Step 1: Identify the rule.
A wrong person has been made a defendant in a suit. The Code of Civil Procedure, 1908 deals with such party errors under Order I, Rule 10.
Step 2: What Order I Rule 10 allows.
Under Order I, Rule 10(2), the court may, at any stage, strike out the name of a party wrongly joined and add the name of the person who ought to have been joined. So the court can fix the parties.
Step 3: Why the suit need not fail.
The law says a suit should not be thrown out just because of a mis-joinder (wrong party added) or non-joinder (right party left out). The court prefers to correct the parties so the real dispute can be decided.
Step 4: Apply to the facts.
Since one person was wrongly impleaded as defendant, the court can simply permit substitution of the proper defendant or add the correct one, instead of ending the case.
Step 5: Knock out the wrong options.
Forcing a fresh suit, returning the plaint for mis-joinder, or dismissing as not maintainable all go against the clear power in Order I Rule 10 to cure party defects within the same suit.
Step 6: Conclude.
The right course is to allow substitution or addition of the proper defendant.
\[ \boxed{\text{Permit substitution or addition of the proper defendant.}} \]