A limited liability partnership (LLP) is entitled to be substituted as a party in a lawsuit in place of a company that has been converted into an LLP.

JUDGMENT

Dinesh Mehta, J.

1. Mr. Vikas Balia appears for the respondents No. 1 to 3 and accepts notices on their behalf; service upon proforma respondents is dispensed with, considering the issue involved in the present writ petition. The service is, therefore, complete.

2. The present writ petition is directed against the order dated 08.07.2019, passed by the learned Additional District Judge No. 2, Udaipur (hereinafter referred to as the 'trial Court'), by which the petitioner's application dated 06.07.2019 filed Section 58(1) of the Limited Liability Partnership Act, 2008 (hereinafter referred to as the 'Act of 2008') read with Section 151 of the Civil Procedure Code has been rejected.

3. The facts appertain to the present writ petition are that the plaintiffs (respondents No. 1 to 3 herein) instituted a suit for specific performance of an agreement against the present petitioner-vendor Premier Poly Processors Pvt. Ltd. During pendency of the suit, the defendant-Company (Premier Poly Processors Pvt. Ltd.) was converted to 'Premier Poly Processors (LLP)' - a limited liability partnership firm in accordance with the provisions of the Act of 2008 (w.e.f. 24.09.2018).

4. In the advent of its conversion from a Company to a Limited Liability Partnership (LLP) Firm, the petitioner moved an application dated 08.01.2019 under Order I Rule 10 of the Code inter alia indicating that its legal status has changed from a Private Limited Company to that of a Limited Liability Partnership Firm. The petitioner's aforesaid application came to be rejected by the trial Court, vide its order dated 02.07.2019. Against the order rejecting its application under Order I Rule 10 of the Code, the petitioner preferred a writ petition, (SB CWP No. 10420/2019), wherein an interim order has been passed and the proceedings of the Civil Suit No. 197/2011 have been stayed by this Court.

5. Thereafter, the petitioner stood advised to file another application seeking its substitution, instead of impleadment, for which, the subject application dated 06.07.2019 under Section 58 of the Act of 2008 read with Section 151 of the Code came to be filed. It was stated in the application that in view of the provisions of the Act of 2008, all the assets and liabilities including the suit properties have vested in the applicant and thus, it be substituted in place of the defendant No. 5.

6. The plaintiffs opposed the said application inter alia contending that substitution cannot be permitted outrightly, as during the pendency of the suit, the defendant No. 5 has disposed of or alienated some of the properties involved in the suit, hence erstwhile share holders/Directors are required to be continued as a party in the suit, else plaintiffs' interest would be jeopardised.

7. Learned trial Court rejected petitioner's application dated 06.07.2019, by an order dated 08.07.2019 and refused its substitution in place of erstwhile company.

8. Mr. Manoj Bhandari, learned counsel for the petitioner impugning the order dated 08.07.2019, contended that the petitioner- Premier Poly Processor Pvt. Ltd., as a matter of fact, has ceased to exist and in place thereof, a new entity, namely, Premier Poly Processors (LLP), a Limited Liability Partnership Firm has come into existence, as such the trial Court has erred in rejecting petitioner's application. He contended that it is by operation of law, particularly the provisions of the Act of 2008, that all assets and liabilities belonging to erstwhile company have vested in the present Limited Liability Partnership Firm. He further argued that an entity, which has ceased to exist, can neither be allowed to appear as a defendant nor can the present petitioner -a Limited Liability Partnership Firm having taken all liabilities and assets of the earlier company, be refused right of participation in the present suit proceedings.

9. Mr. Vikas Balia, learned counsel for the respondents No. 1 to 3 fairly conceded that defendant No. 5 deserved to be substituted