2016 (8) TMI 1303 - Tri - Companies Law

Winding up petition - Application for impleadment - Held that - Such application is allowed, if a party is a necessary party without whom no order can be made effectively or a proper party in whose absence an effective order cannot be made and whose presence is necessary for complete and final decision on the question involved in the proceeding. In this case, the applicant has applied for impleadment in a company petition filed under section 397/398 under the Companies Act, 1956. The action being a shareholder action, a non-shareholder and a non-member cannot seek to assert any right or to agitate any grievance in the same. If application is not allowed, he will not suffer any prejudice in the event of reliefs as prayed for in the company petition being granted or not. In the present case, the applicant has sought to assert a right to obtain the petitioner s shares in the company on the basis of the memorandum of understanding. This being a private dispute under an independent contract between the shareholder and prospective purchaser of his shares in company, which is not a dispute which comes under the purview of the company petition filed under sections 397 and 398 of the Companies Act, 1956. Thus, it is clear that the applicant is neither a necessary party nor a proper party, and whose presence in the company petition is not essential for a complete and final decision on the question involved in the company petition filed under sections 397 and 398 of the Act. Therefore, this court has no jurisdiction to order impleadment of applicant especially against the wishes of the petitioner. Hence, the applicant s prayer for impleadment is rejected.

Summary

Issues:
Intervention in main Company Petition under sections 397 and 398 of the Companies Act, 1956.

Analysis:
The judgment by the National Company Law Tribunal, Kolkata, involved a Company Application filed by Libra Retailers (P) Ltd. seeking intervention in a main Company Petition filed by Adbhut Vincom (P) Ltd. against Hotel Birsa (P) Ltd. The applicant claimed rights through a memorandum of understanding for share acquisition. However, the respondent argued that the applicant failed to fulfill payment obligations as per the agreement, leading to its termination. The key issue revolved around whether the applicant should be allowed to intervene in the petition.

The Tribunal deliberated on the applicant's standing, noting that as a non-shareholder, the applicant lacked locus standi to participate in a shareholder's action alleging oppression and mismanagement under sections 397 and 398 of the Companies Act, 1956. Since no shares were transferred to the applicant, the Tribunal found that the applicant would not suffer any prejudice from the outcome of the petition, whether the reliefs were granted or not. The Tribunal emphasized that the dispute stemmed from a private contract between a shareholder and a potential purchaser, falling outside the scope of the company petition.

Citing legal precedents, including the case of Udit Narain Singh Malpaharia v. Additional Member Board of Revenue, the Tribunal highlighted the distinction between necessary and proper parties in legal proceedings. Referring to Vidur Impex and Traders (P) Ltd. v. Tosh Apartments (P) Ltd., the Tribunal outlined principles governing impleadment applications, emphasizing the necessity of a party's presence for effective adjudication. Applying these principles, the Tribunal concluded that the applicant was neither a necessary nor a proper party in the company petition, as their involvement was not essential for a final decision on the matters at hand.

Ultimately, the Tribunal rejected the applicant's plea for impleadment, deeming their presence in the petition unnecessary for a complete and final resolution. The judgment underscored that the applicant's claim to the respondent's shares based on the memorandum of understanding did not fall within the purview of the shareholder action under sections 397 and 398. Consequently, the Tribunal scheduled the company petition for further hearing, dismissing the applicant's intervention request.