Full Judgment Text
2026 INSC 8
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. OF 2026
(Arising out of SLP (C) Nos. 6024-6025 OF 2022)
NAK ENGINEERING COMPANY PVT. LTD. …APPELLANT(S)
VERSUS
TARUN KESHRICHAND SHAH AND ORS. …RESPONDENT(S)
J U D G M E N T
PANKAJ MITHAL, J.
1. Leave granted.
2. We have heard Shri Chander Uday Singh, senior counsel
assisted by Shri Amarjit Singh Bedi, Advocate-on-Record
1
for the appellant-NAK Engineering Company Pvt. Ltd. and
Dr. Abhinav Chandrachud, learned counsel assisted by
Shri Surjendu Sankar Das, Advocate-on-Record for the
2
respondent No.1- Tarun Keshrichand Shah .
Signature Not Verified
Digitally signed by
LOKESH ARORA
Date: 2026.01.05
18:24:02 IST
Reason:
1
Hereinafter referred to as ‘appellant’
2
Hereinafter referred to as ‘respondent No.1’
1
3
3. Respondent No.2- Priyalata Keshrichand Shah is reported
to be dead and her interest is represented by respondent
No.1.
4
4.
Respondent No.3- M/s Kishore Engineering Company has
not appeared. It had not even appeared in the Trial Court
or the High Court. It has not even filed any written
statement, despite service of notice.
5. In a Suit No.6117 of 2007 filed by respondent No.1 and
respondent No.2 against respondent No.3, a Notice of
Motion No.1346 of 2018 was moved to add the appellant as
the party defendant to participate and contest the aforesaid
suit. Earlier, a Notice of Motion No. 1925 of 2017 was also
moved by the appellant seeking to set aside the order to
proceed in the said suit ex-parte . Both the said motions
were allowed by the court of first instance vide a common
Order dated 05.10.2018. However, the said order was set
aside by the High Court by the impugned judgment and
3
Hereinafter referred to as ‘respondent No.2’
4
Hereinafter referred to as ‘respondent No.3’
2
order dated 21.02.2022 in exercise of its power under
Article 227 of the Constitution of India.
6. Under challenge in these appeals is thus the above
judgment and order of the High Court dated 21.02.2022
setting aside the order of the court of first instance
permitting impleadment of the appellant as one of the
defendants to the suit meaning thereby that the motion of
addition of the appellant as one of the defendants to the
suit stands rejected.
7. One Keshrichand Shah was the original owner of the
commercial premises admeasuring 1700 sq. feet existing
on the third floor of the Churchgate House, Mumbai. He
was the sole proprietor of M/s Union Commercial
Corporation. The aforesaid Keshrichand Shah through its
proprietorship firm M/s Union Commercial Corporation let
out an area of 525 square feet of the above premises having
five cabins to one M/s Modern Products Pvt. Ltd. The said
M/s Modern Products Pvt. Ltd. licensed or sublet the same
to the respondent no.3. In addition to the rent of Rs.400/-
per month payable to M/s Modern Products Pvt. Ltd., the
3
respondent No.3 also used to pay service charges at the
rate of Rs.2,100/- per month for the use of furniture and
fixtures therein to the owner, Keshrichand Shah. On the
death of Kesharichand Shah, the said service charges were
realized by his heirs, i.e., respondent nos.1 and 2.
8. The respondent Nos.1 and 2 instituted a Suit No.3319 of
2007 on the original civil side of the Bombay High Court
but on account of pecuniary jurisdiction it was later
transferred to the Bombay City Civil Court and re-
numbered as Suit No.6117 of 2017.
9. The aforesaid suit was instituted by respondent Nos.1 and
2 against respondent No.3 for the recovery of service
charges at the rate of Rs.2,100/- per month, amounting to
Rs.75,600/- for the period November 2004 to October
2007.
10. In the aforesaid suit, notice was served upon sole
defendant i.e., respondent no.3 but no one appeared on its
behalf and filed any written statement. Thus, after closing
the evidence on 11.02.2014, the court vide order dated
12.11.2014 proceeded in the matter.
ex-parte
4
11. It was much thereafter on 02.04.2018 that the appellant
filed an application for being impleaded as the defendant
in this suit contending that it is a successor of respondent
No.3 under Part IX of the Companies Act, 1956. The
appellant is actually running the business of respondent
No.3. Therefore, it is a necessary party to the suit.
12. The appellant contended that it had acquired knowledge of
the suit only on 02.10.2012 and that it has proceeded ex-
parte against the respondent No.3. There was no proper
service of the notice upon the respondent No.3 or upon the
appellant. It was contended that the appellant has drawn
separate proceedings for getting the ex-parte order set
aside. The appellant had no knowledge of the transfer of
the suit from the Bombay High Court to the City Civil Court
as no notice in this regard was received or served upon it.
13. It may be not out of context to mention here that the
respondent Nos.1 and 2 apart from instituting the above
suit had also filed a suit for the eviction of the respondent
No.3 and the appellant and its Directors from the premises
in dispute in the Small Causes Court. This apart, a
5
criminal complaint was also lodged against the appellant
and its Director–Himanshu Patwa on account of dishonour
of two cheques of Rs.2,100/- and Rs.400/- issued by them
in respect of the monthly service charges and the rent
respectively in connection with the demised premises.
14. It is in the above background that the court of first instance
vide order dated 05.10.2018 allowed the motion to add the
appellant as one of the defendants to the suit observing
that there is no dispute to the fact that the appellant is in
occupation of the suit premises. The suit premises was
initially let out to the respondent No.3 and is now in
possession of appellant, who claims to be the successor
company that has taken over the business of respondent
No.3. The certificate of incorporation relied upon by the
appellant along with the Memorandum of Association
prima facie reveals that the appellant has taken over and
acquired the business interest of the respondent No.3. The
court accepted the said certificate issued by the Registrar
of the companies opining that it lacked jurisdiction to rule
on the validity of the said certificate.
6
15. The aforesaid order of the court of first instance on being
taken up before the High Court under Article 227 of the
Constitution has been reversed and the impleadment of the
appellant has been revoked on the ground that it is not a
proper or a necessary party to the suit. The suit will not fail
for want of its presence.
16. The High Court proceeded to pass the impugned order on
the premise that no relationship of tenant and landlord
existed between the parties and that the appellant is the
unauthorized occupant that need not be joined as a
defendant to the suit.
17. The High Court further held that the issue of recovery of
arrears of service charges can be decided even in the
absence of the appellant as the respondent No.3 had no
legal sanctity of law to authorize the use of furniture and
fixtures to a third party.
18. It is alleged that the High Court completely ignored the fact
that the appellant is the successor company of the tenant–
respondent No.3 whose complete business has been taken
over by it. The appellant has stepped into the shoes of
7
respondent No.3 and was in possession of the premises in
that capacity and was not an unauthorized occupant.
19. It is in this background that we have been called upon to
consider to decide whether the appellant is a necessary and
proper party to be impleaded in the suit No.6117 of 2007
for the recovery of service charges in respect of the
premises in dispute which was admittedly sublet to the
respondent No.3 to whose business the appellant happens
to be a successor.
20. The first and the foremost argument of Shri Chander Uday
Singh, senior counsel appearing for the appellant is that
the High Court exceeded its jurisdiction under Article 227
of the Constitution in setting aside the judgment and order
of the court of first instance as if it is sitting in appeal. The
order of the Trial Court allowing the impleadment was an
interlocutory order which required no interference by the
High Court in exercise of its supervisory power. The High
Court incorrectly concluded that the appellant is not a
necessary party to the suit, completely ignoring the fact
that the respondent Nos.1 and 2 themselves had arrayed it
8
as one of the defendants in a suit for eviction from the
premises filed before the Small Causes Court. The High
Court also erred in not appreciating that the appellant is a
successor to respondent No.3 under the Companies Act
and that the validity of the certificate of registration issued
by the Registrar of Companies in favour of the appellant
could not have been adjudicated while exercising powers
under Article 227 of the Constitution.
21. It is further contended that the appellant has been paying
service charges through cheque since 1991 and the
respondent nos.1 and 2 were aware of it. Rather, the
service charges from 2004 were received by the respondent
Nos.1 and 2, implying an admission on their part that the
appellant is the person liable to pay the same. Even the
furniture and telephone lines in the premises, which
existed, have been used by the appellant since 1991 with
the knowledge of the respondent No.1. Therefore, the High
Court was not right in holding that since there is no
relationship of tenant and landlord between the parties, the
appellant is not a necessary party. The relationship of
9
tenant and landlord in the matter was not relevant and
material, as it was not a suit for eviction rather a suit for
recovery of service charges.
22.
He further argued that, in fact, any decree that may be
passed in the suit in question against the respondent No.3
that is practically defunct, would lead to execution of the
decree against the appellant and as such the appellant is a
necessary and proper party to the suit.
23. Dr. Abhinav Chandrachud, learned counsel appearing for
the respondent No.1 in defense submits that the appellant
has not come up before the court with clean hands rather
with an ulterior motive to legitimize its illegal occupation
over the premises in dispute. The summons in the suit were
served upon the respondent No.3 way back in the year
2008. The acknowledgement bears the signature and the
stamp of the appellant which clearly proves that the
appellant was aware of the institution of the suit but even
then, remained silent for over nine years before seeking
impleadment. The appellant is an unauthorized occupant
of the premises in dispute and therefore, in the suit for
10
eviction, was made one of the defendants so that the
eviction decree if any may be effectively executed. However,
this does not mean that it is also a necessary and proper
party to the present suit for the recovery of arrears of
service charges.
24. Further, the certificate of incorporation of the appellant is
not a proof of successorship to the respondent No.3 and
that the certificate annexed with the appeal is a new and
different document which was not part of the record before
the courts below. The respondent No.3 still continues to be
a registered company and is still in existence and therefore,
the appellant cannot be accepted to be its successor more
particularly when it is only a firm and not even a company.
25. Lastly, it has been submitted that the respondent Nos.1
and 2 who instituted the suit are dominus litis in the matter
and cannot be compelled to add a defendant against their
wishes if they do not desire to seek any relief against such
a person.
26. Undisputedly, the suit in question has been filed by the
owners of the property to recover service charges for the
11
use of furniture and fixtures from the respondent No.3 that
was inducted as a sub-tenant in the premises in dispute by
M/s Modern Products Pvt. Ltd. The dispute is not regarding
recovery of rent or arrears of rent. Therefore, the
relationship of landlord and tenant between the parties is
completely alien to the controversy in question.
27. The dispute is essentially with regard to payment of service
charges between the owners of the property and its user
i.e. respondent No.3. Therefore, no other person has any
right to be impleaded so as to defend the suit regarding
payment of service charges.
28. The appellant claims to be the successor of respondent
No.3 and as such, wants to defend the suit on its behalf or
as its representative.
29. The respondent No.3, though stated to be a private limited
company, is only a partnership firm having only four
members. There is no authentic proof on record that the
above partnership firm was ever converted into a company.
The conversion of a partnership firm into a company as
under Part IX of Companies Act, 1956 requires fulfilment
12
of strict conditions such as having at least seven
partners/members and execution of certain deeds. The
respondent No.3 was having only four partners and as such
was ineligible for conversion under the relevant law.
Further, there is nothing on record to indicate that the
aforesaid firm respondent No.3 has ceased to exist or has
become extinct. The extract of respondent No.3 firm dated
20.09.2016 from the office of the Registrar of Firms reveals
that respondent No.3 continues to exist as a partnership
firm even though appellant may have been incorporated as
a new company.
30. The appellant has relied upon the Certificate of
Incorporation dated 22.02.1988 to claim that it has
succeeded the respondent No.3. No doubt, a company
comes into existence as a body corporate from the date of
its incorporation having perpetual succession and a
common seal. However, its incorporation or its Certificate
of Incorporation in no way conclusively proves that it has
come into existence as a successor of respondent No.3. In
such circumstances, appellant cannot be accepted to be
13
the successor of respondent No.3 so as to permit it to be
impleaded and to defend the suit for the recovery of service
charges.
31.
The appellant has nowhere established its independent
right to be impleaded to defend the suit except for claiming
to be the successor of respondent No.3 which, in our
opinion, has no legs to stand.
32. The above discussion takes us to another aspect of the
matter as to whether the appellant is a necessary or a
proper party to be impleaded. The governing principles and
law in this regard are well-settled.
33. The fundamental distinction between a "necessary party"
and a "proper party" was succinctly explained in Ramesh
Hirachand Kundanmal v. Municipal Corporation of
5
Greater Bombay , wherein this Court held:
“6… A necessary party is one without whom no order
can be made effectively. A proper party is one in whose
absence an effective order can be made but whose
5
(1992) 2 SCC 524
14
presence is necessary for a complete and final decision
on the question involved in the proceeding.”
6
34. In Kasturi v. Iyyamperumal , this Court crystallized the
twin tests for a necessary party:
“…the question of jurisdiction of the court to invoke
Order 1 Rule 10 CPC to add a party who is not made a
party in the suit by the plaintiff shall not arise unless a
party proposed to be added has direct and legal interest
in the controversy involved in the suit. … two tests are to
be satisfied for determining the question as to who is a
necessary party. The tests are: (1) there must be a right
to some relief against such party in respect of the
controversies involved in the proceedings; (2) no
effective decree can be passed in the absence of such
party.”
35. This principle has been consistently reiterated. In Mumbai
International Airport (P) Ltd. v. Regency Convention
7
Centre & Hotels (P) Ltd. , this Court reiterated:
“15 . A “necessary party” is a person who ought to have been
joined as a party and in whose absence no effective decree
could be passed at all by the court. If a “necessary party” is
not impleaded, the suit itself is liable to be dismissed. A
6
(2005) 6 SCC 733
7
(2010) 7 SCC 417
15
“proper party” is a party who, though not a necessary party,
is a person whose presence would enable the court to
completely, effectively and adequately adjudicate upon all
matters in dispute in the suit, though he need not be a person
in favour of or against whom the decree is to be made. If a
person is not found to be a proper or necessary party, the
court has no jurisdiction to implead him, against the wishes
of the plaintiff. The fact that a person is likely to secure a
right/interest in a suit property, after the suit is decided
against the plaintiff, will not make such person a necessary
party or a proper party to the suit for specific performance.”
36. Vidur Impex & Traders (P) Ltd. v. Tosh
Thereafter, in
8
Apartments (P) Ltd. , the broad principles governing
impleadment were summarized:
“41.2. A necessary party is the person who ought to be joined
as party to the suit and in whose absence an effective decree
cannot be passed by the court.
41.3. A proper party is a person whose presence would
enable the court to completely, effectively and properly
adjudicate upon all matters and issues, though he may not be
a person in favour of or against whom a decree is to be made.
41.4. If a person is not found to be a proper or necessary
party, the court does not have the jurisdiction to order his
impleadment against the wishes of the plaintiff.”
8
(2012) 8 SCC 384
16
37. In the case at hand, the respondent Nos.1 and 2 are not
claiming any relief against the appellant. There is no iota of
material to indicate that the relief, as claimed in the suit
against respondent No.3, if granted, would be implemented
against the appellant. Therefore, the appellant is not a
necessary party to the suit.
38. The appellant cannot also be construed as a proper party
once it has failed to establish that it is a successor to the
respondent No.3. In the absence of any evidence to prove
that respondent No.3 has ceased to exist or cannot be
represented in the suit on its own to contest it on merits,
we are of the opinion that the appellant is not even a proper
party to provide any assistance to the court in the suit.
39. This apart, the respondent Nos.1 and 2 who have instituted
the suit are dominus litis and it is for them to choose their
adversaries. If they do not array the proper and necessary
parties to the suit, they do it at their own risk. However,
they cannot be compelled to add a party to defend a suit
against their wishes. The decree, if any, passed in the suit
would be binding only between the parties to the suit and
17
would not infringe upon any right of a third party, much
less of the appellant that is not a party to the suit.
40. This conclusion is reinforced by the fundamental principle
9
Kanaklata Das v. Naba Kumar Das
laid down in ,
wherein this Court has observed:
“11.4. …the plaintiff being a dominus litis cannot be
compelled to make any third person a party to the suit, be
that a plaintiff or the defendant, against his wish unless such
person is able to prove that he is a necessary party to the suit
and without his presence, the suit cannot proceed and nor
can be decided effectively. In other words, no person can
compel the plaintiff to allow such person to become the co-
plaintiff or defendant in the suit. It is more so when such
person is unable to show as to how he is a necessary or
proper party to the suit and how without his presence, the suit
can neither proceed and nor it can be decided or how his
presence is necessary for the effective decision of the suit.
11.5. … a necessary party is one without whom, no order can
be made effectively, 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 question
involved in the proceeding.”
9
(2018) 2 SCC 352
18
41. In the above facts and circumstances, if the High Court, for
one reason or the other, has set aside the order of
impleadment passed by the court of first instance, we do
not consider it to be illegal so as to set it aside and restore
the order of the Trial Court.
42. There is one another reason for not interfering with the
impugned judgment and order of the High Court. The
summons issued in the suit meant to be served upon
respondent No.3, were served in the year 2008. The seal
and signatures on the acknowledgement on the said
summons is of the appellant which clearly indicates that
the appellant had acquired knowledge of the suit in the
year 2008. However, the appellant kept silent and moved
the motion for impleadment only after the evidence was
closed in the year 2014 and the court had directed to
proceed ex-parte in the matter. The impleadment
application was filed almost after nine years of the
knowledge of the pendency of the suit. Thus, the
impleadment has been rightly refused to the appellant by
the High Court.
19
43. We are conscious of the fact that the jurisdiction of the
High Court under Article 227 is simply supervisory in
nature and that the High Court ought not to have
intervened in the matter. However, once the order has been
interfered with, and rightly so, we do not wish to commit
another illegality by restoring an incorrect order passed by
the court of first instance.
44. In view of the above discussion, we are of the opinion that
the appeals lack merit and are dismissed but with the
direction that the decree passed in the suit would not be
used against the appellant and would not be implemented
against it.
45. The appeals are dismissed with no order as to cost.
46. Pending application(s), if any, shall stand disposed of.
………………………………………...J.
[PANKAJ MITHAL]
………………………………………...J.
[PRASANNA B. VARALE]
NEW DELHI;
JANUARY 5, 2026.
20
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. OF 2026
(Arising out of SLP (C) Nos. 6024-6025 OF 2022)
NAK ENGINEERING COMPANY PVT. LTD. …APPELLANT(S)
VERSUS
TARUN KESHRICHAND SHAH AND ORS. …RESPONDENT(S)
J U D G M E N T
PANKAJ MITHAL, J.
1. Leave granted.
2. We have heard Shri Chander Uday Singh, senior counsel
assisted by Shri Amarjit Singh Bedi, Advocate-on-Record
1
for the appellant-NAK Engineering Company Pvt. Ltd. and
Dr. Abhinav Chandrachud, learned counsel assisted by
Shri Surjendu Sankar Das, Advocate-on-Record for the
2
respondent No.1- Tarun Keshrichand Shah .
Signature Not Verified
Digitally signed by
LOKESH ARORA
Date: 2026.01.05
18:24:02 IST
Reason:
1
Hereinafter referred to as ‘appellant’
2
Hereinafter referred to as ‘respondent No.1’
1
3
3. Respondent No.2- Priyalata Keshrichand Shah is reported
to be dead and her interest is represented by respondent
No.1.
4
4.
Respondent No.3- M/s Kishore Engineering Company has
not appeared. It had not even appeared in the Trial Court
or the High Court. It has not even filed any written
statement, despite service of notice.
5. In a Suit No.6117 of 2007 filed by respondent No.1 and
respondent No.2 against respondent No.3, a Notice of
Motion No.1346 of 2018 was moved to add the appellant as
the party defendant to participate and contest the aforesaid
suit. Earlier, a Notice of Motion No. 1925 of 2017 was also
moved by the appellant seeking to set aside the order to
proceed in the said suit ex-parte . Both the said motions
were allowed by the court of first instance vide a common
Order dated 05.10.2018. However, the said order was set
aside by the High Court by the impugned judgment and
3
Hereinafter referred to as ‘respondent No.2’
4
Hereinafter referred to as ‘respondent No.3’
2
order dated 21.02.2022 in exercise of its power under
Article 227 of the Constitution of India.
6. Under challenge in these appeals is thus the above
judgment and order of the High Court dated 21.02.2022
setting aside the order of the court of first instance
permitting impleadment of the appellant as one of the
defendants to the suit meaning thereby that the motion of
addition of the appellant as one of the defendants to the
suit stands rejected.
7. One Keshrichand Shah was the original owner of the
commercial premises admeasuring 1700 sq. feet existing
on the third floor of the Churchgate House, Mumbai. He
was the sole proprietor of M/s Union Commercial
Corporation. The aforesaid Keshrichand Shah through its
proprietorship firm M/s Union Commercial Corporation let
out an area of 525 square feet of the above premises having
five cabins to one M/s Modern Products Pvt. Ltd. The said
M/s Modern Products Pvt. Ltd. licensed or sublet the same
to the respondent no.3. In addition to the rent of Rs.400/-
per month payable to M/s Modern Products Pvt. Ltd., the
3
respondent No.3 also used to pay service charges at the
rate of Rs.2,100/- per month for the use of furniture and
fixtures therein to the owner, Keshrichand Shah. On the
death of Kesharichand Shah, the said service charges were
realized by his heirs, i.e., respondent nos.1 and 2.
8. The respondent Nos.1 and 2 instituted a Suit No.3319 of
2007 on the original civil side of the Bombay High Court
but on account of pecuniary jurisdiction it was later
transferred to the Bombay City Civil Court and re-
numbered as Suit No.6117 of 2017.
9. The aforesaid suit was instituted by respondent Nos.1 and
2 against respondent No.3 for the recovery of service
charges at the rate of Rs.2,100/- per month, amounting to
Rs.75,600/- for the period November 2004 to October
2007.
10. In the aforesaid suit, notice was served upon sole
defendant i.e., respondent no.3 but no one appeared on its
behalf and filed any written statement. Thus, after closing
the evidence on 11.02.2014, the court vide order dated
12.11.2014 proceeded in the matter.
ex-parte
4
11. It was much thereafter on 02.04.2018 that the appellant
filed an application for being impleaded as the defendant
in this suit contending that it is a successor of respondent
No.3 under Part IX of the Companies Act, 1956. The
appellant is actually running the business of respondent
No.3. Therefore, it is a necessary party to the suit.
12. The appellant contended that it had acquired knowledge of
the suit only on 02.10.2012 and that it has proceeded ex-
parte against the respondent No.3. There was no proper
service of the notice upon the respondent No.3 or upon the
appellant. It was contended that the appellant has drawn
separate proceedings for getting the ex-parte order set
aside. The appellant had no knowledge of the transfer of
the suit from the Bombay High Court to the City Civil Court
as no notice in this regard was received or served upon it.
13. It may be not out of context to mention here that the
respondent Nos.1 and 2 apart from instituting the above
suit had also filed a suit for the eviction of the respondent
No.3 and the appellant and its Directors from the premises
in dispute in the Small Causes Court. This apart, a
5
criminal complaint was also lodged against the appellant
and its Director–Himanshu Patwa on account of dishonour
of two cheques of Rs.2,100/- and Rs.400/- issued by them
in respect of the monthly service charges and the rent
respectively in connection with the demised premises.
14. It is in the above background that the court of first instance
vide order dated 05.10.2018 allowed the motion to add the
appellant as one of the defendants to the suit observing
that there is no dispute to the fact that the appellant is in
occupation of the suit premises. The suit premises was
initially let out to the respondent No.3 and is now in
possession of appellant, who claims to be the successor
company that has taken over the business of respondent
No.3. The certificate of incorporation relied upon by the
appellant along with the Memorandum of Association
prima facie reveals that the appellant has taken over and
acquired the business interest of the respondent No.3. The
court accepted the said certificate issued by the Registrar
of the companies opining that it lacked jurisdiction to rule
on the validity of the said certificate.
6
15. The aforesaid order of the court of first instance on being
taken up before the High Court under Article 227 of the
Constitution has been reversed and the impleadment of the
appellant has been revoked on the ground that it is not a
proper or a necessary party to the suit. The suit will not fail
for want of its presence.
16. The High Court proceeded to pass the impugned order on
the premise that no relationship of tenant and landlord
existed between the parties and that the appellant is the
unauthorized occupant that need not be joined as a
defendant to the suit.
17. The High Court further held that the issue of recovery of
arrears of service charges can be decided even in the
absence of the appellant as the respondent No.3 had no
legal sanctity of law to authorize the use of furniture and
fixtures to a third party.
18. It is alleged that the High Court completely ignored the fact
that the appellant is the successor company of the tenant–
respondent No.3 whose complete business has been taken
over by it. The appellant has stepped into the shoes of
7
respondent No.3 and was in possession of the premises in
that capacity and was not an unauthorized occupant.
19. It is in this background that we have been called upon to
consider to decide whether the appellant is a necessary and
proper party to be impleaded in the suit No.6117 of 2007
for the recovery of service charges in respect of the
premises in dispute which was admittedly sublet to the
respondent No.3 to whose business the appellant happens
to be a successor.
20. The first and the foremost argument of Shri Chander Uday
Singh, senior counsel appearing for the appellant is that
the High Court exceeded its jurisdiction under Article 227
of the Constitution in setting aside the judgment and order
of the court of first instance as if it is sitting in appeal. The
order of the Trial Court allowing the impleadment was an
interlocutory order which required no interference by the
High Court in exercise of its supervisory power. The High
Court incorrectly concluded that the appellant is not a
necessary party to the suit, completely ignoring the fact
that the respondent Nos.1 and 2 themselves had arrayed it
8
as one of the defendants in a suit for eviction from the
premises filed before the Small Causes Court. The High
Court also erred in not appreciating that the appellant is a
successor to respondent No.3 under the Companies Act
and that the validity of the certificate of registration issued
by the Registrar of Companies in favour of the appellant
could not have been adjudicated while exercising powers
under Article 227 of the Constitution.
21. It is further contended that the appellant has been paying
service charges through cheque since 1991 and the
respondent nos.1 and 2 were aware of it. Rather, the
service charges from 2004 were received by the respondent
Nos.1 and 2, implying an admission on their part that the
appellant is the person liable to pay the same. Even the
furniture and telephone lines in the premises, which
existed, have been used by the appellant since 1991 with
the knowledge of the respondent No.1. Therefore, the High
Court was not right in holding that since there is no
relationship of tenant and landlord between the parties, the
appellant is not a necessary party. The relationship of
9
tenant and landlord in the matter was not relevant and
material, as it was not a suit for eviction rather a suit for
recovery of service charges.
22.
He further argued that, in fact, any decree that may be
passed in the suit in question against the respondent No.3
that is practically defunct, would lead to execution of the
decree against the appellant and as such the appellant is a
necessary and proper party to the suit.
23. Dr. Abhinav Chandrachud, learned counsel appearing for
the respondent No.1 in defense submits that the appellant
has not come up before the court with clean hands rather
with an ulterior motive to legitimize its illegal occupation
over the premises in dispute. The summons in the suit were
served upon the respondent No.3 way back in the year
2008. The acknowledgement bears the signature and the
stamp of the appellant which clearly proves that the
appellant was aware of the institution of the suit but even
then, remained silent for over nine years before seeking
impleadment. The appellant is an unauthorized occupant
of the premises in dispute and therefore, in the suit for
10
eviction, was made one of the defendants so that the
eviction decree if any may be effectively executed. However,
this does not mean that it is also a necessary and proper
party to the present suit for the recovery of arrears of
service charges.
24. Further, the certificate of incorporation of the appellant is
not a proof of successorship to the respondent No.3 and
that the certificate annexed with the appeal is a new and
different document which was not part of the record before
the courts below. The respondent No.3 still continues to be
a registered company and is still in existence and therefore,
the appellant cannot be accepted to be its successor more
particularly when it is only a firm and not even a company.
25. Lastly, it has been submitted that the respondent Nos.1
and 2 who instituted the suit are dominus litis in the matter
and cannot be compelled to add a defendant against their
wishes if they do not desire to seek any relief against such
a person.
26. Undisputedly, the suit in question has been filed by the
owners of the property to recover service charges for the
11
use of furniture and fixtures from the respondent No.3 that
was inducted as a sub-tenant in the premises in dispute by
M/s Modern Products Pvt. Ltd. The dispute is not regarding
recovery of rent or arrears of rent. Therefore, the
relationship of landlord and tenant between the parties is
completely alien to the controversy in question.
27. The dispute is essentially with regard to payment of service
charges between the owners of the property and its user
i.e. respondent No.3. Therefore, no other person has any
right to be impleaded so as to defend the suit regarding
payment of service charges.
28. The appellant claims to be the successor of respondent
No.3 and as such, wants to defend the suit on its behalf or
as its representative.
29. The respondent No.3, though stated to be a private limited
company, is only a partnership firm having only four
members. There is no authentic proof on record that the
above partnership firm was ever converted into a company.
The conversion of a partnership firm into a company as
under Part IX of Companies Act, 1956 requires fulfilment
12
of strict conditions such as having at least seven
partners/members and execution of certain deeds. The
respondent No.3 was having only four partners and as such
was ineligible for conversion under the relevant law.
Further, there is nothing on record to indicate that the
aforesaid firm respondent No.3 has ceased to exist or has
become extinct. The extract of respondent No.3 firm dated
20.09.2016 from the office of the Registrar of Firms reveals
that respondent No.3 continues to exist as a partnership
firm even though appellant may have been incorporated as
a new company.
30. The appellant has relied upon the Certificate of
Incorporation dated 22.02.1988 to claim that it has
succeeded the respondent No.3. No doubt, a company
comes into existence as a body corporate from the date of
its incorporation having perpetual succession and a
common seal. However, its incorporation or its Certificate
of Incorporation in no way conclusively proves that it has
come into existence as a successor of respondent No.3. In
such circumstances, appellant cannot be accepted to be
13
the successor of respondent No.3 so as to permit it to be
impleaded and to defend the suit for the recovery of service
charges.
31.
The appellant has nowhere established its independent
right to be impleaded to defend the suit except for claiming
to be the successor of respondent No.3 which, in our
opinion, has no legs to stand.
32. The above discussion takes us to another aspect of the
matter as to whether the appellant is a necessary or a
proper party to be impleaded. The governing principles and
law in this regard are well-settled.
33. The fundamental distinction between a "necessary party"
and a "proper party" was succinctly explained in Ramesh
Hirachand Kundanmal v. Municipal Corporation of
5
Greater Bombay , wherein this Court held:
“6… A necessary party is one without whom no order
can be made effectively. A proper party is one in whose
absence an effective order can be made but whose
5
(1992) 2 SCC 524
14
presence is necessary for a complete and final decision
on the question involved in the proceeding.”
6
34. In Kasturi v. Iyyamperumal , this Court crystallized the
twin tests for a necessary party:
“…the question of jurisdiction of the court to invoke
Order 1 Rule 10 CPC to add a party who is not made a
party in the suit by the plaintiff shall not arise unless a
party proposed to be added has direct and legal interest
in the controversy involved in the suit. … two tests are to
be satisfied for determining the question as to who is a
necessary party. The tests are: (1) there must be a right
to some relief against such party in respect of the
controversies involved in the proceedings; (2) no
effective decree can be passed in the absence of such
party.”
35. This principle has been consistently reiterated. In Mumbai
International Airport (P) Ltd. v. Regency Convention
7
Centre & Hotels (P) Ltd. , this Court reiterated:
“15 . A “necessary party” is a person who ought to have been
joined as a party and in whose absence no effective decree
could be passed at all by the court. If a “necessary party” is
not impleaded, the suit itself is liable to be dismissed. A
6
(2005) 6 SCC 733
7
(2010) 7 SCC 417
15
“proper party” is a party who, though not a necessary party,
is a person whose presence would enable the court to
completely, effectively and adequately adjudicate upon all
matters in dispute in the suit, though he need not be a person
in favour of or against whom the decree is to be made. If a
person is not found to be a proper or necessary party, the
court has no jurisdiction to implead him, against the wishes
of the plaintiff. The fact that a person is likely to secure a
right/interest in a suit property, after the suit is decided
against the plaintiff, will not make such person a necessary
party or a proper party to the suit for specific performance.”
36. Vidur Impex & Traders (P) Ltd. v. Tosh
Thereafter, in
8
Apartments (P) Ltd. , the broad principles governing
impleadment were summarized:
“41.2. A necessary party is the person who ought to be joined
as party to the suit and in whose absence an effective decree
cannot be passed by the court.
41.3. A proper party is a person whose presence would
enable the court to completely, effectively and properly
adjudicate upon all matters and issues, though he may not be
a person in favour of or against whom a decree is to be made.
41.4. If a person is not found to be a proper or necessary
party, the court does not have the jurisdiction to order his
impleadment against the wishes of the plaintiff.”
8
(2012) 8 SCC 384
16
37. In the case at hand, the respondent Nos.1 and 2 are not
claiming any relief against the appellant. There is no iota of
material to indicate that the relief, as claimed in the suit
against respondent No.3, if granted, would be implemented
against the appellant. Therefore, the appellant is not a
necessary party to the suit.
38. The appellant cannot also be construed as a proper party
once it has failed to establish that it is a successor to the
respondent No.3. In the absence of any evidence to prove
that respondent No.3 has ceased to exist or cannot be
represented in the suit on its own to contest it on merits,
we are of the opinion that the appellant is not even a proper
party to provide any assistance to the court in the suit.
39. This apart, the respondent Nos.1 and 2 who have instituted
the suit are dominus litis and it is for them to choose their
adversaries. If they do not array the proper and necessary
parties to the suit, they do it at their own risk. However,
they cannot be compelled to add a party to defend a suit
against their wishes. The decree, if any, passed in the suit
would be binding only between the parties to the suit and
17
would not infringe upon any right of a third party, much
less of the appellant that is not a party to the suit.
40. This conclusion is reinforced by the fundamental principle
9
Kanaklata Das v. Naba Kumar Das
laid down in ,
wherein this Court has observed:
“11.4. …the plaintiff being a dominus litis cannot be
compelled to make any third person a party to the suit, be
that a plaintiff or the defendant, against his wish unless such
person is able to prove that he is a necessary party to the suit
and without his presence, the suit cannot proceed and nor
can be decided effectively. In other words, no person can
compel the plaintiff to allow such person to become the co-
plaintiff or defendant in the suit. It is more so when such
person is unable to show as to how he is a necessary or
proper party to the suit and how without his presence, the suit
can neither proceed and nor it can be decided or how his
presence is necessary for the effective decision of the suit.
11.5. … a necessary party is one without whom, no order can
be made effectively, 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 question
involved in the proceeding.”
9
(2018) 2 SCC 352
18
41. In the above facts and circumstances, if the High Court, for
one reason or the other, has set aside the order of
impleadment passed by the court of first instance, we do
not consider it to be illegal so as to set it aside and restore
the order of the Trial Court.
42. There is one another reason for not interfering with the
impugned judgment and order of the High Court. The
summons issued in the suit meant to be served upon
respondent No.3, were served in the year 2008. The seal
and signatures on the acknowledgement on the said
summons is of the appellant which clearly indicates that
the appellant had acquired knowledge of the suit in the
year 2008. However, the appellant kept silent and moved
the motion for impleadment only after the evidence was
closed in the year 2014 and the court had directed to
proceed ex-parte in the matter. The impleadment
application was filed almost after nine years of the
knowledge of the pendency of the suit. Thus, the
impleadment has been rightly refused to the appellant by
the High Court.
19
43. We are conscious of the fact that the jurisdiction of the
High Court under Article 227 is simply supervisory in
nature and that the High Court ought not to have
intervened in the matter. However, once the order has been
interfered with, and rightly so, we do not wish to commit
another illegality by restoring an incorrect order passed by
the court of first instance.
44. In view of the above discussion, we are of the opinion that
the appeals lack merit and are dismissed but with the
direction that the decree passed in the suit would not be
used against the appellant and would not be implemented
against it.
45. The appeals are dismissed with no order as to cost.
46. Pending application(s), if any, shall stand disposed of.
………………………………………...J.
[PANKAJ MITHAL]
………………………………………...J.
[PRASANNA B. VARALE]
NEW DELHI;
JANUARY 5, 2026.
20