Top
Know the Law

Impleadment Of Parties In Civil Proceedings - Principles [Know The Law]

Amrita Thakore
8 Jun 2020 6:04 AM GMT
Impleadment Of Parties In Civil Proceedings - Principles [Know The Law]

There is many a time a casual approach to the matter of applications seeking impleadment of third parties in civil proceedings. Such impleadment applications tend to be dealt with frequently without checking the law on the subject and without determining whether the third party can be impleaded or not. The common refrain is, "It is only a joinder application." Impleadment of third parties who are not entitled in law to be impleaded can result in derailment or protection of proceedings. However, the law on impleadment is quite well settled by the Supreme Court in a number of decisions and this piece seeks to enumerate those principles of law.

I. GENERAL PRINCIPLES UNDER ORDER 1 RULE 10 OF CPC:

Order 1 Rules 9 and 10 of the Code of Civil Procedure, 1908 (CPC) read as under:

9. Misjoinder and non-joinder.-

No suit shall be defeated by reason of the misjoinder or non-joinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it:

Provided that nothing in this rule shall apply to non-joinder of a necessary party.

10. Suit in name of wrong plaintiff.-

(1) Where a suit has been instituted in the name of the wrong person as plaintiff or where it is doubtful whether it has been instituted in the name of the right plaintiff, the Court may at any stage of the suit, if satisfied that the suit has been instituted through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the Court thinks just.

(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.

(3) No person shall be added as a plaintiff suing without a next friend or as the next friend of a plaintiff under any disability without his consent.

(4) Where defendant added, plaint to be amended.- Where a defendant is added, the plaint shall, unless the Court otherwise directs, be amended in such manner as may be necessary, and amended copies of the summons and of the plaint shall be served on the new defendant and, if the Court thinks fit, on the original defendant.

(5) Subject to the provisions of the Indian Limitation Act, 1877 (15 of 1877), Section 22, the proceedings as against any person added as defendant shall be deemed to have begun only on the service of the summons.

The general principles of law set out by the Supreme Court in the context of Order 1 Rule 10(2) are enumerated hereinbelow:

(1) THE DOMINUS LITUS RULE:

The general rule is that the plaintiff is the dominus litus and may choose the persons against whom he wishes to litigate and cannot be forced to sue a person against whom he does not seek any relief. Hence, a person who is not a party has no right to be impleaded against the wishes of the plaintiff unless it is a compulsion of the rule of law.[1]

(2) O. 1 R. 10(2), AN EXCEPTION TO DOMINUS LITUS RULE:

This general rule of the plaintiff being the dominus litus is subject to the provisions of Order 1 Rule 10(2) of CPC as per which, 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 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."

Order 1 Rule 10(2) therefore carves out an exception to the general rule and gives the court the discretion to add as a party a person who ought to have been joined or whose presence is necessary for effectually and completely adjudicating all questions involved in the suit, in other words, a party who is found to be a necessary party or a proper party. It is required to be noted that Order 1 Rule 10(2) does not confer a right upon a non-party to be joined but is about judicial discretion to add a party.[2]

(3) COURT'S LIMITED DISCRETION:

The discretion of the court under Order 1 Rule 10(2) is limited. It is only if a party is a necessary or a proper party that they can be directed by the court to be joined in the proceeding. If a person is not found to be a necessary or proper party, the court has no jurisdiction to order impleadment against the wishes of the plaintiff.[3] The court is therefore duty bound to arrive at a conclusion that a party is a necessary party or proper party before it can pass an order directing impleadment contrary to the plaintiff's wishes. The discretion to either allow or reject an application for impleadment of a party is required to be exercised according to settled principles of law and according to reason and fair play.[4]

(4) NECESSARY PARTY:

The Supreme Court has held that a "necessary party" is one without whose presence no effective decree can be passed and without whom the suit itself would be liable to be dismissed.[5] It has also been held that the reason which makes it necessary to make such a person a party to an action is so that it is bound by the result of the action and the question to be settled, therefore, should be incapable of being completed and effectually settled unless he is a party.[6] In suits relating to property, in order that a third party may be impleaded, they should have a direct or legal interest in the subject matter of the litigation as distinguished from a mere commercial interest.[7] Legal interest is interpreted to mean that the result of the suit affects the third party legally.[8] Where however the subject matter of a litigation is a declaration as regards status or legal character, the rule of present interest does not apply with full force since the result of a declaratory decree on the question of status affects not only the parties before the court but generations to come.[9]

A larger bench of the Supreme Court has evolved these two tests to be satisfied for determining whether a person is a necessary party: (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.[10]

It has been held that what makes a person a necessary party is not merely that it has an interest in the correct solution of some question involved in the litigation or has some legal contentions to advance or has evidence to give on any of the questions involved. Moreover, a person whose object is to prosecute its own cause of action or who the defendant wants to prosecute cannot be joined for merely that reason.[11]

(5) PROPER PARTY:

A "proper party" is one in whose absence an effective order can be made but whose presence is necessary for a complete, effective and proper adjudication on the questions involved in the proceeding.[12] A court does not have jurisdiction to join a person whose presence is not necessary for the effectual and complete adjudication of all the questions involved in the dispute and this question, i.e. whether his presence is necessary for the effectual and complete adjudication of all questions, is to be decided keeping in mind the scope of the suit. The phrase "all the questions involved" means only the controversies with regard to the right which is set up and the relief claimed on one side and denied on the other and not the controversies which may arise between the plaintiffs inter se, or between the defendants inter se, or between the plaintiffs and third parties or between the defendants and third parties.[13] Further, in the case of a proper party, the court has a discretion to allow or reject the application and a party has no right to insist upon being impleadment merely because his being a proper party.[14]

(6) WHEN NON-JOINDER FATAL:

Order 1 Rule 9 of CPC provides that no suit shall be defeated by reason of the misjoinder or non-joinder of parties, and the court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it. However, it contains a proviso to the effect that nothing in the rule shall apply to non-joinder of a necessary party. Therefore, while non-joinder of necessary parties may prove fatal, the non-joinder of proper parties may not be fatal to the proceedings, but would certainly adversely affect interest of justice and complete adjudication of the proceedings before the appropriate forum.[15]

(7) MULTIPLICITY:

The main object of impleadment of a party is not to prevent multiplicity of proceedings although it is also one of the objects.[16] Therefore, impleadment cannot be permitted solely on this ground de hors the aforesaid principles in regard to necessary or proper party.[17]

II. LAW AS TO IMPLEADMENT IN SUITS FOR SPECIFIC PERFORMANCE:

A question which very often raises its head in suits for specific performance is whether a stranger to an agreement for sale can be added as a party in a suit for specific performance of an agreement for sale.

Some of the provisions which would be relevant in the context of impleadment of parties in suits for specific performance of agreements for sale are reproduced hereinbelow.

Sections 15 and 19 of the Specific Relief Act, 1963:

15. Who may obtain specific performance.-

Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by-

(a) any party thereto;

(b) the representative-in-interest or the principal, of any party thereto:

Provided that where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party;

(c) where the contract is a settlement on marriage, or a compromise of doubtful rights between members of the same family, any person beneficially entitled thereunder;

(d) where the contract has been entered into by a tenant for life in due exercise of a power, the remainderman;

(e) a reversioner in possession, where the agreement is a covenant entered into with his predecessor-in-title and the reversioner is entitled to the benefit of such covenant;

(f) a reversioner in remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach;

(f-a) when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited liability partnership which arises out of the amalgamation.

(g) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;

(h) when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company:

Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.

19. Relief against parties and persons claiming under them by subsequent title.-

Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-

(a) either party thereto;

(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;

(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant;

(c-a) when a limited liability partnership has entered into a contract and subsequently becomes amalgamated with another limited liability partnership, the new limited liability partnership which arises out of the amalgamation.

(d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;

(e) when the promoters of a company have, before its incorporation entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company:

Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.

Section 52 of the Transfer of Property Act, 1882:

52. Transfer of property pending suit relating thereto.-

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, the property 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 the decree or order which may be made therein, except under the authority of the court and on such terms as it may impose.

Explanation.-For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.

Order 22 Rule 10 of CPC:

10. Procedure in case of assignment before final order in suit.-

(1) In other cases of an assignment, creation or devolution of any interest during the pendency of a suit, the suit may, by leave of the court, be continued by or against the person to or upon whom such interest has come or devolved.

(2) The attachment of a decree pending an appeal therefrom shall be deemed to be an interest entitling the person who procured such attachment to the benefit of sub-rule (1).

The principles laid down by the Supreme Court in regard to impleadment in suits for specific performance of agreement for sale are as under:

(1) The scope of a suit for specific performance cannot be enlarged to convert the same into a suit for title and possession, A third party or a stranger to the contract could not be added so as to convert a suit of one character into a suit of a different character.[18] A person who claims independently and adversely to the claim of the vendor would not fall within any of the categories provided for in Section 19 of the Specific Relief Act, 1963, which is exhaustive on the question as to who are the parties against whom specific performance of a contract may be enforced. Such as person is therefore not a necessary party and is not entitled to be joined in a suit for specific performance.[19] Further, in a suit for specific performance of a contract for sale, the issue to be decided is the existence, validity and enforceability of the contract entered into between the parties thereto, whether the plaintiff is ready and willing to perform their part of the contract and whether he is entitled to a decree for specific performance of such contract. The presence of a third party claiming title independently or adversely to the vendor would therefore not be necessary for the court to effectually and completely adjudicate upon the questions arising in a suit for specific performance. Therefore such a person is not even a proper party to the suit.[20] This is in fact nothing but application of the aforementioned general principles in regard to impleadment. Based on the aforesaid principle, a person, who was not a party to the contract but wanted to be impleaded as a defendant on the ground that he had acquired subsequent interest in the property by virtue of a separate decree obtained from the court, was held not entitled to be joined as a defendant.[21] However, in another case, where the original defendant was not the only titleholder of the subject property but was joint holder along with his sons, it was held that it cannot be laid down as an absolute proposition that whenever a suit for specific performance is filed by A against B, a third party C can never be impleaded in that suit and that, if C can show a fair semblance of title or interest he can certainly file an application for impleadment.[22]

(2) On the other hand, the usual question which arises is in regard to the status of a purchaser of the suit property from the vendor in a suit for specific performance of a prior agreement for sale by the vendor in favour of the plaintiff. In light of Section 19(b) of the Specific Relief Act, 1963, a sale of immovable property in the teeth of an earlier agreement to sell is immune from specific performance of an earlier contract for sale only if the transferee has acquired the title for valuable consideration, in good faith and without notice of the original contract.[23] Further, Section 52 of the Transfer of Property Act, 1882 makes it evident that a transfer pendente lite is not illegal ipso jure but remains subservient to the pending litigation, that is, the transfer is good except to the extent it might conflict with rights decreed.[24] Even where the sale deed is executed in breach of an injunction issued by a competent court, such breach would not render the transfer whether by way of an absolute sale or otherwise ineffective and while the party committing the breach may doubtless incur the liability to be punished for the breach committed by it but the sale by itself may remain valid as between the parties to the transaction subject only to any directions which the competent court may issue in the suit against the vendor.[25] Therefore, a transferee pendent lite, who is a representative-in-interest of the party from whom he has acquired the interest, would be a necessary party in a suit for specific performance inter alia since he would be directly affected by the outcome of the suit and bound by the final decree therein and it is likely that a transferor pendente lite may not even defend the title properly as he has no interest in the same or may collude with the plaintiff in which case the interest of the transferee pendente lite would be ignored.[26] In any case, independent of Order 1 Rule 10(2), such person would be added even on account of the provisions of Order 22 Rule 10 of CPC.[27] Furthermore, the proper form of decree in case specific performance is ultimately granted to the plaintiff is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title that resides in him to the plaintiff.[28] Therefore, looking to all these factors, although there is some divergence of opinion on the right of transferee pendent lite to be joined, it has been held that an application for joining a transferee pendente lite should be liberally considered and normally allowed.[29]

However, it has also been held in one case that the court can order impleadment of a purchaser whose conduct is above board, and who files the application for being joined as party within reasonable time of his acquiring knowledge about the pending litigation but 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 would be fully justified in declining the prayer for impleadment.[30] Some judgments have even gone to the extent of holding in a blanket manner that a transferee pendente lite is not required to be joined as a party at all. In the humble opinion of this author, these views do not appear to be correct.

(3) Under Order 22 Rule 10, no detailed inquiry at the stage of granting leave is contemplated and the court has only to be prima facie satisfied for exercising its discretion. The question about the existence and validity of the assignment, creation or devolution can be considered at the final hearing of the proceedings.[31]

Conclusion:

Thus, the law on impleadment is quite well settled, and such applications should be decided based on the law so as to ensure that unnecessary complications are avoided at a later stage.

(The author is a lawyer practising in the Gujarat High Court)



[1] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524, Kasturi v. Iyyamperumal, (2005) 6 SCC 733, Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417

[2] Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417

[3] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524, Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417, Vidur Impex v. Tosh Apartments, (2012) 8 SCC 384

[4] Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417, CCI v. SAIL, (2010) 10 SCC 744

[5] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524, Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417, Vidur Impex v. Tosh Apartments, (2012) 8 SCC 384

[6] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524

[7] Razia Begum v. Sahebzadi Anwar Begum, AIR 1958 SC 886, Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524

[8] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[9] Razia Begum v. Sahebzadi Anwar Begum, AIR 1958 SC 886, Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524

[10] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[11] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524

[12] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524, Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417, Vidur Impex v. Tosh Apartments, (2012) 8 SCC 384

[13] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[14] Mumbai International Airport v. Regency Convention Centre, (2010) 7 SCC 417 para 13-15

[15] CCI v. SAIL, (2010) 10 SCC 744

[16] Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay 1992 (2) SCC 524, Savitri Devi v. District Judge, (1999) 2 SCC 577

[17] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[18] Kasturi v. Iyyamperumal, (2005) 6 SCC 733, Bharat Karsondas Thakkar v. Kiran Construction Co., (2008) 13 SCC 658

[19] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[20] Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[21] Anil Kumar Singh v. Shivnath Mishra, 1995 (3) SCC 147, Bharat Karsondas Thakkar v. Kiran Construction Co., (2008) 13 SCC 658

[22] Sumtibai v. Paras Finance Co. Regd. Partnership Firm Beawer (Raj.), (2007) 10 SCC 82

[23] Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397

[24] Nagubai Ammal v. B. Shama Rao, AIR 1956 SC 593, Vinod Seth v. Devinder Bajaj, (2010) 8 SCC 1, A. Nawab John v. V, N. Subramaniyam, (2012) 7 SCC 738, T. Ravi v. B. Chinna Narasimha, (2017) 7 SCC 342, Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397

[25] Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397

[26] Amit Kumar Shaw v. Farida Khatoon, (2005) 11 SCC 403, Kasturi v. Iyyamperumal, (2005) 6 SCC 733

[27] Khemchand Shankar Choudhari v. Vishnu Hari Patil, (1983) 1 SCC 18, Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397

[28] Durga Prasad v. Deep Chand, AIR 1954 SC 75, R. C. Chandiok v. Chuni Lal Sabharwal, (1970) 3 SCC 140, Vishwa Nath Sharma v. Shyam Shanker Goela, (2007) 10 SCC 595, Vijay A. Mittal v. Kulwant Rai, (2019) 3 SCC 520

[29] A. Nawab John v. V, N. Subramaniyam, (2012) 7 SCC 738

[30] Vidur Impex v. Tosh Apartments, (2012) 8 SCC 384

[31] Amit Kumar Shaw v. Farida Khatoon, (2005) 11 SCC 403

Next Story