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Judgment
Ranjit Singh, J
Prayer made by appellant M/s. S.G.S. Construction and Developers (P) Ltd. for being impleaded as party respondent in S.A. filed by Maharaji Educational Trust and another has been rejected by the Tribunal below. Aggrieved against the same, the appellant has filed the present appeal to impugn that part of the order whereby the I.A. filed by the appellant under Order 1 Rule 10, CPC read with relevant provisions of the Securitization Act is dismissed. A brief mention to the fact would be sufficient to get the hang of the issue in the present appeal.
M/s. Maharaji Educational Trust (for short MET) had filed one S.A. against HUDCO and its authorized officer to challenge the notice dated 19.9.2011 issued by respondent HUDCO under Section 13(2) of the SARFAESI Act. MET had also sought interim relief for stay of notice. When the case was listed on 30.11.2011 for hearing of the interim relief, one I.A. came to be filed by the appellant construction company being a third party for its impleadment. This application was filed along with the order passed by the Lucknow Bench of the High Court.
The prayer of the appellant was that before passing any order in the S.A., the I.A. filed by the appellant be taken up for hearing in view of the interim order passed by the said Bench of the High Court wherein proceedings qua the mortgaged property mentioned at Sl No. 6 was directed to remain in abeyance.
It may call for a notice here that in the course of hearing on 30.11.2011, the Counsel for MET as well as HUDCO had agreed that the authorized officer of HUDCO could take symbolic possession of the property and HUDCO was even requested to sell this property at the first instance which was being valued more than the dues of HUDCO. In view of the order passed by the Hon'ble High Court, the Tribunal could not pass any order on the interim relief prayed by MET. It was also disclosed before the Tribunal below that MET had filed one SLP against the order passed by the High Court and the Apex Court had stayed the operation of the order passed by the High Court. The appellant construction company had thus filed an application for being impleaded in the S.A., which was then taken up for consideration by the Tribunal below.
The prayer by the appellant in this application was that it was a necessary and proper party as it is aggrieved against the action and measure taken by HUDCO, as the company had entered into an agreement to sell on 26.8.2010 with MET with part of agricultural land measuring 63.45 acres situated at Village Akbarpur, Behrampur, Mirzapur, Mithepur, Pargona Loni Tehsil and District Ghaziabad, U.P. This was the property listed at Sl No. 6 of recovery certificate issued pursuant to the order passed in O.A. No. 160/2012. The appellant would plead that MET had approached the Tribunal with unclean hands and concealed various material facts in the S.A. filed by it. As per the appellant, issue arising in the S.A. filed would have direct bearing on the S.A. filed by the appellant and thus would affect the rights of the appellant which had entered into a bona fide agreement to sell dated 26.8.2010 with MET.
MET filed reply to this application raising objection to the prayer made by the appellant. As per the MET, there was no reason for impleading a third party in the proceeding initiated by the creditors against the borrowers and there is no scope for allowing the prayer of the appellant for being impleaded as proper or necessary, party. MET also urged that the claim of the appellant of the basis of alleged agreement to sell which was void ab initio and incapable oh; performance. As per MET, the agreement was obtained by playing fraud, coercion, duress and misrepresentation. This agreement was not registered. It was also pleaded that once possession of the secured asset has been taken over by the secured creditor in exercise of power under Section 13(4) of the SARFAESI Act, there is no scope for any third party to intervene in the case to seek hearing. MET had also pleaded that outcome of the S.A. filed by it has no bearing on the S.A. 82/2011 filed by the appellant and thus pleaded that the application was liable to be dismissed.
The respondent HUDCO filed a separate reply to this application. As per the HUDCO, the appellant/applicant was an outsider to the recovery certificate and had no locus standi to file application for its impleadment. Respondent HUDCO would also plead that the SARFAESI Act did not recognize any outsider of the proceeding and thus appellant/applicant was neither necessary nor proper party as it is not aggrieved by any of the measures initiated by HDUCO. The respondent HDUCO would also plead that the alleged agreement to sell was a sham documents and did not confer any right in favour of the appellant. The plea further was that the validity of the agreement to sell was under legal scrutiny of the Hon'ble Supreme Court in the SLP filed by MET, and arbitration proceedings stated to have been commenced was termed as wrong and not binding on the respondent HUDCO. The appellant had invoked arbitration proceedings in regard to its right with regard to the agricultural land and accordingly pleaded that it was a necessary or proper party.
The Tribunal, after hearing the parties, has dismissed the prayer by holding that the appellant has already filed a separate S.A. No. 82/2011 against HUDCO and MET, which is pending adjudication before the same Tribunal. The Tribunal, while rejecting the prayer, had issued direction that S.A. Nos. 81/2011 and 82/2011 be listed and taken up together to avoid any conflicting decision. It is against this order that the present appeal is filed by the appellant.
Counsel for the appellant has not been able to show in any satisfactory manner that the appellant would have a right to be impleaded as a party in the S.A. filed by the borrower against the measures initiated by the creditor. The whole claim of the appellant is based on so-called agreement to sell which it had allegedly entered into with the borrower. The borrower MET has termed this agreement to sell with the appellant as void having been obtained by playing fraud, coercion and duress. The appellant concededly is a third party and stranger to the lis between MET and the secured creditor HUDCO. If any property is mortgaged with the secured creditor, then any transfer of the said property has to be subject to the rights of the mortgagor are concerned. Even otherwise, serious debatable issues would arise in this case as far as the rights of the appellant are concerned. It has been pleaded before me with some justification that the agreement to sell even if otherwise valid, may not create any right in favour of the appellant as per law laid in various authoritative pronouncements. This issue had been considered by this Tribunal in the case Bhilwara Textiles Pvt. Ltd. v. State Bank of India & Ors., I (2015) BC 115. This Tribunal has clearly held that agreement to sell does not create any right in favour of the purchaser. This view is on the basis of law laid down in the case of K. Basavarajappa v. Tax Recovery Commissioner, Bangalore & Ors., 1996 (SLT Soft) 2032 : (1996) 11 SCC 632. The claim on the basis of this agreement to sell, therefore, cannot entitle the appellant to seek its impleadment in the S.A. filed by MET who is the borrower.
In this case, apparently, one effort after another is made to stall the recovery proceedings. There would hardly be any justification for the appellant to seek its impleadment in the S.A. filed by borrower MET when the appellant itself has taken recourse to the filing of a separate S.A., which is under consideration of the Tribunal blow.
The borrower is stated to have agreed for sale of the property and the appellant has made claim on the basis of an agreement to sell. Once the borrower has termed the agreement to be vitiated by fraud, misrepresentation, coercion and duress, the plea by the appellant that it is a necessary or proper party can only be made if it succeeds in seeking implementation/execution of this agreement which can be by way of suit for specific performance. In an S.A. filed by the borrower which has no concern with the appellant who is a third party, the prayer by the appellant for being impleaded as necessary or proper party is clearly misplaced and misconceived. The Tribunal below has rejected the prayer, as the appellant has filed the S.A. There is no valid reason to interfere in this view formed by the Tribunal below.
The appellant is certainly not a necessary party in the S.A. filed by MET, the borrower. The appellant cannot be taken as a proper party as well. A necessary party is one without whose presence no order can be effectively made. A proper party is one in whose absence an effective order can be made but whose presence is necessary for complete and final decision on the questions involved in the proceedings. Undoubtedly, while considering such a request for adding the name of a party or for directing to strike out the name of a party, 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 effectively and completely adjudicate upon and settle all questions involved in the suit. While considering any such plea one cannot lose sight of the fact that the plaintiff in a suit being a dominus litis may choose a person against whom he wishes to litigate and that he cannot be compelled to sue a person against whom he does not wish to seek a relief. It can, therefore, be said that a person who is not a necessary or property party cannot be impleaded. The appellant has no role in a lis between borrower and the Bank. If there is any dispute, it is between the appellant and the borrower. Appellant has apparently no title to the property only on the basis of agreement to sell. It is thus clear that the appellant cannot be taken as a necessary or proper party. The appellant, in any case, is having no right in regard to the property in question on the basis of agreement to sell. His prayer primarily was entertained and considered because of the order passed by the Lucknow Bench of the Hon'ble Allahabad High Court. This order has finally been set aside by the Hon'ble Supreme Court while allowing SLP of the borrower by holding that the appellant has no right to invoke the writ jurisdiction of the High Court. A cost of Rs. 5 lac has also been imposed on the appellant.
There is no merit in this appeal. The same is accordingly dismissed.