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Durga Charan Sarkar v. Jotindra Mohan Tagore And Ors.
Structured Summary of the Opinion
Factual and Procedural Background
The plaintiff-appellant sued to establish his right to and confirm his possession of certain immoveable property and to obtain a declaration that the property was not liable to attachment and sale in execution of various decrees held by defendants Nos. 1 to 4 against defendants Nos. 5 to 7. The property was subsequently sold in execution of the decree held by defendant No. 1 and purchased at auction by Radha Rani Chowdhurani and Jagut Gowri Chowdhurani, who were then added as defendants Nos. 8 and 9. The plaintiff's stated cause of action included a prayer (K) that the entire taluk (the property) be declared not fit to be attached and sold in execution of the principal defendants' decrees.
The defence (relevant to this appeal) was that the suit could not proceed in the absence of certain other decree-holders who had obtained decrees against defendants Nos. 5 to 7, had caused attachment of the property, and whose adjudication had rejected the plaintiff's earlier claims on attachment. The trial Court sustained that objection and dismissed the suit on the preliminary ground (defect of parties) as well as on merits. The Lower Appellate Court affirmed the dismissal, relying principally on the defect of parties and did not fully traverse the merits. This appeal followed.
Legal Issues Presented
- Whether decree-holders other than the one who actually caused the sale of the property are necessary parties to the plaintiff's suit seeking a declaration that the property is not liable to attachment and sale in execution of decrees.
- What legal test determines whether a person is a "necessary party" under the Code of Civil Procedure, having regard to Sections 28, 32 and 34 (and related provisions) as applied by the Court.
- Whether the auction-purchasers (defendants Nos. 8 and 9) or any defendant entitled to be indemnified can compel the joinder of third parties who are only potentially liable to indemnify them (i.e., whether indemnity alone makes a third party a necessary party).
- Whether the absence of the other decree-holders can be excused on limitation grounds or because their decrees are already satisfied, making their joinder unnecessary.
- Whether omission of a specific third-party procedure (Rule 48 of Order XVI under the Judicature Act) in the Code of Civil Procedure prevents the Court from joining third parties who have an interest or against whom relief is sought.
Arguments of the Parties
Appellant's Arguments
- The Courts below erred in holding that decree-holders other than those who caused the sale were necessary parties, because those other decree-holders did not proceed to bring the property to sale and therefore no right to any relief existed against them in respect of this suit.
- Section 28 of the Code of Civil Procedure implies that those other decree-holders could not have been joined as defendants; their absence therefore could not constitute a defect in the form of the suit.
- The decree-holder who brought the property to sale (defendant No. 1) was only a proper party and not a necessary party. The appellant cited the case Bank of Hindustan, China and Japan v. Premchand Rai Chand (1868) 5 Bom. H.C. 83 in support.
- The mere fact of a person having a remote interest or of a defendant being entitled to indemnity by a third party does not make that third party a necessary party. For this proposition the appellant relied on Mahomed Badsha v. Nicol, Fleming and others (1878) I.L.R., 4 Cal., 355.
Respondents' Arguments
- Although some decree-holders did not themselves bring the property to sale, they had applied for attachment and sale and had successfully resisted the plaintiff's claim to the attached property under Section 278; they abstained from a sale only because Section 295 allows them to share rateably in proceeds of a sale effected by another decree-holder.
- Given that the auction-purchaser (defendant) is entitled under Section 315 to a refund of purchase-money from persons to whom the money may have been paid, and that part of that money has been paid to the absent decree-holders, the auction-purchasers will be prejudiced if the suit proceeds without the absent decree-holders being made parties.
- The absent decree-holders therefore have a direct interest in the suit and there exists a right to relief against them; consequently they should have been made parties and their absence is a fatal defect.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bank of Hindustan, China and Japan v. Premchand Rai Chand (1868) 5 Bom. H.C. 83 | Authority cited for the proposition that the decree-holder who brought the property to sale was a proper party; appellant invoked it to argue that such a party need not be a necessary party. | The Court observed that in that case the question whether such a decree-holder was a necessary party was not raised. Therefore that decision did not decide the present question and was not decisive against the present holding that the absent decree-holders were necessary parties. |
| Mahomed Badsha v. Nicol, Fleming and others (1878) I.L.R., 4 Cal., 355 | Authority cited for the proposition that the mere possibility of indemnity by third parties does not make those third parties necessary parties to the suit. | The Court distinguished that case: unlike the absent decree-holders here, the third parties in Mahomed Badsha had no interest in the subject-matter and the plaintiff had no right to relief against them. Accordingly, Mahomed Badsha did not control the decision in the present matter. |
Court's Reasoning and Analysis
The Court analysed the question of necessary parties by reference to the Code of Civil Procedure and the functional tests derivable from its provisions. Noting that the Code does not expressly define "necessary parties," the Court read Sections 28, 32 and 34 together to extract two cumulative conditions for a person to be a necessary party defendant:
- There must be a right to some relief against that person in respect of the matter involved in the suit; and
- The person's presence must be necessary to enable the Court effectually and completely to adjudicate upon and settle all questions involved in the suit.
Applying the first condition, the Court found that the absent decree-holders had applied for attachment and sale and had successfully resisted the plaintiff's claim under Section 278; the plaint itself sought, by prayer (K), a declaration that the property was not fit to be attached and sold in execution of the decrees of any of the principal defendants. Therefore, if the plaintiff's suit were well founded, he would have a right to ask for that relief against the absent decree-holders — satisfying the first condition.
On the second condition, the Court concluded that the absent decree-holders must be before the Court because:
- They shared in proceeds of sale rateably under Section 295; if the suit succeeded, they would run the risk of being made liable under Section 315 to repay purchase-money to the auction-purchasers;
- They had an interest in ensuring that the question of proprietary right in the property was correctly determined;
- The auction-purchasers (defendants Nos. 8 and 9) had a practical interest in having those decree-holders present because the absent decree-holders' absence would make any decree rendered in their absence non-evidential against them and would force the auction-purchasers to have the matter readjudicated in their presence later, causing inconvenience and possible injury.
The Court considered and rejected the appellant's points that (a) the Code does not incorporate the third-party procedure (Rule 48 of Order XVI under the Judicature Act) and therefore the Court had no power to make such persons parties, and (b) indemnity alone cannot make third parties necessary. The Court held those absent decree-holders were not mere indemnitors; they had direct interest and the plaintiff had a right to relief against them.
The Court distinguished the earlier cases relied upon by the appellant. It held that, in Mahomed Badsha, the absent third parties had no interest in the subject-matter and no right against them existed; by contrast, the absent decree-holders in the present case did have an interest and were subject to a right of relief by the plaintiff. Regarding the Bank of Hindustan case, the Court observed that the specific question whether a sale-bringing decree-holder was a necessary party was not dealt with there.
The Court also relied on an equity-authority extract (Story's Equity Pleadings, para. 138) to underline that even if absent parties are not strictly indispensable by ownership interest alone, their absence may be required to avoid injustice, inconvenience, liability, or future litigation to parties before the Court.
Finally, the Court rejected an argument that limitation or the satisfaction of the absent decree-holders' decrees rendered their joinder unnecessary. The Court found that the plaintiff's suit sought to render such satisfactions nugatory by its claims, so limitation or purported satisfaction did not excuse their joinder.
Holding and Implications
CORE RULING: The Courts below were correct that the suit was not maintainable because the plaintiff failed to make the absent decree-holders parties; accordingly, the appeal is dismissed.
The appeal is therefore DISMISSED WITH COSTS.
Immediate consequences for the parties: the plaintiff's appeal fails and the dismissal of the suit on the ground of defect of parties is affirmed. The absent decree-holders must be made parties where (i) the plaintiff has a right to relief against them and (ii) their presence is necessary to enable the Court to effectually and completely adjudicate the matter (as applied in this case because of Sections 278, 295 and 315 of the Code of Civil Procedure and the nature of the auction-purchasers' rights).
The opinion does not set out any specific pronouncement that it is creating a new legal precedent; it applies existing statutory provisions and distinguishing case-law to the facts of this dispute to reach the conclusion above.
1. This appeal arises out of a suit brought by the plaintiff appellant for establishment of his right to and confirmation of his possession of certain immoveable property, and for a declaration that it was not liable to attachment and sale in execution of certain decrees held by defendants Nos. 1 to 4 against defendants Nos. 5 to 7. Subsequently, upon the property in suit being sold in execution of the decree held by defendant No 1 and purchased at auction by two persons Radha Rani Chowdhurani and Jagut Gowri Chowdhurani, they were added as defendants Nos. 8 and 9. The defence, so far as it is necessary to be considered for the purposes of the present appeal, was that the suit; could not proceed in the absence of certain persons, who, like the defendants Nos. 1 to 4, had obtained decrees against defendants Nos. 5 to 7, and had attached the property in dispute, and on attachment at whose instance claims had been preferred by the plaintiff and had been rejected upon adjudication.
2. The first Court allowed that objection, but it also went into the merits of the case and dismissed the suit as well on the preliminary objection as on the merits. On appeal the Lower Appellate Court has affirmed the decree of the first Court without going fully into the merits of the case, it being of opinion that the objection as to defect of parties was fatal to the plaintiff's case.
3. In second appeal it is contended on behalf of the plaintiff that the Courts below were wrong in holding, that the decree-holders other than those at whose instance the property was brought to sale were necessary parties to the suit. It is argued that, as those other decree-holders did not proceed to bring the property in dispute to sale, no right to any relief existed as against them in respect of the matter of the present suit, that Section 28 of the Code of Civil Procedure therefore by implication shows that they could not have been joined as defendants in the present suit, and if they could not have been joined as defendants their absence could not amount to a defect in the form of the suit. It is also argued that even the decree-holder at whose instance the property in dispute was brought to sale was only a proper but not a necessary party to the suit; and in support of this argument the case of the Bank of Hindustan, China and Japan v. Premchand Rai Chand (1868), 5 Bom., H.C., 83, is cited. It has been further urged that the mere fact of a person having a remote interest in the subject matter of the suit, would not be a sufficient ground for holding that he is a necessary party; nor would the fact of any of the defendants being entitled to be indemnified by a third party in the event of the suit succeeding make such third party a necessary party to it, and in support of this last contention the case of Mahomed Badsha v. Nicol, Fleming and others (1878) I.L.R., 4 Cal., 355 is relied upon. On the other hand it is argued for the respondents that, although the other decree-holders, whose absence from the record has given rise to the objection on the ground of defect of parties, did not actually cause the sale of the property in dispute in execution of their decrees, yet they, like the decree-holder defendant No. 1, applied for attachment and sale of the property in execution of their decrees, and successfully resisted the claim of the present plaintiff to the attached property, and they abstained from bringing the property to sale only because, the law, Section 295 of the Code of Civil Procedure, entitled them to share in the proceeds realised by the sale brought about by defendant No. 1 rateably with him, and the other decree-holders who had taken out execution against defendants Nos. 5 to 7; and that being so, it is contended, those decree-holders cannot be said to be persons against whom no right to any relief existed in respect of the subject-matter of this suit. It is further argued for the respondents that, as by Section 315 of the Code of Civil Procedure, the auction purchaser defendant is entitled to a refund of the purchase-money from any person to whom the same may have been paid, and as a part of that money has been paid to the absent decree-holders, he will be prejudiced, if the suit is allowed to proceed in the absence of those decree-holders.
4. After considering the arguments of both sides we are of opinion that the view taken by the Courts below that the absent decree-holders are necessary parties to this suit is correct. The Code of Civil Procedure does not contain any express provision as to who should be considered necessary parties, and what would be the effect of the omission of a plaintiff to bring on the record all necessary parties. Section 34, however, by implication shows that an objection for want of parties is a valid objection to a suit or proceeding; and Sections 28 and 32 by implication show who are to be deemed necessary parties. Reading Sections 28 and 32 together we think that in order that a, party may be considered a necessary party defendant, two conditions must be satisfied, first, that there must be a right to some relief against him in respect of the matter involved in the suit; and second, that his presence should be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit. Now let us see whether those conditions are satisfied as regards the absent decree-holders. As they had applied for attachment and sale of the property now in dispute in execution of their decrees, and had successfully resisted the claim of the present plaintiff under Section 278 of the Code of Civil Procedure, it is clear that the plaintiff, if his suit is well founded, has the right to ask for a declaration as against them that the property in dispute is not liable to sale in execution of their decrees, and that the order disallowing his claim was wrongly made. Indeed, we find that there is a prayer in the present plaint, namely, prayer (K) which is to the effect that the entire taluk, that is the property in dispute, may be held and declared as not fit to be attached and sold in execution of the decrees of any of the principal defendants. If there was a right to claim that relief as against the principal defendants there was an equal right to claim the same relief as against the absent decree-holders. The first condition, therefore, is, in our opinion, quite satisfied.
5. Is the second condition also satisfied? We are of opinion that it is. For in order to enable the Court to adjudicate upon and settle effectually and completely all the questions involved in the suit, it is, we think, necessary that all the decree-holders, who had taken out execution against the judgment-debtors, and caused attachment of the property now in dispute and who have obtained satisfaction rateably out of the proceeds realized by the sale of that property, under Section 295 of the Code of Civil Procedure, ought to be before the Court. They are all interested in seeing that the question as to the proprietary right in the property in dispute is correctly determined, and they all run the risk, in the event of the present suit succeeding, of being made liable under Section 315 of the Code of Civil Procedure to repay to the auction-purchaser defendant the purchase-money which has been rateably received by them. They are, in our opinion, necessary parties for this double reason. They are interested in the result of the suit, and two of the defendants, namely, defendants Nos. 8 and 9, the auction-purchasers are interested in having them before the Court as their absence will certainly cause inconvenience, and may possibly cause injury to them so far as the enforcement of their right to the refund of the purchase-money goes. If this suit succeeds, the auction-purchaser defendants would, under Section 315 of the Code of Civil Procedure, be entitled to receive back the purchase-money from the persons to whom it has been paid; some of those persons are the absent decree-holders; and, if this suit proceeds in their absence, the decree made in it will be no evidence against them. So that the auction-purchasers will be put to the inconvenience of having the matter readjudicated in their presence with the possibility of a different result being arrived at, and with a consequent possible risk of injury to them. It was argued that, if that were so, the same reason might have held good in the case of Mahomed Badsha v. Nicol, Fleming and others (1878) I.L.R., 4 Cal., 355; but the Court in that case was of a different opinion. We think that case is clearly distinguishable from the present. There, as here, the defendant, it is true, was entitled to be indemnified by certain other parties; but those other parties in that case, unlike the absent decree-holders in this case, had no interest in the subject-matter of the suit, nor had the plaintiff any right to any relief as against them, whereas in the present suit the plaintiff, as has been said above, has a right to some relief as against the absent decree-holders.
6. It is argued that our Code of Civil Procedure embodies only Rule 11 of order XVI of the rules made under the Judicature Act, but does not incorporate Rule 48 of order XVI known as the third party procedure, and that, therefore, the mere fact of some of the parties to the suit being entitled to be indemnified by certain third parties cannot make those third parties necessary parties, nor has the Court any power to make them parties. We are of opinion that this contention is incorrect. The absent decree-holders are not merely parties against whom the auction-purchaser defendants are entitled to claim some indemnity. They are persons who have an interest in this suit, and they are persons against whom a right to relief exists in the plaintiff, if the suit is well-founded. As for the case of the Bank of Hindustan, China and Japan v. Prem Chand Rai Chand (1868) 5 Bom. H.C. 83, no doubt it was there held that the decree-holder who brought the property then in dispute to sale was a proper party, but no question was raised in that case as to whether he was a necessary party or not.
7. We may add that the view we take is in accordance with that expressed in Story's Equity Pleadings, paragraph 138, where the learned author observes:
"In the next place an interest of the absent parties in the subject-matter ex directo, which may be injuriously affected, is not indispensable to the operation of the general rule, for, if the defendants actually before the Court may be subjected to undue inconvenience, or to danger of loss, or to future litigation, or to a liability under the decree more extensive and direct, than if the absent parties were before the Court, that of itself will, in many cases, as we shall presently see, furnish a sufficient ground to enforce the rule of making the absent persons parties."In the present ease not only are the auction-purchaser defendants likely to be subjected to inconvenience, and possible injury, by reason of the absence of the other decree-holders, but what is more, they themselves have an interest in the subject-matter of the suit.
8. It was faintly urged that the Lower Appellate Court was wrong in holding that the absent decree-holders cannot be made parties now as the relief against them is barred by limitation, and the ground upon which the argument was based was that as the decrees of the absent decree-holders have been satisfied, it was unnecessary to bring any suit to have the order made in the claim case against them set aside. But this argument overlooks the fact that the satisfaction of the decree which is made the basis of the contention, is sought to be rendered nugatory by the act of the plaintiff in bringing the present suit.
9. We are, therefore, of opinion that the Courts below were right in holding that the suit was not maintainable by reason of the plaintiff not having made the absent decree-holders parties to it.
10. The appeal consequently fails and must be dismissed with costs.
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