When minority shareholders bring an oppression and mismanagement petition to the National Company Law Tribunal, the dispute often has a cross-border dimension — a foreign parent that directs the Indian company's affairs, or a foreign subsidiary through which assets or profits are said to have been diverted. The natural instinct is to name the foreign entity as a respondent. The question is whether that is permissible, what status the foreign entity holds, and what the Tribunal can actually order against it. The short answer is that a foreign-incorporated company can be joined, but usually only as a "proper" rather than a "necessary" party; that improperly joining it is a curable procedural defect, not a fatal one; and that NCLT's power to make substantive orders directly against a foreign entity is constrained by service, enforcement and the territorial limits of Section 242. This piece works through the framework, the case law and the practical consequences.
The Framework: Sections 241–244 and the CPC Behind the Rules
Sections 241 to 244 of the Companies Act, 2013 create the oppression and mismanagement jurisdiction. Section 241 lets a member apply to NCLT where the company's affairs are conducted in a manner prejudicial to the public interest or oppressive to any member, and Section 242 gives the Tribunal broad discretion to "make such order as it thinks fit" to regulate the conduct of the company's affairs. The statute does not restrict who may be named as a respondent, but respondents must have some nexus to the alleged conduct — typically the company itself as the first respondent, and then the individuals or entities said to be responsible, such as majority shareholders, directors or related companies. A party joined merely for convenience, without substantive involvement in the acts complained of, risks being struck out.
The NCLT Rules, 2016 contain no standalone joinder code comparable to Order 1 of the Code of Civil Procedure. What they contain is Rule 11, preserving the Tribunal's inherent power to make orders "necessary for meeting the ends of justice or to prevent abuse of the process", which extends to adding, removing or striking out parties; and an expansive definition of "party" that reaches any person interested in the petition, including the Registrar of Companies, Regional Director, Central or State Government and official liquidator. That breadth does not dispense with the threshold requirement of a legal interest in the subject matter — it widens who may be brought in, not who must be. Through the Rules, the CPC's joinder principles remain applicable, and Order 1 Rule 9 is central:
"No suit shall be defeated by reason of misjoinder or non-joinder of parties, and the court may in every suit deal with the matter in controversy so far as it regards the rights and interests of the parties actually before it."
Rule 9 carries one carve-out: its protection does not extend to the non-joinder of a necessary party. That makes the necessary/proper distinction the pivot of the whole analysis.
Necessary Versus Proper Parties
The distinction turns on whether an effective decree can be passed in the party's absence. NCLAT put it precisely in Company Appeal (AT) (Insolvency) No. 1417 of 2019:
"A necessary party is a party in whose absence no effective order can be passed by a Court of Law/Tribunal/Appropriate Authority. A proper party is a party who although not a necessary party is a person whose presence will enable the Authority to effectively, efficaciously, comprehensively and adequately adjudicate upon all the controversies centering around a given case."
Impleadment, the same judgment held, is a matter of discretion "based on sound judicial principles" that "cannot be exercised in a cavalier and whimsical fashion" — the Tribunal must decide whether the party is necessary or proper, give notice and an opportunity to be heard, and avoid serious miscarriage of justice or undue hardship. And it confirmed the cure for getting it wrong: "In case of misjoinder of a party, the Applicant/Appellant/the Tribunal has always the option to strike out/remove the name of [the improperly joined party] from the array of parties."
Misjoinder Is Curable, Not Fatal
A petition is not defeated because a party — a foreign subsidiary among them — was wrongly joined. The Delhi High Court affirmed the settled position in September 2025:
"No suit shall be defeated by reason of misjoinder or non-joinder of parties… neither misjoinder of parties nor misjoinder of causes of action defeats a suit. At best, it is a curable procedural defect which the Court may regulate by directing amendment, election, or separate trials."
Applied to NCLT, a petition suffering misjoinder can proceed against the properly joined parties, or the Tribunal may direct amendment to remove or add parties, order separate trials, or strike out the improperly joined party. Section 99 of the CPC reinforces the point on appeal: no decree is to be reversed or a case remanded "on account of any misjoinder or non-joinder of parties or causes of action" unless a necessary party was left out — so NCLAT will not upset a decision solely because a party was misjoined, provided the necessary parties were present. The practical lesson is to distinguish sharply between misjoinder (wrong party in) and non-joinder of a necessary party (right party out): only the latter threatens the effectiveness of the decree.
The case law bears this out. In an NCLT Chandigarh decision of October 2024, a respondent argued that "the present petition has misjoinder of parties and is legally unsustainable"; the Tribunal did not dismiss on that ground but examined the substantive allegations and found oppression and mismanagement not made out under Section 241, treating the misjoinder point as secondary. An NCLT Delhi matter took the same approach to a property-leasing third party, assessing the substance of the allegations against each respondent separately rather than dismissing for misjoinder. And in an NCLT Ahmedabad order, the Tribunal considered whether a purchaser of company property was properly joined without striking it out summarily, weighing each respondent's substantive connection to the alleged conduct. The consistent thread is that the Tribunal assesses the merits against each respondent individually; joinder technicalities do not decide the case.
Foreign Entities as Respondents
Nothing categorically prohibits joining a foreign-incorporated company as a respondent. The Supreme Court in Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. (2018) 2 SCC 674 held that "person" under the Insolvency Code includes persons resident outside India, and by extension a foreign entity with sufficient nexus to the Indian company or the conduct complained of can be brought into an NCLT proceeding. But joining a foreign entity and obtaining effective relief against it are different things, and three practical constraints limit the latter. Service of process: the NCLT Rules do not modify the CPC's service provisions, so serving a foreign entity typically requires substituted service or diplomatic channels, which is cumbersome. Enforcement: an NCLT order against a foreign entity must be enforced where that entity's assets or operations lie, and India's writ runs only to Indian territory. Direct substantive orders: NCLT cannot pass a winding-up order or a decree reaching into a foreign company's internal governance without that company properly before it and its rights fully adjudicated, though it may pass interim regulatory orders affecting the Indian company's affairs that incidentally touch the foreign entity's interests.
On status, a foreign subsidiary is rarely a necessary party. The reliefs typical of an O&M petition — regulating the conduct of the company's affairs going forward, a buy-out of minority shares by the majority or the company, removal of oppressive provisions from the articles, removal or suspension of directors — none require the foreign subsidiary's presence. The Indian board can be reconstituted and share buy-outs financed by the Indian company without the foreign entity's concurrence. A foreign subsidiary becomes a proper party where it is alleged to have actively participated in the oppressive conduct (for instance, directing the Indian company to distribute profits unfairly), where funds or assets flow between the Indian and foreign entities to the prejudice of minority shareholders, or where it holds shares or debt of the Indian company and its interests are directly affected by the relief sought — but even then its presence is optional, aiding a more complete adjudication rather than being indispensable. Pleading a foreign subsidiary as a necessary party, when the relief in truth concerns Indian company governance and Indian shareholder rights, invites judicial skepticism.
The cross-border gap is structural. Unlike the Insolvency Code, which has Sections 234 and 235 on agreements with foreign governments and letters of request to foreign courts, the Companies Act, 2013 and the NCLT Rules contain no mechanism for NCLT to issue letters of request or to enforce its orders abroad. NCLT's power in cross-border O&M disputes is therefore narrower than in insolvency, and a foreign corporation should be joined only where its presence is genuinely needed to regulate the Indian company's affairs and where service is feasible or the entity is likely to submit to the Tribunal's jurisdiction. In practice, foreign entities have been impleaded, but outcomes rarely turn on orders directed at the foreign entity — the substantive relief, where granted, runs against the Indian company and its board.
Framing Relief Around the Territorial Limit
Section 242 lists illustrative reliefs — regulation of the company's affairs, purchase of shares, restrictions on share transfer or allotment, termination or modification of agreements with a managing director, director or manager, removal or suspension of directors, and interim orders. These are expressly tied to regulating the conduct of the "company", meaning the Indian company whose affairs are complained of; the section does not empower NCLT to make substantive orders directly against a foreign entity not incorporated in India. What it does allow, under Section 242(4), is interim orders regulating the Indian company's affairs during the pendency of the petition, which may indirectly affect a foreign entity — for example, restraining the Indian company from transferring assets to the foreign entity. The drafting distinction is important and easily got wrong: relief should be framed as regulation of the Indian company's conduct ("order the Indian company to recover transferred assets from the foreign subsidiary") rather than as a direct command to the foreign entity ("order the foreign subsidiary to return assets"). The former is within NCLT's jurisdictional competence; the latter reaches beyond it.
Raising and Curing Misjoinder
Where a respondent challenges the joinder of a foreign entity, the objection is raised in the reply to the petition (Rule 41) or by an interlocutory application (Rule 8) seeking to strike out the improperly joined party, with Rule 11's inherent power as the foundation for striking out. Under CPC Order 1 Rule 13, objections to joinder must be taken at the earliest opportunity — for NCLT, in the reply and before the merits are tried, though benches have in practice addressed the issue during substantive hearings. Once misjoinder is raised, the Tribunal may allow the petition to continue without the misjoined party, strike that party out by formal order, allow amendment under Rule 155 where the defect is curable (such as a misdescription) and causes no prejudice, or direct separate proceedings where misjoinder of parties is entangled with misjoinder of causes of action. Conceding misjoinder need not harm a party's substantive position if the properly joined parties suffice to adjudicate the O&M allegation; striking out extraneous respondents can in fact expedite the proceedings and reduce cost.
So, Can the Foreign Company Be Joined?
It can. A foreign-incorporated entity may be joined as a respondent in an NCLT oppression and mismanagement petition where it has a genuine nexus to the alleged conduct — but in most minority-shareholder disputes it will be a proper party at best, not a necessary one, and misjoinder of it is a curable defect rather than a bar to the petition. The realistic limit is on relief, not joinder: NCLT's substantive orders run against the Indian company and its board, and against a foreign entity its power is confined by service, enforcement and the territorial reach of Section 242. Two candid qualifications frame all of this. There is sparse reported case law addressing the joinder of foreign subsidiaries specifically in O&M petitions, so the position is extrapolated from general joinder principles; and the Companies Act does not clarify NCLT's territorial reach over foreign entities, leaving some uncertainty at the margins. Where the foreign entity's conduct is central and its assets lie abroad, the practical course is to use the NCLT petition to govern the Indian company and to pursue the foreign entity through parallel proceedings in its own jurisdiction.
Practical Takeaways
- Before joining a foreign entity, establish a concrete factual nexus to the oppression or mismanagement — active participation, prejudicial asset or fund flows, or a directly affected shareholding or debt interest — not mere related-party status.
- Assess status honestly: in most minority-shareholder petitions a foreign subsidiary is a proper party, not a necessary one; pleading it as necessary invites skepticism.
- Confirm that service on the foreign entity is feasible; if it is impractical, reconsider joinder, because NCLT cannot issue letters of request or enforce abroad.
- Frame relief as regulation of the Indian company's affairs (for example, restraining the Indian company from transferring assets to the foreign entity) rather than as a direct order against the foreign entity.
- Treat misjoinder as curable: if a foreign respondent's connection is tenuous, be prepared to strike it out to streamline the case rather than defend a weak joinder; the petition continues against the properly joined parties.
- Where core relief depends on the foreign entity's conduct (such as recovery of misappropriated assets from it), consider parallel proceedings in the foreign jurisdiction, as NCLT's reach is limited.
Key Authorities
- Companies Act, 2013, Sections 241, 242 and 242(4) — the oppression and mismanagement jurisdiction and the illustrative (and territorially bounded) reliefs.
- NCLT Rules, 2016, Rules 8, 11, 41 and 155 — inherent powers, defects in pleadings, replies and amendment. Source
- Code of Civil Procedure, 1908, Order 1 Rules 9, 10 and 13, and Section 99 — misjoinder and non-joinder, striking out, timing of objections, and the appellate bar on reversal for misjoinder.
- Company Appeal (AT) (Insolvency) No. 1417 of 2019, NCLAT (22 May 2020) — the necessary/proper party distinction and the striking-out remedy for misjoinder. Source
- Delhi High Court, C.R.P. 23/2024 (9 September 2025), citing Prem Lala Nahata v. Chandi Prasad Sikaria — misjoinder as a curable procedural defect. Source
- Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. (2018) 2 SCC 674 — "person" includes entities resident outside India, supporting the participation of foreign parties.
- Insolvency and Bankruptcy Code, 2016, Sections 234–235 — cross-border mechanisms that have no equivalent in the Companies Act or NCLT Rules, marking the limit of NCLT's reach over foreign entities.
This analysis reflects the law as at July 2026. It is published for general information and does not constitute legal advice.