TaxTMI 
TaxTMI 
2012 (8) TMI 1111
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....igh Court. The other question which needs consideration is whether the Delhi High Court was justified in appointing a receiver with a direction to take possession of the suit property despite the fact that the Calcutta High Court had already appointed a receiver at the instance of M/s. Bhagwati Developers Pvt. Ltd. (for short, 'Bhagwati Developers'). 3. The suit property was leased by the Secretary of State for India to Sidh Nath Khanna and Sukh Nath Khanna sometime in 1930. After 12 years, the Governor General in Council sanctioned the grant of perpetual lease in favour of one of them, namely, Sidh Nath Khanna. In the family partition which took place in December 1955, the suit property fell to the share of Shri Devi Prasad Khanna, who was one of the heirs of Sidh Nath Khanna. He rented out the same to the Sudan Embassy on 12.9.1962. In October 1977, the name of respondent No.2-Pradeep Kumar Khanna (son of Devi Prasad Khanna), who died during the pendency of the litigation before the High Court and is represented by his legal representatives, was entered in the records of the Ministry of Works and Housing, Land and Development Office and the lease was transferred in his name. ....
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....97 in favour of Bhagwati Developers for a consideration of Rs. 4.26 crores and received Rs. 3.05 crores. 7. At that stage, respondent No.1 filed IA No. 8145/1998 for restraining respondent Nos.2 and 4 from handing over possession of the suit property to any other person. Respondent No.2 contested the application by asserting that he had not executed any sale deed in favour of the appellants and that possession of the suit property had already been handed over to respondent No.4. Thereupon, respondent No.1 filed CCP No. 118/1998 under Order 39 Rule 2A CPC with the allegation that the non-applicants including the appellants herein had entered into a conspiracy for the purpose of grabbing the property in violation of the order of injunction passed by the High Court. The learned Single Judge entertained the contempt petition against respondent Nos. 2 and 4 but declined to do so qua the appellants by observing that no prima facie case had been made out against those who were not parties to the suit. Respondent No.1 also filed IA No.8146/1998 under Order 26 Rule 9 read with Order 39 Rule 7 and Section 151 CPC for appointment of Local Commissioner and IA No.8147/1998 under Order 40 Rul....
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.... 10. As the appellants failed to act in consonance with the arbitral award, Bhagwati Developers filed an application under Section 36 of the Arbitration and Conciliation Act, 1996 in the Calcutta High Court, which was allowed by the learned Single Judge of that High Court vide order dated 17.8.2000 and a direction was issued to the appellants to comply with the arbitral award. The learned Single Judge also appointed Shri Nar Narayan Ganguli, Advocate as receiver and directed him to take possession of the suit property. When the receiver came to Delhi for execution of the award, respondent No.4 refused to hand over possession. Thereupon, the Calcutta High Court directed the police authorities at Delhi to assist the receiver for ensuring compliance of order dated 17.8.2000. Armed with that direction, the receiver visited Delhi on 19.1.2001 and 5.2.2001 and took symbolic possession of the suit property by putting locks and seals on all the inner and outer gates. 11. When the representative of respondent No.1 learnt about the award of the arbitrator and the order passed by the Calcutta High Court, he filed IA No.625/2001 in the Delhi High Court under Order 39 Rules 1 and 2 read w....
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....ere was an arbitration clause in the agreement between them, they referred the matter to arbitration. The learned Arbitrator gave an Award dated 7th January, 1999 wherein he directed Respondents No. 4 to 9 in this application to hand over peaceful vacant possession of the suit property to Respondent No.10 in this application. No objections appear to have been filed to this Award with the result that Respondent No.10 in this application filed proceedings in the Calcutta High Court praying for a direction for the appointment of a Receiver to take physical possession of the suit property. The Calcutta High Court passed an order apparently directing the Receiver to take possession of the suit property. On 13th December, 2000 the Calcutta High Court directed the police authorities to render all assistance to the Receiver to take steps in accordance with the earlier order passed by the Calcutta High Court. When the Receiver and the police authorities came to take possession of the suit property, L.K. Kaul became aware of the proceedings in the Calcutta High Court. It is submitted that there has been gross concealment and misrepresentation of facts by Defendant No.1 in the suit to R....
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....er disclosed to the decree-holder nor to the Arbitrator and this question was not necessary to be gone into while executing the decree and, as such, it was also not placed before this Court and this Court having not been apprised of such facts had passed an order for taking over possession of the property. In the order dated 8.2.2001 the Delhi High Court had taken a note of this position. Be that as it may, it is not necessary to make any observation with regard to the findings made therein, nor this Court can comment on the order passed by another Court on the basis of the materials placed before it. But it appears that there is every possibility of conflicting orders being passed in respect of the self-same properties between the parties or those claiming through one or the other of them by two High Courts. Judicial propriety demands that the court should maintain its decorum and dignity and should not pass any order which will lie in conflict with each other. It is the parties who may fight each other but not the Courts. If some order is passed, it is expected that another Court should pay proper regards and respect to such order. Since it is pointed out that these facts were no....
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....s possession was lawful because respondent No.2 had put him in possession in furtherance of the agreement executed in 1992. 15. At this stage, we may mention that respondent No.4 also filed IA No.7373/2006 in Suit No.425/1993 for grant of leave to amend the written statement by incorporating the fact that respondent No.2 had agreed to pay Rs. 4 crores as service charges for getting the property vacated from the Sudan Embassy with a stipulation that in the event of non-payment of the amount, vacant and peaceful possession of the suit property will be handed over to him; that even though he got the property vacated from the Sudan Embassy, respondent No.2 did not pay the amount and handed over possession of the property as security for the same. Respondent No.4 claimed that these facts could not be incorporated in the original written statement because his earlier lawyer thought that the same were not necessary for deciding the suit filed by respondent No.1 for specific performance and permanent injunction. Respondent No.4 also sought incorporation of the fact that the property had been mortgaged to him and he was in possession as a mortgagee. Respondent No.1 opposed the prayer for....
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....of any nature. Learned counsel for the plaintiff has also been able to establish by way of various authorities referred to above that it is a fit case where Receiver should be appointed for the management of the property who can manage the affairs of the suit property under the supervision of the Court as there is every likelihood that in the eventuality of not appointing the Receiver there is strong likelihood of the property being usurped in a clandestine manner so as to frustrate the claims of the rightful claimant. Even otherwise not appointing the Receiver at this juncture might lead to multifarious litigation. 27. Therefore in order to prevent all these wrongs and further damage and waste to the property, appointment of Receiver has become essential so as to preserve the property. Therefore, Sh. Rajesh Gupta, Advocate is hereby appointed as Receiver. His fee is fixed at Rs. 50,000/- initially subject to revision, depending on the quantum of work he might have to undertake while acting as Receiver to be paid by the plaintiff. He will manage the affairs of the suit property by removing defendant No.3 from the suit property. If need arise, he may take the assistance of ....
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....en otherwise amendment which is sought to be made was well within the knowledge of defendant No. 3. During all these years when proceedings were continuing that he was being termed as trespasser. What prevented him to explain his true position at the earliest is not explained at all. To me it seems that when arguments were being heard and the counsel for the parties put up their respective claims then it has struck the mind of defendant No. 3 to apply for such amendment as it might work to his advantages. If at all he was in possession because of defendant No.l's consent he should have pleaded so at the earliest. Such belated amendment which is otherwise totally inconsistent to the stand taken earlier in the written statement cannot be allowed as in that case it would amount to take the case back to the year 1993 when the suit was filed. Therefore this application has no merit, it being full of malice, the same is dismissed." 18. After about 11 years of the execution of agreements for sale in their favour by respondent No.2, the appellants filed IA No.1861/2008 under Order 1 Rule 10(2) CPC for impleadment as defendants in Suit No. 425/1993. They pleaded that by virtue of the....
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....urt to conclude that the vendor P.K. Khanna allegedly sold the properties in 1997. The applicants also claim as such. They were aware about the existence of this suit if not in 1999 at least from 2001 onwards, when they were made parties in an application and subject to an injunction. Their conduct in approaching, for impleadment, now seven years later, cannot be countenanced. That apart, as held in Kasturi's case their impleadment would completely alter the nature of the suit which was instituted in 1993 for specific performance of a contract, of 1988. There is no whisper of leave having been obtained by their vendor, to this transaction. The record shows that the vendor was admittedly restrained by an injunction from parting with possession or creating third party rights in respect of the suit property, on 18th February, 1993. That order was subsequently confirmed after hearing the vendor/P.K. Khanna i.e. first defendant on 5th April, 1994. In view of the principles spelt out in Bibi Zubaida Khatoon and Surjit Singh accepting this application would defeat the ends of justice and undermine public policy." 20. Bhagwati Developers challenged order dated 3.9.2007 in F....
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....ferred the suit property by executing purported six sale deeds on 28.5.1997 in favour of Vidur Impex & Traders and others. It is the submission of learned counsel appearing for the plaintiff that intentionally six sale deeds were executed showing consideration of Rs. 48 lacs each keeping the same below the prescribed limit of Rs. 50 lacs with a fraudulent intent to avoid the application of Chapter XX-C of the Income-Tax Act. (e) On coming to know of the aforesaid sale transactions, the plaintiff filed application under Order XXXIX Rule 1 & 2 CPC for restraining the defendant Nos.1 & 2 from transferring possession of the suit property to the said six transferees under the alleged six sale deeds. Restraint order to this effect was passed by the learned Single Judge. Further orders were passed restraining these six transferees (defendant No.s 4 to 9) from acting upon the impugned sale deeds. (f) Defendant No.l in his reply took the stand that impugned sale deeds were forged and fabricated and were not executed by him. He even filed suit No. 161/1999 for declaration to this effect. However, this suit was withdrawn on 10.1.2001 vide application IA No. 255/2001....
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....erving that after executing the agreement for sale in favour of Bhagwati Developers they do not have any subsisting interest in the property. The Division Bench also agreed with the learned Single Judge that the application filed by the appellants lacked bona fides because they purchased the suit property from respondent No.2 despite the order of injunction passed by the High Court and there was no tangible explanation for filing the application after a long time gap of about 8 years. 22. Learned senior counsel for the appellants emphasised that his clients were not aware of the agreement for sale executed by respondent No.2 in favour of respondent No.1, the suit for specific performance and permanent injunction filed by respondent No.1 in the Delhi High Court and injunction order dated 18.2.1993 till January, 2001 when the learned Single Judge restrained respondent Nos.2 and 4 from transferring possession of the suit property to the appellants, and argued that the High Court committed serious error by declining their prayer for impleadment as parties to the suit. He submitted that the appellants are bona fide purchasers for consideration and are entitled to contest the suit fil....
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....violation of an injunction granted by the Court would be hit by the doctrine of lis pendens enshrined in Section 52 of the Transfer of Property Act, 1882. Learned senior counsel further submitted that on the date of filing IA No.1861/2008 the appellants did not have any subsisting interest in the suit property because they had already executed an agreement for sale in favour of Bhagwati Developers and received substantial part of the consideration and the mere fact that they were made parties in the interlocutory applications filed before the Delhi High Court cannot entitle them to seek impleadment as defendants in the pending suit. Learned senior counsel then argued that the agreement to sell executed between the appellants and Bhagwati Developers and the proceedings instituted before the Calcutta High Court were collusive and fraudulent and the appellants and Bhagwati Developers cannot take benefit of the order passed by that Court. He emphasized that even though the appellants and Bhagwati Developers had knowledge of the suit pending before the Delhi High Court, they deliberately suppressed this fact from the Calcutta High Court and succeeded in persuading the Court to appoint a....
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....of initial jurisdiction of the Court but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case." (emphasis supplied) 27. In Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC 147, this Court interpreted Order 1 Rule 10(2) in the following manner: "By operation of the above-quoted rule though the court may have power to strike out the name of a party improperly joined or add a party either on application or without application of either party, but the condition precedent is that the court must be satisfied that the presence of the party to be added, would be necessary in order to enable the court to effectually and completely adjudicate upon and settle all questions involved in the suit. To bring a person as party- defendant is not a substantive right but one of procedure and the court has discretion in its proper exercise. The object of the rule is to bring on record all the persons who are parties to the dispute relating to the subject-matter so that the dispute may be determined in their presence at the same time without any protraction, inconvenience and to avoid multiplicity of proceedings." 28. In Mumbai....
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....court to completely, effectively and adequately adjudicate upon all matters in dispute in the suit, though he need not be a person in favour of or against whom the decree is to be made. If a person is not found to be a proper or necessary party, the court has no jurisdiction to implead him, against the wishes of the plaintiff. The fact that a person is likely to secure a right/interest in a suit property, after the suit is decided against the plaintiff, will not make such person a necessary party or a proper party to the suit for specific performance. Let us consider the scope and ambit of Order 1 Rule 10(2) CPC regarding striking out or adding parties. The said sub-rule is not about the right of a non-party to be impleaded as a party, but about the judicial discretion of the court to strike out or add parties at any stage of a proceeding. The discretion under the sub-rule can be exercised either suo motu or on the application of the plaintiff or the defendant, or on an application of a person who is not a party to the suit. The court can strike out any party who is improperly joined. The court can add anyone as a plaintiff or as a defendant if it finds that he is a necessary pa....
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....tract for sale. For deciding the question who is a proper party in a suit for specific performance the guiding principle is that the presence of such a party is necessary to adjudicate the controversies involved in the suit for specific performance of the contract for sale. Thus, the question is to be decided keeping in mind the scope of the suit. The question that is to be decided in a suit for specific performance of the contract for sale is to the enforceability of the contract entered into between the parties to the contract. If the person seeking addition is added in such a suit, the scope of the suit for specific performance would be enlarged and it would be practically converted into a suit for title. Therefore, for effective adjudication of the controversies involved in the suit, presence of such parties cannot be said to be necessary at all. Lord Chancellor Cottenham in Tasker v. Small made the following observations: "It is not disputed that, generally, to a bill for a specific performance of a contract of sale, the parties to the contract only are the proper parties; and, when the ground of the jurisdiction of Courts of Equity in suits of that kind is considered....
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....me to know about the pendency of the appeals. Immediately thereafter, they filed an application for impleadment which was rejected by the High Court. This Court referred to the provision of Order 1 Rule 10(2) and Order 22 Rule 10 CPC as also Section 52 of the Transfer of Property Act, 1882 and observed: "Section 52 of the Transfer of Property Act is an expression of the principle "pending a litigation nothing new should be introduced". It provides that pendente lite, neither party to the litigation, in which any right to immovable property is in question, can alienate or otherwise deal with such property so as to affect his appointment. This section is based on equity and good conscience and is intended to protect the parties to litigation against alienations by their opponent during the pendency of the suit. In order to constitute a lis pendens, the following elements must be present: 1. There must be a suit or proceeding pending in a court of competent jurisdiction. 2. The suit or proceeding must not be collusive. 3. The litigation must be one in which right to immovable property is directly and specifically in question. 4. There must ....
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....party to the suit, but only renders it subservient to the rights of the other parties to the litigation. Section 52 will not therefore render a transaction relating to the suit property during the pendency of the suit void but render the transfer inoperative insofar as the other parties to the suit. Transfer of any right, title or interest in the suit property or the consequential acquisition of any right, title or interest, during the pendency of the suit will be subject to the decision in the suit. The principle underlying Section 52 of the TP Act is based on justice and equity. The operation of the bar under Section 52 is however subject to the power of the court to exempt the suit property from the operation of Section 52 subject to such conditions it may impose. That means that the court in which the suit is pending, has the power, in appropriate cases, to permit a party to transfer the property which is the subject-matter of the suit without being subjected to the rights of any part to the suit, by imposing such terms as it deems fit. Having regard to the facts and circumstances, we are of the view that this is a fit case where the suit property should be exempted fr....
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....stretch of imagination, be said to be either necessary or proper parties to the suit. A necessary party is one whose presence is absolutely necessary and without whose presence the issue cannot effectually and completely be adjudicated upon and decided between the parties. A proper party is one whose presence would be necessary to effectually and completely adjudicate upon the disputes. In either case the respondents cannot be said to be either necessary or proper parties to the suit in which the primary relief was found on the basis of the registered Will executed by the appellant's mother, Smt Hira Devi. Moreover, admittedly the respondents claimed right, title and interest pursuant to the registered sale deeds said to have been executed by the defendants-heirs of Rajender Kaur on 2-12-1991 and 12- 12-1991, pending suit. Section 52 of the Transfer of Property Act envisages that: "During the pendency in any court having authority within the limits of India ... of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party ....
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....le the Court to completely, effectively and properly adjudicate upon all matters and issues, though he may not be a person in favour of or against whom a decree is to be made. 4. If a person is not found to be a proper or necessary party, the Court does not have the jurisdiction to order his impleadment against the wishes of the plaintiff. 5. In a suit for specific performance, the Court can order impleadment of a purchaser whose conduct is above board, and who files application for being joined as party within reasonable time of his acquiring knowledge about the pending litigation. 6. However, if the applicant is guilty of contumacious conduct or is beneficiary of a clandestine transaction or a transaction made by the owner of the suit property in violation of the restraint order passed by the Court or the application is unduly delayed then the Court will be fully justified in declining the prayer for impleadment. 37. In the light of the above, we shall now consider whether the learned Single Judge and the Division Bench of the High Court committed an error by dismissing the appellants' application for impleadment as parties to Suit No.425/1993. At th....
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....gap between the agreements for sale and the sale deeds executed by respondent No.2 in favour of the appellants and the execution of agreement for sale by the appellants in favour of Bhagwati Developers would make any person of ordinary prudence to believe that respondent No.2, the appellants and Bhagwati Developers had entered into these transactions with the sole object of frustrating agreement for sale dated 13.9.1988 executed in favour of respondent No.1 and the suit pending before the Delhi High Court. In any case, the appellants will be deemed to have become aware of the same on receipt of summons in Suit No.161/1999 filed by respondent No.2 for annulment of the agreements for sale and the sale deeds in which respondent No.2 had clearly made a mention of Suit No.425/1993 filed by respondent No.1 for specific performance of agreement for sale dated 13.12.1988 and injunction or at least when the learned Single Judge of the Delhi High Court entertained IA No.625/2001 filed by respondent No.1 and restrained respondent Nos.2 and 4 from transferring possession of the suit property to the appellants. However, in the application for impleadment filed by them, the appellants did not of....
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....is thus clear that when Bhagwati Developers approached the Calcutta High Court, the Delhi High Court was already seized with the suit involving the subject matter of the award. The contention of the appellants and Bhagawati Developers that they were unaware of the proceedings before the Delhi High Court cannot be accepted because in Suit No.161/1999 filed by respondent No.2 for declaring that the agreements for sale and the sale deeds relied upon by the appellants were false and fabricated, a specific reference was made to the suit filed by respondent No.1. That apart, in its order dated 15.2.2001 passed in the application filed by respondent No.4 in EC No.10/2000, the learned Single Judge of the Calcutta High Court categorically observed that the said Court had not been apprised of the facts relating to the suit pending before the Delhi High Court and the injunction orders passed therein including order dated 8.2.2001 restraining the receiver of the Calcutta High Court from taking possession of the property and that if these facts had been disclosed, the Court would have been slow in passing the order that it had passed earlier and hence the order passed by it, if it is in conflic....