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Premier Poly Processors L.L.P., (Converted From M/s. Premier Poly Processors Pvt. Ltd.) v/s Modi Lal, By L.Rs

    Civil Writ Petition No. 11886 of 2019
    Decided On, 19 August 2019
    At, High Court of Rajasthan
    For the Appearing Parties: Manoj Bhandari, Deelip Kawadia, Vikas Balia, Advocates.

Judgment Text
1. Mr. Vikas Balia appears for the respondents Nos.1 to 3 and accepts notices on their behalf; service upon proforma respondents is dispensed with, considering the issue involved in the present writ petition. The service is, therefore, complete.

2. The present writ petition is directed against the order dated 08.07.2019, passed by the learned Additional District Judge No.2, Udaipur (hereinafter referred to as the ' trial Court' ), by which the petitioner' s application dated 06.07.2019 filed Section 58(1) of the Limited Liability Partnership Act, 2008 (hereinafter referred to as the ' Act of 2008' ) read with Section 151 of the Civil Procedure Code has been rejected.

3. The facts appertain to the present writ petition are that the plaintiffs (respondents Nos.1 to 3 herein) instituted a suit for specific performance of an agreement against the present petitioner-vendor Premier Poly Processors Pvt. Ltd. During pendency of the suit, the defendant-Company (Premier Poly Processors Pvt. Ltd.) was converted to ' Premier Poly Processors (LLP)' - a limited liability partnership firm in accordance with the provisions of the Act of 2008 (w.e.f. 24.09.2018).

4. In the advent of its conversion from a Company to a Limited Liability Partnership (LLP) Firm, the petitioner moved an application dated 08.01.2019 under Order I Rule 10 of the Code inter alia indicating that its legal status has changed from a Private Limited Company to that of a Limited Liability Partnership Firm. The petitioner' s aforesaid application came to be rejected by the trial Court, vide its order dated 02.07.2019. Against the order rejecting its application under Order I Rule 10 of the Code, the petitioner preferred a writ petition, (SB CWP No.10420/2019), wherein an interim order has been passed and the proceedings of the Civil Suit No.197/2011 have been stayed by this Court.

5. Thereafter, the petitioner stood advised to file another application seeking its substitution, instead of impleadment, for which, the subject application dated 06.07.2019 under Section 58 of the Act of 2008 read with Section 151 of the Code came to be filed. It was stated in the application that in view of the provisions of the Act of 2008, all the assets and liabilities including the suit properties have vested in the applicant and thus, it be substituted in place of the defendant No.5.

6. The plaintiffs opposed the said application inter alia contending that substitution cannot be permitted outrightly, as during the pendency of the suit, the defendant No.5 has disposed of or alienated some of the properties involved in the suit, hence erstwhile share holders/Directors are required to be continued as a party in the suit, else plaintiffs' interest would be jeopardised.

7. Learned trial Court rejected petitioner' s application dated 06.07.2019, by an order dated 08.07.2019 and refused its substitution in place of erstwhile company.

8. Mr. Manoj Bhandari, learned counsel for the petitioner impugning the order dated 08.07.2019, contended that the petitioner- Premier Poly Processor Pvt. Ltd., as a matter of fact, has ceased to exist and in place thereof, a new entity, namely, Premier Poly Processors (LLP), a Limited Liability Partnership Firm has come into existence, as such the trial Court has erred in rejecting petitioner' s application. He contended that it is by operation of law, particularly the provisions of the Act of 2008, that all assets and liabilities belonging to erstwhile company have vested in the present Limited Liability Partnership Firm. He further argued that an entity, which has ceased to exist, can neither be allowed to appear as a defendant nor can the present petitioner - a Limited Liability Partnership Firm having taken all liabilities and assets of the earlier company, be refused right of participation in the present suit proceedings.

9. Mr. Vikas Balia, learned counsel for the respondents Nos.1 to 3 fairly conceded that defendant No.5 deserved to be substituted in place of the company, which has ceased to exist.

10. He however contended that if earlier company or its directors are not arrayed as a party, having transferred/alienated certain properties during pendency of the suit proceedings, the rights of the plaintiffs would be prejudiced, as there will be no one to apprise the Court about the pendente lite transfer/alienation of the property. Mr. Balia invited attention of the Court towards the order dated 25.02.2019, vide which the plaintiffs' application dated 21.01.2019, seeking disclosure of the relevant fact and production of documents relating to pendente lite transfer(s) had been rejected to contend that at least the Directors/Shareholders of erstwhile company should be kept as defendants.

11. I have heard learned counsel for the parties and perused the material available on record.

12. As far as the petitioner' s contention that the newly constituted entity, namely Premier Poly Processors LLP Firm, which has come into being, is entitled to be substituted as defendant No.5 in place of the erstwhile company is concerned, this Court has no hitch in accepting the same. In considered opinion of this Court, by operation of law the erstwhile company-defendant No.5 has cea-sed to exist and in its place a new entity Premier Poly Processors (LLP), a Limited Liability Partnership Firm, has come into existence. By virtue of provisions of the Act of 2008, all the assets, liabilities and litigations etc. have devolved in the present Limited Liability Partnership Firm.

13. If the name of defendant No.5, as it exists in the cause title is not obliterated and the same is continued to be reflected, it will be like keeping a dead person' s name in the cause title. A company' s name which has ceased to exist cannot be reflected in the cause title as a defendant.

14. The present writ petition is, therefore, allowed. The impugned order dated 08.07.2019 passed by the trial Court is quashed and set aside. Petitioner' s application which has been captioned as application under Section 58 of the Act of 2008 read with Section 151 of the Code of Civil Procedure is treated to be an application for substitution (under Order XXII Rule 10 of the Code) and the petitioner namely; Premier Poly Processors (LLP) is substituted in place of the existing defendant No.5 erstwhile company namely; Premier Poly Processors Pvt. Limited. Petitioner shall file amended cause title in terms of the present order within a period of 10 days from today.

15. It is to be noted that the trial Court rejected plaintiffs' application dated 21.01.2019 on 25.02.2019, in wake of the facts obtaining at the relevant time, particularly because the trial Court had rejected petitioner' s appli

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cation under Order I Rule 10 of the Code. In the changed circumstances, particularly when the petitioner has been arrayed as defendant No.5, the plaintiffs (respondents Nos.1 to 3 herein) shall be free to file a fresh application seeking requisite information/details qua the properties and/or requiring the defendant No.5 to place on record relevant documents vide which the erstwhile defendant No.5 had transferred or alienated the properties. As and when such application is filed, the trial Court shall decide the same in accordance with law, being uninfluenced by its earlier order dated 25.02.2019, passed in this regard. 16. The writ petition is allowed, as indicated above. 17. The stay application No.11892/2019 is also disposed of.