### Suspended Director is neither a necessary nor proper party when CIRP is effectively represented by the RP.

In brief

The question

1. Whether a suspended director/shareholder is a necessary or proper party to an appeal challenging the admission of a Section 10 petition when a Resolution Professional is already representing the Corporate Debtor.

The court held

The Tribunal held that the applicant failed to satisfy the parameters for impleadment as a necessary party under Order 1 Rule 10 of the CPC

It also directed

The presence of the suspended director was deemed unnecessary for the effective adjudication of the appeal, as the RP was already participating and the issues were limited to the application of Section 65 of the I&B Code

Consequently, the impleadment application (IA No. 192/2026) was rejected

01Facts

The Respondent No. 1 (Corporate Debtor) filed a petition under Section 10 of the I&B Code for initiation of Corporate Insolvency Resolution Process (CIRP), which was admitted by the NCLT, Bengaluru on 26.09.2025

pp. 1-2

The Appellant, an Operational Creditor who secured a commercial money decree against the Respondent on 15.09.2025, challenged this admission on grounds of fraud and siphoning of funds under Section 65 of the Code

pp. 2-3

While the appeal was pending, one Mr. Nischith Bhaskar Shetty (Applicant), a suspended director and 51% shareholder of the Corporate Debtor, filed an impleadment application (IA No. 192/2026)

p. 4

He claimed to be a necessary party to defend the company, alleging the Resolution Professional (RP) was not effectively representing the Corporate Debtor's interests

p. 4

The RP and Appellant opposed the impleadment, noting the RP had already filed responses and the applicant's presence was unnecessary for the adjudication of the legal issues raised

p. 5

02Issues

i.1. Whether a suspended director/shareholder is a necessary or proper party to an appeal challenging the admission of a Section 10 petition when a Resolution Professional is already representing the Corporate Debtor.

p. 6

ii.2. Whether the applicant satisfied the criteria for impleadment under Order 1 Rule 10 of the Code of Civil Procedure (CPC).

p. 6

03Law Applied

The Court primarily applied Order 1 Rule 10 of the CPC, which stipulates that a party seeking impleadment must establish that the case cannot be effectively decided in their absence

p. 6

It further relied on the framework of the Insolvency and Bankruptcy Code (IBC), specifically Section 10 regarding CIRP initiation by the Corporate Debtor, Section 19 regarding the obligation of suspended directors to provide information to the RP, and Section 65 regarding fraudulent or malicious initiation of proceedings

p. 2, 5, 6

04Reasoning

The Tribunal reasoned that for a party to be impleaded, they must demonstrate they are "necessary parties" without whom a "lis" cannot be effectively decided

p. 6

In this case, the RP had already taken over the management of the Corporate Debtor and had entered an appearance to defend the company in the appeal

p. 5

The Tribunal found that the applicant failed to provide any substantiated evidence or documents showing his presence was essential to resolve the specific legal challenge regarding Section 65

p. 6

The Tribunal observed that the RP is legally competent to represent the Corporate Debtor and can obtain any necessary information from the suspended director under Section 19 of the Code

p. 5

Furthermore, the Tribunal noted that the applicant's primary motivation appeared to be an attempt to thwart the implications of a prior commercial decree rather than addressing the core insolvency controversy

p. 7