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Judgment
M. Karpagavinayagam, J.—The question that arises for consideration is whether the applicant/ proposed party M/s. ION Exchange Finance Limited is a necessary or proper party to be joined as one of the party respondent in O. A No. 318 of 1999 under Order 1, Rule 1 of the CPC in the suit instituted by the plaintiff, the first respondent herein in C.S. No. 340 of 1999. The plaintiff, the first respondent in this application filed the suit in C.S. No. 340 of 1999 for declaration that the Stock Certificate Ms/97 belongs to the plaintiff and he is the absolute owner of the same and for permanent injunction restraining the Chief General Manager, Reserve Bank of India, the third respondent herein, from transferring it in the name of the Syndicate Bank, Mumbai, the fourth respondent herein and also for a mandatory injunction directing the Syndicate Bank to withdraw the documents from the Reserve Bank and renunciate in favour of the plaintiff.
The plaintiff also filed application in O.A. No. 318 of 1999 seeking for the grant of interim injunction restraining the Reserve Bank of India, the third respondent herein from transferring the Stock Certificate Ms/97 in favour of the Syndicate Bank, the fourth respondent herein. Accordingly, this Court passed an order dated 25.5.1999 directing the third respondent to retain the Stock Certificate Ms/97 with it, until further orders.
At this stage, the present applicant ION Exchange Finance Limited, the proposed party, filed this application in A. No. 219 of 2000 requesting this Court to implead the applicant as a party respondent in O.A. No. 318 of 1999 under Order 1, Rule 10 of C.P.C.
This application is vehemently opposed by the plaintiff, the first respondent contending that the applicant, the proposed party, is not a necessary or proper party.
According to the applicant/proposed party, the applicant Company granted an inter-corporate loan to one Premier Housing and Industrial Enterprises Limited, the second respondent herein, for Rs. 20 lakhs on 23.4.1997. The borrower granted a security for the said loan in the shape of a Government of India Stock Certificate No. MS-97 amounting to Rs. 21,45,000/- Unable to repay the loan, the borrower, the second respondent herein requested the applicant to sell the security and realise the amount. Accordingly, on 30.4.1998, the applicant sold the said security to Mafatlal Securities Limited. Thereafter, the Mafatlal Securities Limited sold the security to Birla Global Finance Limited. On 22.4.1999 Birla Global Finance Limited through Syndicate Bank, the fourth respondent herein, lodged the said security with Reserve Bank of India, the third respondent herein for a transfer of the certificate to their name. At that stage, the plaintiff filed the suit, as if he is the owner of the Stock Certificate in question and sought for declaration and permanent injunction. Pending disposal of the said suit, the plaintiff, the first respondent obtained interim injunction restraining the Reserve Bank of India from transferring the stock certificate in favour of the present borrower.
The above factors as contained in the affidavit filed by the proposed party would reveal that the applicant/proposed party to whom the Stock Certificate was earlier pledged and on 23.4.1997 was authorised to sell the Stock Certificate by the owner Premier Capital Market Services Limited, the second respondent herein, sold the said certificate on 13.4.1998 to Mafatlal Securities Limited, who in turn, sold to the Birla Global Finance Limited and thereafter on 22.4.1999 the Birla Global Finance Limited through the Syndicate Bank, the fourth respondent herein, lodged the said security with PDO, Mumbai for a transfer of the Certificate to their name.
By virtue of the interim order passed by this Court, it is now contended that the rights of the parties who were borrowers from the proposed party, the pledgee, who sold the Certificate on behalf of the owner, have been seriously affected,
On the other hand, it is contended by the counsel for the plaintiff, the first respondent herein that it is the case of the plaintiff that the Premier Capital Market Services Limited, the first defendant and second respondent herein, purchased Government Stock Certificate Ms-57 for Rs. 23,22,000/- in their name on behalf of the plaintiff, thereafter, split up the same into three Trusts and transferred two Trusts, namely, Ms 98 and 99, but however, did not transfer Ms 97 for the value of Rs. 21,45,000/- in the name of the plaintiff and instead, he fraudulently delivered to the Syndicate Bank Mumbai, who seeks to transfer the Certificate to its name, in pursuance of an arrangement between the second and fourth respondent and that under those circumstances, the applicant/proposed party is not a necessary party.
The counsel for both would cite various authorities interpreting the scope under Order 1 Rule 10 C.P.C.
Mr. Krishna Srinivasan representing M/s. Ramasubramanian and Associates, appearing for the applicant/ proposed party would cite the following authorities -
(1) Mahadeva Rice and Oil Mills v. Chennimalai Gounder (A.I.R. 1968 Madras 287);
(2) Khaja Abdul v. Mahabub Sahed A.I.E. 1979 Andhra Pradesh 152);
(3) Ramesh Hirachand Kundanmal Vs. Municipal Corporation of Greater Bombay and Others,
(4) Krishnan Lal v. Sudesh Kumari (A.I.R. 1998 Punjab and Haryana 168);
(5) Savitri Devi Vs. District Judge, Gorakhpur and Others,
Mr. S.Y. Raghuraman, appearing for the plaintiff, the first respondent herein would cite the following decisions:-
Udit Narain Singh Malpaharia Vs. Additional Member, Board of Revenue, Bihar,
B. Somaiah v. Amina Begum (A.I.R. 1976 P. 182);
(3) K.A.M. Sheriff v. Ramu Reddiar (A.I.R. 1977 Madras 185=90 L.W.120) ;
(4) Bharatha Panicker v. Krishnakumari (1983 II M.L.J. 189) ;
A perusal of the decisions referred to above, would give out the following settled principles : -
(1) Order 1, Rule 10, C.P.C. enables the court to add any person as party at any stage of the proceedings if the person whose presence before the court is necessary in order to enable the court to effectively and completely adjudicate upon and settle all the questions involved in suit. Avoidance of multiplicity of proceedings is also one of the objects of the said provision in the Code.
(2) Rule 10(2) gives a wide discretion to the court to meet every case of defect of parties and is not affected by the inaction of the plaintiff to bring the necessary parties on record. A necessary party is one without whom no order can be made effectively. The addition of parties is generally not a question of initial jurisdiction of the court but of a judicial discretion which has to be exercised in view of. all the facts and circumstances of a particular case.
(3) If the intervener has a cause of action against the plaintiff relating to the subject matter of the existing action, the court has power to join the intervener so as to give effect to the primary object of the order which is to avoid multiplicity of actions.
(4) The proposed party has a defined, subsisting, direct and subsisting interest in the litigation, which interest is either legal or equitable and which right is cognisable
(5) object of the provision is to adopt a liberal construction to enable the Court to determine all the questions relating to the subject matter of the suit arising not only between the parties to the suit but once and for all in the presence of all those parties whose presence is necessary or proper for an effective and final adjudication.
(6) When the Court has to determine the question of title of the party, who claims to be the owner of the property in question, he shall also be considered to be a necessary and proper party without whose presence the question cannot be finally and effectually adjudicated upon.
(7) The object of this Rule is bringing before the court at any time of the proceedings, all persons who are directly; interested in the subject-matter of the suit so that all disputes in relation to such parties and same subject-matter could be decided together and finally without inconvenience and expense of separate action and trials.
(8) Where a person applies to be made a party to a suit, what the Court ought to see is whether there will be prejudice by his not being added as a party.
(9) Meticulous care should be taken to avoid adding of a party if it is intended merely as a rule to ventilate independent grievances and enlarge the scope of the controversy in a pending lis.
In the light of the above legal and fact situation, the question whether the applicant/proposed party is a necessary party or not has to be decided.
According to the plaintiff, stock certificate Ms.97 for the value of Rs. 21,45,000/- belongs to him. The plaintiff would contend that the stock certificate purchased by the Premier Capital Market Services Limited on behalf of the plaintiff, but it transferred two other certificates and did not transfer the stock certificate Ms 97.
According to the proposed party, the stock certificate which was owned by the Premier Capital Market Services Limited was pledged and granted as a security to the applicant for the loan of Rs. 20 lakhs given by the applicant Company to the Premier Capital Market Services Limited on 23.4.1997 and since the loan amount was not paid, he was authorised to sell the same and accordingly, sold it on 13.4.1998 to Mafatlal Securities Limited, who thereafter, sold it to Birla Global Finance Limited and subsequently, Birla Global Finance Limited lodged the said security for the transfer of the said certificate to their name through Syndicate Bank; therefore, it has become necessary to hear the proposed party in order to decide as to whether the plaintiff/ respondent is really the owner or the sale by the proposed party, the pledge as authorised by the owner of the stock certificate, viz., Premier Capital Market Services Limited, the second respondent herein is valid.
It is quite relevant to note that it is specifically contended by the proposed party that the Premier Capital Market Services Limited, the first defendant had no legal right whatsoever to transfer the said certificate or the rights thereto to any one, after it had been pledged to secure the amount to the applicant and that in any event, even such an alleged transfer cannot affect the rights or deprive the applicant to their rights of security over the said stock certificate.
On going through the records, it is cleat that even according to the plaintiff, the stock certificate was" never transferred to the plaintiff and admittedly, the plaintiff did not have any possession or custody of the said original certificate at the relevant point of time.
Under these circumstances, the submission of the Learned Counsel for the proposed party that its right to realise the value of the certificate to recover their loan cannot be disputed in any manner, does have force.
Admittedly, the factual aspects regarding the sale by the proposed party as authorised by the second respondent herein to various parties have not been mentioned .either in the plaint or in the affidavit. This is probably because the plaintiff did not know all these details. However, when the proposed party who is the seller of the stock certificate in question has given all these particulars in the form of affidavit and typed sets containing various documents, in my view, the proposed party is a necessary party to be impleaded as a party respondent in this application.
In the light of the materials available on the record through the typed set and affidavit filed by the proposed party, I am of the opinion that the applicant is interested in the subject-matter of the suit and he shall be allowed to contest the proceedings, since according to the applicant, he being the pledgee, sold the stock certificate as authorised by the original owner; and if he is not impleaded, then the applicant would, in my view, certainly be prejudiced.
On the other hand, if ultimately plaintiff gets the decree declaring that he is the owner of the stock certificate, then sale of the stock certificate, by the impleading party would become invalid and in that event, the applicant would be the affected party On this ground also, the applicant would be necessary and proper party to be heard by making as a party in these proceedings. In the result, the application for impleading is allowed. The plaintiff is directed to amend the cause title in O.A. 318 of 1999 within two weeks from today.