2016 (11) TMI 1694 - Tri - Companies Law

Oppression and mismanagement - transfer of shares - holding of Extraordinary General Meeting - whether the R1/petitioner is entitled to maintain the C.P. under Section 397 and 398 alleging oppression and mismanagement? - HELD THAT - The applicant NSS Karayogam is neither a shareholder in Rl company nor any relief has been claimed against the same. Moreover the petitioner is not a secretary of NSS Karayogam as has been held by the Subordinate court. Kozhicode. dated. 28.6.20 12. He is neither a necessary party nor a proper party in the matter relating to C.P. filed under Sections 397 and 398 of the Companies Act. 1956. because no relief is claimed against the applicant nor any transfer of shares pertaining to NSS Karayogam is under challenge. There is no concern whatsoever of NSS Karayogam with the Company petition. Petition dismissed.

Summary

Issues involved:
1. Whether the applicant is a necessary or proper party in the matter relating to the company petition filed under Sections 397 and 398 of the Companies Act, 1956.

Analysis:
1. The case involved an application filed by M/s. Nair Service Society Karayogam, Kodal Nadakkavu (referred to as "NSS Karayogam") concerning shareholding issues in a company petition. The applicant claimed to still hold 520 equity shares in the company, which were allegedly falsely claimed to be transferred. The respondent/petitioner countered these claims, stating that the shares were indeed transferred and rectified in a General Body Meeting. The tribunal noted that the company petition focused on allegations of oppression and mismanagement, not on share transfers. The respondent argued that the applicant was not a necessary party as no relief was claimed against them regarding the share transfers.

2. The tribunal emphasized the nature of the company petition, which challenged the holding of an Extraordinary General Meeting and related appointments/removals, without addressing the issue of share transfers involving the applicant. The reliefs sought in the petition did not include any claims related to the applicant's shares. The tribunal concluded that the applicant was not a necessary or proper party in the petition as there was no relief claimed against them, and the share transfer issue was not central to the petition's subject matter.

3. Regarding the legal principles of impleading parties, the tribunal cited the general rule that a petitioner can choose whom to litigate against and cannot be compelled to sue a party from whom no relief is sought. The tribunal referred to Order 1, Rule 10 of the Civil Procedure Code, distinguishing between necessary and proper parties. A necessary party is crucial for an effective order, while a proper party's presence is necessary for a complete decision. Citing relevant case law, the tribunal found that the applicant, NSS Karayogam, was neither a shareholder in the company nor subject to any relief claimed in the petition, thus not qualifying as a necessary or proper party.

4. In conclusion, the tribunal rejected the applicant's claim to be impleaded in the company petition, stating that NSS Karayogam was not a necessary or proper party in the matter. The tribunal highlighted that no relief was sought against the applicant, and the share transfer issue was not a central concern of the petition. The application was deemed devoid of merits and rejected, with no costs awarded. The case was scheduled for final arguments on a later date.