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MADRAS HIGH COURT
M/s.EDMI Limited – Appellant
Versus
RS Yarns and power Pvt.Ltd and another – Respondent
A/4536/2021
ORDER I RULE 10(2) CPC - NECESSARY AND PROPER PARTY - SUMMARY
Fact of the Case:
The plaintiff filed a suit against the 1st defendant for recovery of money, alleging that the 1st defendant failed to supply meters after receiving payments. The plaintiff added the 2nd defendant, a holding company of the 1st defendant, as a party to the suit, contending that the 2nd defendant directed the 1st defendant not to supply the meters.
Finding of the Court:
The court held that the 2nd defendant was not a necessary party to the suit, as an effective decree could be passed against the 1st defendant in its absence. However, the court found that the 2nd defendant was a proper party, as its presence would enable the court to completely and effectively adjudicate upon the matters in dispute.
Issues: Whether the 2nd defendant was a necessary or proper party to the suit.
Ratio Decidendi: 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. A proper 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.
Final Decision: The court dismissed the application filed by the 2nd defendant to strike out its name from the suit.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
(ORDINARY ORIGINAL CIVIL JURISDICTION)
WEDNESDAY, THE 12TH DAY OF JANUARY 2022
THE HON'BLE MR. JUSTICE N.ANAND VENKATESH
A.No. 4536 of 2021
in
C.S.No.302 of 2020
C.S.No.302 of 2020:-
RS Yarns & Power Pvt. Ltd.
Represented by its Director Mr.S.Babu
40(1) S.V.Colony East, 9
th Street,
PN Road, Tirupur – 641 602.
...Plaintiff
-Vs-
1.M/s EDMI India P.Ltd.
Represented by its Director Mr.Sukant Behera,
M-3, 9
th Street, Dr.VSI Estate,
Thiruvanmiyur, Chennai – 600 041.
2.M/s EDMI Limited,
Represented by its Director Mr.How New Sang,
47, Yishun Industrial Park A,
Singapore – 768 724.
... Defendants
A.No. 4536 of 2021:-
M/s EDMI Limited,
https://hcservices.ecourts.gov.in/hcservices/
Represented by its Director Mr.How New Sang,
47, Yishun Industrial Park A,
Singapore – 768 724.
...Applicant / 2
nd Defendant
Vs.
1.RS Yarns & Power Pvt. Ltd.
Represented by its Director Mr.S.Babu
40(1) S.V.Colony East, 9
th Street,
PN Road, Tirupur – 641 602.
... 1
st Respondent / Plaintiff
2.M/s EDMI India P.Ltd.
Represented by its Director Mr.Sukant Behera,
M-3, 9
th Street, Dr.VSI Estate,
Thiruvanmiyur, Chennai – 600 041. ... 2
nd Respondent / 1
st Defendant
Application praying that this Hon'ble Court be pleased to strike out the name of
the applicant/2
nd defendant in the above C.S.(Commercial) No.302 of 2020.
This Application coming on this day before this court for hearing, the court
made the following order:-
This application has been filed by the 2
nd defendant to strike out the name of
the 2
nd defendant in the suit.
2.The 1
st respondent / plaintiff has filed the present suit seeking for the relief
of recovery of money. The case of the 1
st respondent is that in the course of
https://hcservices.ecourts.gov.in/hcservices/
transanction, the 1
st respondent/ plaintiff entered into a Memorandum of
Understanding dated 20.03.2019 with the 2
nd respondent / 1
st defendant for supply of
meters and the grievance of the 1
st respondent is that the 2
nd respondent / 1
st defendant
did not supply the meters after having received the payments from the 1
st defendant /
plaintiff.
3.The applicant / 2
nd defendant has filed the present application mainly on the
ground that there is absolutely no privity of contract between the applicant and the 1
st
respondent and they are in no way involved in the transaction and even though, the
2
nd respondent / 1
st defendant is a subsidiary company of the applicant, that does not
in any way make the applicant liable under the transaction, since the 2
nd respondent /
1
st defendant is an independent entity.
4.A counter affidavit has been filed by the 1
st respondent /plaintiff and it has
been explained in the counter affidavit as to how the applicant is a proper party in the
present suit. The 1
st respondent / plaintiff has sought for the dismissal of this
application.
5.Heard the learned counsel for Mr.M.Santhanaraman and M.Surya senthil for
M/s.Surana and Surana,learned counsel for 1
st respondent and Mr.T.V.Suresh Kumar,
learned counsel for 2
nd respondent.
https://hcservices.ecourts.gov.in/hcservices/
6.A careful reading of the plaint shows that the entire transaction is as between
the 1
st respondent /plaintiff and the 2
nd respondent / 1
st defendant. Admittedly, the 2
nd
respondent is the subsidiary company of the applicant and it is stated that the
applicant holds more than 99% of the shares in the 2
nd respondent /1
st defendant
company. It is now too well settled that a holding company and a subsdiary company
are independent entities in the eye of law and a company cannot be added as a party
just because it is the holding company without anything more.
7.The 1
st respondent / plaintiff has come up with a specific stand that the 2
nd
respondent / 1
st defendant went against the terms of MOU and refused to supply
materials. One important reason that was given by the 2
nd respondent / 1
st defendant is
that the 1
st r
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