Jai Shree Holidays and Tours Pvt Ltd v. Prakash Verma

16. Explaining the scope of jurisdiction under Article 227, this Court in Estralla Rubber[1] has observed: (SCC pp. 101-102, para 6) ―6. The scope and ambit of exercise of power and jurisdiction by a High Court under Article 227 of the Constitution of India is examined and explained in a number of decisions of this Court. The exercise of power under this article involves a duty on the High Court to keep inferior courts and tribunals within the bounds of their authority and to see that they do the duty expected or required of them in a legal manner. The High Court is not vested with any unlimited prerogative to correct all kinds of hardship or wrong decisions made within the limits of the jurisdiction of the subordinate courts or tribunals. Exercise of this power and interfering with the orders of the courts or tribunals is restricted to cases of serious dereliction of duty and flagrant violation of fundamental principles of law or justice, where if the High Court does not interfere, a grave injustice remains uncorrected. It is also well settled that the High Court while acting under this Article cannot exercise its power as an appellate court or substitute its own judgment in place of that of the subordinate court to correct an error, which is not apparent on the face of the record. The High Court can set aside or ignore the findings of facts of an inferior court or tribunal, if there is no evidence at all to justify or the finding is so perverse, that no reasonable person can possibly come to such a conclusion, which the court or tribunal has come to.‖

(iii) Puri Investments v. Young Friend and Co.[3] ―14. In the case before us, occupation of a portion of the subject-premises by the three doctors stands admitted. What has been argued by the learned counsel for the appellant is that once the Tribunal had arrived at a finding on fact based on the principles of law, which have been enunciated by this Court, and reflected in the aforesaid passages quoted from the three authorities, the interference by the High Court under Article 227 of the Constitution of India was unwarranted. To persuade us to sustain the High Court's order, learned counsel appearing for the respondents has emphasized that full control over the premises was never ceded to the medical practitioners and the entry and exit to the premises in question remained under exclusive control of the respondent(s)-tenant. This is the main defence of the tenant. We have considered the submissions of the respective counsel and also gone through the decisions of the fact-finding fora and also that of the High Court. At this stage, we cannot revisit the factual aspects of the dispute. Nor can we re-appreciate evidence to assess the quality thereof, which has been considered by the two fact-finding fora. The view of the forum of first instance was reversed by the Appellate Tribunal. The High Court was conscious of the restrictive nature of jurisdiction under Article 227 of the Constitution of India. In the judgment under appeal, it has been recorded that it could not subject the decision of the appellate forum in a manner which would project as if it was sitting in appeal. It proceeded, on such observation being made, to opine that it was the duty of the supervisory Court to interdict if it was found that findings of the appellate forum were perverse. Three situations were spelt out in the judgment under appeal as to when a finding on facts or questions of law would be perverse. These are: —

(i) Erroneous on account of non-consideration of material evidence, or

(ii) Being conclusions which are contrary to the evidence, or

(iii) Based on inferences that are impermissible in law.

15. We are in agreement with the High Court's enunciation of the principles of law on scope of interference by the supervisory Court on decisions of the fact-finding forum. But having gone through the decisions of the two stages of fact-finding by the statutory fora, we are of the view that there was overstepping of this boundary by the supervisory Court. In its exercise of scrutinizing the evidence to find out if any of the three aforesaid conditions were breached, there was re-appreciation of evidence itself by the supervisory Court.

16. In our opinion, the High Court in exercise of its jurisdiction under Article 227 of the Constitution of India in the judgment under appeal had gone deep into the factual arena to disagree with the final fact-finding forum. ……‖

(iv) Sadhana Lodh v. National Insurance Co. Ltd[4] ―7. The supervisory jurisdiction conferred on the High Courts under Article 227 of the Constitution is confined only to see whether an inferior court or tribunal has proceeded within its parameters and not to correct an error apparent on the face of the record, much less of an error of law. In exercising the supervisory power under Article 227 of the Constitution, the High Court does not act as an appellate court or the tribunal. It is also not permissible to a High Court on a petition filed under Article 227 of the Constitution to review or reweigh the evidence upon which the inferior court or tribunal purports to have passed the order or to correct errors of law in the decision.‖ (Emphasis Supplied)

(v) Ibrat Faizan v. Omaxe Buildhome (P) Ltd.[5] ―28. The scope and ambit of jurisdiction of Article 227 of the Constitution has been explained by this Court in the case of Estralla Rubber[1], which has been consistently followed by this Court (see the recent decision of this Court in the case of Garment Craft[2] ). Therefore, while exercising the powers under Article 227 of the Constitution, the High Court has to act within the parameters to exercise the powers under Article 227 of the Constitution. It goes without saying that even while considering the grant of interim stay/relief in a writ petition under Article 227 of the Constitution of India, the High Court has to bear in mind the limited jurisdiction of superintendence under Article 227 of the Constitution. Therefore, while granting any interim stay/relief in a writ petition under Article 227 of the Constitution against an order passed by the National Commission, the same shall always be subject to the rigour of the powers to be exercised under Article 227 of the Constitution of India.‖

13. While exercising jurisdiction under Article 227 of the Constitution of India, the Court does not examine the correctness or otherwise of the order under challenge. The jurisdiction is specifically supervisory in nature. A supervisor merely supervises. He does not substitute his subjective satisfaction for the subjective satisfaction of the authority which is being supervised. It is only, therefore, where, the manner of exercise of discretion by the Court below is such as leads to manifest injunction or is contrary to any settled principle of law, that interference under Article 227 of the Constitution of India would be warranted.

14. The Court is, therefore, required to examine the present petition in that background.

15. Order I Rule 10(2) of the CPC, whereunder the impugned order has been passed, reads as under: (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.

16. The discretion on whether to add or remove, delete parties from a pending litigation, therefore, vests with the Court which is in seisin of the litigation. Parties, whose presence is necessary, or even proper, for the Court to be able to properly adjudicate the lis, are entitled to be impleaded in the proceedings.

17. The law, regarding ―necessary‖ and ―proper‖ parties to a litigation, stands settled by a plethora of decisions of the Supreme Court.

18. In Kasturi v. Iyyamperumal11, it was held that a ―necessary party‖ to a lis was one (i) against whom there was a right to relief in respect of the controversies involved in the proceedings, or (ii) in the absence of whom no effective decree could be passed. The test was thus postulated in Ramesh Hirachand Kundanmal v. Municipal

Corpn. of Greater Bombay12: ―14. It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objective. The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some question involved and has thought of relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. Similar provision was considered in Amon v. Raphael Tuck & Sons Ltd.13, wherein after quoting the observations of Wynn-Parry, J. in Dollfus Mieg et Compagnie S.A. v. Bank of England14, that their true test lies not so much in an analysis of what are the constituents of the applicants' rights, but rather in what would be the result on the subject matter of the action if those rights could be established, Devlin, J. has stated: ―The test is ‗May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights’.‖ (Emphasis supplied)

19. In Kanaklata Das v. Naba Kumar Das15, the Supreme Court ruled thus, with respect to the right of a third party to seek to be impleaded as a defendant (in para 11.[4] of the report): ―11.4. Fourth, the plaintiff being a dominus litis cannot be

(1956) 1 All ER 273 (1950) 2 All ER 605-611 compelled to make any third person a party to the suit, be that a plaintiff or the defendant, against his wish unless such person is able to prove that he is a necessary party to the suit and without his presence, the suit cannot proceed and nor can be decided effectively. In other words, no person can compel the plaintiff to allow such person to become the co-plaintiff or defendant in the suit. It is more so when such person is unable to show as to how he is a necessary or proper party to the suit and how without his presence, the suit can neither proceed and nor it can be decided or how his presence is necessary for the effective decision of the suit. (See Ruma Chakraborty v. Sudha Rani Banerjee16 )‖

20. While it is true that the plaintiff, as dominus litis, may at the first instance implead those parties whom she, or he, deems to be necessary and proper parties to the lis, if a party not so impleaded seeks impleadment in the proceedings, the right of such party to be impleaded would have to be adjudged on the anvil of Order I Rule 10(2).

21. In para 15 of the report in Mumbai International Airport (P) Ltd. v. Regency Convention Centre and Hotels (P) Ltd17, the Supreme Court has adverted to the concepts of ―necessary party‖ and ―proper party‖. A ―necessary party‖, according to the Supreme Court, is a person who ought to have been joined as a party and in whose absence no effective decree could at all be passed by the Court. A ―proper party‖, on the other hand, would include parties whose presence, even if they are not necessary parties, is necessary, ―to enable the Court to completely, effectively and adequately adjudicate upon all matters in dispute in the suit‖ though he need not be a person in favour of or against whom the decree is to be made. If a person is neither a necessary nor a proper party, he cannot seek impleadment in the suit.

22. Vidur Impex and Traders (P) Ltd. v. Tosh Apartments (P) Ltd.18: delineated the principles governing impleadment of a third party as defendant thus: "41.1. The court can, at any stage of the proceedings, either on an 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.

41.2. 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.

41.3. 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.

41.4. 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.

41.5. 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.

41.6. 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."

23. The question that rises, therefore, is whether Respondent 4 could be treated either as a necessary or a proper party in the plaint instituted by the petitioner against the respondents, on the basis of the allegations in the plaint and the material on record at this point of time.

24. The plaint, no doubt, alleges that, at the time of furnishing of written undertaking by Respondent 1 on 5th January 2015, Respondent 4 was present and that she stood as a guarantor for the said undertaking. The said undertaking, however, is in writing and a copy thereof is on record.

25. A bare glance at the document reveals that there is nothing in the document, which indicates that Respondent 4 stood as a guarantor for the undertaking given by Respondent 1. Clearly, Respondent 4 has signed the document merely as a witness, at the foot of the document. The assertion, in the plaint, that Respondent 4 stood as a guarantor for the said undertaking of Respondent 1, is, therefore, prima facie, not borne out by the document itself. In this context, one may also refer to Sections 91 of the Indian Evidence Act, 1982, which (sans Explanations and Exceptions) reads thus: ―91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document. – When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.‖

26. Significantly, the paragraphs in the written statement field by Respondent 4, by way of response to the plaint, which answers para 4(n), (o), (q) and (r-s) of the plaint, read thus: ―4(N.) That In reply to this para, it is specifically denied that either the answering defendant or defendant no.3 ever assured or stood guarantor for the payment of the amount, allegedly payable by the defendant no.1. It is submitted that the answering defendant signed the said undertaking as a witness only. (O) That the contents of para 4 (o) of the plaint needs no reply as the same do· not relates to answering defendant however it is submitted that the answering defendant never stood guarantor for defendant no. l as alleged. (Q). That in reply to this para, It is specifically denied that either the answering defendant or defendant no.3 ever assured or stood guarantor for the payment of the amount, allegedly payable by the defendant no. l. (R-S) That the contents of para 4(R&S) of the plaint needs no reply as the same do not relates to answering defendant however, it is submitted that the answering defendant never stood guarantor for defendant no.1 as alleged.‖

27. Respondent 4 has, therefore, asserted, time after time, in the written statement, that she did not stand guarantor for the undertaking dated 5th January 2015 given by Respondent 1 to the petitioner. That position is, prima facie, also borne out by the document itself.

28. Mr. Goel, learned Counsel for the petitioner, places reliance on the judgment of a learned Single Judge of High Court of Kerala in P.J. Rajappan v. Associated Industries (Pvt.) Ltd.19, and of a learned Single Judge of this Court in Nanak Chand Jain v. Harish Chander Sabharwal 20.

29. Having perused the said decisions, neither of them, in my view, can come to the aid of the petitioner.

30. P.J. Rajappan (―Rajappan‖, hereinafter), the appellant before the High Court of Kerala in P.J. Rajappan19, submitted that, as he had (1990) 1 KLJ 77 2013 SCC OnLine Del 1376 not signed the agreement forming subject matter of controversy in that case a guarantor, he could not be held liable for any amount due to the plaintiff from the defendant.

31. The High Court of Kerala has identified, in the opening paragraph of the judgment, the issue that arose before it as ―whether the second defendant can be held liable as a guarantor as Ex. A/1 agreement is not signed by him‖. Thereafter, the High Court proceeds to note that ―the totality of the evidence in the case definitely indicates that the second defendant stood as a guarantor for the performance of the agreement by the first defendant‖. In this context, the High Court has noted the fact that there was material to indicate that the second defendant was instrumental in supplying plywood to the plaintiff and that the case of the plaintiff against the second defendant stood established by the accounts kept by the plaintiff firm, exhibited as Ex. A-3 and A-4. Thereafter, in para 4 and 5 of the report in the said case, on which Mr. Goel places reliance, the High Court of Kerala holds as under: ―4. A contract of guarantee is a tripartite agreement involving the principal debtor, surety and creditor. In a case where there is evidence of the involvement of a guarantor, the mere failure on his part in not signing the agreement is not sufficient to demolish otherwise acceptable evidence of his involvement in the transaction leading to the conclusion that he guranteed the due performance of the contract by the principal debtor. When a Court has to decide whether a person has really guaranteed the due performance of the contract by the principal debtor, all the circumstances concerning the transaction will have to be necessarily considered. Court cannot adopt a hyper technical attitude that the guarantor has not signed the agreement and so he cannot be saddled with the liability. Due regard has to be given to the relative position of the contracting parties and to the entire circumstances which led to the contract. Section 126 of the Indian Contract Act provides that a guarantee may be either oral or written. Under the English law by virtue of Section 4 of the Statute of Frauds, a contract of guarantee must be evidenced by writing. The Indian Law makes a departure from the English law.

5. Under Section 126 a contract of guarantee need not necessarily be in writing; it may be express by words of mouth, or it may be tacit or implied and may be inferred from the course of the conduct of the parties concerned. Contracts of guarantee have to be interpreted taking into account the relative position of the contracting parties and in the backdrop of the contract. The Court has to consider all the surrounding circumstances and evidence to come to a finding when the guarantor refutes his legal liability. In Mathura Das v. Secretary of State21 and in Nandlal Chanandas v. Firm Kishinchand22 it was held that contract of guarantee can be created either by oral or by written instrument and that it may be express or it may be implied and may be inferred from the course of conduct of the parties concerned. There is overwhelming evidence in this case that the second defendant had guaranteed the due performance of the contract by the first defendant, the principal debtor. Hence the mere omission on his part to sign the agreement cannot absolve him from his liability as the guarantor.‖

32. Para 8 of the report of this Court in Nanak Chand Jain20, on which Mr. Goel places reliance, reads thus: ―8. In Mathura Das and Ors. versus Secy. of State and Anr21., a Single Judge of Allahabad High Court held that a contract of indemnity or a contract of guarantee may be created either orally or by a written instrument. Ch.[8] Contract Act, is not exhaustive on the subject. A contract of guarantee need not necessarily be in writing; it may be express, by words of mouth, or it may be tacit or implied and may be inferred from the course of conduct of the parties concerned. The above view has been followed in Nandlal Chanandas v. Firm Kishinchand-Butamal22. From the statement of PW[1], which inspires confidence, it is proved that loan was extended to appellant no.1 and appellant no. 2 assured the repayment.‖

33. Significantly, both the aforesaid judgments were rendered in appeals, following a full trial and leading of evidence. The case that was put up by the alleged guarantor in the said case was that, merely because the guarantor had not signed the agreement, he could not be held liable as guarantor for the loan in question. It is in these circumstances that the Court held that, if a cohesive reading of the AIR 1930 All. 848 AIR 1937 Sindh 50 entire evidence, in the light of the surrounding circumstances, indicated that the person in question was a guarantor, he could not escape liability.

34. Neither of these cases, therefore, dealt with an application under Order I Rule 10 of the CPC.

35. The impugned order does not operate as an indemnity, for all times to come, against Respondent 4 being impleaded in the proceedings. All that the learned ADJ has held is that, given the assertions in the plaint and the documents filed with the plaint, no case for impleadment of Respondent 4 in the said proceedings could be said to be made out.

36. There is, clearly, no infirmity in the said reasoning of the learned ADJ, especially viewed in the backdrop of the written statement of Respondent 4.

37. If, at any future point of time, during the course of trial or thereafter, the petitioner is able to establish or prove that Respondent 4 in fact stood guarantor for the agreement, it would be open to the petitioner at that stage to seek impleadment of the respondent by moving an appropriate application in that regard.

38. Sans any such evidence, and on a mere allegation in the plaint which is unsupported by the documents filed with the plaint and is not admitted by the Respondent 4 in the written statement, if the learned ADJ deemed it appropriate, for the present, to delete Respondent 4 from the array of parties, the said view clearly does not justify interference under Article 227 of the Constitution of India.

39. For the aforesaid reasons, I do not find the present case to be one which calls for interference.

40. The petition is accordingly dismissed in limine, with no orders as to costs.

C. HARI SHANKAR, J

NOVEMBER 25, 2022