2005 (8) TMI 371 - HC - Companies Law

Summary

Issues:
1. Application under order 1, rule 10 of the Code of Civil Procedure, 1908 to permit a party to come on record as the fourth defendant in a suit.
2. Contention regarding the authority of a director to represent a company in a suit.
3. Dispute over the directorship status and interests of the managing director in protecting the company's interests.
4. Exercise of discretion by the learned Judge in allowing the application and the challenge through a Civil Revision Petition.

Analysis:
1. The Civil Revision Petition (CRP) challenged an order allowing a party to come on record as the fourth defendant in a suit under order 1, rule 10 of the CPC. The application was opposed, but the learned Judge permitted it, leading to the filing of the CRP.

2. The petitioner's counsel argued that any director, as per the articles of association, can represent the company in a suit to protect its interests. Reference was made to specific clauses in the articles and a previous court decision supporting this stance. It was contended that the proposed party's intention to act against the company's interests should disqualify her from being added as a necessary party under order 1, rule 10 of the CPC.

3. In response, the proposed party's counsel stated that the petitioner, styling as a director, had actually resigned, and the managing director was genuinely interested in safeguarding the company's image and interests through bona fide litigations. The internal disputes within the company, including the directorship status and conflicting interests, were highlighted.

4. The High Court refrained from delving into the internal company disputes, emphasizing that such matters should be resolved within the framework of the Companies Act, 1956. The Court acknowledged that determining the bona fides of the litigation and the interests of the company would be crucial during the final disposal of the suit. The Judge's exercise of discretion in allowing the managing director to come on record was upheld, with a reminder that the merits of the contentions should be addressed during the main suit proceedings. The CRP was dismissed, leaving the detailed arguments for the trial court's consideration at the appropriate time.