CLB allowed impleadment of directors in case on ground of necessary parties.

1.  The petitioners filed petition under section 397/398 making various complaints relating to acts of oppression and mismanagement purportedly committed by the respondents in the conduct of affairs of the respondent No. 1 company.

2.  The applicants filed the application seeking their impleadment as respondents in the array of the parties of the company petition stating that they were also the shareholders of the company.

3.  It was claimed by the applicants that they were directors of the company and the petitioner in collusion with respondent Nos. 2 and 3 removed them by way of filing Form no. 32 showing their cessation as directors in the EOGM which was actually never held and their removal as directors of the company was false and fabricated and Form no. 32 showing their cessation as directors wasvoid and as such they continued to hold the office of the directorship of the company.

4.  According to the applicants, petitioners were mismanaging the company's affairs which was prejudicial to the interest of its shareholders as also detrimental to the interest of the company.

5.  Applicants, therefore, claimed that their presence in the proceeding was necessary for completion and effective adjudication of the matter in the collusive petition.

On appeal CLB Held as under :

6.  The ROC, Pune, after receipt of the complaint from the applicants, made an enquiry and on the basis of the material available before it found substance in the complaint. 

7.  The general rule in regard to the impleadment of parties is that the plaintiff in the suit, beingdominus litis may choose a person against whom he wishes to litigate and cannot be compelled to sue a person against whom he does not seek any relief. Consequently, a person who is not a party has no right to be impleaded against the wishes of the plaintiff. 

8.  But this general rule is subject to the exception as stipulated in order 1 rule 10(2) of Civil Procedure Code, which provides for impleadment of proper and necessary parties. It is well-settled proposition of law that a necessary party is one, without whom no order can be made effectually, a proper party in whose absence an effective order cannot be made and whose presence is necessary for a complete and final decision on the question involved in the proceeding. Rule 10(2) of Order 1 of the CPC also indicates as to who is to be termed as a 'necessary' or 'proper party'. 

9.  These provisions, inter alia, empower the Court to add the name of any person, namely (1) 'who ought to have been joined' and (2) ' whose presence before the court may be necessary in order to enable the Court to effectually and completely adjudicate upon and settle all the issues involved in the matter. The object of Order 1 rule 10 is to bring before the court, at the same time, all persons who have an interest in the subject-matter of the dispute so that separate trials are avoided and all parties are bound by the decision. A party may not be a 'necessary party', but may be a 'proper party'. 

10.  A party would be a 'proper party' if it is interested in the result of the litigation and has the right to seek assistance of the court on coming to a decision on the point in issue; however, it is not necessary that a relief is asked against him. Object is to avoid needless multiplicity of suits and to protect his interest and the interest of the party already on record, and the application is made bona fide and in the interest of justice. 

11.  It is trite law that third parties who are likely to be affected by reliefs sought in the petition must be impleaded as parties. It has been settled by a catena of judicial precedents that the only reason which makes it necessary to make a person a party to an action so that he should be bound by the result of the action and the question to be settled, therefore, must be a question in the action which cannot be effectually and completely settled unless he is a party. 

12.  Taking into consideration that the EOGM whereat the applicants were allegedly removed as directors of the company is in dispute, the applicants are the necessary parties and their presence is required for effective and complete adjudication of the company petition. Therefore, application for impleadment was allowed.