Impleadment Plea Can't Be Rejected Because Locus Standi Was Challenged Before It: NCLT Bengaluru

The National Company Law Tribunal (NCLT), Bengaluru Bench, has held that an impleadment application cannot be rejected merely because it was filed after an objection to the petitioner's locus standi.

"The scope of consideration in an application under Order I Rule 10(2) CPC is not confined to examining whether a party strengthens the case of the Applicant but for the tribunal to assess whether the presence of such party is necessary for complete, effective and final adjudication of the issues/controversy involved in the proceedings," the tribunal held.

The ruling was delivered by a bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada while allowing an application by Manyata Infrastructure Developments Private Limited to implead Manyata Reality as a co-petitioner in a company petition under Section 213(b) of the Companies Act, 2013.

The company petition seeks an investigation into the affairs of Buoyant Technology Constellation Private Limited over allegations of fraudulent diversion of funds, misuse of land, and other acts allegedly committed in transactions arising from a Memorandum of Understanding dated December 23, 2009.

Manyata Infra submitted that Manyata Reality was also a party to the MoU and that its presence was necessary for a complete adjudication of the dispute.

Buoyant Technology Constellation Private Limited and Sushil Pandurang Mantri opposed the application. They argued that it was filed only after Manyata Infrastructure's locus standi was questioned and was an attempt to cure a defect in maintainability.

They also contended that the procedural provisions under Order I Rule 10(2) of the Code of Civil Procedure and Rule 11 of the NCLT Rules could not be used to overcome substantive defects such as lack of locus standi or maintainability.

Rejecting the objections, the tribunal observed that proceedings under Section 213(b) involve allegations of fraud and unlawful conduct requiring a comprehensive examination of the surrounding transactions, the entities involved and the persons whose rights and interests are alleged to have been affected.

It further held, "It may be exaggerated to discern that the current petitioner alone despite being a constituent of MoU would not be competent to maintain the petition. It, therefore, doesn't matter that the petitioner became wise to file this application on an objection being raised by the Respondent No. 2. The endeavour is to provide completeness of representation in the petition, have full sequence of events and to include a major player in the crucial transactions and its version on the issues raised in the petition, as it may at some stage get affected by the decisions herein that the presence of Manyata Reality in these proceedings is deemed necessary. Such course would assist this Tribunal in arriving at a fair conclusion regarding the allegations made in the Company Petition and avoid multiplicity of proceedings in respect of the same subject matter."

The tribunal also found that allowing the application would not prejudice the respondents. "The Respondents shall continue to have full opportunity to contest the Company Petition including on its maintainability. The impleadment merely ensures that all parties having a direct and substantial interest in the controversy are before this Tribunal when the matter is finally adjudicated," it held before allowing the application.