Whether non-voluntary transfer of ownership from defaulting borrower to the Bank under SARFAESI proceedings will result in assigning contractual rights under the Maintenance Agreement?

Cannes has argued that since the Sale Deed between TDI and Surya makes a reference to the Maintenance Agreement, combined with the fact that the Bank has admittedly stepped into the shoes of Surya, leads to the conclusion that such rights of the previous owner stands assigned to the new one. The Court is however unable to accept such an argument.

10. Replacing the owner of the property does not ipso facto lead to the conclusion that the Bank would also be bound by the Maintenance Agreement, which is a separate and a distinct agreement, executed between Surya and Cannes for availing CAM services for one unit in TDI Mall. Unarguably, the obligations and rights flowing from this agreement were distinct from those flowing from the Sale Deed, and cannot be jumbled together for the purpose of reading a privity of contract where there is none.

11. A party cannot be subjected to obligations of a contract to which it is not a party. A stranger or a third party cannot be bound if there no is assignment of contractual rights and liabilities. Certainly, the non-voluntary transfer of ownership from Surya to the Bank under SARFAESI proceedings does not result in assignment of contractual rights under the Maintenance Agreement. The burden of the liability acquired by Surya under a separate Maintenance Agreement, cannot be foisted on the Bank just because it has become the owner of the property. Surya’s liability under the Maintenance Agreement is not attached to the immovable property, even if it was in relation thereto. A mere general reference in the erstwhile Sale Deed to the Maintenance Agreement is insufficient to bind the Bank to the arbitration agreement contained in the Maintenance Agreement.

12. The Maintenance Agreement in its recital, does provide that it shall also bind the parties’ nominees, administrators, legal representatives and the assignee. Thus, the pertinent question is whether the Bank is an assignee under the Maintenance Agreement or not? There is no document on record to show that Surya had specifically assigned its rights and obligations, either in rem or specifically under the Maintenance Agreement, in favour of the Bank. In fact, Cannes also does not deny this fact. No averment has been made to any other document to urge that it would constitute as assignment of Surya’s rights to the Bank under the Maintenance Agreement. The court is thus unable to assume the existence of any assignment of rights. In order to be bound by the terms of the agreement, including the arbitration clause, the assignment of such rights has to be necessarily shown, by way of make a binding agreement between the parties. This is a pre-requisite to bind the Bank to arbitration.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 Date of Decision: 07th October, 2021 

ARB.P. 591/2020

 CANNES PROPERTY MANAGEMENT SERVICES PRIVATE LIMITED Vs ALLAHABAD BANK 

 CORAM: HON'BLE MR. JUSTICE SANJEEV NARULA

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Whether court can allow application if it is made under wrong provision of law?

According to us, the application was wrongly filed under
Order I Rule 10 CPC and it should have been filed Order XXII
Rule 10 CPC which reads thus:
“ORDER XXII : DEATH, MARRIAGE AND INSOLVENCY
OF PARTIES
xxx xxx xxx
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
subrule
(1).”
8. It is well settled law that mere mentioning of an
incorrect provision is not fatal to the application if the power to
pass such an order is available with the court.

NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10521 OF 2013

PRUTHVIRAJSINH NODHUBHA JADEJA  Vs  JAYESHKUMAR CHHAKADDAS
SHAH 
Deepak Gupta, J.

Dated:October 04, 2019
Citation: (2019) 9 SCC 533

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Whether assignee is bound by permanent prohibitory injunction decree passed against assignor?

Now a question may arise as to whether the assignee is bound by a permanent prohibitory injunction decree passed against the assignor? This question was answered by a Division Bench of this Court in Rajappan v. Sankaran Sudhakaran (MANU/KE/0067/1997 : 1997 (1) KLT 748). The principle reads as follows:

"In the face of S. 146 of the Code, the judgment debtors cannot contend that they are not bound to obey the decree for injunction granted against their predecessor-in-interest restraining him from tampering with the boundary of the property or from entering the property of the decree holder or from committing any acts of waste therein. To permit such a plea would be to ignore the principle of public policy embodied in Ss. 11 and 146 of the Code of Civil Procedure on the one hand and S. 52 of the Transfer of Property Act on the other. The contention on behalf of the legal representatives of the judgment debtor is that the decree holder is bound to file another suit against them for the identical relief. In such a suit, can the legal representatives of the judgment debtor put forward a claim which has already been concluded by the decree against their predecessor-in-interest? Can they say that the boundary had not been properly fixed in the earlier litigation and they are entitled to show that the boundary between the properties lay elsewhere? According to us, they cannot. They would be barred by res-judicata from so doing since res-judicata bars not only the parties to the suit but also persons who claim under the parties to the suit and are litigating under the same title. There is no justification for whittling down the scope of S. 146 of the Code and to insist that a fresh suit must be filed anytime a stranger to the decree succeeds to the property of the judgment debtor in the prior litigation who has suffered a decree."

A learned Single Judge, following the above decision, held in Jihas v. Salim (MANU/KE/0657/2014 : 2014 (2) KLT 1004) that a decree granting injunction to do or not to do a particular act or thing in the land would run with the land notwithstanding the change of ownership. So, this aspect also goes against the plaintiff.

33. Learned author William Williamson Kerr in his treatise on the Law and Practice of Injunctions (sixth edition) says that perpetual injunctions are such as form part of the decree made at the hearing upon merits. The perpetual injunction is in effect a decree and concludes a right. The following quotation is relevant for our purpose:

"The jurisdiction to grant a perpetual injunction is founded on the equity of relieving a party from the necessity of bringing action after action at law for every violation of a common law right, and of finally quieting the right, after a case has received such full decision as entitles a person to be protected against further trials of the right."

34. From the above discussion, it is very much clear that the plaintiff cannot legally contend that he is in possession of the property and claim a permanent prohibitory injunction decree, either as a substantive relief or as a consequential relief, in view of the attainment of finality of the judgment and decree in O.S. No. 157 of 2003 and the counter claim therein. Hence these questions are decided against the plaintiff (respondent).

IN THE HIGH COURT OF KERALA AT ERNAKULAM

RSA No. 855 of 2016 (B)

Decided On: 06.01.2017

E.N. Chandran Vs. Valsan Matathil

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Whether suit filed by assignee of plaintiff whose suit is dismissed is maintainable on same cause of action?

 Another legal aspect to be mentioned is that by virtue of the statement of law in Order IX Rule 9 of the Code, where a suit is wholly or partly dismissed under Rule 8 of Order IX, the plaintiff shall be precluded from bringing a fresh suit in respect of the same cause of action. But, he may apply for an order to set the dismissal aside and if he satisfies the court that there was sufficient cause for his non-appearance when the suit was called on for hearing, the court shall make an order setting aside the dismissal upon such terms as to costs.

23. In this context, a question a may arise whether the plaintiff, who is only an assignee from the plaintiff in O.S. No. 157 of 2003, is barred from instituting a fresh suit on the same cause of action? This question was considered by the Supreme Court elaborately in Suraj Ratan Thirani and Others v. The Azamabad Tea Co. & Others (MANU/SC/0231/1964 : AIR 1965 SC 295). It was observed that the term "cause of action" is to be construed with reference rather to substance than to the form of action. It was held that if essential bundle of facts on which the plaintiff based his/her title and the right to relief were identical in two suits, then the bar under Order IX Rule 9 of the Code will apply to the second suit, even if it was brought by an assignee from the plaintiff in the first suit. Following quotation may be relevant for our purpose:

"We are not however impressed by the argument that the ban imposed by Order 9 Rule 9 creates merely a personal bar or estoppel against the particular plaintiff suing on the same cause of action and leaves the matter at large for those claiming under him. Beyond the absence in Order 9 Rule 9 of the words referring 'to those claiming under the plaintiff' there is nothing to warrant this argument. It has neither principle, nor logic to commend it......... The rule would obviously have no value and the bar imposed by it would be rendered meaningless, if the plaintiff whose suit was dismissed for default had only to transfer the property to another and the latter was able to agitate rights which his vendor was precluded by law from putting forward."

24. The above said principle was followed in M/s. Parasram Harnand Rao v. M/s. Shanti Parsad Narinder Kumar Jain and another (MANU/SC/0479/1980 : (1980) 3 SCC 565).

25. It is therefore well settled that if there is identity of cause of action between the earlier suit, which was dismissed for default, and the present suit, though it is instituted by an assignee of the plaintiff in the earlier suit, the bar under Order IX Rule 9 of the Code will be attracted. Even though the plaintiff in this case may contend that the second suit by the assignee of the plaintiff in O.S. No. 157 of 2003 is filed on a different cause of action, it may be an insurmountable task for him to claim any benefit because there is a clear identity of cause of actions in both the suits.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

RSA No. 855 of 2016 (B)

Decided On: 06.01.2017

E.N. Chandran Vs. Valsan Matathil

Hon'ble Judges/Coram:

A. Hariprasad, J.

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Whether there can be valid demand notice if copy of notice is sent to other side?

The question is: whether merely because copy of demand notice, which was addressed to defendant Nos. 1 and 2, was “forwarded” to defendant No. 3, fulfils the mandatory requirement of due service of a demand notice on the defendant No. 3 within the meaning of section 12(2) of the Act. By now, it is well established position that, unless a notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the Transfer of Property Act, 1882, no suit for recovery of possession can be maintained by the landlord against the tenant. The fact that defendants 1 and 2 have been duly served with the said demand notice would be of no avail, in the fact situation of the present case. In law, defendant No. 3 would become the direct tenant of the plaintiff in terms of section 5(1l)(aa) of the Act, soon after the determination of tenancy of defendant Nos. 1 and 2. On acquiring such status the plaintiff was obliged to serve the defendant No. 3 with a notice in writing about the demand of the standard rent and permitted increases in the manner provided in section 12(2) of the Act. It is not in dispute that the demand notice dated 22-10-1982 Exhibit 59 has been addressed to only defendants 1 and 2 and at the end of the notice it is mentioned that copy is marked to defendant No. 3 (i.e. C.C. sent for information). There is a marked difference between the requirement of sending a demand notice-which is necessarily required to be addressed to a person then merely forwarding a copy of such communication. The latter, at best is in the nature of apprising the recipient of that communication of the fact of issuance of a legal notice to the addressee (i.e. defendant Nos. 1 and 2) by the sender (plaintiff). On the other hand, the legal requirement is of sending or addressing a notice in writing of the demand to the tenant, which postulates putting him to notice about non-payment of the rent and permitted increases which is due, and “calling upon him to pay” the same forthwith, In other words, where the tenant happens to be an assignee, who is in possession of the suit premises in his own rights on account of a valid assignment and is allegedly in arrears of rent, a demand notice under section 12(2) must be given to him as well. In absence of such a notice to the assignee, the question of instituting ejectment suit against him on the ground of arrears of rent does not arise at all. In that, section 12(2) is a statutory bar for institution of suit against the tenant until a demand notice is issued to him and is duly served 
upon him in the manner provided for therein. The fact that the assignee may become aware about the contents of the demand notice sent to the original or head tenants does not extricate the landlord of his obligation to issue or address a valid demand notice to the assignee, if he wants to proceed even against the assignee along with the head-tenant for ejectment from the suit premises on the ground of arrears of rent. The fact that the plaintiff in this case was not aware that the defendant No. 3 (petitioner) was lawful transferee/assignee in the suit premises does not take the matter any further. The requirement of section 12(2) is not a mere formality. It is a mandatory provision and only on compliance of the said obligation, the cause of action to sue the tenant on the ground of arrears of rent would accrue to the landlord. Non-compliance of the said mandatory requirement in any manner would result in dismissal of the suit for want of cause of action-as the bar placed by sub-section (2) of section 12 of the Act is not lifted. A priori, even though respondent No. 1 (plaintiff) may have succeeded in getting ejectment decree against the defendants 1 and 2-the head tenants, that decree (insofar as the ground of default) will be of no avail against the assignee (defendant No. 3) unless it is shown that lawful demand notice was addressed also to transferee/assignee (defendant No. 3) and in spite of that notice he failed to pay the outstanding amount demanded in the said notice or file application for fixation of standard rent within a period of one month from the date of service of the notice.

Bombay High Court

Bombay Rent Act, Section 12(2) and (3)

(Bombay)

(Before A.M. Khanwilkar, J.)

Shankar Vishnu Sonar (Lohokare) 

Versus

Kusum Gajanan Pawar

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How to ascertain privity of contract in suit for specific performance of contract?

 In the present case, the averments in the plaint
suggests that the suit is filed for specific performance of an
agreement executed in the year 2000. The agreement of
the year 2000 also has recitals about the agreement signed
between the respondent no.1 and the respondent no.2 way
back in the year 1996. Besides the power of attorney in
favour of the respondent no.2 is also referred to by the
appellant in the plaint. On perusal of the recitals in the
agreement of 1996, it clearly inter alia provides that the
purchaser therein would also include the administrator,
executor and assignee. In such circumstances, the
agreement of the year 1996 also contemplates that the
purchaser could assign his rights in terms of the agreement
in favour of any person. In such circumstances, the
contention of Mr. Tamba that privity of contract has not
been spelt out, cannot be accepted at this stage. Needless
to say that the respondents can always raise such defence in
the written statement and the learned Judge would have to
examine such aspect, on its own merits, while deciding the
suit.
 IN THE HIGH COURT OF BOMBAY AT GOA.
First Appeal No.19 of 2015
Mr. Carlton Fortes,

 V
Shri Devkikrishna Ravalnath Devasthan

 CORAM : F.M. REIS & K.L. WADANE, JJ.
 Dated : 01st July, 2015.
Citation:2016(5) ALLMR298

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Whether assignee can claim impleadment in suit for partition if property was assigned contrary to order of court?

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 prelavent public policy, When the Court intends a particular state of affairs to exist while it is in seizin 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.

Supreme Court of India

Surjit Singh & Ors. Etc. Etc vs Harbans Singh & Ors. Etc. Etc on 6 September, 1995

Equivalent citations: 1996 AIR 135, 1995 SCC (6) 50

           
BENCH:
PUNCHHI, M.M.
MANOHAR SUJATA V. (J)

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Whether suit or appeal is liable to be dismissed if assignee fails to make application for impleadment?

We have heard learned counsel for the parties and opine that the impugned
judgment is patently illegal. Merely due to the assignment or release of the rights
during the pendency of the appeal, the appellant did not in any manner lose the
right to continue the appeal. Merely by transfer of the property during the
pendency of the suit or the appeal, plaintiff or appellant, as the case may be,
ordinarily has a right to continue the appeal. It is at the option of the assignee to
move an application for impleadment. Considering the provisions contained in
Order 22 Rule 10 and Order 22 Rule 11 of the Code of Civil Procedure, the
impugned judgment and order of the High Court cannot be allowed to be sustained.
Order 22 Rule 10 and Order 22 Rule 11CPC are extracted hereunder :
ORDER XXII, RULES 10 AND 11.
“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).
x x x x x
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.”
 A bare reading of the provisions of Order XXII Rule 10 makes it clear that
the legislature has not envisaged the penalty of dismissal of the suit or appeal on
account of failure of the assignee to move an application for impleadment and to
continue the proceedings. Thus, there cannot be dismissal of the suit or appeal, as
the case may be, on account of failure of assignee to file an application to continue
the proceedings. It would be open to the assignor to continue the proceedings
notwithstanding the fact that he ceased to have any interest in the subject-matter of
dispute. He can continue the proceedings for the benefit of assignee. 
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7889 OF 2015
(Arising out of S.L.P. [C] No.36889 of 2013)
Sharadamma … Appellant
Vs.
Mohammed Pyrejan (D) through LRs. & Anr. … Respondents
Citation;(2016)1 SCC730
ARUN MISHRA, J.

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When decree passed by court will be binding on assignee who purchased suit property during pendency of suit?

 This Court in Jaskirat Datwani v. Vidyavati & Ors. [2002 (5) SCC 647],
while relying upon Dhurandhar Prasad (supra), has laid down that even if no step
is taken by assignee, suit may be continued by the original party and the person
upon whom the interest has devolved will be bound by the decree, particularly
when such party had the knowledge of the proceedings. Ordinarily, the person is
bound by the decree until and unless it is shown that the decree was based upon
fraud or collusion etc.

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.7889 OF 2015
(Arising out of S.L.P. [C] No.36889 of 2013)

Sharadamma  Vs. Mohammed Pyrejan (D) through LRs. & Anr.

Dated;September 23, 2015.
Citation:(2016)1SCC 730

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