Arun Sampatrao Patil v. Amruta Laxman Waghmare & Ors.

2 Applicant herein has filed this Application to be made a party to this Appeal on grounds, inter alia, that Respondent No.6, i.e., Mr.Nilesh Kanade Group through its proprietor Nilesh Satish Kanade had assigned the said property in favour of Applicant. The assignment deed dated 13th March 2007 (the deed of assignment), copy whereof is annexed to the application is signed by Respondent No.1, Respondent No.6 and Applicant. The assignment deed has been signed by Respondent No.6, as constituted attorney of Respondent No.1. According to Applicant the assignment happened during the pendency of the suit and it was left to Respondent No.6 to defend the suit and now Respondent No.6 has turned hostile against Applicant and is not pursuing the First Appeal diligently because this Appeal has been pending in this Court for quite some time. According to Applicant, therefore, Applicant should be added as Respondent to the First Appeal. Mr.Kanade relied on Order XXII Rule 10 and 11 of the Code of Civil Procedure (CPC) and also Section 146 of the CPC. For ease of reference, both are reproduced herein: “Order XXII Rule 10 xxxxxxx

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). [10-A. Duty of pleader to communicate to Court death of a party – Whenever a pleader appearing for a party to the suit comes to know of the death of that party, he shall inform the Court about it, and the Court shall thereupon give notice of such death to the other party, and, for this purpose, the contract between the pleader and the deceased party shall be deemed to subsist.] Order XXII Rule 11

11. Application of Order to appeals – In the application of this Order to appeals, so far as may be, the word “plaintiff” shall be held to include an appellant, the word “defendant” a respondent, and the word “suit” an appeal.” “Section 146. Proceedings by or against representatives – Save as otherwise provided by this Code or by any law for the time being in force, where any proceeding may be taken or application made by or against any person, then the proceeding may be taken or the application may be made by or against any person claiming under him.”

3 Mr.Kanade submitted that since Respondent No.6 has assigned his rights to Applicant, by virtue of Order XXII Rule 10 read with Rule 11, the Appeal, by leave of the Court, may be continued by or against Applicant because it is upon Applicant that the interest of Respondent No.6 has devolved.

4 Mr.Kanade, in the alternative, submitted that even if Order XXII Rule 10 would not be applicable still by virtue of Section 146 of CPC, the Appeal may be proceeded against Applicant because Applicant is claiming under Respondent No.6.

5 Mr.Kanade submitted that as per the deed of assignment, Applicant has paid Rs.[4] crores to Respondent No.6, and, therefore, should be made a party to the Appeal since Respondent No.6 is not effectively defending the Appeal. Mr.Kanade submitted, relying upon a judgment of the Apex Court in Smt.Saila Bala Dassi Vs.Nirmala Sundari Dassi[1], that the Apex Court has held that Section 146 of CPC provides any proceedings which can be taken by a person may also be taken by any person claiming under him and that the expression “claiming under” is wide enough to include cases of assignment as in the present case. Mr.Kanade also relied upon another Judgment of the Apex Court in the case of Amit Kumar Shaw and Anr. Vs. Farida Khatoon and Anr.[2] to submit that under Order XXII Rule 10 no detailed inquiry at the stage of granting leave, is contemplated. A Court has to only be prima facie satisfied for exercising its discretion in granting leave for continuing the suit by or against the person on whom the interest has devolved by assignment or devolution. The question about the existence and validity of the assignment or devolution can be considered at the final hearing of the proceedings. These submissions were made by Mr.Kanade in response to a primary objection that Mr.Tamboli raised that the assignment deed on which Applicant was relying upon was on the teeth of an injunction order that was in force, as regards the said property.

6 Opposing the Civil Application, Mr.Tamboli submitted that on 14th November 2006, the trial Court had passed an order restraining Respondent No.1, his agents, servants or any other persons acting on his behalf from alienating or creating any third party interest in the suit property, i.e., land bearing Survey No.143/2 Wakad, Pune, until further orders. Mr.Tamboli submitted, relying on a judgment of the Apex Court in Surjit Singh and Ors. Vs. Harbans Singh and Ors.[3] and a Judgment of a Division Bench of this Court in Keshrimal Jivji Shah and Anr. Vs. Bank of Maharashtra and Ors.[4] that transfer of immovable property in violation of an order of injunction or prohibition issued by Court of law, confers no right, title or interest in the transferee, as it is no transfer at all. Mr.Tamboli submitted that the transferee cannot be allowed to reap advantage or benefit from such transfer merely because he is not party to the proceedings in which order of injunction or other prohibitory direction or restraint came to be issued. It is enough that the transferor is a party and the order was in force. Mr.Tamboli also submitted that if Applicant really wanted to participate in the proceedings, assuming for the sake of argument that the assignment deed was not hit by the order of injunction, Applicant should have stepped into the proceedings when the suit was pending and could not, at the appeal stage, attempt to joint as a party.

4 2004 (3) Mh.L.J. 893 7 On the submission of Mr.Kanade that the trial Court should not hold a detailed inquiry at the stage of granting of relief, Mr.Tamboli submitted that an inquiry to ascertain whether the assignment deed exists or should be construed as a nullity or illegality would not amount to holding a detailed inquiry. Mr.Tamboli also submitted that in any event as held by the Apex Court in Surjit Singh (Supra) the Court has the duty, as also the right, to treat the alienation/assignment having not taken place at all for its purposes.

10 The applications have been made in these appeals. But the alleged assignment in favour of applicant took place, admittedly during the pendency of the suit, not during the pendency of these appeals. Therefore, the application under Order XXII Rule 10 cannot be sustained. We find support in Saila Bala Dassi (Supra) where the Apex Court on similar facts and circumstances held that the Application under Order XXII Rule 10 was not maintainable. This was because even in Saila Bala Dassi (Supra), the Appellant, though had acquired rights when the suit was pending, chose to apply under Order XXII Rule 10 during the Appeal stage. In paragraph 7, the Apex Court held: “7……. But it is contended for the first respondent that even if Suit No. 158 of 1935 is considered as pending when the transfer in favour of the appellant was made, that would not affect the result, as no application had been made by her to be brought on record in the original court during the pendency of the suit. Nor could the application made to the appellate Court be sustained under O. 22, R. 10, as, the transfer in favour of the appellant was made prior to the filing of that appeal and not during its pendency. This contention appears to be well-founded; …...” (Emphasis supplied) As noted earlier, even in the case at hand, the Application is being made at the stage of Appeal when the alleged assignment in favour of Appellant was made prior to the filing of the Appeal and not during its pendency.

11 If Order XXII Rule 10 would not apply, then certainly, the Judgment of the Apex Court in Amit Kumar Shaw (Supra) that under Order XXI Rule 10 no detailed inquiry at the stage of granting leave is contemplated would not be applicable. In any case, as submitted by Mr.Tamboli, an inquiry to ascertain whether the assignment deed exists or should be construed as a nullity or illegality would not amount to holding a detailed inquiry.

12 Coming to the indisputable fact that the order of injunction against Defendant No.1 passed on 14th November 2006 (and is in force even today) was in force when the deed of assignment dated 13th January 2007 relied upon by Applicant, was entered into, Mr.Kanade submitted that Applicant was not a party to the suit. That would not serve the cause of applicant. This is because, Respondent No.6 and also Respondent No.1 were parties to the deed of assignment and they were parties to the suit. Both Respondent Nos.[1] and 6 have signed the deed of assignment though according to Mr.Tamboli Respondent No.6 by signing on behalf of Respondent No.1, has misused the power of attorney given in favour of Respondent No.6 by Respondent No.1. Further, the Division Bench of this Court in Keshrimal Jivji Shah (Supra) relying on Surjit Singh (Supra) held that the transfer of immovable property in violation of an order of injunction, or prohibition issued by Court by law, confers no right, title or interest in the transferee, as it is no transfer at all. The Court held that such a transfer would be a nullity. Paragraphs 26, 27 and 28 of Keshrimal Jivji (Supra) read as under: “26. We cannot accept Shri Naphade's contention that observations of the Supreme Court in the case of Surjeet Singh should be read as restricted to proceedings under Order 22, Rule 10 of Civil Procedure Code and the same cannot be extended to defiance of injunction order issued under Order 39, Rule 1 of Civil Procedure Code. Once the issue is placed on the pedestal of public policy and the very faith of litigants in Rule of law and administration of justice, then it is not possible to make the distinction or bifurcation suggested by Shri Naphade. It would mean that consequences of nullifying such transaction not being provided by the Statute, it would not lose its legal efficacy even if it is in utter disregard to or in violation of or breach of prohibitory order or order of injunction issued by a Court of law. It would mean that parties can breach and violate Court orders openly and with impunity and neither they nor the beneficiaries suffer any consequences. It is time that we recognise the principle that transfer of immovable property in violation of an order of injunction or prohibition issued by Court of law, confers no right, title or interest in the transferee, as it is no transfer at all. The transferee cannot be allowed to reap advantage or benefit from such transfer merely because he is not party to the proceedings in which order of injunction or other prohibitory direction or restraint came to be issued. It is enough that the transferor is a party and the order was in force. These two conditions being satisfied, the transfer must not be upheld. If this course is not adopted then the tendency to flout orders of Courts which is increasing day by day can never be curbed. The Court exercises its powers on the foundation of respect and regard for its authority by litigating public. People would loose faith and respect completely if the Court does not curb and prevent this tendency. The note of caution of the Supreme Court must be consistently at the back of everybody's mind. Therefore, Shri Naphade is not right in the distinction which he is trying to make.

27. Equally untenable is the contention of Shri Naphade that an order of injunction will bind only the transferor in this case. It is his submission that the said order does not bind the world at large. He submits that ownership rights are neither taken away nor restricted in any manner by order of injunction or other preventive directions. He submits that the transfer in favour of his client was thus neither invalid nor illegal, leave alone null and void. For the reasons already recorded above, we find it difficult to accept this contention of Shri Naphade. Decision of the Supreme Court in the case of Krishan Kumar Narula v. State of Jammu and Kashmir, reported in AIR 1967 SC 1386 has no application. There, the Supreme Court was distinguishing an order of stay from an order of injunction. The distinction was made in the context of consequences upon breach and violation of such orders. It is in that context that the Supreme Court observed that the order of stay is qua a Court, whereas an order of injunction reaches and touches a party to the lis. These observations cannot be applied when it is noticed that during the pendency of an order of injunction, immovable property, which is subject matter of restraint or injunction, is transferred. When this course is admittedly adopted, then there is no choice but to declare the transaction as illegal. There is no question of then deciding the nature and effect of the order of injunction.

28. Mr. Naphade's submissions overlook the effect of an order of injunction. An order issuing interlocutory injunction is issued with a view to preserve and protect status quo during the pendency of the suit or litigation. The true effect of such an order is, therefore, preservation of status quo prevailing as on the date of issuance of the order. Any alteration in the status quo as prevailing and directed to be maintained by the Court of law is not permissible except with leave or sanction of Court. It is well settled that if Courts are not to honour and implement their own orders and encourage party litigants, be they public authorities, to invent methods of their own to short circuit and give a go by to the obligations and liabilities incurred by them under orders of Courts, the rule of law will become casualty in the process - a consequence to be jealously averred by all and at any rate by the highest Courts in the State.”

13 Paragraph 4 of Surjit Singh (Supra) reads as under: “As said before, the assignment is by means of a registered deed. The assignment had taken place after the passing of the preliminary decree in which Pritam Singh has been allotted 1/3rd share. His right to property to that extent stood established. A decree relating to immovable property worth more than hundred rupees, if being assigned, was required to be registered. That has instantly been done. It is per se property, for it relates to the immovable property involved in the suit. It clearly and squarely fell within the ambit of the restraint order. In sum, it did not make any appreciable difference whether property per se had been alienated or a decree pertaining to that property. In defiance of the restraint order, the alienation/assignment was made. If we were to let it go as such, it would defeat the ends of justice and the prevalent public policy, When the Court intends a particular state of affairs to exist while it is in seisin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the Court orders otherwise. The Court, in these circumstances has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes. Once that is so, Pritam Singh and his assignees, respondents herein, cannot claim to be impleaded as parties on the basis of assignment. Therefore, the assignees-respondents could not have been impleaded by the trial court as parties to the suit, in disobedience of its orders. The principles of lis pendens are altogether on a different footing. We do not propose to examine their involvement presently. All what is emphasised is that the assignees in the present facts and circumstances had no cause to be impleaded as parties to the suit. On that basis, there was no cause for going into the question of interpretation of paragraphs 13 and 14 of the settlement deed. The path treaded by the courts below was, in our view, out of their bounds. Unhesitatingly, we upset all the three orders of the courts below and reject the application of the assignees for impleadment under Order 22 Rule 10 C.P.C.”

14 Therefore, since the deed of assignment has been entered into in defiance of an injunction order, Applicant cannot claim to be impleaded as party on the basis of the said assignment. In fact, in Surjit Singh (Supra), the facts were almost similar, where there was an assignment by means of registered deed and the assignment happened after an order of injunction was passed. The Court observed that in defiance of the restraint order, the assignment was made like in the case at hand. If we let it go as such, it would defeat the ends of justice and the prevalent public policy. This Court, in the circumstances, has the duty, as also the right, to treat, the deed of assignment having not taken place at all for its purposes.