AI Structured Summary
Not yet generated for this judgment
Judgment
V. Sujatha, J
1) This civil revision petition is filed by the petitioner/plaintiff under Article 227 of the Constitution of India challenging the order dated 14.08.2024 passed in I.A.No.33 of 2021 in O.S.No.31 of 2020 by the Principal Civil Judge (Senior Division), Madanapalle, whereby, the Trial Court allowed the said interlocutory application filed Under Order I Rule 10 of Code of Civil Procedure (for short “C.P.C.”) to permit the petitioner in I.A. to come on record as defendant No.2.
2) The revision petitioner – company, represented by one N.C.Nanda Kumar, Managing Director, is the plaintiff in the main suit. The petitioner company is incorporated under the Companies Act, 1956 on 05.11.1993 vide registration No.014895. The petitioner company has two members as its board of directors i.e. the Managing Director and one N.Chandra Sekhar. The property to an extent of Ac.5.51 ½ cents and Ac.5.51 ½ cents in Sy.Nos.656, 658, 659 and 660, Vempalle Revenue Village, Madanapalle Mandal and Sub-District, Chittoor District were purchased by the petitioner company from one Nadella Rama Murthy under two registered sale deeds bearing document Nos.6306 of 1994 and 6307 of 1994 dated 07.12.1994. Respondent No.1/defendant No.1, who was the then Managing Director, had represented the petitioner company for the said transaction and had entered into the said sale deeds. However, immediately thereafter, respondent No.1/defendant No.1 ceased to be the Managing Director of the petitioner company and he has sold away his shares and had quit from the petitioner company and is not part of the petitioner company for more than 2 ½ decades. The said fact was also informed to the Registrar of Companies at Bangalore.
3) While things stood thus, the representatives of the petitioner company came to know that respondent No.1/defendant No.1, who is no longer associated or connected with the petitioner company, had executed a series of documents representing and canvassing himself as representative of the petitioner company in favour of third parties. Upon verification from reliable sources, the representatives of the petitioner company came to know that respondent No.1/ defendant No.1 is trying to mutate the property in his name in revenue records and also trying to sell the same to third parties and defraud the company and knock away the suit schedule property. Accordingly, petitioner company filed a suit O.S.No.31 of 2020 as against respondent No.1/defendant No.1 on the file of the Principal Civil Judge (Senior Division), Madanapalle for declaration and permanent injunction in favour of the plaintiff restraining the defendant therein, and his men from interfering with the plaintiff’s peaceful possession and enjoyment of the land to an extent of Ac.11.03 cents in Sy.Nos.659, 658, 660 of Vempalle Revenue Village, Madanapalle Mandal, Chittoor District.
4) While the said suit is pending adjudication, one Thalla Gayatri Reddy (respondent No.2 herein) has filed an implead petition vide I.A.No.33 of 2021 under Order 1 Rule 10 of the C.P.C. seeking impleadment as defendant No.2 in the main suit. The said application was allowed by the Court below vide orders dated 14.08.2024. Aggrieved by the same, plaintiff in the main suit filed the present revision.
5) Heard learned counsel for the revision petitioner-plaintiff and learned counsel for respondent No.2-defenant No.2.
6) Learned counsel for the revision petitioner – plaintiff contended that the defendant No.2 and defendant No.1 in the suit are siblings and the present implead petition has been filed by defendant No.2 only to support the case of the defendant No.1. There are no bonafides to file the present implead petition. Defendant No.2 is not a necessary and proper party to the suit and requested to allow the present revision.
7) Learned counsel for the respondent No.2-defendant No.2 contended that defendant No.2 is the major share holder having 60% of the shares out of total 50,000 shares that belong to the plaintiff company and the factum of holding major shares by her was categorically admitted by the plaintiff in the plaint, as such she is the necessary party to be impleaded in the above suit. He further contended that defendant No.2 being major shareholder in the company is very much essential and necessary party to the suit and in her absence, no effective decree could be passed and supported the order of the Court below in all respects and requested this Court to dismiss the revision petition.
8) Having heard the submissions made by the learned counsel representing both parties and on perusal of the material available on record, the point that arises for consideration is as follows:
“Whether Thalla Gayatri Reddy is a necessary party to be impleaded in O.S.No.31 of 2020 as defendant No.2?”
P O I N T:
9) In the present case, suit O.S.No.31 of 2020 has been filed by the plaintiff against defendant No.1 for permanent injunction. One Thalla Gayatri Reddy filed I.A.No.33 of 2021 under Order I Rule 10 of C.P.C. to permit her to come on record as defendant No.2 in the suit on the ground that she is necessary party to the suit proceedings.
10) Order 1 Rule 10(2) of C.P.C. provides for impleadment of proper or necessary parties. The said sub-rule is extracted below:
(2) Court may strike out or add parties.
The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.
11) The said provision makes it clear that a court may, at any stage of the proceedings (including suits for specific performance), either upon or even without any application, and on such terms as may appear to it to be just, direct that any of the following persons may be added as a party: (a) any person who ought to have been joined as plaintiff or defendant, but not added; or (b) any person whose presence before the court may be necessary in order to enable the court to effectively and completely adjudicate upon and settle the question involved in the suit. In short, the court is given the discretion to add as a party, any person who is found to be a necessary party or proper party.
12) The terms “necessary party” and “proper party” have been defined by the Hon’ble Supreme Court in “Mumbai International Airport Pvt. Ltd. Vs. Regency Convention Centre and Hotels Pvt. Ltd. and Ors. AIR 2010 SC 3109”, which are as follows:
“A 'necessary party' is a person who ought to have been joined as a party and in whose absence no effective decree could be passed at all by the Court. If a 'necessary party' is not impleaded, the suit itself is liable to be dismissed. A 'proper party' is a party who, though not a necessary party, is a person whose presence would enable the court to completely, effectively and adequately adjudicate upon all matters in disputes in the suit, though he need not be a person in favour of or against whom the decree is to be made.
13) Keeping in view the law laid down by the Hon’ble Supreme Court in the said judgment, this Court would like to examine whether defendant No.2 (who was added by the trial Court) is necessary party.
14) Defendant No.2 contended that she is the major share holder having 60% of the shares out of total 50,000 shares that belong to the plaintiff company and she being major shareholder in the company is very much essential and necessary party to the suit and in her absence, no effective decree could be passed by the Court.
15) In the present case, suit O.S.No.31 of 2020 has been filed by the plaintiff against defendant No.1 for permanent injunction and defendant No.2 was not made as party and no relief was sought against her. But, she sought to be impleaded in the suit on the ground that she is a major share holder. While dealing with the similar issue, in “Mrs.Bacha F.Guzdar, Bombay Vs.Commissioner of Income Tax, Bombay AIR 1955 Supreme Court 74” relied on by the learned counsel for the petitioner, the Hon’ble Supreme Court held as follows:
“A shareholder has got no interest in the property of the company though he has undoubtedly a right to participate in the profits if and when the company decides a divide them.
The company is a juristic person and is distinct from the shareholders.”
16) In “Ramesh Hirachand Kundanmal Vs. Municipal Corporation of Greater Bombay (1992) 2 SCC 524”, relied on by the learned counsel for the petitioner, Hon’ble Supreme Court held as follows:
“..............The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness.”
17) In the present case, if defendant No.2 has relevant evidence to give against the plaintiff, she may give evidence as a witness, but not as a party defendant.
18) In “Razia Begum Vs. Sahebzadi Anwar Begum AIR 1958 SC 886” relied on by the learned counsel for the petitioner, the Hon’ble Supreme Court held that the Court has jurisdiction to add as a party defendant only a person who is directly interested in the subject-matter of the litigation and not a person who will be only indirectly or commercially affected.
19) In “Moser Vs. Marsden (1892) 1 Ch. 487” Lindley L.J. has held that a party who is not directly interested in the issues between the plaintiff and the defendant, but is only indirectly or commercially affected, cannot be added as a defendant because the court has no jurisdiction to bring him on the record even as a “proper party”.
20) In “M/s J.N.Real Estate Vs. Shailendra Pradhan 2025 (5) CTC 310” relied on by the learned counsel for respondent No.2, the Hon’ble Supreme Court held as follows:
“A party who is seeking impleadment may not be a necessary party but still, could be termed as a proper party. There is a fine distinction between a necessary party and a proper party. A necessary party is a person in whose absence no effective decree could be passed at all by the court. Whereas a proper party is one who though not a necessary party is a person whose presence would enable the court to effectively and adequately adjudicate upon all matters in dispute in the suit.”
21) In the present case, it is the petitioner that owns the property and not respondent No.2 – defendant No.2. Further, defendant No.2 contended that she is the major share holder having 60% of the shares out of total 50,000 shares belonging to the petitioner company. Therefore, it can be said that she is having commercial interest in the company and undoubtedly, she has a right to participate in the profits if and when the company decides to divide them. Merely, because she has commercial interest, it cannot be said that she is a proper or necessary party to the suit proceedings. If a person is not found to be a proper or necessary party, the court has no jurisdiction to implead him, against the wishes of the plaintiff. Even otherwise, it is the case of the plaintiff that defendant No.1, who was the then Managing Director of the company, entered into the sale deeds in the capacity of Managing Director of the Company, but, however, thereafter, defendant No.1 ceased to be the Managing Director of the plaintiff company and he has sold away his share and had quit from the plaintiff company. The said fact was also informed to the Registrar of Companies at Bangalore. Further, if Ms. Thalla Gayatri Reddy (impleaded defendant No.2) intends to give evidence, she can do so as a witness but not as a party defendant.
22) In view of my foregoing discussion, I find that the order of the trial Court is erroneous and the same is liable to be set aside by exercising power under Article 227 of the Constitution of India.
23) In the result, the civil revision petition is allowed setting aside the order dated 14.08.2024 in I.A.No.33 of 2021 in O.S.No.31 of 2020 on the file of the Principal Civil Judge (Senior Division), Madanapalle. No costs.
24) Consequently, miscellaneous applications pending if any, shall also stand dismissed.