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SUPREME COURT OF INDIA
KURIAN JOSEPH, R. BANUMATHI, JJ.
Life Insurance Corporation of India - Appellant
Versus
Sanjeev Builders Pvt. Ltd. And Ors. - Respondents
Civil Appeal No. 16964 of 2017 (Arising out of SLP(C) No. 614 of 2015)
Decided On : 24-10-2017
Specific Performance - Order 22 Rule 10 CPC - Mrs. Saradambal Ammal v. E.R. Kandasamy Goundar and Others (1947) 2 MLJ 374, Jawaharlal v. Smt. Saraswatibai Babulal Joshi and Others AIR 1987 Bombay 276 - The court discussed the application of Order 22 Rule 10 CPC and the permissibility of assignment of contractual rights under the agreement. The court highlighted the need for only a prima facie satisfaction that the interest has been assigned and the grounds on merits need not be considered. The court also emphasized the importance of filing an application for impleading a party within a reasonable time, and the need for a liberal approach in allowing amendments to avoid multiplicity of litigations.
Fact of the Case:
The respondent No.1 filed suit No.894 of 1986 against the appellant for specific performance of the agreement of sale dated 08.06.1979. In 2014, respondent No.3 filed Chamber Summons No. 187/2014 to implead as Plaintiff No.3 in the suit, claiming assignment of interest from respondent No.1. The Single Judge allowed the Chamber Summons, and the Division Bench affirmed the decision. The appellant appealed against the dismissal of the Letters Patent Appeal.
Finding of the Court:
The court found that the order allowing the application to implead respondent No.3 as Plaintiff No.3 after 27 years of filing the suit vitally affects the valuable rights of the appellant. The court held that the application was not filed within a reasonable time and would cause serious prejudice to the appellant, depriving valuable right of defence available to the appellant.
Issues: The main issue was the permissibility of impleading respondent No.3 as Plaintiff No.3 in the suit after 27 years of filing the suit for specific performance, and the application of Order 22 Rule 10 CPC in such circumstances.
Ratio Decidendi: The court emphasized the need for a liberal approach in allowing amendments to avoid multiplicity of litigations. It also highlighted the importance of filing an application for impleading a party within a reasonable time and the need for judicious exercise of discretion in granting leave to continue the suit to an assignee under Order 22 Rule 10 CPC.
Final Decision: The impugned judgment was set aside, and the appeal was allowed. Chamber Summons No.187 of 2014 in Suit No.894 of 1986 stands dismissed.
The Supreme Court allowed the appeal by the Life Insurance Corporation of India against the Bombay High Court's decision affirming the Single Judge's order impleading respondent No. 3 as Plaintiff No. 3 in a 1986 suit for specific performance of a 1979 sale agreement.[1000621770001] (!) (!) Respondent No. 1 filed Suit No. 894/1986 seeking specific performance or damages, alleging the agreement was not rescinded despite the appellant's claim of rescission in 1984; respondent No. 1 later assigned interest to respondent No. 2, its sister concern.[1000621770002] In 2014, respondent No. 3 filed Chamber Summons No. 187/2014 claiming a 1987 assignment from respondent No. 1 (with respondent No. 2's consent) and seeking impleadment as Plaintiff No. 3 plus amendment of the plaint.[1000621770003] The appellant opposed on grounds of 27-year delay post-suit filing and issues framing, non-bona fide assignment, and lack of transferable rights post-rescission.[1000621770003][1000621770005] The Single Judge allowed impleadment, holding merits to be tried later, assignment permissible without appellant's consent, and delay not fatal.[1000621770004] The Division Bench dismissed the Letters Patent Appeal.[1000621770001]
The Court held the Single Judge's order was a "judgment" under Letters Patent Clause 15, as it vitally affected the appellant's valuable defense rights after 27 years, enabling the appeal.[1000621770008][1000621770009][1000621770010] (!) (!) (!) Under Order 22 Rule 10 CPC, suits may continue by leave of court post-assignment pendente lite, but discretion must be exercised judiciously, not arbitrarily.[1000621770011] (!) (!) Mere assignment allegation is insufficient; impleadment applications in specific performance suits require filing within reasonable time to avoid prejudice.[1000621770012][1000621770013] (!) (!) (!) Here, the 27-year unexplained delay caused serious prejudice to the appellant's accrued defense rights in commercial litigation between companies.[1000621770013][1000621770015] No prior application under Order 22 Rule 10 was filed; the summons sought direct amendment, which should not be liberally allowed to defeat rights despite general policy favoring amendments to avoid multiplicity.[1000621770014][1000621770015]
The impugned judgment was set aside, appeal allowed, and Chamber Summons No. 187/2014 dismissed.[1000621770016]
JUDGMENT :
R. Banumathi, J.
Leave granted.
2. This appeal arises out of the judgment of the High Court of Judicature at Bombay dated 22.08.2014, in and by which, the Division Bench dismissed the appeal filed by the appellant thereby affirming the order of the Single Judge in Chamber Summons No.187 of 2014 by which the respondent No.3 was impleaded as Plaintiff No.3 in Suit No.894 of 1986.
3. The respondent No.1 filed suit No.894 of 1986 against the appellant for specific performance of the agreement of sale dated 08.06.1979 by which the appellant is said to have agreed to sell the suit property to respondent No.1 and in the alternative directing the appellant to pay a sum of Rs.10,75,021.05 with further interest on the sum of Rs.4,52,778/- at the rate of 18% per annum from the date of the suit till payment or realization. According to the appellant, the said agreement has been rescinded on 28.11.1984. The respondent No.1 is said to have assigned the interest to respondent No.2, their sister concern.
4. In the year 2014, respondent No.3-Kedia Construction Company Limited filed Chamber Summons No. 187/2014 stating that subsequent to the filing of the suit, with the consent of respondent No.2, Plaintiff No.1/respondent No.1 had assigned its interest to respondent No.3 for a consideration of Rs. 23,31,000/- by an agreement for sale dated 24.08.1987. The Chamber Summons was filed to implead respondent No.3 as Plaintiff No.3 and praying to amend the suit pursuant to the agreement of sale in its favour. The appellant opposed the Chamber Summons on the ground that the respondent No.3 was not a bona fide assignee or a necessary party and that the issues in the suit were framed on 31.01.2014 and that there has been an inordinate delay of 27 years in filing the application which has not been explained. It was also contended that the agreement dated 08.06.1979 in favour of respondent No.1 itself was terminated on 28.11.1984 and the respondent No.1/Plaintiff No.1 could not have transferred any right to the respondents.
5. The Single Judge held that the issue as to whether the interest of respondent Nos.1 and 2 can be transferred to respondent No.3 has to be tried in the suit and not at that stage and delay in filing the application cannot be a ground for not impleading the respondent No.3. The chamber judge held that the agreement dated 08.06.1979 permits assignment of rights and there is no requirement therein for permission being taken from the appellant. The court relied on the Madras High Court judgment in Mrs. Saradambal Ammal v. E.R. Kandasamy Goundar and Others (1947) 2 MLJ 374 wherein it was held that such assignment of contractual rights was permissible under Order 22 Rule 10 CPC. The Single Judge also relied upon the judgment of the Bombay High Court in Jawaharlal v. Smt. Saraswatibai Babulal Joshi and Others AIR 1987 Bombay 276, wherein it was held that the detailed enquiry was not needed under Order 22 Rule 10 CPC and that there need be only a prima facie satisfaction that the interest has been assigned and the grounds on merits need not be considered. The court noted that though the suit was filed in 1986, the same was listed for the first time only in 2000 and then in 2007, in 2008 and later in 2014. Observing that no prejudice will be caused to the appellant, the Chamber Summons was allowed vide order dated 16.04.2014 and costs of Rs. 10,000/- was directed to be paid to the appellant. Being aggrieved, the appellant preferred the Letters Patent Appeal which came to be dismissed holding that the proposed amendment did not affect the case of the appellant on merits and that the appellant could challenge the assignment in favour of respondent No.3 after the final decree. Being aggrieved by the dismissal of Letters Patent Appeal, the appellant has preferred this appeal.
6. Mr. Goburdhan, learned counsel for the appellant contended that when the suit for specific performance was pending from 1986 and the same was well within the knowledg
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