Impleadment Not Dependent on Specific Relief: Kerala High Court Sets Aside NCLT Order Refusing to Implead Alleged Transferees
Introduction
The Kerala High Court, in Sandeep Chandrasenan and Another v. Usha Krishnakumar [2026 KER 79190], set aside an NCLT, Kochi Bench order refusing to implead two alleged share transferees in proceedings concerning allegations of mismanagement in Tharakan Web Innovations Private Limited.The dispute arose when the company contended that two original petitioners had transferred their shares to third parties. Upon the NCLT’s direction, the company produced the share transfer forms identifying Sandeep Chandrasenan and Anishmon Thomas as transferees. However, the alleged transferees denied signing the forms and alleged that their signatures had been fabricated.
The original petitioners subsequently sought to implead the alleged transferees. The NCLT rejected the application, observing that no specific relief was sought against them, the existing pleadings did not challenge the transfers, no amendment application had been filed, and the impleadment request was belated.Aggrieved, the proposed parties approached the Kerala High Court, contending that the need for their impleadment arose only after the share transfer forms were produced before the NCLT.
Issues Before the High Court
The High Court considered two principal issues:
- Whether the writ petition could be entertained under Article 226 of the Constitution despite the availability of an alternative appellate remedy under Section 421 of the Companies Act, 2013.
- Whether the alleged share transferees could be impleaded in the pending company proceedings when no specific relief had been sought against them?
Court’s Analysis and Findings
- Availability of an Alternative Remedy Does Not Automatically Bar Writ Jurisdiction
The company opposed the writ petition on the ground that the impugned NCLT order was appealable under Section 421 of the Companies Act, 2013.The High Court considered whether the availability of this alternative remedy prevented it from exercising its writ jurisdiction under Article 226 of the Constitution.
Relying on the Supreme Court’s decision in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd., the Court observed that the existence of an alternative remedy does not operate as an absolute bar to the exercise of writ jurisdiction, particularly where a violation of the principles of natural justice is established. The Court therefore examined whether the refusal to permit impleadment, in the circumstances of the case, resulted in such a violation.
- Impleadment Was Necessary for Effective Adjudication
The Court noted that the original petitioners sought impleadment after the share transfer forms were produced before the NCLT and the identities of the alleged transferees became known.The proposed parties denied the alleged transfers and asserted that their signatures on the transfer forms had been fabricated. Their involvement was therefore directly relevant to resolving the dispute over the validity of the transfers and the original petitioners’ continued shareholding.In this context, the Court referred to Order I Rule 10 of the Code of Civil Procedure, 1908, which provides for the addition of parties where their presence is necessary for the effective and complete adjudication of the questions involved in the proceedings.
The Court emphasised that impleadment is not confined to cases in which a specific relief is claimed against the proposed party. A party may also be impleaded where the adjudication of the dispute cannot be effectively undertaken in their absence.The Court observed that the original petitioners had sought production of the relevant documents after the company questioned their shareholding and had applied for impleadment once the alleged transferees were identified. In these circumstances, the Court held that refusing to consider the impleadment request was contrary to the principles of natural justice.The Court held that the proposed parties were proper parties to the proceedings, notwithstanding the absence of specific prayers against them. Accordingly, it set aside the NCLT’s order and allowed the application seeking their impleadment in the pending company petition.
Significance for Practice
The ruling confirms that alleged share transferees can be made parties before the NCLT whenever their presence is needed to decide whether a share transfer is valid, even if no relief is claimed against them. Petitioners should apply for impleadment, along with an amendment of their pleadings, as soon as the transferees are identified. Companies that rely on disputed transfers should expect the transferees to be heard.
