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2014 (5) TMI 1149 - HC - Indian LawsProper party to the suit - deleting the defendant / respondent no.2 from the array of defendants in the suit, holding the defendant / respondent no.2 to be neither a necessary nor a proper party to the suit - termination of the appellant / plaintiff’s service with the defendant no.1 by the defendant no.2 - whether because 100% of the shares of the defendant no.1 Company are held by the defendant no.2, the defendant no.2 is a necessary party? Held that:- First of the aforesaid argument is against the very grain of Company Law. A Company is a distinct legal entity from its shareholder, even if all the shares are held by one person only. Thus, merely because the defendant no.2 holds 100% of the shareholding of the defendant no.1 Company, would not make the defendant no.2 liable for the dues and acts of the defendant no.1. Admittedly both defendant no.1 and defendant no.2 are separate legal entities. No case for piercing of the corporate veil is made out. The Supreme Court in Vodafone International Holding B.V. Vs. Union of India (2012 (1) TMI 52 - SUPREME COURT OF INDIA ) has held that a Company is a separate legal persona and the fact that all its shares are owned by one person or by the parent Company has nothing to do with its separate legal existence. Whether the termination of the services of the appellant / plaintiff could have been done by the defendant no.1 Company only and not by the defendant no.2.? - Held that:- The second argument is equally ambiguous. Even if it is to be presumed that it is the defendant no.2 which has terminated the services of the plaintiff and which the defendant no.2 could not have done, being not the employer of the appellant / plaintiff, that would only make the termination to be illegal but would not make the defendant no.2 Company with whom the appellant / plaintiff had no privity, liable. The claim if any of the appellant / plaintiff for such illegal termination would remain against the defendant no.1 Company only and not against the defendant no.2. Plaintiff during the hearing has also argued that the appellant / plaintiff was reporting to the defendant no.2. Even if that be so, merely because an employee, in the course of employment, is required to report to another instead of to the employer, would not make such another liable for any claims arising from such employment. No cause of action against the defendant no.2 is disclosed. Appeal dismissed.
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