NCLAT Modifies NCLT Order Dismissing Company Petition for Non-Joinder of Necessary Party, Allows Impleadment

The National Company Law Appellate Tribunal at Chennai recently modified an order of the NCLT which had dismissed a company petition on the ground of non-joinder of a necessary party.

The NCLT Amravati had dismissed a company petition filed by two individuals after observing that the principal relief was sought against Al-Sami Food Exports Pvt Ltd, which had not been made a party. Since the matter had reached the stage of arguments, the tribunal declined to permit addition of the party at that belated stage and dismissed the petition on account of non-joinder of necessary parties.

Allowing the appeal, a coram of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain observed that the provisions of the Companies Act, 2013 are guided by the principles of natural justice and are not strictly bound by the Civil Procedure Code.

“The governing principles under law, so far it relates to the proceedings carried on under the provisions of the Companies Act, 2013 before the Tribunals constituted under the Companies Act are that these proceedings as contemplated under the provisions of the Companies Act, 2013 shall not be bound by the procedures contemplated under the Code of Civil Procedure and are to be guided by the principles of natural justice, in light of the provisions of Section 424 of Companies Act.” it observed

NCLAT emphasised that it is the tribunal's duty to ensure, at the very beginning of the proceedings, that the correct parties are before it and that the dispute is decided on merits, rather than being dismissed on technical grounds like non-joinder of necessary parties.

“Past conduct of litigant in a judicial proceedings should not be taken into consideration, particularly when the Tribunals are deciding the rights” it added

While agreeing with the NCLT's observation that there was non-joinder of a necessary party, the appellate tribunal held that, in the interest of justice, the appellant ought to have been granted an opportunity to amend the cause title.

The Appellate Tribunal granted two weeks' time to the appellants implead the necessary party and clarified that the respondents would be permitted to file their counter thereafter.

The appellate tribunal clarified that the earlier appeal concerning forfeiture of the right to file counter would not impede the respondents from filing their counter after amendment.

For Appellants: Advocate Yahya Batatawala and Tehseen Fatima Khatri PCS

For Respondents: Senior Advocate PH Arvindh Pandian and Advocates Amrith Bhargav, Jerin Asher Sojan and KM Ashif