Pre-Suit Assignee Cannot Be Impleaded As Co-Plaintiff Under Order I Rule 10 CPC: Bombay HC [Read Judgment]

Bombay: The Bombay High Court has quashed an order impleading a third-party assignee as co-plaintiff in a specific performance suit, holding that a deed of assignment executed prior to the filing of the suit cannot be a valid ground for impleadment under Order I Rule 10 of the Code of Civil Procedure, 1908.

The dispute arose from a suit for specific performance of development agreements executed in 2006 and 2007. The defendants had terminated the agreements in April 2009, which the plaintiff challenged by filing the suit. During the proceedings, the defendants discovered that, even before the suit was filed, the plaintiff had assigned its rights under the agreement to respondent no.2 through a registered deed dated 27th July 2007, without informing the defendants. The trial court rejected the plaintiff’s application to amend the plaint to implead respondent no.2 but allowed a similar application independently filed by respondent no.2 under Order I Rule 10 CPC. This order was challenged by the defendants.

The defendants argued that since the assignment had taken place before the suit, respondent no.2 could not be impleaded under Order I Rule 10 CPC, and that Order XXII Rule 10 CPC would apply only to assignments made during the pendency of a suit. They further alleged that the impleadment was sought to overcome their objection regarding the plaintiff’s lack of rights and to avoid limitation issues. Reliance was placed on the Supreme Court’s decision in LIC v. Sanjeev Builders. The respondents, however, argued that no prejudice was caused to the defendants and that the plaintiff, being dominus litis, had no objection to the impleadment. They relied on Robin Ramjibhai Patel, Mumbai International Airport, and a Bombay High Court decision in State Trading Corporation of India Ltd. v. ICICI Lombard General Insurance Company Ltd.

Justice Gauri Godse noted that it was undisputed that the deed of assignment predated the filing of the suit, and observed that while the third party had appeared through separate counsel before the trial court, both respondents were represented by the same advocate in the writ petition, lending credence to the defendants' contention that the third party, being a sister concern of the plaintiff, had sought impleadment to defeat the defence.

The Court held:

"Order I of Rule 10 grants power to the court to add a party as plaintiff when it is found that the suit is instituted in the name of the wrong person through a bona fide mistake and that, to determine the real matter of the dispute, it is necessary to substitute or add the name of the plaintiff... Thus, the assignment in favour of the third party cannot be a ground to add the party as a co-plaintiff by relying upon Order I Rule 10, as the assignment is prior to the date of filing of the suit."

Distinguishing the precedents relied upon by the respondents, the Court held that Robin Patel concerned rival claims against a common vendor and was inapplicable where the third party claimed through the plaintiff itself, that Life Insurance Corporation of India permitted impleadment only where rights were assigned during the pendency of a suit, and that Mumbai International Airport and the State Trading Corporation decision of the Bombay High Court both concerned assignments occurring pendente lite, governed by Order XXII Rule 10 CPC, and were therefore of no assistance on facts where the assignment predated institution of the suit.

The Court also found the trial court's reasoning erroneous insofar as it had treated the third party as having "purchased the litigation" and "stepped into the shoes of the plaintiff," holding that since the assignment preceded the filing of the suit, there was no question of the third party purchasing pending litigation at all. Holding that the impleadment would cause serious prejudice to the defendants by defeating their defence that the plaintiff, having divested its rights before filing suit, could not maintain the action, the Court set aside the trial court's order allowing the application, while clarifying that this would not preclude the third party from filing a separate suit, subject to all just objections.

Appearances: Mr. Drupad Patil along with Ms. Srushti Chalke appeared for the petitioners, while Mr. Rohan Savant along with Mr. Vinayak Chitale, instructed by Parinam Law Associates, appeared for the respondents.

Case Title: Savita Arun Zambre & Ors. vs. Manjari Projects Private Limited & Anr. [Writ Petition No. 1227 of 2015]

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