Karnataka High Court
M/S. B. E. Contracts Private Limited vs M/S. Varun Enterprises on 6 February, 2026
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
-1-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF FEBRUARY, 2026
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO. 10331 OF 2024 (GM-CPC)
BETWEEN:
1. M/S. B. E. CONTRACTS PRIVATE LIMITED
11-C VANDHANA
11 TOLSTOY MARG
NEW DELHI- 110001
REPRESENTED BY ITS
RAJ MANGAL PANDEY,
DEPUTY GENERAL MANAGER
Digitally signed
by S/O CHOTELAL PANDEY,
SHARADAVANI
B AGED ABOUT 51 YEARS,
Location: High
Court of EMAIL [email protected]
Karnataka
2. MR SANJAY GUJRAL
S/O B K GUJRAL
AGED ABOUT 70 YEARS,
DIRECTOR,
M/S B.E. CONTRACTS PRIVATE LIMITED,
11-C, VANDHANA,
11 TOLSTOY MARG,
NEW DELHI- 110001
3. MR SIDDHARTH GUJRAL
S/O SANJAY GUJRAL
AGED ABOUT 46 YEARS,
DIRECTOR,
M/S B.E. CONTRACTS PRIVATE LIMITED,
11-C, VANDHANA,
-2-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
11 TOLSTOY MARG,
NEW DELHI- 110001
4. MR KARAN GUJRAN
S/O SANJAY GUJRAL
AGED ABOUT 40 YEARS,
DIRECTOR
M/S B.E. CONTRACTS PRIVATE LIMITED,
11-C, VANDHANA
11 TOLSTOY MARG
NEW DELHI- 110001
SINCE DEAD ON 21.01.2025
PETITIONER NO.2 IS THE
LEGAL REPRESENTATIVE
ALREADY ON RECORD
PETITIONER NO.4 REPRESENTED BY
PETITIONER NO.2 AS LR
5. VANITA GUJRAL
W/O SANJAY GUJRAL
AGED ABOUT 67 YEARS,
DIRECTOR,
M/S B.E. CONTRACTS PRIVATE LIMITED,
11-C, VANDHANA,
11 TOLSTOY MARG,
NEW DELHI- 110001
...PETITIONERS
(BY MISS. ISHITA YADU FOR
SRI. SHASHANK KUMAR., ADVOCATE)
AND:
M/S. VARUN ENTERPRISES
(PROPRIETORSHIP FIRM)
REPRESENTED BY ITS PROPRIETOR,
MR KARTHIK K S/O KRISHNAPPA
-3-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
OFFICE AT NO.8 AND 9, 1ST MAIN, 1ST BLOCK
2ND STAGE, RMV EXTENSION,
AAHWATH NAGAR, (DOLLARS COLONY)
BANGALORE- 560 094
EMAIL: [email protected]
...RESPONDENT
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER
DATED 28/03/2024, PASSED ON THE IA UNDER ORDER 1 RULE
10 OF CIVIL PROCEDURE CODE, AT ANNEXURE-F, PASSED BY
THE LXXXIV A.C.C AND S.J, BENGALURU, CCH-85 COM. O.S
1137/23 STRIKE OFF/ DELETE THE PETITIONER NO. 2 TO NO. 5
FROM THE PLAINT.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING
IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
This petition by the defendants in Commercial
OS.No.1137/2023 on the file of the LXXXIV Additional City
Civil and Sessions Judge, Bengaluru is directed against the
impugned order dated 28.03.2024 whereby the application
IA.No.2 filed by the petitioners/defendants to delete
-4-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
defendants No.2 to 5 from the suit was rejected by the
Commercial Court.
2. Heard learned counsel for the petitioners and
perused the material on record. The respondent having
been served with notice of the present petition has chosen
to remain unrepresented and has not contested the present
petition.
3. A perusal of the material on record will indicate that
the respondent/plaintiff instituted the aforesaid suit against
the petitioners/defendants for recovery of a sum of
Rs.1,28,16,076/- and for other reliefs. The defendant No.1
is a private limited company and defendant No.2 is its
managing director while defendants No.3 to 5 are the
remaining directors of the defendant No.1-company. In
addition to contesting the suit, the petitioners/defendants
filed the instant application seeking deletion of defendants
No.2 to 5 on the ground that the subject transaction was
between the plaintiff and defendant No.1 which is a private
limited company and a independent juristic and legal entity
-5-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
and the defendants No.2 to 5 being the directors cannot be
held personally liable for the liability of the company which
is an independent juristic and legal entity. The said
application filed by the petitioners having been contested by
the respondents/plaintiffs, the trial Court proceeded to pass
the impugned order rejecting IA.No.2, aggrieved by which
the petitioners are before this Court by way of the present
petition.
4. Learned counsel for petitioners would submit that
the impugned order is contrary to facts and law and the
same deserves to be set aside by placing reliance upon the
judgments reported in 2018 SCC 10722 in M/s Faith
Mercantile Pvt. Ltd., V/s M/s Simbhaoli Sugars Ltd &
Ors. And in C.R.PNo.166/2018 and CM.Appeal
No.32378/2017 and 10441/2021 dated 12.04.2021
in Sanju Bathla and Anr. V/s Manu Maheshwari & Ors.
By the Hon’ble High Court of Delhi.
-6-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
5. A perusal of undisputed material on record including
the plaint averments will clearly indicate that while the
defendant No.1 is an independent jurisdiction and legal
entity, represented by defendant No.2 its managing
director, the remaining defendants i.e., defendants No.3 to
5 are merely directors of the defendant No.1 company and
cannot be held liable to answer the claim of the plaintiff
which is as against the defendant No.1-company. In this
context, in the case of Max Linear Technologies Private
Limited, this Court held as under:
CAV ORDER
“The petitioners/defendant Nos.3 to 5 and 10 to 24
are before this Court calling in question an order dated 19-
07-2024 passed by the LXXXIV Additional City Civil and
Sessions (CCH-85) (Commercial Court), Bengaluru on
I.A.Nos.I to XVIII in Commercial O.S.No.1495 of 2023,
rejecting the applications filed by the petitioners seeking
their deletion from the array of defendants.
2. Facts, in brief, germane are as follows: –
2.1. The 1st petitioner/defendant No.3 is an Indian
Company engaged in the business of engineering services
providing systems on chip solutions used for broadband,
mobile and wireline infrastructure, data centre and
industrial and multi-market applications. Petitioner No.2
who is defendant Nos.4 and 5 is the Director of the 1st
petitioner Company and 2nd respondent Company.
Petitioner No.3/defendant No.10 is again Director of
-7-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
Physical Design of 1st petitioner Company; petitioners
Nos.4 to 6/defendant Nos. 11 to 13 are the erstwhile
Directors of respondent No.2 Company, petitioner Nos. 7
to 17/defendant Nos. 14 to 24 are the erstwhile
employees of 2nd respondent Company. The 1st
respondent is an Indian consulting Company specialized in
developing integrated hardware and software solutions for
the semiconductor industry. The 2nd
respondent/defendant No.1 is a Private Limited Company
engaged in the business of engineering consulting and
product development and respondent No.3 is the erstwhile
Director of respondent No.2 Company.
2.2. In the month of November, 2021 one Manjesh,
founder and CEO of the 1st respondent Company
approaches the 2nd respondent Company offering
assistance to the Company for identification of potential M
& A opportunities. It is the case of the petitioners that
during discussions, the 2nd respondent shared the
Company’s profile with the 1st respondent, but no
confidential data or information was shared at that stage.
After several rounds of discussions and exchange of drafts,
on 09-05-2022, the 1st respondent Company/plaintiff and
the 2nd respondent Company/defendant No.1 enter into a
Non-Disclosure Agreement (NDA) and a Managed Services
Partner Agreement (MSPA) on 25 01-2022. The 3rd
respondent/defendant No.2 being the Director and
authorized signatory of the 2nd respondent Company
signed and executed the said agreements on behalf of the
Company. The MSPA was valid for a term of three months
during which period if the 2nd respondent Company was
contacted by any third parties who were introduced
through the 1st respondent Company, the 2nd respondent
was required to promptly inform the 1st respondent
Company regarding the same and the 1st respondent
Company was also entitled to success fees. The 2nd
respondent Company however states that their
relationship with the 2nd respondent Company was non-
exclusive in nature. Prior to these agreements, on 14-03-
2022, the 2nd respondent Company also entered into an
NDA with Aptamitra USA Consulting LLC who was the US
subsidiary of the 1st respondent Company, which was
valid for a term of 2 years.
-8-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
2.3. Subsequently, several discussions ensue
between the 2nd and 3rd respondent Companies regarding
the employment of the employees of the 2nd respondent
Company in USA, for which the 1st respondent Company
with the help of its US subsidiary, would facilitate in
obtaining H1B visas for the employees. The two companies
also enter into an H1B Master Services Agreement for the
same. Out of the 45 employee profiles which were shared,
11 employees – the petitioner Nos.7 to 17, were selected
for the HIB visa process, all of which according to the 1st
respondent Company cost it a huge amount of money.
This, the respondent No.1 Company states, increased the
valuation of the 2nd respondent Company. However,
though the initial approvals for the 11 employees were
obtained, the 2nd respondent company decided 10 not to
proceed with the H1B visa engagement process and none
of the employees were thus placed. Even the draft Master
Services Agreement for the purported US based
arrangements was never executed.
2.4. In July, 2022 the 2nd respondent
Company/defendant No.1 comes in contact with the
petitioner No.1 Company/defendant No.3 which the
Petitioner No.1 states happened without the involvement
of respondent No.1 Company and was unrelated to the
transactions between the 1st and 2nd respondent
Companies. In August, 2022 the term of the MSPA
between the 1st and 2nd respondent Companies expired
and by September, 2022 the H1B visa process culminated.
The unilateral withdrawal from the H1B visa process,
causes a rift between the 1st and 2nd respondent
Companies, which the 1st respondent states, was caused
by the inducement of the petitioner No.1 Company, upon
increase in valuation of the 2nd respondent Company.
Legal proceedings were thus taken up by the 1st
respondent/plaintiff by causing a legal notice to petitioners
1 to 9 demanding ₹40/- crores on account of loss of
business opportunities and credibility. Mediation
proceedings were initiated under Section 12A of the
Commercial Courts Act, 2015 by filing a mediation
application before the competent fora seeking ₹32/- crore
damages on account of alleged breach of contract. During
mediation proceedings, the 1st respondent had named
only respondent No.2 and petitioners 1 to 9 as opposite
parties. The mediation proceedings failed. On failure of
-9-
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
mediation proceedings, a commercial suit comes to be
instituted in Commercial O.S.No.1495 of 2023 now
arraigning respondents 2 and 3 and petitioners 1 to 17 as
defendants 1 to 24 in the suit. The Commercial Court
directed issuance of summons to all the defendants, the
petitioners and respondents 2 and 3.
2.5. The issue in the lis does not relate to the merit
of the matter before the concerned Court. In the
concerned Court an application is filed under Order 1 to
Rule 10 r/w Section 151 of the CPC by defendant No.15
seeking his deletion from the array of parties. Likewise,
other applications sprang under Order 1 Rule 10 of the
CPC seeking their deletion from the array of parties. Those
applications were filed by the remaining defendants named
in this petition, barring defendants 1 and 2 and defendants
8 and 9. The 12 applications were preferred on the score
that there is no cause of action against the petitioners; no
agreement between the petitioners and the 1st
respondent/plaintiff and that the 1st petitioner/defendant
No.3 is a separate entity. Written statements were filed by
the 1st petitioner and 2nd respondent. 3rd respondent and
remaining petitioners adopted the written statement filed
by 1st petitioner and 2nd respondent. The concerned
Court, after hearing the parties on the applications under
Order 1 Rule 10 of the CPC, rejected the applications
seeking deletion of defendants from the array of parties, in
terms of the impugned order. Aggrieved by the said order,
the petitioners are before this Court in the subject
petition.
3. Heard Sri. Vivek Holla along with Smt. Maitreyi B.
Kannur, learned counsel appearing for the petitioners and
Sri. Manu P. Kulkarni along with Smt. Sukanya Basu
Mallik, learned counsel appearing for the respondent No.1.
4. The learned counsel appearing for the petitioners
would contend that the Commercial Court has failed to
appreciate that the real controversy in the case before it,
is between the 1st respondent/plaintiff and defendant Nos.
1 and 2. No relief is claimed against these petitioners in
the suit and no cause of action is made out against these
petitioners. The suit is filed for the alleged breach of terms
and conditions of two agreements dated 9-05-2022
executed only between the plaintiff and defendant No.1 to
which the present petitioners are not parties or
– 10 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
signatories. There is no privity of contract except between
the plaintiff and defendant No.1. The allegations of breach
of terms and conditions of the MSPA and NDA, the two
agreements, were only made against the 2nd
respondent/1st defendant. The learned counsel would
submit that mere discharge of duties by the Directors of
the Company would not make such Director necessary or
proper parties to the suit against the Company. Petitioner
Nos. 7 to 17 are erstwhile employees of the 2nd
respondent. They are only beneficiaries of the H1B visa
process and they had no direct dealings with the plaintiff.
The learned counsel submits that the object of Order 1
Rule 10 of the CPC is investing ample power upon the
Court to strike out the name of any party who has been
improperly joined. He would seek the petition be allowed
and the petitioners be deleted from the array of
defendants.
5. Per contra, the learned counsel appearing for the
plaintiff/1st respondent would contend that the petition is
preferred by misrepresenting the facts. Respondent Nos. 1
and 2 entered into an exclusivity agreement, whereby
respondent No.1 was appointed as the MSP for M & A
pursuant to an agreement between the plaintiff/
respondent No.1 and respondent No.2. There is a clear
admission of breach of exclusivity as obtaining in the
terms of the contract. Therefore, the 1st
respondent/Company is only claiming its legitimate fee as
agreed upon in the agreements. He would contend that
the order of the Commercial Court is challenged belatedly
after about 3 months, only to protract the proceedings
before the concerned Court. He would submit that there is
clear cause of action against petitioner Nos. 2 to 6 as they
are liable for inducing the respondent No.2 to breach the
MSPA and NDA. The petitioner Nos.7 to 17 had the
knowledge of the arrangements as evidenced from
multiple communications. He would contend that the
plaintiff being the dominus litus has a right to choose the
person against whom he wishes to litigate. The petitioners
are liable for tortious interference or tort of inducement of
breach of contract. The petitioners are also liable for
committing the tort of civil conspiracy. On this score he
would submit that the petition be dismissed and the order
of the concerned Court be affirmed.
– 11 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
6. I have given my anxious consideration to the
submissions made by the respective learned counsels for
all the parties and have perused the material available on
record.
7. The afore-narrated facts are a matter of record.
They would not require any reiteration. In furtherance
whereof, the issue that falls for consideration is whether
applications filed by these petitioners under Order 1 Rule
10 of the CPC seeking their deletion require to be allowed
or otherwise. The learned counsel appearing for the 1st
respondent would accept the fact that petitioners 7 to
17/defendants 14 to 24 have no role to play and,
therefore, they could be deleted from the array of
defendants. Thus, what remains to be considered is
whether petitioners 1 to 6 are proper and necessary
parties to the lis. Therefore, the 16 examination of the
impugned order is now restricted only to petitioners 1 to
6.
8. Before embarking upon consideration of the issue
on its merits, I deem it appropriate to notice the statute
and the interpretation of the said statute by various
Courts. Order 1 Rule 10 of the CPC reads as follows:
“10. Suit in name of wrong plaintiff.–(1)
Where a suit has been instituted in the name
of the wrong person as plaintiff or where it is
doubtful whether it has been instituted in the
name of the right plaintiff, the Court may at
any stage of the suit, if satisfied that the suit
has been instituted through a bona fide
mistake, and that it is necessary for the
determination of the real matter in dispute so
to do, order any other person to be substituted
or added as plaintiff upon such terms as the
Court thinks just.
(2) Court may strike out or add parties.–
The Court may at any stage of the
proceedings, either upon or without the
application of either party, and on such
terms as may appear to the Court to be
just, order that the name of any party
improperly joined, whether as plaintiff or
defendant, be struck out, and that the
– 12 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
name of any person who ought to have
been joined, whether as plaintiff or
defendant, or whose presence before the
Court may be necessary in order to enable
the Court effectually and completely to
adjudicate upon and settle all the
questions involved in the suit, be added.
(3) No person shall be added as a plaintiff
suing without a next friend or as the next
friend of a plaintiff under any disability without
his consent.
(4) Where defendant added, plaint to be
amended.– Where a defendant is added, the
plaint shall, unless the Court otherwise directs,
be amended in such manner as may be
necessary, and amended copies of the
summons and of the plaint shall be served on
the new defendant and, if the Court thinks fit,
on the original defendant. (5) Subject to the
provisions of the Indian Limitation Act, 1877
(15 of 1877), Section 22, the proceedings as
against any person added as defendant shall
be deemed to have begun only on the service
of the summons.”
(Emphasis supplied)
Sub-rule (2) of Order 1 Rule 10 provides the power to the
Court to either add parties as plaintiffs or defendants
whose presence, the Court deems is necessary for
effective adjudication of the suit or delete such parties if
they were improperly joined.
INTERPRETATION OF ORDER 1 RULE 10 OF THE CPC:
8.1. The Apex Court in it’s recent judgment in the case of
J.N. REAL ESTATE v. SHAILENDRA PRADHAN 1 holds as
follows:
".... .... .... 1 2025 SCC OnLine SC 1015 - 13 - NC: 2026:KHC:7370 WP No. 10331 of 2024 HC-KAR
22. This Court in Mumbai International Airport (P)
Ltd. v. Regency Convention Centre & Hotels (P) Ltd., (2010)
7 SCC 417, explained the scope of Order I Rule 10(2) of
the CPC. In the unique facts which existed therein, there was
a likelihood that the appellant would secure a right/interest
in the suit property if the suit for specific performance
instituted by the respondent against the Airport Authority of
India was dismissed. It was held, that in such a factual
circumstance and such being the right asserted by the
appellant, it cannot be made a party to the suit for specific
performance. While holding so, it was observed that
although the general rule is that the plaintiff,
being dominus litis, may choose the persons against
whom he wishes to litigate and seek relief, yet this
rule of impleadment would be subject to the provisions
of Order I Rule 10(2) wherein courts are vested with
the discretion to strike out or add parties to a suit
depending on whether their impleadment is deemed
necessary or proper. It was held that, even in suits for
specific performance, a court may, at any stage of the
proceedings, implead a person who is found to be a
necessary party or proper party.
23. In Mumbai International Airport (supra), this Court
explained the import of the expressions “necessary party”
and “proper party” as thus:
“14. The said provision makes it clear that a
court may, at any stage of the proceedings (including
suits for specific performance), either upon or even
without any application, and on such terms as may
appear to it to be just, direct that any of the
following persons may be added as a party : (a) any
person who ought to have been joined as plaintiff or
defendant, but not added; or (b) any person whose
presence before the court may be necessary in order
to enable the court to effectively and completely
adjudicate upon and settle the questions involved in
the suit. In short, the court is given the discretion to
add as a party, any person who is found to be a
necessary party or proper party.
15. 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. If a “necessary
party” is not impleaded, the suit itself is liable
– 14 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
to be dismissed. A “proper party” is a party
who, though not a necessary 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. If
a person is not found to be a proper or
necessary party, the court has no jurisdiction to
implead him, against the wishes of the
plaintiff. The fact that a person is likely to
secure a right/interest in a suit property, after
the suit is decided against the plaintiff, will not
make such person a necessary party or a
proper party to the suit for specific
performance.”
(Emphasis supplied)
24. It is limpid in the aforesaid observation that
if a party is found to either a necessary or proper
party, the court would have the jurisdiction to implead
him, even against the wishes of the plaintiff
concerned. In Mumbai International Airport (supra)
another pertinent question that arose was whether
there existed any conflict between the three-judge
bench decision of this Court
in Kasturi v. Iyyamperumal, (2005) 6 SCC 733 and the
decision of a two-judge bench in Sumtibai v. Paras
Finance Co. Regd. Partnership Firm Beawer
(Raj.), (2007) 10 SCC 82.
25. In Kasturi (supra), the respondent nos. 1 and 4 to
11 respectively therein, based their claim to be added as
party defendants on an independent title and possession of
the contracted property. In such a backdrop, while
rejecting the applications for impleadment, this Court
had expounded the scope of Order I Rule
10(2) CPC and laid down certain tests for determining
whether a person is a ‘necessary party’ for the purpose
of impleadment in a suit for specific performance as
follows:
(i) First, that a bare reading of Order I Rule 10(2)
clearly indicates that the necessary parties in a
suit for specific performance of a contract for
sale or an agreement to sell, are the parties to
the contract or, if they are dead, their legal
– 15 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
representatives, as also persons who had
purchased the contracted property from the
vendor. A subsequent purchaser would be a
necessary party since his rights would be
affected irrespective of whether he had
purchased the contracted property, with or
without notice of the contract. However, it was
clarified that a person whose claim is adverse
to the claim of a vendor, is not a ‘necessary
party’. Therefore, two tests were laid down by
this Court, which must be satisfied for
determining the question as to who is a
necessary party — (1) there must be a right to
some relief against such party in respect of the
controversies involved in the proceedings; (2)
no effective decree can be passed in the
absence of such party. The relevant
observations read as under:
“7. In our view, a bare reading of this
provision, namely, second part of Order 1 Rule
10 sub-rule (2) CPC would clearly show that the
necessary parties in a suit for specific
performance of a contract for sale are the
parties to the contract or if they are dead, their
legal representatives as also a person who had
purchased the contracted property from the
vendor. In equity as well as in law, the contract
constitutes rights and also regulates the
liabilities of the parties. A purchaser is a
necessary party as he would be affected if he
had purchased with or without notice of the
contract, but a person who claims adversely to
the claim of a vendor is, however, not a
necessary party. From the above, it is now clear
that two tests are to be satisfied for
determining the question who is a necessary
party. Tests are — (1) there must be a right to
some relief against such party in respect of the
controversies involved in the proceedings; (2)
no effective decree can be passed in the
absence of such party.”
(Emphasis supplied)
(ii) Secondly, as regards the meaning of “proper
party”, it was observed that in case of a suit for
specific performance, the guiding principle for
deciding who is a proper party is that the
presence of such a party is necessary to
adjudicate the controversies involved in the
suit for specific performance of the agreement
– 16 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
to sell. Such a question has to be decided while
keeping in mind the scope of the suit for
specific performance. If the addition of that
party enlarges the scope of such suit so as to
convert it into a suit for title, then the presence
of such a party cannot be said to be necessary
for the effective adjudication of the
controversies involved in the suit. The relevant
observations read as under:
“11. As noted hereinearlier, two tests are
required to be satisfied to determine the question
who is a necessary party, let us now consider who is
a proper party in a suit for specific performance
of a contract for sale. For deciding the question
who is a proper party in a suit for specific
performance the guiding principle is that the
presence of such a party is necessary to
adjudicate the controversies involved in the suit
for specific performance of the contract for
sale. Thus, the question is to be decided
keeping in mind the scope of the suit. The
question that is to be decided in a suit for
specific performance of the contract for sale is
to the enforceability of the contract entered
into between the parties to the contract. If the
person seeking addition is added in such a suit,
the scope of the suit for specific performance
would be enlarged and it would be practically
converted into a suit for title. Therefore, for
effective adjudication of the controversies involved in
the suit, presence of such parties cannot be said to
be necessary at all. Lord Chancellor Cottenham in
Tasker v. Small [(1834) 40 ER 848 : 3 My & Cr 63]
made the following observations : (ER pp. 850-51)‘It is not disputed that, generally, to a bill for
a specific performance of a contract of sale, the
parties to the contract only are the proper parties;
and, when the ground of the jurisdiction of Courts of
Equity in suits of that kind is considered it could not
properly be otherwise. The Court assumes
jurisdiction in such cases, because a court of law,
giving damages only for the non-performance of the
contract, in many cases does not afford an adequate
remedy. But, in equity, as well as at law, the contract
constitutes the right, and regulates the liabilities of
the parties; and the object of both proceedings is to
place the party complaining as nearly as possible in
the same situation as the defendant had agreed that
he should be placed in. It is obvious that persons,
strangers to the contract, and, therefore, neither
entitled to the right, nor subject to the liabilities
which arise out of it, are as much strangers to a
– 17 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
proceeding to enforce the execution of it as they are
to a proceeding to recover damages for the breach of
it.’
—xxx—
13. From the aforesaid discussion, it is
pellucid that necessary parties are those persons in
whose absence no decree can be passed by the court
or that there must be a right to some relief against
some party in respect of the controversy involved in
the proceedings and proper parties are those whose
presence before the court would be necessary in
order to enable the court effectually and completely
to adjudicate upon and settle all the questions
involved in the suit although no relief in the suit was
claimed against such person.”
—xxx—
15. […] In the case of Vijay
Pratap v. Sambhu Saran Sinha [(1996) 10 SCC 53]
this Court had taken the same view which is being
taken by us in this judgment as discussed above.
This Court in that decision clearly held that to decide
the right, title and interest in the suit property of the
stranger to the contract is beyond the scope of the
suit for specific performance of the contract and the
same cannot be turned into a regular title
suit. Therefore, in our view, a third party or a
stranger to the contract cannot be added so as to
convert a suit of one character into a suit of different
character. […]”
(Emphasis supplied)
(iii) Thirdly, an intervenor seeking to be impleaded
must be directly and legally interested in the
answers to the controversies involved in the
suit for specific performance of the agreement
to sell. It was held that a person is considered
to be legally interested in the answers to the
controversy, only if he can satisfy the court
that it may lead to a result that would legally
affect him. The relevant observations read as
under:
—xxx—
“17. […] Apart from that, the intervener
must be directly and legally interested in the
answers to the controversies involved in the
suit for specific performance of the contract for
sale. In Amon v. Raphael Tuck and Sons
– 18 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
Ltd. [[1956] 1 All ER 273 : [1956] 1 Q.B.
357 : [1956] 2 WLR 372] it has been held that a
person is legally interested in the answers to the
controversies only if he can satisfy the court that it
may lead to a result that will affect him legally.”
(Emphasis supplied)
26. However, this Court, in its subsequent decision
in Sumtibai (supra), was faced with a factual scenario
wherein the sons of the original defendant were also prima
facie found to be co-owners of the contracted property. The
sons were already impleaded in their capacity of being legal
representatives to the deceased defendant who had entered
into an agreement to sell in favour of the plaintiff therein. In
this background, it was observed that it cannot be laid down
as an absolute proposition that in a suit for specific
performance, a third party can never be impleaded. It was
opined that the decision of this court in Kasturi (supra) must
be seen in the context in which it was delivered.
Furthermore, some circumstantial flexibility is necessary to
be taken into account in each case, since an additional or
different fact may materially change the conclusion.
Therefore, the sons of the original defendant were allowed to
file an additional written statement and take the defence of
co-ownership which was available to them.
27. While distinguishing Kasturi (supra), it was held
in Sumtibai (supra) that if a third party can show a fair
semblance of title or interest, he can file an application for
impleadment in the suit for specific performance. The
relevant observations read thus:
“13. As held in Bharat Petroleum Corpn.
Ltd. v. N.R. Vairamani [(2004) 8 SCC 579 : AIR 2004
SC 4778] a decision cannot be relied on without
disclosing the factual situation. In the same
judgment this Court also observed : (SCC pp. 584-
85, paras 9-12)‘9. Courts should not place reliance on
decisions without discussing as to how the factual
situation fits in with the fact situation of the decision
on which reliance is placed. Observations of courts
are neither to be read as Euclid’s theorems nor as
provisions of a statute and that too taken out of their
context. These observations must be read in the
context in which they appear to have been
– 19 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
stated. Judgments of courts are not to be construed
as statutes. To interpret words, phrases and
provisions of a statute, it may become necessary for
judges to embark into lengthy discussions but the
discussion is meant to explain and not to define.
Judges interpret statutes, they do not interpret
judgments. They interpret words of statutes; their
words are not to be interpreted as statutes.
In London Graving Dock Co. Ltd. v. Horton [[1951]
A.C. 737 (HL)] (AC at p. 761) Lord
MacDermottobserved : (All ER p. 14 C-D) […]’
—xxx—
14. In view of the aforesaid decisions we are
of the opinion that Kasturi case [(2005) 6 SCC 733]
is clearly distinguishable. In our opinion it cannot be
laid down as an absolute proposition that whenever a
suit for specific performance is filed by A against B, a
third party C can never be impleaded in that suit. In
our opinion, if C can show a fair semblance of title or
interest he can certainly file an application for
impleadment. To take a contrary view would lead to
multiplicity of proceedings because then C will have
to wait until a decree is passed against B, and then
file a suit for cancellation of the decree on the
ground that A had no title in the property in dispute.
Clearly, such a view cannot be countenanced.”
(Emphasis supplied)
28. This Court in Mumbai International
Airport (supra) was also of the view that different
situations require the application of different facets of
Order I Rule 10(2) and consequently, held that there
was no conflict between the decisions of this Court
in Kasturi (supra) and Sumtibai (supra). It was
reiterated that that Order I Rule 10(2) CPC did not
pertain to the ‘right’ of a non-party to be impleaded as
a party but deals with the ‘judicial discretion’ of the
court to strike out or add parties at any stage of the
proceeding. In exercising this judicial discretion,
courts must act according to reason and fair play and
not according to whims and caprice.
29. It was observed that the court may exercise
discretion in impleading a person who is a ‘proper
party’ upon an application by a non-party to the suit
for specific performance. If the court is of the view
– 20 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
that the impleadment of such a proper party will alter
the nature of the suit or introduce a new cause of
action, it may either refuse to implead such person or
order for his impleadment on certain conditions.
However, even otherwise, the court would not be
precluded from impleading a ‘proper party’
unconditionally in its discretion. The relevant
observations rendered in Mumbai International
Airport (supra) read thus:
“24.4 If an application is made by a plaintiff
for impleading someone as a proper party, subject to
limitation, bona fides, etc., the court will normally
implead him, if he is found to be a proper party. On
the other hand, if a non-party makes an application
seeking impleadment as a proper party and the court
finds him to be a proper party, the court may direct
his addition as a defendant; but if the court finds
that his addition will alter the nature of the suit or
introduce a new cause of action, it may dismiss the
application even if he is found to be a proper party, if
it does not want to widen the scope of the specific
performance suit; or the court may direct such
applicant to be impleaded as a proper party, either
unconditionally or subject to terms. For example, if D
claiming to be a co-owner of a suit property, enters
into an agreement for sale of his share in favour of P
representing that he is the co-owner with half-share,
and P files a suit for specific performance of the said
agreement of sale in respect of the undivided half-
share, the court may permit the other co-owner who
contends that D has only one-fourth share, to be
impleaded as an additional defendant as a proper
party, and may examine the issue whether the
plaintiff is entitled to specific performance of the
agreement in respect of half a share or only one-
fourth share; alternatively the court may refuse to
implead the other co-owner and leave open the
question in regard to the extent of share of the
defendant vendor to be decided in an independent
proceeding by the other co-owner, or the plaintiff;
alternatively the court may implead him but subject
to the term that the dispute, if any, between the
impleaded co-owner and the original defendant in
regard to the extent of the share will not be the
subject-matter of the suit for specific performance,
and that it will decide in the suit only the issues
relating to specific performance, that is, whether the
– 21 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
defendant executed the agreement/contract and
whether such contract should be specifically
enforced.
25. In other words, the court has the
discretion to either to allow or reject an
application of a person claiming to be a proper
party, depending upon the facts and
circumstances and no person has a right to
insist that he should be impleaded as a party,
merely because he is a proper party.”
(Emphasis supplied)”
The Apex Court in the afore-quoted judgment while
reiterating the law laid down in it’s earlier judgments in
the cases of MUMBAI INTERNATIONAL AIRPORT (P)
LIMITED v. REGENCY CONVENTION CENTRE &
HOTELS (P) LIMITED2 and
3
KASTURI v. IYYAMPERUMAL , holds that a necessary
party is a person who ought to have been joined as a
party to the suit in whose absence an effective decree
cannot be passed by the Court. A proper party is a person
whose presence would enable the Court to completely,
effectively and properly adjudicate upon all matters and
issues, though he will not be a person in favour or against
whom a decree is to be made. If a person is not found to
be a proper or necessary party, the Court does not have
the jurisdiction to order his impleadment against the
wishes of the plaintiff.
8.2. The test for determining who is a necessary
party and who is a necessary witness and the
difference between the two, is considered by the
Apex Court, in it’s earlier decision in the case of
RAMESH HIRACHAND KUNDANMAL v.
MUNICIPAL CORPORATION OF GREATER
BOMBAY4 wherein it is held as follows:
“…. …. ….
14. It cannot be said that the main object of the
rule is to prevent multiplicity of actions though it
may incidentally have that effect. But that appears2
(2010) 7 SCC 417
3
(2005) 6 SCC 733
4
(1992) 2 SCC 524
– 22 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
to be a desirable consequence of the rule rather
than its main objective. The person to be joined
must be one whose presence is necessary as a
party. What makes a person a necessary party
is not merely that he has relevant evidence to
give on some of the questions involved; that
would only make him a necessary witness. It
is not merely that he has an interest in the
correct solution of some question involved
and has thought of relevant arguments to
advance. The only reason which makes it
necessary to make a person a party to an
action is so that he should be bound by the
result of the action and the question to be
settled, therefore, must be a question in the
action which cannot be effectually and
completely settled unless he is a party. The
line has been drawn on a wider construction
of the rule between the direct interest or the
legal interest and commercial interest. It is,
therefore, necessary that the person must be
directly or legally interested in the action in
the answer, i.e., he can say that the litigation
may lead to a result which will affect him
legally that is by curtailing his legal rights. It
is difficult to say that the rule contemplates joining
as a defendant a person whose only object is to
prosecute his own cause of action. Similar provision
was considered in Amon v. Raphael Tuck & Sons
Ltd. [(1956) 1 All ER 273 : (1956) 1 QB 357] ,
wherein after quoting the observations of Wynn-
Parry, J. in DollfusMieg et Compagnie S.A. v. Bank
of England [(1950) 2 All ER 605, 611] , that their
true test lies not so much in an analysis of
what are the constituents of the applicants’
rights, but rather in what would be the result
on the subject matter of the action if those
rights could be established, Devlin, J. has
stated:
“The test is ‘May the order for which the plaintiff is
asking directly affect the intervener in the
enjoyment of his legal rights’.”
(Emphasis supplied)
8.3. The Apex Court, again in its later judgment, in
AIRPORTS ECONOMIC REGULATORY
AUTHORITY OF INDIA v. DELHI
– 23 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
INTERNATIONAL AIRPORT LIMITED5 while
summarizing the principles of exercise of
jurisdiction under Order 1 Rule 10 or 10(2) of the
CPC, holds that a party would be a necessary party
only when such party would be bound by the result
of the action and has a direct or a legal interest in
the proceeding. The Apex Court observes as
follows:
“…. …. ….
39. Order 1 Rule 10 CPC grants the court the
power to strike out or add parties. The rule
provides that the court may either with or
without the application of the party, add the
name of the party who ought to have been
joined or whose presence before the court
may be necessary for the court to effectively
adjudicate upon the questions involved in the
suit. [ Order 1 Rule 10(2):”10. (2) Court may
strike out or add parties.–The Court may at any
stage of the proceedings, either upon or without
the application of either party, and on such terms
as may appear to the Court to be just, order that
the name of any party improperly joined, whether
as plaintiff or defendant, be struck out, and that the
name of any person who ought to have been
joined, whether as plaintiff or defendant, or whose
presence before the Court may be necessary in
order to enable the Court effectually and
completely to adjudicate upon and settle all the
questions involved in the suit, be added.”] This
Court has sufficiently dealt with proper and
necessary parties referable to Order 1 Rule
10CPC. A necessary party is defined as
someone who is indispensable to the suit and
without whom the suit cannot effectively
proceed. A proper party, on the other hand, is
a party who has an interest in the
adjudication of the suit though they may not
be a person in whose favour or against whom
a decree ought to be made. [ See Vidur Impex &
Traders (P) Ltd. v. Tosh Apartments (P) Ltd.,
(2012) 8 SCC 384 : (2012) 4 SCC (Civ)
1; Thomson Press (India) Ltd. v. Nanak Builders &
Investors (P) Ltd., (2013) 5 SCC 397 : (2013) 3
SCC (Civ) 1] This Court has further held that a
party would not become a necessary party
merely because she has an interest in the
5
(2024) 15 SCC 345
– 24 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
correct solution of the question involved. She
would be a necessary party only when she
would be bound by the result of the action and
has a direct or a legal interest in the
proceeding. [ See Ramesh
HirachandKundanmal v. Municipal Corpn., Greater
Bombay, (1992) 2 SCC 524, para 14; Also
see Kasturi v. Iyyamperumal, (2005) 6 SCC 733] In
view of the judgments of this Court
in CCI [CCI v. SAIL, (2010) 10 SCC 744]
and Dabholkar [Bar Council of Maharashtra v. M.V.
Dabholkar, (1975) 2 SCC 702] , a statutory
authority would have a legal interest in
appeals against orders made by it in discharge
of its regulatory duty.”
(Emphasis supplied)
8.4. The High Court of Bombay in AAKASH
EDUCATIONAL SERVICES LIMITED v. LATA
BHAGWANJI SHAH6 while considering a case where the
defendant seeks deletion from the array of parties on the
score that there is no cause of action projected against the
said defendant, holds as follows:
“…. …. ….
19. In light of the aforesaid submissions, the
core question that arises for consideration is,
whether the impleadment of Defendant Nos. 2
and 3 as party-Defendants is justifiable. A
useful reference, in this context, can be made
to the relevant provisions contained in the
Code.
…. …. ….
24. A conjoint reading of the aforesaid
provisions would indicate that, though the
plaintiff is dominus litis and may implead the
parties as defendants to the suit, against
whom the plaintiff perceives to have cause of
action, the plaintiff does not have an
unfettered choice. The primary question that
comes to the fore is, whether a party already
impleaded or sought to be added, is a
necessary or proper party, to the suit. A person
who has no semblance of right or interest in
6
2025 SCC OnLine Bom 4194
– 25 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
the subject matter of the suit, nor the decree
passed in the suit has the effect of affecting his
rights or liabilities, can be impleaded as a party
defendant to the suit. The general rule
of dominus litis is thus subject to the
provisions of Order 1 Rule 10(2) of the Code,
which provides for striking out or addition of
the parties.
25. It is well recognized that, the deletion or
addition of the parties to the suit is not a
matter of initial jurisdiction, but that of judicial
discretion. Such discretion is required to be
exercised keeping in view all the
circumstances. Under the provisions of sub-
Rule 2 of Rule 10 of Order 1, the Court is
empowered, at any stage of the suit, to add or
delete a party. From the phraseology of sub-
Rule (2) of Rule 10 of Order 1, it becomes
evident that, the person who can be added as a
party to the suit ought to be either (a) a
person who ought to have been joined as
Plaintiff or defendnat, but not impleaded or (b)
any person whose presence before the Court
may be necessary in order to effectively and
completely adjudicate upon, and settle the
questions involved in the suit.
26. In the case of ‘Mumbai International Airport Private
Limited v. Regency Convention Centre and Hotels Private
Limited [(2010) 7 SCC 417] the Supreme Court, expounded the
distinction between a necessary party and a proper party in the
following term:
“15. 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. If a ‘necessary party’ is not
impleaded, the suit itself is liable to be
dismissed. A ‘proper party’ is a party who,
though not a necessary party, is a person
whose presence would enable the court to
completely, effectively and adequately
adjudicate upon all matters in disputes in the
suit, though he need not be a person in favour
of or against whom the decree is to be made. If
a person is not found to be a proper or
necessary party, the court has no jurisdiction
– 26 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
to implead him, against the wishes of the
plaintiff. The fact that a person is likely to
secure a right/interest in a suit property, after
the suit is decided against the plaintiff, will not
make such person a necessary party or a
proper party to the suit for specific
performance.”
27. The Supreme Court also expounded the nature of the
jurisdiction exercised by the Court in the matter of
addition or deletion of the parties under Order 1 Rule
10(2) as under:
“22. Let us consider the scope and ambit of
Order I of Rule 10(2) CPC regarding striking
out or adding parties. The said sub-rule is not
about the right of a non-party to be impleaded
as a party, but about the judicial discretion of
the court to strike out or add parties at any
stage of a proceeding. The discretion under the
sub-rule can be exercised either suo moto or
on the application of the plaintiff or the
defendant, or on an application of a person
who is not a party to the suit. The court can
strike out any party who is improperly joined.
The court can add anyone as a plaintiff or as a
defendant if it finds that he is a necessary
party or proper party. Such deletion or addition
can be without any conditions or subject to
such terms as the court deems fit to impose. In
exercising its judicial discretion under Order 1
Rule 10(2) of the Code, the court will of course
act according to reason and fair play and not
according to whims and caprice.
(Emphasis supplied)
28. Thus, the essential test to add a person as a
party defendant to the suit, is whether in the
absence of such person no effective decree can be
passed in the suit; meaning thereby a necessary
party, or though no relief is claimed against a
person, the presence of such person, would assist
the Court in completely and effectually adjudicating
the suit; meaning thereby a proper party. The
concept of joinder of a party is inextricably
interlinked with the joinder of causes of action. A
– 27 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
party can be added to a proceeding, if there is any
cause of action against such party as well.
29. A profitable reference, in this context, can be made to
the decision of the Supreme Court in the case of ‘Iswar
Bhai C. Patel alias Bachu Bhai Patel v. Harihar
Behera2 wherein the Supreme Court enunciated that the
simple principle is that, a person is made a party in a
suit because there is a cause of action against him
and when causes of action are joined, the parties
are also joined. The observations in para Nos. 11 to 14
read as under:
……. ……. …….
30. In view of the aforesaid exposition of law,
whenever defendant seeks deletion of his name
from the array of the defendants, the Court is
required to pose unto itself the question as to
whether the said defendant can be said to be either
a necessary or proper party to the suit. The said
determination would, undoubtedly, hinge upon the
averments in the plaint and the documents annexed
with it. If there is slightest material to show the
existence of a cause of action against such person,
he cannot be deleted from the array of the
defendants for the only reason, that, the plaintiff
does not claim whole of relief against such person.
However, the necessary nexus between the
defendants and the lis ought to be, prima facie,
evident.
31. The nature of the Suit also assumes material
significance. In the case at hand the Plaintiffs seek
to primarily recover the unpaid licence fee and
damages for alleged unlawful occupation of the Suit
premises and also for having allegedly caused
damage thereto. The Suits are in relation to the
recovery of licence fee. The Suits broadly fall in the
category of Suits for recovery of possession and
licence fee of the demised premises.”
(Emphasis supplied)
– 28 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
The High Court of Bombay holds that whenever the
defendant seeks deletion of his name from the array
of defendants, the Court is required to pose on to
itself the question as to whether the said defendant
can be said to be either a necessary or a proper party
to the suit. The Court further holds that, the decision
would necessarily hinge on the averments in the
plaint and the documents annexed to it. Further, the
Court holds that, though the plaintiff is dominus litis
to the suit and may implead the parties as
defendants to the suit, against whom the plaintiff
perceives to have cause of action, the plaintiff does
not have an unfettered choice.
LIABILITY OF DIRECTORS IN SUITS AGAINST A
COMPANY:
9. Since petitioner Nos.2 to 6 are all Directors of either
petitioner No.1 or respondent No.2 company, it becomes
apposite to notice the law on liability of the Directors of a
Company, for their impleadment, in suits against the
Company.
9.1. In MAHENDER KUMAR AGGARWAL v. ANSAL
BUILDWELL LTD.7, the High Court of Delhi, holds that in
a suit for damages where the Company has been made a
party, the Director and General Manager of a Company are
not necessary parties as no relief was claimed against
them and their presence was not necessary for effective
disposal of the suit. The High Court observes as follows:
“2. Record shows that the present suit is a suit for
recovery of of damages for a malicious prosecution.
It had been filed by Mr. Mahender Aggarwal
arraying M/s Ansal Buildwell Ltd. as defendant No.
1. There is no dispute to the factum that M/s
Buildwell Ltd. is a duly incorporated company.
Defendants No. 2 & 3 Gopal Ansal and Anurag
Verma were the Managing Director and
General Manager of the said company;
averments made in the present suit have been
perused. This is a suit for damages on account
of malicious prosecution and defamation;
7
2011 SCC OnLine Del 4474
– 29 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
contention is that defendant No. 1 had filed a
false and malicious complaint against the plaintiff
pursuant to which an FIR had been registered
which FIR had been quashed by the order of Justice
S.N. Dhingra on 28.09.2007. While quashing the
said FIR, it had been noted that the defendants had
committed a misuse of the judicial process; it was
in these circumstances that the present suit for
malicious prosecution came to be filed by the
plaintiff against defendant No. 1; defendants No. 2
& 3 have also been arrayed in the memo of parties.
In the body of the plaint in para 10 it had been
stated that it is clear that conduct of the defendants
was to hatch a criminal conspiracy against the
plaintiff; the defendants as per para 10 makes a
reference to the defendants. Relevant would it be
to extract the FIR and the averments made therein.
It is not in dispute that pursuant to the present
complaint made under Section 156(3) of the Code
of the Criminal Procedure; the criminal machinery
had been set in motion and the aforenoted FIR
bearing No. 612/2010 had been registered on the
asking of the Magistrate. The complaint had been
filed by defendant No. 1 under Section
384/506/120-B IPC; this FIR as noted supra has
since been quashed.
3. The body of a plaint necessarily deciphers
what the plaintiff has to state; the impugned
order has correctly noted this and recorded
that there is no specific averments against
defendants No. 2 & 3 and as such the joinder
of defendants No. 2 & 3 is misplaced.
Defendant No. 1 is admittedly an individual;
he being a company and having an identity of
its own. The plaint did not disclose any cause
of action against defendants No. 2 & 3; the
twin test for deciding an application under
Order 1 Rule 10 of the Code had also been
adverted to; a necessary party would be a
party against whom a relief is sought or in the
absence of that party no effective decree can
be passed. Applying the said test, the Court
had correctly noted that defendants No. 2 & 3
are liable to be deleted as no relief against
them has been claimed and their presence is
also not necessary for effective disposal of the
suit; the impugned order in no manner suffers
from any infirmity.”
– 30 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
(Emphasis supplied)
9.2. Again, in ACE INNOVATORS (P) LTD. v. HEWLETT
PACKARD INDIA SALES (P) LTD.8, the High Court of
Delhi holds that under Section 230 of the Indian Contract
Act, 1872, the agent of the defendant Company who has
not entered into a contract with the plaintiff Company
cannot be sued for damages for breach of contract.
Further while deciding an application under
Order 1 Rule 10 of the CPC, the averments in the plaint
have to be read by way of a demurrer. The High
Court observes as follows:
“5. It is well settled that for deciding the application under
Order VII Rule 11 CPC r/w Order I Rule 10CPC the
averments made in the plaint have to be read by way of
demurrer. The only averments in the entire plaint against the
Defendant No. 3 is that the Defendant No. 3 is the authorized
distributor and supplied the products of HP company, that the
Defendant No. 3 delivered to the Plaintiff 127 HP laptops instead
of 215 HP laptops, did not deliver the remaining 88 laptops and
finally after great persuasion 127 HP laptops were picked up by
the representative of the Defendant No. 3 on 23rd November,
2011. Admittedly there is no privity of contract between the
Plaintiff and the Defendant No. 3. Further admittedly the
Defendant No. 3 is an agent of Defendant no. 1 Company, its
authorized distributor/supplier. It is in the light of these
averments it is to be seen whether the Defendant No. 3 is
a necessary party or not. Section 230 of the Indian
Contract Act (in short ‘Contract Act‘) provides as under:–
230. Agent cannot personally enforce, nor be
bound by, contracts on behalf of principal. – In
the absence of any contract to that effect an agent
cannot personally enforce contracts entered into by
him on behalf of his principal, nor is he personally
bound by them.
Presumption of contract to contrary. – Such a
contract shall be presumed to exist in the following
cases:–
8
2013 SCC OnLine Del 4019
– 31 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
(1) Where the contract is made by an agent for the
sale or purchase of goods for a merchant resident
abroad;
(2) Where the agent does not disclose the name of
his principal;
(3) where the principal, though disclosed, cannot
be sued.”
6. It is thus evident that in terms of Section 230 of
the Contract Act, in the absence of any contract to
that effect an agent cannot personally enforce
contracts entered into by him on behalf of his
principal, nor is he personally bound by him. Further
there is no presumption to the contrary as the name
of the principal is known to the Plaintiff. In the
present case, the agent, that is Defendant No. 3 has
not entered into the contract with the Plaintiff and
thus cannot be sued for the damages for breach of
contract by Defendant No. 1. In Prem Nath Motors
Limited (supra) the Hon’ble Supreme Court held:
“7. Section 230 of the Contract Act categorically
makes it clear that an agent is not liable for the
acts of a disclosed principal subject to a contract of
the contrary. No such contract to the contrary has
been pleaded. An identical issue was considered by
this Court in the case of Marine Contained Services
South (P) Ltd. v. Go Go Garments, where a similar
order passed under the Consumer Protection Act
was set aside by this Court. It was held that by
virtue of Section 230 the agent could not be sued
when the principal had been disclosed. A similar view
has been expressed by a three judge Bench of this Court
in Civil Appeal 6653/2005 arising out of S.L.P. (C) No.
19562/2004.”
This court in Tristar Consultants (supra) held:
“26. A perusal of Section 230 of the Indian Contract
Act, 1872 shows that unless an agent personally
binds himself, an agent is not personally liable for
contracts entered into by him on behalf of his
principal.
– 32 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
27. I may note an exception. The exception is that where
an agent has contracted on behalf of a principal who is
unnamed and undisclosed, on properly constituted
pleadings and on so establishing, such an agent who acts
on behalf of a undisclosed principal may be personally
liable for a contract entered into by him.
28. To interpret the law as is sought to be projected
by the petitioner would mean negation of the
concept of a company being limited by its liability
as per the memorandum and articles of association
of the company. Other than where directors have
made themselves personally liable i.e. by way of
guarantee, indemnity etc. liabilities of directors of a
company, under common law, are confined to cases
of malfeasance and misfeasance i.e. where they
have been guilty of tort towards those to whom
they owe a duty of care i.e. discharge fiduciary
obligations. Additionally, qua third parties, where
directors have committed tort. To the third party,
they may be personally liable.
29. For example by making false representations
about a company, a director induces a third party
to advance a loan to the company. On proof of
fraudulent misrepresentation, a director may be
personally liable to the third party.
30. But this liability would not flow from a contract
but would flow in an action at tort. The tort being
of misrepresentation of inducement and causing
injury to the third party having induced the third
party to part with money.”
7. In the facts of the case, though the plaint is not liable
to be rejected for mis-joinder of Defendant No. 3 however,
the Defendant No. 3 is liable to be deleted from the array
of parties as he is neither a proper party nor a necessary
party.
Application is disposed of deleting the Defendant No. 3
from the array of parties.”
(Emphasis supplied)
9.3. The Division Bench of the High Court of Gujarat in
PASCHIM GUJARAT VIJ CO. LTD. v. MANIBHADRA
– 33 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
ISPAT LTD.9, while upholding the order of the trial
Court, striking out the Directors from the array of
parties on the ground that, Directors cannot be held
liable for acts of the Company and due to lack of cause
of action in the plaint, discusses the Doctrine of Lifting
of Corporate Veil and observes as follows:
“22. Thus, the dictum of law as laid by the
Supreme Court in the aforesaid decision is that
the court can strike out any party who is
improperly joined. The court may also add
anyone as a plaintiff or as a defendant if it
finds that such person is a necessary party
or a proper party. In exercising its judicial
discretion under Order 1 Rule 10(2) of the
Code, the court should act according to the
reasons and fair play and not according to
the whims and caprice.
…… …… ……
24. Indisputably, a company incorporated
under the Companies Act, whether as a
private limited company or a public limited
company, is a juristic entity. The decisions of
the company are taken by the Board of
Directors of a company. The company acts
through its Board of Directors, and an
individual Director cannot don the mantle of
the company by acting on its behalf, unless
he is so authorized to act by a special
resolution passed by the Board or unless the
Articles of Association so warrant. It is
equally well settled that a Director of a
company though he owes a fiduciary duty to
the company, he owes no contractual duty
qua the third parties. There are, however,
two exceptions to this rule. The first is,
where the Director or Directors make
themselves personally liable, i.e. by
execution of personal guarantees,
indemnities, etc. The second is, where a
Director induces a third party to act (to his
detriment by advancing a loan or money to
the company. On the third party proving
such fraudulent misrepresentation, a
Director may be held personally liable to the
said third party. It is, however, well settled9
2019 SCC OnLine Guj 6933
– 34 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
that this liability would not flow from a
contract, but would flow in an action at tort,
the tort being of misrepresentation and of
inducing the third party to act to his
detriment and to part with money.
25. This is the settled position ever since 1897
when the House of Lords decided the case
of Salomon v. Salomon & Co. Ltd., [1897] A.C.
22, and Lord Macnaghten, observed as under:
“…the company is at law a different person
altogether from the subscribers to the
memorandum; and, though it may be that after
incorporation the business is precisely the same
as it was before, the same persons are managers,
and the same hands receive the profits, the
company is not in law the agent of the subscribers
or trustee for them. Nor are the subscribers as
members liable, in any shape or form, except to
the extent and in the manner provided by that
Act.”
26. However, with the passage of time
inroads have been made into the aforesaid
legal principle that the company is a legal
entity distinct from its shareholders and
directors and certain exceptions have been
carved out. One such inroad is commonly
described as the lifting or piercing of the
corporate veil. This has been succinctly put by
the Supreme Court in Tata Engineering and
Locomotive Co. Ltd. v. State of Bihar, (1964) 6
SCR 885, as follows:
“..The true legal position in regard to the
character of a corporation or a company
which owes its incorporation to a statutory
authority, is not in doubt or dispute. The
Corporation in law is equal to a natural
person and has a legal entity of its own. The
entity of the Corporation is entirely separate
from that of its shareholders; it bears its
own name and has a seal of its own; its
assets are separate and distinct from those
of its members; it can sue and be sued
exclusively for its own purpose; its creditors
cannot obtain satisfaction from the assets of
its members; the liability of the members or
shareholders is limited to the capital
– 35 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
invested by them; similarly, the creditors of
the members have no right to the assets of
the Corporation. This position has been well
established ever since the decision in the case
of Salomon v. Salomon and Co. was pronounced
in 1897; and indeed, it has always been the well-
recognised principle of common law. However, in
the course of time, the doctrine that the
Corporation or a Company has a legal and
separate entity of its own has been
subjected to certain exceptions by the
application of the fiction that the veil of the
Corporation can be lifted and its face
examined in substance. The doctrine of the
lifting of the veil thus marks a change in the
attitude that law had originally adopted
towards the concept of the separate entity
or personality of the Corporation. As a result
of the impact of the complexity of economic
factors, judicial decisions have sometimes
recognised exceptions to the rule about the
juristic personality of the corporation. It may
be that in course of time these exceptions
may grow in number and to meet the
requirement the theory about the
personality of the corporation may be
confined more and more.”
…… …… ……
28. The question therefore in the instant
case is – Can the corporate veil be lifted in
the present case to reveal the identity of the
person or persons behind it? The plaintiff in
its plaint has not made out any such case to
justify the piercing of the corporate veil. The
plaint is absolutely silent as regards the
personal liability of the Directors to pay the
dues of the plaintiff. There is not even a
whisper in the plaint in this regard.
29. Ultimately, the moot question which needs to
be answered is, whether the respondents nos. 2,
3 and 4 herein as the Directors could be said to
have made themselves personally liable for the
dues of the company.
30. The Delhi High Court, in the case of Tristar
Consultants v. Customer Services India Pvt. Ltd.,
reported in (2007) 139 DLT 688, has explained
– 36 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
the position of law. The observations made in
paragraphs 28, 29 and 30 of the said judgment
read thus:
“28. To interpret the law as is sought to be
projected by the petitioner would mean negation
of the concept of a company being limited by its
liability as per the memorandum and articles of
association of the company. Other than where
directors have made themselves personally liable
i.e. by way of guarantee, indemnity, etc. liabilities
of directors of a company, under common law,
are confined to cases of malfeasance and
misfeasance i.e. where they have been guilty of
tort towards those to whom they owe a duty of
care ie. discharge fiduciary obligations.
Additionally, qua third parties, where directors
have committed tort. To the third party, they may
be personally liable.
29. For example by making false
representations about a company, a director
induces a third party to advance a loan to
the company. On proof of fraudulent
misrepresentation, a director may be
personally liable to the third party.
30. But this liability would not flow from a
contract but would flow in an action at tort.
The tort being of misrepresentation of
inducement and causing injury to the third
party having induced the third party to part
with money.”
…… …… ……
32. It is not in dispute that in the case at hand,
there is no assertion in the plaint that the
respondents nos. 2, 3 and 4 as Directors of the
company had extended any contract of guarantee
or had even undertaken to make payment to the
plaintiff company of the dues towards the
electricity charges.
33. It is also well settled that fraud, if alleged,
must be pleaded meticulously and in detail and
proved to the hilt. A mere assertion that fraud has
been committed is neither here nor there. Precisely
and in what manner fraud has been committed is
required to be delineated by the party alleging the
– 37 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
same if the plea of fraud is to be made the basis of a
decree against the other party. Bald assertions and
vague allegations will not be countenanced by the
courts. Rule 4 of Order VI specifically lays down that
the particulars of the fraud alleged (with dates and
items, if necessary) shall be stated in the plaint.
…… …… ……
35. A Division Bench of the Allahabad High Court, in the
case of Meekin Transmission Limited (supra), has dealt with
the issue exhaustively. The decision of the Allahabad High
Court is under the following heads:
“- Concept of Companies – History of Incorporation of
Companies and relevant statutes:
– Status of Company, Directors and Shareholders –
individually and inter se in Common Law as well in the
Act:
– Doctrine of Piercing of Veil (Lifting the Corporate
Veil) : Exception to the Law of Separate Entity:
– Initial burden for application of the doctrine of
“Piercing of Veil”:
36. We may quote the relevant observations made in the
aforesaid decision thus:
“Concept of Companies – History of
Incorporation of Companies and relevant statutes:
…… …… ……
Status of Company, Directors and Shareholders –
individually and inter se in Common Law as well in
the Act
…… …… ……
23. The position of a Director vis a vis
company has been equated with an Agent in as
much as, the company cannot act in its own
person but has to act only through Directors
who, therefore, have the relationship of an Agent
qua company. However, the Managing Director
has been held to have a dual capacity inasmuch
as being a Director he is an agent of the company
but he is also an employee. In Shri Ram
Pershad v. C.I.T., (1972) 2 SCC 696 : AIR 1973 SC
637, the Apex Court held:
– 38 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
“It is again true that a director of a
company is not a servant but an agent
inasmuch as the company cannot act in its own
person but has only to act through directors
who qua the company have the relationship of
an agent to its principal. A Managing Director
may have a dual capacity. He may both be a
Director as well as employee……”
24. The work, performance and responsibility of
Directors, Managing Directors and other Officers of the
company is provided in the various provisions of the
Act and it is not necessary for us to go in further
details of those provisions for the purpose of present
case.
25. From the above discussion the position as
culled out is that the word “Company” imports an
association of number of individuals formed for a
common purpose. When such an association is
incorporated, it becomes a body corporate, a
legal entity, separate and distinct from such
individuals. Such incorporation must owe its
existence to a statutory authority. The
corporation/Company, in law, is equal to a
natural person and has a separate legal entity of
its own. Once incorporated, the entity of the
corporation is entirely separate from that of the
share holders, It bears its own name; has a seal
of its own; its assets are separate and distinct
from those of its members; it can sue and be
sued exclusively for its own purpose; the liability
of the members or share holders is limited to the
capital invested by them; the creditors of the
Company cannot obtain satisfaction from the
assets of the share holders/members of the
company and similarly creditors of the
members/share holders have no right to the
assets of the Company. This position was
recognised in Salomon v. Salomon and
Co., [1897] A.C. 22 and since then has always
been well recognised as a principle of common
law. The effect of registration of the company is
provided under Section 34 of the Act.
…… …… ……
27. A Company being an artificial juridical
person cannot act by its own. It acts through
Directors. The executive authority of the
Company is vested ordinarily in the Board of
– 39 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
Directors which is responsible for the proper
management of the Company. There are several
duties and obligations of the Board of Directors
and Directors of the Company which are
enshrined in detail in various provisions of the
Act. The Directors are paid remuneration for
services they render but cannot claim
remuneration as of right and, instead, if it is
provided in the memorandum or Article of
Association, they would be entitled for such
remuneration as provided therein. The company
is a separate entity qua Directors also inasmuch
as, the Directors represent the company and may
enter into a contract of employment with himself
in his individual capacity and simultaneously
acting for company.
…… …… ……
32. In brief, we can cull out the following:
(1) Company is a distinct and separate juristic
personality having its own rights of right to
property etc;
(2) The shareholders have no interest in any
particular asset of the company or the property of the
company except of participating in profits, if any, when
the company decides to divide them or to claim his
share when the company is wound down in accordance
with the articles of the company;
(3) A company is distinct from its Board of
Directors who cannot enforce a right in their
individual capacity which belongs to the
company (TELCO v. State of Bihar, AIR 1965 SC
40.
(4) The liability of the company
simultaneously is also not the liability of
shareholders. The shareholders cannot be made
liable under a decree against a company has held
in Nihal Chand v. Kharak Singh Sunder Singh, (1936)
2 Comp Cas 418 and Harihar Prasad v. Bansi
Missir, (1932) 6 Comp Cas 32.
Doctrine of Piercing of Veil (Lifting the
Corporate Veil) : Exception to the Law of
Separate Entity:
– 40 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
...... ...... ......
78. In the nutshell, the doctrine of lifting of veil or
piercing the veil is now a well established principle
which has been applied from time to time by the
Courts in India also. There is no doubt about the
proposition that whenever the circumstances so
warrant, the corporate veil of the company can be
lifted to look into the fact as to whose face is behind
the corporate veil who is trying to play fraud or taking
advantage of the corporate personality for immoral,
illegal or other purpose which are against public policy.
Such lifting of veil is also has to implemented
whenever a statute so provided. However, it is not a
matter of routine affair. It needs a detailed
investigation into the facts and affairs of the company
to find out as to whether the veil of the corporate
personality needs to be lifted in a particular case.
After lifting the veil, in a case where it is so
required, it is not always that the Directors
would automatically be responsible but again it is
a matter of investigation as to who is/are the
person/s responsible and liable who had
occasioned for application of said doctrine.
Initial burden for application of the doctrine
of “Piercing of Veil”:
…… …… ……
39. Order 1 Rule 3 of the CPC requires that where
right to relief in respect of or arising out of the same
act or transaction or series of acts or transactions is
alleged to exist against various persons whether
jointly, severally or in the alternative and if separate
suits were brought against such persons, common
questions of law or fact would arise, such persons
may be joined in one suit as defendants.
40. Sub rule 2 of Rule 10 of Order 1 permits a court, at
any stage of the proceedings, either upon or without any
application of either party, to strike out a person improperly
joined as a defendant.
41. In a suit for recovery of money, only such
persons can be impleaded as defendants against
whom averments are made which, on proof, would
entitle the plaintiff to a decree whether jointly or
severally or in the alternative against the said
persons named as defendants.
– 41 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
42. The other facet of the aforesaid proposition of law is
that there must be a cause of action disclosed against a
person impleaded as a defendant.
43. The learned counsel for the petitioner did not
dispute that in the plaint there is no assertion against
the Directors of the company that they personally
undertook or agreed to clear any liability of the
defendant outstanding against the plaintiff. No
guarantee or indemnification has been pleaded. But,
the submission of the learned counsel for the
petitioner is that every Director acts as the agent of a
company and, therefore, as an agent, a Director
would be personally liable if he has acted on behalf of
the company.
44. The learned counsel for the petitioner has relied
upon a decision of the Supreme Court in the case of Ram
Parshad v. Commissioner of Income Tax, reported in (1972)
2 SCC 696 : (1973) 1 SCR 985. The following passage has
been relied upon:
“Through an agent as such is not a servant, a
servant is generally for some purposes his master’s
implied agent, the extent of the agency depending
upon the duties or position of the servant. It is again
true that a director of a company is not a servant
but an agent inasmuch as the company cannot
act in its own person but has only to act through
directors who qua the company have the
relationship of an agent to its capacity. Managing
Director may have a dual capacity.”
45. It is a settled law that a company is a juristic
person. Therefore, a company has to act through a
living human being. Collectively, the decisions on
behalf of the company are taken by the Board of
Directors of a company. An individual Director has no
power to act on behalf of a company of which he is a
Director, unless there is a specific resolution of the
Board of Directors of the company giving specific
power to him/her or, where the Articles of company
confer such a power.
– 42 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
46. The Directors of companies have been
described as agents, trustees or representatives of
the company because of the fact vis-a-vis the
company they act in a fiduciary capacity. They
perform acts and duties for the benefit of the
company. Thus, the Directors are the agents of the
company to the extent they have been authorized to
perform certain acts on behalf of the company. But
the Directors of a company owe no fiduciary or
contractual duties or any duty of care to third parties
who deal with the company. This distinction has been
ignored by the learned counsel for the petitioner.
47. The Directors of a company are referred to as
the agents of the company in the context of their
fiduciary duty to the company and, therefore, if they
derive any personal benefit while purporting to act on
behalf of the company, they will be liable to the
company and its shareholders. But the Directors
cannot be treated as acting as the agents of the
company in the conventional sense of an agent, vis-a-
vis third parties.
48. As conventionally understood, a person acts as
an agent for a principal and represents the principal
before the third parties. Such contracts which are
concluded by the agent on behalf of his principal with
third parties would bind the principal to the third
party.
…… …… ……
50. A perusal of Section 230 of the Indian Contract Act,
1872, shows that unless an agent personally binds himself,
an agent is not personally liable for contracts entered into
by him on behalf of his principal. We may note an
exception. The exception is that where an agent has
contracted on behalf of a principal who is unnamed and
undisclosed, on properly constituted pleadings and on so
establishing, such an agent who acts on behalf of an
undisclosed principal may be personally liable for a contract
entered into by him.
51. To interpret the law as is sought to be
projected by the petitioner would mean negation of
the concept of a company being limited by its liability
– 43 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
as per the Memorandum and Articles of Association of
the company. Other than where Directors have made
themselves personally liable, i.e. by way of
guarantee, indemnity etc., liabilities of Directors of a
company under the common law are confined to cases
of malfeasance and misfeasance, i.e. where they have
been guilty of tort towards those to whom they owe a
duty of care, i.e. discharge fiduciary obligations.
Additionally, qua third parties, where Directors have
committed tort. To the third party, they may be
personally liable.
52. For example, by making false representations
about a company, a Director induces a third party to
advance a loan to the company. On proof of
fraudulent misrepresentation, a Director may be
personally liable to the third party. But this liability
would not flow from a contract but would flow in an
action at tort. The tort being of misrepresentation of
inducement and causing injury to the third party
having induced the third party to part with money.
(see Tristar Consultants v. Customer Services India
Pvt. Ltd., reported in (2007) 139 DLT 688).
53. We are also not impressed by the submission of Ms.
Bhaya as regards the issue no. 9 framed by the Commercial
Court.
54. We are afraid, such an issue could not have been
framed. We fail to understand on what basis the
Commercial Court has framed the issue no. 9. The term
‘issue’ in a civil court mean, ‘a disputed question relating to
the rival contentions in a suit’. An issue in a case is a
‘material proposition’ (means directly relevant and vital
statement which affirms or denies) of fact or of law. The
term ‘material proposition’ refers to the ’cause of action’ of
a case. The ’cause of action’ is a bundle of essential facts
when considered against the law applicable to such facts,
gives the plaintiff a right to seek some relief against the
defendant in the case. The issues are to be framed by the
court from the following sources:
(1) Allegations of parties or on their behalf on oath;
– 44 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
(2) Allegations made in the pleadings/interrogatories;
(3) The contents of documents produced by both the
parties.
55. In the case on hand, as discussed in this
judgment, it is not the case of the plaintiff that the
Directors are also personally responsible for the
payment of the dues of the Board. It is not even their
case in the entire plaint in this regard. By merely
saying something in the prayer clause with regard to
the personal liability of the Directors the issue no. 9
could not have been framed.
…… …… ……
59. In view of the aforesaid discussion, we have reached
to the conclusion that we should not interfere with the
impugned order passed by the court below in exercise of
our supervisory jurisdiction under Article 227 of the
Constitution of India.
…… …… ……
62. If a particular defendant has no connection with the
cause of action pleaded against the other defendants, he is
certainly a person improperly joined entitling him to make
an application to have his name struck out. One of the
grounds on which such an application can be made is that
the plaint discloses no cause of action against the
defendant. An application may not be maintainable under
Order 7 Rule 11(a) of the CPC for a variety of reasons. For
instance, in the present case, it may not be maintainable as
the Directors are not the only defendants. The suit against
the defendant no. 1, i.e. the company, must proceed to
trial. There is no application by the company under Order 7
Rule 11 of the CPC. In such circumstances, the law is that
the proper course is to strike out the names of the
defendants against whom there is no cause of action.
However, a plea that the plaint discloses no cause of action
is essentially one on a demurrer. Such a plea ought to be
accepted only when the court comes to a conclusion that
even if the averments in the plaint are proved, the plaintiff
would not be entitled to the reliefs claimed. The court must,
therefore, presume that the facts stated in the plaint are
correct. In view of the drastic consequences of upholding
such a plea, it is axiomatic that it ought to be accepted only
in clear cases. Moreover, while considering an
application for striking out the name of a defendant
– 45 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
on the ground that the plaint discloses no cause of
action against him, the court ought to act with great
circumspection and even greater restraint.
(Emphasis supplied)
9.4. Yet again, the High Court of Delhi in SANUJ
BHATLA v. MANU MAHESHWARI, while observing
that the Directors of a Company cannot be held
personally liable in the absence of allegations of fraud or
misrepresentation in the averments of the plaint, holds
as follows:
“21. Learned counsel for the Defendant Nos. 2
and 3, in my view, has rightly argued that in the
absence of any allegations of fraud or
misrepresentation, Directors cannot be held
personally liable. It is also not the case of the Plaintiff
that the Directors were personal guarantors to the loan
transaction or had assured to indemnify the amount. It
is a settled law that doctrine of lifting the
corporate veil is available to the Plaintiff where it
is permitted by the Statute or Corporate structure
is instituted to perpetuate a fraud. The averments
made in the plaint, in my view, do not justify the
lifting of the corporate veil to make the Directors
personally liable. The cryptic observation of the Trial
Court, that the facts and circumstances of the case
attract the principle of lifting the corporate veil, is not
supported by the pleadings and I may also note that the
order does not even give any reasons for having so
held.”
(Emphasis supplied)
9.5. The High Court of Bombay in AAKASH
EDUCATIONAL SERVICES LIMITED supra also
observes that the Directors of a Company despite being
the Managing Director or CEO are not necessary parties to
the suit especially when no allegations are made against
them and such Directors despite managing the day to day
affairs, cannot be made party-defendants to the suit when
the Company has already been made a defendant. The
High Court holds as follows:
“33. Applying the aforesaid principles to the facts of
the case at hand, evidently, the Defendant Nos. 2 and 3
have been impleaded as party Defendants for the reason
that they were the Managing Director and CEO and
– 46 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
Whole-time Director, respectively, of the Defendant No.
1-company, with an assertion that they were in-charge of
and responsible for day to day management of the affairs
of the Defendant No. 1-company. There is no assertion
spelling out the particular role of Defendant Nos. 2 and 3
in the transactions in question. The submission on
behalf of the Respondents-Plaintiffs that the
Defendant No. 2 has signed the Resolution passed
by the Board of Directors in the capacity of the
Managing Director of the Defendant No. 1-company
or that the Defendant No. 3 has issued the letter of
authorisation to execute the Leave and Licence
Agreement on behalf of the Defendant No. 1-
company in the capacity of the CEO and whole-time
Director of the Defendant No. 1-company and,
therefore, they are necessary parties to the Suit,
does not merit acceptance. The Defendant No. 1-
company being a corporate entity can sue and be sued in
the said juristic character.
34. In the absence of any material to show that, in
the absence of Defendant Nos. 2 and 3, the Suit
cannot proceed and no effective decree can be
passed, or how the presence of Defendant Nos. 2 and
3 is necessary for effective and complete adjudication
of the Suit, the general allegations in the Plaint that
the Defendant Nos. 2 and 3 were responsible for
conduct of the business and day to day affairs of the
Defendant No. 1-company and were liable for the acts
of the company, are insufficient to sustain the
impleadment of Defendant Nos. 2 and 3 as party-
Defendants to the Suits.
…… …… ……
36. In the backdrop of nature of the Suits, the
averments in the Plaint and the reliefs claimed
therein, the Defendant Nos. 2 and 3, do not appear to
be either necessary or proper parties to the Suits. If
the submissions on behalf of the Respondents-
Plaintiffs are readily acceded to and the Managing
Director and CEO and Whole-time Director of the
corporate entity are permitted to be impleaded sans
any specific pleadings qua them, then there is an
imminent risk that the Managing Director/CEO of the
corporate entities would be dragged into a multitude
– 47 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
of proceedings even though there is no cause of
action qua such officers.”
(Emphasis supplied)
9.6. Recently, the High Court of Delhi in SHUSHANT
MUTTREJA v. RAM KUMAR RATHI10, held that while
deciding an application under Order 1 Rule 10 of the CPC,
the trial Court ought to examine whether the allegations
are primarily against the Company or there is any
personal liability of the Directors of the Company. The
High Court observes as follows:
“17. The facts in the present case are however,
entirely different. The suit filed before the learned Trial
Court is a suit for recovery of monies paid to the
Company. The Application filed by the Petitioners was
dismissed by the learned Trial Court relying on a
wrongful interpretation of the Hariharnath case that the
directors of the Company (Petitioner Nos. 1 and 2) would
be personally held as liable for the debts of the
Company. Thus, in order to ascertain personal
liability, the plaint and the averments as set out in
the plaint, were required to be looked into. There is
no finding by the learned Trial Court of the
personal liability of the Directors.
18. A perusal of the plaint shows that the
allegations in the plaint are primarily only against
the Company. The Petitioners have contended that
there is no personal liability of the Directors. It is
further contended that even as per the plaint, the
money was only paid to the Company. The learned
Trial Court would have to examine all these
contentions as well.
18.1. In the case of Mukesh Hans v. Uma Bhasin
[2010 SCC OnLine Del 2776], a Coordinate Bench of this
Court has held that the Directors are not personally
liable for the acts of the Company and owe no
contractual duty qua a third party. There are only
two exceptions to this Rule viz. (a) if there is a personal10
2025 SCC OnLine Del 2809
– 48 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
guarantee, indemnity etc. and (b) if Director induces
third party to act to his detriment by advancing loan to
the Company and third party proves fraudulent
misrepresentation. The relevant extract is reproduced
below:
…… …… ……
21. The learned Trial Court is directed to examine the
Application under Order VII Rule 11, CPC afresh as
against the Petitioners/Directors of the Company. So far
as concerns, Application under Order VIII Rule 1
and Order I Rule 10 (2) of the CPC which were also
dismissed by the learned Trial Court by the
Impugned Order/Order in Review, the learned
Trial Court is directed to examine these
Applications afresh given the findings of this
Court.”
(Emphasis supplied)
TORT OF INDUCEMENT OF BREACH OF CONTRACT:
10. The other submission is that these petitioners
should remain in the array of defendants for the tort of
inducement of breach of contract. To bring home the tort
of breach of contract what would be the requirements is
recognized by the High Court of Delhi in the case of
AMWAY INDIA ENTERPRISES (PRIVATE) LIMITED v.
1MG TECHNOLOGIES (PRIVATE) LIMITED 11 wherein it
has been held as follows:
“…. …. ….
323. The tort of inducement of breach of contract traces
back its origin to the 19th century. The tort is enforced in
a manner in which performance of contractual obligations
are insisted upon even by third parties, who are not privy
to the contracts. Under this tort, initially malice was
required to be established for imputing liability.
However, as Salmond and Heuston 5 puts it, the tort
is now broad enough to include any interference
with contractual relationships. The relevant extract
is set out herein below:
11
2019 SCC OnLine Del 9061
– 49 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
“The tort had its origin in the action for
enticing away the servant of another. In
Lumley v. Gye, it was held that such an action
lay even when the contract, the breach of
which has been procured was not one of
service in the strict sense of the term. It was,
however, for some time believed that the
principle so established was confined to cases
where (i) the defendant’s action was
malicious and (ii) the contract in question
was one to render exclusive personal services
for a fixed period. But now it is perfectly well
established that the scope of the action is not
limited in either of these ways. Indeed, the
modern cases indicate that the tort has
become so broad as to be better described as
unlawful interference with contractual
relations.
…………
Proof of malice in the sense of spite or ill-will is
unnecessary…….”
324. The interference with contractual
relationships need not only be direct, but it could
also be indirect interference. As held in Aasia
Industrial Technologies (supra), if any party
procures breach of a contract, that is sufficient to
constitute inducement of the breach, and make them
liable under the tort. The relevant portion of the
judgment of the Bombay High Court, is as under:
“16. Thus it is to be seen that the tort of inducing
breach of contract, as now developed in England
is that if the act of third party, either by
persuasion, inducement or procurement results in
breach of a contract, the third party would have
committed an actionable interference with the
contract. Again so far from persuading or inducing
or procuring one of the parties to the contract to
break it, the third party may commit an actionable
interference with the contract, against the will of
both and without the knowledge of either if with
knowledge of the contract, he does an act which if
done by one of the parties to it, would have been
a breach. Of this type of interference the case of
G.W.K. Ltd. (supra) affords a striking example. If,
instead of persuading B of unlawful action against
him, A brings about the break of the contract
– 50 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
between B and C by operating through a third
party. A may still be liable to C, provided unlawful
means are used. The act of the third party may be
against the will of both and without the
knowledge of either. It must however be with the
knowledge of the contract. But the plaintiff is not
obliged to prove that the defendant knew the
precise terms of the contract breached; it is
enough if the defendant’s knowledge is sufficient
to entitle the Court to say that he has knowingly
or recklessly procured a breach. Proof of malice in
the sense of spite or ill-will is unnecessary. It is
no justification for the defendant to say that he
had an honest doubt whether he was interfering
with the plaintiff’s contract, or that he acted
without malice or in good faith. It is enough to
show that the defendant did an act which must
damage the plaintiff; it need not be proved that he
intended to do so. It is certain that justification is
capable of being a defence to this tort, but what
constitutes justification is incapable of exact
definition. It has been said that regard must be
had to the nature of the contract broken, the
position of the parties to the contract, the
grounds for the breach, the means employed to
procure it, the relation of the person procuring it
to the person who breaks the contract, and the
object of the person procuring the breach..”
325. In Balailal Mukherjee & Co. (P) Ltd. v. Sea
Traders Pvt. Ltd., 1990 SCC OnLine Cal 55 another case
which recognised this tort, a ld. Single Judge of the
Calcutta High Court, observed as under:
“13. Mr. Mukherjee appearing in support of the
application relied strongly on the observations of Lord Denning in
the off cited Court of Appeal decision in the case of Torquay
Hotel Co. Ltd. v. Cousins reported in LR (1969) 2 Ch. Div. In that
decision Lord Denning observed:
The principle of Lumley v. Gye (1853) 2 E. & B. 216
is that each of the parties to a contract has a “right to the
performance” of it : and it is wrong for another to procure
one of the parties to break it or not to perform it. That
principle was extended a step further by Lord Macnaghten
in Quinn v. Leeathem [1901] A.C. 495, so that each of the
parties has a right to have his “contractual relations” with
the other duly observed. “It is,” he said at page 510. “a
violation of legal right to interfere with contractual
– 51 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
relations recognised by law if there be no sufficient
justification for the interference…………….”
326. After reviewing the case laws, the Court held
that the conduct of one of the brothers, who was a partner
in the partnership firm, to induce breach by a Japanese
customer of its contract with the firm, constituted a tort
and the injunction was granted.
327. In the context of the present cases, e-
commerce platforms such as Amazon, Flipkart and
Snapdeal, carry out substantial sales of consumer
products from their platforms. They have invested
heavily in logistics and creation of a large network of
suppliers, third party service providers, delivery
personnel and warehousing facility, logistical
support, etc. The said parties ought to be conscious
of the sellers, whom they permit to operate on their
platforms, and the kind of products that are being
sold. They are not merely passive non-interfering
platforms, but provide a large number of value-
added services to the consumers and users. Upon
being notified by the Plaintiffs of unauthorised sales
on their platforms, they have a duty to ensure that
the contractual relationships are not unnecessarily
interfered with by their businesses. In the case of
Amazon for example, the Intellectual Property
policy, excluded products’ list etc., clearly shows
that there is a policy in place, that only authorised
sellers can put up their products on the Amazon
platform for sale, with the consent of the brand
owners. The notices issued by the Plaintiffs, clearly,
notified the platforms, who were offering the Plaintiffs’
products, inter alia, as under –
……. …… ……
329. The tort of inducement of breach of
contract and tortious interference with contracts is a
well-recognised tort. However, the application of the
said tort has to evolve with the changing practices of
society including the commercial world. E-commerce
platforms have an obligation, upon being notified, to
ensure that they do not induce breach of contracts in any
manner. The least that ought to have been done is
adherence to their own Intellectual Property Protection
Policies and other policies such as ‘Excluded products’ list’,
– 52 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
‘Banned Products’ List’, and ‘Terms of Use’. The internal
policies themselves being clear, the non-insistence of
Plaintiff’s consent from the sellers who wish to display the
Plaintiffs’ products on the platform, and non-insistence of
authorization or documents showing that the seller on the
platform was duly authorised to sell, by itself, constitutes
inducement of the breach. Moreover, even after being
notified the platforms refused to take down the products
and insisted that only if the Plaintiffs establish that the
products are counterfeit, they would be taken down.”
(Emphasis supplied)
The High Court of Delhi in the afore-quoted judgment
holds that interference with contractual relationship need
not be direct, but it could also be indirect interference. If
any party indulges in breach of contract, that is sufficient
to constitute inducement of the breach. But there must be
adequate material to demonstrate inducement for breach
of contract. In the absence of adequate material, breach of
contract or its inducement is unavailable.
10.1. In an earlier judgment, the High Court of
Delhi in ICC DEVELOPMENT (INTERNATIONAL)
LTD. v. ARVEE ENTERPRISES12, while discussing
the essential elements for the tort of breach of
contract by inducement, holds that in the absence of
adequate material on record, the plea of inducement
to breach the contract is not sustainable. The High
Court observes as follows:
“20. The essential element for a cause of
action based on breach of contract by inducement
are (a) interference in the execution of the
contract, (b) interference must be deliberate and
(c) interference must be direct. In the present
case, none of these ingredients have been made
out. There is no averment in the plaint to show
that defendants were aware or had knowledge of
the contract between the plaintiff and the
sponsors. Not only this, neither the sponsors nor
the official tour operator and their agents have
been impleaded as parties in the suit. In the12
2003 SCC OnLine Del 2
– 53 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
absence of adequate material on record, the plea
of inducement to breach the contract is also not
sustainable. The terms and conditions with regard to
the sale of tickets to the event, now pleaded by the
plaintiff, did not form part and parcel of the agreement
between the authorised agent of the Event and the
defendants. The question whether the said conditions
were known to the defendants or not, cannot be decided
at this stage. This is a question of fact which can be
determined only after the trial. (Lonrho Ltd. v. Shell
Petroleum Co. Ltd., (1981) 2 ALL ER 456) and Merkur
Island Shipping Corp. v. Laughton, (1983) 1 ALL ER
334.”
(Emphasis supplied)
10.2. Prior to the afore-quoted judgments of the High
Court of Delhi, the High Court of Bombay in its earlier
judgment in the case of AMBIENCE SPACE SELLERS
LTD. v. ASIA INDUSTRIAL TECHNOLOGY PVT. LTD.13,
holds as follows:
“7. The law regarding the Tort of Inducing breach of
contract has long been recognised by English Courts.
Before the English authorities are considered it would be
appropriate to set out the ratio laid down by Supreme
Court in the case of Jaylaxmi Salt Works (P) Ltd. v. State
of Gujarat reported in (1994) 4 SCC 1. In this case the
Supreme Court has held that injury and damage are two
basic ingredients of the law of Tort. The Supreme Court
has held that the Tortious liability are breach of duty
primarily fixed by the law while in contract they are
fixed by the parties themselves. The Supreme Court
has held that the law of Torts being a developing law
its frontiers are incapable of being strictly
barricated. The Supreme Court has held that the
ambit of Tortious law keeps on widening on the
touchstone of fairness and practicality of the
situation. The Supreme Court has held that truly
speaking the entire law of Torts is founded and
structured on morality i.e. that no one has a right to
injure or harm others intentionally or even
innocently. The Supreme Court has held that
therefore it would be primitive to class strictly or to13
1996 SCC OnLine Bom 586
– 54 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
give finality to the ever-expanding and growing
horizon of Tortious liability. The Supreme Court has
held that a liberal approach to Tortious liability by
Courts is more conducive for social development,
orderly growth of the society and cultural refineness.
….. ….. …..
13. Thus it is to be seen that the Tort of Inducing
breach of contract, as now developed in England, is
that if the act of third party, either by persuasion,
inducement or procurement results in breach of a
contract, the third party would have committed an
actionable interference with the contract. The act of
the third party may be against the will of both and
without the knowledge of either. It must however,
be with the knowledge of the contract. The same
would be the result if the third party places a
physical restraint upon one of the parties so as to
prevent him from carrying out his part of the
contract. It is to be seen that such action would be a
direct invasion. It is to be further seen that this
direct invasion need not necessarily lead to the
conclusion that there should be monetary
compensation. Such direct interference would itself
be a wrongful act and would amount to an
actionable interference of course any act honestly
done by a person in furtherance of his own
trade/profession, will not amount to a Tort of
Inducing breach of contract, merely because it has
induced such a breach. This because free and fair
competition cannot be curtailed. The difference in all such
cases is whether the act is done solely to carry on one’s
own trade or whether the act was done with intent to
induce a breach or profiteer from somebody else’s efforts.”
(Emphasis supplied)
The High Court of Bombay in the afore-quoted judgment
observes that the tort of inducing breach of contract, as
developed in England, is that if the act of a third party,
either by persuasion, inducement or procurement results
in breach of a contract, the third party would have
committed an actionable interference with the contract.
The act of the third party may be against the will of both
– 55 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
and without the knowledge of either, but it must
however, be with the knowledge of the contract.
11. On the bedrock of the principles laid down by the
Apex Court and several High Courts in the afore-quoted
judgments what would unmistakably emerge is that the
role of the defendants must be seen by the concerned
Court when an application is filed seeking impleadment
of a defendant or deletion of a defendant and it is also to
be seen whether the party who is sought to be
impleaded is a necessary or party or a necessary
witness. Further, Directors or employees/agents of a
company cannot be held liable for acts of the company
unless the plaint averments reveal that the Directors
have committed fraud, misrepresentation or a tort of
inducement of breach of contract.
12. What is to be seen now, is whether the order dated
19-07-2024, of the concerned Court, rejecting the
applications of the petitioners under Order 1 Rule 10 of
the CPC, filed for deletion from the array of defendants,
can be sustained in light of the law laid down as
discussed above. The order reads as follows:
“44. Point No.1: The learned counsel for these
defendants have submitted their written arguments,
basing on the contents of the application and affidavits
annexed to these applications. They have pointed out
towards the provisions of Order I Rule 10 of CPC. The
defendant Nos.1 to 14 applied for job, but, they have
been impleaded as defendants without any cause of
action and without any reasons. The defendant Nos.3
to 24 are the employees of defendant No.2. The suit is
filed by the plaintiff for alleged breach of the terms and
conditions of the MSPA dated 09.05.2022 and NDA
dated 09.05.2022. As per the say of the plaintiff there
was an alleged Agreement between the plaintiff and
the defendant No.1 in respect to facilitation of H1B
Visa approval for the employees of the defendant No.1
i.e. defendant Nos.11 to 24. They have also draw my
attention towards the contents of the applications as
well as affidavits as stated supra. These defendants
are not necessary parties.
– 56 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
45. During their arguments, they have relied upon
some decisions reported in (1992) 2 SCC 534 in
Ramesh Hirechand Kundanmmal Vs Municipal
Corporation of Greater Bombay. 2007 SCC Online Del
758 in Arjun Nath Vs British Airways.
46. Per contra, the learned counsel for the plaintiff
has also submitted his arguments and he has pointed
out towards the statement of objections filed to these
applications. All these defendants are necessary
parties to adjudicate the matter. He has pointed out
towards the plaint averments as well as the defence
raised by the defendant Nos.1 and 3 and other
defendants have adopted these written statement.
47. During his arguments, he has relied upon the
decisions reported in Hardeva Vs Ismail
(MANU/RH/0036/1970). Udit Narain Singh Mlpaharia
Vs Addl. Member, Board of Revenue, Bihar
(MANU/SC/0045/1962), Mumbai International Airport
Pvt. Ltd. Vs Regency Convention Centre & Hotels Pvt
Ltd. in (2010) 7 SCC 417, Kasturi Vs lyyamperumal in
(2005) 6 SCC 733, Firm Mahadeva Rice and Oil Mills Vs
Chennimalai Gounder (MANU/TN/0192/1968), Anil
Kumar Singh Vs Shiv Nath Mishra in (1995) 3 SCC 147
and Abdul Jaleel Vs Aishabi in AIR 1992 Kar 380.
48. After hearing the learned counsel for the
plaintiff and after going through the written arguments
submitted by the learned counsel for the defendants, I
have gone through the pleadings of the parties. This
suit is filed by the plaintiff for the relief of recovery of a
sum of Rs.40.00 Crores from the defendants. There
are 24 defendants in this suit.
49. After going through the contents of these IAs
and affidavits annexed to these applications, it is as
good as the contents of the application filed under IA
No.1 and contents of the affidavit annexed to it. The
say of these defendants is, unnecessarily they have
been made as parties to the suit. There are no grounds
to implead them as defendants.
50. After going through the materials on records,
defence raised by the defendant Nos.1 and 3, which is
– 57 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
adopted by the other defendants, it is clear that, some
of the defendants were the Ex-employees of the
defendant No.1 company, there are some Agreements
between the plaintiff company and some of the
defendants. The 2nd defendant is the Managing Director
of the defendant No.1 company. The 1st defendant
initiated a NDA i.e. Non Disclosure Agreement and
MSPA i.e. Master Services Partner Agreement with the
plaintiff company. The 1st defendant initiated the H1B
MSA Agreement on 10.06.2023 for business
collaboration regarding the deployment of H1B
candidates and cunningly obtained the plaintiff’s
signature. It is forthcoming in the plaint averments.
The defendants have denied these allegations made in
the plaint.
51. I have gone through the decisions relied
upon by the learned counsel for the defendant
Nos.3 to 24. The principles laid down in these
decisions are well founded. I have gone through
the decisions relied upon by the learned counsel
for the plaintiff company. The principles laid
down in these decisions are well founded. These
decisions come to the aid of the plaintiff
company at this juncture of the suit. Since the
defendant Nos.3 to 24 have filed their defence.
Therefore, a full dressed trial is required, without
the presence of these defendant Nos.3 to 24, the
suit may not be adjudicated effectively.
Therefore, in the light the discussions made
supra, the defendant Nos.3 to 24 have not made
out grounds to delete them from the suit.
Accordingly, I answer the Point No.1 in the
negative.
52. Point No.2: In view of the discussions made
supra, I made the following:
ORDER
The applications filed on behalf of the
defendant Nos.3 to 24 U/Or. I Rule 10 CPC,
as I.A.Nos. I to XVIII are hereby rejected.”
– 58 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
(Emphasis added)
The concerned Court in the afore-quoted order fails to
observe the specific role of each defendant in the plaint
and without sufficient reasons rejects the applications
under Order 1 Rule 10 of the CPC. I therefore, deem it
appropriate to notice the individual role of each petitioner
as averred in the plaint.
12.1. Role of petitioner No.1 Company/defendant
No.3: There are allegations against the 1st
petitioner/defendant No.3 Company in the plaint for
inducement of breach of contract. The plaint averments
show that the petitioner No.1 company despite knowledge
of the existing contract between respondents 1 and 2
Companies, induced respondent No.2 and acquired
respondent No.2 during the exclusivity period. A prima
facie case and cause of action for the tort of procurement
of breach of contract is made out against petitioner No.1
Company/defendant No.3 and petitioner No.1 would be
required for effectively deciding the case and providing
the necessary reliefs to the plaintiff.
12.2. Role of petitioner No.2/defendant Nos.4 and
5: There the plaint averments reveal no allegations
against petitioner No.2/defendants 4 and 5 regarding the
involvement of petitioner No.2 in inducing the breach of
contact. Further, if required, it is always open to the
concerned Court to direct petitioner No.2 to appear as a
witness in the case before the Court. Therefore, though
petitioner No.2 might be a necessary witness he is not a
necessary party to the case, as no cause of action has
been made or pleaded against petitioner No.2. The relief
claimed by the plaintiff and the dispute between the
parties, can be effectively adjudicated without the
presence of petitioner No.2 as a party to the case.
12.3. Role petitioner No.3/defendant No.10:
The only allegation against petitioner No.3 in the entire
plaint is that petitioner No.3 in the capacity of Director,
Physical Design of petitioner No.1 company, had replied
to respondent No.1/plaintiff when the M&A between
Respondent No.2 and petitioner No.1 was finalized. This
action of petitioner No.3 cannot constitute the tort of
inducement of breach of contract, since petitioner No.3
– 59 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
was only acting as an agent of petitioner No.1 company
while responding to the plaintiff. There are no other
allegations to satisfy the tests set by various Courts for
inducement of breach of contract, and no cause of action
has been made out in the suit against the petitioner No.3.
It is always open to the concerned Court, if required, to
direct Petitioner No.3 to appear as a witness in the case
before the Court and this by itself does not make him a
necessary party, as no specific claims or reliefs are made
against petitioner No.3. Further, the suit can be
adjudicated effectively without the presence of petitioner
No.3 as a party-defendant to the case.
12.4. Role of petitioners 4 to 6/defendants 11 to 13:
Petitioners Nos. 4, 5, and 6 being the erstwhile Directors
of respondent No.2 Company are merely agents of the
said Company. They were not party to the contract
between respondent No.1 and respondent No.2 Company
and owe a fiduciary duty only to respondent No.2
Company and not to other third parties. The plaint
averments reveal no assertions regarding how they have
breached the contract and therefore, no cause of action
has been made out against petitioner Nos. 4 to 6. They
can all however, be brought in, as witnesses by the
concerned Court, if required, during the course of the
trial. The relief claimed and the dispute in the case can be
effectively adjudicated without the presence of petitioners
Nos. 4 to 6 as party defendants to the case.
12.5. Role of petitioners 7 to 17/defendants 14 to
24: Petitioner Nos. 7 to 17 being the ex-employees of
respondent No.2 Company are merely agents of the
Company and have no connection to the dispute between
the parties and no cause of action has been made out
against them in the entire plaint. Further, the learned
counsel appearing for the respondent No.1 Company
himself submits that he does not have any objection to
petitioner Nos. 7 to 17 being deleted from the array of
defendants.
13. The concerned Court while rejecting the applications
does not advert to the role of petitioner Nos. 2 to 17 to
keep them in the array of defendants or delete them. In
the light of their role being restricted as noticed
hereinabove; no cause of action being made out against
– 60 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
them; they not being signatories to any of the
agreements and merely being Directors of the Company,
they cannot be permitted to undergo the rigmarole of
judicial proceedings. As against petitioner No.1 Company,
there are specific allegations in the plaint against the said
company and is required for effectively adjudicating the
matter and providing necessary relief’s as claimed by the
plaintiff.
14. In the light of absence of pleadings with regard to the
specific role of petitioner Nos. 2 to 17, the order of the
concerned Court which rejects the applications not
withstanding their roles as narrated above, cannot be
sustained. A case of tortious inducement of breach of
contract having been made out against petitioner No.1
Company, the Petitioner No.1 Company does not deserve
to be deleted from the array of parties. In that light, the
applications under Order 1 to 10 of the CPC, filed by
petitioner Nos.2 to 17, ought to be allowed.
17. For the aforesaid reasons, the following:
ORDER
(i) Writ Petition is allowed in part. The order
dated 19-07-2024 passed by the LXXXIV
Additional City Civil and Sessions Judge (CCH-85)
(Commercial Court), Bengaluru on I.A.Nos. I to
XVIII in Commercial O.S.No. 1495 of 2023 stands
quashed qua all other defendants, except defendant
No.3/petitioner No.1.
(ii) The applications filed by the petitioner Nos. 2
to 17 under Order 1 Rule 10 of the CPC are allowed.
Petitioners Nos. 2 to 17 who are defendant Nos. 4, 5
and 10 to 24 before the concerned Court stand
deleted from the array of parties/defendants.
(iii) Any observation made in the course of the
order is only for the purpose of consideration of the
impugned order qua the applications under Order 1
Rule 10 of the CPC. The observations in no way
influence pending proceedings before the concerned
Court qua the remaining parties.
– 61 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
Consequently, I.A.No.1 of 2025 also stand disposed”.
6. In the instant case, even according to the plaint
averments, except stating that the defendants No.3 to 5
were directors who were in charge of the day to day affairs
of the defendant No.1-company, there are no separate
allegations made against defendants No.3 to 5 so as to
make them personally liable to answer the claim as against
the defendant No.1.
7. Under these circumstances, in the light of the
principles laid down by this Hon’ble Court in the case of
Maxlinear Technologies Pvt. Ltd., I am of the considered
opinion that the Commercial Court fell in error in refusing to
delete defendants No.3 to 5 from the array of parties to the
suit.
8. Insofar as defendant No.2 is concerned, he has
already been described as the managing director of
defendant No.1-company and as representing the
defendant No.1-company as can be seen from the cause
– 62 –
NC: 2026:KHC:7370
WP No. 10331 of 2024
HC-KAR
title to the plaint and it would be just and appropriate to
continue the suit as against defendant No.2 also by deleting
defendants No.3 to 5 from the array of parties to the suit.
9. Under these circumstances, I am of the view that
the impugned order passed by the trial Court deserves to
be set aside and IA.No.2 deserves to be allowed only
insofar as defendants No.3 to 5 are concerned.
10. In result, I proceed to pass the following:
ORDER
i. Writ petition is hereby partly allowed.
ii. Impugned order dated 28.03.2024 in
Commercial.OS.No.1137/2023 passed by
the LXXXIV Additional City Civil and
Sessions Judge, Bengaluru is thereby set
aside.
iii. IA No.2 filed by the defendants is partly
allowed by directing deletion of
defendants No.3 to 5 from the array of
parties to the suit.
– 63 –
NC: 2026:KHC:7370
WP No. 10331 of 2024HC-KAR
iv. The trial Court shall continue the suit only
as against defendants No.1 and 2 and
dispose of the suit in accordance with law.
Sd/-
(S.R.KRISHNA KUMAR)
JUDGERJ
List No.: 1 Sl No.: 17
