Tribunal Upholds Auditor's Inclusion in Company Petition Ensuring Fair Adjudication

The Tribunal upheld the impleadment of the statutory auditor as a necessary party in the Company Petition, emphasizing fair adjudication and judicial propriety by retaining the auditor in the party array for effective resolution of the dispute. The application to remove the auditor was dismissed, affirming the decision to include the auditor as the Additional 5th Respondent in the Company Petition.

---

---

Issues:
Impleadment of statutory auditor as a necessary party in a Company Petition under Sections 241 and 242 of the Companies Act, 2013.

Analysis:
1. The applicant, who is the statutory auditor of the 1st Respondent Company, filed an application seeking removal from the array of parties in the Company Petition No. 12/KOB/2020. The Tribunal had earlier allowed the impleadment of the applicant as the Additional 5th Respondent in the main Company Petition.

2. The applicant argued that he had not failed to discharge his statutory and fiduciary duties. Reference was made to a previous case where statutory auditors were initially included as respondents but subsequently removed from the party-array. However, in the present case, the statutory auditor was impleaded later by order of the Tribunal.

3. The respondents contended that the applicant was a necessary party for the adjudication of the Company Petition due to his role as the auditor and alleged failure to perform duties properly, leading to illegal activities causing losses to shareholders.

4. The Tribunal considered the arguments from both sides and reviewed the documents on record. It noted that the applicant was impleaded based on the contentions raised in the application, and the order for impleadment was made after due consideration.

5. Referring to a Supreme Court case, the Tribunal highlighted the principles of impleadment, emphasizing the importance of joining parties necessary for effective adjudication. The discretion to add or remove parties is based on judicial principles and should not be exercised arbitrarily.

6. The Tribunal concluded that once a party has been impleaded and given the opportunity to present their contentions, it is not appropriate for that party to later seek removal from the party array. Upholding judicial propriety, the Tribunal dismissed the application to remove the applicant from the party array.

7. The judgment emphasized the importance of rendering a fair and final order in the main Company Petition after hearing all parties involved. The decision to retain the applicant as a party was deemed necessary for an effective adjudication of the controversy.

8. Ultimately, the Tribunal dismissed the application to remove the applicant from the party array, affirming the decision to implead the applicant as the Additional 5th Respondent in the Company Petition No. 12/KOB/2020.

In summary, the Tribunal upheld the impleadment of the statutory auditor as a necessary party in the Company Petition, emphasizing the importance of fair adjudication and judicial propriety in maintaining the party array for effective resolution of the dispute.

---