2021 (7) TMI 878 - Tri - Companies Law

Prayer to be transposed as the Respondent in Company Petition - HELD THAT - This Application is not filed with any bona-fide purpose. It is filed almost 2 years from the date on which the Petitioner No. 3 decided to withdraw himself as one of the Petitioners. In this case, the remaining Petitioners completed their arguments in main petition and when we called upon Respondent No. 2 to make his submissions, this application came to be filed by Petitioner No. 3. It appears to us that. Petitioner No. 3 has filed this Application only to delay the hearing of the main petition. It is seen from the record that Petitioner No. 3 has consented to join as the petitioner. He had signed vakalatnama of Mr. S. Subha Reddy. Later on, he withdrew the same. It is alright if he does not wish to continue as the Petitioner but he cannot be added as Respondent that too against the wishes of remaining Petitioners and when they did not make any allegations against him, they did not claim any relief against him. Application rejected with cost of ₹ 1,00,000/- to be paid to the remaining Petitioners.

Summary

Issues:
Application for transposition of a party in a Company Petition.

Analysis:
The judgment deals with an application filed by Petitioner No. 3 seeking to be transposed as a Respondent in a Company Petition. The Petitioner stated that he was wrongly arrayed as Petitioner No. 3 without his consent and wished to join as a Respondent instead. The other Petitioners opposed this, arguing that the Applicant had joined the petition willingly, engaged legal representation, and signed necessary documents. They also contended that they did not seek any relief against Petitioner No. 3, making the application not maintainable. The Tribunal heard arguments from both sides extensively, considering the material on record and legal precedents cited by the counsels.

The Tribunal referred to Section 424 of the Companies Act, 2013, emphasizing that it is guided by the principles of natural justice and not bound by the Code of Civil Procedure. Since there was no specific rule in the NCLT Rules, 2016 addressing such applications, the Tribunal clarified that the application could not be treated under Order-I, Rule-10 of the Code of Civil Procedure. The judgment also referenced a similar case from the NCLT Chennai Bench, highlighting the principle that a Petitioner has the right to choose against whom to litigate, and a non-party cannot be impleaded without sufficient cause.

In this specific case, the Tribunal noted that the Applicant was already a party as Petitioner No. 3 and now sought to become a Respondent against the wishes of the other Petitioners. Since no allegations were made against Petitioner No. 3, and no relief was sought from him, the Tribunal concluded that he was neither a necessary nor a proper party in the proceedings. The Tribunal found the application lacking bona fide intent, filed after a significant delay in the proceedings, seemingly to cause a delay in the main petition's hearing. Considering these factors and the stage of the proceedings, the Tribunal rejected the application with costs imposed on the Applicant.

Furthermore, the Tribunal clarified that the Respondents in the Company Petition could cite the Applicant as a witness if needed, indicating that his evidence could be considered in the case. The judgment concluded by disposing of the instant application and emphasizing the possibility of the Applicant being called as a witness by the Respondents, if required.