Shri Varalakshmi vs. M/S.Leither Shiram Manufacturing Limited

Facts

Shri Varalakshmi Sago Foods Private Limited (the petitioner) filed a Civil Miscellaneous Petition (CMP) to be impleaded as the second appellant in a Second Appeal (SA). The petitioner purchased a property with a windmill from the 6th respondent on February 18, 2015. The property was previously owned by the first respondent, who had filed a suit (O.S. No. 55 of 2012) against the second respondent for declaration of title and injunctions. The suit was dismissed, but the appeal (A.S. No. 3 of 2015) was partly allowed, leading to the current Second Appeal (SA(MD) No. 4 of 2021) filed by the first respondent. The petitioner claims to have been in possession and enjoyment of the property for eight years, running the windmill, and sought impleadment as they would be significantly affected if the Second Appeal is decided without their participation. The second respondent objected, alleging the petitioner's purchase was during the pendency of litigation and that the petitioner was aware of the dispute.

Held

The Court held that the petitioner should be impleaded as the second appellant in the Second Appeal. The Court found that the petitioner purchased the property on February 18, 2015, while the appeal (A.S. No. 3 of 2015) was filed on January 5, 2015, clearly establishing that the purchase was made during the pendency of the litigation (pendente lite). Citing the settled principle of law that a subsequent purchaser during the pendency of a suit is bound by the decree that reaches finality, the Court also referred to Supreme Court rulings, including Savitri Devi's case, which held that an alienee pendente lite is a necessary party. The Court reasoned that the petitioner's interest in the property was substantial, given their claim of significant investment in the windmill and its operation, supported by tax, electricity, and GST receipts. The Court concluded that impleading the petitioner would not prejudice the second respondent, as it would not alter the cause of action but merely add a party with a substantial interest. Therefore, the petitioner was allowed to be added as a party to ensure that each party has an opportunity to substantiate their case.

Key Issues

1. Whether the petitioner, a subsequent purchaser of the property during the pendency of litigation, is a necessary or proper party to be impleaded as the second appellant in the Second Appeal (SA(MD) No. 4 of 2021)? This issue turns on the principles of lis pendens and the rights of subsequent purchasers. Petitioner's Arguments: The petitioner argued that they purchased the property for substantial consideration, have invested heavily in running the windmill for eight years, and would suffer significant loss if the Second Appeal is decided without their involvement. They claimed to be a necessary party for effective adjudication and cited precedents where alienees pendente lite were allowed to be impleaded. They also mentioned producing tax, electricity bills, and GST receipts as proof of their investment and operation. Second Respondent's Arguments: The second respondent contended that the petitioner purchased the property during the pendency of the suit (lis pendens) and was aware of the litigation, even filing a previous petition related to the execution proceedings. They argued that the petitioner's purchase was not bona fide and that any rights should be worked out against their vendor. They also alleged collusion between the petitioner and the first respondent and that the petitioner was not in absolute possession.