In a significant ruling on who can step into an ongoing civil dispute, the Supreme Court of India has refused to allow NAK Engineering Company Pvt. Ltd. to be added as a defendant in a Mumbai suit seeking recovery of service charges. The Court upheld the Bombay High Court’s decision and clarified the limits of impleadment, especially when the original defendant continues to exist.
Background of the Case
The dispute traces back to a commercial property at Churchgate House in Mumbai. The premises were originally owned by Keshrichand Shah, who had let out part of the space through a chain of arrangements. Over time, Kishore Engineering Company came to occupy the premises and paid monthly service charges for furniture and fixtures.
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After Shah’s death, his heirs-Tarun Keshrichand Shah and another family member-filed a civil suit in 2007 seeking recovery of unpaid service charges amounting to ₹75,600 for a three-year period. The suit was initially filed on the original side of the Bombay High Court and later transferred to the City Civil Court due to jurisdictional reasons.
Despite service of summons, Kishore Engineering Company did not appear. In 2014, the trial court proceeded ex-parte after closing evidence.
Nearly four years later, in 2018, NAK Engineering Company Pvt. Ltd. approached the trial court claiming it was the successor of Kishore Engineering under the Companies Act. The company argued that it was actually running the business from the premises and should therefore be allowed to defend the suit.
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The trial court accepted this plea and allowed NAK Engineering to be impleaded. However, this order was challenged before the Bombay High Court, which reversed the decision, holding that NAK Engineering was neither a necessary nor a proper party to the suit.
Challenging the High Court’s order, NAK Engineering argued that the High Court had exceeded its supervisory jurisdiction under Article 227 of the Constitution. Senior counsel submitted that the company had stepped into the shoes of the original occupant and would be directly affected by any decree passed in the suit.
On the other hand, the property owners opposed the plea, stating that NAK Engineering was an unauthorized occupant attempting to legitimize its possession. They also pointed out that the original defendant-Kishore Engineering-was still in existence and capable of defending the suit.
“The plaintiffs are dominus litis and cannot be forced to fight a party against whom they seek no relief,” the respondents argued.
Court’s Observations
The Supreme Court examined well-settled principles on impleadment and reiterated the difference between a “necessary party” and a “proper party.” The bench noted that the suit was strictly for recovery of service charges and not for eviction or rent.
“The relationship of landlord and tenant is completely alien to the controversy in question,” the Court observed.
The judges found no convincing material to show that NAK Engineering had legally succeeded Kishore Engineering. Mere incorporation of a company, the Court said, does not prove succession.
The bench also took serious note of the delay. Records showed that summons in the suit were acknowledged in 2008 with NAK Engineering’s seal, indicating prior knowledge. Yet, the company waited nearly nine years-until after the matter had gone ex-parte-to seek impleadment.
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Final Decision
Upholding the Bombay High Court’s ruling, the Supreme Court dismissed the appeals filed by NAK Engineering. The Court held that the company was neither a necessary nor a proper party and that the plaintiffs could not be compelled to add it as a defendant.
However, the bench clarified that any decree passed in the suit would not be enforced against NAK Engineering.
“The appeals lack merit and are dismissed,” the Court concluded, bringing the long procedural battle to an end.
Case Title: NAK Engineering Company Pvt. Ltd. v. Tarun Keshrichand Shah & Ors.
Case No.: Civil Appeal arising out of SLP (C) Nos. 6024–6025 of 2022
Case Type: Civil Appeal
Decision Date: January 5, 2026
