Swil Limited v. Gujarat Industrial Investment Corporation Ltd.
2011-04-19
BELA TRIVEDI
body2011
DigiLaw.ai
JUDGMENT 1. THE present Civil Revision Application has been filed by the applicant (original defendant No.2) challenging the order dated 24.01.2003 passed by the learned Chamber Judge, City Civil and Sessions Court, Ahmedabad, below Chamber Summons Exh.23 in Summary Suit No.51 of 2002. 2. THE short facts giving rise to the present Revision Application are that the present respondent No.1 (original plaintiff) is a Government of Gujarat undertaking and a company incorporated under the Companies Act, engaged in the business of providing various types of financial assistance to the companies and body corporates. The present applicant (original defendant No.2) is also a company incorporated under the Companies Act, of which the present respondent No.2 (original defendant No.1) was the co-promoter. The respondent No.1 (original plaintiff) has filed the suit being Summary Suit No.51 of 2002 before the City Civil and Sessions Court, Ahmedabad under Order 37 of Code of Civil Procedure against the present applicant (original defendant No.2) and the respondent No.2 (original defendant No.1) seeking a decree for a sum of Rs.5,37,09,850/-.
The respondent No.1 (original plaintiff) has filed the suit being Summary Suit No.51 of 2002 before the City Civil and Sessions Court, Ahmedabad under Order 37 of Code of Civil Procedure against the present applicant (original defendant No.2) and the respondent No.2 (original defendant No.1) seeking a decree for a sum of Rs.5,37,09,850/-. It has been averred inter alia in the plaint that the plaintiff had agreed to underwrite/procure subscription of 7,60,000 Fully Convertible Debentures (FCDs) of Rs.100/- each for cash at par, aggregating to Rs.760.00 Lacs, as a standby underwriter, in the right issue of the FCDs of the defendant No.2 company; that the said issue could not be subscribed fully and therefore the defendant No.2 company by its development notice dated 03.05.1995 requested the plaintiff to subscribe 7,60,000 number of FCDs of Rs.100/- each for cash at par, aggregating to Rs.760.00 Lacs representing the shortfall in subscription; that accordingly, the plaintiff subscribed to 7,60,000 numbers of FCDs of the defendant No.2 on different dates; that the defendant No.2 issued a letter of allotment dated 08.06.1999 and allotted 7,60,000 number of FCDs of Rs.100/- each which were required to be converted into Equity Shares at the end of 17 months from the date of allotment; that however, at the time of subscription to the said FCDs, the plaintiff had called upon and requested the defendant No.1 to buy back shares worth Rs.380.00 Lacs at a price of Rs.10/- each from the plaintiff within 30 days from the date of conversion of FCDs into Equity Shares; that accordingly, an agreement for buy back of shares was entered into between the parties in the month of May 1999 and it was agreed that the defendant No.1 shall ensure a return of 17.5% per annum payable semi-annually on the amount paid by the plaintiff towards the subscription of the said FCDs from the date of subscription; that however, thereafter the defendants requested the plaintiff to extend the date of conversion up to 07.06.2001, and therefore a fresh agreement for Buy-back of shares was executed between the parties on 27.11.2000; that in the said agreement the defendant no.1 had agreed to Buy-back shares worth Rs.3.80 crores at a price of Rs.10/- each from the plaintiff by 07.06.2001 and to reimburse loss, if any, to the plaintiff; that however, the defendant No.1 failed to make payment of Rs.3.80 crores along with return of 17.5% per annum as agreed in the said agreement dated 27.11.2000 and therefore the plaintiff filed the suit for the recovery of the said amount along with interest from the defendant No.1 as claimed in the plaint.
It further appears that the present applicant (original defendant No.2) moved the Chamber Summons Exh.23 contending inter alia that the defendant No.2 was wrongly joined as the defendant No.2 in the suit and therefore its name be deleted from the cause title of the suit. The said Chamber Summons came to be dismissed by the learned Chamber Judge vide the impugned order dated 24.01.2003 after hearing the learned advocates for the parties. Being aggrieved by the said order, the applicant has preferred the present revision application under Section 115 of the Code of Civil Procedure. 3. IT has been submitted by learned Advocate Mr. A.B. Trivedi for Mr. Mihir Joshi for the applicant that the applicant who is defendant No.2 in the suit is neither necessary nor proper party in the suit and the learned Chamber Judge has committed an error of law in rejecting the Chamber Summons moved by the defendant No.2 under Order 1 Rule 10 of Code of Civil Procedure. According to Mr. Trivedi, the plaintiff has neither made any allegation against the defendant No.2 nor has claimed any relief against the defendant No.2 in the plaint. He also submitted that the agreement dated 27.11.2000 was entered into between the plaintiff Corporation and the defendant No.1 in his personal capacity, and the suit having been filed for the recovery of the amount claimed towards the buy back of shares of the defendant No.2 company, pursuant to the said agreement, the defendant No.2 could not be said to be either the proper party or the necessary party. Mr. Trivedi has relied upon the judgments of Hon'ble Delhi High Court in the case of Hbl Limited v. Union of India, 2001(0)AIJ-DL 1317807 and in case of Tbwa Anthem Private Limited v. Madhukar Kamath, 2001(0) AIJ-DL 1317706 and of Himanchal Pradesh High Court in case of State Bank of India v. Krishna Pottery Udyog Association, 1993(0)AIJ-HP 700408, to submit that a person could be impleaded as a party to the suit only if he is a necessary or formal party to the suit or whose presence may be necessary to enable the Court to effectually and completely adjudicate upon and settle all the questions involved in the suit. 4. LEARNED Advocate Mr.
4. LEARNED Advocate Mr. R.D. Dave for the respondent No.1 however, supporting, the impugned order passed by the learned Chamber Judge, has submitted that the applicant defendant No.2 being a necessary and proper party for effectually and completely deciding all the questions involved in the suit, the Chamber Judge has rightly dismissed the Chamber Summons of the applicant. He also submitted that though no relief is claimed by the plaintiff against the defendant no.2, the presence of defendant no.2 is very much necessary inasmuch as the defendant no.1 was a promoter of the defendant no.2 company, and the plaintiff had subscribed the FCDs of the defendant no.2 as per the request made by it in its demand notice dated 03.05.1995, which was also referred to in the agreement dated 27.11.2000 entered into between the plaintiff and defendant no.1. According to him, there being no error of jurisdiction on the part of the learned Chamber Judge, the present revision application deserves to be dismissed. Before adverting to the rival contentions raised by the learned advocates for the parties, it would be beneficial to reproduce the relevant part of provisions contained in Order 1, Rule 10(2) on which the reliance has been placed by the parties. The said provision reads as under: 10(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 than 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. 5. FROM the bare perusal of the said provision it emerges that the Court has power to strike out the name of any party improperly joined, whether as plaintiff or defendant. The Court has also power to add the name of the 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.
The Court has also power to add the name of the 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. It is needless to say that whether a person is a necessary party or a proper party to the suit to enable the Court effectually and completely to adjudicate upon and settle the questions involved in the suit, would depend upon the facts of each case. Hence, let us examine as to whether the applicant defendant No.2 was the party improperly joined or was a necessary or a proper party to the suit filed by the respondent no.1 plaintiff. 6. HAVING regard to the submissions made by the learned advocates for the parties and the documents on record, more particularly, the averments made in the plaint and the impugned order passed by the learned Chamber Judge, it appears that though the suit has been filed by the respondent No.1 Corporation (original plaintiff) seeking decree against the respondent No.2 (original defendant No.1) the applicant has been joined as the defendant no.2 in the suit, as the defendant no.1 was the promoter of the defendant no.2 company at the relevant time when the agreement dated 27.11.2000 was entered into between the plaintiff and the defendant No.1. It is pertinent to note that the plaintiff on the basis of demand notice dated 03.05.1999 of the defendant no.2 company had subscribed to 7,60,000 number of FCDs of the defendant No.2, and that thereafter the defendant No.2 company had also issued a letter of allotment dated 08.06.1999 and allotted 7,60,000 number of FCDs of Rs.100/- each to the plaintiff, which were required to be converted into Equity Shares. The agreement dated 27.11.2000 entered into between the plaintiff and the defendant No.1 also mentions about the said development notice and the letter of allotment etc. As such, from the above facts and circumstances of the case, it clearly transpires that the presence of defendant No.2 i.e. the present applicant would be very much necessary to enable the Court to effectually and completely adjudicate upon all questions involved in the suit.
As such, from the above facts and circumstances of the case, it clearly transpires that the presence of defendant No.2 i.e. the present applicant would be very much necessary to enable the Court to effectually and completely adjudicate upon all questions involved in the suit. The Hon'ble Supreme Court in the latest decision in the case of Mumbai International Airport Pvt. Ltd. v. Regency Convention Centre and Hotels Pvt. Ltd. and Ors., AIR 2010 SC 3109 , while considering the scope of Order 1, Rule 10(2), observed as under: "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." 7. IN view of the above settled legal position, it emerges that a 'proper party' is a party whose presence would enable the Court to completely, effectively and adequately adjudicate upon all matters in dispute in the suit, and such person or party could be joined as the party defendant though no relief is claimed against him. It cannot be gainsaid that the plaintiff being dominus litis can choose the persons against whom he wishes to litigate, of course, the Court has powers under Order 1, Rule 10(2) to strike out the name of any party improperly joined in the suit. Nonetheless, if the party is found to be either necessary party or proper party, such party could not be said to be the party improperly joined whose name should be struck out under the said provision. 8. AS held earlier, the applicant defendant no.2, having been found to be a proper party whose presence is necessary for effectually and completely adjudicate upon and settle all questions involved in the suit, the learned Chamber Judge has rightly rejected the Chamber Summons Exh.23 of the applicant.
8. AS held earlier, the applicant defendant no.2, having been found to be a proper party whose presence is necessary for effectually and completely adjudicate upon and settle all questions involved in the suit, the learned Chamber Judge has rightly rejected the Chamber Summons Exh.23 of the applicant. The learned Chamber Judge having rightly exercised its discretion, this Court does not find any illegality or infirmity in the said order, requiring interference of this Court exercising limited revisional jurisdiction under Section 115 of C.P.C. The revision application being devoid of merits deserves to be dismissed and is accordingly dismissed. Interim relief, if any, stands vacated.