BALURAM Vs P.CHELLATHANGAM & ORS : Supreme Court - Indian Trusts Act and Civil Procedure Code -1908
Supreme Court of India
CIVIL APPEAL NOS. 10940-10941 OF 2014 Judgment Date: Dec 10, 2014
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 10940-10941 OF 2014
(ARISING OUT OF SLP (C) NOS.996-997 of 2013)
BALURAM ...APPELLANT
VERSUS
P. CHELLATHANGAM & ORS. ..RESPONDENTS
J U D G M E N T
ADARSH KUMAR GOEL, J.
1. Leave granted.
2. These appeals have been preferred against Orders dated
24th November, 2011 and 18th September, 2012 passed by the High Court of
Madras, Bench at Madurai in C.R.P. No.2610 of 2010 and in Review
Application No.1 of 2012 in C.R.P. No.2610 of 2010 respectively.
3. The question raised for our consideration is whether the High Court
was justified in reversing the Order of the trial Court allowing the prayer
of the appellant to be added as a party in a suit for specific performance
filed by Respondent No.1-plaintiff.
4. Case of the plaintiff in O.S. No.3 of 2007 filed in the Court of
District Judge, Kanyakumari, is that K. Jagathees and R. Subbaram Babu @
Subbaram, Respondent Nos.2 and 3 respectively (original defendants in the
suit) acting as trustees of "Subbaiah Paniker Family Welfare Trust" (for
short "the Trust") entered into the agreement dated 9th December, 2003 to
sell the suit property in favour of the plaintiff. The price of the
property was settled at Rs.22,000/- per cent. A sum of Rs.1 lakh was
received as advance. The plaintiff was ready and willing to perform his
part of the contract but the defendants failed to execute the sale deed
even in extended time. When called upon to do so, they took the stand that
the sale deed could be executed only if the beneficiaries of the Trust
agreed to the sale which was not a valid ground.
5. During pendency of the suit, the appellant filed I.A. No.584 of 2008
in O.S. No.3 of 2007 in the Court of District Judge, Kanyakumari at
Nagercoil, for being impleaded as defendant, pleading that he will suffer
prejudice being beneficiary of the Trust if the sale is effected at a throw
away price. According to him, the value of the property was more than
Rs.50,000/- per cent while the proposed sale was for Rs.22,000/-
per cent.
6. The application was opposed by the plaintiff submitting that the
beneficiary was a stranger to the agreement and was not a necessary or
proper party.
7. The trial Court accepted the application. It held that the plaintiff
was not a stranger to the subject matter of dispute and was entitled to be
impleaded as a party. Reliance was placed on the Judgment of the Madras
High Court in S.D. Joseph and Other vs. E. Ebinesan and others[1] holding
as follows :
"Every member who is having interest and right should be given an
opportunity of being heard and the court must see whether subject matter
could be factually adjudicated upon in the absence of proposed parties in a
case where the property belonged to YMCA, a public Trust."
8. Aggrieved by the Order of the trial Court, the respondent-plaintiff
preferred a revision petition under Article 227 of the Constitution before
the High Court with the plea that the appellant was not a necessary or
proper party and thus the order of the trial Court impleading him as a
party defendant was erroneous. Reliance was placed on the Judgment of this
Court in Bharat Karasondas Thakkar vs. Kiran Construction Co. and
others[2]. The High Court upheld the plea of the plaintiff and dismissed
the I.A. No.584 of 2008 filed by the appellant in the suit filed by the
respondent-plaintiff. It was further observed that since suit property is
a Trust property, the trial Court can look into the relevant provisions of
law and examine whether permission of the Court was required before
entering into the sale agreement.
9. Aggrieved by the Order of the High Court, the appellant has
approached this Court.
10. We have heard learned counsel for the parties.
11. Learned counsel for the appellant vehemently submitted that the view
taken by the High Court is patently erroneous. The appellant was certainly
a proper party and the trial Court was justified in exercising its
jurisdiction under Order I Rule 10(2) of the Code of Civil Procedure, 1908
in impleading the appellant as a party. Even if the Trustee had the right
of alienation, the Court was entitled to control the exercise of power of a
Trustee under Section 49 of the Indian Trusts Act, 1881 (for short "the
Trusts Act"). The appellant was entitled to be impleaded as a party to
safeguard his right as beneficiary of the Trust so that the Trustees did
not exercise their power of alienation unreasonably. Reliance has been
placed on Judgment of this court in Mumbai International Airport (P) Ltd.
vs. Regency Convention Centre & Hotels (P) Ltd.[3].
12. Learned counsel for Respondent No.1 however, opposed the above
submission and supported the impugned order passed by the High Court. It
was submitted that since the appellant was neither necessary nor proper
party, application for impleading the appellant as a party could not be
entertained. The appellant was stranger to the transaction and could not
object to the sale in question.
13. After due consideration of the rival submissions, we are of the view
that the High Court erred in interfering with the order of the trial Court
impleading the appellant as a party defendant. Admittedly, the appellant
is a beneficiary of the Trust and under the provisions of the Trusts Act,
the Trustee has to act reasonably in exercise of his right of alienation
under the terms of the trust deed. Appellant cannot thus be treated as a
stranger. No doubt, it may be permissible for the appellant to file a
separate suit, as suggested by Respondent No.1, but the beneficiary could
certainly be held to be a proper party. There is no valid reason to
decline his prayer to be impleaded as a party to avoid multiplicity of
proceedings. Order I Rule 10(2), CPC enables, the Court to add a necessary
or proper party so as to "effectually and completely adjudicate upon and
settle all the questions involved in the suit".
14. In Mumbai International Airport (supra) this Court observed :
13. The general rule in regard to impleadment of parties is that the
plaintiff in a suit, being dominus litis, may choose the persons against
whom he wishes to litigate and cannot be compelled to sue a person against
whom he does not seek any relief. Consequently, a person who is not a party
has no right to be impleaded against the wishes of the plaintiff. But this
general rule is subject to the provisions of Order 1 Rule 10(2) of the Code
of Civil Procedure ("the Code", for short), which provides for impleadment
of proper or necessary parties. The said sub-rule is extracted below:
"10. (2) Court may strike out or add parties.-The court may at any stage of
the proceedings, either upon or without the application of either party,
and on such terms as may appear to the court to be just, order that the
name of any party improperly joined, whether as plaintiff or defendant, be
[pic]struck out, and that the name of any person who ought to have been
joined, whether as plaintiff or defendant, or whose presence before the
court may be necessary in order to enable the court effectually and
completely to adjudicate upon and settle all the questions involved in the
suit, be added."
14. The said provision makes it clear that a court may, at any stage of the
proceedings (including suits for specific performance), either upon or even
without any application, and on such terms as may appear to it to be just,
direct that any of the following persons may be added as a party: (a) any
person who ought to have been joined as plaintiff or defendant, but not
added; or (b) any person whose presence before the court may be necessary
in order to enable the court to effectively and completely adjudicate upon
and settle the questions involved in the suit. In short, the court is given
the discretion to add as a party, any person who is found to be a necessary
party or proper party.
15. 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, the suit itself is
liable to be dismissed. A "proper party" is a party who, though not a
necessary party, is a person whose presence would enable the 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.
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19. Referring to suits for specific performance, this Court in Kasturi
[(2005) 6 SCC 733], held that the following persons are to be considered as
necessary parties: (i) the parties to the contract which is sought to be
enforced or their legal representatives; (ii) a transferee of the property
which is the subject-matter of the contract. This Court also explained that
a person who has a direct interest in the subject-matter of the suit for
specific performance of an agreement of sale may be impleaded as a proper
party on his application under Order 1 Rule 10 CPC. This Court concluded
that a purchaser of the suit property subsequent to the suit agreement
would be a necessary party as he would be affected if he had purchased it
with or without notice of the contract, but a person who claims a title
adverse to that of the defendant vendor will not be a necessary party.
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22. 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 party or proper party. Such
deletion or addition can be without any conditions or subject to such terms
as the court deems fit to impose. In exercising its judicial discretion
under Order 1 Rule 10(2) of the Code, the court will of course act
according to reason and fair play and not according to whims and caprice."
15. In the present case, the appellant could not be held to be a stranger
being beneficiary of the Trust property. The trial Court was justified in
impleading him as a party. The High Court erred in interfering with the
order of the trial Court.
16. Accordingly, we allow this appeal, set aside the impugned order of
the High Court and restore that of the trial Court dated 10th August, 2010,
impleading the appellant as a party defendant in the suit. There will be
no order as to costs.
................................................J.
(T.S. THAKUR)
.................................................J.
(ADARSH KUMAR GOEL)
NEW DELHI
DECEMBER 10, 2014
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