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Samarjit Singh Chattha v/s Fashion Flare & Others

    FAO (OS) No.177 OF 2012

    Decided On, 25 April 2012

    At, High Court of Delhi


    For the Appellant: U.U. Lalit, Sr. Adv. with Mohit Chaudhary, Ms. Rashi Bansal, & A. Das, Advocates. For the Respondents :---.

Judgment Text



CM No.7435/2012 (Exemption)

Allowed subject to just exceptions.

FAO (OS) No.177/2012

1. A suit was laid by respondent No.1 as original plaintiff against respondents 2 & 3 as original defendants for specific performance of a Receipt-cum-Agreement dated 24.12.2009 for sale of immovable property bearing flat No.84-D, Entire 1st floor, Malcha Marg, Chanakya Puri, New Delhi for an apparent consideration of `12.51 crore. It is the say of the original plaintiff that a sum of `1.21 crore was paid to the original defendants but the amount is disputed by the original defendants who claimed only `1,08,50,000.00 was received. It is, however, not disputed that as per the said Receipt-cum-Agreement the balance payment was to be made on or before 27.7.2010.

2. The original defendants prior to this crucial date claim to have entered into an agreement to sell with the appellant on 7.1.2010 which culminated into a sale deed executed on 28.4.2010. The controversy in the appeal has arisen on account of the endeavour of the original plaintiff to amend the plaint and to add the appellant as a party in the suit. The learned single Judge in terms of the impugned order dated 13.2.2012 has allowed the application.

3. Learned senior counsel for the appellant assails the judgement and contends that the controversy arising out of the execution of the sale deed in favour of the appellant cannot be adjudicated in the suit filed by the original plaintiff and that the appellant is neither a necessary nor a property party to the suit, the appellant not being a party to the agreement of which the specific performance is sought. It is, thus, pleaded that the appellant is a third party to the transaction in question and, thus, cannot assist the Court in any manner whatsoever in deciding the controversy in the present suit. It is, of course, his contention that the appellant is a bonafide purchaser for consideration. We may note that the apparent consideration for which the property has been sold to the appellant is `6.00 crore, i.e., less than half the value alleged to be agreed consideration between the original plaintiff and the original defendants.

4. In support of his plea learned counsel has relied upon the judgement of the Supreme Court in Bharat Karsondas Thakkar Vs. Kiran Construction Company & Ors. (2008) 13 SCC 658. The only facts which need to be set out are that in pursuance of termination of an agreement, a suit was instituted for specific performance of the agreement which resulted in a consent decree. Subsequently the endeavour of the third party to seek specific performance on the basis of a prior agreement and also seek cancellation of the decree was called into question. Learned senior counsel has invited our attention to the observations made in paragraph 13 of the said judgement where it has been observed that 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 was the issue in question as in the present case. The Court elucidated the controversy by stating that really the same revolved around the issue as to whether the person 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 other two parties be added as a party in the suit for specific performance. In our considered view this was the crucial question which had to be answered. It is, thus, in that context that while placing reliance on the earlier judgement of the Supreme Court in Kasturi Vs. Iyyamperumal & Ors. (2005) 6 SCC 733 observations have been made qua the status of a stranger to an agreement and it has been found that the nature, character of the suit was sought to be changed by calling into question the decree passed earlier.

5. The reason we have set out the aforesaid ration is that a judgement cannot be read like a statute and, thus, one has to see what is the ratio of the judgement as applicable to a given factual situation. We may usefully refer to in this behalf to the judgement of the Supreme Court in Padma Sundara Rao (Dead) & Ors. Vs. State of T.N. & Ors. (2002) 3 SCC 533 where in paragraph 9 it is observed as under:

'9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are 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, said Lord Morris in Herrington Vs. British Railways Board (1972) 2 WLR 537.Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.'

6. Similarly the other judgement relied upon by learned senior counsel which has also been referred to in Bharat Karsondas Thakkar case (supra) is Kasturi Vs. Iyyamperumal & Ors. The question to be examined was posed in the second paragraph of the judgement as to whether in a suit for specific performance of contract for sale of a property instituted by a purchaser against the vendor, a stranger or a third party to the contract claiming an independent title and possession over the contracted property, is entitled to be added as party-defendant in the said suit. This question is to be read with the factual matrix where the said third party itself sought impleadment as a party in the proceedings. It is trite to say that a plaintiff is a dominus litis in any legal proceedings and if the plaintiff chooses not to add a party and take the consequences thereof, the plaintiff cannot be compelled to add as a party who claims rights under a separate contract. In order to ensure that the party seeking impleadment was not prejudiciously affected the rights of such a party have been safeguarded by making observations in paragraph 15 of the judgement to the effect that such a party would be at liberty either to obstruct the execution in order to protect their possession by taking recourse to relevant provisions of the Code of Civil Procedure, 1908 (hereinafter referred to as the „said Code‟) if they are available to them or file an independent suit for declaration and possession against those parties. In the present case it is the plaintiff himself who is seeking the addition of a party in view of provisions of Section 19 (b) of the Specific Relief Act, 1963.

7. Now turning to the impugned order, what the plaintiff seeks to do is to join the causes of action and it is really not disputed before us that the claim of the plaintiff is not barred by limitation as against the appellant herein. We find that such a course of action is, thus, permissible on the part of the original plaintiff. Such a course of action is also mandated by Order 2 Rule 1 of the said Code which prescribes that every suit shall as far as practicable be framed as to afford ground for final decision upon the subjects in dispute and to 'prevent further litigation concerning them'. Thus, multiplicity of proceedings are to be prevented especially when the plaintiff who is the dominus litis seeks to do so.

8. We may notice that the learned single Judge has analyzed the controversy in detail. On the factual matrix the learned single Judge has noted the crucial fact of sale of property to the appellant by the original plaintiff even prior to the last date for performance of the obligations inter se the original plaintiff and the original defendants. The learned single Judge has rightly drawn support from the observations made in paragraph 7 of the judgement in Kasturi Vs. Iyyamperumal & Ors. Case (supra) to the following effect:

7. In our view, a bare reading of this provision namely, second part of Order 1 Rule 10 sub-rule (2) of the CPC would clearly show that the necessary parties in a suit for specific performance of a contract for sale are the parties to the contract or if they are dead their legal representatives as also a person who had purchased the contracted property from the vendor. In equity as well as in law, the contract constitutes rights and also regulates the liabilities of the parties. A purchaser is a necessary party as he would be affected if he had purchased with notice of the contract, but a person who claims adversely to the claim of a vendor is, however, not a necessary party. From the above, it is now clear that two tests are to be satisfied for determining the question who is a necessary party. Tests are - (1) there must be a right to some relief against such party in respect of the controversies involved in the proceedings (2) no effective decree can be passed in the absence of such party.'

(emphasis supplied)

It has, thus, been categorically held that where a person had purchased a contracted property from a vendor, he/she can be impleaded as a party as the purchaser is a necessary party being affected if he has purchased with notice of the contract, the exception being a person who claims adversely to the claim of the vendor where such party would not be a necessary party. The latter is not so in the facts of the present case. It is, once again, emphasized in paragraph 11 of the said judgement that the question 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.

9. Whether the appellant is a bonafide purchaser and what is its effect or whether there is a collusion between the appellant and the original plaintiff or a collusion between the original plaintiff and the original defendants as alleged by learned counsel for the appellant are matters to be decided in the suit.

10. We may in the end express some concern arising from the stated apparent consideration under the two agreements. The apparent consideration as per the Receipt-cum-Agre

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ement between the original plaintiff and the original defendant is `12.51 crore on the other hand the sale deed executed in favour of the appellant by the original plaintiff is only for `6.00 crore. The agreements are in close proximity of time and the difference in consideration is 100 per cent. It is a matter of public knowledge that the property in this area is extremely valuable. It is a matter of public revenue as stamp duty is payable. Thus, the question would arise as to whether there is concealment of consideration or whether the consideration has flowed under the table qua the transaction between the original plaintiff and the appellant requiring investigation by the Revenue. We, however, leave it to the learned single Judge to issue necessary directions in this behalf so that the matter is properly investigated. 11. The appeal is dismissed with the aforesaid observations. 12. A copy of the order be placed before the learned single Judge. CM No.7434/2012 (Stay) In view of the dismissal of the appeal the application does not survive for consideration and the same stands disposed of.