Summary
The Court upheld the High Court's refusal to implead the appellant, which claimed to be the corporate successor of a sub-tenant firm, as a defendant in the owners' suit for service charges. The appellant had not shown that it succeeded the firm, the owners sought no relief against it, the plaintiffs as dominus litis could not be made to add it, and it had delayed about nine years after learning of the suit. The decree is not to be enforced against the appellant.
Issues
- Whether the appellant, claiming to be the successor of respondent No.3 under Part IX of the Companies Act, 1956, was a necessary or proper party to the suit for recovery of service charges.
- Whether the order setting aside the impleadment, passed by the High Court under Article 227, should be interfered with.
Provisions considered
- Order I Rule 10, Code of Civil Procedure, 1908Applying the twin tests for a necessary party (a right to relief against the party, and no effective decree without it) and the test for a proper party, the Court held that the appellant was neither, and could not be added against the plaintiffs' wishes. (¶¶ 32, 33, 34, 35, 36, 37, 38, 39, 40)
- Part IX, Companies Act, 1956The claimed conversion of respondent No.3 into the appellant company was not established: the firm had only four partners, the Court noted the strict conditions for conversion, and the firm's registration showed it still existed. A certificate of incorporation does not by itself prove succession. (¶¶ 29, 30, 31)
- Article 227, Constitution of IndiaAlthough the supervisory jurisdiction is limited and the High Court ought not to have intervened in an interlocutory order, the Court declined to restore an incorrect trial-court order once it had been rightly set aside. (¶¶ 41, 43)
Held
- In a suit by owners to recover service charges for furniture and fixtures, the landlord-tenant relationship is irrelevant; the dispute lies only between the owners and the user who was liable to pay. (¶¶ 26, 27)
- A certificate of incorporation shows that a company exists as a body corporate but does not conclusively prove that it came into existence as successor of a particular firm; the appellant failed to establish succession to respondent No.3, which continued to exist as a firm. (¶¶ 29, 30, 31)
- A necessary party is one against whom some relief is claimed and without whom no effective decree can be passed; a proper party is one whose presence enables complete adjudication. Since no relief was claimed against the appellant and it had not established succession, it was neither a necessary nor a proper party. (¶¶ 33, 34, 37, 38)
- The plaintiffs are dominus litis and cannot be compelled to add a defendant against their wishes; they proceed at their own risk, and the decree binds only the parties to the suit. (¶¶ 39, 40)
- Impleadment was also rightly refused because the appellant, which had received the summons in 2008, waited about nine years and sought impleadment only after evidence closed and the suit was set down ex parte. (¶ 42)
- Though the High Court's Article 227 jurisdiction is supervisory and it ought not to have intervened, the Supreme Court would not commit another illegality by restoring an incorrect trial-court order. (¶¶ 41, 43)
Result
Appeals dismissed with no order as to costs, with a direction that any decree passed in the suit shall not be used or implemented against the appellant.