Asian Hotels (North) Ltd. vs Alok Kumar Lodha & Ors.

Civil Appeal · 2022 INSC 713Decided 12 Jul 2022
Civil Appeal Nos. 3703-3750 of 2022
M.R. Shah · B.V. Nagarathna

Background

Asian Hotels (North) Ltd. had, since 1983, granted shop licenses at its hotel premises to various shopkeepers. In 2020, it revoked these licenses, prompting the licensees (including respondent Alok Kumar Lodha) to sue in the Delhi High Court seeking a declaration that their licenses were irrevocable and perpetual. During the pendency of these suits, the licensee-plaintiffs sought to amend their plaints to also challenge mortgages the hotel had created over the premises in favour of various banks (some dating to the 1980s), and to implead those banks as defendants. The Delhi High Court allowed both the amendment and the impleadment, relying on the "plaintiff is dominus litis" principle and a precedent (Kasturi v. Iyyamperumal) concerning specific performance suits.

Decision Breakdown

The Supreme Court held that the High Court erred in allowing the amendment because it fundamentally changed the nature of the suits, from a challenge to license revocation into a challenge against decades-old mortgages, which would also cause misjoinder of causes of action. It clarified that the "dominus litis" principle (a plaintiff's right to choose whom to sue) only permits adding parties who are necessary or proper to the existing dispute, not unrelated third parties like mortgagee banks. The Court also found the High Court's reliance on Kasturi misplaced, since that case involved specific performance against subsequent purchasers of the very property in dispute: a materially different situation. Since the licensees were themselves aware, under their license agreements, that the hotel could mortgage the premises to fund its development, they could not belatedly challenge those mortgages in a suit about license revocation. All the appeals were allowed and the High Court's orders permitting amendment and impleadment were set aside, with no order as to costs.

Lesson Learnt

A plaintiff cannot use an amendment application to fundamentally alter the character of a lawsuit or to drag in unrelated third parties (like a mortgagee bank) whose rights have no direct bearing on the original dispute; courts will disallow amendments that change the essential nature of the suit or cause misjoinder of unrelated claims.

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