1997 Supreme(Mad) 1476

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE I. DAVID CHRISTIAN
M.P. Kanoi and Others
Versus
Mr. Palani Prop. M.P.Builders, residing at V-28-A, Zakaria Colony Main Road, Choolaimedu, Chennai
C.S.No.359 of 1996
Decided On : 15-12-1997

In a suit for specific performance of an agreement of sale, the subsequent purchasers of the property are necessary parties and must be impleaded as defendants along with the original vendor to obtain an effective decree.

Headnote:

SPECIFIC PERFORMANCE - IMPLEADING THIRD PARTY - SETTING ASIDE EX-PARTE DECREE - STAY OF EXECUTION - NECESSARY PARTIES - MAINTAINABILITY OF APPLICATIONS - LOCUS STANDI - SECTION 151 CPC - ORDER 1 RULE 10(2) CPC - SALE DEEDS - AGREEMENTS OF SALE - ENCUMBRANCE CERTIFICATE - DUTY OF PLAINTIFFS IN SPECIFIC PERFORMANCE SUITS - AVOIDANCE OF MULTIPLICITY OF PROCEEDINGS - INJUSTICE AND UNLAWFUL ENRICHMENT - SUPPRESSION OF MATERIAL FACTS - INTEREST IN SUBJECT MATTER OF SUIT - COURT'S INHERENT POWERS - SETTING ASIDE EX-PARTE ORDERS AGAINST NON-PARTIES - JURISDICTION TO ADD PARTIES AT ANY STAGE OF PROCEEDINGS - EFFECT OF SUBSEQUENT SALE DEEDS ON AGREEMENTS OF SALE - NECESSITY OF IMPLEADING SUBSEQUENT PURCHASERS IN SPECIFIC PERFORMANCE SUITS - ENCUMBRANCE CERTIFICATE AS EVIDENCE OF SUBSEQUENT TRANSACTIONS - DUTY OF PLAINTIFFS TO IMPLEAD SUBSEQUENT PURCHASERS - EFFECT OF FAILURE TO IMPLEAD SUBSEQUENT PURCHASERS ON DECREE - RIGHT OF SUBSEQUENT PURCHASERS TO RECOVER MONEY PAID TO VENDOR - AVOIDANCE OF UNJUST ENRICHMENT OF VENDOR - AVOIDANCE OF MULTIPLICITY OF PROCEEDINGS - COMPLETE JUSTICE - NECESSITY OF IMPLEADING THIRD PARTIES WITH INTEREST IN SUBJECT MATTER OF SUIT - DUTY OF PLAINTIFFS TO DISCLOSE MATERIAL FACTS - CONSEQUENCES OF SUPPRESSION OF MATERIAL FACTS - MAINTAINABILITY OF APPLICATIONS BY THIRD PARTIES WITH INTEREST IN SUBJECT MATTER OF SUIT - SETTING ASIDE OF EX-PARTE DECREE - IMPLEADING THIRD PARTIES AS ADDITIONAL DEFENDANTS - DISMISSAL OF EXECUTION PETITION.

Fact of the Case:

Third-party applicants filed applications to implead themselves as defendants, set aside an ex-parte decree, and stay its execution. They claimed to have purchased flats in the suit property from the power of attorney holder of the original owners, while the plaintiffs had obtained an ex-parte decree for specific performance of an agreement of sale with the same power of attorney holder. The plaintiffs contended that the applicants were not necessary parties and had no locus standi to intervene in the suit.

Finding of the Court:

The court held that the applicants were necessary parties to the suit and had a legitimate interest in the subject matter of the suit. It found that the plaintiffs had knowledge of the sale deeds in favor of the applicants but had deliberately omitted to implead them as defendants. The court also noted that the applicants had paid valuable consideration for the flats and would suffer injustice if the ex-parte decree was not set aside.

Issues: 1. Whether the applications filed by the third-party applicants were maintainable. 2. Whether the applicants had locus standi to get impleaded in the suit and have the ex-parte decree set aside. 3. Whether the applicants were necessary parties to the suit. 4. Whether the plaintiffs were guilty of suppression of material facts by not impleading the applicants as defendants. 5. Whether the court had the jurisdiction to implead the applicants as additional defendants at this stage of the proceedings.

Ratio Decidendi: 1. The court held that the applications were maintainable under Section 151 of the Code of Civil Procedure, which empowers the court to make such orders as may be necessary for the ends of justice. 2. The court found that the applicants had a legitimate interest in the subject matter of the suit as they had purchased flats in the suit property and had paid valuable consideration for the same. 3. The court held that the applicants were necessary parties to the suit as their presence was necessary for a complete and effective adjudication of the dispute. 4. The court found that the plaintiffs were guilty of suppression of material facts by not impleading the applicants as defendants, as they had knowledge of the sale deeds in favor of the applicants. 5. The court held that it had the jurisdiction to implead the applicants as additional defendants at this stage of the proceedings under Order 1 Rule 10(2) of the Code of Civil Procedure, which allows the court to add the name of any person as a party whose presence is necessary for a complete and effective adjudication of the dispute.

Final Decision: The court allowed the applications filed by the third-party applicants, set aside the ex-parte decree, directed the plaintiffs to implead the applicants as additional defendants in the suit, and dismissed the execution petition.