Shri Bankhandi Nath Developers Pvt. Ltd. v. Dharmendra Kumar Rathore
2024-01-31
SARAL SRIVASTAVA
body2024
DigiLaw.ai
JUDGMENT : Saral Srivastava, J. 1. Heard Ms Shreya Gupta, learned counsel for the plaintiff/revisionist and Sri Navin Sinha, learned Senior Advocate assisted by Sri Arvind Srivastava, learned counsel for the respondents. 2. By means of the present civil revision, the plaintiff/revisionist has assailed the order dated 11.05.2022 passed by the Civil Judge (Senior Division), Bareilly by which he has allowed the application 151Ka and application 227Ga of Dharmendra Kumar Rathore-respondent no.1 for impleading him as 'defendant' in Original Suit No.530 of 2017. 3. The facts in brief are that the plaintiff/revisionist is a private limited company duly registered with the Registrar of Companies Uttar Pradesh and Uttarakhand, Kanpur on 07.07.2011. The plaintiff-revisionist has instituted the Original Suit No.530 of 2017 praying for a decree of specific performance of agreement to sale dated 12.07.2011 executed by respondent no.2 (defendant no.1 in original suit) in favour of plaintiff/revisionist registered in the office of Sub-Registrar-II, Bareilly on 12.07.2011, and a direction to the respondent no.2 to execute the sale deed of the land described in the plaint and in the agreement to sale dated 12.07.2011 (hereinafter referred to as 'suit property') in favour of plaintiff/revisionist after taking the balance sale consideration of Rs.2 crore & 28 lacs from the plaintiff/revisionist. It is further prayed that respondent no.3 (defendant no.2 in the original suit) and respondent no.5 (defendant no.4 in the original suit) be also directed to join with defendant no.1 as sellers in the said sale deed. The plaintiff/revisionist further prayed for a decree declaring the two sale deeds dated 11.11.2011 registered on 15.11.2011 and the sale deed dated 29.11.2012 registered on 01.12.2012 as null and void. 4. The case of the plaintiff/revisionist is that respondent no.2 agreed to sell the plaintiff/revisionist his Bhumidhari land detailed in paragraph 4 of the plaint situated at village Bilwa, Tehsil and District Bareilly. Respondent no.2 for the said purpose executed a registered agreement to sale dated 12.07.2011 registered in the office of Sub-Registrar II, Bareilly on 12.07.2011 (hereinafter referred to as 'agreement') in favour of the plaintiff/revisionist through its two Directors namely, Dharmendra Kumar Rathore and Smt. Neetu Sahu.
Respondent no.2 for the said purpose executed a registered agreement to sale dated 12.07.2011 registered in the office of Sub-Registrar II, Bareilly on 12.07.2011 (hereinafter referred to as 'agreement') in favour of the plaintiff/revisionist through its two Directors namely, Dharmendra Kumar Rathore and Smt. Neetu Sahu. The total amount of sale consideration for the suit property under the agreement was Rs.3,28,00,000/- (Rs.3 crores & 28 lac) out of which, an amount of Rs.1 crore was paid to respondent no.2 by plaintiff/revisionist as part of sale consideration and balance amount of sale consideration was agreed to be paid at the time of execution of sale deed. 5. Under the agreement, six months was stipulated for the execution of the sale deed, and it was also agreed between the plaintiff/revisionist and respondent no.2 that the plaintiff/revisionist as prospective purchaser shall be at liberty to get the sale deed executed in its name or the name of other person or persons, firm or company of its choice and may also get the sale deed executed in one go or in parts as may be permissible under the relevant revenue law. It is also agreed that all the costs and expenses of registration, stamp duty etc. shall be borne by the plaintiff/revisionist. 6. Initially, on 07.07.2011 at the time of incorporation of the plaintiff/revisionist's company, Dharmendra Kumar Rathore and Smt. Neetu Sahu were promoters and first Directors of the company. Thereafter, Bharat Kumar Agarwal and Smt. Smita Agarwal became shareholders of the plaintiff/revisionist's company by purchasing 25% shares of the company by each of them w.e.f. 11.07.2011. Thus, Dharmendra Kumar Rathore, Smt. Neetu Sahu, Bharat Kumar Agarwal and Smt. Smita Agarwal became the shareholder of the plaintiff/revisionist's company each having 25% shares in the company. Bharat Kumar Agarwal and Smt. Smita Agarwal were also appointed Directors of the plaintiff/revisionist's company on 18.07.2011. Thus, the plaintiff/revisionist's company had four Directors namely, Dharmendra Kumar Rathore, Smt. Neetu Sahu, Bharat Kumar Agarwal and Smt. Smita Agarwal w.e.f. 18.07.2011. 7. The further case in the plaint is that the two Directors namely Dharmendra Kumar Rathore and Smt. Neetu Sahu resigned from the Directorship of the plaintiff/revisionist's company w.e.f. 18.10.2011.
Thus, the plaintiff/revisionist's company had four Directors namely, Dharmendra Kumar Rathore, Smt. Neetu Sahu, Bharat Kumar Agarwal and Smt. Smita Agarwal w.e.f. 18.07.2011. 7. The further case in the plaint is that the two Directors namely Dharmendra Kumar Rathore and Smt. Neetu Sahu resigned from the Directorship of the plaintiff/revisionist's company w.e.f. 18.10.2011. It is further stated that before the expiry of the period stipulated in the agreement for execution of the sale deed, two Directors of the plaintiff/revisionist's company namely, Bharat Kumar Agarwal and Smt. Smita Agarwal came to know that respondent no.2 had sold away the suit property by executing two sale deeds; one sale deed dated 11.11.2011 (registered on 15.11.2011 in the office of Sub-Registrar, Bareilly) in favour of respondent no.4 (defendant no.3 in the suit) and respondent no.5 (defendant no.4 in the suit) is in respect to one half of the land of the suit property of southern portion; and second sale deed dated 11.11.2011 (registered on 15.11.2011 in the office of Sub-Registrar, Bareilly) in favour of respondent no.3 in respect of one half of the northern portion of suit property. At the time of execution of the second sale deed, the name of respondent no.3 was M/s Saraswati Paddy Private Limited and its Director was Sri Anupam Agarwal, but thereafter, its name was changed to M/s Marigold Infra Developers Private Limited. 8. It is further stated that in both the aforesaid sale deeds, it is mentioned that respondent no.2 had earlier entered into the aforesaid agreement to sale dated 12.07.2011 in favour of the plaintiff/revisionist, and plaintiff/revisionist under clause 11 of the agreement through its resolution dated 15.07.2011 nominated and requested to the vendor i.e. respondent no.2 to sell the said land to the purchaser concerned. It was also mentioned in the aforesaid two sale deeds that the amount of advance of Rs.1 crore was paid by the plaintiff/revisionist to respondent no.2 under the agreement be adjusted in each of the said sale deeds equally. The expenses incurred in the execution and registration of sale deeds viz stamp duty, registration charges etc. were borne and paid by the vendor i.e. respondent no.2. 9.
The expenses incurred in the execution and registration of sale deeds viz stamp duty, registration charges etc. were borne and paid by the vendor i.e. respondent no.2. 9. The plaintiff/revisionist further alleges that when two Directors namely, Bharat Kumar Agarwal and Smt. Smita Agarwal came to know about aforesaid two sale deeds dated 11.11.2011 (registered on 15.11.2011 in the office of Sub-Registrar, Bareilly), they objected to it alleging that no resolution dated 15.07.2011 was ever passed by the plaintiff/revisionist's company authorising the sale of suit property to said purchasers. Plaintiff/revisionist also alleged that two Directors namely, Dharmendra Kumar Rathore and Smt. Neetu Sahu had resigned from the plaintiff/revisionist's company on 18.10.2011 and they in collusion with purchasers and respondent no.2 and other persons got the sale deeds executed without there being any such resolution as referred in the said sale deeds to cause grave loss to the plaintiff/revisionist's company. 10. The aforesaid two Directors namely, Bharat Kumar Agarwal and Smt. Smita Agarwal made complaints about the aforesaid illegal sale to various authorities and requested that the sale deeds be cancelled. 11. It is further stated that the respondent nos.4 and 5 despite knowing the fact that sale deeds have not been legally executed, sold away and transferred the suit property purchased by them through the aforesaid sale deeds dated 11.11.2011 to respondent no.6 (defendant no.5 in the suit). 12. As there arose serious dispute among the Directors, two Directors namely, Bharat Kumar Agarwal and Smt. Smita Agarwal filed Company Petition No.99 (N.D.) of 2012 (Bharat Kumar and Another Vs. Shri Bankhandi Nath Developers Private Limited), under Sections 397 and 398 of the Companies Act, 1956 before the National Company Law Tribunal, Allahabad Bench praying that the aforesaid sale deeds dated 11.11.2011 and the two sale deeds dated 15.11.2011 be declared null and void and suit property sold under the aforesaid sale deeds be restored. They further prayed that a proceeding for fraudulent conduct of business be launched against the respondents in the said company petition. 13. Later on, Dharmendra Kumar Rathore and Smt. Neetu Sahu also filed Company Petition No.86 (N.D.) of 2013 (Dharmendra Kumar Rathore and Another Vs. Shri Bankhandi Nath Developers Private Limited) praying for a declaration that transfer/allotment of shares to Bharat Kumar Agarwal and Smt. Smita Agarwal be declared as invalid and null and void.
13. Later on, Dharmendra Kumar Rathore and Smt. Neetu Sahu also filed Company Petition No.86 (N.D.) of 2013 (Dharmendra Kumar Rathore and Another Vs. Shri Bankhandi Nath Developers Private Limited) praying for a declaration that transfer/allotment of shares to Bharat Kumar Agarwal and Smt. Smita Agarwal be declared as invalid and null and void. Further declaration sought was that the alleged transfer forms be declared invalid, null and void and the resolution passed on 18.07.2011 for appointing Bharat Kumar Agarwal and Smt. Smita Agarwal as Director on the filing of Form-32 is cancelled besides other reliefs. 14. The National Company Law Tribunal (hereinafter referred to as 'N.C.L.T.') decided both the company petitions i.e. Company Petition No.99 (N.D.) of 2012 and Company Petition No.86 (N.D.) of 2013 by common judgement dated 24.01.2017 wherein it held that Bharat Kumar Agarwal and Smt. Smita Agarwal are the shareholders and Directors of the plaintiff/revisionist's company having together 50% authorized capital and shall continue as such. The N.C.L.T. also held that Dharmendra Kumar Rathore and Smt. Neetu Sahu have not resigned from the Directorship and they are continuing as Directors of the plaintiff/revisionist's company. It also held that there was no resolution dated 15.07.2011 authorising execution of the sale deeds dated 11.11.2011 in favour of respondent nos.3, 4 and 5. The N.C.L.T also held that no resolution for parting with the rights of the plaintiff/revisionist under the agreement to purchase the suit property in suit was ever passed by the Board or by Extraordinary General Meeting (hereinafter referred to as 'EOGM') or by Annual General Meeting (hereinafter referred to as 'AGM') and held that parting of the suit property by the company at the behest of Dharmendra Kumar Rathore and Smt. Neetu Sahu without approval of the Board and members ignoring legal requirements cannot be held to be legal. However, N.C.L.T. refused to cancel the sale deeds and held that the plaintiff/revisionist may get the agreement enforced through a competent Civil Court since it has no jurisdiction to grant the said relief. 15.
However, N.C.L.T. refused to cancel the sale deeds and held that the plaintiff/revisionist may get the agreement enforced through a competent Civil Court since it has no jurisdiction to grant the said relief. 15. Bharat Kumar Agarwal and Smt. Smita Agarwal filed a Company Appeal No.72 of 2017 whereas Dharmendra Kumar Rathore and Smt. Neetu Sahu filed Company Appeal Nos.108 & 109 of 2017 before the National Company Law Appellate Tribunal, Delhi against the judgement and order dated 24.01.2017 passed by the N.C.L.T. The National Company Law Appellate Tribunal decided all three appeals by a common judgement dated 23.08.2017 affirming the judgement dated 24.01.2017 passed by the N.C.L.T and further directed Dharmendra Kumar Rathore to compensate the plaintiff/revisionist in the manner provided in the order. 16. It is also stated by the plaintiff/revisionist in the plaint that the plaintiff/revisionist has always been ready and willing to perform its part of the agreement and pay the balance sale consideration to respondent no.2 and to get the sale deed executed from him in terms of the agreement. In the aforesaid factual backdrop, the plaintiff/revisionist has prayed for the relief, referred to above. 17. In the aforesaid suit, an application 151Ka under Order 1 Rule 10 of C.P.C. has been filed by Dharmendra Kumar Rathore, who is one of the Directors of the plaintiff/revisionist's company for being impleaded as 'defendant' in the suit. The said application has been filed by Dharmendra Kumar Rathore mainly on the ground that N.C.L.T. in its order dated 24.01.2017 held that there are four Directors in the company, but because of the dispute between them, they are divided, and no decision of the company can be taken without the majority of the Directors. Consequently, the N.C.L.T. appointed Sri Anil Kumar, a practising Company Secretary so that the decision could be taken by the company by majority. It is further stated that no meeting of the five Directors had taken place to decide about the filing of suit on behalf of the company. Therefore, one Director Sri Bharat Kumar Agarwal alone is not competent to institute the suit as no decision to institute the suit has been taken by the other four Directors.
It is further stated that no meeting of the five Directors had taken place to decide about the filing of suit on behalf of the company. Therefore, one Director Sri Bharat Kumar Agarwal alone is not competent to institute the suit as no decision to institute the suit has been taken by the other four Directors. It is further stated that since respondent no.1 Dharmendra Kumar Rathore is the Director of the company and has a direct interest in the suit property, therefore, any decision in the suit will affect the interest of respondent no.1, hence, he is a necessary and proper party in the suit. 18. It is further stated that Bharat Kumar Agarwal has stated wrong facts in the plaint which are adverse to the interest of respondent no.1, and therefore, respondent no.1 is a necessary and proper party in the suit. 19. The application 151Ka of respondent no.1 was objected to by the plaintiff/revisionist by filing objection 163Ga contending inter alia that respondent no.1 is neither necessary nor proper party in the suit and application 151Ka has been filed on misconceived grounds. It is further stated that so far as the legality of the resolution passed by the company is concerned, a third party has no right to challenge the legality and correctness of the resolution, and this Court has no jurisdiction to decide the legality and correctness of the said resolution. It is further stated that the averments made in application 151Ka are vague since respondent no.1 has not stated in his application what facts have been concealed by the plaintiff/revisionist. It is also stated that the suit has been instituted in the interest of the company and for the benefit of the company, and in case relief prayed for in the suit is granted, respondent no.1 shall not suffer any prejudice rather he would be benefited by the decree in favour of the plaintiff/revisionist. 20. It transpires from the record that the plaintiff/revisionist also filed an application under Order 39 Rules 1 & 2 of C.P.C. praying for an interim injunction. The said application was rejected by the trial court by order dated 21.10.2021. Against the said order, the plaintiff/revisionist preferred F.A.F.O. No.1771 of 2021 which was dismissed by the Division Bench of this Court by judgement dated 26.11.2021.
The said application was rejected by the trial court by order dated 21.10.2021. Against the said order, the plaintiff/revisionist preferred F.A.F.O. No.1771 of 2021 which was dismissed by the Division Bench of this Court by judgement dated 26.11.2021. Against the judgement of this Court dated 26.11.2021 passed in F.A.F.O. No.1771 of 2021, the plaintiff/revisionist preferred Special Leave to Appeal (C) No.1204 of 2022 in which, Apex Court has passed the following order on 07.02.2022:- “Upon hearing the counsel the Court made the following ORDER Applications for exemption from filing O.T., permission to file additional documents/facts/annexures are allowed. Learned counsel for the petitioner points out that the original vendor (respondent No.1) executed a registered agreement to sell on 12.07.2011 in respect of 55,000 sq. mtrs. of land with 50% stamp duty paid in favour of the petitioner company. There are two subsequent agreements dated 11.11.2011 registered on 15.11.2011 executed in favour of respondent No.2 and respondent Nos.3 & 4. It is the say of learned counsel for the petitioner that in view of there being an issue on the Board resolution authorizing the subsequent sales, the matter went to NCLT and thereafter NCLAT and this Court which upheld the findings that the Board Resolution authorizing the same was fraudulent in character. It is thereafter in the year 2017, the suits for specific performance were filed in which interim orders have been declined by the trial Court after 4 years and the appeal against the same dismissed by the impugned order. He further submits that pending suit, sale transactions have taken place to third parties, including respondent No.5, represented before us, by respondent Nos.3 & 4. These parties, it is submitted were before the NCLT but only respondent No.5 is arrayed as a defendant in the suit as a subsequent purchaser other than the first four respondents. The case of the petitioner is thus predicated on the findings of a fraudulent Board Resolution and also its submissions that the original vendor/respondent No.1 was asked to execute sale deed in favour of respondent No. 2 and respondent Nos. 3 & 4 and the proceeds therefrom is not known where they went. In this behalf he submits that as per the registered agreement for sale dated 12.07.2011, one crore had been paid out of a total consideration of Rs. 3 crores 28 lakh.
3 & 4 and the proceeds therefrom is not known where they went. In this behalf he submits that as per the registered agreement for sale dated 12.07.2011, one crore had been paid out of a total consideration of Rs. 3 crores 28 lakh. The petitioner is thus stated to have been left high and dry and that the property is dealt with in the meantime, it may be difficult to realize the money from those properties, the dispute being one inter se the company. On the other hand learned counsel for respondent No. 5 submits that he is a subsequent second purchaser and thus, his interest cannot be compromised. The impugned orders being interim in character, we would normally loathe to interfere with the same. However, the High Court order also does not deal with this crucial aspects to give prima facie finding way one necessitating our scrutiny. or the other Issue notice on the special leave petition as well on interim relief returnable on 07.03.2022. Learned counsel for respondent No.5 accepts notice. Respondents Nos. 1 and 4 be served dasti as well. We may note the disputed Board Resolution is dated 15.07.2011 which has been found to be fraudulent by the different forums stated to be authorizing Mr. Dharmendra Rathore, one of the Directors who is stated to be still a Director of the petitioner company. In order to enable this Court to take a view and to find out where the monies realized have gone, we consider appropriate to implead Mr. Dharmendra Rathore as respondent No. 6 in the present proceedings. Amended Memo of parties be filed within a week. Notice in terms aforesaid will also issue to the newly impleaded as respondent No. 6. A copy of the order to accompany the notice.” 21. The aforesaid S.L.P. was disposed off by the Apex Court by judgement dated 07.03.2022. Respondent no.1 on the strength of the judgement dated 07.02.2022 passed by the Apex Court in Special Leave to Appeal (C) No.1204 of 2022 filed an application 227Ga for impleading him as 'defendant' in the suit. 22.
The aforesaid S.L.P. was disposed off by the Apex Court by judgement dated 07.03.2022. Respondent no.1 on the strength of the judgement dated 07.02.2022 passed by the Apex Court in Special Leave to Appeal (C) No.1204 of 2022 filed an application 227Ga for impleading him as 'defendant' in the suit. 22. The aforesaid application was contested by the plaintiff/revisionist by filing objection 231Ga stating therein that the impleadment of respondent no.1 by the Apex Court in Special Leave to Appeal (C) No.1204 of 2022 was for a limited purpose and Apex Court has never directed or allowed the impleadment of respondent no.1 in the above suit. 23. The trial court by order dated 11.05.2022 allowed the application 151Ka and 227Ga of respondent no.1 by placing reliance upon the order passed by the Apex Court on 07.02.2022 in Special Leave to Appeal (C) No.1204 of 2022. The order dated 11.05.2022 is assailed in the present revision. 24. Challenging the aforesaid order, learned counsel for the plaintiff/revisionist has contended that the order of the trial court allowing application 151Ka and application 227Ga is erroneous and has been passed without application of mind inasmuch as the trial court while allowing the aforesaid applications has failed to consider the necessary ingredients of Order 1 Rule 10 of C.P.C. in allowing the impleadment application of respondent in the suit. It is contended that the plaintiff/revisionist is a dominus litis and he cannot be compelled to proceed against a person against whom he does not claim any relief. It is further contended that the plaintiff/revisionist being dominus litis is not bound to sue every possible adverse claim in the suit. It is further contended that respondent no.1 is neither a necessary nor a proper party in the suit, therefore, the trial court has committed material irregularity in not considering the fact whether respondent no.1 has made out a case for impleadment under Order 1 Rule 10 of C.P.C. or not. 25. It is further contended that the trial court has failed to appreciate correctly the order passed by the Apex Court in S.L.P. No.1204 of 2022 for impleading respondent no.1 as 'defendant' in the suit.
25. It is further contended that the trial court has failed to appreciate correctly the order passed by the Apex Court in S.L.P. No.1204 of 2022 for impleading respondent no.1 as 'defendant' in the suit. It is submitted that the impleadment of respondent no.1 in the suit was for a limited purpose to get the direction of the National Company Law Appellate Tribunal directing respondent no.1 to compensate the company by depositing Rs.1 crore along with 12% interest complied with. Thus, it is contended that the revisional court has committed manifest irregularity in allowing the application of respondent no.1. 26. Per contra, Sri Navin Sinha, learned Senior Counsel for the respondents submits that respondent no.1 is a necessary and proper party in the suit. It is contended that it is not disputed that respondent no.1 is one of the Directors of the plaintiff/revisionist's company as has been held by the N.C.L.T. and affirmed by the National Company Law Appellate Tribunal, therefore, he has direct interest in the suit property. In such view of the fact, even if no relief has been claimed against respondent no.1, he is a proper party in the suit. 27. It is submitted that reading of the plaint does not disclose that there is any pleading to the effect that the plaintiff/revisionist's company passed any resolution authorising Bharat Kumar Agarwal to institute suit for enforcement of the agreement to sale. He further contends that after the order was passed by the National Company Law Appellate Tribunal, no meeting of five Directors of the plaintiff/revisionist's company had taken place resolving to institute a suit for enforcement of the agreement to sale, and this fact has been specifically stated by the respondent no.1 in paragraph 5 of his application which has not been denied by the plaintiff/revisionist's company in its objection 163Ga to the application 151Ka of respondent no.1. Accordingly, his further submission is that there is no provision to challenge the resolution of the Company under the Companies Act.
Accordingly, his further submission is that there is no provision to challenge the resolution of the Company under the Companies Act. He further submits that since the relevant issue which arises in the instant case to be considered by the trial court is whether the company has taken any decision to take legal recourse for enforcement of the agreement to sell, and the said issue strikes at the maintainability of the suit and cannot be decided effectively in the absence of respondent no.1 and the decision on said issue does not change the nature of suit, therefore, the respondent no.1 is necessary and proper party in the suit. 28. It is further stated that there are serious allegations made by the plaintiff/revisionist in the plaint against respondent no.1 that respondent no.1 has colluded with other persons in executing the sale deed, and in such view of the fact, the respondent no.1 has a right to defend himself and thus, respondent no.1 is a necessary and proper party in the suit and application of respondent no.1 falls within the parameters of Order 1 Rule 10 of C.P.C., therefore, the trial court has not committed any illegality in allowing the application of respondent no.1. Lastly, he contends that by impleading respondent no.1, plaintiff/revisionist would not suffer any prejudice. 29. I have considered the rival submissions of the parties and perused the record. 30. Plaintiff-revisionist instituted Original Suit No.530 of 2017 praying for a decree of specific performance of agreement to sale dated 12.07.2011 executed by respondent no.2 in favour of plaintiff-revisionist. It emanates from the record that initially there were two shareholders of the plaintiff's company, namely, Dharmendra Kumar Rathore and Smt. Neetu Sahu and they were the Directors of the plaintiff's company. Subsequently, Bharat Kumar Agarwal and Smt. Smita Agarwal purchased 50% share from Dharmendra Kumar Rathore and Smt. Neetu Sahu, and thus, there were four shareholders each having 25% shareholding in the company. 31. The plaintiff/revisionist entered into an agreement to sale executed by respondent no.2 in favour of the plaintiff's company through its Director Dharmendra Kumar Rathore for sale consideration of Rs.3,28,00,000/- (Rs. Three Crores & Twenty Eight Lacs), out of which Rs.1 crore was paid as advance.
31. The plaintiff/revisionist entered into an agreement to sale executed by respondent no.2 in favour of the plaintiff's company through its Director Dharmendra Kumar Rathore for sale consideration of Rs.3,28,00,000/- (Rs. Three Crores & Twenty Eight Lacs), out of which Rs.1 crore was paid as advance. It was stipulated in the agreement to sale that the sale deed was to be executed within six months either in favour of the plaintiff-revisionist or in the name of another person or persons, firm or company of its choice and may also get the sale deed executed in one go or in portion as permissible under the relevant Revenue Law. Later on, Bharat Kumar Agarwal and Smt. Smita Agarwal also became the Directors of the plaintiff's company on 18.07.2011, and thereafter, there were four Directors of the plaintiff's company namely, Dharmendra Kumar Rathore, Smt. Neetu Sahu, Bharat Kumar Agarwal and Smt. Smita Agarwal. 32. It transpires from the record that respondent no.2 sold away the suit property by executing two sale deeds; one dated 11.11.2011 in favour of respondent no.4 & 5 selling southern one half of the suit property; and the second sale deed on the same date i.e., 11.11.2011 in favour of respondent no.3 in respect of one half of the northern portion of the suit property. It further transpires from the record that a dispute arose among the Directors of the company which led Bharat Kumar Agarwal and Smt. Smita Agarwal to file a Company Petition No. 99 (N.D.) of 2012, under Sections 397 & 398 of the Companies Act, 1956 before the N.C.L.T. praying for a relief of declaration declaring the sale deed dated 11.11.2011 and two sale deeds dated 15.11.2011 as null and void and suit property sold under the aforesaid sale deeds be restored to the plaintiff's company. The other Company Petition No.86 (N.D.) of 2013 was filed by Dharmendra Kumar Rathore and Smt. Neetu Sahu praying that allotment of share to Bharat Kumar Agarwal and Smt. Smita Agarwal be declared invalid and null and void. The N.C.L.T. decided both the company petitions, i.e. Company Petition No. 99 (N.D.) of 2012 and Company Petition No.86 (N.D.) of 2013 by a common judgement dated 24.01.2017.
The N.C.L.T. decided both the company petitions, i.e. Company Petition No. 99 (N.D.) of 2012 and Company Petition No.86 (N.D.) of 2013 by a common judgement dated 24.01.2017. Paragraphs 5.2 to 5.5, 6.1 & 7 of the judgement of N.C.L.T. dated 24.01.2017 which have been relied upon by learned counsel for both the parties in respect of their submissions are reproduced herein below:- “5.2. Thus, there cannot be any doubt that the Company has agreed to purchase the property and the Company is at liberty to obtain sale deed either in its own name or in the name of any other else within a period of six months, subject to other conditions of contract. But very strangely, on 15.11.2011 the company has taken the decision to part with that land. The reason for that as stated by the Respondents in their petition in CP 86/2013 is that they being directors of the Company got an offer for sale of the land at a point, therefore in order to benefit the Respondent No.1 Company, the land was sold to (1) Saraswati Paddy Products Pvt. Ltd. and (now Mari Gold Infra) (2) Shri Styendra Rathore and Shri Prem Shankar Rathore by way of registered sale deed on 15.11.2011 and thus 'earned profit within a short span of time'. 5.3 One of the important clauses of the sale deeds is that the Vendor has borne the Registration and Stamp duty charges. Under the deeds the sale consideration is Rs.3,28,00,000. It is the same value for which the land was purchased from Respondent No.4 under the agreement of sale by the Company. Therefore, there is no profit earned by the company as pleaded by the Respondents. Further very weirdly, the vendor had to bear the Stamp duty and Registration charges which comes to Rs.23 lakhs as shown in both the sale deeds together. Why the 4th Respondent had to bear loss in meeting this stipulation is un-understandable and this also goes contrary to the ordinary course of transactions. It is unknown whether the advance consideration paid by the Company under the agreement of sale was returned to it by the vendees under the sale deeds. The Respondents did not produce any evidence to that effect. Therefore, deliberately this transaction, instead of fetching profit to the company resulted in incurring huge loss.
It is unknown whether the advance consideration paid by the Company under the agreement of sale was returned to it by the vendees under the sale deeds. The Respondents did not produce any evidence to that effect. Therefore, deliberately this transaction, instead of fetching profit to the company resulted in incurring huge loss. If such is not called an act of mismanagement, certainly it is imprudent act prejudicially affecting the interest of the company. 5.4. Interestingly, the Board did not record any minutes of its meeting and produce that the decision to get the sale deed executed in favour of 3rd parties in pursuance of the Agreement of sale, by the Respondent No.4 approved by the EOGM which is necessary to part with the property of the Company. Even if any such meeting was held, that minutes are not valid because, the Petitioners who are Directors are not parties to that resolution. The Respondents did not even plead that there is any such resolution passed by the Board and the EOGM or AGM. The property of the company acquired under the agreement of sale cannot be parted with in favour of a 3rd party without the approval of the Board and Members. To that extent, the parting of property by the company at the behest of the Respondent No.2 and 3 claiming to be sole directors of the company ignoring the legal requirements and also the fact that there are other Directors, the Petitioner in CP-99/2012 as per our findings above, is not legal. 5.5. The next important question that remains with us is whether the sale deeds dated 15.11.2011 can be declared as 'null and void' as sought for in CP 99/2012. The jurisdiction of this tribunal is summary in nature and the powers thereof while dealing with causes of oppression and mismanagement are spelt out in Sec. 402 of 1956 Act and Sec. 242 of Companies Act, 2013. Two important clauses of Sec. 242 are relied upon by the learned counsel for the Petitioners in CP 99/2012 to contend that the Tribunal is competent to set aside any transfer of property under Sec. 242. Those two clauses are: (e).
Two important clauses of Sec. 242 are relied upon by the learned counsel for the Petitioners in CP 99/2012 to contend that the Tribunal is competent to set aside any transfer of property under Sec. 242. Those two clauses are: (e). the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f). the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g). the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; Clause (e) is with respect to termination of any agreement between directors of the company; and clause (f) is between company and 3rd parties. To fall back on the spirit of clause (f), the 3rd party shall give consent. Here the 3rd party, other than the directors is Respondent No.11, 5 to 6 who are vendees under two registered sale deeds executed by Respondent No.4. They are resisting the CP 99/2012 substantially and so, there is no consent as such they are giving to terminate any agreement i.e., the sale deeds, if they are taken as 'agreements' for the purpose of cl.(f) of sec. 242 above. Clauses (g) cannot be attracted because the tribunal can set aside any transfer etc made or done within three months before the date of the application. Obviously this is also not applicable. Further, it is pertinent to note that there is no transfer of property as such effected by the Company but it is by the 4th Respondent. Had the sale deeds in question dated 15.11.2011 been executed by or on behalf of the Company, this provision could have been very well attracted. 5.6... 6.1.
Obviously this is also not applicable. Further, it is pertinent to note that there is no transfer of property as such effected by the Company but it is by the 4th Respondent. Had the sale deeds in question dated 15.11.2011 been executed by or on behalf of the Company, this provision could have been very well attracted. 5.6... 6.1. As observed in point No.3, parting with the property of the company in favour of 3rd parties is virtually parting with equitable rights of the company to seek sale deed from the vendor in pursuance of the agreement of sale. When once the act of the Respondents in allowing the sale deed executed by the vendor in favour of 3rd party, is held oppressive and not binding on the company, that decision does not disturb the rights accrued to the Respondents 4 to 6 and 11, the vendees under sale deeds because there is transfer of property to them by operation of Sec. 54 of the Transfer of Property Act. Therefore, the Company has to take legal action for getting those sale deeds cancelled and obtain a sale deed in its favour and for that the Board of the Company has to take decision with the ratification by the members. Whether or not the Board will take a decision is left to the wisdom of the Directors and Members of the company. 7. Result: In view of the above discussion and observations, the following Order is passed: 1. It is declared that both the groups, namely the Petitioners in CP 99/2012 and Petitioners in CP86/2013 are guilty of committing acts of oppression and mismanagement; 2. It is declared that both petitioners in CP 99/2012 and Petitioners in CP86/2013 are Directors of the Board of the Company; 3 (a) Shri Anil Kumar, Practicing Company Secretary is appointed as 5th Director of the Company to enable the Board to take majority decision on the following issues: (i) whether any legal action shall be taken by the Company for getting the sale deeds dated 15.11.2011 executed by Mr. Alok Goel in favour of 3rd parties cancelled and to specifically enforce the agreement of sale dated 12.07.2011 in favour of the Company executed by Mr.
Alok Goel in favour of 3rd parties cancelled and to specifically enforce the agreement of sale dated 12.07.2011 in favour of the Company executed by Mr. Alok Kumar Goel according to law; (ii) Whether the Registered office of the Company be shifted or not; (iii) Any other issue relating to the affairs of the Company in order to put the company on track to continue its business as per the objectives of its incorporation; 3 (b) Shri Anil Kumar is further empowered to supervise that the Board meeting and the meeting of members is convened smoothly by following the procedure according to the Companies Act, 2013 and relevant rules and report to the Tribunal. He shall continue as Director of the Board till the Board elects another independent director within a period of 6 months from the date of this order or such other period as the Tribunal may direct on the application of any of the Directors or the members of the Company. 3 (c) Each of parties shall pay Rs. 25, 000/ (twenty five thousand only) (total Rs.50,000) to Shri Anil Kumar as his honorarium in advance, besides reimbursing his travelling and other incidental expenses, whenever he claims therefor; 4. Both parties in both the petitions shall file certified copy of this order before Registrar of Companies, Kanpur within 30 days from the date of this order; 5. All the other reliefs claimed in both the petitions are refused and merged in this order; 6. All applications if any pending as on today are hereby disposed of and merged in this order; 7. The Company Petitions CP 99/2012 and 86/2013 are disposed off accordingly; 8. Both parties shall bear their respective costs.” 33. Against the judgement of N.C.L.T. dated 24.01.2017, Bharat Kumar Agarwal and Smt, Smita Agarwal preferred Company Appeal (AT) No.72 of 2017 and two Company Appeals i.e., Company Appeal (AT) Nos.108 & 109 of 2017 preferred by Dharmendra Kumar Rathore and Smt. Neetu Sahu before the National Company Law Appellate Tribunal which were decided by it by a common judgement dated 23.08.2017. 34. It is further relevant to point out that the Special Leave Petition preferred by Dharmendra Kumar Rathore i.e. Civil Appeal Diary No.38283 of 2017 against the judgement dated 23.08.2017 of National Company Law Appellate Tribunal was dismissed by the Apex Court by judgement and order dated 10.08.2018. 35.
34. It is further relevant to point out that the Special Leave Petition preferred by Dharmendra Kumar Rathore i.e. Civil Appeal Diary No.38283 of 2017 against the judgement dated 23.08.2017 of National Company Law Appellate Tribunal was dismissed by the Apex Court by judgement and order dated 10.08.2018. 35. Before adverting to the submission of respective counsels, it would be useful to have a glance at Order 1 Rule 10 of C.P.C. which is reproduced herein below. “10. Suit in name of wrong plaintiff.—(1) Where a suit has been instituted in the name of the wrong person as plaintiff or where it is doubtful whether it has been instituted in the name of the right plaintiff, the Court may at any stage of the suit, if satisfied that the suit has been instituted through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the Court thinks just. (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. (3) No person shall be added as a plaintiff suing without a next friend or as the next friend of a plaintiff under any disability without his consent.
(3) No person shall be added as a plaintiff suing without a next friend or as the next friend of a plaintiff under any disability without his consent. (4) Where defendant added, plaint to be amended.—Where a defendant is added, the plaint shall, unless the Court otherwise directs, be amended in such manner as may be necessary, and amended copies of the summons and of the plaint shall be served on the new defendant and, if the Court thinks fit, on the original defendant (5) Subject to the provisions of the Indian Limitation Act, 1877 (XV of 1877), Section 22, the proceedings as against any person added as defendant shall be deemed to have begun only on the service of the summons. ” 36. The Apex Court while interpreting Order 1 Rule 10 of C.P.C. ruled that the party filing application under Order1 Rule 10 (2) of C.P.C. has to establish that he is a necessary and proper party in the proceeding and without his presence the court cannot effectively and completely adjudicate upon and settle all the questions involved in the suit. Once the person who files an application under Order 1 Rule 10 of C.P.C. establishes the existence of the aforesaid prerequisite conditions, the Court is under obligation to exercise its jurisdiction under Order 1 Rule 10 of C.P.C. and direct for impleadment of such person. 37. In this respect it would be apt to refer few judgments of the Apex Court: 38. In Ramesh Hirchand Kundanmal Vs. Municipal Corporation of Greater Bombay and Others (1992) 2 SCC 524 , the question which came for consideration before the Apex Court was whether the second respondent is a necessary and proper party to be joined as 'defendant' under Order 1 Rule 10 of C.P.C. in the suit instituted by the appellant against respondent no.1. 39. In the said case under the Dealership Agreement of 1974, appellant Ramesh Hirchand Kundanmal was in possession of the service station erected on the land held by respondent no.2-Hindustan Petroleum Corporation Ltd. as lessee. The service station consisted of a petrol pump on the ground floor and a structure with an open terrace for parking vehicles.
39. In the said case under the Dealership Agreement of 1974, appellant Ramesh Hirchand Kundanmal was in possession of the service station erected on the land held by respondent no.2-Hindustan Petroleum Corporation Ltd. as lessee. The service station consisted of a petrol pump on the ground floor and a structure with an open terrace for parking vehicles. Respondent no.1, the Municipal Corporation of Greater Bombay issued notice dated August 5, 1988, under Section 351 of the Municipal Corporation Act to the appellant for demolition of two chattels on the terrace on the ground that these were unauthorised constructions. The appellant instituted suit No.6181 of 1988 before the City Civil Court, Bombay challenging the validity of the notice and for injunction restraining the municipal corporation from demolishing the structures. 40. In the said suit, an application under Order 1 Rule 10 of C.P.C. was filed by respondent no.2 -Hindustan Petroleum Corporation Ltd. on the ground that they have materials to show that the constructions are unauthorised, and they are necessary parties to the litigation. The trial court allowed the said application and directed the appellant to add respondent no.2 as the defendant and amend the plaint suitably. The appellant preferred Writ Petition No.4229 of 1989 under Article 227 of the Constitution of India in the High Court of Bombay challenging the order passed by the trial court allowing the impleadment application which was dismissed by the High Court. The order of the trial court allowing the impleadment application and the order of the High Court dismissing the writ petition of the appellant came to be challenged by the appellant before the Apex Court in the present case. 41. In the said appeal, three submissions were advanced by the appellant; The plaintiff is dominus litis, and therefore, cannot be forced to join the second respondent as the defendant; secondly, the second respondent is neither a necessary nor a proper party to the suit; thirdly, addition of second respondent would enlarge the issue in the suit. In this regard, it would be relevant to reproduce paragraphs 13, 14 and 15 of the said judgement:- “13. A clear distinction has been drawn between suits relating to property and those in which the subject-matter of litigation is a declaration as regards status or legal character.
In this regard, it would be relevant to reproduce paragraphs 13, 14 and 15 of the said judgement:- “13. A clear distinction has been drawn between suits relating to property and those in which the subject-matter of litigation is a declaration as regards status or legal character. In the former category, the rule of present interest as distinguished from the commercial interest is required to be shown before a person may be added as a party. 14. It cannot be said that the main object of the rule is to prevent multiplicity of actions though it may incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objectives. 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. It is not merely that he has an interest in the correct solution of some questions involved and has thought or relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is so that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. The line has been drawn on wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action.
It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. Similar provision was considered in Amon v. Raphael Tuck & Sons Ltd., (1956) 1 All E.R. 273, wherein after quoting the observations of Wynn-Parry, J. in Dollfus Mieg et Compagnie S.A v. Bank of England, (1950) 2 All E.R. 611, that there true test lies not so much in an analysis of what are the constituents of the applicants' rights, but rather in what would be the result on the subject-matter of the action if those rights could be established, Devlin, J. has stated:- “The test is `May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights'." 15. It has been strenuously contended before us that the respondent 2 has no interest in the subject-matter of the litigation and the presence of the respondent is not required to adjudicate upon the issue involved in the suit or for the purpose of deciding the real matter involved. It is pointed out that the subject-matter in the suit is the notice issued by the Municipal Corporation to the appellant and the issue is whether it is justified or not. The Hindustan Petroleum Corporation Limited is interested in supporting the Municipal Corporation and sustaining the action taken against the appellant. But that does not amount to any legal interest in the subject-matter in the sense that the order, if any, either in favour of the appellant or against the appellant would be binding on this respondent. It is true that being lessee of the premises, the Hindustan Petroleum Corporation Limited has an answer for the action proposed by the Municipal Corporation against the appellant, but for the purpose of granting the relief sought for by the appellant by examining the justification of the notice issued by the Municipal Corporation, it is not necessary for the Court to consider that answer. If that be so, the presence of the respondent cannot be considered as necessary for the purpose of enabling the Court to effectually and completely adjudicate upon and settle all the questions involved in the suit. The appellant is proceeded against by the Municipal Corporation for the alleged action in violation of the municipal laws.
If that be so, the presence of the respondent cannot be considered as necessary for the purpose of enabling the Court to effectually and completely adjudicate upon and settle all the questions involved in the suit. The appellant is proceeded against by the Municipal Corporation for the alleged action in violation of the municipal laws. The grievance of the respondent against the appellant, if any, could only be for violation of the agreement and that is based on a different cause of action. The consolidation of these two in the same suit is neither contemplated nor permissible.” 42. In the case of Kasturi Vs Iyyamperum and Others (2005) 6 SCC 733 the question which cropped up for consideration before the Apex Court was whether in a suit for specific performance of contract for sale of a property instituted by a purchaser against the vendor, a stranger or a third party to the contract claiming to have an independent title and possession over the contracted property is entitled to be added as a party-defendant in the suit. In the said case, a suit for specific performance of the contract was instituted by the appellant against respondents no.2 and 3. An application was filed in the suit by respondents no.1 and 4 to 11, who were admittedly not parties to the contract setting up a claim of independent title and possession over the contracted property to get themselves added in the suit as 'defendants'. 43. The trial court allowed the application for impleadment of respondent no.1 and 4 to 11, and the writ petition preferred against the order of the trial court was also dismissed by the High Court. These two orders came to be challenged before the Apex Court. The Apex Court after considering the scope of Order 1 Rule 10 of C.P.C. held that a third party, who is alien to the agreement, is neither necessary nor proper party and cannot be impleaded as defendant. Paragraphs 13, 16, 17 and 18 of the said judgement are reproduced herein below:- “13.
The Apex Court after considering the scope of Order 1 Rule 10 of C.P.C. held that a third party, who is alien to the agreement, is neither necessary nor proper party and cannot be impleaded as defendant. Paragraphs 13, 16, 17 and 18 of the said judgement are reproduced herein below:- “13. From the aforesaid discussion, it is pellucid that necessary parties are those persons in whose absence no decree can be passed by the Court or that there must be a right to some relief against some party in respect of the controversy involved in the proceedings and proper parties are those whose presence before the Court would be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit although no relief in the suit was claimed against such person. 14... 15.. 16. That apart, from a plain reading of the expression used in sub-rule (2) Order 1 Rule 10 CPC "all the questions involved in the suit" it is abundantly clear that the legislature clearly meant that the controversies raised as between the parties to the litigation must be gone into only, that is to say, controversies with regard to the right which is set up and the relief claimed on one side and denied on the other and not the controversies which may arise between the plaintiff/appellant and the defendants inter se or questions between the parties to the suit and a third party. In our view, therefore, the court cannot allow adjudication of collateral matters so as to convert a suit for specific performance of contract for sale into a complicated suit for title between the plaintiff/appellant on one hand and Respondent Nos. 2 & 3 and Respondent Nos. 1 and 4 to 11 on the other. This addition, if allowed, would lead to a complicated litigation by which the trial and decision of serious questions which are totally outside the scope of the suit would have to be gone into.
2 & 3 and Respondent Nos. 1 and 4 to 11 on the other. This addition, if allowed, would lead to a complicated litigation by which the trial and decision of serious questions which are totally outside the scope of the suit would have to be gone into. As the decree of a suit for specific performance of the contract for sale, if passed, cannot, at all, affect the right, title and interest of the respondent Nos.1 and 4 to 11 in respect of the contracted property and in view of the detailed discussion made hereinearlier, the respondent Nos.1 and 4 to 11 would not, at all, be necessary to be added in the instant suit for specific performance of the contract for sale. 17. It is difficult to conceive that while deciding the question as to who is in possession of the contracted property, it would be open to the Court to decide the question of possession of a third party or a stranger as first the lis to be decided is the enforceability of the contract entered into between the appellant and the Respondent 3 and whether contract was executed by the appellant and the Respondent Nos.2 and 3 for sale of the contracted property, whether the plaintiffs were ready and willing to perform their part of the contract and whether the appellant is entitled to a decree for specific performance of a contract for sale against the Respondent Nos.2 and 3. Secondly in that case, whoever asserts his independent possession of the contracted property has to be added in the suit, then this process may continue without a final decision of the suit. Apart from that, the intervener must be directly and legally interested in the answers to the controversies involved in the suit for specific performance of the contract for sale. In Amol Vs. Raphael Tuck and Sons Ltd. [1956(1) All ER 273] it has been held that a person is legally interested in the answers to the controversies only if he can satisfy the Court that it may lead to a result that will effect him legally. 18. That apart, there is another principle which cannot also be forgotten.
In Amol Vs. Raphael Tuck and Sons Ltd. [1956(1) All ER 273] it has been held that a person is legally interested in the answers to the controversies only if he can satisfy the Court that it may lead to a result that will effect him legally. 18. That apart, there is another principle which cannot also be forgotten. The appellant, who has filed the instant suit for specific performance of the contract for sale is dominus litis and cannot be forced to add parties against whom he does not want to fight unless it is a compulsion of the rule of law, as already discussed above. For the reasons aforesaid, we are, therefore, of the view that Respondent Nos.1 and 4 to 11 are neither necessary parties nor proper parties and therefore they are not entitled to be added as party-defendants in the pending suit for specific performance of the contract for sale.” 44. In a recent judgement of the Apex Court in the case of Gurmit Singh Bhatia Vs. Kiran Kant Robinson and Others (2020) 3 SCC 773, the Apex Court considered the issue whether the plaintiff could be compelled to implead a person in a suit for a specific performance against his wishes and more particularly in respect of a person against whom no relief has been claimed by him. In the said case, the suit was instituted by respondent no.2 and 3 against respondent no.1 for specific performance of agreement to sale. During the pendency of the suit, and despite there being an injunction order, a sale deed was executed by respondent no. 1 in favour of the appellant. The appellant, thereafter, filed an application for impleadment under Order 1 Rule 10 of C.P.C. The trial court allowed the impleadment application which order was set aside by the High Court in a writ petition. The appellant preferred the appeal against the judgement of the High Court dismissing the writ petition of the appellant before the Apex Court. The Apex Court placed reliance upon the judgement in the case of Kasturi (supra) and dismissed the special leave petition. 45. It can thus be seen that the Apex Court has held that for being a necessary and proper party, the twin conditions have to be satisfied.
The Apex Court placed reliance upon the judgement in the case of Kasturi (supra) and dismissed the special leave petition. 45. It can thus be seen that the Apex Court has held that for being a necessary and proper party, the twin conditions have to be satisfied. The first one is that there must be a right to some relief against such a party in respect of the controversies involved in the proceeding. The second is that no effective decree can be passed in the absence of such a party. Thus, in other words, it is necessary that a person must be directly or legally interested in the action in the answer i.e. the litigation would affect him legally by curtailing his legal rights. Further, the presence of such a person is necessary to decide and adjudicate all the issues involved in the suit and the absence of such party would handicap the Court from adjudicating the issues involved in the suit. 46. While elaborating on the scope of Order 1 Rule 10 of C.P.C., the Apex Court has further emphasised that the main object of the rule is not to prevent the multiplicity of actions though it may incidentally have that effect. A person would not be a necessary and proper party merely because he has relevant evidence to give on some of the questions involved; that would only make such a person a necessary witness. Such a person would also not become a necessary party because he has an interest in the correct solution of some questions and has thought or relevant arguments to advance. 47. Further, a plain reading of the expression 'all the questions involved in the suit' used in sub-Rule 2 of Order 1 Rule 10 of C.P.C. signifies that the legislature conceived that the controversies raised between the parties to the litigation must be gone into only. The Court cannot by invoking power under Order 1 Rule 10 (2) of C.P.C. allow adjudication of collateral matters as this would lead to a complicated litigation by which the trial and decision of serious questions which are outside the realm of issues involved in the suit would have to be gone into. 48. Now, this Court proceeds to consider the legality of the order of the trial court allowing the impleadment application.
48. Now, this Court proceeds to consider the legality of the order of the trial court allowing the impleadment application. The order of the trial court reflects that it has placed reliance upon the order passed by the Apex Court in Special Leave to Appeal (C) No.1204 of 2022 which has been extracted above. The trial court did not advert to the scope of Order 1 Rule 10 (2) of C.P.C. in passing the impugned order. When this lacuna in the order was pointed out to the learned counsel for the respondents, he could not demonstrate from the impugned order that the trial court has recorded finding that ingredients of Order 1 Rule 10 (2) of C.P.C. are present, so respondent no.1 is a proper party in the suit and his presence is necessary to effectively adjudicate all the issues involved in the suit. Thus, it can easily be held that the trial court has committed material irregularity in allowing the application of respondent no.1 under Order 1 Rule 10 of C.P.C. 49. Now, the question which further comes for consideration before this Court is whether this Court in the exercise of power under Section 115 of C.P.C. can proceed to decide the impleadment application of respondent no.1 on merit or should remand the matter to the trial court to decide the application 227Ga of respondent no.1 afresh. 50. Learned counsel for the plaintiff/revisionist submits that this Court in the exercise of power under Section 115 of C.P.C. can decide the application if there is no disputed question of fact or purely a legal issue is involved. She submits that in the present case, only the question of law is involved i.e. whether the impleadment application of respondent no.1 satisfies the essential conditions to invoke the power under Order 1 Rule 10 (2) of C.P.C. to conclude that respondent no.1 is a necessary and proper party and has a right to be impleaded. 51. She has placed reliance upon the two judgements of this Court. In the case of Maulvi Muhammad Vs. Syed Husain 1880 ILR 3 All. 3 203, the question referred to the larger Bench was whether Section 622 of Act 10 of 1877 gives larger power of revision in civil cases than the power of Courts in exercising jurisdiction of Second Appeal.
In the case of Maulvi Muhammad Vs. Syed Husain 1880 ILR 3 All. 3 203, the question referred to the larger Bench was whether Section 622 of Act 10 of 1877 gives larger power of revision in civil cases than the power of Courts in exercising jurisdiction of Second Appeal. In other words, the question was whether under Section 622 of Act 10 of 1877, the Court in the exercise of power of revision has the power to pass all orders it can pass in Second Appeals. In this regard, it would be apt to reproduce the judgement of Stuart, C.J as well as the judgement of Straight, J and Old-field, J:- “Stuart, C.J: ...Under this s.622, I consider, we can make any order, whether in regard to fact or law, we may think proper for the purposes of the justice of the case. In fact, it appears to me that the power given to the High Court under s. 622 in civil cases very much resembles, if it is not the same as, the jurisdiction given to the High Court in criminal cases under s. 297 of the Criminal Procedure Code, by which the High Court is empowered to "pass such judgment, sentence, or order as it thinks fit." In my opinion, we have under s. 622 the same power as this in civil cases." “Straight, J, Oldfield, J:- concurring. I would answer this reference by saying that, in my opinion, the terms of s. 622, Act X of 1877, as amended by Act XII. of 1879, are so wide and comprehensive as to invest the High Court with the power to call for the records of cases not open to second appeal, and to pass any order on them which might properly be made in second appeal. The words added by Act XII. of 1879 were apparently introduced for the purpose of relaxing the somewhat contracted limits within which it had been competent for the High Court to exercise revision over the proceedings of Sub-ordinate tribunals in which no second appeal lay, and to give them a narrow interpretation would, I think, be to defeat the object the Legislature had in view.
of 1879 were apparently introduced for the purpose of relaxing the somewhat contracted limits within which it had been competent for the High Court to exercise revision over the proceedings of Sub-ordinate tribunals in which no second appeal lay, and to give them a narrow interpretation would, I think, be to defeat the object the Legislature had in view. Placing the most reasonable construction I can upon the terms “acting in the exercise of its jurisdiction illegally or with material irregularity,” I should read them to mean, deciding erroneously in point of law, or irregularly in a material particular in respect of procedure, and if this view be correct, the High Courts must necessarily possess in revision all the powers they have in second appeal. It is argued that this practically provides a second appeal in all cases that are in the strict sense of the term unappealable, and it is further urged that, if so serious an alteration of the law had been contemplated, words might readily have been found to express such an intention. I confess I feel the force of this contention, but I cannot give effect to it in face of the, what appear to me to be, plain directions of s. 622 in its present shape. I would accordingly answer the question put by this reference in the affirmative.” 52. In the case of Laxmi Kishore and Another Vs. Har Prasad Shukla 1981 Allahabad Rent Cases 545, the question referred to the Bench was in respect to the powers of the revisional court under Section 25 of Provincial Small Causes Courts Act. The question which was referred to the Bench was as follows:- “Whether under section 25 of the Provincial Small Cause Courts Act a revisional court can pass a suitable decree in a case on a consideration of the evidence on record, if it finds that the findings recorded by the trial court were vitiated by an error of law, or can it only remand the case for a fresh trial?” 53. The Bench while answering the aforesaid question held as under:- “14. It was in this state of affairs that section 103 was enacted in the present Code of 1908. It expressly enables the High Court to determine an issue of fact itself rather than remand matters in such cases. 15.
The Bench while answering the aforesaid question held as under:- “14. It was in this state of affairs that section 103 was enacted in the present Code of 1908. It expressly enables the High Court to determine an issue of fact itself rather than remand matters in such cases. 15. The question is what is the effect of exclusion of section 103 from the purview of the prescribed powers and procedure for revision under Sec. 25 of the Small Cause Courts Act. The answer is evident. The court exercising revisional power under Section 25 does not possess jurisdiction to determine issues of fact itself, by entering into the evidence and assessing it. 16. This aspect makes the Full Bench decision of this court in Maulvi Muhammad v. Syed Husain, distinguishable. In that case, the Full Bench was considering the scope of the phrase “may call for the record of the case and pass such orders with respect thereto as it thinks fit” occurring in Section 622 of this Act corresponding to the present section 115 CPC. It was held that under it, the court had to pass all orders which it can pass in second appeals. In second appeals, the court can, in given circumstances, determine the question of fact. As already seen, a court acting under Section 25 of the Provincial Small Causes Courts Act has no such power. The power to determine question of fact has been expressly taken away. 17... 18. The court deciding a revision under section 25 of the Provincial Small Cause Courts Act has to satisfy itself that the trial courts' decree or order is according to law. Of course, the Revisional Court should keep in mind the Supreme Court's dictum in Naicker’ case (supra) that a wrong decision on fact is also a decision according to law. 19. If it finds that there is no evidence to sustain a finding on a particular issue of fact, it can ignore that finding. Same will be the case where the finding is based only on inadmissible evidence. In such cases, the court will be justified in deciding the question of fact itself, because the evidence is all one way. No assessment is needed. The court can also decide the revision if only a question of law or some preliminary point of law, viz., validity of notice, is sufficient for its decision. 20.
In such cases, the court will be justified in deciding the question of fact itself, because the evidence is all one way. No assessment is needed. The court can also decide the revision if only a question of law or some preliminary point of law, viz., validity of notice, is sufficient for its decision. 20. But, if it finds that a particular finding of fact is vitiated by an error of law, it has a power to pass such order as the justice of the case requires; but it has no jurisdiction to reassess or reappraise the evidence in order to determine an issue of fact for itself. If it cannot dispose of the case adequately without a finding on a particular issue of fact, it should send the case back after laying down proper guidelines. It cannot enter into the evidence, assess it and determine an issue of fact. 21. Our answer to the question referred to us is that, in the stated circumstances, the revisional Court has no power to consider the evidence for itself in order to determine an issue of fact. The proper course is to remand the case to the trial court.” 54. In the case of Shankar Ramchandra Abhyankar Vs. Krishnaji Dattatreya Bapal (1969) 2 SCC 74 , the issue before the Apex Court was whether the High Court could interfere under Article 226 and 227 of the Constitution of India with the order of the appellate court in proceedings under an act where a petition for revision under Section 115 of C.P.C. against the same order had been previously dismissed by the learned Judge of High Court. The following paragraphs from the judgement apposite to the issue are reproduced herein below:- “5. It would appear that their Lordships of the Privy Council regarded the revisional jurisdiction to be a part and parcel of the appellate jurisdiction of the High Court. This is what was said in Nagendra Nath Dey v. Suresh Chandra Dey 59 IA 283.
The following paragraphs from the judgement apposite to the issue are reproduced herein below:- “5. It would appear that their Lordships of the Privy Council regarded the revisional jurisdiction to be a part and parcel of the appellate jurisdiction of the High Court. This is what was said in Nagendra Nath Dey v. Suresh Chandra Dey 59 IA 283. “There is no definition of appeal in the Code of Civil Procedure, but their Lordship have no doubt that any application by a party to an appellate court, asking it to set aside or revise a decision of a subordinate Court, is an appeal within the ordinary acceptation of the term....” Similarly in Raja of Ramnad v. Kamid Rowthen 53 IA 74, a civil revision petition was considered to be an appropriate form of appeal from the judgment in a suit of small causes nature. A full Bench of the Madras High Court in P.P.P. Chidambara Nadar v. C.P.A. Rama Nadar A.I.R. 1937 Mad. 385 had to decide whether with reference to Article 182(2) of the Limitation Act, 1908, the term "appeal" was used in a restrictive sense so as to exclude revision petitions and the expression "appellate court" was to be confined to a court exercising appellate, as opposed to, revisional powers. After an exhaustive examination of the case law including the decisions of the Privy Council mentioned above the Full Bench expressed the view that Article 182(2) applied to civil revisions as well and not only to appeals in the narrow sense of that terms as used in the Civil Procedure Code. In Secretary of State for India in Council v. British India Steam Navigation Company 13 C.L.J. 90 and order passed by the High Court in exercise of its revisional jurisdiction under Section 115, Code of Civil Procedure, was held to be an order made or passed in appeal within the meaning of Section 39 of the Letters Patent. Mookerji, J., who delivered the judgment of the Division Bench referred to the observations of Lord Westbury in Attorney General v. Sillem (1864) 10 R.L.C. 704 and of Subramania Ayyar, J. in Chappan v. Moidin I.L.R. (1958) Mad. 68, 80 on the true nature of the right of appeal. Such a right was one of entering a superior Court and invoking its aid and interposition redress the error of the court below.
68, 80 on the true nature of the right of appeal. Such a right was one of entering a superior Court and invoking its aid and interposition redress the error of the court below. Two things which were required to constitute appellate jurisdiction were the existence of the relation of superior and inferior Court and the power on the part of the former to review decisions of the latter. In the well known work of Story on Constitution (of United States) vol. 2, Article 1761, it is stated that the essential criterion of appellate jurisdiction is that it revises and corrects the proceedings in a cause already instituted and does not create that cause. The appellate jurisdiction may be exercised in a variety of forms and, indeed, in any form in which the Legislature may choose to prescribe. According to Article 1762 the most usual modes of exercising appellate jurisdiction, at least those which are most known in the United States, are by a writ of error, or by an appeal, or by some process of removal of a suit from an inferior tribunal. An appeal is a process of civil law origin and removes a cause, entirely subjecting the fact as well as the law, to a review and a retrial. A writ of error is a process of common law origin, and it removes nothing for re-examination but the law. The former mode is usually adopted in cases of equity and admiralty jurisdiction; the latter, in suits at common law tried by a jury. 6. Now when the aid of the High Court is invoked on the revisional side it is done because it is a superior court and it can interfere for the purpose of rectifying the error of the court below. Section 115 of the Code of Civil Procedure circumscribes the limits of that jurisdiction but the jurisdiction which is being exercised is a part of the general appellate jurisdiction of the High Court as a superior court. It is only one of the modes of exercising power conferred by the statute; basically and fundamentally it is the appellate jurisdiction of the High Court which is being invoked and exercised in a wider and larger sense.
It is only one of the modes of exercising power conferred by the statute; basically and fundamentally it is the appellate jurisdiction of the High Court which is being invoked and exercised in a wider and larger sense. We do not, therefore, consider that the principle of merger of orders of inferior courts in those of superior Courts would be affected or would become inapplicable by making a distinction between a petition for revision and an appeal. 55. The judgement referred to above, postulates that the revision power of the High Court is akin to the powers of High Court's appellate power. Thus, the power of the revision of Superior Court or High Court is that of an Appellate Court with the only restraint that the prerequisite conditions to invoke power under Section 115 of C.P.C. must be present. Once, the High Court is of the view that the essential conditions to invoke jurisdiction under Section 115 of C.P.C. are present, then the High Court can revise the order passed by the subordinate courts in the exercise of power under Section 115 of C.P.C. 56. However, Sri Navin Sinha, learned Senior Counsel for the respondents submits that if this Court finds that conditions enumerated in Section 115 of C.P.C. are present to exercise the power of revision, the Court may not substitute the finding of the trial court by recording a fresh finding rather the court should remand the matter. In this respect, he has placed reliance upon paragraph 10 of the judgement of Apex Court in the case of Pandurang Dhondi Chougule Vs. Maruti Hari Jadhav 1966 AIR SC 153 which is reproduced herein below:- “10. The provisions of Section 115 of the Code have been examined by judicial decisions on several occasions. While exercising its jurisdiction under Section 115, it is not competent to the High Court to correct errors of fact however gross they may, or even errors of law, unless the said errors have relation to the jurisdiction of the court to try the dispute itself.
While exercising its jurisdiction under Section 115, it is not competent to the High Court to correct errors of fact however gross they may, or even errors of law, unless the said errors have relation to the jurisdiction of the court to try the dispute itself. As clauses (a), (b) and (c) of Section 115 indicate, it is only in cases where the subordinate court has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity that the revisional jurisdiction of the High Court can be properly invoked. It is conceivable that points of law may arise in proceedings instituted before subordinate courts which are related to questions of jurisdiction. It is well settled that a plea of limitation or a plea of res judicata is a plea of law which concerns the jurisdiction of the court which tries the proceedings. A finding on these pleas in favour of the party raising them would oust the jurisdiction of the court, and so, an erroneous decision on these pleas can be said to be concerned with questions of jurisdiction which fall within the purview of Section 115 of the Code. But an erroneous decision on a question of law reached by the subordinate court which has no relation to questions of jurisdiction of that court, cannot be corrected by the High Court under Section 115.” 57. He has also placed reliance upon paragraphs 9, 10 and 42 of the judgement of this Court in the case of Anil Kumar Singh Vs. Pappu and Others 2022(2) ADJ 267 which are reproduced herein below:- “9. Before proceeding to consider the merits of the issue it would be worthwhile to refer to a few decisions as to the scope of revisional jurisdiction under section 115, C.P.C. by the High Court. A Four Judges' Bench of the Supreme Court of India had an occasion to consider this aspect of the matter in the case of Kesardeo Chamria v. Radha Kissen Chamria & Ors. AIR 1953 SC 53 . Relevant extract of the said judgment is quoted hereinbelow: "17. We now proceed to consider whether a revision was competent against the order of 25th April, 1945, when no appeal lay.
AIR 1953 SC 53 . Relevant extract of the said judgment is quoted hereinbelow: "17. We now proceed to consider whether a revision was competent against the order of 25th April, 1945, when no appeal lay. It seems to us that in this matter really the High Court entertained an appeal in the guise of a revision. The revisional jurisdiction of the High Court is set out in the 115th section of the Code of Civil Procedure in these terms: "The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which appeal lies thereto, and it such subordinate Court appears: (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit." A large number of cases have been collected in the fourth edition of Chitaley & Rao's Code of Civil Procedure (Vol. 1), which only serve to show that the High Courts have not always appreciated the limits of the jurisdiction conferred by this section. In Mohunt Bhagwan Ramanuj Das v. Khetter Moni Dassn the High Court of Calcutta expressed the opinion that sub-clause (c) of Section 115 of the Civil Procedure Code, was intended to authorise the High Courts to interfere and correct gross and palpable errors of subordinate Courts, so as to prevent grave injustice in non-appealable cases. This decision was, however, dissented from by the same High Court in Enat Mondul v. Baloram Dey but was cited with approval by Lort-Williams, 3., in Gulabchand Bangur v. Kabiruddin Ahmed. In these circumstances it is worthwhile recalling again to mind the decisions of the Privy Council on this subject and the limits stated therein for the exercise of jurisdiction conferred by this section on the High Courts. 18.
In these circumstances it is worthwhile recalling again to mind the decisions of the Privy Council on this subject and the limits stated therein for the exercise of jurisdiction conferred by this section on the High Courts. 18. As long ago as 1894, in Rajah Amir Hassen Khan v. Sheo Baksh Singhi the Privy Council made the following observations on Section 622 of the former Code of Civil Procedure, which was replaced by Section 115 of the Code of 1908: "The question then is, did the Judges of the lower Courts in this case, in the exercise of their jurisdiction, act illegally or with material irregularity. It appears that they had perfect jurisdiction to decide the case, and even if they decided wrongly, they did not exercise their jurisdiction illegally or with material irregularity." In 1917 again in Balakrishna Udayar v. Vasudeva Aiyar the Board observed: "It will be observed that the section applies to jurisdiction alone, the irregular exercise or non-exercise of it, or the illegal assumption of it. The section is not directed against conclusions of law or fact in which the question of jurisdiction is not involved." In 1949 in Venkatagiri Ayyangar v. Hindu Religious Endowments Board, Madrass the Privy Council again examined the scope of Section 115 and observed that they could see no justification for the view that the section was intended to authorise the High Court to interfere and correct gross and palpable errors of subordinate Courts so as to prevent grave injustice in non-appealable cases and that it would be difficult to formulate any standard by which the degree of error of subordinate Courts could be measured. It was said - "Section 115 applies only to cases in which no appeal lies, and, where the legislature has provided no right of appeal, the manifest intention is that the order of the trial Court, right or wrong, shall be final. The section empowers the High Court to satisfy itself on three matters, (a) that the order of the subordinate Court is within its jurisdiction; (b) that the case is one in which the Court ought to exercise jurisdiction; and (c) that in exercising jurisdiction the Court has not acted illegally.
The section empowers the High Court to satisfy itself on three matters, (a) that the order of the subordinate Court is within its jurisdiction; (b) that the case is one in which the Court ought to exercise jurisdiction; and (c) that in exercising jurisdiction the Court has not acted illegally. that is, in breach of some provision of law, or with material irregularity, that is, by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision. If the High Court is satisfied on those three matters, it has no power to interfere because it differs, however from the conclusions of the subordinate Court on questions of fact or law." 19. Later in the same year in Joy Chand Lal Babu v. Kamalaksha Choudhuryis Their Lordships had again adverted to this matter and reiterated what they had said in their earlier decision. They pointed out: "There have been a very large number of decisions of Indian High Courts on Section 115 to many of which Their Lordships have been referred. Some of such decisions prompt the observation that High Courts have not always appreciated that although error in a decision of a subordinate Court does not by itself involve that the subordinate Court has acted illegally or with material irregularity so as to justify Interference in revision under sub-section (c), nevertheless, if the erroneous decision results in the subordinate Court exercising jurisdiction not vested in it by law, or failing to exercise a jurisdiction so vested, a case for revision arises under sub-section (a) or sub-section (b) and sub-section (c) can be ignored." 20. Reference may also be made to the observations of Bose, 3. in his order of reference in Narayan Sonaji v. Sheshrao Vithobail wherein it was said that the words "illegally" and "material irregularity" do not cover either errors of fact or law. They do not refer to the decision arrived at but to the manner in which it is reached. The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with." 10.
They do not refer to the decision arrived at but to the manner in which it is reached. The errors contemplated relate to material defects of procedure and not to errors of either law or fact after the formalities which the law prescribes have been complied with." 10. Though section 115 C.P.C. has undergone some changes over the years, especially so far as its application in the State of U.P. is concerned and in addition to the requirements contained in Clause (a) to (c) of section 115, C.P.C. which are required to be satisfied for exercise of such revisional jurisdiction, now, by virtue of the U.P. Act 14 of 2003, two other requirements are required to be satisfied, (i) the order if it had been made in favour of the party applying for revision, would have finally disposed off the suit or other proceeding; or (ii) the order, if allowed to stand, would occasion a failure of justice or cause irreparable injury to the party against whom it is made. However, as far as clauses (a), (b) and (c) laying down the jurisdictional parameters for exercise of revisional jurisdiction under Section 115(1), C.P.C. they stand as it is, therefore, to this extent the law as laid down in Kesardeo Chhamaria (supra) applies even today as to the meaning and purport of the said clauses. 42. In view of the law which has been discussed hereinabove and considering the scope of a revision under section 115, C.P.C. in the light of the decision in the case of Kesardeo Chhamaria (supra) it cannot be said that the Court below has committed any jurisdictional error attracting clause (a) to (c) of Section 115, C.P.C. nor that the order if it was made in favour of the revisionist would not have disposed off the proceedings for impleadment nor that the order, impugned herein, if allowed to stand, would occasion a failure of justice or cause irreparable injury to the party against whom it is made. As already noticed, in the facts of the case, the presence of the transferee pendent lite is necessary for complete and effective adjudication of the suit and issues involved therein and the Court below has exercised its discretion in the matter, which does not require any interference under Article 115, C.P.C.” 58.
As already noticed, in the facts of the case, the presence of the transferee pendent lite is necessary for complete and effective adjudication of the suit and issues involved therein and the Court below has exercised its discretion in the matter, which does not require any interference under Article 115, C.P.C.” 58. The reading of the judgement of the Apex Court in the case of Pandurang Dhondi Chougule (supra) reveals that the Apex Court has held that the Superior Court while exercising the power under Section 115 of C.P.C. is not competent to correct the errors of fact or law unless the said error has relation to the jurisdiction of the Court to try the dispute itself. In other words, it is held that the Superior Court or High Court can exercise its revisional power under Section 115 of C.P.C. when the subordinate court has exercised a jurisdiction not vested in it by law or it has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity. The High Court cannot invoke its jurisdiction under Section 115 of C.P.C. where the subordinate court has taken erroneous view on a question of law which has no relation to the question of jurisdiction of that court. 59. At this stage, it would be apt to notice that Section 115 of C.P.C. as applicable to State of Uttar Pradesh, states ''superior Court may 'revise' an order passed in a suit or other proceedings by the subordinate court where no appeal lies against the order.....". The legislature has used the word 'revise' which in the dictionary is described as meaning to 're-examine, to review, to correct, or to amend the fault'. So the legislature in the State of U.P. has given ample power under Section 115 of C.P.C. by using the word 'revise' to the revisional court to review, correct or amend the fault in the orders of the subordinate courts. 60. The Court has already held that the impugned order cannot be sustained for want of consideration of the prerequisite condition of Order 1 Rule 10 (2) of C.P.C to allow impleadment application. 61.
60. The Court has already held that the impugned order cannot be sustained for want of consideration of the prerequisite condition of Order 1 Rule 10 (2) of C.P.C to allow impleadment application. 61. In the light of the aforesaid principle, the only question which needs adjudication by this Court in the instant case is whether the application under Order 1 Rule 10 (2) of C.P.C. meets the requirement of said provision to confer right upon the respondent no.1 to be impleaded in the suit. 62. Since, the trial court has committed material irregularity and failed to exercise jurisdiction vested in it correctly, and the revision power of the High Court is akin to the power of the appellate court, therefore, the issue of impleadment of respondent no.1 can be adjudicated by this Court, and this Court does not deem it fit to remand the matter to the trial court to decide the application of respondent no.1 afresh. 63. The impleadment application has been filed by respondent no.1 alleging that there is no resolution of the plaintiff's company to institute the aforesaid suit inasmuch as after the order was passed by the National Company Law Appellate Tribunal, no meeting of five Directors of plaintiff's company had taken place resolving to institute a suit for enforcement of agreement to sale. Further averments in the application are that the allegation of collusion by respondent no.1 with other persons in executing the sale deed has been levelled by the plaintiff/revisionist. Therefore, respondent No. 1 is the proper party in the suit to rebut and meet the said allegation. The further ground in the application is that since the Apex Court in its order dated 07.02.2022 has directed for impleadment of respondent no.1 in the special leave petition, therefore, respondent no.1 is a necessary party in the suit. 64. In the opinion of the Court, the averments contained in the application of respondent no.1 under Order 1 Rule 10 (2) of C.P.C. does not make out a case in favour of respondent no.1 to conclude that he is necessary and proper party in the suit, and he is entitled to be impleaded under Order 1 Rule 10 (2) of C.P.C. for the reasons enumerated below. 65.
65. The question whether there is any resolution of the plaintiff's company resolving to institute a suit for the enforcement of the agreement to sell can very well be adjudicated even in the absence of respondent no.1. In this respect, it is pertinent to note that it is open to the defendants in the suit to take such plea and get an issue framed and prove by leading cogent evidence that suit has been instituted by incompetent person inasmuch as there was no meeting of the Board of the Directors of the company resolving to institute a suit for the execution of agreement to sell. Respondent no.1 can at best be a witness in the said case because he could lead evidence on record to prove that no meeting of the Board of the plaintiff's company had taken place. Only to prove that there was no resolution of the plaintiff's company to institute a suit for enforcement of agreement to sale does not make him a necessary and proper party in the suit. The suit is for enforcement of the agreement to sale which admittedly has been entered into between the plaintiff's company and respondent no.2. It is pertinent to note that the domain of Order 1 Rule 10(2) of C.P.C is to implead a person whose presence is necessary to decide the issues in the suit which have arisen between the parties, but not the issues which are between the plaintiff and third party. Order 1 Rule 10(2) of C.P.C. is not meant to implead such a person and to expand the scope of dispute. 66. Now, coming to the second ground of respondent no.1 that there are allegations of collusion against respondent no.1 in the suit, and therefore, to defend and to rebut the allegation against him, his presence is necessary, this Court may note that the allegation made in paragraph 12 of the plaint are allegation of collusion against respondent no.1 in reference to the execution of sale deed, and the reason for such allegation is that in the sale deeds executed by respondent no.2 in favour of respondent nos.3 to 6, it is mentioned that there was resolution of the plaintiff's company authorising the said sale to said purchaser. In this respect, it would be apt to reproduce the conclusion by the N.C.L.T in paragraph 6:- “6.
In this respect, it would be apt to reproduce the conclusion by the N.C.L.T in paragraph 6:- “6. Conclusion: The findings recorded above would demonstrate certain situations to accept the contention of both the parties that there is oppression and mismanagement. They are: (i). The Respondents have deliberately denied the fact that the Petitioners are members and Directors in the Company, having gained the monetary benefit from them. This defence is taken by the Respondents only to preclude the Petitioners from participating in all affairs of the Company and that is an act of oppression committed by the Respondents. (ii). So far as the Petitioners are concerned, they have propounded the theory of resignation by the Respondents 2 and 3 to preclude them from the administration of the Company which amounts of oppression. (iii). Further, the Respondents, having unilaterally parted with the valuable land belonging to the Company, without approval of Board and members, incurred loss to the Company which amounts to an act of mismanagement. These acts of oppression and mismanagement are attributable to both the parties equally which is sufficient to order liquidation of the company. But ordering liquidation will not be the appropriate solution to place the company on right track.” 67. It is also relevant to reproduce the finding returned by the National Company Law Appellate Tribunal holding that there was no resolution of the plaintiff's company to part with the suit property, and after recording the relevant finding, the National Company Law Appellate Tribunal directed the respondent no.1 to deposit Rs.1 crore alongwith 12% interest to compensate the plaintiff's company. Paragraphs 14, 15 and 16 of the said judgment are reproduced herein below:- “14. We have perused the chequered career of the matter and also the exchange of additional affidavits by the Appellant and Respondents before this Tribunal. It is observable that the Appellant/Petitioner believing on the rosy picture painted by the respondents found the deal of property lucrative and invested money. The Respondents parted with its right to sale in favour of 3rd party. Appellant/ Petitioners knot the story of resignation of respondents.
It is observable that the Appellant/Petitioner believing on the rosy picture painted by the respondents found the deal of property lucrative and invested money. The Respondents parted with its right to sale in favour of 3rd party. Appellant/ Petitioners knot the story of resignation of respondents. Though we are not into the details of the finding of the tribunal below concluding the failure on the part of both of the groups in maintaining standard of probity, fair play and business ethics thus committed oppression against each other and as has been dealt in the previous paras, but it is pertinent to take a note of the Additional Affidavits filed by the Respondents: a. M/s Oak Infradevelopers Pvt Ltd Respondent No. 13 has claimed that they purchased on the southern side of the said property from Mr. Satyendar Rathore & Prem Shankar Rathore vide sale deed 01.12.2012, for sale consideration of Rs. 1,75,00,000. b. Respondent 9 & 10 i.e. Satyendar Rathore .& Prem Shankar Rathore has contended that they purchased the southern side of the property vide sale deed dated 15.11.2011 registered with the Registrar of Regional Office Bareily for consideration of Rs. 1, 14,00,000 and got adjusted the half of the advance amount of Rs. 50,00,000. Further contended that the they tendered a cheque of Rs 55,00,000 dated 15.11.2011 in terms of demands of M/s Bankhandi Nath Developers Pvt Ltd was returned by Mr Dharmindar Kumar director of M/s Bankhandi Nath Developers Pvt Ltd, stating that "we are returning herewith the cheque as we are finding it difficult to en-cash the same due to dispute in the company." c. Respondent No. 5 has stated in its additional affidavit that Respondent 4 was agreed to sale for a total sale consideration of Rs.328,00,000 and advance was already paid by Respondent No.1 to the vendor. So the Respondent No.1 agreed to take 55,00,000 as against the 50% share of the advance paid by them to the vendor. And balance sale consideration of Rs. 1,14,00,000 by adjusting the half of the advance amount of Rs. 50,00,000. Further stated that the cheque dated 15.11.2011 was returned to them by Mr Dharmendra Kumar vide letter dated 21.11.2011 stating that "we are returning herewith the cheque as we are finding it difficult to en-cash the same due to dispute in the company." 15.
1,14,00,000 by adjusting the half of the advance amount of Rs. 50,00,000. Further stated that the cheque dated 15.11.2011 was returned to them by Mr Dharmendra Kumar vide letter dated 21.11.2011 stating that "we are returning herewith the cheque as we are finding it difficult to en-cash the same due to dispute in the company." 15. The statements by the Respondents above leaves it no more a grey area that the money which ought to have been received from the 3rd parties have been denied to be accepted and returned by the Respondent No. 2 on ground of dispute in the company finding it difficult to en-cash the same. Till date the Respondent has not produced any evidence on record whether the company has received the money proposed by the vendee Respondents. What seem opaque to the Tribunal is, if Company was experiencing internal dispute in the management, Respondent 2 should not have taken decision of parting with its right to sale under the agreement to sale on behalf of company. It is an intriguing situation that the Respondent 2 & 3 did not find it difficult to sell the property but found it difficult to accept the money on behalf of company which should have come to the coffers of the company. We hold the conduct of respondent as prejudicial to the interest of the company. The only property the company had was sold, claiming to be a beneficial deal, ended with neither receipt of money nor profitable continuous operation of the company in furtherance of its objectives, in fact halted its operation. 16. In view of the additional facts brought into notice through additional affidavits, while keeping all the directions in the order of NCLT intact, we uphold the decision of the Tribunal with the following modification: "i) As the decision of returning money was a major decision, which was to be 'taken by the company but unilaterally taken by Respondent No.2 have caused prejudice to the company. The Respondent No. 2 is directed to ensure that the money which was returned comes to the account of company. The Respondent directors are also directed to compensate the company equal to 12% of interest p.a. on the amounts outstanding from 15.11.2011 to till date within one month from the date of order.
The Respondent No. 2 is directed to ensure that the money which was returned comes to the account of company. The Respondent directors are also directed to compensate the company equal to 12% of interest p.a. on the amounts outstanding from 15.11.2011 to till date within one month from the date of order. (ii) The new 5th director appointed in the company will continue to enable the board to take majority decision w. r. t. a. Whether the registered office of the company be shifted or not. b. Any other issue relating to the affairs of the company in order to put the company on tract to continue its business as per objectives of its incorporation." Appeals are disposed off accordingly. Parties to bear their own cost.” 68. The judgement of N.C.L.T. affirmed by the National Company Law Appellate Tribunal has attained finality as the special leave petition preferred against the order of National Company Law Appellate Tribunal has been dismissed. 69. It has come on record that the National Company Law Appellate Tribunal has held that there was no resolution of the plaintiff's company to part with the suit property in favour of a third party. The National Company Law Appellate Tribunal directed respondent no.1 to return the money to the plaintiff's company which he had got in execution of the sale deeds. 70. In the light of the finding returned by the N.C.L.T. as well as the National Company Law Appellate Tribunal about the conduct of respondent no.1, the allegation of collusion does not prejudice or curtail any right of respondent no.1 to make him a necessary and proper party to be impleaded in the suit. Respondent no.1 is continuing as Director of the plaintiff's company. The object of filing the impleadment application appears to defeat the interest of the plaintiff's company by getting the suit dismissed. Such conduct of respondent no.1 cannot be appreciated. 71.
Respondent no.1 is continuing as Director of the plaintiff's company. The object of filing the impleadment application appears to defeat the interest of the plaintiff's company by getting the suit dismissed. Such conduct of respondent no.1 cannot be appreciated. 71. The Court may note that the purpose of enactment of Order 1 Rule 10(2) of C.P.C. is to implead a person who comes up with a bona fide prayer for impleadment on the ground that if any decree is passed, that would infringe or curtail his legal rights, but said provision is not incorporated to come to aid of a person whose bona fide is skeptical and has approached the Court with disdainful object to get the suit dismissed which is detrimental to the interest of the plaintiff. In the present case, the application of respondent no.1 is misconceived and has been filed with malicious intention to cause harm to the company of he is a Director. 72. Whether any right has accrued to respondent no.1 to be impleaded as a party in the suit because of the impleadment of respondent no.1 in the special leave petition. 73. The Court at the first instance would consider the background in which Apex Court passed the order dated 07.02.2022 for impleadment of respondent no.1 in the Special Leave to Appeal (C) No.1204 of 2022. The temporary injunction application filed by the plaintiff/revisionist was rejected by the trial court by order dated 21.10.2021, and F.A.F.O. No.1771 of 2021 preferred against the refusal of the temporary injunction order was also dismissed. Both the orders came to be challenged by the plaintiff/revisionist in the special leave petition and the Apex Court found that the order passed by the National Company Law Appellate Tribunal directing respondent no.1 to deposit the money alongwith 12% interest has not been complied with. Considering the fact that National Company Law Appellate Tribunal has held that conduct of respondent no.1 was prejudicial to the interest of the plaintiff's company and the order of the National Company Law Appellate Tribunal was not complied with, therefore, to protect the interest of the plaintiff's company and to ensure the compliance of the order of National Company Law Appellate Tribunal, the Apex Court directed for impleadment of respondent no.1 in the special leave petition. 74.
74. Perusal of the order of the Apex Court nowhere indicates that the Apex Court ever intended to implead respondent no.1 as the party in the suit. The impleadment of respondent no.1 was only for a limited purpose that is to ensure compliance of the order of the National Company Law Appellate Tribunal. This Court may note that in the supplementary counter affidavit, the respondents have enclosed cheques in favour of the plaintiff's company, but there is no material on record to indicate that those cheques have been encashed and money has been deposited in the accounts of the plaintiff's company. 75. In the instant case, the suit has been instituted for the specific performance of the contract and respondent no.1 is a third party. The law is settled that the plaintiff/revisionist being dominus litis cannot be forced to implead a person who is neither a necessary nor proper party. Further, no relief has been claimed against respondent no.1 in the suit nor the averments contained in Order 1 Rule 10(2) of C.P.C. makes out a case that the presence of respondent no.1 is necessary to enable the Court to settle all questions and issues involved in the suit, and to pass effective decree. 76. In view of the aforesaid discussion, this Court is also of the opinion that the conduct of respondent no.1 is not appropriate as till date he has not complied with the order passed by the National Company Law Appellate Tribunal as well as the order of Apex Court in letter and spirit. 77. In such view of the fact, this Court is of the opinion that respondent no.1 is neither a necessary nor a proper party to the suit, and the application of respondent no.1 under Order 1 Rule 10(2) of C.P.C. is misconceived and deserves to be rejected. 78. Thus, for the reasons given above, the revision is allowed and the order dated 11.05.2022 passed by the Civil Judge (Senior Division), Bareilly is quashed and applications 151Ka and application 227Ga are hereby rejected. There shall be no order as to costs.