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CASE NO.: Appeal (civil)  2573 of 2008

PETITIONER: Bharat Karsondas Thakkar

RESPONDENT: M/s Kiran Construction Co. & Ors

DATE OF JUDGMENT: 09/04/2008

BENCH: A.K. MATHUR & ALTAMAS KABIR

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 2573 OF 2008 (@ SPECIAL LEAVE PETITION (C) NO.2328 of 2007)

ALTAMAS KABIR,J.

1.      Leave granted. 2.      On 27.5.1949 one  Sowar Ramji Vaity was given  a grant by the Collector of Thane, which entitled  him  to lease of the lands in Serial Nos.83-91 in  village Mulund for a term of 999 years. Sowar Ramji  Vaity died in 1965 leaving behind him four legal  representatives, namely, Jagannath, Babu, Vishnu  and Bhaskar. On 1.10.1973 the Vaitys entered into  an Agreement with one K.L. Danani to sell their  rights and interests in the said land for a  total  consideration of Rs.2 lakhs. In between April and  June 1974, Mr. K.L. Danani constituted a  partnership firm with one Mr. K.B. Thakkar and S.S.  Thakkar under the name of M/s Swas Construction  Company.  B.K. Thakkar, the appellant herein, who  was then a minor, was also admitted to the benefits  of the partnership firm. As his contribution   towards the  partnership firm K.L. Danani brought  the benefits of the said Agreement dated 1.10.1973  to the partnership firm.  In 1976, with the  enactment of the Urban Land (Ceiling and  Regulation) Act, 1976, K.L. Danani  claiming to be  in possession of the lands in question under the  Agreement dated 1.10.1973   filed a statement as  required under Section 6(1) of the aforesaid Act.   On 12.6.1979 the Government of Maharashtra executed  a lease in favour of the Vaitys for a total term of  60 years.

3.      Soon, thereafter, on 18.6.1979 the Vaitys  entered into another Agreement with M/s Modern  Development Corporation granting them development  rights over the same properties.  Clause 14 of the  Agreement mentioned the fact that the Vaitys had  entered into an Agreement to sell the said lands to  M/s Thakkar and Associates.  M/s Modern Development  Corporation, in their turn entered into an  Agreement with Kiran Construction Company, the

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respondent No.1 herein, to transfer its beneficial  interest in the suit land, except for Sl.No.91, in  favour of the said respondent No.1. Clause 12 of  the said Agreement required Modern Development  Corporation to obtain confirmation from M/s Thakkar  and Associates that there was no subsisting  Agreement for sale in their favour in respect of  the property agreed to be sold. 4.      On 18.2.1980 the present appellant Bharat K.  Das Thakkar and K.B. Thakkar filed Suit No.252 of  1980 in the Bombay High Court against K.L. Danani  and S.S. Thakkar seeking a declaration that a  partnership had subsisted between them and that  K.L. Danani and S.S. Thakkar have retired from Swas  Construction Company, and, in the alternative, for  an order of dissolution of partnership, accounts,  costs and other reliefs. On Notice of Motion No.283  of 1980 filed by the appellant and K.B.Thakkar in  Suit No.252 of 1980, K.L. Danani gave an  undertaking not to part with the possession of the  suit land pending disposal of the Notice of Motion.  The said Notice of Motion No.283 of 1980 was  finally disposed of on 9.10.1980 and a Court  Receiver was appointed by the Bombay High Court and  put into possession of the suit lands.

5.      On 15.5.1981 the Vaitys terminated the  Agreement dated 18.6.1979 with M/s Modern  Development Corporation Limited. Such termination  was followed by Suit No.1578 of 1981 instituted by  the respondent No.1 on 7.9.1981 against the Vaitys  and the partners of M/s Modern Development  Corporation Limited for specific performance of the  Agreements allegedly executed on 18.6.1979 and  24.8.1979. On 14.9.1981 the Bombay High Court  restrained the Vaitys and the partners of M/s  Modern Development Corporation Limited from  selling, transferring or further parting with  possession of the suit lands. Notice of Motion  No.1271 of 1981 on which the above restraint order  was passed was heard on 1.7.1982 and the Vaitys  were restrained during the pendency of the Suit No.  1578 of 1981 from selling, transferring,  encumbering the suit property forming the subject  matter of the Agreement dated 18.6.1979 entered  into by the Vaitys with M/s. Modern Development  Corporation Limited.   6.      During pendency of the said suit for specific  performance filed by respondent No.1, all the  parties to Suit No.252 of 1980 arrived at a  comprehensive settlement which was reduced into  consent terms  which were filed in the said suit  pending before the Bombay High Court. By its order  dated 6.5.1998 the Bombay High Court passed a  decree in Suit No.252 of 1980 on the basis of the  consent terms filed by the parties to the suit. By  virtue of the said decree, the Vaitys, inter alia,  admitted that an Agreement had been executed on  1.10.1973 in favour of K.L. Danani and that M/s  Swas Construction Company was placed in possession  of the suit lands on 3.8.1975.

7.      Under the consent decree the Court Receiver  was entrusted  to discharge certain functions which  had been agreed upon and recorded in the consent

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decree. Pursuant thereto in January 1999 the Court  Receiver took out a Notice of Motion No.140 of 1999  in Suit No.1578 of 1981 filed by the Respondent  No.1 praying that the order of injunction made on  1.7.1982 be vacated.  On 25.8.1999 the Vaitys also  took out Notice of Motion No.2700 of 1999 in the  aforesaid suit for the same relief. During the  pendency of the suit the respondent No.1 took out  Chamber Summons No.1203 of 2000 in his suit seeking  to amend the plaint by joining the respondent No.13  to 19 as defendants  and to also challenge the  consent decree passed by the Bombay High Court in  Suit No.252 of 1980 on 6.5.1998.  The High Court  dismissed the Chamber Summons No.1203 of 2003   filed by the respondent No.1 in his suit and also   vacated the injunction granted on 1.7.1982. As a  consequence the other two notices of Motion for  vacating the order of injunction dated 1.7.1982  were allowed. Aggrieved by the said order of the  learned Single Judge dated 21.6.2001, the  respondent No.1 filed Appeal No. 745 of 2001 before  the Division Bench of the High Court. On 16.11.2006  the High Court allowed the aforesaid appeal,  thereby allowing the amendment of the plaint and  directed that the amendment to the plaint be  effected accordingly. 8.      It is the said order of the Division Bench  which is the subject matter of challenge in the  present appeal and raises the question as to  whether in a suit for specific performance of an  agreement for sale of immovable property instituted  by the beneficiary of the agreement against the  vendor, a stranger or a third party to the  agreement who had acquired an interest in the same  property   is either a necessary or a proper party  to the suit. In other words, could the appellant  herein, who had acquired an independent right in  the suit property by way of a separate decree but  was not a party to the agreement between the  respondent No.1 and M/s Modern Development  Corporation, be added as a party in the suit for  specific performance filed by respondent No.1 and  whether the decree passed in his favour could be  assailed by the respondent No.1 in his suit for  specific performance. 9.      Although, we have set out the facts which are  relevant for an understanding of the circumstances  in which the order impugned in this appeal came to  be passed, the scope of the appeal is confined to  the question whether the Division Bench of the High  Court had exercised its jurisdiction correctly by  allowing the amendment to implead the appellant  as  a  party to  the suit for specific performance   filed by respondent  No.1 and also by allowing the  amendment to the pleadings and the prayer in the  plaint to include the following prayers: "a(i) that this Hon’ble Court be  pleased to declare that the decree  passed on 6th May 1998  in Suit  No.252 of 1980 in so far as it  relates to the Suit Property  more  particularly described in Exhibit  ’A’ hereto is illegal, null and void  and is liable to be quashed and set  aside;

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a(ii) that it may be declared that  the decree dated 6th May 1998  passed  in Suit No.252 of 1980 in so far as  it relates to the Suit Property more  particularly described in Exhibit A  hereto is not binding upon the  Plaintiffs herein;

a(iii)  that the Court Receiver,  High Court, Bombay appointed  Receiver in the Suit  property more  particularly described in the  Exhibit A hereto be discharged;

b(iii)   that the Defendant Nos. 1  to 4(c), and 13 to 18 and herein be  ordered and decreed to pay to the  Plaintiffs as and by way of  exemplary/punitive damages the sum  of Rs.50 crores together with  interest thereon at the rate of 18%  per annum from 6th May 1998 till  payment or realisation.

d(i)  that pending hearing and final  disposal of the Suit operation of  Order dated 6th May 1998 passed in  Suit No.252 of 1980 in so far as it  relates to the Suit property more  particularly described in Exhibit  ’A’ hereto be stayed."

10.     Appearing in support of the appeal, Mr.F.  De’Vitre, Senior Advocate, submitted that the  learned Single Judge of the Bombay High Court had  dismissed Chamber Summons No.1203 of 2000 filed by  the respondent No.1 herein in Suit No.1578 of 1981,  mainly on the ground of limitation holding that the  relief claimed by way of amendment of the plaint  for setting aside the consent decree had its origin  in the Agreement dated 1.10.1973  executed by the  Vaitys in favour of K.L. Danani and that the same  had not been challenged earlier by the respondent  No.1  despite having knowledge thereof. 11.       Mr. De’Vitre, submitted that apart from the  above, the fact relating to the earlier Agreement  and the filing of Suit No.252 of 1980 and the  appointment of the Court Receiver and his taking  possession of the suit properties were intimated to  the learned advocate for the Respondent No.1 by the  learned advocate for the petitioner and K.B.  Thakkar by letter dated 27.3.1984 and at least  since that date the respondent No.1 had knowledge  of the earlier Agreement and the consent decree,  but he did not take any steps to amend the plaint  of the suit filed by him on 7.9.1981 for specific  performance of the Agreement said to have been   executed between the Vaitys and the partners of M/s  Modern Development Corporation and between M/s  Modern Development Corporation and the respondent  No.1.  Such amendment was sought to be made only on  5.10.2000 by way of Chamber Summons No.1203 of  2000. Mr. De’Vitre submitted that even if the date

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of intimation of the filing of Suit No. 252 of 1980  on 27.3.1984  is taken to be starting point of  limitation, even then the later suit filed by  respondent had stood barred by limitation, and it  was so held by the learned Single Judge of the  Bombay High Court while rejecting the Chamber  Summons No.1203 of 2000 filed by the respondent  No.1.

12.     In addition to the above, Mr. De’Vitre  submitted that by allowing the amendment sought for  by the respondent No.1 of his plaint, the Division  Bench of the Bombay High Court  had allowed the  respondent No.1 to completely change the nature and  character of his suit from one  for specific  performance of an agreement to one for declaration  of title against a third party to the agreement for  which specific performance had been claimed. It was  submitted that the suit, as amended, was no longer  maintainable as one under Section 19 of the  Specific Relief Act, 1963.

13.     In support of his aforesaid submission, Mr.  De’Vitre referred to and relied on a decision of a  three Judge Bench of this Court in Kasturi vs.      Iyyamperumal and others [(2005) 6 SCC 733] where an  identical question arose in almost identical  circumstances, as to whether a third party or  stranger to the contract could be added in a suit  for specific performance merely in order to find  out who is in possession of the contracted property  or to avoid multiplicity of suits and such question  was answered in the negative. 14.     Mr. De’Vitre also referred to another decision  of this Court in Anil Kumar Singh vs. Shivnath  Mishra (1995 3 SCC 147) where also, in an almost  identical fact situation, this Court held that  having regard to the provisions of Sections 15 and  16 of the Specific Relief Act, 1963, the respondent  in the said case was neither a necessary nor a  proper party to adjudicate upon the dispute arising  in the suit since he was not a party to the  agreement of sale in respect of which specific  performance had been prayed.

15.     Relying on the said decisions, Mr. De’Vitre  urged that the decision of the Division Bench of  the Bombay High Court impugned in the present  appeal was liable to be set aside.

16.     The submissions made on behalf of the  appellant was strongly opposed by Mr. Buddy A.  Ranganadhan, learned advocate appearing for the  respondents.  It was submitted by him that no  prejudice could be caused to the appellant by the  amendment of the pleadings in the respondent’s suit  since filing of a separate suit for setting aside  the consent decree would only lead to multiplicity  of proceedings.   In fact, in order to avoid such  multiplicity of proceedings, the High Court had  very pragmatically allowed the amendments so that  the said question could also be decided in the suit  filed by the respondent No.1, inasmuch as, the  subject matter of the suit of the respondent No.1  and the consent decree was one and the same.  It

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was urged that having regard to the nature of the  claim of the respondent No.1, the High Court had on  1st July, 1982, restrained the Vaitys from selling,  tranferring, encumbering, alienating or further  parting with the suit property during the pendency  of the suit filed by the respondent No.1.

17.     Mr. Ranganadhan submitted that in the interest  of justice and for a complete adjudication of the  rights of the parties inter-se in respect of the  suit property, the amendment of the plaint allowed  by the High Court should not be disturbed and      the interim order of injunction passed on 1.7.1982  should be allowed to continue.   

18.     Mr. Ranganadhan referred to the decision of a  Bench of three Judges of this Court in Durga Prasad  vs. Deep Chand (AIR 1954 SC 75) which also involved  a suit for specific performance by a prior  purchaser against his vendor and a subsequent  purchaser who had paid the purchase money to the  vendor.  In the said context, this Court held that  in case the suit filed by the prior purchaser is  decreed, then the form of decree should be such as  to direct specific performance of the contract  between the vendor and the prior transferee and to  direct the subsequent transferee to join in the  conveyance so as to pass on the title which resides  in him to the prior transferee.  It was observed  that the only work required to be performed by the  subsequent transferee was to pass on his title to  the prior transferee.  Mr. Ranganadhan submitted  that in this case also, all that the appellant was  required to do in the present suit was to pass on  his title, obtained on the basis of the consent  decree, to the respondent No.1 as plaintiff.   Accordingly, in view of the aforesaid decision, it  could not be said that the High Court committed any  error in allowing the impleadment of the appellant  in the suit or in allowing the prayers in the  plaint to be amended to include a declaration for  declaring the consent decree to be not binding on  the plaintiffs.   

19.     Reliance was also placed on another decision  of this Court in Sampath Kumar vs. Ayyakannu and  Anr. (2002 (7) SCC 559) wherein while considering  the provisions of Order 6 Rule 17 of the Code of  Civil Procedure, hereinafter referred to as the  "Code", this Court observed that amendment of  pleadings at a pre-trial stage should be liberally  allowed. 20.     It was lastly submitted that even on the  question of bar of limitation, the Division Bench  of the High Court had erred in holding that the  suit was not barred particularly when the  amendment, which was necessitated by the consent  decree, related back to the agreement dated 1st  October, 1973.   As a consequence, the limitation  would  run from the date of the consent decree and  not from the date of the agreement dated 1st  October, 1973, although, the effect of the decree  would relate back to the agreement of 1st October,  1973.

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21.     Having carefully considered the submissions  made on behalf of the respective parties, and the  decisions cited on their behalf, we are of the view  that the Division Bench of the High Court erred in  law in allowing the amendment of the plaint sought  for by the respondent No.1 herein as the plaintiff  in the suit.   Even if the bar of limitation is not  taken into account, the plaintiff, namely, the  respondent No.1 herein, is faced with the ominous  question as to whether the amendment of the  pleadings could have at all been allowed by the  High Court since it completely changed the nature  and character of the suit from being a suit for  specific performance of an agreement to one for  declaration of title and possession followed by a  prayer for specific performance of an agreement of  sale entered into between its assignee and the  vendors of the assignees.  Along with that is the  other question, which very often raises its head in  suits for specific performance, that is, whether a  stranger to an agreement for sale can be added as a  party in a suit for specific performance of an  agreement for sale in view of Section 15 of the  Specific Relief Act, 1963.  The relevant provision  of Section 15 with which we are concerned is  contained in clause (a) thereof and entitles any  party to the contract to seek specific performance  of such contract.  Admittedly, the appellant herein  is a third party to the agreement and does not,  therefore, fall within the category of "parties to  the agreement".  The appellant also does not come  within the ambit of Section 19 of the said Act,  which provides for relief against parties and  persons claiming under them by subsequent title.   This aspect of the matter has been dealt with in  detail in Kasturi’s case (supra).  While holding  that the scope of a suit for specific performance  could not be enlarged to convert the same into a  suit for title and possession, Their Lordships  observed that a third party or a stranger to the  contract could not be added so as to convert a suit  of one character into a suit of a different  character. 22.     In the instant case, the appellant obtained  the consent decree on the strength of an agreement  said to have been entered into between the Vaitys  and K.L. Danani who brought the said agreement to  the partnership which was formed by him with two  other persons.   Although, this fact was brought to  the notice of the learned advocates for the  respondent No.1 on 27th March, 1984, no steps were  taken by the said respondent to amend the plaint at  that stage.   Instead, the respondent No.1 waited  till a consent decree was passed before applying  for  amendment of the plaint. The proper course of  action for the respondent No.1 would have been to  challenge the consent decree not in its suit for  specific performance, but in a separate suit for  declaration that the consent decree ought not to  have been passed and the same was not binding on  the respondent.  By seeking amendment of the plaint  in its suit for specific performance, the  respondent No.1 has created its own difficulties by  substantially changing the nature and character of  the original suit, which is not permissible in law.  

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If, as was held in Durga Prasad’s case (supra), the  impleadment of the appellant was only for the  purpose of joining him in the conveyance if the  respondent No.1’s suit ultimately succeeded, the  ratio of the said decision would possibly have been  applicable to the facts of this case.   Unfortunately, that is not the case here, since the  respondent No.1 has by amending the plaint prayed  for a declaration that the consent decree obtained  by the appellant was not binding on him and also  for a declaration that the consent decree was null  and void and was liable to be quashed. 23.     In our view, the decision of this Court in  Durga Prasad’s case (supra), cannot be brought to  the aid of the case made out by respondent No.1.   Furthermore, the Division Bench of the High Court  also appears to have committed an error in  observing that the decision in Anil Kumar Singh’s  case (supra) was not applicable to the facts of  this case, despite the fact that on a consideration  of the provisions of Order 1 Rule 10 and Order 22  Rule 10 of the Code, this Court held that since the  plaintiff in the said matter was merely seeking the  specific performance of an agreement of sale, any  attempt to implead a third party to the contract in  the suit would be hit by the provisions of Section  15 (a) of the Specific Relief Act, 1963.  In fact,  in Anil Kumar Singh’s case (supra) in a suit for  specific performance, the respondent, who was not a  party to the contract but wanted to be impleaded as  a defendant on the ground that he had acquired  subsequent interest as a co-owner by virtue of a  decree obtained from the court, was held not  entitled to be joined as defendant either under  Order 1 Rule 3 or  under Order 1 Rule 10(ii) of the  Code having regard to the provisions of Sections 15  and 6 of the Specific Relief Act, 1963.

24.     As it appears the respondent No.1, was  proceeding before a wrong forum to establish its  stand that the decree obtained by the appellant was  a nullity and was not binding on it.

25.     In that view of the matter, although, we are  setting aside the order of the Division Bench of  the High Court impugned in this appeal, the  respondent No.1 may, if so advised, file a separate  suit to challenge the consent decree in view of the  fact that he had been pursuing his claim before the  wrong forum.

26.      We, therefore, allow the appeal and set aside  the impugned order of the Division Bench of the  High Court in Appeal No. 745 of 2001 in Chamber  Summons No. 1203 of 2000 in Suit No. 1578 of 1981,  pending in the Bombay High Court. The respondent  No.1 may file a separate suit to challenge the  consent decree obtained by the appellant on 6th May,  1998 in Suit No. 252 of 1980 filed by the appellant  herein and one K.B. Thakkar against K.L. Danani and  S.S. Thakkar and invoke the relevant provisions of  the Limitation Act, 1963, for the period during  which he was pursuing his relief against the  consent decree in his suit and the appeals arising  therefrom.

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27.     There will be no order as to costs.