Introduction

The question of who should be impleaded as a party in proceedings before the National Company Law Tribunal (NCLT) can have a significant bearing on the effective adjudication of company disputes. This is particularly so in proceedings alleging oppression and mismanagement, where the parties may dispute the very shareholding status of the petitioners.

In a recent decision, the Kerala High Court held that persons shown as transferees of disputed shares could be impleaded in a pending company petition, even though no specific adjudicatory relief had been sought against them. The Court found that their presence was necessary for the effective adjudication of the preliminary objection concerning the petitioners’ shareholding.

The Court also held that the impleadment application could not be treated as belated when it was filed shortly after the relevant share-transfer forms were produced before the NCLT. Importantly, the High Court exercised its jurisdiction under Article 226 of the Constitution notwithstanding the availability of an appellate remedy under Section 421 of the Companies Act, 2013, since the circumstances involved a violation of the principles of natural justice.

The decision provides useful guidance on the application of the principles governing necessary and proper parties in company proceedings.

Case Details

1. Background and Facts of the Case

The dispute arose out of a company petition, CP(C/Act)/28/KOB/2022, instituted before the NCLT, Kochi Bench, by Respondents 1 to 3, alleging mismanagement of the fourth respondent company, M/s. Tharakan Web Innovations Private Limited.

The petitioners in the writ proceedings were persons whose names appeared as transferees of shares allegedly transferred by the third respondent in the company.

Dispute concerning the transfer of shares

During the proceedings before the NCLT, the company filed a counter statement contending that the shares held by Respondents 2 and 3 had been transferred to third parties. The petitioners in the writ petition were subsequently identified as transferees in the share-transfer documents produced by the company.

The original company petitioners disputed the alleged transfer and sought production of the original, duly completed and stamped share-transfer forms, stated to have been executed by Respondents 2 and 3.

Accordingly, they filed IA(C/Act)/170/KOB/2023 seeking a direction to the company and certain respondents to produce the relevant share-transfer documents.

By order dated 5 December 2025, the NCLT directed the respondents to place on record all documents relating to the shares allegedly transferred by the applicants.

In compliance with that direction, the company produced relevant documents, including SH-4 share-transfer forms, along with an affidavit. The affidavit was filed before the NCLT on 29 December 2025.

Upon examining the documents, the applicants came to know that the shares of the third respondent were shown as having been transferred in favour of the present writ petitioners.

Application for impleadment

Following the production of the share-transfer documents, the original company petitioners filed IA(C/Act)/12/KOB/2026 on 21 January 2026, seeking to implead the present writ petitioners in the pending company petition.

The proposed parties contended that they had never signed the share-transfer forms and that their alleged signatures appearing in those documents were fabricated. They also alleged that the company and other respondents were attempting to involve them through disputed documents.

The proposed parties entered appearance before the NCLT and filed affidavits denying the alleged execution of the share-transfer documents.

However, by order dated 2 April 2026, the NCLT dismissed the impleadment application. Challenging that order, the proposed parties approached the Kerala High Court under Article 226 of the Constitution.

2.Reasons Given by the NCLT for Rejecting Impleadment

The NCLT proceeded on the basis that a person could be impleaded only if that person was either a necessary party or a proper party to the proceedings.

It examined the pleadings and reliefs in the main company petition and found, among other things, that:

• No specific adjudicatory relief had been sought against the proposed parties.
• The existing pleadings did not contain a challenge to the validity of the alleged share transfers.
• No amendment to the company petition had been sought.
• There were no sufficient foundational pleadings warranting their impleadment.
• The application for impleadment had been filed in 2026 without a satisfactory explanation for the delay.

On these grounds, the NCLT rejected the application.

The central question before the High Court was whether the proposed transferees were proper parties whose presence was necessary for effective adjudication of the dispute concerning the shareholding of the original company petitioners.

3.Whether Article 226 Can Be Invoked Against an NCLT Order Despite an Alternative Remedy Under Section 421?

One of the objections raised before the High Court was that the impugned order of the NCLT was appealable under Section 421 of the Companies Act, 2013. It was also contended that any challenge to the order ought to have been made by the applicants before the NCLT, rather than by the proposed parties.

The High Court considered the scope of its jurisdiction under Article 226 in the context of the availability of an alternative statutory remedy.

Principle governing alternative remedies

The Court relied on the decision of the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. through the Authorised Signatory v. Edelweiss Asset Reconstruction Company Ltd. through the Director and Others [(2021) 9 SCC 657].

The Supreme Court had reiterated that the rule of non-exercise of writ jurisdiction when an alternative remedy is available is a rule of self-restraint. It identified circumstances in which the availability of an alternative remedy would not operate as a bar, including:

1. Where the writ petition is filed for enforcement of fundamental rights;
2. Where there has been a violation of the principles of natural justice; and
3. Where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.

Applying this principle, the Kerala High Court held that where there is a violation of the principles of natural justice, it would be justified in invoking its jurisdiction under Article 226.

Why the Court entertained the writ petition

The High Court found that the proposed parties were directly affected by the impleadment issue. Their names appeared in the share-transfer documents produced before the NCLT, and they had entered appearance and filed affidavits denying the alleged transfers.

The Court therefore examined the matter on the basis that the proposed parties were interested persons who had a legitimate grievance concerning the refusal to implead them.

The decision does not lay down that every interlocutory order of the NCLT can be challenged directly under Article 226. Rather, the Court exercised writ jurisdiction in the particular circumstances before it, having found a violation of natural justice.

4.Necessary Party and Proper Party: Application of Order I Rule 10 CPC

The principal issue in the case concerned the distinction between a necessary party and a proper party.

The High Court referred to Order I Rule 10 of the Code of Civil Procedure, 1908, which provides the procedural basis for adding parties to proceedings.

The Court also relied on two important decisions of the Supreme Court.

A.Kasturi v. Iyyamperumal [(2005) 6 SCC 733]

The High Court referred to this decision while considering the principles governing impleadment under Order I Rule 10 CPC.

The relevant test includes whether there is a right to relief against the proposed party and whether effective adjudication can take place in that party’s absence.

B. Vidur Impex & Traders (P) Ltd. v. Tosh Apartments (P) Ltd. [(2012) 8 SCC 384]

The High Court extracted the following principle from the Supreme Court’s decision:

“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 may not be a person in favour of or against whom a decree is to be made.”

This principle was central to the High Court’s reasoning.

It recognised that a person need not necessarily be someone against whom a specific relief is claimed to qualify as a proper party. The relevant consideration is whether that person’s presence would assist the adjudicating forum in completely and effectively deciding the issues involved.

Application to the facts

In the present case, the original company petitioners alleged mismanagement of the company. The respondents raised a preliminary objection that the petitioners no longer held shares in the company because their shares had allegedly been transferred to third parties.

The original petitioners disputed the transfers and sought production of the relevant share-transfer forms. The documents subsequently produced identified the writ petitioners as the alleged transferees.

The High Court considered the sequence of events significant:

• The original company petitioners disputed the alleged share transfers.
• They sought production of the share-transfer documents.
• The NCLT directed production of those documents.
• The documents produced identified the present writ petitioners as transferees.
• The original petitioners thereafter sought to implead those transferees.
• The proposed parties entered appearance and denied the alleged transfers.

In these circumstances, the Court held that the proposed transferees were proper parties for effective adjudication of the preliminary objection concerning the original petitioners’ shareholding.

The Court specifically observed that their presence was necessary even though no specific prayer had been made against them.

5.Can a Person Be Impleaded Even When No Specific Relief Is Claimed Against That Person?

This is one of the important aspects of the judgment.

The NCLT had rejected impleadment substantially on the ground that no adjudicatory relief was claimed against the proposed parties.

The High Court disagreed with this approach.

The Court held that, for effective adjudication of the preliminary objection raised by the respondents before the NCLT, the proposed transferees were proper parties, notwithstanding the absence of any specific prayer against them.

The issue was not merely whether the original company petitioners had sought a decree or other substantive relief against the proposed parties. The issue was whether the NCLT could effectively determine the objection regarding the petitioners’ shareholding without hearing the persons who were shown in the documents as transferees.

The proposed parties were directly connected with the disputed share transfers. Their presence would enable the NCLT to consider the rival contentions concerning the alleged transfers and the resulting shareholding position.

Accordingly, the High Court held that the NCLT had erred in refusing impleadment.

Practical principle: The absence of a specific substantive prayer against a proposed party is not, by itself, sufficient to reject impleadment where that person’s presence is necessary for complete, effective and proper adjudication of an issue arising in the proceedings.

6.Whether Impleadment Was Belated?

Another important issue concerned the delay in filing the impleadment application.

The company contended that the names of the proposed transferees had been disclosed in the counter statement filed before the NCLT in 2022. It was therefore argued that the application filed on 21 January 2026 was highly belated.

The High Court did not accept this contention.

It examined the procedural history and noted that the original company petitioners had not remained inactive from 2022 onwards.

The sequence was as follows:

1. The company raised the contention that the shares had been transferred to third parties.
2. The original company petitioners filed a rejoinder seeking details of the alleged transfers.
3. An application was filed on 16 November 2023 seeking production of the documents relating to the share transfers.
4. The NCLT passed an order on 5 December 2025 directing production of the relevant documents.
5. The company produced the share-transfer forms on 29 December 2025.
6. The impleadment application was filed on 21 January 2026.

The High Court observed that the application for impleadment was filed after the share-transfer forms were produced and the details of the transferees became available.

It therefore held that this was not a case where the original company petitioners had remained silent from 2022 onwards. The finding of the NCLT that the impleadment application was delayed could not be sustained.

Significance of the ruling

The decision demonstrates that delay in seeking impleadment must be considered in the context of the procedural history of the case.

Where the identity and relevant details of a proposed party become clear only after documents are produced pursuant to an order of the Tribunal, the date of such production may be an important factor in determining whether the subsequent impleadment application was filed belatedly.

The judgment does not, however, establish that every application filed after the production of documents must necessarily be allowed. The circumstances and conduct of the parties remain relevant.

7.The Proposed Parties’ Right to Challenge the NCLT Order

The company also raised an objection that the impugned NCLT order should have been challenged by the applicants who had sought impleadment, rather than by the proposed parties themselves.

The High Court rejected this objection.

It noted that the proposed parties had been made parties to the impleadment application and had been permitted to file their affidavits pursuant to the NCLT’s order dated 22 January 2026.

They had also filed detailed affidavits denying the alleged share transfers and raising allegations of fraud.

The Court held that the proposed parties were interested persons in view of the alleged fraud said to have been committed upon them. In those circumstances, they were entitled to challenge the order rejecting the impleadment application.

Thus, the Court recognised that persons who are directly affected by an order on an impleadment application may, depending on the circumstances, have sufficient interest to challenge that order.

8.Final Decision of the Kerala High Court

After considering the rival contentions and the connected records, the High Court allowed the writ petition.

The Court:

• Set aside the NCLT order dated 2 April 2026 in IA(C/Act)/12/KOB/2026;
• Allowed IA(C/Act)/12/KOB/2026 filed in CP(C/Act)/28/KOB/2022 before the NCLT, Kochi Bench.

The result was that the proposed transferees were allowed to be impleaded in the pending company petition.

It is important to note that the High Court’s decision was confined to the question of impleadment. It did not finally determine whether the share-transfer forms were genuine, whether the signatures were fabricated, or whether the alleged transfers were legally valid. Those issues remain matters for consideration in the appropriate proceedings before the NCLT.

9.Legal and Practical Implications for Company Law Practitioners

The judgment provides several useful lessons for practitioners handling company petitions involving disputed shareholding, oppression and mismanagement allegations, and contested transfers of shares.

A.Impleadment is not confined to persons against whom substantive relief is claimed

The judgment reinforces the distinction between a necessary party and a proper party.

A person may qualify as a proper party even where no specific relief is claimed against that person, provided that the person’s presence is necessary to enable complete, effective and proper adjudication of the issues.

B.The Tribunal must consider the real controversy between the parties

In disputes involving alleged transfers of shares, the Tribunal should consider whether the persons shown as transferees have a direct connection with the issue being adjudicated.

Where the validity or effect of a transfer is central to a preliminary objection concerning the petitioners’ shareholding, the presence of the alleged transferees may be necessary for an effective determination.

C.Delay must be assessed in the context of the proceedings

The mere fact that an application for impleadment is filed several years after the commencement of the main proceedings does not, by itself, conclude the question of delay.

The Tribunal should examine when the relevant information became available, what steps were taken by the applicant to obtain the necessary documents, and whether the applicant acted with reasonable promptness after obtaining the relevant information.

D. Opportunity of hearing is an important procedural safeguard

Where the rights or interests of persons identified in disputed documents are directly involved in an issue before the Tribunal, their participation may be necessary to ensure a fair adjudication.

The decision illustrates the importance of hearing persons whose presence is required for effective determination of a contested issue.

E. Article 226 jurisdiction is exceptional, not an ordinary substitute for an appeal

The judgment also provides a reminder that the availability of an appeal under Section 421 of the Companies Act does not automatically extinguish the High Court’s writ jurisdiction.

However, the existence of an alternative remedy remains an important consideration. The High Court intervened because it found a violation of natural justice in the particular circumstances of the case. The decision should not be read as permitting routine writ challenges against interlocutory orders of the NCLT.

10.Conclusion

The decision in Sandeep Chandrasenan & Anr. v. Usha Krishnakumar & Ors. reinforces an important procedural principle: the power to implead parties is intended to facilitate complete and effective adjudication, and should not be restricted merely because no specific substantive relief is claimed against the proposed party.

In company proceedings where shareholding is disputed on the basis of alleged transfers, persons identified as transferees may be proper parties if their presence is necessary to determine the issues effectively.

The judgment also clarifies that delay in seeking impleadment must be assessed with reference to the actual procedural history, particularly where the relevant documents identifying the proposed parties were produced only at a later stage.

For advocates appearing before the NCLT, the decision is a useful authority when seeking impleadment of persons whose presence is necessary to adjudicate disputes concerning share transfers, membership and the maintainability of company petitions.

Case Reference

Sandeep Chandrasenan & Anr. v. Usha Krishnakumar & Ors., W.P.(C) No. 15055 of 2026, judgment dated 15 October 2026, High Court of Kerala, 2026:KER:79190.

Coram: The Honourable Mr. Justice Harisankar V. Menon.

Relevant statutory provisions: Article 226 of the Constitution of India; Section 421 of the Companies Act, 2013; Order I Rule 10 of the Code of Civil Procedure, 1908.

Important decisions referred to:

1. Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [(2021) 9 SCC 657].
2. Kasturi v. Iyyamperumal [(2005) 6 SCC 733].
3. Vidur Impex & Traders (P) Ltd. v. Tosh Apartments (P) Ltd. [(2012) 8 SCC 384].

Disclaimer: This article is intended for general legal information and academic discussion. It is based on the judgment identified above and should not be treated as legal advice or as a substitute for examining the complete judgment and applicable law in a particular case.