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M.G. Builders and Company Private Ltd. and anr. Vs. Des Raj Arora - Court Judgment

SooperKanoon Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberRFA 260/2006
Judge
Reported in131(2006)DLT147; 2006(90)DRJ576
ActsCompanies Act, 1956; Code of Civil Procedure (CPC) - Sections 24, 24(5) and 96 - Order 1, Rules 1, 9, 10, 10(1), and 10A - Order 7, Rules 10 and 11 - Order 18, Rules 2(4) and 17A - Order 39, Rules 1 and 2; Code of Civil Procedure (CPC) (Amendment) Act, 1976
AppellantM.G. Builders and Company Private Ltd. and anr.
RespondentDes Raj Arora
Appellant Advocate A.K. Aggarwal and; Umesh Mishra, Advs
Respondent Advocate Hitender Kapur, Adv.
DispositionAppeal allowed
Cases Referred and Govindanathan v. Pandithan and Ors.
Excerpt:
.....the court would deal with the parties actually before it. delhi vidyut board at best could be a proper party to the suit. the cumulative effect of the above well enunciated provisions governing the subject is that the court has to exercise its jurisdiction to derive balance between ends of justice and extent of default of the applicant. (b) whether presence of such party before the court is necessary for effectively and completely adjudicating the matter and granting a complete and effective decree to the party entitled to? in addition to above, where the court considers the presence of a party necessary for proper and complete adjudication, then it may well be considered relevant whether non-impleadment of such a party would result in avoidable multiplicity of litigation, then effort..........party. the general rule is that the suit cannot be dismissed on the ground of non-joinder of proper parties. even if reasoning given by the trial court on the first issue is taken to be correct, for the sake of argument, then also the court ought not to have dismissed the suit on any sustainable legal reasoning. the trial court ought to have continued with the suit at least on behalf of one of the plaintiffs.6. no issues were framed at that stage to determine whether delhi vidyut board was a necessary or a proper party. it probably was not even possible in the facts of the present case. but in any case, there is no discussion in the judgment of the trial court where it has discussed whether such a party was a proper party or a necessary party. the agreements between the parties.....
Judgment:

Swatanter Kumar, J.

1. Two companies M/s M.G. Builders & Company Private Ltd. and M/s. Nippun Construction (P) Ltd., duly incorporated under the provisions of the Companies Act, 1956 with their registered office at 105, X-21, Loha Mandi, Naraina, New Delhi and H-1, Ashok Vihar, Phase-I, New Delhi filed a suit for possession, declaration, permanent and mandatory injunction against Sh Des Raj Arora, respondent in the present appeal. The suit was instituted on the facts that appellant No. 1 is the perpetual lessee of property known as plot No. 2 Community Centre Wazirpur Industrial Area, Delhi and he had constructed a multi-storied Commercial Complex over the said plot. Similarly, Appellant No. 2 was the owner of the adjacent Plot No. 1 and he had also constructed a multi-storied building on that plot. The respondent is the perpetual lessee of plot No. 5 and had also constructed a multi-storied commercial complex over the said plot. The appellants have approached the defendant for providing them space and facilities in his building at plot No. 5 for installation of transformer/electric sub-station for electrification of their respective buildings. The agreements dated 16.10.1995 and 30.10.1995 were executed between the parties and a consideration of Rs. 9 lacs each was paid by the appellants to the defendant at the time of entering into the agreements for installation of electric substation. The respondent had also written to Delhi Electric Supply Undertaking at the relevant time that he has no objection for installation of electric substation. An area of nearly 800 square feet situated at the ground floor of the said building was handed over to DESU. After delivering the possession, somewhere in January, 2006, the defendant illegally and malafidely, trespassed into the said portion and put up two shutters and giving the shape of two shops, the illegal construction was raised. Photographs of such illegal construction are annexed to the plaint. The grievance of the plaintiffs was that the area for which they had already paid consideration was a common area and possession of which was handed over to DESU, had been illegally and unauthorisedly trespassed into by the defendant and he was liable to remove the constructions and restore the possession in terms of the agreements between the parties. Thus, the appellants prayed before the Trial Court for the relief of possession and mandatory injunction as well as prohibition.

2. Along with the suit an application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure praying for ad-interim injunction was also filed. The suit as well as the application for interim prayer was contested by the respondents. In the written statement the defendant took a preliminary objection that the suit jointly filed by the plaintiff was not maintainable and that Delhi Vidyut Board had not been joined as a party and, thereforee, the plaint was liable to be rejected under Order VII Rule 11 CPC. On merits, the execution of the agreement was not denied but it is stated that the authorities were reluctant to install the transformers in the building after Uphaar Tragedy in Delhi and the plaintiffs were not entitled to relief of possession.

3. The application of the appellants for grant of interim injunction came up for hearing before the Trial Court. Vide its order dated 4.4.06, the Trial Court not only dismissed the application for injunction but also dismissed the suit as not maintainable. As the suit was dismissed vide judgment dated 4.4.06, the appellants have filed the present Regular First Appeal under Section 96 of the Code of Civil Procedure before this Court.

4. The learned Counsel appearing for the appellants contended that the impugned judgment is contrary to the settled principles of law and is based upon improper appreciation of the facts on record. The learned Trial Court has dismissed the suit of the plaintiff mainly for two reasons which are as under:

I am, thus, not inclined to accept the contention of the Ld. Counsel for the plaintiff that both the plaintiffs can be joined together in one suit as plaintiffs in view of the provisions of Order 1 Rule 1 CPC, as the rights to relief are not arising out of the same Act or transaction or series of act of transactions in these plaintiffs. These two plaintiffs have separate right to relief arising out of separate transaction, which cannot be clubbed together.

That aside, it is seen that the plaintiffs have themselves, stated that the possession of the said space had been handed over to DVB/DESU/NDPL and hence DVB/DESU/NDPL was the necessary party for any effective relief in the case.

5. Under Order 1 Rule 1 of the Code of Civil Procedure all persons can be joined as plaintiffs where any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons whether jointly or severely and if such persons brought separate suits and any common question of law or fact would arise. In face of these provisions there would obviously be a definite doubt as to the very maintainability of the suit. Both the plaintiffs are distinct legal entities but they have a common cause of action based upon similar agreement in relation to the same premises which were to be utilised jointly by the plaintiffs and the respondents as owners of Plot Nos. 1, 2 and 5 of Wazirpur Industrial Area, New Delhi. A common question of law or fact would arise even if both the plaintiffs and/or the respondents had brought separate suit. The consideration in terms of the agreements dated 16.10.1995 and 30.10.1995 had admittedly been paid. This Court is not concerned with the merits of the claim, but to dismiss the suit as not maintainable, is the finding of the Court which is not in consonance with the provisions of the Code. Furthermore, the provisions of Order 1 Rule 9 of the Code clearly states that no suit shall be defeated or dismissed by reason of misguide or non-joinder of parties and the Court would deal with the parties actually before it. The only exception carved out is where a party is not joined which is a necessary party. The general rule is that the suit cannot be dismissed on the ground of non-joinder of proper parties. Even if reasoning given by the Trial Court on the first issue is taken to be correct, for the sake of argument, then also the Court ought not to have dismissed the suit on any sustainable legal reasoning. The Trial Court ought to have continued with the suit at least on behalf of one of the plaintiffs.

6. No issues were framed at that stage to determine whether Delhi Vidyut Board was a necessary or a proper party. It probably was not even possible in the facts of the present case. But in any case, there is no discussion in the judgment of the Trial Court where it has discussed whether such a party was a proper party or a necessary party. The agreements between the parties were admittedly executed, consideration was paid and if for any reason whatsoever the parties were not agreeable to install the transformer in that common portion of the parties, then it would be very difficult to say that Delhi Vidyut Board was a necessary party to the suit. May be, the parties could bring the correct facts in regard to installation of the transformers even by summoning of witness. Delhi Vidyut Board at best could be a proper party to the suit. Both the reasons given by the Trial Court, thus, are not in conformity with the provisions of the Code and various judicial pronouncements.

7. One of the basic object underlining the concept of necessary and proper parties is that multiplicity of litigation should be avoided. While dealing with these provisions, the Courts have taken the view that where there are several plaintiffs they can sue together even if the right is several, but when a common question of law or fact arises for determination before the Court, it may not even be necessary that every plaintiff should be interested in the entire subject matter of the suit. The purpose of this procedural law is to permit parties, who are interested in the subject matter of the suit and may be having different rights but it involves common question of law and fact, to sue jointly. Reference in this regard can be made to the judgment of this Court in C.R. No. 2066/1997 decided on 12.2.98 where the Court held as under:

The cumulative effect of the above well enunciated provisions governing the subject is that the Court has to exercise its jurisdiction to derive balance between ends of justice and extent of default of the applicant. The powers given to the Court under Sub-rule 4 of Rule 2 of Order 18 cannot be curtailed by reading the provisions of Rule 17A of the same order. Both these provisions must be read and construed harmoniously so as to further cause of justice and necessary for effective and complete adjudication of rival contentions raised by the parties in a suit or proceedings. The procedural law must be moulded to further cause of justice rather than frustrate the same.

8. The procedural law must act as a linch-pin to keep the wheel of expeditious and effective determination of dispute in its place and moving. The procedural checks must achieve its end object of just fair and expeditious justice to parties without seriously prejudicing the rights of any parties.

9. The learned Trial Court has not adverted on any of these aspects. The rules of procedure are intended to achieve the ends of justice and not to shut the doors of judicial process at the threshold of the proceedings. The Court in normal circumstances would grant an opportunity to the parties to implead or delete parties which in the opinion of the Court needs to be imp leaded being necessary or proper parties to the suit. The case was fixed for arguments on the injunction application, and dismissal of the suit at that stage of the proceedings was hardly called for in the facts and circumstances of the case. A Division Bench of this Court in the case of Aviat Chemicals Pvt. Ltd. and Anr. v. Magna Laboratories (Gujrat) Pvt. Ltd. and Anr. 2006 I AD (Delhi) 726 held that provisions of Order VII Rule 10 of the Code of Civil Procedure squarely fall in the domain of procedural law. The intent of the procedural law is always to achieve the ends of justice and not to frustrate the same. The law of procedure is a mission to achieve an end and not an end in itself so as to throttle the progress of the proceedings in a manner which would be prejudicial to the very administration of justice and expeditious disposal of the suits. While referring to various cases, the Court further held as under:

The principles enunciated above have been reiterated with approval by the Supreme Court in its subsequent judgment and have been consistently followed by the High Court. Judicial discretion is to be exercised and provisions of a statute of the code are to be interpreted in a manner which would further the cause of justice rather than the one which would frustrate the same. The entire scheme underlining the code is intended to do substantial justice and decide the suits expeditiously. The provisions of Section 24(5) are intended to transfer a suit where it is being tried or is pending at any stage before a Court of no jurisdiction. The provisions of Order 7 Rule 10 are to deal with a situation where the Court normally, initially or even after representation of a plaint has no pecuniary jurisdiction and such plaint ought to be filed in some other Court. Both these provisions are to be construed harmoniously and they are no destructive of each other. Merely because the Court has lost pecuniary jurisdiction and proceedings under Order 7 Rule 10 or 10(a) are pending before the Court per se will not oust the jurisdiction of the Court to pass an order under Section 24 of the Code. Loss of pecuniary jurisdiction may result from operation of law or by an act of a party by its own violation.

10. Reference can also be made in this regard to the judgment of Punjab and Haryana High Court in the case of Krishan Lal v. Sudesh Kumari 1998 10 ICC 674 where the Court held as under:

In order to have a pervasive and baroque approach to the provisions of the Code which would be also in consonance with the scheme of the Code, would be to read the provisions of Order 1 and other effecting provisions of the Code collectively, rather than t6o read and construe Order 1 Rule 10 of the Code in abstract or isolation. Interpretation of construction of procedural laws or provisions related thereto must be read to achieve the ends of justice which is an indispensable object of basic rule of law. With the modern development in all spheres of life the Courts must mould the procedural laws to further the cause of expeditious disposal and determination of all questions in one proceedings, if permissible in law rather than to direct the parties to create multiplicity of litigation.

Without being innovative and primarily on reiteration of the settled principles and in a derivative manner, it is possible to indicate certain factors which may be considered by the Court while determining such a question:

(a) Whether the applicant is necessary and proper party keeping in view the facts and circumstances of the case?

(b) Whether presence of such party before the Court is necessary for effectively and completely adjudicating the matter and granting a complete and effective decree to the party entitled to?

(c) Whether such a party interested would be directly effected as a result of culmination of such persons into decree or it would only be effected remotely, indirectly and distantly?

In addition to above, where the Court considers the presence of a party necessary for proper and complete adjudication, then it may well be considered relevant whether non-impleadment of such a party would result in avoidable multiplicity of litigation, then effort should be to implead a party rather than to force the party to go to a fresh litigation.

The above principles are not exhaustive but are merely indicative what may be considered by the Court in addition to such consideration, which may be appropriately considered by the Court keeping in view the facts and circumstances of a given case. The legislative intent to provide an effective protection to a party who may be affected by the questions to be determined by a Court in a suit or proceedings and to have complete adjudication is clear from the introduction of Rule 10-A in Order 1 of the Code vide Civil Procedure Code Amendment Act, 1976.

In order to further the cause of this procedural legislation and to achieve the ends of justice it would be appropriate to liberally construe these provisions without causing detriment or prejudice to the interests of the parties to the list. Where a case cannot be completely adjudicated upon or decided in absence of the4 party who approaches the Court for impleadment in that event the application would have to be considered favorably to avoid incomplete and ineffective conclusion of the suit. At this stage it may be appropriate to refer to the following observations made by this Court in the case of Kaka Singh v. Rohi Singh AIR 1978 P&h; 30, as under:

In allowing or disallowing an application under Order 1 Rule 10 of the Code, what has to be seen is whether the addition of a new party would be consistent with the scope of the enquiry as necessitated in the pending suit and whether in the absence of such a party it would not be possible to completely and effectively dispose of the controversy in the pending suit.

XXXXXXXWhat the Court ought to see is whether there is anything in the suit which cannot be determined owing to his absence or whether there would be prejudice by his not being made a party.

The object of this Rule is bringing before the Court at any time of the proceedings, all persons who are directly interested in the subject matter of the suit so that all disputes in relation to such parties and same subject matter could be decided t6ogether and finally without inconvenience and expense of separate action and trials. Reference may be made to the case of Razia Behum v. Sahebzadi Anwar Begum AIR 1958 Ap 195.

The mere fact that a party could bring a suit in its own right by itself or could not be the sole reason for refusing impleadment of a party who may otherwise satisfy the criterion referred supra. Wide discretion is vested in the Court and so far such an exercise of jurisdiction is not arbitrary, such an order may not call for interference. A Division Bench of this Court in the case of Arjan Singh and Ors. v. Kartar Singh and Ors. (1975)77 P.L.R. 34 held as under:

Order 1 Rule 10(2) gives wide discretion to the Court to meet every case of defect of parties, but the power must be exercised on judicial principles and not arbitrarily. One of the well known principles is that the person to be added must be necessary to effectually and completely adjudicate upon and settle all the points in the suit and that a party should not be added merely to avoid multiplicity of suits.

The jurisdiction of the Court under this Rule has been held to be not one of initial jurisdiction of the Court, but one of judicial discretion, which has to be exercised keeping in view the facts and circumstances of a given case. At this stage, it may be more appropriate to refer to the following observations of the Hon'ble Apex Court in the case of Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay : [1992]2SCR1 as under:Though the plaintiff appellant is dominus litus and it not bound to sue every possible adverse claimant in the same suit and he may choose to implead only those person as defendants against whom he wishes to proceed, but the Court may at any stage of the suit direct addition of parties. A party can be joined as defendant even thought the plaintiff does not think that he has any cause of action against him. The question of impleadment of party has to be decided on the touchstone of Order 1 Rule 10 which provides that only a necessary or a proper party may be added. In the light of the clear language of the rule, it is not open to the appellant to contend that a person cannot be added as defendant even in a case where his presence to enable the Court to decide the matter 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. The Court is empowered to join a person whose presence is necessary for the prescribed purpose and cannot under the rule direct the addition of a person whose presence is not necessary for that purpose. If the intervener has a cause of action against the plaintiff relating to the subject matter of the existing action, the Court has power to join the intervener so as to give effect to the primary object of the order which is to avoid multiplicity of actions.

11. It has to be kept in mind that proper parties are parties whose presence before the Court enables the Court to adjudicate more effectively and completely the matters in issue. Necessary parties are those parties in whose absence the Court may not be able to fully and finally determine the matters in issue effectively. Even in the suit for recovery of land from an auction purchaser at a sale by the revenue authorities on the ground of invalidity of auction it was held that Government was not a necessary party. Besides impleadment of a necessary or a proper party an element of prejudice should normally exist so as to frustrate the suit of the plaintiff for non-joinder. In the case of Ragho Prasad Gupta v. Shri Krishna Poddar : [1969]1SCR834 the Court held that non-joinder of real owner in the suit instituted by a Bhumidar against a third party had not caused any prejudice as such the Bhumidar are bound by the decree. In a petition titled as General Manager South Central Railway Sikanderabad and Ors. v. AVR Siddhanti and Ors. : (1974)ILLJ312SC challenging the seniority of Railway staff, non-joinder of employees was not considered to be a fatal non-joinder of parties so as to defeat the suit. Even if the suit suffers from a defect of misguide or non-joinder of parties, misguide or non-joinder of cause of action, normally the Court would be inclined to grant an opportunity to amend the plaint and require the plaintiff to elect or restrict his claim, to the necessary parties in the suit. This was the view taken by different courts in the cases of Madan Lal L. Rajaram and Ors. v. Munsidatu and Ors. AIR 1956 Pep 80 and Govindanathan v. Pandithan and Ors. : AIR1950Mad760 . Of course this cannot be stated as an absolute proposition of law but merely is a principle which may guide exercise of judicial discretion by the Court in such circumstances. The factual matrix of the present case clearly shows that the judgment passed by the Trial Court cannot be sustained in law. It was required that the Court should have at least framed issues, put the parties at notice and then pronounced upon the right and obligation of the parties to the suit by finally disposing of the suit, if it so desired. The Court has ignored the word and spirit of law as contained in Rule 9 of Order 1 of the Code of Civil Procedure.

12. For the reasons afore-stated, the present appeal deserve to succeed. The judgment under appeal is set aside. The suit is remanded to the Trial Court, which shall proceed with the suit now in accordance with law. However, in the facts and circumstances of the case, parties are left to bear their own costs.


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