Impleadment Denied to Alleged “Successor” Without Proof: Dominus Litis, Necessary/Proper Party Tests, and Protection of Non-Parties from Execution

1. Introduction

NAK Engineering Company Pvt. Ltd. v. Tarun Keshrichand Shah and Ors. (2026 INSC 8) concerns the limits of impleadment under Order I Rule 10 of the Code of Civil Procedure, 1908 (“CPC”) in a suit seeking recovery of “service charges” for the use of furniture and fixtures in commercial premises. The core controversy arose when NAK Engineering Company Pvt. Ltd. (“appellant”) sought to be added as a defendant in a money suit filed by Tarun Keshrichand Shah and his mother (since deceased, represented) (“plaintiffs/respondents”) against M/s Kishore Engineering Company (“respondent No.3”).

The plaintiffs’ suit (Suit No.6117 of 2007) was for recovery of arrears of service charges allegedly payable by respondent No.3 (a user/sub-tenant of part of the premises). The appellant applied to (i) set aside the ex parte proceedings, and (ii) be impleaded, claiming it was the “successor” of respondent No.3 under Part IX of the Companies Act, 1956 and was in possession of the premises. The Trial Court allowed impleadment; the High Court, exercising Article 227 supervisory jurisdiction, set aside that order. The Supreme Court affirmed the High Court’s refusal to implead the appellant and added a protective direction that any decree in the suit could not be used/executed against the appellant.

Key Issues

• Whether the appellant was a necessary or proper party to a suit for recovery of service charges against respondent No.3.
• Whether a Certificate of Incorporation sufficed to prove “successorship” to a partnership firm under Part IX of the Companies Act, 1956.
• Whether the High Court properly exercised Article 227 jurisdiction in interfering with an interlocutory impleadment order.
• What safeguards apply to a non-party when a money decree is passed in a suit from which it is excluded.

2. Summary of the Judgment

• The Supreme Court held the appellant was neither a necessary nor a proper party to the suit for service charges.
• The appellant failed to establish that it was a successor to respondent No.3; a Certificate of Incorporation did not conclusively prove succession.
• The Court emphasized that the plaintiffs were dominus litis and could not be compelled to sue/implead a party against whom they sought no relief, unless the party was necessary.
• Delay was decisive: the summons served in 2008 bore the appellant’s seal/signature, yet impleadment was sought only in 2018 after ex parte proceedings—an unjustified lapse.
• Although acknowledging that Article 227 is supervisory and ordinarily should not be used like an appeal, the Supreme Court declined to restore what it considered an incorrect impleadment order.
• Protective direction: any decree passed in the suit “would not be used against the appellant and would not be implemented against it.”

3. Analysis

A. Precedents Cited

1) Ramesh Hirachand Kundanmal v. Municipal Corporation Of Greater Bombay

The Supreme Court used this decision to restate the foundational distinction: a necessary party is one “without whom no order can be made effectively,” while a proper party is one whose presence is not indispensable to pass an effective order, but is needed for “a complete and final decision.” This framing set the conceptual baseline for testing the appellant’s claim to participation.

2) Kasturi v. Iyyamperumal

The Court relied on Kasturi for the “twin tests” for a necessary party: (i) there must be a right to some relief against such party in respect of the controversies involved; and (ii) no effective decree can be passed in its absence. Applying these tests, the Court found the plaintiffs sought no relief against the appellant, and the suit for service charges could proceed to decree against respondent No.3 alone.

3) Mumbai International Airport (P) Ltd. v. Regency Convention Centre & Hotels (P) Ltd.

This precedent was used for two propositions: (i) non-impleadment of a necessary party may be fatal; but (ii) if a person is neither necessary nor proper, the court has no jurisdiction to implead him against the plaintiff’s wishes. The Supreme Court imported that logic here: absent necessity/propriety, compulsion of impleadment would violate the dominus litis principle.

4) Vidur Impex & Traders (P) Ltd. v. Tosh Apartments (P) Ltd.

The Court treated Vidur Impex as a synthesis of impleadment principles—especially: (a) necessary party: no effective decree without them; (b) proper party: presence enables complete adjudication; and (c) absent either status, courts cannot order impleadment against the plaintiff’s wishes. The Court concluded the appellant could not assist “complete adjudication” because it failed to prove its representative/successor status and respondent No.3 still existed.

5) Kanaklata Das v. Naba Kumar Das

The Supreme Court used Kanaklata Das to reinforce dominus litis: a plaintiff cannot be compelled to implead a third party unless that party proves necessity (i.e., the suit cannot proceed or be effectively decided without them). This was pivotal because the appellant’s argument effectively sought to convert its asserted interest/possession into a right of participation, even though the plaintiffs did not sue it for service charges.

B. Legal Reasoning

1) The suit’s nature controlled the impleadment inquiry

The Court stressed the action was for recovery of service charges for use of furniture and fixtures, not for eviction and not for recovery of rent. Accordingly, the High Court’s “landlord-tenant relationship” premise was described as not material to the real controversy. The determinative question was narrower: who is answerable in law on the pleaded service-charge liability asserted against respondent No.3.

2) “Successorship” was not proved; incorporation was not enough

The appellant’s central justification for impleadment was that it had “stepped into the shoes” of respondent No.3 under Part IX of the Companies Act, 1956. The Supreme Court rejected this on evidentiary and legal structure:

• Respondent No.3 was found to be a partnership firm with four members; Part IX conversion was stated to require “strict conditions” including at least seven members.
• An extract from the Registrar of Firms (dated 20.09.2016) indicated respondent No.3 continued to exist as a firm.
• The appellant’s Certificate of Incorporation (dated 22.02.1988) established only that the appellant came into existence as a company—not that it legally succeeded respondent No.3.

Consequently, the appellant failed to show any legally recognized representative capacity enabling it to “defend on behalf of” respondent No.3.

3) Necessary/proper party tests applied strictly

• Not a necessary party: The plaintiffs did not claim relief against the appellant; the Court saw no material that any decree against respondent No.3 would (as a matter of law in that suit) be “implemented against the appellant.”
• Not a proper party: Since successor status was unproven and respondent No.3 still existed, the appellant’s presence was not required for complete adjudication of the service-charge claim pleaded against respondent No.3.

4) Dominus litis as a restraint on forced joinder

The Court reaffirmed that plaintiffs choose their adversaries and assume the risk of suing the “wrong” party; courts do not ordinarily compel addition of defendants merely because a third party alleges some connection to the dispute. Importantly, the Court treated the eviction suit (where the appellant had been impleaded) as irrelevant to compulsion in the service-charges suit: joinder in eviction to ensure effective execution does not automatically translate into necessity/propriety in a distinct money claim framed against a different defendant.

5) Delay and acquiescence undermined equitable discretion

Even apart from the doctrinal tests, the Court relied on conduct: the 2008 acknowledgement of summons bore the appellant’s seal/signature, yet the impleadment motion came only in 2018—after evidence closure (2014) and ex parte direction. This nine-year delay supported refusal as a matter of procedural fairness and case management.

6) Article 227: supervisory limits acknowledged, but outcome preserved

The Court candidly observed that Article 227 is “simply supervisory” and that the High Court “ought not to have intervened.” Yet, the Supreme Court declined to restore the Trial Court’s order, reasoning it would amount to “another illegality” because impleadment itself was incorrect on merits. The decision thus illustrates a pragmatic approach: even if the route (Article 227 interference) is debatable, the Supreme Court may decline to unsettle the correct end-result.

C. Impact

1) Tightening of “successor/representative” impleadment claims

Parties claiming to be successors to an existing firm/company must expect strict scrutiny at the impleadment stage. Mere possession of premises, business continuation assertions, or a certificate of incorporation will not suffice absent proof that: (i) the original entity has ceased/merged/converted as per law; and (ii) the applicant bears the legal burden/liability in the very cause of action pleaded.

2) Reinforcement of dominus litis in money suits

The judgment strengthens the proposition that in a straightforward recovery suit, plaintiffs cannot be compelled to add a party merely because that party anticipates downstream execution risk or wants to protect an alleged interest collateral to the pleaded claim.

3) Protective ring-fencing of non-parties from execution

The direction that any decree “would not be used against the appellant” is significant. It underscores the general rule that decrees bind parties and privies, and signals judicial caution against indirect enforcement against persons denied participation. Future litigants resisting impleadment may nonetheless cite this case to seek an express protective clarification where the decree-holder might attempt execution against an alleged successor/occupant.

4) Article 227: signal to High Courts, but no automatic reversal

While the Supreme Court reiterated that Article 227 is not appellate, it also signaled that the Court may still preserve an order resulting in a substantively correct position. Practically, litigants should not assume that pointing out “excess of Article 227” will itself restore an erroneous trial-level discretionary order.

4. Complex Concepts Simplified

• Impleadment (Order I Rule 10 CPC): Adding someone as a party to a case. Courts allow this only when that person’s presence is legally required (necessary) or materially helpful for complete adjudication (proper).
• Necessary party: Without them, the court cannot pass an effective decree at all.
• Proper party: The court can pass a decree without them, but their presence helps fully resolve the issues.
• Dominus litis: The plaintiff is the “master of the suit”—they choose whom to sue; courts generally do not force additional defendants unless legally required.
• Article 227 (supervisory jurisdiction): High Court power to supervise subordinate courts; it is not meant to function like a normal appeal on facts and merits, though it can correct jurisdictional/patent errors.
• Ex parte proceedings: When a defendant does not appear, the court may proceed without them.
• Part IX conversion (Companies Act, 1956): A statutory route for certain firms to register/convert into a company; the Court emphasized that strict legal conditions apply and must be proven, not presumed.

5. Conclusion

The Supreme Court’s ruling consolidates a practical but strict impleadment standard: a person claiming to be a “successor” cannot enter a pending suit merely by asserting business continuity or relying on incorporation documents; they must establish a legal nexus to the pleaded liability and satisfy the necessary/proper party tests. The judgment powerfully reiterates dominus litis and narrows forced joinder in recovery actions. At the same time, the Court balanced exclusion from the suit with fairness by expressly directing that any decree passed would not be executed against the appellant—thereby protecting non-parties from indirect enforcement.