Thursday, 4 December 2014

Necessary and Proper Parties in Law

2014 C L C 261
[Sindh]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
Mirza AFZAL BAIG----Appellant
Versus
MUDABBIR ALI KHAN and others----Respondents
High Court Appeal No.4 of 2012, decided on 11th October, 2013.
(a) Civil Procedure Code (V of 1908)---
----O. I, R. 10---Necessary and proper parties---Scope---Necessary party is one, without whom no proper order can be made effectively, whereas proper party is one, in whose absence, although effective order can be made but presence of such party is necessary for complete and final adjudication of questions involved in any proceedings---Addition of parties is generally not a question of initial jurisdiction of Court---Such is  the  judicial  discretion  of  Court,  which  has  to  be  exercised  after  examining  peculiar  facts  and  circumstances  of  each  case. 
            Ghulam Ahmad Chaudhry v. Akbar Hussain through legal heirs and others PLD 2002 SC 615  rel.
(b) Civil Procedure Code (V of 1908)---
----O. I, R. 10---Specific Relief Act (I of 1877), S.12---Law Reforms Ordinance (XII of 1972), S.3---Suit for specific performance of agreement to sell---Intra-court appeal---Necessary party---Principles---Suit was filed in year, 2005 and appellant filed an application in year, 2008, for impleading as necessary party---Contention of appellant was that he was in possession of suit property, while plaintiff and defendant in collusion and in order to deprive him of his valuable rights in suit property filed the suit---Validity---While considering application under O.I, R.10, C.P.C. the Court had to minutely examine peculiar facts of each case and after satisfying as to whether or not an applicant had made out a case to be impleaded as party, either as plaintiff or as defendant, as the case might be, could pass necessary orders by allowing or refusing such request---Appellant was not stepping into the shoes of defendant nor of substitution as defendant, who was contesting suit filed by plaintiff---Defendant had filed written statement, wherein he accused plaintiff of even forging his   signatures---Division Bench of High Court, at such stage, declined to give any observation that there was any element of collusion or connivance between plaintiff and defendant, as alleged by appellant and nothing had been brought on record to show so as to corroborate such allegation---Order passed by Single Judge dismissing application of appellant did not suffer from any factual or legal error---Single Judge had exercised discretion vested in it properly by keeping in view peculiar facts and circumstances of the case---Division Bench declined to interfere in order passed by Single Judge---Intra-court appeal was dismissed in circumstances.
            Islamic Republic of Pakistan v. Abdul Wali Khan PLD 1975 SC 463; Shahnawaz v. Abdul Ghafoor and others 2008 SCMR 352; Central Government of Pakistan v. Suleman Khan PLD 1992 SC 590; UZIN Export Import Enterprises for Foreign Trade Karachi v. Union Bank of Middle East Limited PLD 1994 SC 95  distinguished.
            Bibi Zubaida Khatoon v. Amichand Aggarwal AIR 2004 SC 173; Messrs Vidur Impex and Traders (Private) Limited and others v. Tosh Apartments (Private) Limited AIR 2012 SC 2925; Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay (1992) 2 SCC 524; Anil Kumar Singh v. Shivnath Mishra (1995) 3 SCC 147; Mumbai International Airport (P) Limited v. Regency Convention Centre and Hotels (P) Limited AIR 2010 SC 3109; Kasturi v. Iyyamperumal AIR 2005 SC 2813 and Savitri Devi v. D.J. Gorakhpur AIR 1999 SC 976  ref.
            Mirza Adil Baig for Appellant.
            Imran Ahmed for Respondent No.1.
            Date of hearing: 21st September, 2013.
ORDER
            MUHAMMAD JUNAID GHAFFAR, J.--- Instant High Court Appeal arises out of an order dated 24-11-2011 passed by the learned Single Judge of this Court in Suit No.1330 of 2005 whereby the application filed by the present appellant under Order I, Rule 10 read with section 151, C.P.C. for impleading him as a party i.e. defendant in the suit was dismissed. By consent of both the learned counsel for the parties, instant appeal is being disposed of at Katcha Peshi stage.
2.         Briefly, facts as per memo. of appeal are that, the appellant entered into an agreement of sale dated 15-8-2006 with the respondent No.2 namely (Muhammad Alam) in respect of the Suit property viz. Industrial Plot of land bearing No.50, situated at Malir Town Ship, Karachi admeasuring 600 sq. yards, with construction thereon for a total sale consideration of Rs.60,00,000. It is further stated that the respondent No.2 at the time of signing of the said agreement, did not disclose about the earlier transaction already entered into, between respondent No.2, with the respondent No. 1 nor it was mentioned in the written statement in Suit No.1408 of 2008 which was filed by the present appellant against the said respondent No.2. It is further stated that subsequent to signing of the agreement dated 15-8-2006, a supplementary agreement was also entered into by the appellant on 31-1-2006 with the respondent No.2 at his request, wherein, for the first time, the respondent No.2 had disclosed that the said property was under litigation before this court in Suit No.1390 of 2005 and also assured the appellant that the same will be settled, but subsequently failed to do so, which caused suspicion in the mind of the appellant as evasive replies were being given by the respondent No.2. Hence, the appellant filed suit against the respondent No.2 bearing No.1408 of 2008 for specific performance, permanent injunction and recovery of damages and compensation. It has been further stated in the memo. of appeal that the appellant was unable to trace out Suit bearing No.1330 of 2005 and subsequently when it was finally traced by the appellant, he filed an application under Order I, Rule 10, C.P.C. in the said suit on or about 13-12-2008. It is further averred that as per supplementary agreement, the appellant was given the complete possession of the suit property as major portion of the agreed amount of Rs.26,00,000 was already paid to the respondent No.2 by the appellant. It is also stated that the respondent No.1 also filed an application under Order I, Rule 10, C.P.C. i.e. C.M.A. No.11603 of 2008 in Suit No.1408 of 2008, filed by the present appellant to which the appellant had given consent and vide order dated 13-4-2009, the respondent No.1 was allowed to be arrayed as defendant in the aforesaid Suit filed by the appellant. It is stated that this consent was given by the appellant on a verbal assurance that the respondent No.1 will also give consent to the application under Order I, Rule 10, C.P.C. filed by the appellant in Suit No.1330 of 2005 which, according to the appellant, was not been given by the respondent and in consequence thereof the said application was dismissed vide order dated 24-11-2011 which has been impugned in the instant appeal.


3.         Learned counsel for the appellant has submitted that appellant is in possession of the suit property since 15-6-2007 whereas respondents Nos.1 and 2 are in collusion and in order to deprive the appellant of his valuable rights in the suit property; have concocted a false story by creating a forged agreement. It is contended by the learned counsel that the respondent No.2 had already handed over the possession of entire suit property with construction thereon to the appellant, who is enjoying the exclusive peaceful possession of the same, and had there been any illegal possession on the part of the appellant, the respondent No.1 could have reported the matter to the police or to this court at the relevant point of time, but nothing has been done except filing a contempt application in Suit No.1330 of 2005 on 20-12-2008 with an intention to cause harassment to the appellant. It is also stated that the respondent No.1 had filed application under Order I, Rule 10, C.P.C. as well as the contempt application, only after filing of the Suit No.1408 of 2008 by the appellant on 10-10-2008, to claim his possession over the suit property which in fact is in possession of the appellant and has never been with respondent No.1.
4.         Learned counsel for appellant has further argued that the learned Single Judge while passing the impugned order dated 24-11-2011 has failed to appreciate that sufficient documents were placed on record, to show that the respondents Nos.1 and 2 are in connivance and collusion with each other to deprive the appellant of his valuable rights in the suit property. Per learned counsel, allegation regarding the knowledge about a pending litigation in respect of suit property is misconceived as the suit number which was provided to the appellant was 1390 of 2005 which did not relate to the suit property and when the file of the said suit was summoned by the learned Single Judge during the hearing of the suit on 6-5-2011, it transpired that the said suit did not relate to the subject-matter, therefore, per learned counsel, it could not have been presumed that the appellant was aware about any proceedings pending in this court. Per learned counsel, the correct number of the suit in respect of subject property i.e. Suit No.1330 of 2005 was intimated at a later stage. He further argued that the appellant is a proper and necessary party on the basis of documents produced by him and in view of the peculiar facts and circumstances of the case particularly, when it is evident from record that respondents Nos.1 and 2 are in collusion and further that if there had been any amount due and payable to the respondent No.2 by the respondent No.1, he could not have abandoned the proceedings at the stage of evidence in Suit No.1330 of 2005 and would have claimed his alleged remaining amount. It is further contended by the learned counsel that the appellant has paid substantial amount to the respondent No.2, who has handed over the possession to the appellant on 15-6-2007 pursuant to a valid agreement, which is still being enjoyed by him, therefore the learned Single Judge has erred in law and fact by not considering that the appellant was a necessary and proper party in the instant suit. His further submission was, that it is very likely that the suit of respondent No.1 will be decreed as prayed with the collusion and connivance of respondent No.2 and such decree will adversely affect the valuable right of the appellant, who should have been allowed to be joined as a necessary party as to avoid the multiplicity of litigation and to effectively end the controversy between the parties which relate to the same subject property. Learned counsel has further referred to the written statement filed by the respondent No.2 (defendant in Suit No.1330 of 2005) wherein it has been alleged by the respondent No.2 that the respondent No.1 (plaintiff) has prepared forged sale agreement with his forged signature and the suit has been filed on the basis of such forged sale agreement. He further argued that the appellant was knowingly and purposely given incorrect information about the pending litigation with an incorrect Suit No.1390 of 2005 instead of Suit No.1330 of 2005 which subsequently, on inspection by the appellant led to believe that there is no pending litigation in respect of the suit premises, as apparently Suit No.1390 of 2005 was altogether in respect of different parties and different subject matter. In support of his arguments he relied upon PLD 1975 SC 463 (Islamic Republic of Pakistan v. Abdul Wali Khan), 2008 SCMR 352 (Shahnawaz v. Abdul Ghafoor and others), PLD 1992 SC 590 (Central Government of Pakistan v. Suleman Khan), PLD 1994 SC 95 (UZIN Export Import Enterprises for Foreign Trade Karachi v. Union Bank of Middle East Limited PLD 1994 SC 95).
5.         Conversely, learned counsel for respondent No.1, who is the main  contesting   party   has   supported   the   impugned   order   dated   24-11-2011 and argued that both the purported agreement(s) of the appellant dated 15-8-2006 and 31-10-2006 are subsequent in time whereas in the Suit filed by the respondent No.1 for specific performance of contract in respect of suit property, evidence has been recorded and the same was at the stage of final arguments when the appellant has filed application under Order I, Rule 10, C.P.C. without any lawful justification. Learned counsel for the respondent No 1 has also referred to sections 31 and 33 of the Contract Act, 1872, and argued that the respondent No.1 pursuant to a valid agreement in respect of the suit property, is in possession of the original documents of title, therefore he was a necessary party in the suit filed by the appellant subsequent to the suit of respondent, whereas, the appellant is not a necessary party in the instant suit filed by the respondent No.1. It has been further contented by the learned counsel that the case of the appellant is hit by section 52 of the Transfer of Property Act, 1882, as the appellant while executing the purported agreement(s) in respect of the subject property was well aware about the litigation and the suit which was already pending at the time of execution of the subsequent agreement(s) by the appellant. Per learned counsel, restraining order was also in field since 2005 in Suit No.1330 of 2005 in respect of subject property. It has been further argued by the learned counsel that the respondent No.1 was rightly allowed to be impleaded as a party in the suit filed by the appellant to prevent a fraud which was intended to be committed by the appellant which could adversely affect the decision in the suit of the respondent No.1. Per learned counsel, the impugned order does not suffer from any legal or factual infirmity, hence require no interference by this court and prayed the instant appeal may be dismissed. In support of his contention the learned counsel has placed reliance in the case of Bibi Zubaida Khatoon v. Amichand Aggarwal AIR 2004 SC 173.
6.         We have heard both the learned counsel and have also perused the record. We have also summoned the files of Suits Nos.1330 of 2005 and 1408 of 2008 so as to ascertain the nature and the current status of the proceedings.
7.         The precise question which requires determination in the instant appeal is as to whether, under the peculiar facts and circumstances of this case, the appellant was entitled to be arrayed as a defendant in Suit No.1330 of 2005 filed by the respondent No.1 or not. It will be advantageous  to  reproduce  the  relevant  provisions  of  Order  I,  Rule 10(2), C.P.C. which read as follows:---
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 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.

8.         We shall confine ourselves to the application and interpretation of the provisions of Sub-Rule (2) of Rule 10 of C.P.C. only, as in the instant matter other Sub-Rules of Order I, Rule 10, C.P.C. are not relevant or applicable to the facts of the case. Under Sub-Rule (2) of Rule 10, C.P.C., court has wide discretion to fill in a defect relating to necessary or proper parties in a suit, and is not affected by the in-action of the plaintiff to bring a necessary party on record. In terms of the provisions of Order I, Rule 10, court has discretion to implead any party either on an application or on its own motion, as a necessary or a proper party in a suit. Needless to state, that a necessary party is one, without whom no proper order can be made effectively, whereas a proper party is one, in whose absence, although, effective order can be made but presence of such party is a necessity for a complete and final adjudication of the questions involved in any proceedings. However, the addition of parties is generally not a question of initial jurisdiction of the court; rather it is the judicial discretion of the court, which has to be exercised after examining the peculiar fact and circumstances each case. The Hon'ble Supreme Court in a case reported as PLD 2002 SC 615 in the case of Ghulam Ahmad Chaudhry v. Akbar Hussain through legal heirs and others has held as under:---
            "A wide judicial discretion is vested in the Court to add parties at any stage of the suit in whose absence no effective decree can be passed. It may be observed that where a necessary party is not impleaded, the decree may not be binding on it. Likewise, a person against whom no relief is asked for, may not be a necessary party but he may be a proper party. For the purpose of addition of parties, the Court is governed by provisions of Order I, Rules 1 and 2 and Order II, Rule 3, C.P.C. In law a Court is empowered to bring on record only necessary or proper parties. Once a suit has been  instituted, parties can be added only with the leave of the Court and not otherwise. Power of adding parties is not a question of initial jurisdiction  but of judicial discretion, which has to be exercised having regard to all the facts and circumstances of the case......) (underlining is ours) In this case, though the Hon'ble Supreme Court has upheld impleading of a party at the appellate stage by the Court keeping in view the peculiar facts of the case, whereas, in the instant case, by applying the principle as laid down by the Hon'ble Supreme Court, appellant is neither a necessary nor a proper party."

9.         In a recent judgment of the Indian Supreme Court in the case of Messrs Vidur Impex and Traders (Private) Limited and others v. Tosh Apartments (Private) Limited reported as AIR 2012 SC 2925, after examining various judgments on the subject, reported in (1992) 2 SCC 524 (Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay), (1995) 3 SCC 147 (Anil Kumar Singh v. Shivnath Mishra), AIR 2010 SC 3109 (Mumbai International Airport (P) Limited v. Regency Convention Centre and Hotels (P) Limited), AIR 2005 SC 2813 (Kasturi v. Iyyamperumal), AIR 1999 SC 976 (Savitri Devi v. D.J. Gorakhpur), the Hon'ble Supreme Court has formulated certain broad principles and guidelines which should govern disposal of an application for impleading a party to a suit, which we would like to rely upon and are accordingly reproduced as under;---
(a)        The court can, at any stage of the proceedings, either on any 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.
(b)        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.
(c)        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.
(d)        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.
(e)        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.
(f)         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.


10.       When we examine the facts of the present case and the arguments advanced by the learned counsel for the appellant, it seems to be an admitted position that the appellant was in the knowledge of some litigation going on in respect of the suit property at the time of executing the supplementary agreement dated 31-10-2006, and as such, the argument advance by the learned counsel for the appellant, that a wrong or incorrect suit number was disclosed to the appellant is devoid of any merits. Once it was known to the appellant that litigation is pending in respect of the suit property, it was incumbent upon the appellant to inquire further about the said proceedings and to be vigilant. But, the record shows that the appellant, instead of making further inquiries, has even made payments subsequent to the signing of the supplementary agreement, therefore, it could not be said with certainty that the appellant was not in the knowledge of any sort of litigation pending in respect of subject property.
11.       It is a settled principle of law that for a person claiming to be joined as a party in a suit for specific performance, the conduct of the purchaser (appellant in this case) must be above board, and the person who files such application to the Court, must approach the court within a reasonable time from the date when he acquired knowledge about the pending  litigation.  Similarly,  while  deciding  an  application  under Order I, Rule 10, C.P.C., it is also to be kept in mind by the Court, that the applicant (appellant in this case) is not guilty of any contumacious conduct, or is a beneficiary of a transaction made by the owner of the property particularly by violating a restraining order already passed by the court in respect of the said property. In the instant case, by applying the above principle of law, it could easily be said that the conduct of the appellant is neither above board, nor the appellant approached the court within a reasonable time. Moreover, admittedly, the agreement purportedly entered into by the respondent No.2 (defendant in Suit No.1408 of 2008) with the appellant was made much after passing of restraining order, in the suit filed by the respondent No.1 bearing Suit No.1330 of 2005.
12.       It is a trite law that while considering the application under Order I, Rule 10, C.P.C., the court has to minutely examine the peculiar facts of each case, and after satisfying itself as to whether or not an applicant has made out a case to be impleaded as a party, either as a plaintiff or as a defendant, as the case may be, may pass necessary orders, by allowing or refusing such request. The discretion so vested in the court is very broad and wide. There cannot be a decisive binding precedent, so as to say the least, which the court has to follow in such matters due to peculiarity of the facts of each case. It is to be seen by the court, by itself, based on the facts of each case, how and when to exercise such discretion.
13.       When the facts of the present case are examined on the touchstone of the above principles, it can be seen that admittedly appellant was in knowledge of litigation pending in respect of the suit property however, the appellant was not vigilant enough to do any further investigation regarding pendency of such litigation and reportedly made further payments to respondent No.2 even without advertising the execution of the purported sale agreement through a public notice, which a prudent buyer/purchaser is required to do, on the contrary a suit for specific performance has been filed by the appellant against respondent No.2, within and under his own rights; and, thereafter sought to implead the present appellant as defendant in the suit filed by the respondent No.1. Unfortunately, nothing has been brought on record by the learned counsel for the appellant, nor the acts of the appellant have impressed us to exercise any discretion in his favour. As per inspection of record of file of Suit No.1330 of 2005, it is noted that the same is fixed for final arguments after completion of evidence through Commission, and, any indulgence at this stage of the case, would, seriously impair the rights of the respondent No.1 without any reasonable cause or justification. We cannot put the respondent No.1 as of now, to fight each or any other defendant, in pursuit of its own rights/remedy. This would amount to creating liability afresh in a matter, which is already pending since 2005, and is ripe for final arguments.
14.       The appellant in fact has filed its own suit for specific performance, against respondent No.2 and has its remedy against respondent No.2 and not against respondent No.1. He is also claiming damages in his suit, in addition to specific performance of an agreement which he entered into having full knowledge about pending litigation and the conduct of respondent No.2, all along. He has to face the consequences, if any, for such acts of his own, for which Respondent No.1 cannot be blamed or burdened by allowing the appellants impleadment at this stage of the case. The right being claimed by the appellants to be impleaded as a party in an earlier suit is in fact not a legally enforceable right against the respondent No.1 as his interest in so far as its enforcement against respondent No.1 is concerned, is not substantial, but peripheral.



15.       Further, the appellant's case is not of stepping into the shoes of respondent No.2, nor of substitution, as the respondent No.2, who is contesting the suit filed by respondent No.1 as a defendant, has filed written statement, wherein the respondent No.2 has accused the respondent No.1 of even forging his signatures. Therefore, at this stage it cannot be said that there is any element of collusion or connivance between respondents Nos.1 and 2, as alleged by the appellants. Nothing has been brought on record or shown to us by the appellant, so as to corroborate such an allegation. We may further observe that the suit filed by the respondent No.1, is not for declaration of title, but for specific performance of an agreement only. Had it been otherwise, the appellant could have any cause or ground to be impleaded as a party in the instant suit. The appellant has already filed its own suit for specific performance against the respondent No 2 which may be decided on its own merits. The remedy available to the appellant, has already been availed as per law in the shape of a suit for specific performance, as well as for recovery of damages and compensation and therefore, proper course of action for the appellant would be to pursue its own suit and the remedy in accordance with law, instead of making attempt to thwart and delay the disposal of the suit of the respondent which has no bearing on the claim of the appellant. The case as set up by the appellant is entirely based upon an agreement with the respondent No 2, and is neither a case of any registered sale deed or title in his favour nor of a transferee of the suit property.
16.       The case-law relied upon by the learned counsel for the appellant on examination has been found to be of no assistance to the contentions raised by the learned counsel for the appellant as the facts of all the cases relied upon, have been found to be materially different as against the facts set up in the instant appeal. The case law reported in PLD 1975 SC 463 (Islamic Republic of Pakistan v. Abdul Wali Khan) in fact relates to a situation wherein an application was filed before the Hon'ble Supreme Court under Article 187 of the Constitution of Pakistan read with Order XLIX, Rule 6 of the Rules of the Hon'ble Supreme Court by one United Democratic Front who wanted to be joined as a party, on the ground as the Front will be affected by the decision in that case. Such contention was repelled by the Hon'ble Supreme Court by holding, that in a generic sense every decision of the Hon'ble Supreme Court on a point of law is likely to affect everyone in whose case a similar point of law arises, but such decision does not give every person a right to intervene in every such proceedings merely on the ground that it is likely to affect them in some future proceedings. In so far as the case of Shahnawaz v. Abdul Ghafoor and others reported in 2008 SCMR 352 is concerned, the same in fact, is not in respect of issue related to Order I, Rule 10 and is rather in respect of sections 3 and 54 of the Transfer of Property Act of 1882. On further perusal, it transpires that it goes against the appellant as in this case it was held by the Hon'ble Supreme Court that subsequent vendee was a bona fide purchaser for value as he had no notice or knowledge of any prior agreement. Whereas, in this case the appellant himself has stated that it had knowledge of at least some sort of litigation in respect of the same property. The case reported as Central Government of Pakistan v. Suleman Khan reported as PLD 1992 SC 590 is also of no help to the appellant as in this matter the issue was in respect of a transposition of a party, and not of joining or impleadment of a new defendant in the suit for specific performance. Again in the case reported as UZIN Export Import Enterprises for Foreign Trade Karachi v. Union Bank of Middle East Limited PLD 1994 SC 95 the facts are entirely on a different footing as in this matter bank guarantee was executed by a bank (A) alone, and 2 banks (A & B) were jointly made responsible for the payment of the guaranteed amount, and as such this provision incorporated within the bank guarantee, prevailed upon the Hon'ble Supreme court to allow the other bank (B) to be arrayed as a defendant in the suit.
17.       In view of hereinabove, we are of the opinion that the impugned order does not suffer from any factual or legal error, whereas the discretion vested in the Court has been properly exercised by keeping in view the peculiar facts and circumstances of this case. Accordingly, we do not find any merits in the instant High Court Appeal, which is hereby dismissed along with listed application(s), however, with no order as to cost.

MH/A-124/K                                                               Intra-Court Appeal dismissed.

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