# M/s Shri Bankhandi Nath Developers Pvt. Ltd v. Dharmendra Kumar Rathore & Ors

- **Citation:** (2024) 4 ILRA 1061
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-31
- **Case number:** Civil Revision No. 61 of 2022
- **Bench:** Saral Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-shri-bankhandi-nath-developers-pvt-ltd-v-dharmendra-kumar-rathore-ors-51771
- **Pages:** 30

## Headnote

Criminal Law - Code of Civil Procedure,
1908 - Order 1 Rule 10(2), Section 115 -
Companies Act, 1956 - Sections 397 &
398 - Civil Revision Against Impleadment Order
- Necessary and Proper Party - Dominus Litis
Principle - Specific Performance of Agreement
to Sale - Fraudulent Board Resolution -
Jurisdiction of Revisional Court
The plaintiff/revisionist, M/s Shri Bankhandi
Nath Developers Pvt. Ltd., challenged the order
dated 11.05.2022 by the Civil Judge (Senior
Division), Bareilly, allowing applications (151Ka
and 227Ga) of respondent no.1, Dharmendra
Kumar Rathore, to be impleaded as a
defendant in Original Suit No. 530 of 2017 for
specific performance of an agreement to sale
dated 12.07.2011 and to declare subsequent
sale deeds dated 11.11.2011 and 29.11.2012
null and void. The plaintiff/revisionist, a
company,
alleged
that
respondent
no.2
executed the agreement for Rs.3.28 crore,
receiving Rs.1 crore as advance, but sold the
suit property to respondents no.3, 4, and 5 via
two sale deeds, falsely claiming a company
resolution dated 15.07.2011 authorized the
sales. Respondent no.1, a director, sought
impleadment, arguing: (1) no board resolution
authorized the suit's filing, (2) allegations of
his collusion in the sale deeds necessitated his
defense, and (3) his impleadment in a related
SLP (No. 1204 of 2022) by the Supreme Court
justified his inclusion. The plaintiff/revisionist
contended that respondent no.1 was neither
necessary nor proper, as no relief was sought
against him, and the plaintiff, as dominus litis,
could not be compelled to include him. Held:
The revision was allowed, quashing the trial
court's order, finding: (1) the trial court failed
to assess Order 1 Rule 10(2) requirements,
committing
material
irregularity;
(2)
respondent no.1 was not a necessary or proper
party, as his presence was not essential to
adjudicate the suit's issues, per Ramesh
Hirchand Kundanmal Vs Municipal Corporation
of Greater Bombay, (1992) 2 SCC 524, Kasturi
Vs Iyyamperum, (2005) 6 SCC 733, and Gurmit
Singh Bhatia Vs Kiran Kant Robinson, (2020) 3
SCC
773;
(3)
the
issue
of
the
suit's
maintainability could be raised by existing
defendants
without
respondent
no.1's
inclusion; (4) allegations of collusion did not
confer a legal right for impleadment, as NCLT
and NCLAT findings confirmed no resolution
authorized the sales and respondent no.1's
conduct was prejudicial; (5) the Supreme
Court's impleadment in the SLP was for
ensuring compliance with NCLAT's order, not
for the suit; (6) respondent no.1's application
appeared malicious, aimed at dismissing the
suit to harm the company. The court,
exercising revisional powers under Section 115
CPC, decided the issue without remanding, as
it involved a legal question, per Maulvi
Muhammad Vs Syed Husain, 1880 ILR 3 All.
203, and rejected the applications.

List of Cases cited:
1062 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

_Characters 0–39,727 of 105,102. This is a partial read: ask again with offset=39727 for what follows._

4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1061
discussed above, in my view, both
the preliminary objections raised by Union
of India are well founded and instant
anticipatory
bail
application
is
not
maintainable.

39.

Accordingly,
without
expressing any opinion on the merits of the
case,
the
instant
anticipatory
bail
application is rejected.
----------
(2024) 4 ILRA 1061
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 31.01.2024

BEFORE

THE HON'BLE SARAL SRIVASTAVA, J.

Civil Revision No. 61 of 2022

M/s Shri Bankhandi Nath Developers Pvt.
Ltd. ...Petitioner
Versus
Dharmendra Kumar Rathore & Ors.
 ...Respondents

Counsel for the Petitioner:
Ms. Shreya Gupta, Sri Ravi Anand Agarwal

Counsel for the Respondents:
Sri Arvind Srivastava III, Sri Sushil Kumar
Shukla, Sri Navin Sinha (Sr. Advocate)

Criminal Law - Code of Civil Procedure,
1908 - Order 1 Rule 10(2), Section 115 -
Companies Act, 1956 - Sections 397 &
398 - Civil Revision Against Impleadment Order
- Necessary and Proper Party - Dominus Litis
Principle - Specific Performance of Agreement
to Sale - Fraudulent Board Resolution -
Jurisdiction of Revisional Court
The plaintiff/revisionist, M/s Shri Bankhandi
Nath Developers Pvt. Ltd., challenged the order
dated 11.05.2022 by the Civil Judge (Senior
Division), Bareilly, allowing applications (151Ka
and 227Ga) of respondent no.1, Dharmendra
Kumar Rathore, to be impleaded as a
defendant in Original Suit No. 530 of 2017 for
specific performance of an agreement to sale
dated 12.07.2011 and to declare subsequent
sale deeds dated 11.11.2011 and 29.11.2012
null and void. The plaintiff/revisionist, a
company,
alleged
that
respondent
no.2
executed the agreement for Rs.3.28 crore,
receiving Rs.1 crore as advance, but sold the
suit property to respondents no.3, 4, and 5 via
two sale deeds, falsely claiming a company
resolution dated 15.07.2011 authorized the
sales. Respondent no.1, a director, sought
impleadment, arguing: (1) no board resolution
authorized the suit's filing, (2) allegations of
his collusion in the sale deeds necessitated his
defense, and (3) his impleadment in a related
SLP (No. 1204 of 2022) by the Supreme Court
justified his inclusion. The plaintiff/revisionist
contended that respondent no.1 was neither
necessary nor proper, as no relief was sought
against him, and the plaintiff, as dominus litis,
could not be compelled to include him. Held:
The revision was allowed, quashing the trial
court's order, finding: (1) the trial court failed
to assess Order 1 Rule 10(2) requirements,
committing
material
irregularity;
(2)
respondent no.1 was not a necessary or proper
party, as his presence was not essential to
adjudicate the suit's issues, per Ramesh
Hirchand Kundanmal Vs Municipal Corporation
of Greater Bombay, (1992) 2 SCC 524, Kasturi
Vs Iyyamperum, (2005) 6 SCC 733, and Gurmit
Singh Bhatia Vs Kiran Kant Robinson, (2020) 3
SCC
773;
(3)
the
issue
of
the
suit's
maintainability could be raised by existing
defendants
without
respondent
no.1's
inclusion; (4) allegations of collusion did not
confer a legal right for impleadment, as NCLT
and NCLAT findings confirmed no resolution
authorized the sales and respondent no.1's
conduct was prejudicial; (5) the Supreme
Court's impleadment in the SLP was for
ensuring compliance with NCLAT's order, not
for the suit; (6) respondent no.1's application
appeared malicious, aimed at dismissing the
suit to harm the company. The court,
exercising revisional powers under Section 115
CPC, decided the issue without remanding, as
it involved a legal question, per Maulvi
Muhammad Vs Syed Husain, 1880 ILR 3 All.
203, and rejected the applications.

List of Cases cited:
1062 INDIAN LAW REPORTS ALLAHABAD SERIES
1. Ramesh Hirchand Kundanmal Vs Municipal
Corporation of Greater Bombay, (1992) 2 SCC
524

2. Kasturi Vs Iyyamperum, (2005) 6 SCC 733

3. Gurmit Singh Bhatia Vs Kiran Kant Robinson,
(2020) 3 SCC 773

4. Maulvi Muhammad Vs Syed Husain, 1880 ILR
3 All. 203

5. Laxmi Kishore Vs Har Prasad Shukla, 1981
Allahabad Rent Cases 545

6. Shankar Ramchandra Abhyankar Vs Krishnaji
Dattatreya Bapal, (1969) 2 SCC 74

7. Pandurang Dhondi Chougule Vs Maruti Hari
Jadhav, 1966 AIR SC 153

8. Anil Kumar Singh Vs Pappu, 2022(2) ADJ 267

9. Kesardeo Chamria Vs Radha Kissen Chamria,
AIR 1953 SC 53

10. Mohunt Bhagwan Ramanuj Das Vs Khetter
Moni Dass, (Calcutta HC)

11. Enat Mondul Vs Baloram Dey, (Calcutta HC)

(Delivered by Hon'ble Saral Srivastava, J.)

1. Heard Ms Shreya Gupta, learned
counsel for the plaintiff/revisionist and
Sri Navin Sinha, learned Senior Advocate
assisted by Sri Arvind Srivastava, learned
counsel for the respondents.

2. By means of the present civil
revision,
the
plaintiff/revisionist
has
assailed the order dated 11.05.2022
passed by the Civil Judge (Senior
Division), Bareilly by which he has
allowed the application 151Ka and
application 227Ga of Dharmendra Kumar
Rathore-respondent no.1 for impleading
him as 'defendant' in Original Suit
No.530 of 2017.
3. The facts in brief are that the
plaintiff/revisionist is a private limited
company duly registered with the Registrar
of
Companies
Uttar
Pradesh
and
Uttarakhand, Kanpur on 07.07.2011. The
plaintiff-revisionist
has
instituted
the
Original Suit No.530 of 2017 praying for a
decree
of
specific
performance
of
agreement
to
sale
dated
12.07.2011
executed by respondent no.2 (defendant
no.1 in original suit) in favour of
plaintiff/revisionist registered in the office
of Sub-Registrar-II, Bareilly on 12.07.2011,
and a direction to the respondent no.2 to
execute the sale deed of the land described
in the plaint and in the agreement to sale
dated 12.07.2011 (hereinafter referred to as
'suit
property')
in
favour
of
plaintiff/revisionist after taking the balance
sale consideration of Rs.2 crore & 28 lacs
from the plaintiff/revisionist. It is further
prayed that respondent no.3 (defendant
no.2 in the original suit) and respondent
no.5 (defendant no.4 in the original suit) be
also directed to join with defendant no.1 as
sellers in the said sale deed. The
plaintiff/revisionist further prayed for a
decree declaring the two sale deeds dated
11.11.2011 registered on 15.11.2011 and
the sale deed dated 29.11.2012 registered
on 01.12.2012 as null and void.

4.

The
case
of
the
plaintiff/revisionist is that respondent no.2
agreed to sell the plaintiff/revisionist his
Bhumidhari land detailed in paragraph 4 of
the plaint situated at village Bilwa, Tehsil
and District Bareilly. Respondent no.2 for
the said purpose executed a registered
agreement
to
sale
dated
12.07.2011
registered in the office of Sub-Registrar II,
Bareilly on 12.07.2011 (hereinafter referred
to as 'agreement') in favour of the
plaintiff/revisionist
through
its
two
Directors namely, Dharmendra Kumar
4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1063
Rathore and Smt. Neetu Sahu. The total
amount of sale consideration for the suit
property
under
the
agreement
was
Rs.3,28,00,000/- (Rs.3 crores & 28 lac) out
of which, an amount of Rs.1 crore was paid
to respondent no.2 by plaintiff/revisionist
as part of sale consideration and balance
amount of sale consideration was agreed to
be paid at the time of execution of sale
deed.

5. Under the agreement, six
months was stipulated for the execution of
the sale deed, and it was also agreed
between
the
plaintiff/revisionist
and
respondent no.2 that the plaintiff/revisionist
as prospective purchaser shall be at liberty
to get the sale deed executed in its name or
the name of other person or persons, firm
or company of its choice and may also get
the sale deed executed in one go or in parts
as may be permissible under the relevant
revenue law. It is also agreed that all the
costs and expenses of registration, stamp
duty
etc.
shall
be
borne
by
the
plaintiff/revisionist.

6. Initially, on 07.07.2011 at the
time
of
incorporation
of
the
plaintiff/revisionist's company, Dharmendra
Kumar Rathore and Smt. Neetu Sahu were
promoters and first Directors of the
company.
Thereafter,
Bharat
Kumar
Agarwal and Smt. Smita Agarwal became
shareholders of the plaintiff/revisionist's
company by purchasing 25% shares of the
company
by
each
of
them
w.e.f.
11.07.2011. Thus, Dharmendra Kumar
Rathore, Smt. Neetu Sahu, Bharat Kumar
Agarwal and Smt. Smita Agarwal became
the shareholder of the plaintiff/revisionist's
company each having 25% shares in the
company. Bharat Kumar Agarwal and Smt.
Smita Agarwal
were
also
appointed
Directors
of
the
plaintiff/revisionist's
company
on
18.07.2011.
Thus,
the
plaintiff/revisionist's company had four
Directors namely, Dharmendra Kumar
Rathore, Smt. Neetu Sahu, Bharat Kumar
Agarwal and Smt. Smita Agarwal w.e.f.
18.07.2011.

7. The further case in the plaint is
that the two Directors namely Dharmendra
Kumar Rathore and Smt. Neetu Sahu
resigned from the Directorship of the
plaintiff/revisionist's
company
w.e.f.
18.10.2011. It is further stated that before
the expiry of the period stipulated in the
agreement for execution of the sale deed,
two Directors of the plaintiff/revisionist's
company namely, Bharat Kumar Agarwal
and Smt. Smita Agarwal came to know that
respondent no.2 had sold away the suit
property by executing two sale deeds; one
sale deed dated 11.11.2011 (registered on
15.11.2011 in the office of Sub-Registrar,
Bareilly) in favour of respondent no.4
(defendant no.3 in the suit) and respondent
no.5 (defendant no.4 in the suit) is in
respect to one half of the land of the suit
property of southern portion; and second
sale deed dated 11.11.2011 (registered on
15.11.2011 in the office of Sub-Registrar,
Bareilly) in favour of respondent no.3 in
respect of one half of the northern portion
of suit property. At the time of execution of
the second sale deed, the name of
respondent no.3 was M/s Saraswati Paddy
Private Limited and its Director was Sri
Anupam Agarwal, but thereafter, its name
was changed to M/s Marigold Infra
Developers Private Limited.

8. It is further stated that in both
the aforesaid sale deeds, it is mentioned
that respondent no.2 had earlier entered
into the aforesaid agreement to sale dated
12.07.2011
in
favour
of
the
plaintiff/revisionist, and plaintiff/revisionist
1064 INDIAN LAW REPORTS ALLAHABAD SERIES
under clause 11 of the agreement through
its resolution dated 15.07.2011 nominated
and requested to the vendor i.e. respondent
no.2 to sell the said land to the purchaser
concerned. It was also mentioned in the
aforesaid two sale deeds that the amount of
advance of Rs.1 crore was paid by the
plaintiff/revisionist to respondent no.2
under the agreement be adjusted in each of
the said sale deeds equally. The expenses
incurred in the execution and registration of
sale deeds viz stamp duty, registration
charges etc. were borne and paid by the
vendor i.e. respondent no.2.

9. The plaintiff/revisionist further
alleges that when two Directors namely,
Bharat Kumar Agarwal and Smt. Smita
Agarwal came to know about aforesaid two
sale deeds dated 11.11.2011 (registered on
15.11.2011 in the office of Sub-Registrar,
Bareilly), they objected to it alleging that no
resolution dated 15.07.2011 was ever passed
by
the
plaintiff/revisionist's
company
authorising the sale of suit property to said
purchasers. Plaintiff/revisionist also alleged
that two Directors namely, Dharmendra
Kumar Rathore and Smt. Neetu Sahu had
resigned
from
the
plaintiff/revisionist's
company on 18.10.2011 and they in collusion
with purchasers and respondent no.2 and
other persons got the sale deeds executed
without there being any such resolution as
referred in the said sale deeds to cause grave
loss to the plaintiff/revisionist's company.

10. The aforesaid two Directors
namely, Bharat Kumar Agarwal and Smt.
Smita Agarwal made complaints about the
aforesaid illegal sale to various authorities
and requested that the sale deeds be
cancelled.

11. It is further stated that the
respondent nos.4 and 5 despite knowing the
fact that sale deeds have not been legally
executed, sold away and transferred the suit
property purchased by them through the
aforesaid sale deeds dated 11.11.2011 to
respondent no.6 (defendant no.5 in the
suit).

12. As there arose serious dispute
among the Directors, two Directors namely,
Bharat Kumar Agarwal and Smt. Smita
Agarwal filed Company Petition No.99
(N.D.) of 2012 (Bharat Kumar and Another
Vs. Shri Bankhandi Nath Developers
Private Limited), under Sections 397 and
398 of the Companies Act, 1956 before the
National
Company
Law
Tribunal,
Allahabad Bench praying that the aforesaid
sale deeds dated 11.11.2011 and the two
sale deeds dated 15.11.2011 be declared
null and void and suit property sold under
the aforesaid sale deeds be restored. They
further prayed that a proceeding for
fraudulent conduct of business be launched
against the respondents in the said
company petition.

13. Later on, Dharmendra Kumar
Rathore and Smt. Neetu Sahu also filed
Company Petition No.86 (N.D.) of 2013
(Dharmendra Kumar Rathore and Another
Vs. Shri Bankhandi Nath Developers
Private Limited) praying for a declaration
that transfer/allotment of shares to Bharat
Kumar Agarwal and Smt. Smita Agarwal
be declared as invalid and null and void.
Further declaration sought was that the
alleged transfer forms be declared invalid,
null and void and the resolution passed on
18.07.2011 for appointing Bharat Kumar
Agarwal and Smt. Smita Agarwal as
Director on the filing of Form-32 is
cancelled besides other reliefs.

14. The National Company Law
Tribunal
(hereinafter
referred
to
as
4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1065
'N.C.L.T.') decided both the company
petitions i.e. Company Petition No.99
(N.D.) of 2012 and Company Petition
No.86 (N.D.) of 2013 by common
judgement dated 24.01.2017 wherein it
held that Bharat Kumar Agarwal and Smt.
Smita Agarwal are the shareholders and
Directors
of
the
plaintiff/revisionist's
company having together 50% authorized
capital and shall continue as such. The
N.C.L.T. also held that Dharmendra Kumar
Rathore and Smt. Neetu Sahu have not
resigned from the Directorship and they are
continuing
as
Directors
of
the
plaintiff/revisionist's company. It also held
that
there
was
no
resolution
dated
15.07.2011 authorising execution of the
sale deeds dated 11.11.2011 in favour of
respondent nos.3, 4 and 5. The N.C.L.T
also held that no resolution for parting with
the rights of the plaintiff/revisionist under
the agreement to purchase the suit property
in suit was ever passed by the Board or by
Extraordinary General Meeting (hereinafter
referred to as 'EOGM') or by Annual
General Meeting (hereinafter referred to as
'AGM') and held that parting of the suit
property by the company at the behest of
Dharmendra Kumar Rathore and Smt.
Neetu Sahu without approval of the Board
and members ignoring legal requirements
cannot be held to be legal. However,
N.C.L.T. refused to cancel the sale deeds
and held that the plaintiff/revisionist may
get the agreement enforced through a
competent Civil Court since it has no
jurisdiction to grant the said relief.

15. Bharat Kumar Agarwal and
Smt. Smita Agarwal filed a Company
Appeal
No.72
of
2017
whereas
Dharmendra Kumar Rathore and Smt.
Neetu Sahu filed Company Appeal Nos.108
& 109 of 2017 before the National
Company Law Appellate Tribunal, Delhi
against the judgement and order dated
24.01.2017 passed by the N.C.L.T. The
National Company Law Appellate Tribunal
decided all three appeals by a common
judgement dated 23.08.2017 affirming the
judgement dated 24.01.2017 passed by the
N.C.L.T and further directed Dharmendra
Kumar
Rathore
to
compensate
the
plaintiff/revisionist in the manner provided
in the order.

16. It is also stated by the
plaintiff/revisionist in the plaint that the
plaintiff/revisionist has always been ready
and willing to perform its part of the
agreement and pay the balance sale
consideration to respondent no.2 and to get
the sale deed executed from him in terms of
the agreement. In the aforesaid factual
backdrop,
the
plaintiff/revisionist
has
prayed for the relief, referred to above.

17. In the aforesaid suit, an
application 151Ka under Order 1 Rule 10
of C.P.C. has been filed by Dharmendra
Kumar Rathore, who is one of the Directors
of the plaintiff/revisionist's company for
being impleaded as 'defendant' in the suit.
The said application has been filed by
Dharmendra Kumar Rathore mainly on the
ground that N.C.L.T. in its order dated
24.01.2017 held that there are four
Directors in the company, but because of
the dispute between them, they are divided,
and no decision of the company can be
taken without the majority of the Directors.
Consequently, the N.C.L.T. appointed Sri
Anil
Kumar,
a
practising
Company
Secretary so that the decision could be
taken by the company by majority. It is
further stated that no meeting of the five
Directors had taken place to decide about
the filing of suit on behalf of the company.
Therefore, one Director Sri Bharat Kumar
Agarwal alone is not competent to institute
1066 INDIAN LAW REPORTS ALLAHABAD SERIES
the suit as no decision to institute the suit
has been taken by the other four Directors.
It is further stated that since respondent
no.1 Dharmendra Kumar Rathore is the
Director of the company and has a direct
interest in the suit property, therefore, any
decision in the suit will affect the interest of
respondent no.1, hence, he is a necessary
and proper party in the suit.

18. It is further stated that Bharat
Kumar Agarwal has stated wrong facts in
the plaint which are adverse to the interest of
respondent no.1, and therefore, respondent
no.1 is a necessary and proper party in the
suit.

19. The application 151Ka of
respondent no.1 was objected to by the
plaintiff/revisionist
by
filing
objection
163Ga contending inter alia that respondent
no.1 is neither necessary nor proper party in
the suit and application 151Ka has been
filed on misconceived grounds. It is further
stated that so far as the legality of the
resolution passed by the company is
concerned, a third party has no right to
challenge the legality and correctness of the
resolution, and this Court has no jurisdiction
to decide the legality and correctness of the
said resolution. It is further stated that the
averments made in application 151Ka are
vague since respondent no.1 has not stated
in his application what facts have been
concealed by the plaintiff/revisionist. It is
also stated that the suit has been instituted in
the interest of the company and for the
benefit of the company, and in case relief
prayed for in the suit is granted, respondent
no.1 shall not suffer any prejudice rather he
would be benefited by the decree in favour
of the plaintiff/revisionist.

20. It transpires from the record
that the plaintiff/revisionist also filed an
application under Order 39 Rules 1 & 2 of
C.P.C. praying for an interim injunction.
The said application was rejected by the
trial court by order dated 21.10.2021.
Against
the
said
order,
the
plaintiff/revisionist
preferred
F.A.F.O.
No.1771 of 2021 which was dismissed by
the Division Bench of this Court by
judgement dated 26.11.2021. Against the
judgement of this Court dated 26.11.2021
passed in F.A.F.O. No.1771 of 2021, the
plaintiff/revisionist preferred Special Leave
to Appeal (C) No.1204 of 2022 in which,
Apex Court has passed the following order
on 07.02.2022:-

"Upon hearing the counsel the
Court made the following
ORDER
Applications for exemption from
filing O.T., permission to file additional
documents/facts/annexures are allowed.
Learned counsel for the petitioner
points out that the original vendor
(respondent No.1) executed a registered
agreement to sell on 12.07.2011 in respect
of 55,000 sq. mtrs. of land with 50% stamp
duty paid in favour of the petitioner
company.
There
are
two
subsequent
agreements dated 11.11.2011 registered on
15.11.2011
executed
in
favour
of
respondent No.2 and respondent Nos.3 & 4.
It is the say of learned counsel for the
petitioner that in view of there being an
issue on the Board resolution authorizing
the subsequent sales, the matter went to
NCLT and thereafter NCLAT and this Court
which upheld the findings that the Board
Resolution authorizing the same was
fraudulent in character. It is thereafter in
the year 2017, the suits for specific
performance were filed in which interim
orders have been declined by the trial
Court after 4 years and the appeal against
the same dismissed by the impugned order.
4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1067
He further submits that pending suit, sale
transactions have taken place to third
parties,
including
respondent
No.5,
represented before us, by respondent Nos.3
& 4. These parties, it is submitted were
before the NCLT but only respondent No.5
is arrayed as a defendant in the suit as a
subsequent purchaser other than the first
four respondents.
The case of the petitioner is thus
predicated on the findings of a fraudulent
Board Resolution and also its submissions
that the original vendor/respondent No.1
was asked to execute sale deed in favour of
respondent No. 2 and respondent Nos. 3 &
4 and the proceeds therefrom is not known
where they went. In this behalf he submits
that as per the registered agreement for
sale dated 12.07.2011, one crore had been
paid out of a total consideration of Rs. 3
crores 28 lakh. The petitioner is thus stated
to have been left high and dry and that the
property is dealt with in the meantime, it
may be difficult to realize the money from
those properties, the dispute being one inter
se the company.
On the other hand learned counsel
for respondent No. 5 submits that he is a
subsequent second purchaser and thus, his
interest cannot be compromised.
The impugned orders being interim
in character, we would normally loathe to
interfere with the same. However, the High
Court order also does not deal with this
crucial aspects to give prima facie finding
way one necessitating our scrutiny. or the
other
Issue notice on the special leave
petition as well on interim relief returnable
on
07.03.2022.
Learned
counsel
for
respondent
No.5
accepts
notice.
Respondents Nos. 1 and 4 be served dasti
as well.
We may note the disputed Board
Resolution is dated 15.07.2011 which has
been found to be fraudulent by the different
forums stated to be authorizing Mr.
Dharmendra Rathore, one of the Directors
who is stated to be still a Director of the
petitioner company. In order to enable this
Court to take a view and to find out where
the monies realized have gone, we consider
appropriate to implead Mr. Dharmendra
Rathore as respondent No. 6 in the present
proceedings.
Amended Memo of parties be filed
within a week.
Notice in terms aforesaid will also
issue to the newly impleaded as respondent
No. 6.
A copy of the order to accompany
the notice."

21. The aforesaid S.L.P. was
disposed off by the Apex Court by
judgement dated 07.03.2022. Respondent
no.1 on the strength of the judgement dated
07.02.2022 passed by the Apex Court in
Special Leave to Appeal (C) No.1204 of
2022 filed an application 227Ga for
impleading him as 'defendant' in the suit.

22. The aforesaid application was
contested by the plaintiff/revisionist by
filing objection 231Ga stating therein that
the impleadment of respondent no.1 by the
Apex Court in Special Leave to Appeal (C)
No.1204 of 2022 was for a limited purpose
and Apex Court has never directed or
allowed the impleadment of respondent
no.1 in the above suit.

23. The trial court by order dated
11.05.2022 allowed the application 151Ka
and 227Ga of respondent no.1 by placing
reliance upon the order passed by the Apex
Court on 07.02.2022 in Special Leave to
Appeal (C) No.1204 of 2022. The order
dated 11.05.2022 is assailed in the present
revision.
1068 INDIAN LAW REPORTS ALLAHABAD SERIES
24. Challenging the aforesaid
order,
learned
counsel
for
the
plaintiff/revisionist has contended that the
order of the trial court allowing application
151Ka and application 227Ga is erroneous
and has been passed without application of
mind inasmuch as the trial court while
allowing the aforesaid applications has
failed to consider the necessary ingredients
of Order 1 Rule 10 of C.P.C. in allowing
the impleadment application of respondent
in the suit. It is contended that the
plaintiff/revisionist is a dominus litis and he
cannot be compelled to proceed against a
person against whom he does not claim any
relief. It is further contended that the
plaintiff/revisionist being dominus litis is
not bound to sue every possible adverse
claim in the suit. It is further contended that
respondent no.1 is neither a necessary nor a
proper party in the suit, therefore, the trial
court has committed material irregularity in
not considering the fact whether respondent
no.1 has made out a case for impleadment
under Order 1 Rule 10 of C.P.C. or not.

25. It is further contended that the
trial court has failed to appreciate correctly
the order passed by the Apex Court in
S.L.P. No.1204 of 2022 for impleading
respondent no.1 as 'defendant' in the suit. It
is submitted that the impleadment of
respondent no.1 in the suit was for a limited
purpose to get the direction of the National
Company Law Appellate Tribunal directing
respondent
no.1
to
compensate
the
company by depositing Rs.1 crore along
with 12% interest complied with. Thus, it is
contended that the revisional court has
committed manifest irregularity in allowing
the application of respondent no.1.

26. Per contra, Sri Navin Sinha,
learned Senior Counsel for the respondents
submits that respondent no.1 is a necessary
and proper party in the suit. It is contended
that it is not disputed that respondent no.1
is
one
of
the
Directors
of
the
plaintiff/revisionist's company as has been
held by the N.C.L.T. and affirmed by the
National Company Law Appellate Tribunal,
therefore, he has direct interest in the suit
property. In such view of the fact, even if
no
relief
has
been
claimed
against
respondent no.1, he is a proper party in the
suit.

27. It is submitted that reading of
the plaint does not disclose that there is
any pleading to the effect that the
plaintiff/revisionist's company passed any
resolution
authorising
Bharat
Kumar
Agarwal to institute suit for enforcement
of the agreement to sale. He further
contends that after the order was passed by
the National Company Law Appellate
Tribunal, no meeting of five Directors of
the plaintiff/revisionist's company had
taken place resolving to institute a suit for
enforcement of the agreement to sale, and
this fact has been specifically stated by the
respondent no.1 in paragraph 5 of his
application which has not been denied by
the plaintiff/revisionist's company in its
objection 163Ga to the application 151Ka
of respondent no.1. Accordingly, his
further submission is that there is no
provision to challenge the resolution of the
Company under the Companies Act. He
further submits that since the relevant
issue which arises in the instant case to be
considered by the trial court is whether the
company has taken any decision to take
legal recourse for enforcement of the
agreement to sell, and the said issue
strikes at the maintainability of the suit
and cannot be decided effectively in the
absence of respondent no.1 and the
decision on said issue does not change the
nature of suit, therefore, the respondent
4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1069
no.1 is necessary and proper party in the
suit.

28. It is further stated that there are
serious
allegations
made
by
the
plaintiff/revisionist in the plaint against
respondent no.1 that respondent no.1 has
colluded with other persons in executing
the sale deed, and in such view of the fact,
the respondent no.1 has a right to defend
himself and thus, respondent no.1 is a
necessary and proper party in the suit and
application of respondent no.1 falls within
the parameters of Order 1 Rule 10 of
C.P.C., therefore, the trial court has not
committed any illegality in allowing the
application of respondent no.1. Lastly, he
contends that by impleading respondent
no.1, plaintiff/revisionist would not suffer
any prejudice.

29. I have considered the rival
submissions of the parties and perused the
record.

30. Plaintiff-revisionist instituted
Original Suit No.530 of 2017 praying for a
decree
of
specific
performance
of
agreement
to
sale
dated
12.07.2011
executed by respondent no.2 in favour of
plaintiff-revisionist. It emanates from the
record that initially there were two
shareholders of the plaintiff's company,
namely, Dharmendra Kumar Rathore and
Smt. Neetu Sahu and they were the
Directors
of
the
plaintiff's
company.
Subsequently, Bharat Kumar Agarwal and
Smt. Smita Agarwal purchased 50% share
from Dharmendra Kumar Rathore and Smt.
Neetu Sahu, and thus, there were four
shareholders
each
having
25%
shareholding in the company.

31. The plaintiff/revisionist entered
into an agreement to sale executed by
respondent no.2 in favour of the plaintiff's
company through its Director Dharmendra
Kumar Rathore for sale consideration of
Rs.3,28,00,000/- (Rs. Three Crores &
Twenty Eight Lacs), out of which Rs.1
crore was paid as advance. It was stipulated
in the agreement to sale that the sale deed
was to be executed within six months either
in favour of the plaintiff-revisionist or in
the name of another person or persons, firm
or company of its choice and may also get
the sale deed executed in one go or in
portion as permissible under the relevant
Revenue Law. Later on, Bharat Kumar
Agarwal and Smt. Smita Agarwal also
became the Directors of the plaintiff's
company on 18.07.2011, and thereafter,
there were four Directors of the plaintiff's
company namely, Dharmendra Kumar
Rathore, Smt. Neetu Sahu, Bharat Kumar
Agarwal and Smt. Smita Agarwal.

32. It transpires from the record
that respondent no.2 sold away the suit
property by executing two sale deeds; one
dated 11.11.2011 in favour of respondent
no.4 & 5 selling southern one half of the
suit property; and the second sale deed on
the same date i.e., 11.11.2011 in favour of
respondent no.3 in respect of one half of
the northern portion of the suit property. It
further transpires from the record that a
dispute arose among the Directors of the
company which led Bharat Kumar Agarwal
and Smt. Smita Agarwal to file a Company
Petition No. 99 (N.D.) of 2012, under
Sections 397 & 398 of the Companies Act,
1956 before the N.C.L.T. praying for a
relief of declaration declaring the sale deed
dated 11.11.2011 and two sale deeds dated
15.11.2011 as null and void and suit
property sold under the aforesaid sale deeds
be restored to the plaintiff's company. The
other Company Petition No.86 (N.D.) of
2013 was filed by Dharmendra Kumar
1070 INDIAN LAW REPORTS ALLAHABAD SERIES
Rathore and Smt. Neetu Sahu praying that
allotment of share to Bharat Kumar
Agarwal and Smt. Smita Agarwal be
declared invalid and null and void. The
N.C.L.T.
decided
both
the
company
petitions, i.e. Company Petition No. 99
(N.D.) of 2012 and Company Petition
No.86 (N.D.) of 2013 by a common
judgement dated 24.01.2017. Paragraphs
5.2 to 5.5, 6.1 & 7 of the judgement of
N.C.L.T. dated 24.01.2017 which have
been relied upon by learned counsel for
both the parties in respect of their
submissions are reproduced herein below:-

"5.2. Thus, there cannot be any
doubt that the Company has agreed to
purchase the property and the Company is
at liberty to obtain sale deed either in its
own name or in the name of any other else
within a period of six months, subject to
other conditions of contract. But very
strangely, on 15.11.2011 the company has
taken the decision to part with that land.
The reason for that as stated by the
Respondents in their petition in CP 86/2013
is that they being directors of the Company
got an offer for sale of the land at a point,
therefore in order to benefit the Respondent
No.1 Company, the land was sold to (1)
Saraswati Paddy Products Pvt. Ltd. and
(now Mari Gold Infra) (2) Shri Styendra
Rathore and Shri Prem Shankar Rathore by
way of registered sale deed on 15.11.2011
and thus 'earned profit within a short span
of time'.
5.3 One of the important clauses of
the sale deeds is that the Vendor has borne
the Registration and Stamp duty charges.
Under the deeds the sale consideration is
Rs.3,28,00,000. It is the same value for
which the land was purchased from
Respondent No.4 under the agreement of
sale by the Company. Therefore, there is no
profit earned by the company as pleaded by
the Respondents. Further very weirdly, the
vendor had to bear the Stamp duty and
Registration charges which comes to Rs.23
lakhs as shown in both the sale deeds
together. Why the 4th Respondent had to
bear loss in meeting this stipulation is ununderstandable and this also goes contrary
to the ordinary course of transactions. It is
unknown
whether
the
advance
consideration paid by the Company under
the agreement of sale was returned to it by
the vendees under the sale deeds. The
Respondents did not produce any evidence
to that effect. Therefore, deliberately this
transaction, instead of fetching profit to the
company resulted in incurring huge loss. If
such
is
not
called
an
act
of
mismanagement, certainly it is imprudent
act prejudicially affecting the interest of the
company.
5.4. Interestingly, the Board did not
record any minutes of its meeting and
produce that the decision to get the sale
deed executed in favour of 3rd parties in
pursuance of the Agreement of sale, by the
Respondent No.4 approved by the EOGM
which is necessary to part with the property
of the Company. Even if any such meeting
was held, that minutes are not valid
because, the Petitioners who are Directors
are not parties to that resolution.
The Respondents did not even plead
that there is any such resolution passed by
the Board and the EOGM or AGM. The
property of the company acquired under the
agreement of sale cannot be parted with in
favour of a 3rd party without the approval of
the Board and Members. To that extent, the
parting of property by the company at the
behest of the Respondent No.2 and 3
claiming to be sole directors of the company
ignoring the legal requirements and also the
fact that there are other Directors, the
Petitioner in CP-99/2012 as per our findings
above, is not legal.
4 All. M/s Shri Bankhandi Nath Developers Pvt. Ltd. Vs. Dharmendra Kumar Rathore & Ors. 1071
5.5. The next important question
that remains with us is whether the sale
deeds dated 15.11.2011 can be declared as
'null and void' as sought for in CP 99/2012.
The jurisdiction of this tribunal is summary
in nature and the powers thereof while
dealing with causes of oppression and
mismanagement are spelt out in Sec. 402 of
1956 Act and Sec. 242 of Companies Act,
2013. Two important clauses of Sec. 242
are relied upon by the learned counsel for
the Petitioners in CP 99/2012 to contend
that the Tribunal is competent to set aside
any transfer of property under Sec. 242.
Those two clauses are:
(e). the termination, setting aside
or
modification,
of
any
agreement,
howsoever
arrived
at,
between
the
company and the managing director, any
other director or manager, upon such terms
and conditions as may, in the opinion of the
Tribunal, be just and equitable in the
circumstances of the case;
(f). the termination, setting aside or
modification of any agreement between the
company and any person other than those
referred to in clause (e):
Provided that no such agreement
shall be terminated, set aside or modified
except after due notice and after obtaining
the consent of the party concerned;
(g). the setting aside of any
transfer, delivery of goods, payment,
execution or other act relating to property
made or done by or against the company
within three months before the date of the
application under this section, which
would, if made or done by or against an
individual, be deemed in his insolvency to
be a fraudulent preference;
Clause (e) is with respect to
termination of any agreement between
directors of the company; and clause (f) is
between company and 3rd parties. To fall
back on the spirit of clause (f), the 3rd
party shall give consent. Here the 3rd
party,
other
than
the
directors
is
Respondent No.11, 5 to 6 who are vendees
under two registered sale deeds executed by
Respondent No.4. They are resisting the CP
99/2012 substantially and so, there is no
consent as such they are giving to terminate
any agreement i.e., the sale deeds, if they
are taken as 'agreements' for the purpose of
cl.(f) of sec. 242 above.
Clauses (g) cannot be attracted
because the tribunal can set aside any
transfer etc made or done within three
months before the date of the application.
Obviously this is also not applicable.
Further, it is pertinent to note that there is
no transfer of property as such effected by
the Company but it is by the 4th
Respondent. Had the sale deeds in question
dated 15.11.2011 been executed by or on
behalf of the Company, this provision could
have been very well attracted.
5.6...
6.1. As observed in point No.3,
parting with the property of the company
in favour of 3rd parties is virtually parting
with equitable rights of the company to
seek sale deed from the vendor in
pursuance of the agreement of sale. When
once the act of the Respondents in
allowing the sale deed executed by the
vendor in favour of 3rd party, is held
oppressive and not binding on the
company, that decision does not disturb
the rights accrued to the Respondents 4 to
6 and 11, the vendees under sale deeds
because there is transfer of property to
them by operation of Sec. 54 of the
Transfer of Property Act. Therefore, the
Company has to take legal action for
getting those sale deeds cancelled and
obtain a sale deed in its favour and for
that the Board of the Company has to take
decision with the ratification by the
members. Whether or not the Board will
1072 INDIAN LAW REPORTS ALLAHABAD SERIES
take a decision is left to the wisdom of the
Directors and Members of the company.
7. Result: In view of the above
discussion and observations, the following
Order is passed:
1. It is declared that both the
groups, namely the Petitioners in CP 99/2012
and Petitioners in CP86/2013 are guilty of
committing
acts
of
oppression
and
mismanagement;
2. It is declared that both petitioners
in CP 99/2012 and Petitioners in CP86/2013
are Directors of the Board of the Company;
3 (a) Shri Anil Kumar, Practicing
Company Secretary is appointed as 5th
Director of the Company to enable the Board
to take majority decision on the following
issues:
(i) whether any legal action shall be
taken by the Company for getting the sale
deeds dated 15.11.2011 executed by Mr. Alok
Goel in favour of 3rd parties cancelled and to
specifically enforce the agreement of sale
dated 12.07.2011 in favour of the Company
executed by Mr. Alok Kumar Goel according
to law;
(ii) Whether the Registered office of
the Company be shifted or not;
iii) Any other issue relating to the
affairs of the Company in order to put the
company on track to continue its business as
per the objectives of its incorporation;
3 (b) Shri Anil Kumar is further
empowered to supervise that the Board
meeting and the meeting of members is
convened
smoothly
by
following
the
procedure according to the Companies Act,
2013 and relevant rules and report to the
Tribunal.