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PETITIONER: AJMERA HOUSING CORPORATION

       Vs.

RESPONDENT: AMRIT M.PATEL (DEAD) THROUGH L.RS. & OTHERS

DATE OF JUDGMENT:       03/08/1998

BENCH: S.B. MAJMUDAR, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T M. JAGANNADHA RAO. J.      Leave granted.      This is  an appeal  against the judgment of the Gujarat High Court  dated 2.3.1998  dismissing  C.R.A.  No.  1342/96 filed under  section 115  of the code of Civil Procedure. By that judgment,  the order of the trial Court dated 1.8.1996, dismissing an application filed by the appellant under Order 1 Rule  10, section  146 and  Order 22  Rule 10  C.P.C.  for impleadment as a plaintiff in the suit was confirmed.      For the  purpose of  appreciating the  questions raised before us, it is necessary to state the following facts:      The appellant  is a  third party to the Suit No.1761 of 1988  which   was  pending  before  the  City  Civil  Judge, Ahmedabad. The  suit was  filed by  a builder,  one Amrit M. Patel, who was the predecessor-in-interest of respondents 1A to 1C,  against three defendants, viz (1) Arujn Bhai Jayanti Lal Parikh  (2) Nirmalaren  Arjunbhai Parikh  and (3) Irajit Arjunlal   Bhai    Parikh    (predecessors-in-interest    of Respondents 2A  to 4).  The relief  claimed was for specific performance of  an agreement  dated 4.2.1982 executed by the three defendants  -  owners  of  the  property  (hereinafter called the  ’owners’) in  favour of the said Amrit Mohan Lal Patel (plaintiff)  (hereinafter called  the ’Builder’).  The said builder  was the sole proprietor of a firm called ’Star Builders’.  The   plaintiff  entered   into  the  above-said agreement with the defendants for the purpose of development of  the  defendants’  property  by  construction  of  flats. Ultimately, after  the land was developed and the flats were constructed, the  owners and the builder were to join in the Sale deeds to be executed in favour of the purchasers of the flats. Under  the agreement,  it was  also agreed  that  the defendants-owners would get Rs.400/- sq.ft. of built up area as mentioned  in clause  15 of  the agreement.  Further, the builder was to pay Rs. 3 lakhs on or before the execution of the agreement,  Rs. 21  lakhs within  3 months  from date of agreement and  22 lakhs  from the  date of payment of Rs. 21 lakhs. The  builder paid  Rs.  3  lakhs  as  aforesaid  and, according to  defendants, he committed default in payment of Rs. 21  lakhs as  well as  of the  further amount  of Rs. 22

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lakhs. simultaneously  with  the  above-said  agreement  the three  owners  executed  an  irrevocable  General  Power  of Attorney dated 4.2.1982 in favour of the builder.      Six years  later, the plaintiff-builder entered into an agreement dated 26.2.1988 with the appellant, Ajmera housing Corporation (hereinafter  called the developer’) under which the appellant  was  to  undertake  the  development  of  the property.  On  the  same  day,  the  plaintiff  executed  an irrevocable Power  of Attorney  in favour  of the appellant. The points  that arise  in the revision mainly turn upon the interpretation  of  the  clauses  in  this  agreement  dated 26.2.1988  by  the  builder  in  favour  of  the  appellant- developer.      On the  ground that the defendants-owners did not allow the plaintiff-builder  to develop  the property, the builder filed the  present suit on 8.4.1988 impleading the owners as defendants No.1  to 3  and claiming  various  reliefs,  i.e. specific  performance   of  the  agreement  dated  4.2.1982, certain injunctions in regard to the property and possession of that  part of the property which was in the possession of the owners.  An alternative prayer was also made for damages in a  sum of  Rs.81 lakhs  against the  owners. Pending  the suit, one  of the  owners Arjun Bhai Jayanti Lal Parikh died and his legal representatives were brought on record.      After the  filing of the suit, the plaintiff - builder, Sri Amrit  Mohan Patel  died  on  18.4.1995  and  his  legal representatives were  also brought  on  record.  During  the pendency of  the suit,  a deposit of Rs.21 lakhs was made by the plaintiff-builder into Court. There is a dispute between the plaintiff’s  legal representatives  and the  appellant - developer in  regard to  the said amount of Rs.21 lakhs. The legal representatives  of the plaintiff-builder contend that the said  amount of Rs.21 lakhs belongs to their father late Amrit Mohan  Lal Patel  and that  he had  deposited the said amount in  the Court  from his  funds. But the contention of the appellant-developer  is that it was he who gave the said amount to  the builder  for such deposit. The said amount of Rs. 21  lakhs was  invested by  the trial  Court in  a fixed deposit.      The present  proceedings arise in the following manner: During the  pendency of  the suit, the legal representatives of the  plaintiff filed  Interlocutory application  (Ex.125) seeking to  withdraw the  suit under Order 23 Rule 1 CPC and in  that  application  they  naturally  impleaded  only  the owners-defendants as  respondents. It  appears that the said respondents had no objection for the withdrawal of the suit. In the  said suit,  the  appellant  -  developer  filed  the present application  (Ex.136) under Order 1 Rule 10, section 146 and  Order 22 Rule 10 C.P.C. for being impleaded and for "substituting" himself  as  a  plaintiff  in  the  place  of deceased builder late Amrit Mohan Lal Patel, notwithstanding that the  legal representatives  of the  original  plaintiff were already  brought on  record and  they  had  desired  to withdraw the  suit. The appellant claimed in his application that he  was an "assignee" of the interest of the plaintiff- builder in  view of  the agreement dated 26.2.88 executed by the plaintiff  in his  favour and  he, therefore,  wanted to continue the  said suit  for  specific  performance  of  the agreement dated 4.2.1982 against the owners.      The earned  trial Judge  by his  order  dated  1.8.1996 permitted   withdrawal    of   the   suit   by   the   legal representatives of  the plaintiff-builder  and rejected  the application of the appellant-developer for being substituted as a  plaintiff in  the  suit.  He  initially  rejected  the contention of  the defedants’  counsel, Sri  Vakil that  the

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plaintiff-builder could not have assigned his rights without the consent  of the  owners and  also the further contention for the  owners that  the agreement  dated 4.2.82  was based upon the  special skill of Sri Amrit Mohal Lal Patel and was of a  personal nature  and therefore  not assignable. Having rejected the  above contention  of  the  owners,  the  trial Judge, however,  felt that  the language  of  the  agreement dated 26.2.88  by the  builder in  favour of  the  developer showed that  under  the  latter  agreement  the  development rights were  merely "entrusted"  to  the  developer  by  the builder and  that there  was no  "assignment" of  the rights which the builder got under the first agreement of 4.2.82 in favour of  the  developer.  According  to  him,  the  second agreement dated  26.2.1988 was  an independent  agreement by the builder  in favour  of the  developer. The learned Judge rejected the  contention of  Sri Shelat  on  behalf  of  the appellant-developer that section 146 of Order 22 Rules 9, 10 were attracted  to the  facts of  the case According to him, ’entrustment’ of  development work  by the  builder  to  the developer could  not be  equated with  ’assignment’  of  his rights under  the earlier  contract. The  learned Judge also held that  in any  event, as it was not a case of assignment of "all  the rights" of the builder, the developer could not be treated as a assignee and, therefore, the appellant could not be  treated as  a legal  representative of  the deceased plaintiff. The subsequent transaction dated 26.2.88 was only a ’part’ of the transaction covered by the earlier agreement dated 4.2.82. Further, the plaintiff could not be said to be a necessary  party to  the suit  inasmuch as he did not have any direct interest in the property. The developer was not a party to  the agreement  dated 4.2.82 sought to be anforced. The Court  relied upon  Anil Kumar Singh vs. Shivnath Mishra [1995 (3)  SCC 147]  where, in  the context  of Order 1 Rule 10(2) CPC and Order 22 Rule 10 it was held that a person who claimed to have subsequently acquired interest as a co-owner was neither  a necessary nor a proper party and could not be impleaded even  as a  defendant. For  the above reasons, the application of  the plaintiff’s  legal  representatives  for withdrawal of  the suit  was allowed  and the application of the appellant  for being  substituted  as  a  plaintiff  was dismissed.      In the  revision filed  by the  appellant in  the  High Court, it was held while dismissing the revision, that there was no  clause in the agreement dated 26.2.88 which provided or which  could be  construed as a transfer of rights by the plaintiff in  favour of  the appellant  with respect  to the suit property.  Hence there  was no  "assignment". The  High Court,  however,  differed  from  the  trial  Court  on  the question as  to whether  the plaintiff-builder  could assign the  benefits  or  liabilities  under  the  agreement  dated 4.2.1982 to  the  appellant,  without  the  consent  of  the original owners.  The court  held that  such consent  of the owners was  indeed necessary  for the  assignment. The court held that  the agreement  dated 26.2.88  was an  independent agreement between  the builder  and the  developer.  It  was contended in  the High  Court by the learned counsel for the appellant that inasmuch as the appellant had deposited Rs.21 lakhs before  the trial  Court (a contention disputed by the plaintiff’s legal  representatives), the  said fact  coupled with the  execution of  Power of  Attorney by the builder in favour  of   the  developer   on  26.2.88   amounted  to  an ’assignment’. This  contention was  also not accepted by the High court.  The Court  held that  neither Order 22 rule 10, nor section  146 nor  Order 1  Rule 10 CPC applied. Order 22 Rule 10  did not  apply because  there was no assignment and

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even if there was one, it was not during the pendency of the suit but  before suit.  Again, Section  146  did  not  apply because there was no "assignment" and the purpose of section 146 was  different. Order  1 Rule  10 did  not apply  as the appellant was  a third  party to the agreement dated 4.2.82. For the above reasons, the revision was dismissed.      In this  appeal, the  learned senior  counsel  for  the appellant Sri  S.K. Dholakia  contended that  the  agreement dated 26.2.88   amounted  at least  to an  assignment of the ’development’ rights  if not  of other rights of the builder and that  was sufficient to bring the case under section 146 or Order 1 Rule 10 CPC. Learned counsel fairly conceded that Order 22  Rule 10  CPC did  not apply  because the agreement dated 26.2.88  was not one entered into pending suit but was one entered  into before  suit. The clauses in the agreement dated 26.2.88  and the  power of  attorney of  the same date were explained  for contending  that it  was not  a case  of ’entrustment’ but  a case  of ’assignment’. It was contended that the  view of  the High Court that consent of the owners was  necessary  before  the  builder  could  enter  into  an agreement with  the appellant-developer  was not correct. It was argued  that the trial court was right in this behalf in holding that  such consent  was not  necessary and  in  also holding that  the contract  with the  plaintiff was  not one based  on  the  special  qualifications  or  skills  of  the plaintiff-builder. So  far as this aspect as to the personal nature of  the   contract  was  concerned,  the  High  Court referred to the same in its judgment but did not express any opinion. Counsel  for appellant submitted that the appellant need  not  go  for  a  suit  but  could  be  allowed  to  be substituted as  a plaintiff  to continue the present suit in the place of the original plaintiff. It was also argued that the deceased  plaintiff had  executed a  separate  agreement dated 29.8.1989  in favour  of appellant  that he  would not ’settle’  the   matter  with   the  defendants  without  the appellant’s consent.      On the  other hand,  learned  senior  counsel  for  the owners-defendants Sri Ramesh P. Bhat argued that his clients have nothing  to do  with the appellant. The defendants have no connection  whatsoever with  the  appellant  because  the appellant was not a party to the agreement dated 4.2.82. Nor were  the   defendants  parties   to  the   agreement  dated 26.2.1988. Further  the original plaintiff when he filed the suit on  8.4.88 did not think of impleading the appellant as a co-plaintiff  even though  the plaintiff  had by that time entered into  the agreement dated 26.2.88 with the appellant before suit.  Nor did  the appellant think of joining in the suit which  was filed in 1988 if he had acquired some rights by "assignment"  before suit.  Even after  the death  of the plaintiff in  1995, the  appellant did not wake up but filed the  application   only  after   delay  of   one  year.  The defendants-owners could  not be  compelled to defend a suit- which the plaintiffs did not want to pursue - merely because a third  party claiming  that he had acquired certain rights against the  original plaintiff  under  an  agreement  dated 26.2.1988, wants  to continue the suit. The appellant has to first establish  his rights  against the  plaintiff’s  legal representatives and  then only  can he  have locus standi to proceed against  the owners.  The defendants have no privity of contract  with the  appellants. It  was  urged  that  the special qualifications  and silks  of Sri  Amrit  Mohan  Lal Patel the  original Plaintiff.  Therefore,  the  said  amrit Mohan Lal  Patel had  no right  to entrust  his duties  to a third party  for development purposes without the consent of the owners  and the owners were satisfied that the appellant

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was an  equal to  the original  plaintiff in  his skills  an capacity. The  owners have no idea of the capacity or skills of  the   appellant.  The   rights  and  duties  which  were absolutely  personal to late Amrit Mohan Lal Patel could not have been assigned to the appellant. It was true that in the preamble to  the agreement  dated 4.2.82. the word ’assigns’ was used  while describing the original Builder as including "his heirs,  executors, administrators  and assigns  of  the OTHER PART".  Learned counsel  argued that  if the rights or duties of  the Builder were personal to the builder and were not assignable,  then the  mere use  of the builder and were not assignable, then the mere use of the word ’assigns’ cold not be  of any  help to  the appellant. The interest created must  be   an  assignable  interest.  The  owners  had  also confidence in  the financial capacity of Sri Amrit Mohan Lal Patel, the  builder and  that was  also another  reason  for holding that the contract dated 4.2.82 was one of a personal nature. Thus  there was  no assignment in fact or in law and there was  no consent  of the owners. The original plaintiff had defaulted.  So far  as the  legal representatives of the builder were  concerned, they were entitled to say that they had neither  the capacities  nor the  special skills  of the original plaintiff.  Therefore, the legal representatives of the  original   plaintiff  were,   for  good   reasons,  not interested in  seeking the  specific  performance  of  their development agreement  against the  owners. Thus  they  were entitled to  withdraw the suit and plead that this was not a contract they could perform.      The learned senior counsel, Sri Maganbhai Barat for the plaintiff’s  legal   representatives   adopted   the   above contentions of  Sri Ramesh  P. Bhat and contended that there were no merits in the appeal.      We have  set out  the  respective  contentions  of  the parties in  sufficient detail. We may state that the learned senior counsel  for the  appellant has,  and  in  our  view, rightly not  relied upon  Order 22  Rule 10  CPC  as  it  is nobody’s case  that there  is an assignment or devolution of interest during  the pendency  of the  suit. So  far as  the reasons given  by the  trial Court  and the  High Court  for rejecting the  case of  the appellant  under order 1 Rule 10 and section  146 c.p.c.  are concerned,  we do  not think it proper to  go into  them  in  detail  inasmuch  as,  in  our opinion, the  above issues  have to  be  thrashed  ut  in  a properly constituted  suit.   We think  it neither desirable not in  the interests  of parties,  to  go  into  the  above questions in  an  appeal  arising  ut  of  an  interlocutory application.  the  problem  is  that  if  we  interpret  the agreements, for the purpose of the application under Order 1 Rule 10  or section  146 c.p.c.,  our review  is  likely  to prejudice any  decision on  the same  questions if  taken up either in  this suit  or in  any separate  suit that  may be filed by  the appellant. The reason is this. any decision in favour of  the appellant to implead him as a plaintiff would necessarily  require  us  to  go  into  the  rights  of  the appellant-developer visa-vis  the original plaintiff-builder and  vis-a-vs   the  defendants,  owners  -  under  the  two agreements. This  may prejudice  the case  of the owners and the legal  representatives of the builder in this very suit, similarly, any decision against the appellant will prejudice the appellant’s case if he files an independent suit. In the above-said peculiar  circumstances of the case we are of the view that  this is  not a fit case to go into the merits and no interference  is called  for under  Article  136  of  the Constitution of  India. The  plaintiff, if he is so advises, may pursue  his  remedies  by  way  of  a  fresh  suit.  The

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observations or  findings of  the trial court or of the High Court in  the impugned  judgments as  to the  rights of  the plaintiff under  the agreements  dated 26.2.88 - whether the observations or  findings  are  in  favour  or  against  the plaintiff -  are kept  open for adjudication in such a suit. We are  not to  be under  stood as having said anything upon the maintainability  or non-maintainability of any such suit or about  the rights  of any  of  the  parties  who  may  be impleaded therein.      We have  stated earlier  that Rs.21  lakhs deposited by the original  plaintiff in  this  suit  are  kept  in  fixed deposit. As  stated earlier  there is  a dispute between the parties in regard to this amount. The appellant says that he provided these  monies to  the deceased  plaintiff  but  the legal representatives of the deceased plaintiff contend that these monies were not provided by the appellant but were the monies belonging  to the deceased plaintiff himself. As this is a  dispute which  cannot be resolved in these proceedings without taking  evidence, we  are of the view that the trial Court should  be directed  to keep the said amount of Rs. 21 lakhs and  interest thereon  in its  control for a period of eight weeks  from today  so as  to enable  the appellant  to seek appropriate relief in a duly constituted suit. We order accordingly. If  no orders  are obtained  by  the  appellant within the above said period in his favour, it shall be open to the  trial  Court  to  dispose  of  any  application  for withdrawal of  the said  monies which  may be  filed by  the plaintiff’s legal  representatives, in  accordance with law. We are  not to  be understood as deciding anything in favour or against  the appellant  or other  parties to  the suit in regard to  the said  amount and  interest thereon,  lying in deposit in the trial Court.      Subject to  the above, this appeal is dismissed. in the circumstances, there will be no order as to costs.