Step 1: Understand the facts.
A suit is filed, but later it turns out that a wrong person was made a defendant. We must find what the court may do under the Code of Civil Procedure, 1908.
Step 2: Recall the aim of the CPC.
The CPC tries to do justice, not to defeat genuine claims on small technical mistakes. So it gives courts power to fix party errors.
Step 3: Understand mis-joinder of parties.
Mis-joinder means a person who should not be a party has been added. This can happen when the plaintiff names the wrong person by mistake or when new facts show another person is the real party.
Step 4: Apply Order I Rule 10 CPC.
Under this rule, the court may remove an unnecessary party, add a necessary party, or substitute the correct defendant. The goal is to decide the whole dispute properly.
Step 5: Check the other options.
Dismissing the suit, sending the plaintiff to file a fresh suit, or returning the plaint are all too harsh and against the spirit of the CPC, which favours correction over throwing out the case.
Step 6: Reach the answer.
Since the law lets the court fix the mistake, the court may permit substitution or addition of the proper defendant.
\[ \boxed{\text{Permit substitution or addition of the proper defendant.}} \]