In Suit By Licensee Challenging Revocation Of License, Mortgage Created Prior To License Cannot Be Challenged- SC
A Supreme Court Bench of Justice MR Shah and Justice BV Nagarathna set aside orders passed by the Delhi High Court while holding that "As per the settled proposition of law, if, by permitting plaintiffs to amend the plaint including a prayer clause nature of the suit is likely to be changed, in that case, the Court would not be justified in allowing the amendment. It would also result in misjoinder of causes of action."
The Court has also held that "in a suit challenging revocation of the respective licenses, the plaintiffs cannot be permitted to challenge the respective mortgages /charges created on the entire premises as void abinitio".
Senior Advocate Shri Mukul Rohatgi appeared for the Defendant-Appellant and Shri Avishkar Singhvi and Shri Rahul Gupta appeared for Respondents before the Court.
In this case, the High Court had allowed applications under Order 6 Rule 17 of the CPC and Order 1 Rule 10 of the CPC and permitted the Original Plaintiff to amend their respective plaints so as to declare void abinitio all the mortgages/charges on the entire premises in question and also implead mortgagee banks/financial institutions for that purpose.
The Appellant had granted licenses for individual shops to various shopkeepers including the Original Plaintiff. In 2020, the Original Plaintiff as a licensor served revocation of license notice. Similar notices were also served on other licensees. Therefore, the respective licensees had instituted the respective suits before the Delhi High Court against the Appellant, seeking a decree of declaration that the license in favour of the Plaintiff in respect of shop/premises is irrevocable and perpetual and the purported revocation of the license is illegal, void and bad in the eyes of law.
A decree was also sought for a declaration declaring that the Plaintiff has unfettered right to occupy and use the said premises/shop under the irrevocable license till the documents of transfer/conveyance are executed by the Appellant.
The Plaintiff proposed to amend the suit challenging various mortgages created by the Appellant, in favour of certain banks and the same was allowed.
The mortgages were created prior to granting of licenses to the shops.
The Supreme Court opined that "The High Court while allowing the amendment application in exercise of powers under Order 6 Rule 17 of the Code of Civil Procedure has not properly appreciated the fact and / or considered the fact that as such, by granting such an amendment and permitting plaintiffs to amend the plaints incorporating the prayer clause to declare the respective charges / mortgages void abinitio, the nature of the suits will be changed."
Referring to the principle that the Plaintiff is the dominus litus, the Court opined that the principle shall only be applicable in a case where the parties sought to be added as defendants are necessary or proper parties.
Therefore, the Supreme Court held that the High Court had committed a grave and serious error in allowing the application under Order 6 Rule 17 and under Order 1 Rule 10 of the Code of Civil Procedure by permitting Original Plaintiffs to amend the plaint including prayer clause. To that end, the Appeals were allowed and the orders passed by the High Court were quashed and set aside.