Sewnarayan Khubchand vs Bahubali Estates Ltd. & Another

Indrajit Chatterjee, J.—This Court is hearing this application under Article 227 of the Constitution of India as against the order No. 26 dated 28th May, 2013 wherein the learned 5th Bench of City Civil Court at Calcutta, in Title Suit No. 1076 of 1988 rejected the application for addition of party under Order 1 Rule X of the Civil Procedure Code (hereinafter called as the said Code).

The case of the petitioner as claimed in this petition can be summarised thus :

The three individuals, namely, Ghamandilal Sarogi, Smt. Kamal Devi Sarogi and Kamal Kumar Gangwal, were the original owners in respect of suit property. The petitioner got possession of the suit property as per a lease deed dated 17-06-1982 for a period of 99 years with a further option to renew it for 99 years and again for 99 years. The lessor instituted one suit against the present petitioner in the City Civil Court for eviction being Title Suit No. 1020 of 1985.

That suit ended in compromise as per settlement effected on 1990 between the parties. The three individuals formed a partnership firm along with others and that partnership became a Joint Stock Company named and styled as "Bahubali Estates Ltd." i.e. the plaintiff/opposite party (hereinafter called as the Company).

A deed of partnership dated 16th October, 1987 was made in between Ghamandilal Sarogi, Smt. Kamala Devi Sarogi, Kamal Kumar Gangwal, Neem Devi Gangwal, Sanjoy Kumar Jain, Smt. Aloka Jain and Smt. Ila Jain. It may be mentioned that Ghamandilal Sarogi, Smt. Kamala Devi Sarogi and Kamal Kumar Gangwal were the owners in respect of the suit property. The said partnership firm was converted into a Joint Stock Company and thereafter the said Joint Stock Company became a Public Limited Company. The said Company filed on suit being Title Suit No. 1076 of 1998. This is the suit in question before the court. The opposite party no.1/defendant no.1 is the partnership firm and the opposite party no.2/defendant no.2 is the partner.

The present opposite party no.1/defendant no.1 has challenged the acquisition by Bahubali Estates Limited. It is claimed to be a suit for eviction and in that case, one application under Order 1, Rule 10 of the C.P.C. was filed by the petitioner/plaintiff. It may further be mentioned that the property in question was mortgaged by Bahubali Estates Limited in favour of Tata Financial Services and in that petition under Order 1, Rule 10 of the C.P.C. it was prayed for by the defendant no.1 that the said Tata Financial Services and Jalan International Hotels Pvt. Ltd. be made a party. The mortgage was done on 29th March, 2012. It was submitted before the learned Trial Court that if the mortgagee is not represented then the petitioner will suffer irreparable loss. That application was, however, dismissed by the impugned order.

It is the claim of the opposite party that one building was constructed over the suit property by the defendant no.1 partnership firm. The major portion of the building was sublet/subleased out by the defendant no.1 to different parties. The partnership firm had such right as per the agreement. It was also agreed that certain amount of rent is to be paid to the original lessor.

The petitioner/defendant no.1 has denied that Bahubali Estates Limited has any title over the suit property. In that suit pending before the City Civil Court Judge, P.W.-1 has already been examined in full and discharged. Gamandilal, Kamala Devi and Kamal Kumar are no longer in picture. The entire premises at 9C, Lord Sinha Road has a total area of 17 Kattahs 15 Chattaks of land and structure therein was mortgaged to Tata Financial Services Limited (the proposed defendant to be added). It is also the claim of the petitioner that by the mortgaging the property Rs.15 crores was taken from that Tata Financial Services in favour of Jalan International Hotels Private Limited (another proposed defendant to be added).

It is further case of the petitioner that out of 17 Kattahs 15 chattaks of land over the said property, the present defendant was claiming interest only over 2 Kattahs 8 chattaks 13 sq.ft. It is also the case of the petitioner that in the lease deed, i.e. running Page Nos. 73 to 77, there is no mention of the said property being that 2 Kattahs , 8 chattaks, 13 sq.ft.. Thus, the said property was also mortgaged as per the said mortgage deed to Tata Financial Services Limited.

In counter to all these, it is the case of the opposite party/plaintiff that this is a landlord�tenant dispute in respect of the leasehold property to the tune of 2 Kattahs 8 chittaks and 13 sq. ft. and the opposite party has claimed that it is the owner of the said land also and the eviction has been prayed for as the tenant defaulted in payment of lease rent and as they also committed breach in respect of the lease deed.

It is also the case of the opposite party that it is a landlord�tenant dispute and the third party cannot have any say as it will be a stranger to such a suit. It is also the case that a stranger cannot be a necessary party in a battle between the landlord and the tenant. It is the further case of the opposite party that there is no privity of contract between the Tata Financial Services and Jalan International Hotels Private Limited with the defendants.

It is also the case of the petitioner that mortgage can be given by the owner of the property keeping the tenant therein and no consent of the tenant is required in such a case. As per the mortgage deed dated 29th March, 2012, Bahubali Limited stood as guarantor in respect of the loan to the tune of Rs.15 crore taken by the that Jalan International Hotels Private Limited. Thus, Bahubali is claiming that it is the owner in respect of the entire property, i.e., the premises and building standing on 9C, Lord Sinha Road. It is also the case of the opposite party that after the partnership was converted into a joint stock company, the partners carried with them the assets of the partnership firm. After it became the joint stock company, the partners were allotted shares of the company and they thus became shareholders. It is also the case of the opposite party that the company is the owner in respect of the suit property by virtue of conversion of the partnership firm into a Public Limited Company. It is also the case that in the pending suit it is to be decided whether the defendants are liable to be evicted or not and whether Bahubali is the owner of the suit property or not. The opposite party has claimed that it is a simple mortgage where possession of any part of the mortgaged property has not been parted to the mortgagee and while creating mortgage Bahubali stood as a guarantor and made over certain title deed (details can be had in running page no. 76). The lease deed dated 17-6-1982 was not given for creating mortgage.

It is also claimed that the leasehold right of defendant no. 1 firm has not been affected in any manner as claimed by the said partnership firm by virtue of the mortgage deed executed on 28th March, 2012 and registered on 29th March, 2012.

It is also the case of the opposite party that the suit was filed in 1998 and the mortgage is a subsequent event which is pertinent to be considered in the eviction suit if it is strongly needed. It is also the case of the petitioner that if the loan is not repaid by the Jalan International Hotels Private Limited to Tata Financial Services, the interest of the defendant firm will not be affected by that. Even if the Tata Capital and Financial Services proceeds against the guarantor or Jalan International Hotels Private Limited, then also no interest of the defendant will be affected. Learned Counsel also took me to The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called as the Act of 2002) and submitted that if Tata Financial Services being a non-banking company apply under the Act of 2002 then even the interest of defendants will be protected.

It was submitted by Mr. Ghosh, learned senior counsel on behalf of the petitioner, that in Clause VI of the mortgage deed (at page 68) of the petition there is no mention that the suit property was included in that deed. He further submitted that there is no mention of it in page 72 of the petition (internal page no.8 in clause 6) that if the borrower/mortgagor shall fail to pay to the mortgagee the mortgaged debt in the agreed manner as provided above, then in such case the mortgagee shall have the full right and liberty to cause the said property to be sold through the court of law and recover the mortgaged debt. It was the apprehension of Mr. Ghosh as argued that if such situation arises, then the present petitioner will have no right to challenge the claim of Tata Financial Service on that score if the loan amount is not repaid by Jalal Hotels Pvt. Ltd.

Mr. Ghosh also took me to sections 13 and 14 of the Act of 2002 to make it clear that Tata Financial Services being a non-banking financial organisation can take recourse to sections 13 and 14 of the said Act to oust the present petitioner from its possession in respect of the suit property.

Regarding the acid test as regards the appreciation of the matter to be tested by a court under Order 1, Rule 10 CPC learned counsel referred to the decision of the Apex Court as reported in (1999) 2 SCC 577, (Savitri Devi v. District Judge, Gorokhpur & Ors.) a three-Judge Bench decision and also a decision of the Apex Court as reported in (2010) 7 SCC 417, (Mumbai International Airport Pvt. Ltd. v. R. Convention Center and Hotels Pvt. Ltd. & Ors.).

It was submitted by the learned counsel that the decision of the Apex Court in Savitri Devi (supra) has been further illustrated in the judgment of Mumbai International Airport Pvt. Ltd. (supra). He took me to paragraph 9 of the decision of Savitri Devi to show that Order 1, Rule 10 of the CPC enables the court to add any person as a party at any stage of the proceeding, if the person whose presence before the court is necessary in order to enable the court to effectively and completely adjudicate upon and settle of the questions involved in the suit; and that avoidance of a multiplicity of proceedings is also one of the objects of the said provision of the Code.

Thus, the Apex Court in that decision categorically held that it will be the discretion of the court to bring before that any person who is vitally interested in the claim. Regarding the latter decision Mr. Ghosh took me to paragraphs 14, 15 and 22 of the said decision to say that the court must exercise its judicial discretion before adding a necessary party or even a proper party and such discretion must be guided by law and it must be governed by reasons, not by humour; it must not be arbitrary, vague and fanciful but legal and regular.

Mr. Ghosh concluded his submission by saying that the present suit pending before the learned trial court is for forfeiture of the lease dated June 17, 1982 and it must be proved by the plaintiff company how it acquired title over the leasehold property considering the fact that the present plaintiff was not the original lessor.

Mr. Ghosh took me to the impugned order passed by the learned trial court to show that actually the learned trial court did not exercise its discretion as granted under Order 1, Rule 10 of the CPC and disposed of the petition in a cut-short manner and the said court was more perturbed considering the fact that direction issued by this court to the said court could not be followed and as such the petition was disposed of in a hurried manner.

I have taken into consideration the argument of the learned advocates appearing on behalf of the parties, the decisions of the Apex Court and the provisions of Sections 13 and 14 of the SARFASI Act. The only question to be answered by this Court in this application under Article 227 of the Constitution is that whether Tata Financial Services and Jalan International Private Limited are necessary parties to the suit now pending before the City Civil Court, Calcutta and whether the order impugned was passed perversely by the learned trial court.

This court is not unmindful of the fact that the title of Bahubali Estates Limited is in dispute by the present petitioner. It is true that the trial court will decide as to whether the said limited company has title over the disputed property located at 9/C, Lord Sinha Road. The subject matter of the suit is, however, not relating to the entire property but in respect of 2 Kattahs 8 Chattaks and 13 Sq. ft. within the total area of 17 Kattahs 15 Chattaks of land and structures therein. The suit was filed by the plaintiff/opposite party for eviction of the defendant firm from that property on the ground of nonpayment of rent and as regards certain breach committed by the defendant in respect of the lease deed. Thus, this is a dispute between the landlord and the tenant but it is not a dispute under the Premises Tenancy Act but as per the Transfer of Property Act in respect of the leasehold property which has been determined by the mortgagor and the possession of the mortgagee, that is the present defendant, is that of "tenant in a sufferance". This term means a tenant who has been served with a notice of eviction or the lease has come to an end. Thus, it is true that the possession of the defendant or the defendants is not that much secured as that of a tenant under the West Bengal Premises Tenancy Act and if the lease is determined naturally the defendant mortgagee will lose his interest in the disputed property. However, this is a matter to be decided at the time of trial as to whether the lease is to be determined on the evidence on record.

It is clear from the documents which is a part of this record that as per one mortgage deed executed by the partners of Bahubali Limited mortgaged the entire area of 9/C of Lord Sinha Road to Tata Financial Services as a guarantor for Jalan International Hotels Private Limited in respect of one loan to the extent of Rs.15 Crore. These two are the proposed defendants to be incorporated in the said Title Suit No.1076 of 1998 as per the petition in question.

The main principle to judge one application under Order 1, Rule 10 (2) of the CPC is the discretion of the Court and such discretion will have to be exercised judicially. The court while assessing such petition will consider as to whether the proposed defendants are necessary party or proper party. The learned trial court in the impugned order rejected the application made by the defendant no.1 for making Tata Financial Services and Jalan International Hotels Private Limited to be impleaded in the suit.

The main apprehension of the present petitioner is that if the interest of the secured creditor that is Tata Financial Services is jeopardiesed by any act of either Bahubali Estates Limited or by Jalan International Hotels Private Limited then the said non-banking financial company may take up the matter under Sections 13 and 14 of the SARFASI Act and in that case the interest of the present petitioner will be at a stake.

The interest of the petitioner is not that unprotected in our judicial system which has been decided as per the decision of the Apex Court as reported in (2014) 6 SCC Page 1 about which I have already referred wherein the Apex Court held in clear terms that the interests of the persons who are there in respect of the secured assets, are duly protected. Thus, the apprehension of the present petitioner in that regard is unfounded.

It is also the claim of the present petitioner that in that mortgage deed there is no recital about the lease deed executed by Ghamandilal Sarogi, Smt. Kamal Devi Sarogi and Kamal Kumar Gangwal. It is of no issue as to whether in that deed of mortgage executed and registered in 2012 there is any recital thereto as regards the previous lease deed. I do not like to pass any comment which may put the learned trial court under trouble for deciding a matter before the trial court takes any decision.

It is true that the suit is for eviction and it cannot be said that the present petitioner may be deprived of his right of possession over the suit property simply because of the mortgage deed. This apprehension is unfounded and without any basis.

It was submitted by the learned lawyer of the opposite party that during the pendency of this application PW-1 and DW-1 have been examined and discharged and DW-2 has been examined partially. It was countered by the learned advocate on behalf of the petitioner by stating that the certified copy of the evidence of DW-2 has not been filed and as such that portion of the claim cannot be taken into consideration by this Court without any affidavit-in-opposition. This Court is of the view that there is nothing to disbelieve one Advocate of this Hon''ble Court practically when the said fact has not been denied with zeal when myself was hearing the argument. There is no claim either in the present application or in the WS filed by the present petitioner that lease rent has been paid even after 1992. Thus, practically the present petitioner is in occupation of the leasehold property in the hurt of Calcutta just free of cost, naturally the said petitioner will be only interested to drag the present suit.

The question about which I have already told is whether Tata Financial Services and Jalan International Hotels Private Limited are the necessary parties. This Court on scrutiny of the argument put forward by the learned advocate appearing on behalf of the parties this court is satisfied that the learned trial court rightly held that both these proposed defendants are not necessary parties to be impleaded. The presence of these two also is not required to plug multiplicity of proceeding.

This Court is of the firm belief that the decisions of the Apex Court as passed in Mumbai International Airport Private Limited (supra) and Sabitri Devi (supra) can safely be treated as the guiding principle even though the fact of those cases before the Apex Court may be distinguishable from the present case before the floor of this Court. This Court on reading and re-reading the said judgments is of the view that while deciding one application under Order 1, Rule 10 (2) of the CPC the court must take into consideration that whether the proposed defendants to be added are necessary or proper parties. This Court is satisfied that those two proposed defendants to be added as per claim of the petitioner cannot be said to be either proper party or necessary party. I have also gone through the provision of Order 1, Rule 10 (3) and 3A of the code of civil procedure and this Court is satisfied that the presence of those two defendants will delay the suit for a further period which is already pending since 18 years. Whatever right the proposed defendant that is Tata Financial Services may acquire vide that mortgage deed that cannot disturb the possession of the present petitioner.

Thus in view of the discussion made above I find no merit in this application as filed under Article 227 of the Constitution of India.

The petition as such is dismissed on contest.

There will be no order as to costs.

The impugned order passed by the learned trial court is hereby confirmed. The learned trial court is directed to dispose of the title suit without giving unnecessary adjournments preferably within six months from the communication of this order.

I hope that the learned counsels appearing on behalf of the parties before the trial court will extend necessary cooperation to the trial court so that the wish of this court may be fulfilled by that court.

Urgent Photostat Certified copy of this order, if applied for, be supplied to the parties after complying with all necessary legal formalities.