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TMI Blog2024 (7) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... are no error in the Impugned Judgment under challenge allowing the Impleadment Application. The Appeal lacks merits and the same is accordingly dismissed. - [ Justice Sharad Kumar Sharma ] Member ( Judicial ) And [ Jatindranatha Swain ] Member ( Technical ) For Appellant : Mr. Aditya Venugopalan , Advocate For Respondent No.1 : Mr. Harikumar G Nair , Advocate JUDGMENT ( Hybrid Mode ) [ Per : Sharad Kumar Sharma , Member ( Judicial ) ] Brief Facts : The instant Company Appeal arises out of the Impugned Order dated 26.11.2020, which has been rendered by the Learned Adjudicating Authority of NCLT, Kochi Bench, in IA No.187/KOB/2020, in IBA/30/KOB/2020. As a consequence of the Impugned Order the Appellant has been directed to be impleaded in proceedings, which have been held under section 60(5) of the I B Code for the purpose of initiation of the CIRP Proceedings. Primarily the grievances of the Appellant is that he would not be the necessary party to the proceedings and that he is not at all required to be impleaded for the reason being that:- (i) No demand notice was ever issued to the applicant. (ii) That he was not a party to the proceedings. (iii) There is no cause of action aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant as the party in the proceedings under section 9, it shows that the Appellant has been impleaded as an Additional Corporate Debtor for two reasons, namely: - (1) He happens to be one of the major share holders of the Corporate Debtor (2) He is managing, controlling and operating the affairs of the company of Respondent No.2. The Impugned Order makes a reference to the ratio as propounded the Judgment rendered in the matters of Mamatha Vs AMB Infrabuild Private Limited and Ors., by this Tribunal by which it comes to a conclusion that the Appellant assumes the status of being an Additional Corporate Debtor in the instant case and therefore becomes a necessary party. The case of the Appellant is that these two parameters which have been propounded as to be the basis of conclusions drawn by the Impugned Order of 26.11.2020, cannot be sustained since being in absolute divergence to the rules and basic norms of the principles of Natural Justice. Elaborating further, he has submitted that the Appellant cannot be treated as to be an Additional Corporate Debtor , for the purposes of proceedings under section 9 for the principal Corporate Debtor, until and unless the Operationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant had to acquire majority shares and certain amount of over sight on the Respondent No.2. The Appellant has further submitted that in its capacity of the shareholder, he had nothing to do in the internal administration and malpractices resulting into a loss incurred by the Respondent No.2. The Appellant submitted that the erstwhile Managing Director Mr. Rajeev C Vijayan, in fact, had generated and had projected a false financial picture to induce the Appellant to invest in Respondent No.2 by misleading him and the same is being addressed by way of initiation of criminal complaint, against the management of Respondent No.2 and also by way of invocation of the arbitration clause available in the Share Purchase Agreement, dated 08.11.2017 and the subsequent Share subscription agreement of 16.11.2017. He contended that while he is taking steps to proceed as against the Managing Director of Respondent No.2 for his misdeeds, both on the criminal side and also on the civil side by the initiation of the arbitration proceeding and when the same were being undertaken, the Appellant has been sought to be impleaded by referring him as to be an Additional Corporate Debtor, by the Impugned Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany and besides that since the Appellant is the holder of 65% of the shares which was considered to be a major shareholding, and since he has major managerial control over the affairs of the Respondent No.2 / Corporate Debtor, thus for an effective Adjudication of proceedings under section 9 he ought to have been a necessary party to the proceedings. Apart from the reasoning which has been assigned by the Learned Adjudicating Authority, it has been observed that the Appellant was having a major control over the affairs of the Corporate Debtor, apart from that he was in charge of day to day affairs of the company and hence he would be responsible for the debt and liabilities, which has been incurred on behalf of the Corporate Debtor. The Respondent No.1 / Applicant to the Impleadment Application has placed before the Learned Adjudicating Authority and has heavily placed reliance upon the Judgment of M/s. Mamatha Vs AMB InfraBuild Pvt. Ltd. as rendered in Comp App (AT) (CH) (Ins) No.155/2018 to push forward his case for impleading M/a. Inkel Ltd. in the CIRP Proceedings. While drawing its reasoning from Para 14 15 of the said Judgment, the Learned Adjudicating Authority has come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing impleaded in a proceeding under section 9 of I B Code, and based on the evidence on record, the Appellant is having a major shareholding and managerial control over the Corporate Debtor and since the Corporate Debtor is a subsidiary of the Appellant, he will be necessary party to CIRP Proceedings and that the decision has been taken by the Learned Adjudicating Authority after an elaborate consideration of the financial and managerial status of the Appellant in the management of the Corporate Debtor. Ultimately, the point of determination as put forth by the Learned Counsels for the parties emerges before this Tribunal as to whether at all a prior notice, prior to allowing of the Impleadment Application, was required to be issued or not. Thus, ultimately the controversy as raised by the Learned Counsel for the Appellant in his arguments, would be confined as to whether the Impleadment Application, as it has been preferred by the Respondent No.1 could at all have been allowed without there being a notice issued to him, who was sought to be impleaded in order to enable him to put forth his views on whether at all he happens to be the necessary party to the proceedings or not. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Delhi High Court, has laid down that notice prior to the impleadment of a person in judicial proceedings is not mandatory and since it is exclusively an aspect to be considered by the court regards the necessity of a person sought to be impleaded, a prior notice is not required. The relevant para 11 is extracted hereunder:- 11. So far as the grievance of the appellant that it should have been put to notice of an application seeking the impleadment, whereby it was proposed to implead the appellant is concerned, I again find no merit in the appellant s submission. The Division Bench of this Court in Walchandnagar Industries (supra) held: In the normal course, it is a contradiction in terms to issue notice of an application seeking the impleadment of a party to the party proposed to be so impleaded. If the Court is convinced by the Plaintiffs submission of the necessity and expediency of impleading the proposed parties, the proposed party should be impleaded and notice would thereafter be issued to it. There is no scope, nor is this practice, for obvious reasons, at the very first instance and at the very initiation of the suit to show cause why it should be arrayed as a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaded as 175th respondent. As the trial court did not notify him before the impleadment, the petitioner challenged the order. The High Court of Karnataka, per S. Sujatha J., in Gunadhar Muttin v. Shantinath [10], has held that under Order I, Rule 10 of CPC, it is hardly required to be stated that the proposed defendant has to be put on notice before passing any order on the application filed by the plaintiff for impleadment of such parties. Thus, Gunadhar Muttin has treated the order of impleadment as irregular for want of pre-impleadment notice. This decision, too, I may respectfully note, has supplied no reasons to read into Order I, Rule 10 the necessity of a pre-impleadment notice. (e) Mumbai International Airport: 42. In Mumbai International Airport Pvt. Ltd., the Supreme Court per R. V. Raveendran J, has distinguished between the necessary party and property party. It has considered the scope and ambit of Order I of Rule 10(2) CPC and held that the sub-rule is not about the right of a non-party to be impleaded as a party, but about the judicial discretion of the court to strike out or add parties at any stage of a proceeding . The discretion under the sub-rule, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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