2017 (12) TMI 1037 - AT - Companies Law

Respondent no.7 liable to be struck out as being an unnecessary appendage - whether pending adjudication of Company Petition filed by the Appellants before the learned Tribunal, proceedings against Respondent no.7 could be justifiably scuttled on the ground that it had no link with Respondent no.1 - Conversion Agreement had been fraudulently executed with the object of taking away the Conversion Agreement from premium in which the Appellants and their group had 53.40 percent shareholding to a concern where the Appellants had no stake. Held that - There is ample material on record to demonstrate that The Eastern Manufacturing Company Limited and Eastern Manufacturing Private Limited is one and the same entity which has entered into conversion agreement with Respondent no.7. Minor typographical errors in the nomenclature of the company cannot detract from the fact that the name, CIN number and address of Respondent no.1 has been clearly stipulated in the statutory documents forming part of records. The agreement dated 29th May, 2009 is relied upon by both parties in respect of their respective stands. The disputed agreement relates to Jute Mill of Respondent no.1 located at 1, Ali Hyder Road, Post Office Titagarh, 24 Parganas (North), West Bengal which is clearly and sufficiently identified. Respondent nos.1 and 7 have not come forward with an alternate location or address for the aforesaid Jute Mill. Appellants have alleged that the aforesaid Jute Mill has been transferred by Respondent no.1 to Respondent no.7 in pursuance of conversion agreement. At the time of arguments we clearly asked Counsel for Respondent no.7 - Are you in possession of the Company at the address given as of Respondent no.1? And the learned Counsel stated - Yes . Considering all this and stand taken by Appellants, deletion of Respondent no.7 from the array of respondents would prejudicially affect the Appellants. Moreover, the Appellants cannot be denied the opportunity to explain and establish that despite of difference in nomenclature, the company is one and the same. Nor can the Appellants be denied an opportunity to seek an amendment to rectify the error in the name and style of the Respondent no.1. The Tribunal overlooked the material facts. Viewed thus, we hold that Respondent no.7 is a necessary party. The finding recorded by the Tribunal in passing the impugned order cannot be supported. It being erroneous is liable to be set aside.

Summary

Issues:
1. Whether Respondent no.7 should be deleted from the array of parties in Company Petition No. 495 of 2012.
2. Whether the Appellants' petition under various sections of The Companies Act, 2013 is maintainable against Respondent no.7.

Analysis:
1. The appeal was filed against an order by the National Company Law Tribunal, Kolkata, allowing the application by Respondent no.7 to delete its name from the array of parties in Company Petition No. 495 of 2012. Respondent no.7 argued that it had no link with the company named as Respondent no.1 in the petition and had entered into a Conversion Agreement with a different entity. The Tribunal found that the Appellants failed to establish a connection between Respondent no.7 and Respondent no.1, leading to the conclusion that the petition was not maintainable against Respondent no.7.

2. The Appellants contended that minor errors in the nomenclature of Respondent no.1 should not render Respondent no.7 as an improper party, as documents identified the company with whom Respondent no.7 had the Conversion Agreement. However, the Respondents argued that the two entities named were different juristic entities, and the Appellants did not prove a nexus between Respondent no.7 and the company named in the petition. The Appellants claimed that the Jute Mill of Respondent no.1 was transferred to Respondent no.7 illegally, but the Tribunal found sufficient evidence to establish that the two entities were the same and that Respondent no.7 was a necessary party in the proceedings.

3. The Tribunal emphasized the importance of correctly identifying parties in a legal proceeding and the Plaintiff's right to include necessary parties for the adjudication of the issues raised. It noted discrepancies in the naming of the company but found substantial evidence to link Respondent no.7 with the entity named in the petition. The Tribunal set aside the order deleting Respondent no.7 from the array of parties, holding that Respondent no.7 was indeed a necessary party. The appeal was allowed, and costs were imposed on Respondent no.7. The Tribunal was directed to expedite the disposal of the Company Petition.