1. Rule. Rule made returnable forthwith, with the consent of the rival parties.
2. By means of present petition, the petitioner has put to challenge the order dated 19.5.2013 passed by learned District Judge-2, Akola (below Exh. 23) in Regular Civil Appeal No.31/2013, by which the said Application (Exh.23) filed by the present petitioner, was rejected.
3. In support of the Writ Petition Mr. A.S. Mehadia, learned counsel for the petitioner challenged the impugned order on the ground that the petitioner is a bona fide purchaser for value without notice to the suit property and he came to know about pendency of the Appeal against the judgment and decree for specific performance of contract that was passed by the learned trial Judge in RCS No.388/2012 and, therefore, in order to save his interest, filed Application (Exh.23) in the pending Appeal. The lower Appellate Court rejected the Application (Exh.23) only on the ground that the petitioner is a subsequent purchaser and is a stranger to the litigation and in view of Section 52 of the Transfer of Property Act (henceforth referred to as œ the T.P. Act?), as per the doctrine of lis pendens, the decree is binding on him. As such, he cannot be allowed to participate in the proceedings in Appeal since he is neither a necessary party nor a proper party. According to Mr. Mehadia, the petitioner was cheated by respondent no.2 and he would be losing his hard-earned income with which he purchased the suit property, he having no knowledge about the suit or the decree that was passed, which is ultimately challenged before the lower Appellate Court. He submitted that the petitioner being a person who has been deceived, cannot be denied the entry from the doors of the Court in order that the petitioner can put up his case before the lower Appellate Court and show his bona fides and the manner in which he was deceived and also may get some relief if the Court finds accordingly. But then, according to him, closing the doors of justice to him would be doing severe injustice to him and also will give rise of multifariousness of litigation. He, therefore, prayed for allowing Application (Exh. 23).
4. Per contra, Mr. U.J. Deshpande, learned counsel for the respondent no.1 argued that his client holds a decree in his favour for specific performance of contract in respect of the earlier contract with the respondent no.2 that was eventually passed without contest from the respondent no.2 and he is entitled to take advantage of the decree passed by the competent court of law in his favour. The petitioner, according to Mr. Deshpande, is a mere stranger. His transaction, if any, is hit by doctrine of lis pendens contemplated under Section 52 of the T.P. Act He relied on the decisions reported in 2013 (2) Civil L.J. 503 (Vidur Impex vs. Tosh Apartmentrs and others); AIR 2005 SC 2813 (1) Kasturi vs. Iyyamperumal and others; and argued that it is consistently held that such a person is not a necessary party to the suit or in the Appeal. He, therefore, prayed for dismissal of the Petition.
5. Mr. B.N. Mohta, learned counsel appearing on behalf of respondent no.2 supported the impugned order.
6. Upon hearing the learned counsel for the rival parties and upon perusal of the impugned order, so also the various judgments of the Honble Supreme Court, I think it will be proper to state few relevant facts in this case.
7. The respondent no.1 Mahadeo filed the Suit for specific performance of contract against the respondent no.2 Smt. Priyawanda in respect of the suit property namely, a house at Emerald Colony, Geetanagar, Akola vide Special Civil Suit No.170/2010 (new RCS No.388/2012). The suit was filed on the ground that the respondent no.2 had entered into an agreement of sale with respondent no.1 on 16.02.2010 for a total consideration of Rs.4,25,000/- and that the sale deed would be completed by 16.05.2010. The said suit proceeded and ultimately a decree came to be passed on 11.2.2013 in favour of respondent no.1 and against the respondent no.2. It appears that the suit was not contested by respondent no.2. The respondent no.2 approached the petitioner and agreed to sell the same suit property to the petitioner for a total sum of Rs.9,00,000/-with a condition that the petitioner should clear the outstanding loan amount from Vidarbha Premier Housing Cooperative Society. The petitioner agreed and accordingly he cleared all the dues and obtained sale deed from the respondent no.2 on 26.2.2013. The Respondent no.2 preferred an Appeal before the lower Appellate Court vide R.C.A. No.31/2013. In the said Appeal, the present petitioner filed Application (Exh.23) for addition of party under Order 1 Rule 10 of the Civil Procedure Code on the ground that he was not aware about the suit that was filed and decree that was passed and he almost paid the double the price than that of respondent no.1 and got the sale deed in his favour, while there was no sale deed in favour of the respondent no.1 though there was decree passed on 11.02.2013 in his favour. The petitioner, therefore, submitted that he was deceived by the respondent no.2 and he being a bona fide purchaser for value without any notice, was entitled to be added as a party to the Appeal so that his grievance can also be taken into consideration while deciding the Appeal.
8. The lower Appellate Court considered plethora of judgments and eventually found that the petitioner was a stranger and in view of the doctrine of lis pendens, he was not required to be added as a party to the Suit since as per Section 52 of the T.P. Act, the decree would be binding on him. The petitioner approached the Court at a very belated stage i.e. after passing of the judgment and decree and the right of the original plaintiff/ respondent no.1 has been confirmed by passing a decree in his favour. According to the Court, the petitioner is neither a necessary party nor a proper party.
9. In my opinion, the above facts will have to be taken into consideration to find out whether the petitioner is a necessary or property party or not. In Ramesh Kundanmal vs. Municipal Corporation of Greater Bombay : (1992) 2 SCC 524 in Paragraph 6, the Honble Supreme Court has observed thus,
œ6.......................A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding. The addition of parties is generally not a question of initial jurisdiction of the Court but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case.?
In Anilkumar Singh vs. Shivnath Mishra (1995) 3 SCC 147, in paragraph 7 the Honble Supreme Court observed thus,
œ7. By operation of above quoted rule though the Court may have power to strike out the name of a party improperly joined or add a party either on application or without application of either party, but the condition precedent is that the Court must be satisfied that the presence of the party to be added, would be necessary in order to enable the Court to effectually and completely adjudicate upon and settle all questions involved in the suit. To bring a person as party-defendant is not a substantive right but one of procedure and the Court has discretion in its proper exercise. The object of the rule is to bring on record and the persons who are parties to the dispute relating to the subject-matter so that the dispute may be determined in their presence at the same time without any protection, inconvenience and to avoid multiplicity of proceedings.?
In Mumbai International Airport (P) Ltd. vs. Regency Convention Centre: (2010) 7 SCC 417, in paragraph 15, the Honble Supreme Court observed thus,
œ15....................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 matter sin dispute in the suit, though he need not be a person in favour of or against whom the decree is made.?
It also observed in paragraph 22 as under :-
œ22.......................The said sub-rule is not about the right of a nonparty 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 three Judges judgment in the case of Kasturi vs. Iyyamperumal, (2005) 6 SCC 733, the Apex Court in paragraph 7 has observed thus;
œ7. In our view, a bare reading of this provision, namely, second part of Order 1 Rule 10 sub-rule (2) 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 or without 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.?
In Amit Kumar Shaw vs. Farida Khatoon :(2005) 11 SCC 403, two judges of the Honble Surpeme Court in para 16 observed thus,
œ16. The doctrine of lis pendense applies only where the lis is pending before a Court. Further pending the suit, the transferee is not entitled as of right to be made a party to the suit, though the Court has a discretion to make him a party. But the transferee pendente lite can be added as a proper party if his interest in the subject-matter of the suit is substantial and not just peripheral. A transferee pendente lite to the extent he has acquired interest from the defendant is vitally interested in the litigation, where the transfer is of the entire interest of the defendant; the latter having no more interest in the property may not properly defend the suit. He may collude with the plaintiff. Hence, though the plaintiff is under no obligation to make a lis pendens transferee a party, under Order XXII, Rule 10 an alienee pendente lite may be joined as party. As already noticed, the Court has discretion in the matter which must be judicially exercised and an alienee would ordinarily be joined as a party to enable him to protect his interests.?
10. Taking upon the conspectus of the view taken by the Honble Supreme Court in the earlier judgments, in the case of Vidur Impex and Traders Pvt. Ltd. vs. Tosh Apartments Pvt.Ltd. And others : (2012) 8 SCC 384 finally in paragraph 41, the Apex Court laid down the following principles:
œ41. Though there is apparent conflict in the observations made in some of the aforementioned judgments, the broad principles which should govern disposal of an application for impleadment are :
41.1 The court can, at any stage of the proceedings, either on an application made by the parties or otherwise, direct impleadment of any person as party, who ought to have been joined as plaintiff or defendant or whose presence before the court is necessary for effective and complete adjudication of the issues involved in the suit.
41.2 A necessary party is the person who ought to be joined as party to the suit and in whose absence an effective decree cannot be passed by the court.
41.3 A proper party is a person whose presence would enable the court to completely, effectively and properly adjudicate upon all matters and issues, though he may not be a person in favour of or against whom a decree is to be made.
41.4 If a person is not found to be a proper or necessary party, the court does not have the jurisdiction to order his impleadment against the wishes of the plaintiff.
41.5 In a suit for specific performance, the court can order impleadment of a purchaser whose conduct is above board, and who files application for being joined as party within reasonable time of his acquiring knowledge about the pending litigation. (emphasis supplied) 41.6 However, if the applicant is guilty of contumacious conduct or is beneficiary of a clandestine transaction or a transaction made by the owner of the suit property in violation of the restraint order passed by the court or the application is unduly delayed then the court will be fully justified in declining the prayer for impleadment.?
11. Upon perusal of paragraph 41 of the aforesaid judgment of the Honble Supreme Court, in my view, there is no straightjacket formula in respect of such cases whether to allow or disallow a subsequent purchaser on record of the suit or appeal as necessary or proper party to the suit. In the light of the dictum laid down by the Honble Supreme Court in the suit for specific performance of contract for which I have supplied the emphasis above, and in the light of the facts of the present case, in my opinion, the petitioner is a person who was clearly deceived by respondent no.2 by contracting with him merely because the respondent no.2 was getting double the price that was agreed with the original plaintiff or respondent no.1 herein-Mahadeo. The petitioner prima facie did not have knowledge when the sale deed was executed in his favour, either of the pendency of the suit in the trial Court or of passing of the decree in favour of respondent no.1 but was caught in a trap laid by the respondent no. 2 who accepted the total consideration and executed sale deed in his favour on 26.02.2013. As per the doctrine of lis pendense under Section 52 of the T.P. Act the sale deed in favour of the petitioner does not automatically become void or illegal but the decree passed in the lis may be binding on the petitioner. But then the rights of the person like the petitioner who stood deceived, can certainly be worked out by the Court ultimately by passing the decree instead of asking such person to go and to file another suit. In my opinion, that would also save the multiplicity of litigation or an avoidable second litigation. As a matter of fact, such a person like the petitioner in that event, would be able to put up his case for a bona fide purchaser for value without any notice or knowledge and of deception practised on him. It is not that Section 52 of the T.P. Act closes the doors of justice to such a person in the litigation merely because he came to know late about passing of the decree, of pendency of the suit or the Appeal, as the case may be. In the backdrop of the above-referred facts in the instant case and in the light of the observations made by the Honble Supreme Court as quoted by me above, I think the petitioner should have been allowed by the lower Appellate Court to participate in the proceedings of Appeal which is pending before it instead of driving him out of the Court.
12. There is a serious omission in the relevant legislation for the last several years due to which persons like the petitioner have been suffering hardship and misery and high risks in the property transactions in the country. It is a matter of anxiety that no corrective step has yet been taken by the legislature though the issue very much concerns the people in the entire country. A little care was taken by Bombay Act No.14/1939 by providing for Bombay Amendment to Section 52, but then the said amendment of the requirement by amended provision has not been made applicable to the areas other than only the Greater Bombay in the State of Maharashtra. It is, therefore, strange that in the State of Maharashtra itself, the said amendment of 1939 which is beneficial of the people at large in the State, has not been made applicable in the entire State, except Greater Bombay till the next date. It is in the above background, the Apex Court in the year 2010 while rendering decision in the case of T.G. Ashok Kumar vs. Govindammal and another : (2010) 14 SCC 370, made a very significant suggestion to the lawmakers but even then no corrective steps have been yet taken by either of the Legislature. It would be appropriate to quote the relevant paragraphs from the said judgment:
œA related suggestion to the law-makers:
19. It is necessary to refer to the hardship, loss, anxiety and unnecessary litigation caused on account of the absence of a mechanism for prospective purchasers to verify whether a property is subject to any pending suit or a decree or attachment. At present, a prospective purchaser can easily find out about any existing encumbrance over a property either by inspection of the registration registers or by securing a certificate relating to encumbrances (that is, copies of entries in the registration registers) from the jurisdictional Sub-Registrar under Section 57 of the Registration Act, 1908. But a prospective purchaser has no way of ascertaining whether there is any suit or proceeding pending in respect of the property, if the person offering the property for sale does not disclose it or deliberately suppresses the information. As a result, after parting with the consideration (which is many a time the lifetime savings), the purchaser gets the shock of his life when he comes to know that the property purchased by him is subject to litigation, and that it may drag on for decades and ultimately deny him title to the property. The pendente lite purchaser will have to wait for the litigation to come to an end or he may have to take over the responsibility of conducting the litigation if the transferor loses interest after the sale. The purchaser may also face objections to his being impleaded as a party to the pending litigation on the ground that being a lis pendense purchaser, he is not a necessary a party. All these inconveniences, risks, hardships and misery could be avoided and the property litigations could be reduced to a considerable extent, if there is some satisfactory and reliable method by which a prospective purchaser can ascertain whether any suit is pending (or whether the property is subject to any decree or attachment) before he decides to purchase the property.
20. It is of some interest that a solution has been found to this problem in the State of Maharashtra by an appropriate local amendment to Section 52 of the Act, by Bombay Act 14 of 1939. Section 52, as applicable in Maharashtra and Gujarat, reads thus ( the amendment is shown in Italics):
52. Transfer of property pending suit relating thereto: (1) During the pendency in any court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, if a notice of the pendency of such suit or proceeding is registered under Section 18 of the Indian Registration Act, 1908, the property after the notice is so registered cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose.
(2) Every notice of pendency of a suit or proceeding referred to in subsection (1) shall contain the following particulars, namely;
(a) the name and address of the owner of immovable property or other person whose right to the immovable property is in question;
(b) the description of the immovable property, the right to which is in question;
(c) the court in which the suit or proceeding is pending;
(d) the nature and title of the suit or proceeding; and
(e) the date on which the suit or proceeding was instituted.?
(emphasis supplied)
21. We hope that the Law Commission and Parliament considers such amendment or other suitable amendment to cover the existing void in title verification or due diligence procedures. Provision can also be made for compulsory registration of such notice sin respect of decrees and in regard to attachments of immovable properties.
22. We may also refer to another related area where registration should be made compulsory to reduce property litigation. At present in most of the States, agreements to sell are not compulsorily registrable as they do not involve transfer of any right, title or interest in an immovable property. Unscrupulous property owners enter into agreements of sale and take huge earnest money deposits/ advances, and then sell the property to others thereby plunging the original agreement-holder and the subsequent purchaser into litigation. Registration of agreements of sale will reduce such litigation. It will also assist in putting an end to the prevalent practice of entering into agreements of sale showing the real consideration and then registering the sale deed for only a part of the real consideration.
23. If all agreements of sale are compulsorily registered, that will go a long way to discourage generation and circulation of black money in real estate matters, as also undervaluation of documents for purposes of stamp duty. It will also discourage the growth of land mafia and musclemen who dominate the real estate scene in various parts of the country. Prevention of a malaise, is always better than allowing a malaise to develop and then trying to cure it.?
CONCLUSION:
13. In the above circumstances, the anxiety expressed by the Apex Court as above, ought to be taken care of by the Parliament as well as State Legislature. The State Legislature ought to extend the said amendment of Bombay Act No.14/1939 to the entire State of Maharashtra rather than resting it only to Greater Bombay. Except saying this, this Court cannot say anything more.
14. Turning back to the present litigation having recorded the conclusions by me as above, the following order will have to be passed:
ORDER
i) Writ Petition No.5541/2013 is allowed.
ii) The impugned order dated 19.05.2013 (below Exh.23) passed by learned District Judge2, Akola in R.C.A. No.31/2013 is set aside.
iii) The Application (Exh. 23) filed by the petitioner is allowed. The petitioner be added as a party to the Appeal in R.C.A. No. 31/2013. The amendment shall be carried out within four weeks. The Appeal shall be heard thereafter.
iv) No order as to costs.
v) The Registrar of this Court to send copy of this judgment to the Ministry of Law and Justice, Shastri Bhawan, New Delhi and Chief Secretary, Maharashtra State, Mantralaya, Mumbai-32, for information and necessary action.