Assignee Under Deed Executed Prior To Filing Of Suit Cannot Be Impleaded As Co-Plaintiff Under Order I Rule 10 CPC: Bombay High Court
The Bombay High Court has held that an assignee under a deed of assignment executed before the filing of a suit cannot be added as a co-plaintiff under Order I Rule 10 of the Code of Civil Procedure (CPC) merely on the ground that the original plaintiff's rights have been assigned. The Court observed that there was no bona fide mistake involved for which adding a third party as a co-plaintiff could be allowed.
held that where the assignment had already divested the original plaintiff of its rights before institution of the suit, the defendants were entitled to oppose the maintainability of the suit on that ground.
Justice Gauri Godse was hearing a writ petition filed by the original defendants challenging an order permitting a third party to be added as co-plaintiff in a suit filed by Manjari Projects Private Limited seeking specific performance of development agreements.
Respondent No. 1, i.e. the original plaintiff, had filed the suit for specific performance of the agreement dated 15th December 2006 and the supplementary agreement dated 22nd August 2007 executed by the petitioners in favour of the plaintiff. The suit also challenged the notice dated 17th April 2009 terminating both the agreements. The plaintiff had assigned its rights to a third party before filing the suit. Since the third party was allowed to be added as co-plaintiff, the present writ petition has been filed by the original defendant.
The defendants contended that the grounds to add a party are only based on the deed of assignment. Since the deed of assignment is prior to the date of filing of the suit, the same cannot be a ground to add the party by taking recourse to Order I Rule 10 of the CPC.
The Court noted that there was no dispute that the deed of assignment was executed before the filing of the suit. It further noted that the original plaintiff had divested itself of all rights under the development agreement and power of attorney in favour of the third party.
The Court observed that 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. It held that there was no such bona fide mistake in the present case for adding a third party as a co-plaintiff.
“… 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,” the Court remarked.
The Court further observed that contingencies regarding the assignment of rights pendente lite are covered under Order XXII Rule 10 of the CPC. However, such a contingency did not arise in the present case.
Refuting the reasoning of the third party purchasing the litigation, the Court observed:
“The trial judge further held that the third party had purchased the litigation… Hence, the third party is deemed a necessary party. This reason is erroneous, inasmuch as the plaintiff had already assigned its right before filing the suit; hence, there is no question of purchasing the litigation or stepping into the shoes of the plaintiff.”
Accordingly, on account of the serious prejudice that would be caused to the defendants, the Court quashed and set aside the trial court's order allowing the impleadment application.
Case Title: Savita Arun Zambre v. Manjari Projects Private Limited [Writ Petition No. 1227 of 2015]