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2021 (12) TMI 41 - HC - VAT and Sales TaxNon-deposit of C-Forms - application under Order I Rule 10 of the CPC - HELD THAT - As per Order I Rule 10(2) of the CPC, the Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out. In MUMBAI INTERNATIONAL AIRPORT PVT. LTD. VERSUS REGENCY CONVENTION CENTRE HOTELS PVT. LTD. ORS. 2010 (7) TMI 1159 - SUPREME COURT the Supreme Court stated that the general rule in regard to impleadment of parties is that the plaintiff in a suit, being dominus litis, may choose the persons against whom he wishes to litigate and cannot be compelled to sue a person against whom he does not seek any relief. The impleadment of a party can be on the basis that it is a necessary or a proper party to the proceedings. A necessary party is one against whom the plaintiff seeks relief or in whose absence an effective decree cannot be passed. A proper party is one against whom relief may not be sought but whose presence is essential for the determination of the questions involved in the suit. A reading of the clauses of the agreement between the respondent no.1/plaintiff and respondent no.2/defendant no.1 clearly demonstrates that the said agreement was on a principal-to-principal basis and the liability to make payment towards the goods supplied was that of the respondent no.2/defendant no.1. Clause 4 of the said agreement specifies that it is the respondent no.2/defendant no.1 who shall be responsible for default in the deposit of C Forms to the respondent no.1/plaintiff, even if the forms could be submitted by the respondent no.2/defendant no.1 or petitioner/defendant no.2 - taking into account the pleadings of the respondent no.1/plaintiff before the Trial Court and the conduct of the respondent no.1/plaintiff before this Court, it is found that neither was any relief sought by the respondent no.1/plaintiff against the petitioner/defendant no.2 nor was there a cause of action pleaded in respect of the petitioner/defendant no.2. The petitioner/defendant no.2 is neither a proper nor a necessary party to the suit. Accordingly, there is a manifest error in the impugned order passed by ADJ, which warrants interference by this Court under Article 227 of the Constitution of India. The only person interested in impleadment of the petitioner/defendant no.2 is the respondent no.2/defendant no.1 in order to avoid/reduce its liability, which may arise under the suit. The impleadment of the petitioner/defendant no.2 is not necessary to decide the issues raised in the plaint - Petition allowed.
Issues Involved:
1. Application for deletion from the array of parties under Order I Rule 10 of the CPC. 2. Determination of whether the petitioner/defendant no.2 is a necessary or proper party to the suit. 3. Analysis of the contractual obligations related to the issuance of C Forms. 4. Examination of the cause of action and relief sought in the suit. 5. Consideration of the legal principles regarding impleadment of parties. Issue-wise Detailed Analysis: 1. Application for Deletion from the Array of Parties under Order I Rule 10 of the CPC: The petitioner/defendant no.2 filed an application under Order I Rule 10 of the CPC seeking deletion from the array of parties, arguing that they were improperly impleaded in the suit. The Additional District Judge (ADJ) dismissed this application, reasoning that the petitioner/defendant no.2 appeared to be a proper party to the suit due to their involvement in the issuance of C Forms and the bills being issued in their name. 2. Determination of Whether the Petitioner/Defendant No.2 is a Necessary or Proper Party to the Suit: The court analyzed the principles laid down in *Mumbai International Airport (P) Ltd. vs. Regency Convention Centre & Hotels (P) Ltd. & Ors.* and *Mohinder Jeet Singh Vs. BMW India Pvt. Ltd. and Ors.* regarding necessary and proper parties. A necessary party is one against whom relief is sought or without whom an effective decree cannot be passed. A proper party is one whose presence is essential for the determination of the questions involved in the suit. The court concluded that the petitioner/defendant no.2 was neither a necessary nor a proper party to the suit. 3. Analysis of the Contractual Obligations Related to the Issuance of C Forms: The agreement dated 29th September, 2005, between the respondent no.1/plaintiff and the respondent no.2/defendant no.1 specified that the latter was responsible for the deposit of C Forms. Clause 4 of the agreement clearly stated that the respondent no.2/defendant no.1 shall be responsible for the payment of 6% difference in Sales Tax in case of default in the deposit of C Forms. The court found that the petitioner/defendant no.2 was not privy to this agreement and thus could not be held liable for the obligations arising from it. 4. Examination of the Cause of Action and Relief Sought in the Suit: The suit was filed for recovery of ?60,47,218/- as principal amount and ?31,18,757/- as interest, totaling ?91,65,975/-. The court noted that the suit did not include any claims related to the penalty for non-issuance of C Forms, which amounted to ?33,82,155/-. The cause of action was based on the dishonored cheques issued by the respondent no.2/defendant no.1, not on any liability related to C Forms. 5. Consideration of the Legal Principles Regarding Impleadment of Parties: The court reiterated that the plaintiff is dominus litis and can choose the parties against whom relief is sought. The court emphasized that the impleadment of a party must be necessary for the effective adjudication of the suit. The court found that the petitioner/defendant no.2 was not a necessary party as no relief was sought against them, and their presence was not essential for the determination of the suit. Conclusion: The court concluded that the petitioner/defendant no.2 was neither a proper nor a necessary party to the suit. The impugned order dated 16th October, 2019, was set aside, and the petitioner/defendant no.2 was deleted from the array of parties in the suit. The petition was allowed, and the court found that the only party interested in the impleadment of the petitioner/defendant no.2 was the respondent no.2/defendant no.1, to avoid or reduce its liability.
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