K. Lakshman, J.
1. Heard Mr. M.S.Prasad, learned Senior Counsel representing Mr. Nallamasu Krishna, learned counsel for the appellants and Mr. Salman Khurshid, learned Senior Counsel representing Mr. Muhammad Veqar Hussain, learned counsel appearing for the respondent No.1, Mr. Srikanth Chintala, learned counsel appearing for respondent Nos.4 to 13 and Mr. A. Jagan, learned counsel appearing for respondent Nos.14 to 29.
2. Notices sent to respondent Nos.2 and 3 were returned unserved with an endorsement ‘unclaimed’. Unclaimed’ amounts to service.
3. The present appeal is filed under Section 96, Order 41 Rule 1 of CPC, challenging the order dated 05.10.2020 passed in O.S.No.25 of 2020 by the XII Additional District Judge, Vikarabad, Ranga Reddy District.
4. The appellants herein are the third parties and the respondent Nos.1 and 2 are plaintiffs and respondent No.3 is the sole defendant in O.S.No.25 of 2020.
5. The respondent Nos.1 and 2 filed a suit in O.S.No.25 of 2020 against 3rd respondent herein for specific performance of agreement of sale dated 20.09.2014 in respect of the suit schedule property i.e. All that part and parcel of lands admeasuring Ac.00.13 guntas in Sy.No.66; admeasuring Ac.16.27 guntas in Sy.No.76; admeasuring Ac.17.02 gutnas in Sy.No.79; admeasuring Ac.20.16 guntas in Sy.No.85; admeasuring Ac.00.16 guntas in Sy.No.87, total admeasuring Ac.54.34 guntas, situated at Mokila village, Shankarpally Mandal, Ranga Reddy District. Children of Defendant No.1 i.e. Mohammad Karam Ali Khan and Mohd. Abbas Khan, were also witnesses to the agreement of sale, dated 20.09.2014 executed by respondent No.3. During pendency of the said suit, they have compromised the matter and basing on the said compromise, learned trial Court decreed the said suit on 05.10.2020.
6. It is contended by the respondent Nos.1 and 2 that 3rd respondent herein being the absolute owner and possessor of the suit schedule property entered into an agreement of sale with possession dated 20.09.2014 agreeing to sell the suit schedule property for total consideration of Rs.1,30,00,000/-. They have paid an amount of Rs.35,00,000/- towards advance sale consideration. They had paid an amount of Rs.25 Lakhs on 21.07.2015, Rs.20 Lakhs, Rs.10 Lakhs on 25.01.2018 and Rs.10 Lakhs on 26.10.2019. Altogether they have paid an amount of One Crore leaving balance of Rs.30 Lakhs which is payable after mutating their names in the revenue records and after clearance of all revenue and other dues payable to the Government. Time is not essence of the contract. Despite receiving and acknowledging the same, 3rd respondent failed to receive the balance sale consideration and execute sale deed in their favour. Therefore, they have filed the aforesaid suit in O.S.No.25 of 2020 against 3rd respondent herein seeking specific performance of agreement of sale dated 20.09.2014.
7. During pendency of the said suit, the respondent Nos.1 and 2/plaintiffs and 3rd respondent/defendant entered into compromise on the specific terms and conditions mentioned therein and filed the said compromise before the trial Court in O.S.No.25 of 2020 along with a petition filed under Order 23 Rule 3 of CPC. Basing on the said compromise, learned trial Court decreed the suit on 05.10.2020.
8. Challenging the said judgment and decree, appellants/third parties, claiming right over the suit schedule property, preferred the present appeal along with the application vide I.A.No. 1 of 2023 to grant leave.
9. It is the specific contention of the appellants herein that respondent Nos.1 to 3 herein obtained the said decree and judgment dated 05.10.2020 in O.S.No.25 of 2020 by playing fraud on the Court and it is a collusive decree. 3rd respondent is not the owner of the suit schedule property and she was never in possession of the same. Therefore, the question of respondent Nos.1 and 2 entering into the agreement of sale dated 20.09.2014 with respondent No.3 does not arise. The appellants came to know about the aforesaid judgment and decree in O.S.No.25 of 2020 on receipt of notice in O.S.No.111 of 2023 filed by respondent Nos.1 to 3 against the appellants on 27.02.2023. Therefore, they sought to set aside the said judgment and decree O.S.No.25 of 2020 dated 05.01.2020.
10. Respondent Nos.4 to 29 are claiming that they are the absolute owners and possessors of the suit schedule property. There are about 638 houses/plots in Mokila village, out of which about 44 plots/houses were allotted to various private individuals under the scheme of ‘Landless Poor’ including respondent Nos.4 to 29 in the year 1983. Even before 1983, respondent Nos.4 to 29 had been in possession of the respective plots, without any interference. Therefore, their names were also mentioned in the revenue records, Door Numbers for the houses were also issued and total extent of land is Ac.16.27 guntas in Sy.No.76 of Mokila Village.
11. They have also specifically mentioned house number, extent DCB Serial Number etc. Thus, according to them, respondent Nos.1 to 3 obtained the aforesaid decree in O.S.No.25 of 2020 by playing fraud and it is a collusive decree.
12. We have heard Mr. M.S.Prasad, learned counsel for the appellants and Mr. Salman Khurshid, learned Senior Counsel appearing for the respondent No.1, Mr. Srikanth Chintala, learned counsel appearing for respondent Nos.4 to 13 and Mr. A.Jagan, learned counsel appearing for respondent Nos.14 to 29, extensively and gave thoughtful consideration of the same.
13. The aforesaid facts would reveal that the respondent Nos.1 and 2 herein have filed a suit in O.S.No.25 of 2020 against the respondent No.3 seeking specific performance of agreement of sale, dated 20.09.2014 in respect of the suit schedule property. During pendency of the said suit, they have entered into a compromise on specific terms and conditions mentioned therein and filed the same along with an application under Order 23 Rule 3 of CPC. On consideration of the same, learned trial Court decreed the said suit basing on the said compromise.
14. Admittedly, the appellants are third parties to the said suit. They preferred the present appeal challenging the said judgment and decree dated 05.10.2020 in O.S.No.25 of 2020 contending that it is a collusive decree. Respondent Nos.1 to 3 obtained the same by playing fraud and they have interest over the suit schedule property.
15. Sri M.S.Prasad, learned Senior Counsel appearing for the appellants strenuously contended that possession was not at all delivered in favour of 3rd respondent in respect of the suit schedule property and the alleged oral gift/Hiba, Memorandum of Gift/Hiba dated 06.01.1990 was created for the purpose of filing of the aforesaid suit and to knock away the suit schedule property. Though that said decree was passed on 05.10.2020, respondent No.3 did not execute registered sale deed in favour of respondent Nos.1 and 2 and respondent Nos.1 and 2 did not file any Execution Petition against 3rd respondent. The said fact would reveal that it is a collusive decree. The alleged Memorandum of Gift/Hiba dated 06.01.1990 lacks three essential ingredients for a valid gift under Mohmmadian law i.e. 1) declaration of a gift by donor, 2) acceptance of gift by donee either expressly or impliedly and 3) Delivery of possession and taking possession thereon by the donee on acceptance either actually and constructively. Therefore, the same is liable to be set aside.
16. As discussed supra, the appellants are claiming that Mr. Sultan Murad Khan is the original owner of the suit schedule property, he has executed a registered gift settlement deed in favour of the appellants vide document bearing No.4408 of 2016, dated 16.08.2016. Possession was also handed over to the appellants herein. Their names were also mutated in the revenue records and E-pattadar passbooks and title deeds were also issued in their favour. Thus, they are the absolute owners and possessors of the suit schedule property in O.S.No.25 of 2020. Suppressing all these facts, without making the appellants as parties as defendants and also Mr. Sultan Murad Khan, the original owner, as a party to the suit, respondent Nos.1 to 3 have obtained decree dated 05.10.2020 in O.S.No.25 of 2020 by playing fraud. It is a collusive decree.
17. As discussed supra, the appellants filed I.A.No.1 of 2023 seeking leave to prefer the present appeal. Vide order dated 28.08.2024, this Court granted leave to appellants to prefer the present appeal. There is no challenge to the said application.
18. As discussed supra, vide impugned judgment and decree, learned trial Court decreed the suit filed by the respondent Nos.1 and 2 for specific performance of agreement of sale, dated 20.09.2014.
19. In the light of the same, this Court has to consider whether the appellant herein can seek to set aside the impugned judgment and decree dated 05.10.2020 in O.S.No.25 of 2020 contending that they have interest over the suit schedule property. The said suit is filed for specific performance of agreement of sale, but not for declaration.
20. In Kasturi vs. Iyyamperumal ((2005) 6 SCC 733), the Three Judge Bench of Hon’ble Apex Court had an occasion to consider the scope and ambit of Order 1 Rule 10 (2) of CPC and Section 19 of the Specific Relief Act. In the said case, it was a suit for specific performance of agreement of sale. A petition was filed to implead her as defendant contending that she has interest over the suit schedule property. The trial Court allowed the said application and the High Court confirmed the same. The plaintiff approached the Apex Court and on examination of the said facts and also considering the scope and ambit of Order – I Rule 10 of CPC and Section 19 of the Specific Relief Act, the Apex Court held the orders passed by the trial Court and the High Court are erroneous and accordingly the Apex Court set aside the said orders. Paragraph Nos.7 to 11 of the said judgment are relevant and the same are extracted below:-
"7. In our view, a bare reading of this provision namely, second part of Order I Rule 10 sub-rule (2) of CPC would clearly show that the necessary parties in a suit for specific performance of a contract for sale are the parties to the contract or if they are dead their legal representatives as also a person who had purchased the contracted property from the vendor. In equity as well as in law, the contract constitutes rights and also regulates the liabilities of the parties. A purchaser is a necessary party as he would be affected if he had purchased with notice of the contract, but a person who claims adversely to the claim of a vendor is, however, not a necessary party. From the above, it is now clear that two tests are to be satisfied for determining the question who is a necessary party. Tests are (1) there must be a right to some relief against such party in respect of the controversies involved in the proceedings (2) no effective decree can be passed in the absence of such party.
8. We may look to this problem from another angle.
Section 19 of the Specific Relief Act, 1963 provides for relief against parties and persons claiming under them by subsequent title. Except as otherwise provided by Chapter II, specific performance f a contract may be enforced against-
"19. (a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant:
(d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company;
Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract."
9. We have carefully considered sub-sections (a) to (e) of Section 19 of the Act. From a careful examination of the aforesaid provisions of sub-sections (a) to (e) of the Specific Relief Act we are of the view that the persons seeking addition in the suit for specific performance of the contract for sale who were not claiming under the vendor but they were claiming adverse to the title of the vendor do not fall in any of the categories enumerated in sub-sections (a) to (e) of Section 19 of the Specific Relief Act.
10. That apart, from a plain reading of Section 19 of the Act we are also of the view that this section is exhaustive on the question as to who are the parties against whom a contract for specific performance may be enforced.
11. As noted herein earlier, two tests are required to be satisfied to determine the question who is a necessary party, let us now consider who is a proper party in a suit for specific performance of a contract for sale. For deciding the question who is a proper party in a suit for specific performance, the guiding principle is that the presence of such a party is necessary to adjudicate the controversies involved in the suit for specific performance of the contract for sale. Thus, the question is to be decided keeping in mind the scope of the suit. The question that is to be decided in a suit for specific performance of the contract for sale is to the enforceability of the contract entered into between the parties to the contract. If the person seeking addition is added in such a suit, the scope of the suit for specific performance would be enlarged and it would be practically converted into a suit for title. Therefore, for effective adjudication of the controversies involved in the suit, presence of such parties cannot be said to be necessary at all….”
21. The Supreme Court in Bharat Karsondas Thakkar v. Kiran Construction Company & Others ((2008) 13 SCC 658) considered whether a third party claiming an independent interest in an immovable property could be impleaded in a suit for specific performance of an agreement relating to that property. The dispute arose when the original owners, after entering into an agreement concerning the property with one party, subsequently executed another agreement granting development rights over the same property to another entity. During the pendency of the suit for specific performance, a third party (i.e. Appellant) obtained a consent decree in separate proceedings concerning the disputed property, whereafter the plaintiff (i.e. Respondent No.1) sought amendment of plaint to challenge the consent decree, implead third parties, and seek consequential reliefs as to title and possession. The Trial Court allowed the amendment of plaint, which was affirmed by the High Court, aggrieved by which the Appellant preferred an appeal before the Supreme Court.
22. The Supreme Court observed that allowing amendment of pleadings would completely change the nature and character of the suit from being a suit for specific performance of an agreement to one for declaration of title and possession. It was observed that the third party to the agreement neither fell within the category of “parties to the agreement” under Section 15 of the Act, nor came within the ambit of Section 19 of the Act. In this regard, the Court referred to the decision in Kasturi (supra), wherein it was observed that neither the scope of a suit for specific performance could be enlarged to convert the same into a suit for title and possession, nor could a stranger be added so as to convert a suit of one character into a suit of a different character. Thus, the Court held that the proper course of action would have been to challenge the consent decree not in a suit for specific performance, but in a separate suit for declaration.
23. The Hon’ble Supreme Court in H. Anjanappa v. A. Prabhakar (2025 SCC OnLine SC 183.) elaborately discussed the principles governing grant of leave to a stranger or third party to prefer an appeal. It is a settled legal position that an appeal cannot be preferred by a stranger unless he falls within the category of an ‘aggrieved person’ or is otherwise prejudicially affected by the judgment and decree. The principles elucidated in the aforesaid judgment are extracted hereunder:
43. The principles governing the grant of leave to appeal may be summarised as under:
i. Sections 96 and 100 of the CPC respectively provide for preferring an appeal from an original decree or decree in appeal respectively;
ii. The said provisions do not enumerate the categories of persons who can file an appeal;
iii. However, it a settled legal proposition that a stranger cannot be permitted to file an appeal in any proceedings unless he satisfies the court that he falls within the category of an aggrieved person;
iv. It is only where a judgment and decree prejudicially affects a person who is not a party to the proceedings, he can prefer an appeal with the leave of the court;
v. A person aggrieved, to file an appeal, must be one whose right is affected by reason of the judgment and decree sought to be impugned;
vi. The expression “person aggrieved” does not include a person who suffers from a psychological or an imaginary injury;
vii. It would be improper to grant leave to appeal to every person who may in some remote or indirect way be prejudicially affected by a decree or judgment; and
viii. Ordinarily leave to appeal should be granted to persons who, though not parties to the proceedings, would be bound by the decree or judgment in that proceeding and who would be precluded from attacking its correctness in other proceedings.
24. The Supreme Court in Shri Mukund Bhavan Trust v. Shirmant Chhatrapati Udayan Raje Pratapsinh Maharaj Bhonsle ((2024) 15 SCC 675.), while referring to its earlier decision in Triloki Nath Singh v. Anirudh Singh ((2020) 6 SCC 629.), held that the bar under Order XXIII Rule 3-A of the CPC is applicable to third parties as well. Consequently, the only remedy available to a third party or stranger questioning the validity of a compromise decree would be to approach the same Court.
25. Whereas in the present case also, the Trial Court decreed the suit filed by respondent Nos.1 and 2 against respondent No.3 for specific performance. The appellants who are third parties to the said suit, filed the present appeal challenging the same.
26. At one point of time, Mr. Salman Khurshid, learned Senior counsel appearing for respondent No.1 sought to set aside the impugned judgment, and remand the matter to the trial Court for fresh consideration, as such, an opportunity may be given to the appellants to implead them as parties in the suit. The same is impermissible. As discussed supra, it was a suit for specific performance, respondent No.1 and others are claiming independent right over the suit schedule property. It is nothing but expanding the scope of the suit for specific performance. Respondent Nos.1 and 2 filed the aforesaid suit in O.S.No.25 of 2020 against the 3rd respondent seeking specific performance of agreement of sale dated 20.09.2014. It is not a suit for declaration of title. In the light of the guiding principle laid down by the Apex Court in Kasturi (supra), setting aside the impugned judgment and decree at the instance of the Appellants herein, third parties to the suit, remanding the matter to trial Court and granting liberty to respondents to implead in the suit is impermissible. It is nothing but expanding the scope of the suit for specific performance. Therefore, the appellants cannot prefer the present appeal.
27. If the appellants are having independent right over the suit schedule property, they have to avail the following remedies:-
1) to file a suit to declare the said judgment and decree as null and void and not binding on them;
2) to file a suit to declare them as owners of the suit schedule property; and
3) to file a claim petition in the event of respondent Nos.1 and 2 filing an Execution Petition seeking execution of the said Judgment and decree dated 05.10.2020 in O.S.No.25 of 2020, resist the said execution.
They can also take all the pleas/grounds raised in the present appeal in the aforesaid suit, or claim petition and they can resist the Execution Petition. They cannot file the present appeal to set aside the impugned judgment and decree seeking remand of the same to the trial Court for fresh disposal which amounts to expanding the scope of the suit for specific performance of agreement of sale.
28. It is apt to note that respondent Nos.1 to 3 in A.S.No.287 of 2023 had filed a suit in O.S.No.111 of 2023 (new O.S.No.501 of 2025) against appellant Nos.1 and 2 in A.S.No.287 of 2023 and others for perpetual injunction and declaration to declare registered documents as null and void and not binding on them. It is pending. Referring to the same, Sri M.S. Prasad, learned Senior Counsel appearing for appellants would contend that in the said suit, the trial Court granted injunction vide order dated 11.04.2023 in I.A.No.69 of 2023 in O.S.NO.111 of 2023 (new 501 of 2025). Challenging the said order, the Defendants preferred an appeal vide CMA No.273 of 2023. Vide order dated 28.12.2023, Division Bench of this Court allowed the said appeal setting aside the said order. Challenging said order, the plaintiffs preferred SLP No. 4543 of 2024. Vide order dated 27.02.2024, the Apex Court disposed of the said SLP granting liberty to respondent Nos.1 to 3 to move an application to appoint an Advocate Commissioner to find out as to who is in actual possession of the property in dispute. Even then, the plaintiffs did not file any petitions seeking appointment of an Advocate Commissioner in terms of the leave granted by the Supreme Court in SLP No.4543 of 2024. However, it is for the respondents to take steps in accordance with the aforesaid order and as per the liberty granted by the Apex Court. We cannot consider the said aspect in the present appeal.
29. It is apt to note that Defendant Nos.5 to 8 in the said suit had filed an application under Order VII Rule 11 of CPC to reject plaint, which was allowed. Therefore, plaintiffs filed an appeal vide A.S.No.324 of 2025. We have allowed the said appeal and remanded the matter to the trial Court with a direction to dispose of the suit strictly in accordance with law afresh.
30. As discussed supra, at the cost of repetition, the suit filed by respondent Nos.1 and 2 against the 3rd respondent in O.S.No.25 of 2020 is not for declaration of title to declare them as owners of the suit schedule property. It is a suit for specific performance of agreement of sale dated 20.09.2014.
31. 3rd respondent is claiming that she is the absolute owner and possessor of the suit schedule property by virtue of Memorandum of Gift/Hiba, dated 06.01.1990 executed by the appellant No.1. The plaintiffs filed original MOG, dated 06.01.1990 along with the plaint and also agreement of sale dated 20.09.2014 executed by 3rd respondent in favour of respondent Nos.1 and 2.
32. Sri M.S. Prasad, learned Senior Counsel appearing for appellants would contend that 3rd respondent is not the owner of the suit schedule property and she was never in possession of the same. However, the said aspects cannot be considered in the present appeal and this Court cannot give a finding as to the ownership and possession of the suit schedule property. It is not a suit for declaration of title. It is only a suit for specific performance of agreement of sale. If the appellants are aggrieved by the said judgment and decre e, they have to avail the aforesaid remedies. Instead of doing so, they have filed the present appeal. Therefore, this appeal is liable to be dismissed.
33. In the light of the aforesaid discussion, this appeal is dismissed. However, liberty is granted to the appellants and respondent Nos.4 to 29 to avail the aforesaid remedies and take all the pleas and grounds which they have taken in the present appeal before the appropriate Court and it is for the said Court to consider and decide the same on its own merits without being influenced by any of the findings herein. However, there is no order as to costs.
Consequently, miscellaneous petitions, if any pending, in this appeal, shall stand closed.
