M/S Starcrest Services PVT LTD vs. Sanjeev Arora And Ors

Facts

M/s Starcrest Services Pvt Ltd (the petitioner), a GST-registered company, engaged in facilities and security services, transferred ₹18,68,85,294/- to its Chartered Accountant, Harish Kumar Rampal, and an associate for depositing GST for July 2017 to December 2020. Upon inquiry by the GST Department in January 2021, it was discovered that Rampal had siphoned off over ₹14 crore by depositing less GST than collected. A portion of this embezzled amount, ₹5.16 crore, was used as an advance for a property purchase. The respondent/plaintiff filed a civil suit for recession of the agreement to sell, admitting receipt of ₹4.71 crore from Rampal's account. The petitioner sought to be impleaded as a necessary party in this civil suit, arguing the funds used for the property purchase belonged to it and were meant for GST deposit. The application for impleadment has been pending for approximately 20 months.

Held

The High Court allowed the revision petition, directing the Civil Judge (Senior Division), Faridabad, to expeditiously decide the application filed by the petitioner under Order 1 Rule 10 CPC for being impleaded as a necessary party in Civil Suit No. 656/2021. The Court noted that the application had been pending for almost two years, with adjournments granted on various pretexts without any decision. The petitioner had also filed an application for preponement, which was not decided. The Court acknowledged the prejudice caused to the petitioner due to the delay, especially concerning the mounting interest on outstanding GST dues and the inability to make prayers regarding the embezzled amount. The operative direction is to dispose of the impleadment application not later than January 31, 2023. The specific question of whether the petitioner is a necessary party was not definitively answered by the High Court; instead, the Court focused on ensuring the timely adjudication of that very issue by the trial court.

Key Issues

1. Whether the petitioner, M/s Starcrest Services Pvt Ltd, is a necessary party to Civil Suit No. 656/2021, filed under Section 27 of the Specific Relief Act, for the recession of an agreement to sell, thereby entitling it to be impleaded under Order 1 Rule 10 read with Section 151 of the Code of Civil Procedure (CPC)? Petitioner's contention: The petitioner argues that it is a necessary party because the funds used for the advance payment towards the property purchase, which is the subject of the civil suit, were its own funds collected for GST deposit and were allegedly siphoned off by its Chartered Accountant. The petitioner relies on the admissions made in the civil suit and the written statement of the deceased Chartered Accountant acknowledging the origin of the funds. Revenue/State's contention: The judgment does not record any specific arguments made by the revenue or state authorities in response to the petitioner's application for impleadment. The focus of the proceedings before the High Court was on the expeditious disposal of the impleadment application.