO No. 295 of 2008 affirming

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the  order  of  the  Single  Judge  and  rejecting  the  petition  filed  by  the  

appellant under Order 1 Rule 10 of CPC for impleadment as defendants in  

a suit for specific performance of contract being Suit No. 3426 of  1991  

filed by plaintiff-Respondent No.1.

3. Although the case has a chequered history, the brief facts of  

the case can be summarized as under :-

4. Mrs. Lakhbir Sawhney, Respondent No. 2 and son Mr. H.S.  

Sawhney,  the  predecessor  of  Respondent  No.  3  (a)  to  (d)  were  the  

owners of the property known as “Ojha House” / “Sawhney Mansion”, F-

Block,  Connaught  Place,  New  Delhi.   (These  respondents  shall  be  

referred as “the Sawhneys” for the sake of convenience).   M/s Nanak  

Builders and Investors Pvt. Ltd., Respondent No.1 is the plaintiff in the  

Suit.  The plaintiff-Respondent No.1 filed a suit in the High Court of Delhi  

being  Suit  No.  3426  of  1991  against  the  defendants-respondents  

Sawhneys’ for a decree for specific performance of agreement.  The case  

of the plaintiff-respondent is that on 29.05.1986 the defendant-respondent  

entered into an agreement with the plaintiff-respondent for sale of an area  

measuring about 4000 sq.ft. on the 1st Floor of F-26, Connaught Place,  

New  Delhi  on  the  consideration  of  Rs.  50  lakhs.   Out  of  the  said

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consideration,  a  sum of  Rs.  1  lakh  was  paid  by  the  plaintiffs  to  the  

defendants vide cheque no. 0534224 drawn from Union Bank of India,  

New  Delhi.   The  aforesaid  property  shall  be  referred  to  as  the  “suit   

property”  which was in  the  tenancy of  M/s  Peerless General  Finance  

Company Limited. In the said agreement it was agreed  inter alia that if  

the premises is vacated and the plaintiff did not complete the sale on the  

defendant,  getting  all  permissions,  sanctions  etc.,  the  defendant  shall  

have the right to forfeit the money.  Plantiff’s further case was that M/s  

Peerless General Finance Company Limited has given a security deposit  

of Rs. 25 lakhs approximately and did not vacate the premises and called  

upon the defendants that they will  vacate the premises only when the  

defendants make the payment, that too on the expiry of the lease which  

expired around September, 1990.  It is alleged by the plaintiff that during  

the intervening period, it  has been making part payments from time to  

time out of the said consideration amount.  In May 1991, the defendants  

got the said suit premises vacated from M/s Peerless General Finance  

Company  Limited.   The  plaintiffs  have  immediately  approached  the  

defendants  to  receive  the  balance  consideration  but  the  same  was  

avoided by the defendant.  A public notice was, therefore, issued in ‘The  

Hindustan Times’ , New Delhi so that the defendants  ‘Sawhneys’ do not

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sell, transfer or alienate the said property to any other person.  Lastly, it   

was alleged by the plaintiff that despite being always ready and willing to  

complete  the  transaction,  the  defendant  avoided  to  obtain  requisite  

permission / sanction and clearance, hence the suit was filed.  During the  

intervening  period  some  more  development  took  place.   One  Living  

Media India Limited, (in short LMI), said to be a group company of the  

Appellant  M/s  Thomson  Press  (India)  Limited  offered  the  defendant-

respondent to take the suit  premises on lease, some time in the year  

1988.  The defendants Sawhneys’ assured the LMI that lease would be  

granted after M/s Peerless vacated the suit property.  LMI, accordingly,  

sent a cheque to the defendants-Sawhneys’  as earnest money in respect  

of the lease.  However, when Sawhneys’ wanted to resile from the agreed  

terms with LMI,  a suit  was filed by LMI being Suit  No.  2872 of  1990  

against Sawhneys’ in Delhi High Court for perpetual injunction restraining  

the Sawhneys’ from parting with possession of the premises to any third  

party.   The  High  Court  passed the  restrain  order  on  19.09.1990 with  

regard to the suit property and appointed a commissioner to report as to  

who is in possession of suit premises.  

It appears that the aforesaid suit filed by LMI was compromised and an  

order was passed on 08.04.1991 whereby, as per the compromise, the

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suit  property was leased out by defendant-Sawhneys’ in favour of LMI  

and possession of the property was given to it.   

5. On  01.11.1991,  the  plaintiff-M/s  Nanak  Builders  in  the  

meantime filed a suit against the defendant-respondent Sawhneys’ being  

suit no. 3426/1991 for specific performance of  agreement to sell dated  

29.05.1986.  In the said suit  pursuant to summons issued against the  

defendants– Sawhneys’ one Mr. Raj Panjwani, Advocate accepted notice  

on behalf of Sawhneys’ and stated before the Court that possession of  

the flat in question is not with the defendants, rather with M/s LMI which  

delivered to them by virtue of the lease.  Mr. Panjwani further stated that  

till disposal of the suit the property in question would not be transferred or  

alienated by the defendants.   The defendants-  Sawhneys’  also filed a  

written  statement  in  the  said  suit.   It  appears  that  the  defendants-

Sawhneys’ took loan from Vijaya Bank and to secure the loan, equitable  

mortgage was created in respect of the suit property.  In 1977 a suit was  

filed by the Bank in Delhi High Court for recovery and redemption of the  

mortgaged  property.   The  said  suit  was  decreed  on  14.10.1998  and  

recovery  certificate  was  issued  by  DRT,  Delhi.   LMI,  a  group  of  the  

appellant  Company intervened and settled  the  decree  by  agreeing  to  

deposit the loan amount of Rs.1.48 crores.  The LMI cleared all the dues,

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income tax liability etc., of Sawhneys’ for sale of the property in favour of  

LMI and its associates.  Finally, in between 31.01.2001 and 03.04.2001  

five sale deeds were executed by defendants-Sawhneys’ in favour of the  

present appellant herein M/s Thomson Press India Limited.  On the basis  

of those sale deeds the appellant moved an application under Order 1  

Rule  10  CPC  for  impleadment  as  defendants  in  a  suit  for  specific  

performance filed by Respondent No.1 herein M/s Nanak Builders and  

Investors Pvt. Ltd.

6. The  learned  Single  Judge  of  the  Delhi  High  Court  after  

hearing the parties dismissed the application on the ground that there  

was an injunction order passed way back on 04.11.1991 in the suit for  

specific  performance  restraining  the  defendants-Sawhneys’  from  

transferring  or  alienating  the  suit  property  passed,  the  purported  sale  

deeds  executed  by  the  defendants  in  favour  of  the  appellant  was  in  

violation of the undertaking given by the respondents which was in the  

nature of injunction.  Aggrieved by the said order, the appellant filed an  

appeal being FAO No.295 of 2008 which was heard by a Division Bench.  

The Division Bench affirmed the order of the Single Judge and held that  

in  view  of  the  injunction  in  the  form  of  undertaking  given  by  the  

respondents-Sawhneys’ and recorded in the suit proceedings,  how the

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property could be purchased by the appellants in the year 2008.  The  

appellant  aggrieved  by  the  aforesaid  orders  filed  this  Special  Leave  

Petition.

7. Mr.  Sunil  Gupta,  learned  senior  counsel  appearing  for  the  

appellant assailed the impugned orders as being illegal, erroneous in law  

and without jurisdiction.  Learned senior counsel firstly contended that the  

appellant  being the  purchaser  of  the suit  property  is  a  necessary  and  

proper  party  for  the  complete  and  effective  adjudication  of  the  suit.  

According  to  him,  the  denial  of  impleadment  will  be  contrary  to  the  

principles governing Order 1 Rule 10 (2) of the CPC though he submitted  

that impleadment as a party is not a matter of right but a matter of judicial  

discretion to be exercised in favour of a necessary and proper party.   Ld.  

Senior counsel further submitted that where a subsequent purchaser has  

purchased a suit property and is deriving its title through the same vendor  

then he would be a necessary party provided it  has purchased with or  

without notice of the prior contract.  He further submitted that after one  

transaction a pendency of the suit arising there from, Section 52 of the  

Transfer of Property Act does not prohibit the subsequent transaction of  

transfer of property nor even declares the same to be null and void.  Ld.  

Senior counsel, however, has not disputed the legal proposition that the

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court  would be justified in  denying impleadment  at  the instance of  the  

applicant who has entered a subsequent transaction knowing that there is  

a  court  injunction  in  a  pending  suit  restraining  and  prohibiting  further  

transaction or  alienation of the property.  Ld. Senior counsel put heavy  

reliance  on  the  decisions  of  the  Supreme  Court   in  Kasturi   v.  

Iyyamperumal  & Ors.  2005(6)  SCC 733,  for  the  proposition  that  an  

application  by  the subsequent  purchaser  for  impleadment  in  a  suit  for  

specific performance by a prior transferee does not alter the nature and  

character of the suit and such a transferee has a right and interest to be  

protected and deserves to be impleaded in the suit.

8. Mr.  Gupta,  strenuously  argued  that  High  Court  has  not  

considered  the  question  whether  the  appellant-purchaser  had  any  

knowledge of the order of injunction dated 04.11.1991 before entering the  

sale  transaction  in  2001.   He  has  submitted  that  even  assuming  that  

Sawhneys’  had  such  a  knowledge,  the  same  cannot  be  held  as  an  

objection to the exercise of judicial discretion in favour of the appellant  

being impleaded in the suit on the application of the appellant itself.

9. Per contra, Mr. Mahender Rana, learned counsel appearing  

for Respondent No.1 firstly contended that the suit is at the stage of final

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hearing and almost all  the witnesses have been examined and at  this  

stage the petition for impleadment cannot be and shall not be allowed.  

Ld. Counsel drew our attention to the legal notice dated 24.06.1990 and  

the notice dated 12.02.1990 published in the newspaper and submitted  

that not only the Sawhneys’ but the appellant and its sister concern had  

full  notice and knowledge of the pendency of the suit and the order of  

injunction on the basis of the undertaking given by Sawhneys’ that the suit  

property shall not be assigned or alienated during the pendency of the  

suit.   Learned  counsel  further  contended that  as  a  matter  of  fact  the  

vendor Sawhneys’ had committed fraud by incorporating in the sale deed  

that  there  was no  agreement  or  any  injunction  passed in  any  suit  or  

proceedings.  In that view of the matter the application for impleadment  

has  been  rightly  rejected  by  the  High  Court.   He  placed  reliance  on  

Vidhur Impex and Traders Pvt. Ltd. v.  Tosh Apartments Pvt. Ltd. &  

Ors. 2012 (8) SCC 384 and Surjit Singh and Others v.  Harbans Singh  

and Others (1995) 6 SCC 50.

10. Before discussing the decision of the Supreme Court relied  

upon by the parties, we would like to highlight some of the important facts  

and developments in the case which are not disputed by the parties.

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11. As  noted  above,  plaintiff-respondent  No.1  filed  the  suit  for  

specific performance on 01.11.1991 against the defendants Sawhneys for  

the specific performance of the agreements dated 29.05.1986.  In the said  

suit,  the  defendants  Sawhneys  through  Mr.  Raj  Panjwani,  Advocate  

accepted  summons  on  their  behalf  and  filed  vakalatnama.   The  said  

Advocate  Mr.  Panjwani,  inter-alia,  stated  before  the  Court  that  the  

defendants would not transfer or alienate the flat in question.  The order  

dated 04.11.1991 was incorporated in the order sheet as under:

“Mr. Panjwani accepts notice. Mr. Panjwani states  that the possession of the flat in question is not with the  defendants. The possession is with M/s. Living Media India  Limited which was delivered to them under the orders of  this Court. Mr. Panjwani states that till the disposal of this  application the defendants  would not  transfer  or  alienate  the flat in question. Let the reply be filed within 6 weeks  with advance copy to the counsel for the plaintiff, who may  file the rejoinder within 2 weeks thereafter. List this I.A. for  disposal on 10.3.1992.”

12. It is also not in dispute that before the institution of the suit the  

plaintiff-respondent  got  a  notice  published  in  the  newspaper  on  

12.02.1990 in Hindustan Times, Delhi Edition.  When this came to the  

notice of the appellant, the sister concern of the appellant, namely, M/s.

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Living  Media  India  Limited  sent  a  legal  notice  to  the  defendants  

Sawhneys’ dated 24.06.1990 and called upon him to execute the lease  

deed in respect of the suit property in terms of the agreement.  In the said  

notice dated 24.06.1990 the sister concern of the appellant in paragraph  

8  stated as under:

“That  a  Public  Notice appeared in the Hindustan  Times Delhi Edition on 12.2.1990. As per this notice one  M/s Nanak Buildings and Investor Pvt.Ltd. claim that you  have entered  into  an Agreement  to  sell  the premises  in  question to them. A copy of this notice is being endorsed to  their  counsel  mentioned  in  the  Public  Notice.  My  client  further  learns  that  you  have  approached  a  number  of  property brokers also for the disposal of the property.”

13. The question,  therefore,  that  falls for  consideration is as to  

whether if the appellant who is the transferee pendente lite having notice  

and knowledge about the pendency of the suit for specific performance  

and order of injunction can be impleaded as party under Order 1 Rule 10  

on the basis of sale deeds executed in their favour by the defendants  

Sawhneys’.

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14. Before coming to the question involved in the case, we would  

like to discuss the decisions of this Court relied upon by the parties.

15. In the case of  Anil Kumar Singh   vs.   Shivnath Mishra  

alias Gadasa Guru (1995) 3 SCC 147, in a suit for specific performance  

of contract a petition was filed under Order 6 Rule 17  CPC seeking leave  

to amend the plaint by impleading the respondent as party defendant in  

the  suit.   The  contention  of  the  petitioner  was  that  the  vendor  had  

colluded with his sons and wife and obtained a collusive decree in a suit  

under  the  U.P.  Zamindari  Abolition  and  Land  Reforms  Act.   It  was  

contended that by operation of law they became the co-sharers of the  

property to be conveyed under the Agreement and, therefore,  he is a  

necessary party.  The trial court dismissed the petition and on revision  

the High Court of Allahabad affirmed the order.  In an appeal  this Court,  

refused to interfere with the order and observed.

“In  this  case,  since  the  suit  is  based  on  agreement  of  sale  said  to  have  been  executed  by  Mishra,  the  sole  defendant  in  the  suit,  the  subsequent  interest  said  to  have  been  acquired  by  the  respondent by virtue of a decree of the court is not a matter  arising out of or in respect of the same act or transaction or  series of acts or transactions in relation to the claim made  in the suit.”

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“The  question  is  whether  the person who has got his interest in the property declared  by an independent decree but not a party to the agreement  of sale, is a necessary and proper party to effectually and  completely  adjudicate  upon  and  settle  all  the  question  involved in the suit.  The question before the court in a suit  for  the  specific  performance  is  whether  the  vendor  had  executed  the  document  and  whether  the  conditions  prescribed in the provisions of the Specific Relief Act have  been  complied  with  for  granting  the  relief  of  specific  performance.”

“Sub-rule(2) of Rule 10 of  Order 1 provides that the Court may either upon or without  an  application  of  either  party,  add  any  party  whose  presence before the Court may be necessary in order to  enable the Court effectually and completely to adjudicate  upon and settle all questions involved in the suit.  Since the  respondent  is  not  a  party  to  the  agreement  of  sale,  it  cannot be said that without his presence the dispute as to  specific performance cannot be determined.  Therefore, he  is not a necessary party.”

16. In the case of  Surjit Singh (Supra) a similar question arose  

for consideration before this Court.   In that case, on the death of one  

Janak Singh, being the head of the family a suit for partition and separate  

possession was filed by and between the parties.  A preliminary decree  

was passed and while proceeding for final decree was pending, the trial  

court  passed  an  order  restraining  all  the  parties  from  alienating  or

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otherwise transferring in any manner any part of the property involved in  

the suit.  In spite of the aforesaid order one of the party assigned the right  

under the preliminary decree involving wife of his lawyer.  On the basis of  

the assigned deed the assignee made an application under  Order  22  

Rule 10 CPC for impleadment as party to the proceeding.  The petition  

was allowed by the trial court and affirmed in appeal by the Additional  

District Judge and then in revision by the High Court.  The matter came  

before this Court allowing the appeal and set aside the orders passed by  

the courts below.  This Court observed :-

       “As said before, the assignment is by means of a  registered deed. The assignment had taken place after the  passing of the preliminary decree in which Pritam Singh has  been allotted 1/3rd share. His right to property to that extent  stood established. A decree relating to immovable property  worth  more  than  hundred  rupees,  if  being  assigned,  was  required to be registered. That has instantly been done. It is  per  se  property,  for  it  relates  to  the  immovable  property  involved  in  the  suit.  It  clearly  and  squarely  fell  within  the  ambit  of  the  restraint  order.  In  sum,  it  did  not  make  any  appreciable  difference  whether  property  per  se  had  been  alienated or a decree pertaining to that property. In defiance  of the restraint order, the alienation/assignment was made. If  we were to let  it  go as such,  it  would defeat  the ends of  justice  and  the  prevalent  public  policy.  When  the  Court  intends a particular state of affairs to exist while it is in seisin  of  a  lis,  that  state  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

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to  be  impleaded  as  parties  on  the  basis  of  assignment.  Therefore, the assignees-respondents could not have been  impleaded  by  the  trial  court  as  parties  to  the  suit,  in  disobedience of its orders. The principles of lis pendens are  altogether  on  a  different  footing.  We  do  not  propose  to  examine their involvement presently. All what is emphasised  is that the assignees in the present facts and circumstances  had no cause to be impleaded as parties to the suit. On that  basis,  there  was  no  cause  for  going  into  the  question  of  interpretation  of  paragraphs  13  and  14  of  the  settlement  deed. The path treaded by the courts below was, in our view,  out  of  their  bounds.  Unhesitatingly,  we upset  all  the three  orders of the courts below and reject the application of the  assignees for impleadment under Order 22 Rule 10 CPC.”

17. In the case of Savitri Devi   v.  District Judge, Gorakhpur  

and  Others  (1999)  2  SCC  577, a  3  Judges’  Bench  of  this  Court  

considered a similar question under Order 1 Rule 10 CPC.  The fact of  

the  case  was  that  the  appellant  filed  a  suit  for  maintenance  and  for  

creation of charge over the ancestral property.  She also applied for an  

interim  order  of  injunction  restraining  her  sons  from  alienating  the  

property during the pendency of the suit.  But a vakalatnama was filed on  

behalf  of  the  defendants  and  4th defendant   also  filed  an  affidavit  

purporting to be on behalf of the defendants, expressing their  concern  

that during the pendency of the case the suit property will not be sold.  In   

the  light  of  consent  of  the  counsel  the  Court  passed  an  order  on  

18.08.1992 directing the parties not to transfer the disputed property till   

the  disposal  of  the  suit.   In  spite  of  the  aforesaid  order  one  of  the

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defendants sold 1/4th share of the land to the 3rd respondent and  1/4th  

share in another land to the 4th respondent on 19.08.1992 and further  

sold 1/4th share to the 5th respondent.  On the basis of this transfer the  

transferee-Respondent Nos.3-5 filed an application under Order 1 Rule  

10 CPC for impleading them as parties to the suit.  The application was  

allowed at all  stages.  This court noticed the relevant facts which has  

been incorporated in paragraph 4 of  the decision which is reproduced  

hereunder :-

        “The trial court passed a detailed order on 14-7- 1997 granting the application of Respondents 3 to 5 and  directed the plaintiff to implead them as defendants in the  suit.  In  the  order  of  the  trial  court,  reference  has  been  made to an application filed by the first defendant to the  effect that he was not earlier aware of the case and the 4th  defendant  had  forged  his  signature  and  filed  a  bogus  vakalatnama.  He  had  also  alleged  that  the  order  of  injunction was obtained fraudulently on 18-8-1992. The trial  court has also referred to an application under Section 340  CrPC filed  by  the  first  defendant  and  observed  that  the  same  had  been  dismissed  by  order  dated  20-12-1992.  There is also a reference in the order of the trial court in the  High Court filed by the plaintiff for quashing orders dated  10-11-1995  and  19-4-1996  passed  in  the  suit  and  a  miscellaneous  civil  appeal  arising  from  the  suit  wherein  Respondents 3 to 5 had been impleaded as parties. It is  seen  from  the  order  of  the  trial  court  that  certain  proceedings under Order XXXIX Rule 2-A CPC concerning  the question of attachment of the properties sold were also  pending. It is only after taking note of all those facts, the

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trial court allowed the application of Respondents 3 to 5 to  implead them as parties to the suit.”

18. This  Court  further  noticed  the  point  taken  by  the  appellant  

based on the principles laid down in Surjit Singh’s case (supra).  Allowing  

the application this Court held :-

              “The facts set out by us in the earlier paragraphs  are sufficient to show that there is a dispute as to whether  the first defendant in the suit was a party to the order of  injunction  made  by  the  Court  on  18-8-1992.  The  proceedings for punishing him for contempt are admittedly  pending. The plea raised by him that the first respondent  had played a fraud not only against  him but also on the  Court would have to be decided before it can be said that  the sales effected by the first defendant were in violation of  the order of the Court. The plea raised by Respondents 3  to 5 that they were bona fide transferees for value in good  faith may have to be decided before it can be held that the  sales in their favour created no interest in the property. The  aforesaid questions have to be decided by the Court either  in the suit or in the application filed by Respondents 3 to 5  for  impleadment  in  the  suit.  If  the  application  for  impleadment  is  thrown  out  without  a  decision  on  the  aforesaid questions, Respondents 3 to 5 will certainly come  up with a separate suit to enforce their alleged rights which  means a multiplicity of proceedings. In such circumstances,  it  cannot  be  said  that  Respondents  3  to  5  are  neither  necessary nor proper parties to the suit.”

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19. While referring Surjit Singh’s case  this Court noticed that in  

that case there was no dispute that the assignors and the assignees had  

knowledge of the order of injunction passed by the Court.  On those facts,  

this Court held that the deed of assignment was not capable of conveying  

any right to the assignee and the order of impleadment of the assignees  

as parties was unsustainable.

20. In the case of Vijay Pratap and Others   v.  Sambhu Saran  

Sinha and Others (1996) 10 SCC 53 a petition was filed under Order 1  

Rule 10 of the CPC in suit for specific performance for impleading him as  

party in place of his father on the ground that  the father during his lifetime  

alleged to have entered into a compromise.  The trial court rejecting the  

petition held that the petitioners are neither necessary or proper parties to  

the suit.  On revision this Court dismissing the same held as under :-

“The trial  court  accordingly  held that  the petitioners are  neither  necessary  nor  proper  parties  to  the  suit.  On  revision, the High Court upheld the same. Shri Sanyal, the  learned  counsel  for  the  petitioners  contended  that  their  father  had  not  signed  the  relinquishment  deed  and  the  signatures appended to it were not that of him. The deed of  relinquishment said to have been signed by the father of  the  petitioners  was  not  genuine.  These  questions  are  matters to be taken into consideration in the suit before the  relinquishment deed and compromise memo between the

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other contesting respondents were acted upon and cannot  be done in the absence of the petitioners. The share of the  petitioners will be affected and, therefore, it would prejudice  their right, title and interest in the property. We cannot go  into these questions at this stage. The trial court has rightly  pointed  that  the  petitioners  are  necessary  and  proper  parties so long as the alleged relinquishment deed said to  have been signed by the deceased father of the petitioners  is on record. It may not bind petitioners but whether it  is  true or valid or binding on them are all questions which in  the  present  suit  cannot  be  gone  into.  Under  those  circumstances, the courts below were right in holding that  the petitioners are not necessary and proper parties but the  remedy  is  elsewhere.  If  the  petitioners  have  got  any  remedy it is open to them to avail of the same according to  law.”

21. In Kasturi’s case (supra) a three Judges’ Bench of this Court  

said  that  in  a  suit  for  specific  performance  of  contract  for  sale  an  

impleadment  petition  was filed  for  addition  as  party  defendant  on  the  

ground  that  the  petitioners  were  claiming  not  under  the  vendor  but  

adverse  to  the  title  of  the  vendor.   In  other  words,  on  the  basis  of  

independent title in the suit property the petitioner sought to be added as  

a necessary party in the suit.  Rejecting the petition this Court held as  

under :-

“As noted herein earlier, two tests are required to  be satisfied to determine the question who is a necessary  party, let us now consider who is a proper party in a suit for

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specific performance of contract for sale.  For deciding the  question  who  is  a  proper  party  in  the  suit  for  specific  performance the guiding principle is that the presence of  such a party is necessary to adjudicate the controversies  involved in the suit for specific performance of the contract  for sale.  Thus, the question is to be decided keeping in  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  1834 (40)  English  Report  848 made the  following  observations :

“It is not disputed that, generally, to a bill  for  specific  performance of  a contract  for  sale,  the   parties to the contract only are the proper parties;  and, when the ground of this jurisdiction of Courts  of Equity in suits of that kind is considered it could  not  properly  be otherwise.   The Court  assumes  jurisdiction in such case, because a Court of law,  giving damages only for the non-performance of  the contract,  in many cases does not  afford an  adequate remedy.  But, in equity,  as well as in   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  

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proceeding to enforce the execution of it as they   are to a proceeding to recover damages for the   breach of it.”

(Emphasis supplied) ………..

“Keeping the principles as stated above in mind, let  us now, on the admitted facts of this case, first consider  whether the respondent Nos.1 and 4 to 11 are necessary  parties or not.  In our opinion, the respondent Nos. 1 and 4  to 11 are not necessary parties effective decree could be  passed in their  absence as they  had not  purchased the  contracted property from the vendor after the contract was  entered into.  They were also not necessary parties as they  would not be affected by the contract entered into between  the appellant and the respondent Nos. 2 and 3.  In the case  of Anil Kumar Singh  v.  Shivnath Mishra alias Gadasa  Guru, 1995 (3) SCC 147, it has been held that since the  applicant who sought for his addition is not a party to the  agreement for sale, it cannot be said that in his absence,  the dispute as to specific performance cannot be decided.  In  this  case  at  paragraph  9,  the  Supreme  Court  while  deciding whether a person is a necessary party or not in a  suit for specific performance of a contract for sale made the  following observation:

“Since  the  respondent  is  not  a  party  to  the   agreement for sale, it cannot be said that without   his  presence  the  dispute  as  to  specific   performance cannot  be determined.   Therefore,   he is not a necessary party.”

(Emphasis Supplied)

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22. In  the case of  Vidhur  Impex (supra),   the Supreme Court  

again had the opportunity to consider all the earlier judgments.  The fact  

of the case was that a suit for specific performance of agreement was  

filed.  The appellants and Bhagwati Developers though totally strangers to  

the agreement, came into picture only when all the respondents entered  

into a clandestine transaction with the appellants for sale of the property  

and executed an agreement of sale which was followed by sale deed.  

Taking  note  all  the  earlier  decisions,  the  Court  laid  down  the  broad  

principles  governing  the  disposal  of  application  for  impleadment.  

Paragraph 36 is worth to be quoted hereinbelow:

“Though  there  is  apparent  conflict  in  the  observations  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 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.

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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.

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.”  

23. It would also be worth to discuss some of the relevant laws in  

order to appreciate the case on hand.   Section 52 of  the Transfer of

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Property Act speaks about the doctrine of lis pendens.  Section 52 reads  

as under:

“52. Transfer of property pending suit relating thereto. –  During the [pendency] in any Court having authority [within  the  limits  of  India  excluding  the  State  of  Jammu  and  Kashmir] or established beyond such limits] by [the Central  Government]  [***] of [any] suit  or proceedings which is not  collusive and in which any right to immovable property is  directly and specifically in question, the property cannot be  transferred or otherwise dealt with by any party to the suit  or proceeding so as to affect the rights of any other party  thereto  under  any  decree  or  order  which  may be  made  therein,  except  under  the  authority  of  the  Court  and  on  such terms as it may impose.

[Explanation  –  For  the  purposes  of  this  section,  the  pendency  of  a  suit  or  proceeding  shall  be  deemed  to  commence from the date of the presentation of the plaint or  the institution of the proceeding in a Court  of  competent  jurisdiction, and to continue until the suit or proceeding has  been disposed of by a final decree or order and complete  satisfaction or discharge of such decree or order has been  obtained,  or  has become unobtainable  by  reason of  the  expiration  of  any  period  of  limitation  prescribed  for  the  execution thereof by any law for the time being in force.”

24. It is well settled that the doctrine of  lis pendens is a doctrine  

based on the ground that it is necessary for the administration of justice  

that the decision of a court in a suit should be binding not only on the

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litigating parties but on those who derive title pendente lite.  The provision  

of  this  Section  does  not  indeed  annul  the  conveyance  or  the  transfer  

otherwise,  but  to  render  it  subservient  to  the rights of  the parties to a  

litigation.  Discussing the principles of lis pendens, the Privy Council in the  

case of  Gouri Dutt Maharaj  v.   Sukur Mohammed & Ors.  AIR (35)  

1948, observed as under:

“The broad purpose of Section 52 is to maintain the  status  quo  unaffected  by  the  act  of  any  party  to  the  litigation pending its determination. The applicability of the  section cannot depend on matters of proof or the strength  or weakness of the case on one side or the other in bona  fide proceedings. To apply any such test is to misconceive  the object of the enactment and in the view of the Board,  the learned Subordinate Judge was in error in this respect  in laying stress, as he did, on the fact that the agreement of  8.6.1932, had not been registered.”

25. In the case of  Kedar Nath Lal & Anr.  v.   Ganesh Ram &  

Ors. AIR 1970 SC 1717, this Court referred the earlier decision (1967 (2)  

SCR 18) and observed:

“The purchaser pendente lite under this doctrine is  bound by the result  of  the litigation on the principle that  since the result must bind the party to it so it must bind the  person driving his right,  title and interest from or through  him.  This  principle  is  well  illustrated  in  Radhamadhub  Holder vs. Monohar 15 I.A. 97 where the facts were almost

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similar to those in the instant case. It is true that Section 52  strictly speaking does not apply to involuntary alienations  such  as  court  sales  but  it  is  well-established  that  the  principle  of  lis  pendens applies  to  such  alienations.(See  Nilkant  v.  Suresh  Chandra  12  I.A.171  and  Moti  Lal  v.  Karrab-ul-Din 24 I.A.170.”

26. The aforesaid Section 52 of the Transfer of Property Act again  

came up for consideration before this Court in the case of Rajender Singh  

& Ors.   v.   Santa Singh & Ors. AIR 1973 SC 2537 and Their Lordship  

with approval of the principles laid down in 1973 (1) SCR 139 reiterated:

“The doctrine of lis pendens was intended to strike  at  attempts  by  parties  to  a  litigation  to  circumvent  the  jurisdiction  of  a  court,  in  which  a  dispute  on  rights  or  interests  in  immovable  property  is  pending,  by  private  dealings  which  may  remove  the  subject  matter  of  litigation from the ambit of the court’s power to decide a  pending dispute of frustrate its decree. Alienees acquiring  any immovable property during a litigation over it are held  to  be  bound,  by  an application  of  the  doctrine,  by  the  decree passed in the suit even though they may not have  been impleaded in it. The whole object of the doctrine of  lis pendens is to subject parties to the litigation as well as  others, who seek to acquire rights in immovable property  which are the subject matter of a litigation, to the power  and jurisdiction of the Court so as to prevent the object of  a pending action from being defeated.”

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27. In the light of the settled principles of law on the doctrine of lis  

pendens,   we have to examine the provisions of Order 1 Rule 10 of the  

Code of Civil Procedure.  Order 1 Rule 10 which empowers the Court to  

add any person as party at any stage of the proceedings if the person  

whose  presence  before  the  court  is  necessary  or  proper  for  effective  

adjudication of the issue involved in the suit.  Order 1 Rule 10 reads as  

under:

“10. Suit in name of wrong plaintiff.-  

  (1)  Where a suit has been instituted in the name of  the wrong person as plaintiff or where it is doubtful whether  it has been instituted in the name of the right plaintiff, the  Court may at any stage of the suit, if satisfied that the suit  has been instituted through a bona fide mistake, and that it  is  necessary  for  the  determination  of  the  real  matter  in  dispute so to do, order any other person to be substituted  or added as plaintiff  upon such terms a the Court thinks  just.

(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

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completely to adjudicate upon and settle all the questions  involved in the suit, be added.

(3) No person shall be added as a plaintiff suing  without a next friend or as the next friend of a plaintiff under  any disability without his consent.

(4) Where  defendant  added,  plaint  to  be  amended.-Where  a  defendant  is  added,  the  plaint  shall,  unless the Court  otherwise directs,  be amended in such  manner as may be necessary, and amended copies of the  summons  and  of  the  plaint  shall  be  served  on  the  new  defendant  and,  if  the  Court  thinks  fit,  on  the  original  defendant.

(5) Subject  to  the  provisions  of  the  Indian  Limitation  Act,  1877  (15  of  1877),  section  22,  the  proceedings  as  against  any  person  added  as  defendant  shall be deemed to have begun only on the service of the  summons.”

28. From the bare reading of the aforesaid provision, it is manifest  

that sub-rule (2) of Rule 10 gives a wider discretion to the Court to meet  

every case or defect of a party and to proceed with a person who is a  

either necessary party or a proper party whose presence in the Court is  

essential for effective determination of the issues involved in the suit.

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29. Considering the aforesaid provisions, this Court in the case of  

Ramesh Hirachand Kundanmal  v.  Municipal Corporation of Greater   

Bombay & Ors. 1992 (2) SCC 524 held as under:

“It cannot be said that the main object of the rule is  to prevent multiplicity of actions though it may incidentally  have  that  effect.  But  that  appears  to  be  a  desirable  consequence of  the rule  rather  than its  main  objectives.  The person to be joined must be one whose presence is  necessary as a party. What makes a person a necessary  party is not merely that he has relevant evidence to give on  some of the questions involved; that would only make him  a necessary witness. It is not merely that he has an interest  in the correct solution of some questions involved and has  thought of relevant arguments to advance. The only reason  which make it necessary to make a person a party to an  action is that he should be bound by the result of the action  and  the  question  to  be  settled,  therefore,  must  be  a  question  in  the  action  which  cannot  be  effectually  and  completely settled unless he is a party. The line has been  drawn  on  a  wider  construction  of  the  rule  between  the  direct interest or the legal interest and commercial interest.  It is, therefore, necessary that the person must be directly  or legally interested in the action in the answer, i.e., he can  say that the litigation may lead to a result which will affect  him legally that is by curtailing his legal rights. It is difficult  to say that  the rule contemplates joining as a defendant  whose only object is to prosecute his own cause of action.  Similar provision was considered in Amon v. Raphael Tuck  & Sons Ltd. (1956) 1 All E.R. 273, wherein after quoting the  observations  of  Wynn-Parry,J.  in  Dollfus  Mieg  et  Compagnie S.A. v. Bank of England (1950) 2 All E.R. 611,  that the true test lies not so much in an analysis of what are  the constituents of the applicants’ rights, but rather in what

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would be the result on the subject matter of the action if  those rights could be established, Devlin,J. has stated:

The test is ‘May the order for which the plaintiff is  asking directly affect  the intervener in the enjoyment of  his legal rights.”

30. At this juncture, we would also like to refer Section 19 of the  

Specific Relief Act which reads as under:

“19. Relief against parties and persons claiming under  them by subsequent title. – Except as otherwise provided  by this Chapter, specific performance of a contract may be  enforced against-

(a) either party thereto;

(b) any  other  person  claiming  under  him by  a  title  arising  subsequently  to  the  contract,  except  a  transferee for value who has paid his money in good faith  and without notice of the original contract;

(c) any  person  claiming  under  a  title  which,  though prior to the contract and known to the plaintiff, might  have been displaced by the defendant;

(d) when a company has entered into a contract  and  subsequently  becomes  amalgamated  with  another  company,  the  new  company  which  arises  out  of  the  amalgamation;

(e) when  the  promoters  of  a  company  have,  before  its  incorporation,  entered  into  a  contract  for  the

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purpose of the company and such contract is warranted by  the terms of the incorporation, the company;

Provided that the company has accepted the contract and  communicated such acceptance to the other party to the  contract.”

31. From the bare reading of the aforesaid provision, it is manifest  

that  a  contract  for  specific  performance  may  be  enforced  against  the  

parties  to the contract  and the persons mentioned in  the said section.  

Clause  (b)  of  Section  19  makes  it  very  clear  that  a  suit  for  specific  

performance cannot  be enforced against  a person who is  a transferee  

from  the  vendor  for  valuable  consideration  and  without  notice  of  the  

original contract which is sought to be enforced in the suit.

32. In the light of the aforesaid discussion both on facts and law,  

we shall now examine some of the relevant facts in order to come to right  

conclusion.

33. As noticed above, even before the institution of suit for specific  

performance when the plaintiff came to know about the activities of the  

Sawhneys’ to deal with the property, a public notice was published at the

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instance  of  the  plaintiff  in  a  newspaper  “The  Hindustan  Times”  dated  

12.02.1990  (Delhi  Edn.)  informing  the  public  in  general  about  the  

agreement with the plaintiffs.   In response to the said notice the sister  

concern of the appellant  M/s Living Media India Limited served a legal  

notice on the defendants- Sawhneys’ dated 24.06.1990 whereby he has  

referred the ‘agreement to sell’ entered into between the plaintiffs and the  

defendants- Sawhneys’.

34. Even after the institution of the suit, the counsel who appeared  

for  the defendants-Sawhneys’  gave an undertaking not  to  transfer  and  

alienate the suit property.  Notwithstanding the order passed by the Court  

regarding the undertaking given on behalf of the defendants- Sawhneys’,  

and having full notice and knowledge of all these facts, the sister concern  

of  the  appellant  namely  Living  Media  India  Ltd.  entered  into  series  of  

transaction and finally the appellant M/s. Thomson Press got a sale deed  

executed in their favour by Sawhneys’ in respect of suit property.  

35. Taking into consideration all these facts, we have no hesitation  

in holding that the appellant entered into a clandestine transaction with the  

defendants-Sawhneys’  and  got  the  property  transferred  in  their  favour.

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Hence  the  appellant  –  M/s  Thomson  Press  cannot  be  held  to  be  a  

bonafide purchaser, without notice.

36. On perusal of the two orders passed by the single judge and  

the Division Bench of the High Court, it reveals that the High Court has not  

gone into the question as to whether if a person who purchases the suit  

property in violation of the order of injunction, and having sufficient notice  

and knowledge of the Agreement, need to be added as party for passing  

an effective decree in the suit.

37. As discussed above, a decree for specific performance of a  

contract may be enforced against a person claimed under the plaintiff, and  

title acquired subsequent to the contract.  There is no dispute that such  

transfer made in favour of the subsequent purchaser is subject to the rider  

provided under Section 52 of the Transfer of Property Act and the restrain  

order passed by the Court.

38. The aforesaid question was considered by the Calcutta High  

Court in the case of Kafiladdin  and others  vs.  Samiraddin and others,  

AIR 1931 Calcutta 67 where Lordship referred the English Law on this  

point  and quoted one of the passage of the Book authored by Dart, on  

“Vendors  and  Purchasers” Edn.8,  Vol.2, which  reads as under :-

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“Equity will enforce specific performance of the contract for  sale  against  the  vendor  himself  and  against  all  persons  claiming under him by a title arising subsequently  to the  contract except purchaser for valuable consideration who  have paid  their  money  and taken  a conveyance without  notice to the original contract.”

Discussing elaborately, the Court finally observed:-

“The statement of the law is exactly what is meant by the  first  two  clauses  of  S.27,  Specific  Relief  Act.   It  is  not  necessary to refer to the English cases in which decrees  have been passed against both the contracting party and  the subsequent purchaser.  It is enough to mention some  of them : Daniels v. Davison (2), Potters  v.  Sanders (3),  Lightfoot  v.  Heron(4).   The question did not pertinently  arise  in any reported case in India; but decrees in case of  specific  performance  of  contract  have  been  passed  in  several cases in different forms.  In Chunder Kanta Roy  v.  Krishna Sundar Roy  (5)  the decree passed against the  contracting party only was upheld.  So it was in Kannan  v.  Krishan (6).   In  Himmatlal   Motilal   v.   Basudeb(7)   the  decree passed against the contracting defendant and the  subsequent  purchaser  was  adopted.   In  Gangaram   v.  Laxman(9) the suit was by the subsequent purchaser and  the decree was that he should convey the property to the  person  holding  the  prior  agreement  to  sale.   It  would  appear that the procedure adopted in passing decrees in  such cases is not  uniform.  But it  is  proper that  English  procedure supported by the Specific Relief Act should be  adopted.  The apparent reasoning is that unless both the  contracting party and the subsequent purchaser join in the  conveyance it is possible that subsequently difficulties may  arise with regard to the plaintiff’s title.”

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39. The Supreme Court referred the aforementioned decision of the  

Calcutta High Court in the case of Durga Prasad and Another   v.  Deep  

Chand  and others  AIR (1954) SC 75, and finally held:-

“In  our  opinion,  the  proper  form of  decree  is  to  direct  specific  performance of  the contract  between the vendor  and the plaintiff and direct the subsequent transferee to join  in the conveyance so as to pass on the title which resides  in  him to  the  plaintiff.   He does  not  join  in  any  special  convenants made between plaintiff and his vendor; all he  does is to pass on his title to the plaintiff.   This was the  course followed by the Calcutta High Court in – Kafiladdin  v.  Samiraddin, AIR 1931 Cal 67 (C) and appears to be the  English practice.  See Fry on Specific Performance, 6th Ed.  Page 90, paragraph 207; also – ‘Potter v. Sanders’, (1846)  67 ER.  We direct accordingly.”

40. Again in the case of Ramesh Chandra  v.  Chunil Lal (1971)  

SC 1238, this Court referred their earlier decision and observed:-

“It  is common ground that the plot in dispute has been  transferred  by  the respondents  and therefore  the  proper  form of the decree would be the same as indicated at page  369 in  Lala Durga Prasad  v.  Lala Deep Chand, 1954  SCR  360  =  (AIR  1954  SC  75)  viz.,  “to  direct  specific  performance of the contract  between the vendor and the  plaintiff and direct the subsequent transferee to join in the  conveyance so as to pass on the title which resides in him  to the plaintiff.  He does not join in any special covenants  made between the plaintiff and his vendor; all he does is to

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pass on his title to the plaintiff”.  We order accordingly.  The  decree  of  the courts  below is  hereby  set  aside  and the  appeal  is  allowed  with  costs  in  this  court  and  the  High  Court.”

41. This Court  again in  the case of  Dwarka Prasad Singh and  

others  vs.  Harikant Prasad Singh and others (1973) SC 655 subscribed  

its earlier view and held that in a suit for specific performance against a  

person with notice of a prior agreement of sale is a necessary party.

42. Having  regard  to  the  law discussed hereinabove  and  in  the  

facts and circumstances of the case and also for the ends of justice the  

appellant  is to be added as party-defendant in the suit.   The appeal is,  

accordingly, allowed and the impugned orders passed by the High Court  

are set aside.

43. Before parting with the order, it is clarified that the appellant  

after impledment as party-defendant shall  be permitted to take all  such  

defences which are available to the vendor Sawhneys’ as the appellant  

derived title, if any, from the vendor on the basis of purchase of the suit   

property  subsequent  to  the agreement  with the plaintiff  and during the  

pendency of the suit.

…………………………….J.

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(T.S. Thakur)

……………………………..J. (M.Y.Eqbal)

New Delhi February  21, 2013

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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  1518  OF 2013 (Arising out of S.L.P (Civil) No.24159 of 2009)

Thomson Press (India) Ltd. …. Appellant (s)

Vs.

Nanak Builders & Investors P. Ltd. & Ors. ….Respondent (s)

J U D G M E N T

T.S. Thakur, J.

I have had the advantage of going through the order  

proposed by my Esteemed Brother M.Y. Eqbal, J.  While I  

entirely agree with the conclusion that the appellant ought  

to be added as a party-defendant to the suit, I wish to add a  

few lines of my own.

There are three distinct conclusions which have been  

drawn  by  Eqbal,  J.  in  the  judgment  proposed  by  his

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Lordship. The first and foremost is that the appellant was  

aware of the “agreement to sell” between the plaintiff and  

the  defendants  in  the  suit.  Publication  of  a  notice  in  the  

Hindustan Times, Delhi Edition, and the legal notice which  

Living Media India Limited, appellant’s sister concern, sent  

to the defendants indeed left no manner of doubt that the  

appellant  was  aware  of  a  pre-existing  agreement  to  sell  

between the plaintiff and the defendants. It is also beyond  

dispute that the sale of the suit property in favour of the  

appellant  was  in  breach  of  a  specific  order  of  injunction  

passed by the trial  Court.   As  a  matter  of  fact,  the sale  

deeds executed by the defendants falsely claimed that there  

was  no  impediment  in  their  selling  the  property  to  the  

appellant even though such an impediment in the form of a  

restraint order did actually exist forbidding the defendants  

from alienating the suit property. The High Court was in that  

view  justified  in  holding  that  the  sale  in  favour  of  the  

appellant  was a  clandestine  transaction  which  finding  has  

been rightly affirmed in the order proposed by my Esteemed

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Brother, and if I may say so with great respect for good and  

valid reasons.

In the light of the above finding it is futile to deny that  

the specific performance prayed for by the plaintiff was and  

continues  to  be  enforceable  not  only  against  the  original  

owner  defendants  but  also  against  the  appellant  their  

transferee. Sale of immovable property in the teeth of an  

earlier  agreement  to  sell  is  immune  from  specific  

performance  of  an  earlier  contract  of  sale  only  if  the  

transferee has acquired the title for valuable consideration,  

in good faith and without notice of the original contract. That  

is evident from Section 19(b) of the Specific Relief Act which  

is to the following effect:

“19.Relief against parties and persons claiming  under  them  by  subsequent  title –  Except  as  otherwise  provided  by  this  Chapter,  specific   performance of a contract may be enforced against –   (a) either party thereto;

(b) any other person claiming under him by a title   arising  subsequently  to  the  contract,  except  a  transferee for value who has paid his money in good   faith and without notice of the original contract;

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(c) xxxxxxxx

(d) xxxxxxxx

(e) xxxxxxxx

There is thus no gainsaying that the appellant was not  

protected  against  specific  performance  of  the  contract  in  

favour of the plaintiff, for even though the transfer in favour  

of the appellant was for valuable consideration it was not in  

good faith nor was it without notice of the original contract.   

The  second  aspect  which  the  proposed  judgment  

succinctly deals with is the effect of a sale pendete lite. The  

legal  position  in  this  regard  is  also  fairly  well  settled.  A  

transfer  pendete  lite  is  not illegal  ipso  jure but  remains  

subservient to the pending litigation. In Nagubai Ammal &  

Ors. v. B. Shama Rao  & Ors. AIR 1856 SC 593, this  

Court  while  interpreting  Section  52  of  the  Transfer  of  

Property Act observed:

“…The words “so as to affect the rights of any other   party thereto under any decree or order which may   be made therein", make it clear that the transfer is   good except to the extent that it might conflict with  

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rights decreed under the decree or order. It is in this   view that transfers pendente lite have been held to   be  valid  and  operative  as  between  the  parties   thereto.”

To  the  same  effect  is  the  decision  of  this  Court  in  

Vinod Seth v. Devinder Bajaj  (2010) 8 SCC 1  where  

this  Court held that  Section 52 does not render transfers  

affected during the pendency of the suit void but only render  

such  transfers  subservient  to  the  rights  as  may  be  

eventually determined by the Court. The following passage  

in this regard is apposite:  

“42. It is well settled that the doctrine of lis pendens   does  not  annul  the  conveyance by a party  to  the   suit, but only renders it subservient to the rights of   the other parties to 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 decision of this Court in A. Nawab John & Ors. v.   

V.N.  Subramanyam (2012)  7  SCC  738 is  a  recent

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reminder  of  the principle  of  law enunciated  in  the earlier  

decisions.  This  Court  in  that  case  summed  up  the  legal  

position thus:

“18  ……..The  mere  pendency  of  a  suit  does  not   prevent  one  of  the  parties  from dealing  with  the   property constituting the subject-matter of the suit.   The  section  only  postulates  a  condition  that  the  alienation will in no manner affect the rights of the   other party under any decree which may be passed   in the suit unless the property was alienated with the   permission of the court.”  

We may finally  refer  to the decision of  this  Court in  

Jayaram Mudaliar  v.  Ayyaswami  and  Ors. (1972)  2  

SCC  200 in  which  were  extracted  with  approval  

observations  made  on  the  doctrine  of  lis  pendens in  

“Commentaries  of  Laws  of  Scotland,  by  Bell”.  This  Court  

said:

“43………..Bell,  in his commentaries  on the Laws of   Scotland said that it was grounded on the maxim:   “Pendente lite nibil innovandum”. He observed:

It is a general rule which seems to have been  recognised  in  all  regular  systems  of   jurisprudence, that during the pendence of an   action,  of  which  the  object  is  to  vest  the

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property  or  obtain  the  possession  of  real   estate, a purchaser shall be held to take that   estate as it stands in the person of the seller,   and  to  be  bound  by  the  claims  which  shall   ultimately be pronounced.”

There is, therefore, little room for any doubt that the  

transfer of the suit property pendete lite is not void ab initio  

and  that  the  purchaser  of  any  such  property  takes  the  

bargain subject to the rights of the plaintiff in the pending  

suit. Although the above decisions do not deal with a fact  

situation where the sale deed is executed in breach of an  

injunction issued by a competent Court, we do not see any  

reason why the breach of any such injunction should render  

the transfer whether by way of an absolute sale or otherwise  

ineffective.  The party committing the breach may doubtless  

incur the liability to be punished for the breach committed  

by it but the sale by itself may remain valid as between the  

parties  to  the  transaction  subject  only  to  any  directions  

which the competent Court may issue in the suit against the  

vendor.

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The third dimension which arises  for  consideration  is  

about the right of a transferee pendete lite to seek addition  

as a party defendant to the suit under Order I, Rule 10 CPC.  

I have no hesitation in concurring with the view that no one  

other than parties to an agreement to sell is a necessary and  

proper  party  to  a  suit.  The  decisions  of  this  Court  have  

elaborated  that  aspect  sufficiently  making  any  further  

elucidation unnecessary. The High Court has understood and  

applied the legal propositions correctly while dismissing the  

application  of  the  appellant  under  Order  I,  Rule  10  CPC.  

What must all the same be addressed is whether the prayer  

made by the appellant could be allowed under Order XXII  

Rule 10 of the CPC, which is as under:

“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  

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the  person  who  procured  such  attachment  to  the   benefit of sub-rule (1).”

A simple  reading of  the above provision would show  

that in cases of assignment, creation or devolution of any  

interest  during  the  pendency  of  a  suit,  the  suit  may,  by  

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

or upon whom such interest has come or devolved. What  

has troubled us is whether independent of Order I Rule 10  

CPC the prayer for addition made by the appellant could be  

considered in the light of the above provisions and, if  so,  

whether the appellant could be added as a party-defendant  

to the suit. Our answer is in the affirmative. It is true that  

the application  which the appellant  made was only  under  

Order I Rule 10 CPC but the enabling provision of Order XXII  

Rule 10 CPC could always be invoked if the fact situation so  

demanded.  It was in any case not urged by counsel for the  

respondents that Order XXII Rule 10 could not be called in  

aid with a view to justifying addition of the appellant as a  

party-defendant. Such being the position all that is required

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to be examined is whether a transferee pendete lite could in  

a  suit  for  specific  performance  be  added  as  a  party  

defendant and, if so, on what terms.   

We are not on virgin ground in so far as that question  

is concerned.  Decisions of this Court have dealt with similar  

situations  and held  that  a  transferee  pendete  lite  can  be  

added  as  a  party  to  the  suit  lest  the  transferee  suffered  

prejudice on account of the transferor losing interest in the  

litigation  post  transfer.  In  Khemchand  Shanker  

Choudhary v. Vishnu Hari Patil (1983) 1 SCC 18, this  

Court  held  that  the  position  of  a  person  on  whom  any  

interest has devolved on account of a transfer during the  

pendency of a suit or a proceeding is somewhat similar to  

the  position  of  an  heir  or  a  legatee  of  a  party  who dies  

during the pendency of  a  suit  or  a  proceeding.  Any such  

heir, legatee or transferee cannot be turned away when she  

applies for being added as a party to the suit. The following  

passage in this regard is apposite:

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“6… Section 52 of the Transfer of Property Act no   doubt lays down that a transferee pendente lite of an  interest  in  an  immovable  property  which  is  the   subject matter of a suit from any of the parties to   the suit will  be bound in so far as that interest is   concerned  by  the  proceedings  in  the  suit.  Such  a   transferee is a representative in interest of the party  from whom he has acquired that interest. Rule 10 of  Order  22  of  the  Code  of  Civil  Procedure  clearly   recognises the right of a transferee to be impleaded  as a party to the proceedings and to be heard before   any order is made. It may be that if  he does not   apply to be impleaded, he may suffer by default on   account of any order passed in the proceedings. But   if he applies to be impleaded as a party and to be   heard, he has got to be so impleaded and heard. He  can also prefer an appeal against an order made in   the  said  proceedings  but  with  the  leave  of  the   appellate court where he is not already brought on   record.  The  position  of  a  person  on  whom  any   interest has devolved on account of a transfer during   the  pendency  of  any  suit  or  a  proceeding  is   somewhat  similar  to  the  position  of  an  heir  or  a   legatee of a party who dies during the pendency of a   suit or a proceeding, or an official receiver who takes   over the assets of such a party on his insolvency. An   heir  or  a  legatee  or  an  official  receiver  or  a   transferee  can  participate  in  the  execution   proceedings even though their names may not have   been shown in  the  decree,  preliminary or  final.  If   they apply to the court to be impleaded as parties   they cannot be turned out.”

(emphasis supplied)

To the same effect is the decision of this Court in Amit  

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

where this Court held that a transferor  pendente lite may

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not even defend the title properly as he has no interest in  

the  same  or  collude  with  the  plaintiff  in  which  case  the  

interest of the purchaser  pendente lite will  be ignored. To  

avoid  such situations  the  transferee  pendente  lite can be  

added as a party defendant to the case provided his interest  

is substantial and not just peripheral. This is particularly so  

where the transferee  pendente lite acquires interest in the  

entire estate that forms the subject matter of the dispute.  

This Court observed:

“16… The doctrine of lis pendens applies only where   the lis is pending before a court. Further pending the   suit, the transferee is not entitled as of right to be   made a party to the suit,  though the court  has a   discretion to make him a party. But the transferee   pendente lite can be added as a 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  

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enable him to protect his interests. The Court has  held that a transferee pendente lite of an interest in   immovable property is a representative-in-interest of   the party from whom he has acquired that interest.   He is entitled to be impleaded in the suit or other   proceedings  where  the  transferee  pendente  lite  is   made a party to the litigation; he is entitled to be   heard in the matter on the merits of the case”

To  the  same  effect  is  the  decision  of  this  Court  in  

Rikhu  Dev,  Chela  Bawa  Harjug  Dass  v.  Som  Dass  

(deceased) through his Chela Shiama Dass, (1976) 1  

SCC 103.

To sum up:

(1) The  appellant  is  not  a  bona  fide purchaser  and  is,  

therefore, not protected against specific performance of  

the  contract  between  the  plaintiffs  and  the  owner  

defendants in the suit.

(2) The transfer in favour of the appellant pendente lite is  

effective in transferring title to the appellant but such  

title  shall  remain  subservient  to  the  rights  of  the  

plaintiff in the suit and subject to any direction which  

the Court may eventually pass therein.   

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(3) Since  the  appellant  has  purchased  the  entire  estate  

that forms the subject matter of the suit, the appellant  

is entitled to be added as a party defendant to the suit.

(4) The appellant shall as a result of his addition raise and  

pursue only such defenses as were available and taken  

by the original defendants and none other.

With  the  above  additions,  I  agree  with  the  order  

proposed by my Esteemed Brother, M.Y. Eqbal, J. that this  

appeal  be  allowed  and  the  appellant  added  as  party  

defendant to the suit in question.   

………………….……….…..…J.       (T.S. Thakur)

New Delhi February 21, 2013