Companies Act Sec. 131 Doesn't Bar 3rd Party Impleadment Under NCLT's Inherent Powers: NCLT Bengaluru

The National Company Law Tribunal (NCLT) at Bengaluru has held that the absence of an express provision for impleading third parties under Section 131 of the Companies Act, 2013 does not curtail its inherent powers under Rule 11 of the NCLT Rules, 2016 to permit the participation of persons necessary for effective adjudication. Section 131 permits a company to revise its financial statements or Board's report when they do not comply with the provisions of the Act.

A Bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada allowed an application filed by Altaf Pasha, Mansoor Ali Khan and Sadiq Pasha under Rule 11 of the NCLT Rules, 2016, directing that they be impleaded as respondents in Imperio Hospitality Private Limited's Section 131 petition. It held:

“Merely because Section 131 does not expressly provide for impleadment of third parties does not denude this Tribunal of its inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016 to permit participation of persons whose presence is considered necessary for an effective adjudication of the issues before it. The power of this Tribunal to regulate its own procedure and secure the ends of justice cannot be curtailed in the absence of an express statutory prohibition.”

The applicants sought impleadment in Imperio Hospitality Private Limited's petition under Section 131 for revision of its financial statements. They claimed to be Additional Directors appointed pursuant to a Board Resolution dated 25 April 2025, following an arrangement under which Shanaaz Hameed claimed 50% shareholding in the company.

The applicants submitted that the proposed revision could affect issues in a pending company petition filed by Shanaaz Hameed under Sections 59, 241 and 242 of the Companies Act concerning the company's shareholding and management.

Imperio Hospitality opposed the application, disputing the applicants' directorship and alleging that their appointment and the related share allotment had been obtained fraudulently and were subsequently cancelled. It also contended that the Section 131 proceedings had no connection with the pending dispute and that Section 131 did not contemplate impleadment of third parties.

The Tribunal observed that while Section 131 does not expressly provide for impleadment of third parties, it also does not expressly prohibit their participation. It held that Rule 11 empowers the Tribunal to permit the participation of persons whose presence is necessary for a proper adjudication and that this power is not curtailed without an express statutory prohibition.

The Bench observed that the applicants' participation could assist it in arriving at a complete and informed decision. It also noted that their impleadment would not prejudice the company, which would have an opportunity to contest their claims. It held:

“….this Tribunal is of the considered view that the Applicants are proper and necessary parties for the limited purpose of adjudication of the present petition, and their impleadment would facilitate a fair and comprehensive adjudication of the petition without causing prejudice to the Respondent.”

Accordingly, the NCLT allowed the application and directed that the applicants be impleaded as respondents.

For Petitioner: Advocate Ranganatha Chenna