NCLAT (12.08.2022) in Mr. Chinna Rao & Ors. Vs. V. Venkatasivakumar & Ors. [I.A. No. 584 of 2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022 ] held that;
There is no provision in the I & B Code, 2016, that enables the `Creditors’ other than those who triggered the `Insolvency Resolution Process’, to be impleaded as `Parties’.
In law, the `Impleadment of Parties’, is ultimately, within the ambit of exercise of discretion by a `Tribunal’ / `Authority’, as the case may be.
More importantly, no person, can be added, unless he is a `necessary party’. A `necessary party’ means that a person is very much necessary to the `Constitution’ of `Suit’ / an `Appeal’ in a given `Proceeding’ before a `Court of Law’ / `Tribunal’ / `Authority’.
In fact, whether a person has an enforceable legal right is to be looked into by a `Tribunal’ in regard to the `impleadment of parties’.
To array a person as a `prospective / proposed Respondent(s)’ is not a `Substantive Right’, but undoubtedly, it is one of the `procedure’ and the `Tribunal’ is to exercise its `judicial discretion’, of course, in a subjective manner, diligently.
It must be borne in mind that a `necessary party’ is one without whom no `Order’ can be passed effectively, in a given case. 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 `questions’, involved in a given `Proceeding’.
Further, a mere interest of a `Party’ in the fruits of a `litigation’, cannot be a `yardstick’ / `test’ for his being impleaded as a `Party’.
Excerpts of the order;
Discussions:
19. At the outset, this `Tribunal’ points out that in IA/584/2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022, the Applicants have prayed for their impleadment as `Respondent Nos. 4 to 7’ in the main `Appeal’ filed by the erstwhile `Liquidator’ of `The Jeypore Sugar Company Ltd.’.
20. A mere perusal of the contents of IA/584/2022 filed by the `Applicants’ in Comp App (AT) (CH) (INS) No. 269 of 2022 clearly indicates that it is averred among other things, that `those who run the `School’ and who run the `Petrol Pump’ have been put to hardship, though IA/1155/2020 was filed before the `Adjudicating Authority’ by the `Workers Union’ stating that the `Trust’ is running the `School’ on the land leased out by the `Corporate Debtor’ to the `Educational Trust’ and the `Petrol Pump’ is run by the `Co-operative Society’ on the `Land’ leased out by the `Corporate Debtor’ and therefore, it was mentioned that the `Liquidator’, at best, can step into the shoes of the `Corporate Debtor’ as `Lessor’, but not to see them, evicted from the `School’ and also from the `Petrol Pump’, based on the `impugned order’ of the `Police protection’.
21. It is the plea of the `Applicants’ that because of the hardships caused by the `Liquidator’, if he is permitted to continue as the `Liquidator’, it will be an irreparable loss to the `company’, to the persons managing the `School’ and `Petrol Pump’, to the `Creditors’, and the `Shareholders’. As such, the `Applicants’ hardships shall also be heard, prior to the `adjudication’, as to the aspect of the `impugned order’, passed by the `Adjudicating Authority’ on 01.07.2022 is liable to be set aside or not, for which, they may be permitted by this `Tribunal’, to be arrayed as R8 and R9 in the instant Comp. App (AT) (CH) INS. No. 269 of 2022, on the file of this `Tribunal’.
22. Conversely, it is the contention of the `1st Respondent / erstwhile Liquidator’ that the IA/584/2022 and IA/585/2022, filed by the `Applicants’ in main Comp. App (AT) (CH) (INS) No. 269 of 2022, are liable to be dismissed, because of the fact that the `1st Respondent / IDBI Bank Officials’ (in main `Appeal’) and erstwhile `Promoters’ are hand in glove in subverting the system and process for achieving their illegal goals unmindful of the economic interest of our country. Further, the Bank Officials had disregarded the `Order of Interim Injunction’, passed by the `Hon’ble Madras High Court’ in WP No. 4458 of 2021 to achieve their illegal goals, etc. That apart, it is the stand of the `1st Respondent/erstwhile Liquidator’ that a `stranger’ cannot be permitted to meddle in any proceedings, unless he satisfies this `Tribunal’ that he falls within the purview of `Aggrieved Person’. Furthermore, only a person who had suffered or suffers from legal injury can assail the act / action / order, etc., in a `Court of Law’/`Tribunal’.
23. In effect, it is the contention of the `1st Respondent/erstwhile Liquidator’ that the two `Interlocutory Applications’ are to be dismissed by this `Tribunal’, since the `Applicants’ therein are not `necessary parties’ to be arrayed as the `Respondents’ in the main Comp. App (AT) (CH) (INS) No. 269 of 2022.
Appraisal:
# 24. It transpires that the `1st Respondent/erstwhile Liquidator’ in I.A. Nos. 584 & 585/2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022 is the Appellant in main Comp. App (AT) (CH) (INS) No. 269 of 2022, as an `Aggrieved Person’, on being dissatisfied with the `impugned order’ dated 01.07.2022 in IA/815/IB/2020 in CP/1307/IB/2018, he has preferred the instant Comp. App (AT) (CH) (INS) No. 269 of 2022.
# 25. It comes to be known that the `1st Respondent/IDBI Bank’ in main Comp. App. (AT) (CH) (INS) No. 269 of 2022 has filed IA/815/IB/2020 in CP/1307/IB/2018 under Section 60 (5) of the I & B Code, read with Rule 11 of the NCLT Rules and Section 276 of the Companies Act, 2013 to remove the `Appellant / erstwhile Liquidator Mr. V. Venkatasivakumar’ of the Jeypore Sugar Company Ltd.
# 26. The Appellant/erstwhile Liquidator Mr. V. Venkatasivakumar, figured as Respondent in IA/815/IB/2020 in CP/1307/IB/2018, before the `Adjudicating Authority’ (NCLT, Division Bench – II, Chennai). The `Adjudicating Authority’ had allowed the IA/815/IB/2020, and appointed Mr. S. Hari Karthik as the `Liquidator’ of the `Corporate Debtor’ / `The Jeypore Sugar Company Ltd.’, by directing the erstwhile `Liquidator’ to handover the charges to the newly appointed `Liquidator’, within 7 days from the date of passing of the order.
# 27. In this connection, it is not out of place for this `Tribunal’ to make a pertinent mention that the `Applicants’ in IA/584/2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022 before this `Tribunal’ has preferred Comp. App (AT) (CH) INS. 207 of 2022 against the erstwhile `Liquidator’ Mr. V. Venkatasivakumar, Appellant in Comp. App (AT) (CH) (INS) No. 269 of 2022 and 6 Others, as against the `Order’ passed by the `Adjudicating Authority’, NCLT, Chennai Bench in IA/229(CHE)/2021 in IA/1155/IB/2020 in CP/1307/IB/2018.
# 28. In reality, IA/229(CHE)/2021 in CP/1307/IB/2018, the Official Respondents Nos. 7 to 11 therein, were directed to provide Police protection to the `Liquidator’ (Mr. V. Venkatasivakumar) so as to enable him to discharge his duties as `Liquidator’. Arraying of Parties:
# 29. It must be borne in mind that there is no provision in the I & B Code, 2016, that enables the `Creditors’ other than those who triggered the `Insolvency Resolution Process’, to be impleaded as `Parties’. In law, the `Impleadment of Parties’, is ultimately, within the ambit of exercise of discretion by a `Tribunal’ / `Authority’, as the case may be. More importantly, no person, can be added, unless he is a `necessary party’. A `necessary party’ means that a person is very much necessary to the `Constitution’ of `Suit’ / an `Appeal’ in a given `Proceeding’ before a `Court of Law’ / `Tribunal’ / `Authority’. In fact, whether a person has an enforceable legal right is to be looked into by a `Tribunal’ in regard to the `impleadment of parties’. To array a person as a `prospective / proposed Respondent(s)’ is not a `Substantive Right’, but undoubtedly, it is one of the `procedure’ and the `Tribunal’ is to exercise its `judicial discretion’, of course, in a subjective manner, diligently.
# 30. It cannot be gainsaid that, an `Individual’ will not be added as a `Party’, just because he will be affected by the `Tribunal’ incidentally, when it passes an `Order’ in a given `proceedings’, before it.
# 31. An `Appellant / Plaintiff’ in a given legal proceeding is the `dominus litis’. He cannot be coerced to include a person as `Party” against whom, he does not want to contest, unless it is a compulsion of Law. It must be borne in mind that a `necessary party’ is one without whom no `Order’ can be passed effectively, in a given case. 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 `questions’, involved in a given `Proceeding’. Further, a mere interest of a `Party’ in the fruits of a `litigation’, cannot be a `yardstick’ / `test’ for his being impleaded as a `Party’.
# 32. Be that as it may, in the light of the aforesaid detailed discussions and in view of the fact that the main Comp. App (AT) (CH) (INS) No. 269 of 2022 is filed by the` erstwhile Liquidator, Mr. V. Venkatasivakumar’ as an `Appellant’ before this `Tribunal’, and he being the `1st Respondent’ in I.A. Nos. 584 and 585 of 2022, who assails the `impugned order’ dated 01.07.2022 in IA/815/IB/2020 in CP/1307/IB/2018, in and by which, he was directed to hand over the charge to the newly appointed `Liquidator Mr. Hari Karthik’, and also this `Tribunal’ keeping in mind the entire conspectus of the attendant facts and circumstances of the present case in a holistic fashion, comes to an inevitable and inescapable conclusion that the `Applicants’ in I.A. Nos. 584 and 585 of 2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022 are not `necessary’/ `proper’ parties, to be arrayed as `Respondents’ in the main Comp. App. (AT) (CH) (INS) No. 269 of 2022 and even without their presence, this `Tribunal’ can `dispose of’ the main `Company Appeal’, of course, on merits, based on the `available material on record’. Viewed in that perspective, the I.A. Nos. 584 and 585 of 2022 filed by the `Applicants’ in Comp. App (AT) (CH) (INS) No. 269 of 2022 are devoid of merits.
Conclusion:
In fine, I.A. Nos. 584 and 585 of 2022 in Comp. App (AT) (CH) (INS) No. 269 of 2022 are dismissed. No costs.
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