Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4900 OF 2010 [Arising out of SLP [C] No.2085 of 2009]

Mumbai International Airport Pvt. Ltd. … Appellant

Vs.

Regency Convention Centre & Hotels Pvt. Ltd. & Ors. … Respondents

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted. Heard the learned counsel.

2. The Airport Authority of India (second respondent herein, AAI for  

short) established under the Airports Authority of India Act, 1994 (‘Act’  

for  short)  to  be  responsible  for  the  development,  operation  and  

maintenance of airports in India. The Government of India took a policy  

decision to amend the Act by Amendment Act 43 of 2003 enabling the  

AAI to lease the airport premises, to private operators with prior approval  

of the Central Government and assign its functions to its lessees except  

air traffic services and watch and ward. In pursuance of the policy of the  

government  in  this  behalf,  the  AAI  decided  to  entrust  the  work  of  

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modernisation  and  upgradation  of  the  Mumbai  Airport  to  a  private  

operator,  to serve the sharply increasing volume of passengers and for  

better  utilisation  of  the  Airport.  AAI  initiated  a  competitive  bidding  

process in that behalf. In the information memorandum that was issued to  

the prospective bidders it was represented that the entire airport premises  

will  be  included  in  the  transaction  including  all  encroached  land  but  

excluding only the following areas : (i)  New ATC tower;  (ii) AAI staff  

colony; (iii) Hotel Leela Venture, and (iv) All retail fuel outlets outside  

the airport operational boundary.

3. Pursuant to the competitive bidding process, the Chhtrapati Shivaji  

International  Airport,  Mumbai  was  handed  over  to  the  appellant  for  

operation,  maintenance,  development and expansion into a world class  

airport  under  an  agreement  dated  4.4.2006.  In  pursuance  of  it,  AAI  

entered into a lease deed dated 26.4.2006 leasing the Mumbai airport to  

the  appellant  on “as  is  where  is”  basis  for  a  period of  30 years.  The  

subject matter of the lease was described as “all the land (along with any  

buildings, constructions or immovable assets,  if any, thereon) which is  

described, delineated and shown in Schedule I hereto, other than (i) any  

lands (along with any buildings,  constructions or  immovable  assets,  if  

any,  thereon)  granted  to  any  third  party  under  any  existing  lease(s),  

constituting the Airport on the date hereof; and (ii) any and all  of the  

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carved out  assets”.   Schedule  I  to  the  lease  deed,  instead  of  giving a  

detailed  description  of  the  demised  property,  referred  to  the  map  

demarcating the demised premises annexed to the lease deed by way of  

description of the demised premises. The map annexed as Schedule I was  

the “plan showing the demised premises, indicating carved out assets and  

lands vested with IAF and Navy”. The carved out assets were : (1) new  

ATC tower; (2) & (2A) the NAD staff colony of AAI; (3) land leased to  

Hotel Leela Venture;  (4) all retail fuel outlets which were outside the  

airport operational  boundary; and (5) convention centre.  The map also  

contains a note below the list of carved out assets, reading as under:  “A :  

The parcel of land measuring 31,000 sq.mts. is currently not made a part  

of the lease deed but may become part of the demised premises subject to  

the court verdict”.

4. According to the appellant the said parcel measuring 31,000 sq.m.  

was  also  part  of  the  airport  that  was  to  be  handed  over  by  AAI  to  

appellant but it  could not be included in view of a pending case (Suit  

No.6846 of 1999 on the file of the Bombay High Court) filed by the first  

respondent  wherein  the  High  Court  had  made  an  interim  order  dated  

2.5.2001, relevant portion of which is extracted below :  

“The Defendant Airport Authority should also separately demarcate an  area of 31000 sq. meters for which the plaintiff is making a claim in  this suit. After the land is so demarcated, a copy of the plan would be  handed  over  to  the  Plaintiff  through  their  advocate.  The  learned  Counsel  further states  that  the land admeasuring 31000 sq.  meters,   

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which would be separately demarcated will not be alienated, sold and  transferred and no third party interest in that land would be created  by  the  Defendants  Airport  Authority  without  seeking  leave  of  this   Court. He further states that the Defendant No.1 would use the 31,000  sq. meters of land only for its own purpose as far as possible without  raising  any permanent  construction  on that  land,  and if  it  becomes  necessary for the Defendant No.1 to raise any permanent construction  on that land, the work of construction would not be started without  giving  two weeks  notice  to  the  Plaintiff,  after  the  building  plan  is  finally sanction by the Planning Authority.”  

(emphasis supplied)

5. In pursuance of the lease of the airport in its favour, the appellant  

claims to have undertaken several developmental activities to make it a  

world class airport. The appellant alleges that it was expecting that the  

litigation initiated by the first respondent would end and it would be able  

to get the said 31,000 sq.m. land also as it was in dire need of land for  

developing the airport. According to the appellant, the Mumbai airport is  

surrounded  by  developed  (constructed)  areas  with  very  limited  

opportunities  to  acquire  any  land  and  the  site  constraints  limit  the  

possibilities  for  development  and  therefore  it  was  necessary  to  make  

optimum  use  of  the  existing  land  in  the  airport  for  the  purpose  of  

modernisation and upgradation;  and therefore,  the disputed land which  

was  lying  idle,  was  required  for  modernisation.  It  therefore  filed  an  

application  seeking  impleadment  as  an  additional  defendant  in  the  

pending suit filed by the first respondent against AAI, contending that its  

interest was likely to be directly affected if any relief is granted to the  

first  respondent-plaintiff  in  the  suit.  The  appellant  alleged  that  the  

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Information Memorandum proposing to privatise the management did not  

exclude the area which was the subject-matter of the suit; and that the suit  

plot could not however be leased to the appellant in view of the interim  

order in the pending suit of the first respondent. The appellant therefore  

claimed that it had, or would have, an interest in the suit land; and at all  

events,  it  was  interested  in  acquiring  it  by  lease  depending  upon  the  

decision in the suit  and therefore  it  was a necessary party and in any  

event a proper party.

6. The said application was resisted by the first respondent inter alia  

on  the  ground that  the  appellant  did  not  have  any interest  in  the  suit  

property and therefore the appellant was neither a necessary party nor a  

proper party to the suit.  It  was also contended that AAI itself  being a  

substantial  shareholder,  having  26%  share  in  the  appellant  company,  

would  protect  the  interest  of  the  appellant  by  contesting  the  suit  and  

therefore  appellant  was  not  a  necessary  party.  AAI  has  also  filed  a  

response  to  appellant’s  application  for  impleadment  raising  two  

contentions : (i) any impleadment at that stage of the suit would delay the  

recording of evidence and final hearing thereby seriously affecting the  

interests of AAI; and (ii) the suit  plot measuring 31000 sq.m. was not  

leased to the appellant.

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7. A learned Single Judge dismissed the appellant’s  application by  

order dated 1.4.2008. The learned Single Judge was of the view that as  

the appellant was yet to acquire any interest in the suit land and as the  

pending suit by the first respondent was for specific performance of an  

agreement  which  was  a  distinct  earlier  transaction  between  the  first  

respondent and AAI to which the appellant was not a party, and as the  

first respondent was not a party to the arrangement between AAI and the  

appellant,  the  court  cannot  permit  impleadment  of  appellant  with  

reference  to  some  future  right  which  may  accrue  in  future,  after  the  

decision in the suit. The appeal filed by the appellant was also dismissed  

by a Division Bench by order dated 25.8.2008. The Division Bench held  

that the appellant did not make out that he was a necessary party and the  

application merely disclosed that he was only claiming to be a proper  

party; that the appellant’s claim was not based on a present demise but a  

future  expectation  based  on  spes  successionis; and  that  therefore,  the  

impleadment of appellant either as a necessary party or proper party or  

formal  party  was  not  warranted.  The  said  order  is  challenged  in  this  

appeal  by special  leave. The question for consideration is  whether the  

appellant  is  a  necessary  or  proper  party  to  the  suit  for  specific  

performance filed by the first respondent.  

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8. The general  rule  in regard to impleadment  of  parties  is  that  the  

plaintiff in a suit, being  dominus litis, may choose the persons against  

whom he  wishes  to  litigate  and cannot  be  compelled  to  sue  a  person  

against whom he does not seek any relief. Consequently, a person who is  

not  a  party  has  no  right  to  be  impleaded  against  the  wishes  of  the  

plaintiff. But this general rule is subject to the provisions of Order I Rule  

10(2) of Code of Civil Procedure (‘Code’ for short), which provides for  

impleadment of proper or necessary parties. The said sub-rule is extracted  

below:  

“Court may strike out or add parties.

(2) The Court  may at  any stage of  the  proceedings,  either  upon or  without the application of either party, and on such terms as may appear to  the Court to be just, order that the name of any party improperly joined,  whether as plaintiff or defendant, be struck out, and that the name of any  person who ought to have been joined, whether as plaintiff or defendant,  or whose presence before the Court may be necessary in order to enable  the Court effectually and completely to adjudicate upon and settle all the  questions involved in the suit, be added.”

  The said provision makes it clear that a court may, at any stage of the  

proceedings  (including  suits  for  specific  performance),  either  upon  or  

even without any application, and on such terms as may appear to it to be  

just, direct that any of the following persons may be added as a party: (a)  

any person who ought to have been joined as plaintiff or defendant, but  

not added; or (b) any person whose presence before the court  may be  

necessary  in  order  to  enable  the  court  to  effectively  and  completely  

adjudicate upon and settle the question involved in the suit. In short, the  

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court is given the discretion to add as a party, any person who is found to  

be a necessary party or proper party.  A ‘necessary party’ is a person who  

ought to have been joined as a party and in whose absence no effective  

decree could be passed at all by the Court. If a ‘necessary party’ is not  

impleaded, the suit itself is liable to be dismissed. A ‘proper party’ is a  

party  who,  though not  a  necessary  party,  is  a  person  whose  presence  

would  enable  the  court  to  completely,  effectively  and  adequately  

adjudicate upon all matters in disputes in the suit,  though he need not be  

a person in favour of or against  whom the decree is  to be made.  If a  

person is not found to be a proper or necessary party, the court has no  

jurisdiction to implead him, against the wishes of the plaintiff. The fact  

that a person is likely to secure a right/interest in a suit property, after the  

suit is decided against the plaintiff, will not make such person a necessary  

party or a proper party to the suit for specific performance.  

9. The learned counsel for the appellants relied upon the following  

observations of a two-Judge Bench of this Court in  Sumtibai v. Paras  

Finance Co. [2007 (10) SCC 82] to contend that a person need not have  

any subsisting right or interest in the suit property for being impleaded as  

a defendant, and that even a person who is likely to acquire an interest  

therein in future, in appropriate cases, is entitled to be impleaded as a  

party:  

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“Learned counsel for the respondent relied on a three-Judge Bench  decision of this Court in  Kasturi v. Iyyamperuma [2005(6) SCC  733]. He has submitted that in this case it has been held that in a  suit for specific performance of a contract for sale of property a  stranger  or  a  third  party  to  the  contract  cannot  be  added  as  defendant  in  the  suit.  In  our  opinion,  the  aforesaid  decision  is  clearly distinguishable. In our opinion, the aforesaid decision can  only be understood to mean that a third party cannot be impleaded  in a suit for specific performance if he has no semblance of title in   the property in dispute. Obviously, a busybody or interloper with  no semblance  of  title  cannot  be impleaded in such a  suit.  That  would  unnecessarily  protract  or  obstruct  the  proceedings  in  the  suit.  However,  the  aforesaid  decision  will  have  no  application  where a third party shows some semblance of title or interest in the  property in dispute………It cannot be laid down as an absolute  proposition that whenever a suit for specific performance is filed  by A against B, a third party C can never be impleaded in that suit.  If C can show a fair semblance of title or interest he can certainly  file an application for impleadment.”   

10. The  learned  counsel  for  the  first  respondent  on  the  other  hand  

submitted that the decision in Sumtibai is not be good law in view of an  

earlier decision of a three-Judge Bench decision of this Court in Kasturi   

v. Iyyamperumal   [2005 (6) SCC 733]. In  Kasturi, this Court reiterated  

the position that necessary parties and proper parties can alone seek to be  

impleaded as parties to a suit for specific performance. This Court held  

that necessary parties are those persons in whose absence no decree can  

be passed by the court or those persons against whom there is a right to  

some relief in respect of the controversy involved in the proceedings; and  

that proper parties are those whose presence before the court would be  

necessary  in  order  to  enable  the  court  effectually  and  completely  to  

adjudicate upon and settle all the questions involved in the suit although  

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no relief in the suit was claimed against such person. Referring to suits  

for specific performance, this Court held that the following persons are to  

be considered as necessary parties: (i) the parties to the contract which is  

sought to be enforced or their legal representatives; (ii) a transferee of the  

property  which  is  the  subject  matter  of  the  contract.  This  Court  also  

explained that a person who has a direct interest in the subject matter of  

the  suit  for  specific  performance  of  an  agreement  of  sale  may  be  

impleaded as a proper party, on his application under Order 1 Rule 10  

CPC.  This  Court  concluded  that  a  purchaser  of  the  suit  property  

subsequent to the suit agreement would be a necessary party as he would  

be affected if he had purchased it with or without notice of the contract,  

but a person who claims a title adverse to that of the defendant-vendor  

will  not  be  a  necessary  party.   The  first  respondent  contended  that  

Kasturi held  that  a  person  claiming  a  title  adverse  to  the  title  of  

defendant-vendor, could not be impleaded, but effect of Sumtibai would  

be that such a person could be impleaded; and that therefore, the decision  

in Sumtibai is contrary to the larger bench decision in Kasturi.

11. On  a  careful  consideration,  we  find  that  there  is  no  conflict  

between the two decisions. The two decisions were dealing with different  

situations  requiring  application  of  different  facets  of  sub-rule  (2)  of  

Rule 10 of Order 1. This is made clear in Sumtibai itself. It was observed  

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that  every judgment must  be  governed  and qualified by the  particular  

facts of the case in which such expressions are to be found; that a little  

difference in facts or additional facts may make a lot of difference in the  

precedential value of a decision and that even a single significant detail  

may alter the entire aspect; that there is always peril in treating the words  

of a judgment as though they were words in a legislative enactment, and  

it is to be remembered that judicial utterances are made in the setting of  

the  facts  of  a  particular  case.  The  decisions  in  Ramesh  Hirachand  

Kundanmal v. Municipal Corporation of Greater Bombay [1992 (2) SCC  

524] and Anil Kumar Singh v. Shivnath Mishra [1995 (3) SCC 147] also  

explain in what circumstances persons may be added as parties.

12. Let us consider the scope and ambit of Order I of Rule 10(2) CPC  

regarding striking out or adding parties. The said sub-rule is not about the  

right  of a non-party to be impleaded as a party, but about the  judicial  

discretion  of  the  court  to  strike  out  or  add  parties  at  any  stage  of  a  

proceeding.  The discretion under the sub-rule can be exercised either suo  

moto or  on the  application  of  the  plaintiff  or  the  defendant,  or  on an  

application of a person who is not a party to the suit. The court can strike  

out any party who is improperly joined. The court can add anyone as a  

plaintiff or as a defendant if it finds that he is a necessary party or proper  

party. Such deletion or addition can be without any conditions or subject  

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to such terms as the court deems fit to impose. In exercising its judicial  

discretion under Order 1 Rule 10(2) of the Code, the court will of course  

act  according to reason and fair play and not according to whims and  

caprice. This Court in Ramji Dayawala & Sons (P) Ltd. vs. Invest Import  

– 1981 (1) SCC 80, reiterated  the classic definition of ‘discretion’ by  

Lord Mansfield in  R.  vs.  Wilkes – 1770 (98) ER 327, that ‘discretion’  

when applied to courts of justice, means sound discretion guided by law.  

It  must  be governed by rule,  not by humour; it  must not be arbitrary,  

vague,  and fanciful,  ‘but  legal  and regular’.  We may  now give  some  

illustrations regarding exercise of discretion under the said Sub-Rule.  

12.1) If  a plaintiff  makes an application for impleading a person as a  

defendant  on  the  ground  that  he  is  a  necessary  party,  the  court  may  

implead him having regard to the  provisions  of  Rules 9  and 10(2)  of  

Order I. If the claim against such a person is barred by limitation, it may  

refuse to add him as a party and even dismiss the suit for non-joinder of a  

necessary party.

12.2)  If the owner of a tenanted property enters into an agreement for  

sale of such property without physical possession, in a suit for specific  

performance by the purchaser, the tenant would not be a necessary party.  

But if the suit for specific performance is filed with an additional prayer  

for delivery of physical possession from the tenant in possession, then the  

tenant  will  be  a  necessary  party  in  so  far  as  the  prayer  for  actual  

possession.  

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12.3) If a person makes an application for being impleaded contending  

that he is a necessary party, and if the court finds that he is a necessary  

party, it can implead him. If the plaintiff opposes such impleadment, then  

instead of impleading such a party, who is found to be a necessary party,  

the court may proceed to dismiss the suit by holding that the applicant  

was a necessary party and in his absence the plaintiff was not entitled to  

any relief in the suit.

12.4)  If an application is made by a plaintiff for impleading someone as  

a proper party, subject to limitation, bonfides etc., the court will normally  

implead him, if he is found to be a proper party. On the other hand, if a  

non-party makes an application seeking impleadment as a proper party  

and court finds him to be a proper party, the court may direct his addition  

as a defendant; but if the court finds that his addition will alter the nature  

of  the  suit  or  introduce  a  new  cause  of  action,  it  may  dismiss  the  

application even if he is found to be a proper party, if it does not want to  

widen the scope of the specific performance suit; or the court may direct  

such applicant to be impleaded as a proper party, either unconditionally  

or subject to terms. For example, if ‘D’ claiming to be a co-owner of a  

suit property, enters into an agreement for sale of his share in favour of  

‘P’ representing that he is the co-owner with half share, and ‘P’ files a  

suit for specific performance of the said agreement of sale in respect of  

the undivided half share, the court may permit the other co-owner who  

contends  that  ‘D’  has  only  one-fourth  share,  to  be  impleaded  as  an  

additional  defendant  as  a  proper  party,  and  may  examine  the  issue  

whether the plaintiff is entitled to specific performance of the agreement  

in respect of half a share or only one-fourth share; alternatively the court  

may refuse to implead the other co-owner and leave open the question in  

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regard to the extent of share of the vendor-defendant to be decided in an  

independent  proceeding  by  the  other  co-owner,  or  the  plaintiff;  

alternatively the court may implead him but subject to the term that the  

dispute,  if  any,  between  the  impleaded  co-owner  and  the  original  

defendant  in  regard  to  the  extent  of  the  share will  not  be the  subject  

matter of the suit for specific performance, and that it will decide in the  

suit, only the issues relating to specific performance, that is whether the  

defendant  executed  the  agreement/contract  and  whether  such  contract  

should  be  specifically  enforced.  In  other  words,  the  court  has  the  

discretion to either to allow or reject an application of a person claiming  

to be a proper party, depending upon the facts and circumstances and no  

person has a right to insist that he should be impleaded as a party, merely  

because he is a proper party.  

13. If the principles relating to impleadment, are kept in view, then the  

purported  divergence  in  the  two  decisions  will  be  found  to  be  non-

existent. The observations in Kasturi and Sumtibai are with reference to  

the facts and circumstances of the respective case. In Kasturi, this Court  

held that in suits for specific performance, only the parties to the contract  

or any legal representative of a party to the contract, or a transferee from  

a party to the contract are necessary parties. In Sumtibai, this Court held  

that a person having semblance of a title can be considered as a proper  

party. Sumtibai did not lay down any proposition that anyone claiming to  

have any semblance  of  title  is  a necessary party.  Nor did  Kasturi lay  

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down that no one, other than the parties to the contract and their legal  

representatives/transferees, can be impleaded even as a proper party.  

14. On a careful examination of the facts of this case, we find that the  

appellant  is  neither  a  necessary  party  nor  a  proper  party.  As  noticed  

above,  the  appellant  is  neither  a  purchaser  nor  the  lessee  of  the  suit  

property  and  has  no  right,  title  or  interest  therein.  First  respondent  -  

plaintiff in the suit has not sought any relief against the appellant. The  

presence of the appellant is not necessary for passing an effective decree  

in  the suit  for  specific  performance.  Nor  is  its  presence  necessary for  

complete and effective adjudication of the matters in issue in the suit for  

specific performance filed by the first respondent-plaintiff against AAI.  

A person who expects  to get  a lease from the defendant  in a suit  for  

specific performance in the event of the suit being dismissed, cannot be  

said to be a person having some semblance of title,  in the property in  

dispute.  

15. Learned  counsel  for  the  appellants  contended  that  in  view  of  

section 12A of the Act when AAI granted a lease of the premises of an  

airport, to carry out any of its functions enumerated in section 12 of the  

said Act, the lessee who has been so assigned any function of AAI, shall  

have the powers of AAI, necessary for the performance of such functions  

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in terms of the lease. Learned counsel for the appellant submitted that in  

view of this provision, it should be deemed that the appellant has stepped  

into the shoes of AAI so far as the Airport premises are concerned. This  

contention has no merit. The appellant as lessee may certainly have the  

powers of AAI necessary for performance of the functions that have been  

assigned to them. What has been assigned is the function of operation,  

management and development agreement with reference to the area that   

been demised.  Obviously the appellant  as lessee of the Airport  cannot  

step  into  the  shoes  of  AAI  for  performance  of  any  functions  with  

reference to an area which has not been demised or leased to it.

16. Learned counsel for the appellant contended that Mumbai airport  

being  one  of  the  premier  airports  in  India  with  a  very  high  and ever  

increasing passenger traffic, needs to modernise and develop every inch  

of the airport land; that the suit land was a part of the airport land and that  

for the pendency of first respondent’s suit within an interim order, AAI  

would have included the suit land also in the lease in its favour. It was  

submitted  that  therefore  a  note  was  made  in  the  lease  that  the  land  

measuring 31000 sq.m. was not being made a part of the lease but may  

become part of the demised premises subject to the court verdict. This  

does not in any way help the appellant to claim a right to be impleaded. If  

the interim order in the suit filed by the first respondent came in the way  

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of granting the lease of the suit land, it is clear that the suit land was not  

leased to appellant. The fact that if AAI succeeded in the suit, the suit  

land may also be leased to the appellant is not sufficient to hold that the  

appellant has any right, interest or a semblance of right or interest in the  

suit  property.  When appellant  is  neither  claiming any right  or  remedy  

against the first respondent and when first respondent is not claiming any  

right or remedy against the appellant, in a suit for specific performance  

by the first respondent against AAI, the appellant cannot be a party. The  

allegation  that  the  land  is  crucial  for  a  premier  airport  or  in  public  

interest, are not relevant to the issue.

17. In the result, the appeal is dismissed.

…………………………J. (R V Raveendran)

New Delhi; …………………………J. July 6, 2010. (K S Radhakrishnan)  

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