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2014 Supreme(Bom) 635

High Court of Judicature at Bombay
R.D. DHANUKA, J.
Darius Rutton Kavasmaneck & Others
Versus
Gharda Chemicals Limited & Others
Chamber Summons No. 669 of 2012 in Suit No. 2932 of 2011
Decided on: 12-03-2014

Advocates Appeared:
For the Plaintiffs:Sharan Jagtiani, a/w. Ankita Singhania, i/b. D.H. Law Associates, Dr. V.V. Tulzapurkar, Senior Advocate, a/w. Rahul Chitnis, Shriraj Dhru, Ms. Khyati Ghevaria, i/b. Dhru & Co., Advocates.
For the Defendants:D1, D3 to D5, Nishad Nadkarni, D2, Mustafa Safiyuddin, a/w. Sumit Rane, i/b. Legasis Partners, Advocates.

Headnote:

Chamber Summons - Impleadment of Party Defendants - BBN(UK) Ltd. and others vs. Janardan Mohandas Rajan Pillai - 1993 (3) Bom.C.R. 228, Palmer's on Company Law 24th Edition, Volume 1, Ram Mehar vs. Surat Singh and others AIR 1989 Punjab and Haryana 307 - Derivative action, representative suit, necessary parties, proper parties, Order 1 Rule 8, Order 1 Rule 10

Fact of the Case:

The plaintiff filed a suit for a declaration that certain patents belong to the 1st defendant and sought an order directing the 2nd defendant to assign and transfer the patents to the 1st defendant. The plaintiff alleged that the 2nd defendant wrongfully secured several patents in his individual name, breaching his fiduciary duties to the company. The plaintiff filed the suit as a derivative action, claiming to protect the interest of the defendant no.1 company and its minority shareholders, including the applicants.

Finding of the Court:

The court found that the interest of the plaintiff and the applicants was not the same, and the suit was not filed on behalf of all the minority shareholders. The court dismissed the Chamber Summons for impleadment, stating that the applicants were neither necessary nor proper parties to the suit, and the court had no jurisdiction to implead the applicants against the wish of the plaintiff.

Issues: The main issue was whether the applicants were necessary or proper parties to the suit, and whether the provisions of Order 1 Rule 8 or Order 1 Rule 10 of the Code of Civil Procedure applied to the derivative action filed by the plaintiff.

Ratio Decidendi: The court held that a representative suit under Order 1 Rule 8 of the Code of Civil Procedure could only be maintained if the same was a derivative action and if the interest of all parties on whose behalf the suit was filed was common. The court also emphasized that the presence of the applicants was not required for the effective adjudication of the issues involved in the suit.

Final Decision: The Chamber Summons for impleadment was dismissed as thoroughly misconceived, and no order as to costs was made.

JUDGMENT

1. By this Chamber Summons, the applicants seek impleadment as party defendants in the above suit. Some of the deciding this chamber summons are as under :-

2. The applicants hold approximately 6.3 % of the shares of the defendant no.1. The original plaintiff no.1 and D.R. Kawasmaneck who is now plaintiff jointly held 17% of shares of defendant no.1 company. It is case of the plaintiff that the defendant no.2 and two other parties controlled by defendant no.2 and Mrs. K.S. Gharda holds 60% shares of defendant no.1 company.

3. The plaintiff has filed this suit for a declaration that the patents enumerated in Ex.J to the plaint and that to be disclosed belongs to the 1st defendant and that the 2nd defendant has no right or interest in respect thereof or any of them and seeks order and decree directing the 2nd defendant to assign and transfer the patent enumerated in Ex.J and to be disclosed to the 1st defendant without any consideration or compensation. It is case of the plaintiff in the plaint that a patent for manufacturing Phosphaorous Trichloride Phosphaorous Pentachloride and cement came to be registered in the name of the 2nd defendant and instead of securing the patent rights in the name of the 1st defendant, the 2nd defendant wrongfully secured several patents and have applied for several patents in his individual name. It is case of the plaintiff that the 2nd defendant owes and controls the majority of the equity shares in the 1st defendant and any resolution moved by the plaintiff that the 1st defendant should initiate action against 2nd defendant will be obviously defeated and therefore the plaintiff has filed the suit as a derivative action. There are several litigations filed and pending between the plaintiff and defendant nos. 1 and 2 in various courts.

4. Mr. Jagtiani, learned counsel appearing for the applicants invited my attention to paragraphs (3), (6) (xiv), paragraph (9) and would submit that admittedly the suit filed by the plaintiff is a derivative action. Learned counsel invited my attention to a letter addressed by the plaintiff to defendant no.2 on 7th November, 2011 alleging that the action on the part of defendant no.2 registering the valuable intellectual property of the defendant no.1 company in his individual name was neither legal nor fair to the company or to its minority shareholders and would be in breach of his fiduciary duties. Learned counsel invited my attention to letter dated 8th May, 2011 from the plaintiff to the defendant no.1 company requesting to furnish certified copies of the minutes of the board meetings and to assure the minority shareholders that no decision had been or shall be taken nor there was and nor will the company entertain the proposal to sale the assets and/or any such assets of the company described in the said letter. The plaintiff requested the company to respond to the said letter and not to give the minority shareholders a chance to complain. Placing reliance on these averments and the correspondence referred to aforesaid, it is submitted by the learned counsel that the suit filed by the plaintiff is not arising out of any personal cause or interest but is a derivative action with a view to protect the interest of the defendant no.1 company and is for the benefit of all the minority shareholders including the applicants. It is submitted that applicants being minority shareholders of defendant no.1 company and forming part of the group of minority shareholders, their views also have to be considered by this court after impleading the applicants as party defendants.

5. Learned counsel for the applicants submits that the present suit has been filed as a representative suit under Order 1 Rule 8 of Code of Civil Procedure or principles of Order 1 Rule 8 would apply to the suit considering the action being derivative action and thus court will have to hear not only the plaintiff but all parties for whose benefit action is brought by the plaintiff. It is submitt























































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