Dhan Raj, Member - (1.) IN this case, company petition has been filed under sections 397, 398, 402, 403 and 408 of the Companies Act, 1956, for the alleged acts of oppression and mismanagement on the part of the respondents and the same is pending for the adjudication. However, in the meantime, respondent's advocate has filed the present Company Application No. 306/2014 with the prayer to add Dr. C.L. Arya as one of the respondents to the present company petition. Precisely speaking, it has been stated that Dr. C.L. Arya is proper and necessary party to the current proceedings before this Hon'ble Board. In this regard, the respondent/applicant's advocate has contended that though no significant/particular relief has been sought against the respondent No. 3, nevertheless, the respondent No. 3 was made party on the strength of the memorandum of settlement dated 7.1.2012, whereby Dr. C.L. Arya was allotted shares of the respondent company. Further, it has been stated that the Hon'ble Company Law Board, vide order dated 26.12.2013, disposed of the Company Application No. 16/2013 stating that the respondent No. 3 is necessary for complete and effective adjudication of the dispute. Further, the present company petition substantially relied on the terms and conditions of the aforesaid memorandum of settlement. In fact, vide clause 7 of the said memorandum of settlement dated 7.1.2012, fresh equity shares were allotted to Dr. Mridula Sharma (respondent No. 3) and Dr. C.L. Arya and since all except Dr. C.L. Arya are parties before this Hon'ble Board, presence of Dr. C.L. Arya is crucial and important for proper, just and fair adjudication of the matter before this Hon'ble Board. As recorded in the order dated 25 March, 2014, the petitioner/non applicant's advocate stated that he does not wish to file reply and, therefore, the respondent/applicant's advocate was also not required to file the rejoinder. Therefore, the matter was put up for arguments. The respondent/applicant's advocate argued that subsequent to the filing of the present petition, the respondent No. 3, i.e., Mrs. Mridula Sharma, had filed an application being Company Application No. 16/2013 for deletion of her name from the array of respondents as no relief had been sought against respondent No. 3 and no specific allegations were made against her. This Hon'ble bench, vide its order dated 26.12.2013, dismissed the application filed by respondent No. 3 with the observation that respondent No. 3 had become a shareholder consequent upon the Memorandum of Settlement dated 7.1.2012 and the order dated 28.2.2012 passed by this Hon'ble Board. As such, it was held that the presence of respondent No. 3 is necessary for complete and effective adjudication of the dispute as the ultimate outcome of the proceedings may affect her adversely. As a matter of fact, like respondent No. 3, Dr. C.L. Arya was also allotted fresh shares as per clause 7 of the Memorandum of Settlement and, hence, Dr. C.L. Arya is also a recipient of and beneficiary of shares under the memorandum of settlement. Therefore, the respondent No. 2's advocate has pleaded that Dr. C.L. Arya stands on the same footing as respondent No. 3 and his presence is therefore necessary for a complete and effective adjudication of the dispute as the outcome of the present proceedings is also likely to affect Dr. C.L. Arya, in the same manner in which it will affect respondent No. 3. Lastly, it has been submitted that the petitioners, despite specifically agreeing to allot 1000 shares to Dr. C.L. Arya, vide clause 7 of the memorandum of settlement, have not issued till date the share certificates in respect of the said 1000 shares to Dr. C.L. Arya who is suffering from pancreatic cancer. The respondent No. 2's advocate has stated the following judicial pronouncements in support of his submissions: (i) In Ramesh Hirachand Kundanmal v. The Municipal Corporation of Greater Bombay : (1992) 2 SCC 524, the Hon'ble Supreme Court of India observed as under: "5. It was argued that the court cannot direct addition of parties against the wishes of the plaintiff who cannot be compelled to proceed against a person against whom he does not claim any relief. Plaintiff is no doubt dominus litis and is not bound to sue every possible adverse claimant in the same suit. He may choose to implead only those persons as defendants against whom he wishes to proceed though tinder order 1 rule 3, to avoid multiplicity of suits and needless expenses. All persons against whom the right to relief is alleged to exist may be joined as defendants. However, the court may at any stage of the suit direct addition of parties. A party can be joined as defendant even though the plaintiff does not think that he had any cause of action against him. R.10 specifically provides that it is open to the court to add at any stage of the suit a necessary or a person whose presence before the court may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the questions involved in the suit. 6. Sub -rule (20) of rule 10 gives a wide discretion to the court to meet every case of defect of parties and is not affected by the inaction of the plaintiff to bring the necessary parties on record. The question of impleadment of a party has to be decided on the touch -stone of order 1 rule 10 which provides that only a necessary or a proper party may be added. A necessary party is one without whom no order can be made effectively. A proper party is one in whose absence an effective order can be made, but whose presence is necessary for a complete and final decision on the question involved in the proceedings. The addition of parties is generally not a question of initial jurisdiction of the court, but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case." (ii) The Hon'ble Delhi High Court, in Gurumauj Saran v. Joyce C. Salim : AIR 1990 Del. 13, held that the plaintiffs right to choose the defendants was not absolute and was circumscribed by the provisions of rule 10 of order 1 of C.P.C. The court made a reference to the statement of law as to the practice prevalent in England as contained in para. 226, vol. 37, Halsbury's Laws of England, Fourth Edition, which reads as under: "226. Intervention by persons who are not parties. - -The general rule of practice is that the plaintiff is entitled to choose the person or persons as defendants against whom he wishes to pursue his claim for the relief or remedy he seeks, and that he cannot be compelled to proceed against other persons whom he has no desire to sue. Nevertheless, the court has power to add a person who is not a party to the action as originally constituted as a defendant against the will of the plaintiff, either on the application of the defendant or of the non -party. An application by any person to be added as a party must, except with the leave of the court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter or the question or issue to be determined as between him and any party to the cause or matter. A person having no legal but only a commercial interest in the outcome of the litigation between the plaintiff and the original defendant cannot be added as a party either for the convenience of the court or otherwise. On the other hand, a person may be added as a defendant, either on his own application or the application of the defendant, where his proprietary or pecuniary rights are or may be directly affected by the proceedings either legally or financially by any order which may be made in the action, or where the intervener may be rendered liable to satisfy any judgment either directly or indirectly." (iii) The Hon'ble High Court of Madras in C.M.V. Krishnamachari v. M.D. Dhanalakshmi Ammal and others : (1966) 2 MLJ 298 held: "In order that a party might be added as a party in the suit he should have a legal interest in the subject matter of the litigation and that the legal interest was not an interest as distinct from an equitable interest but an interest which the law recognized and that a person who would be merely indirectly or commercially affected in the result of the litigation could not be impleaded as a party as a person having a direct interest in the subject matter in dispute. In other words, in order that a person might be added as a party to a suit he should have a direct interest in the subject matter or the litigation. In the instant case, the Petitioner herein had a real, direct and tangible interest in the subject matter of the suit and undoubtedly his presence was necessary to enable the Court to effectively and completely adjudicate upon the points in controversy."
(2.) IN his argument, the petitioner/non applicant's advocate has pointed out that the present application has been filed by respondents Nos. 2 and 3 seeking the addition of new party, i.e., Dr. C.L. Arya in the present petition. Further, it has been stated that Dr. C.L. Arya is a qualified doctor and is presently suffering from cancer and is taking treatment from Cochin. Further, it is due to his contribution to the respondent No. 1 company, the equity shares were allotted to Dr. C.L. Arya in view of the memorandum of settlement dated 7.1.2012 arrived at between the parties in Company Petition No. 29 (ND)/2011. Apart from this, it has been pleaded that Dr. C.L. Arya has not made any agitation with respect to his right in the present petition. On the other hand, the respondents Nos. 2 and 3, just for their vested purposes are raising his non -existent cause in the present petition. In fact, it is the established principle of law that the petitioner/plaintiff is dominus litis and he has the right to choose the party in the matter. In fact, the respondent cannot add or delete someone as the party of the petition/suit. 2.1 The petitioner's advocate has further averred that the respondents Nos. 2 and 3's stand has been inconsistent with respect to the addition/deletion of the parties in the present petition. Earlier, the respondents had filed an application being Company Application No. 16/2013 for seeking deletion of name of respondent No. 3 from the array of parties of the petition and, now, the respondents are taking the contrary stand by stating that Dr. C.L. Arya is the necessary and proper party to the present petition. Moreover, the position of the respondents is on different footing as the petitioners are seeking a substantial relief against them. Further, no such relief has been sought against Dr. C.L. Arya. As a matter of fact, the respondents Nos. 2 and 3 are the husband and wife and both of them together on affidavit have made an allegation that there is oppression and mismanagement existing in the respondent No. 1 company. Thus, the respondents Nos. 2 and 3 cannot equate their case with Dr. C.L. Arya. Lastly, it has been pointed out that respondents Nos. 2 and 3 have wrongly construed the order dated 26.12.2013 passed by this Hon'ble bench by stating that since Dr. C.L. Arya had also been allotted shareholding in terms of the memorandum of settlement dated 7.1.2012 arrived at between the parties in Company Petition No. 29 (ND)/2011, therefore, he should also be impleaded as the party to the present petition. Rather at page No. 9 in the first 8th line of the order dated 26.12.2013, the hon'ble bench has categorically recorded that: 'As the said MOS could not work out between the petitioner and the respondent No. 2, the present petition has been filed by indicating the various unlawful and illegal acts of the respondent No. 2 in connivance with the respondent No. 3'. Not only this, the petitioners have raised the cause of implementation of the said MOS between the petitioner and the respondents No. 2 and 3 and therefore, the respondents have wrongly taken the reference of order dated 26.12.2013 passed by the Hon'ble bench. In his support, the petitioner/non -applicant's advocate has cited the following judgments for reference: I. Anokhe Lal v. Radhamohan Bansal and others : AIR 1997 SC 257: "5. As no suit was pending either in the trial court or in the appellate court when the High Court took up the revision of the first respondent for argument what was the need or occasion to pass an order for impleading a person as a new party in the suit? The revision should only have been dismissed as infructuous. Even otherwise, the court should have been very circumspect in dealing with the application of a third party seeking leave to become party in the suit, when the plaintiff, who is the dominus litis of the suit, is opposed to it. If the consequence of such addition would involve a de novo trial, the court should normally have disallowed the application. Way back in 1931 the Privy Council did not allow an application for impleadment on the ground that such a course might throw open a de novo trial of the suit, even after noticing that the party sought to be impleaded was not merely a proper party but a necessary party in the suit. Naba Kumar Hazra and another v. Radhashyam Manish and others AIR 1931 PC 299. Here, even the first respondent has no case that he is a necessary party to the suit," II. Ramesh Hirachand Kundanmal v. The Municipal Corporation of Greater Bombay : (1992) 2 SCC 524: "14. It cannot be said that the main object of the rule is to prevent multiplicity of petitions though it may incidentally have that effect. But that appears to be a desirable consequence of the rule rather than its main objectives. The person to be joined must be one whose presence is necessary as a party. What makes a person a necessary party is not merely that he has relevant evidence to give on some of the questions involved; that would only make him a necessary witness. It is not merely that he has an interest in the correct solution of some questions involved and has thought of relevant arguments to advance. The only reason which makes it necessary to make a person a party to an action is 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 The line has been drawn on a wider construction of the rule between the direct interest or the legal interest and commercial interest. It is, therefore, necessary that the person must be directly or legally interested in the action in the answer, i.e., he can say that the litigation may lead to a result which will affect him legally that is by curtailing his legal rights. It is difficult to say that the rule contemplates joining as a defendant a person whose only object is to prosecute his own cause of action. Similar provision was considered in Amon v. Raphael Tuck & Sons Ltd., (1956) 1 All ER 273, wherein after quoting the observations of Wynn -Parry, J. In Dollfus Mieg et Compagnie S.A. v. Bank of England, (1950) 3 All ER 611, that the true test lies not so much in an analysis of what are the constituents of the applicants' rights, but rather in what would be the result on the subject matter of the action if those rights could be established. Devlin, J. has stated. The test is 'May the order for which the plaintiff is asking directly affect the intervener in the enjoyment of his legal rights'. 15. It has been strenuously contended before us that the second respondent has no Interest in the subject matter of the litigation and the presence of the respondent is not required to adjudicate upon the issue involved in the suit or for the purpose of deciding the real matter involved. It is pointed out that the subject matter in the suit is the notice issued by the Municipal Corporation to the appellant and the issue is whether it is justified or not. The Hindustan Petroleum Corporation Limited is interested in supporting the Municipal Corporation and sustaining the action taken against the appellant. But that does not amount to any legal interest in the subject matter in the sense that the order, if any, either in favour of the appellant or against the appellant would be binding on this respondent. It is true that being lessee of the premises, the Hindustan Petroleum Corporation Limited has an answer for the action proposed by the Municipal Corporation against the appellant, but for the purpose of granting the relief sought for by the appellant by examining the justification of the notice issued by the Municipal Corporation, it is not necessary for the court to consider that answer. If that be so, the presence of the respondent cannot be considered as necessary for the purpose of enabling the court to effectually and completely adjudicate upon and settle all the questions involved in the suit. The appellant is proceeded against by the Municipal Corporation for the alleged action in violation of the Municipal Laws. The grievance of the respondent against the appellant, if any, could only be for the violation of the agreement; and that is based on a different cause of action. The consolidation of these two in the same suit is neither contemplated nor permissible." III. Mumbai International Airport (P) Ltd. v. Regency Convention Centre and Hotels (P) Ltd. and others : AIR 2010 SC 3109: "12. Let us consider the scope and amit of order 1 of rule 10(2) C.P.C. regarding striking out or adding parties. The said 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 can be exercised either suo moto or on the application of the plaintiff or the defendant, or on an application of a person who is not a party to the suit. The court can strike out any party who is improperly joined. The court can add anyone as a plaintiff or as a defendant if it finds that he is necessary party or proper party. Such deletion or addition can be without any conditions or subject to such terms as the court deems fit to impose. In exercising its judicial discretion under order 1 rule 10(2) of the Code, the court will of course act according to reason and fair play and not according to whims and caprice. This court in Ramji Dayawala and Sons (P) Ltd. v. Invest Import : (1981) 1 SCC 80 reiterated the classic definition of 'discretion' by Lord Mansfield in R. v. Wilkes, (1770) 98 ER 327 that 'discretion' when applied to courts of justice, means sound discretion guided by law. It must be governed by rule, not by humour; it must not be arbitrary, vague, and fanciful, 'but legal and regular'. We may now give some illustrations regarding exercise of discretion under the said sub -rule. 14. On a careful examination of the facts of this case, we find that the appellant is neither a necessary party nor a proper party. As noticed above, the appellant is neither a purchaser nor the lessee of the suit properly and has no right, title or interest therein. First respondent -plaintiff in the suit has not sought any relief against the appellant. The presence of the appellant is not necessary for passing an effective decree in the suit for specific performance. Nor is its presence necessary for complete and effective adjudication of the matters in issue in the suit for specific performance filed by the first respondent plaintiff against AAI. A person who expects to get a lease from the defendant in a suit for specific performance in the event of the suit being dismissed, cannot be said to be a person having some semblance of title, in the property in dispute." 2.2 In view of the aforesaid legal position, it has been argued that only necessary and proper party can become the party of the proceedings and, in the present case, Dr. C.L. Arya is neither a necessary nor a proper party to the present proceedings. Having considered the company application and arguments (oral and written), it is clear that, in the present company petition, Dr. C.L. Arya, has not been impleaded as the respondent. Of course, in another cross Company Petition No. 29 (ND)/2011, there was memorandum of settlement dated 7.1.2012 and, thereby, 1000 shares were to be allotted to Dr. C.L. Arya on account of his contribution in the respondent No. 1 company. However, as stated in the arguments, the said memorandum of settlement could not work out and Dr. C.L. Arya has also not raised any issue relating to the allotment of shares in his favour pursuant to aforesaid memorandum of settlement. Moreover, the perusal of the company petition, present company application and also, the arguments of the petitioner's advocate reveal that no relief has been sought against Dr. C.L. Arya. As a matter of fact, the company petition relates to the allegation of oppression and mismanagement on the part of the respondent 2 and in their affidavit respondents Nos. 2 and 3 have leveled cross -allegation of oppression and mismanagement against the petitioners. Under these circumstances, Dr. C.L. Arya does not carry grievances in the matter and, therefore, no application has been moved by Dr. C.L. Arya for his impleadment and the petitioner's advocate has also not sought any relief against Dr. C.L. Arya. In view of all these facts, Dr. C.L. Arya does not carry legal interest in the litigation and, hence, Dr. C.L. Arya is not necessary and proper party to the main petition. For the adjudication of the instant company application, reliance has been laid on the judgments in the case of Anokhe Lal v. Radhamohan Bansal and others : AIR 1997 SC 257 and Mumbai International Airport (P) Ltd. v. Regency Convention Centre and Hotels (P) Ltd., and others : AIR 2010 SC 3109. As a matter of fact, the company petition can be decided without the presence of Dr. C.L. Arya as he does not carry direct legal and pecuniary interest in the matter. Under the aforesaid legal position, I am of the considered view that Dr. C.L. Arya is not a necessary and proper party in the main company petition and, hence, he cannot be impleaded in the matter. As such, the prayer sought in the present company application is hereby disallowed.
(3.) THE Company Application No. 306/2014 is disposed of accordingly. No Or.as to cost.;