Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Mad) 541

IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. Jayachandran, C.V. Karthikeyan, JJ.
Vellore Institute of Technology (VIT) Rep. by its Trustee G.V. Selvam - Appellant
Versus
B.V. Reddy Enterprises Private Limited Represented by its Director, V. Dinesh Reddy & Others - Respondent
OSA.No. 256 of 2020
Decided On : 30-06-2022

Advocate Appeared:
For the Appellant :R. Thiagarajan, M.A. Saravanan, Advocates.
For the Respondents:T.V. Ramanujun, Senior Counsel, B. Arvind Srevatsa, K.V. Ananthakrushnan Assisted by A. Janani for the Official Assignee, Advocates.

Point of Law: 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, suit itself is liable to be dismissed.

Headnote:
O.S. Rules - Order XXXL Rule 1 0 Code of Civil Procedure, 1908 - Order 1 Rule 10(2) - Indian Penal Code, 1860 - Sections 406,417, 420 – Power of attorneys - Agreement of sale - Cheating - Insolvent by cheque - Whether appeal is maintainable - Whether VIT is a necessary and proper party to adjudicate issues in C.S. - Claimed by plaintiff that 1st and 2nd defendants represented by their power of attorneys/3rd and 4th defendants had then entered in to an agreement of sale with plaintiff to sell same property for a total sale. It had also been stated that entire sale consideration has been paid by plaintiff to 3rd defendant/insolvent by cheque - Held, It is very clear that VIT is neither a necessary nor a proper party in suit instituted by BVR seeking specific performance of an independent agreement of sale. The burden of proof lies on shoulders of BVR to prove agreement and more importantly to also prove that relief of performance is not hit by law of limitation particularly when agreement of year 2006 was cancelled in year 2012 and later claimed to have been revived - Impleading VIT in suit instituted by BVR would be of no assistance either to VIT or to BVR or to meet ends of Justice. (Para 64)
Finding of the court: It is not just rights of plaintiff or the defendants in C.S. which have to be examined but also the right of the appellant/VIT to participate in the suit proceedings as party / defendant. The learned Single Judge had held that the appellant/VIT had no right to be impleaded in C.S.. That particular order which is now under appeal has effectively put an end to possibility of further participation in the judicial proceedings by the appellant/VIT in C.S.. That order had finally adjudicated the rights of the appellant / VIT. When such right has been adjudicated and rejected in totality, then necessarily an appeal arises and an onus is cast on this Appellate Court to examine the correctness of such an order. Therefore, court would hold that the Appeal is maintainable - It is also seen that evidence in C.S. has been completed, but pleadings are not yet completed in C.S.. The cause of action for both the suits are different. The documents relied on by both parties are different. The transactions alleged by both the parties are different. The foundational issues in both the suits are different. Therefore, no purpose would be served by impleading VIT in the suit instituted by BVR - BVR will have to establish their case for specific performance. Similarly VIT will have to establish their case for specific performance. One destabilising the case of the other will not grant any advantage to the party, who so destabilises the case of the other. Both will have to independently prove their case.
Result: Original Side Appeal is dismissed.

JUDGMENT :

Prayer: Appeal filed under Order XXXL Rule 1 of O.S. Rules read with Clause 15 of Letters Patent against the order and decreetal dated 09.07.2020 made in Appln. No. 8678 of 2018 in C.S.No. 285 of 2014.

This Original Side Appeal has been filed by the applicant in A.No. 8678 of 2018 questioning dismissal of the said application by a learned Single Judge of this Court by order dated 09.07.2020. The said application in A.No. 8678 of 2018 had been filed in C.S.No. 285 of 2014 which is now pending before this Bench and listed for advancing arguments. The appellant is a third party to C.S.No. 285 of 2014 and had filed the said application in A.No. 8678 of 2018 under Order 1 Rule 10(2) of the Code of Civil Procedure seeking to be impleaded as the sixth defendant in the said suit.

C.S.No. 285 of 2014:

2. C.S.No. 285 of 2014 had been filed by the first respondent/B.V.Reddy Enterprises Private Limited against four defendants seeking specific performance directing the 1st and 2nd defendants to execute a registered sale deed through their power of attorney agents / 3rd and 4th defendants with respect to the property mentioned in the schedule to the plaint pursuant to an agreement of sale dated 13.12.2006 entered into by the 1st and 2nd defendants through their power of attorneys, 3rd and 4th defendants with the plaintiff and to deliver vacant possession of the said property and also for consequential injunction restraining alienation or altering of the physical features of the property and also for costs of the suit.

3. Since the 3rd defendant/power of attorney agent of the 1st and 2nd defendants had been declared as insolvent in I.P.No.25 of 2014 by order of Court dated 21.04.2014 and since in the Insolvency Petition it had been disclosed that the property which was the subject matter of the agreement also formed part of the estate of the insolvent, the Official Assignee had been impleaded as the 5th defendant by order dated 17.08.2015 in A.No. 4741 of 2015.

4. It is the contention of the plaintiff in C.S.No. 285 of 2014 that the suit schedule property at old Door No. 33, New Door No. 33, College Road, Nungambakkam, Chennai, measuring 5 grounds and 1077 sq.ft., originally belonged to one Mrs. T.R.Subbulakshmi and later she bequeathed the same to her two sons, S.Murali Mani, and S.Balan Mani, the 1st and 2nd defendants in the suit by Will dated 21.01.1997, for which Letters of an Administration had been granted by this Court in O.P.No. 496 of 2005 by order dated 17.01.2006. It had been claimed that S.Murali Mani and S.Balan Mani had entered into an agreement of sale in the said property in favour of Mr.Arjunlal Sunderdas, the 3rd defendant/insolvent. This agreement was dated 18./19.08.2006 and had been registered as Document No.857 of 2006 in the office of the Sub Registrar, Thousand Lights, Chennai. The total sale consideration was determined at Rs.4,08.65,624/-. It had been further claimed that the 3rd defendant/insolvent had paid a sum of Rs.2,50,000/- each to the 1st and 2nd defendants as advance by demand drafts and had agreed to pay the balance of Rs.2,01,82,812/- to each the 1st and 2nd defendants on or before 15.10.2006. A supplemental agreement dated 28.08.2006 had been entered into by the 1st and 2nd defendants with the 3rd defendant/ insolvent wherein the 1st and 2nd defendants both acknowledged receipt of the entire balance sale consideration of Rs.4,08,65,624/-. It was also covenanted in the said supplemental agreement that the 3rd defendant / insolvent had also been put in possession of the property and the title deeds of the property had also been handed over to him. They also agreed to execute a power of attorney to empower the 3rd defendant/insolvent and his brother/ nominee S.M.Lal the 4th defendant to either jointly or severally deal with the property. It had also been covenanted that the time fixed for registration of the sale deed will no longer be applicable and the sale deed will be executed as and when called u