Multi Commodity Exchange of India Ltd v. Mediacom Communication Pvt. Ltd.

1 The present Appeal is filed by the appellant M/s. Multi Commodity Exchange of India Limited (hereinafter referred to as, ‘MCX’), through its authorized representative, being aggrieved by the judgment delivered passed by the learned Single Judge on 29/9/2025, thereby dismissing Commercial Suit No. 87 of 2015 filed by the appellant on the motion of the defendant no.1 Mediacom Communications Private Ltd, by declaring that the plaint did not make out any cause of action against the defendant no.1. By the very said judgment, the learned Single Judge also dismissed the Chamber Summons filed by the appellant seeking impleadment of ‘Mediacom Media India Private Ltd’ (for short ‘MMIPL ’) and for amendment of the plaint, on the ground that such a request is barred by limitation and permitting the amendment at a belated stage, would amount to grant of judicial approval to delay and lethargy on part of indolent litigants. Apart from this, the appellant is also aggrieved by the imposition of cost of Rs. 20 lakhs directed to be paid by it to the defendants by way of exemplary costs.

2 We have heard learned Senior Counsel Mr. Sure[1] Shah for the appellant and Mr. Nirav Shah for defendant no.1. The learned Senior Counsel Mr.Surel Shah representing the appellant - the original plaintiff, who instituted the Commercial Suit by impleading ‘Mediacom Communications Private Limited’ along with its Directors as defendants, would submit that the plaintiff in the backdrop of the pleading, that it being listed on Bombay Stock Exchange (BSE), and as a part of the ongoing National Spot Exchange Limited (NSEL) payment crisis, was directed to undertake special audit of non-trading financial dealings with it’s promoters and related parties and PriceWaterhouse Coopers Private Limited (PWC) conducted the audit and submitted the report to the Ministry of Finance (Economic Affairs). Since the plaintiff had engaged defendant no.1 as its media agency for outdoor print and TV campaign and the defendant had raised invoices, the amount under which, according to the plaintiff, was paid to the tune of Rs.10.92 crores. However, the special audit report reflected glaring flaws in respect of some of the invoices, and since in some of them, broadcasting certificates from the TV channels were not attached by the defendants, whereas in other cases, photographs of hoardings were not attached, which amounted to gross discrepancy. The plaintiff, therefore, pleaded that it, apprised the defendant no.1 of the audit report and sought proof of the delivery in reference to the services rendered upon them by the plaintiff, but the defendant did not co-operate, which gave a cause of action for the plaintiff to file a criminal complaint against the defendants and other co-conspirators. According to Mr.Shah, the defendants played a fraud upon the plaintiff and defrauded it of several crores of rupees without providing any service or deliverable in return, and the audit report, brought it on surface. Premised on the conduct of the defendant being fraudulent, the plaintiff staked it’s claim of refund of the monies paid by it to the defendant, and prayed for a decree, by ordering and directing the defendant to pay an amount of Rs.22,39,75,210.43 in terms of the particulars of claim, which included the principal amount of Rs.10,93,58,113.[9] along with the interest at the rate of 18% p.a. from the date of raising of the invoices.

3 Pending the hearing and final disposal of the Suit, the plaintiff also prayed for direction of the defendant to deposit the outstanding amount in the Court and also sought a direction to the defendants to disclose on oath, particular of all its properties, both movable and immovable, and to seek appropriate securities in its favour. The plaint being instituted was verified by the Assistant Vice President of the plaintiff, and the Suit was instituted on 4/12/2014, which is accompanied with the copies of invoices, as well as the relevant extract of the PWC (Audit) report, as far as dealings with the defendant are concerned. The copies of the letter forwarded to the defendant and addressed on its official address also form part of the plaint.

4 In the Suit so filed by the plaintiff, a Notice of Motion was taken out by defendant no.1 ‘Mediacom Communication Pvt. Ltd’ under Order VII Rule 11(a) of the Code of Civil Procedure, 1908 praying for rejection of the plaint, and also for payment of cost by holding an inquiry u/s. 35 and 35-A of the Code of Civil Procedure for the lapse on part of the plaintiff. The affidavit-in-support of the Notice of Motion was premised on the ground that the Suit did not disclose any cause of action against defendant no.1 and therefore it amounted to misuse of the process of the Court. The affidavit in support specifically pleaded that the Suit filed by the plaintiff for recovery of payments due under certain purported invoices, on its bare perusal would reveal that the invoices have been raised by the plaintiff on Mediacom Media India Pvt Ltd, (in short referred to ‘MMIPL ’, and not on defendant no.1 i.e. Mediacom Communication Private Ltd (MCPL), and the claims staked in the plaint is in relation to the transaction between 2008 and 2010 entered into by the plaintiff with the MMIPL, and the plaint, therefore, suffers from non-joinder of necessary party and misjoinder of defendant no.1 and on the ground of multifariousness, the suit be dismissed against defendant no.1 with exemplary costs. The Notice of Motion was pending for adjudication before the Court.

5 In March 2018, the plaintiff took out chamber summons seeking amendment in the plaint as per Schedule A, which prayed for impleadment of defendant nos.[7] to 13, the defendant no.7 being MMIPL belonging to Group ‘Mediacom’, and with a specific pleading that ‘MMIPL ’ and ‘MCPL ’ are group ‘M’ companies, and are controlled and managed by common Directors, and/or persons having charge, and control over affairs of both. Defendant no.8 Meritus India Pvt Ltd, was pleaded to be an entity in which defendant no.7 Company had merged, and it was pleaded that all obligations, liabilities of defendant 7 Company are now that of defendant no.8 and therefore it is a necessary party. Defendant nos.[9] to 12, being Directors of defendant no.7 and 8 Companies who were all times during subsistence to the contract/agreement with the plaintiff, responsible for the affairs and management of defendant no.7 Company and/or MEDIACOM as a group company, were also sought to be impleaded by the amendment. The Chamber Summons specifically pleaded that defendant nos.[1] and 7 are alter egos of one another and have strong commonality in relation to business transactions with the plaintiff, and it was reliably learnt that invoices raised by the defendant no.7 upon defendant no.1 have been paid over by the plaintiff company to Mediacom, and therefore the defendants are jointly and severely liable for payment. It was also pleaded that the group of companies are entitled to be treated together for the purpose of general accounts, balance sheet, and profit and loss account. According to Mr.Shah, the Chamber Summons filed for impleadment was accompanied with an affidavit affirmed by the Legal Manager of the applicant, who specifically stated that taking out of the Chamber Summons was necessiated on account of certain events that had transpired during the pendency of the Suit, and in detail, the relationship inter se between the defendants was clearly set out. In addition, the Chamber Summons was accompanied with several invoices in support of the impleadment and establishing that MMIPL was a subsidiary company and relevant proof thereof was also annexed.

6 By the common judgment pronouncing upon the application filed by defendant no.1 under Order VII Rule 11 of the Code of Civil Procedure, and the Chamber Summons filed for impleadment of the party, the learned Single Judge has dismissed the Suit by allowing the application under Order VII Rule 11 and rejecting the Chamber Summons filed by the plaintiff for impleadment. According to Mr. Shah, it was imperative for the learned Single Judge to consider the application for amendment, before it could have considered the application for rejection of plaint. According to him, law must take pragmatic and legal approach where the amendment is sought to cure a curable defect, and particularly when a party is desirous of bringing a necessary/proper party on record, and particularly when the trial has not progressed at all, as even the issues are not settled. According to him, when the plaintiff had taken out Chamber Summons under Order VI Rule 17, to cure the alleged defect of non-joinder, and to place on record certain additional facts/subsequent events, with a specific pleading that the trial has not yet commenced, the amendment ought to have been allowed, as it would have advanced justice and avoided multiplicity of proceedings, unless the amendment was to fundamentally change the nature of the Suit or would have resulted in irreparable prejudice incapable of being compensated by costs. Apart from this, according to Mr. Shah, the rejection of the plaint on the ground of limitation is equally unsustainable, as limitation is a mixed question of law and fact, which cannot be determined without the evidence and could not have been a ground for rejection under Order VII Rule 11 (d). It is also the case of Mr. Shah that the plaint categorically pleaded that the entire transaction was vitiated by fraud, inasmuch as monies were wrongfully received and retained, and once the fraud has come to light on the auditor’s report and it was so pleaded, the statutory mandate is clear, that the limitation does not commence from the date of the transaction, but from the date of discovery of fraud, and the limitation automatically get extended, as the cause in the suit arose on the fraud being revealed. Even otherwise, according to Mr.Shah, the question as to whether fraud has been established, and whether plaintiff had exercised due diligence, on the fraud being disclosed, are all matter of evidence. According to him, rejection of plaint on ground of limitation, without trial and without recording evidence, results in premature adjudication of facts, which is impermissible under order VII Rule 11, as it is only upon an issue being formulated, it could have been answered. Further, according to him, the rejection proceeds on the assumption that the impleadment of correction of parties is fatal without examining whether the plaintiff's case fall within the recognized exceptions, where such impleadment relates back, and specifically, when the Court is expected to adopt a liberal approach in the interest of justice, and he would invoke the provision of Section 21 of the Limitation Act, 1963. In short, it is the submission of Mr. Shah, that the correct approach which ought to have been adopted, was to allow the amendment, and test the rival contention on merits instead of non-suiting the plaintiff at the threshold, and upon the amendment being permitted to be carried out, whether the relief could be granted against the defendant, or whether the claim was barred by limitation, ought to have been considered as a triable issue. Submitting that the plaintiff's amendment application expressly aimed at curing the alleged defect and bringing the necessary entity on record, according to him, it was not a case of introducing a wholly new cause of action, but of aligning parties and pleadings with the real controversy that already formed the subject matter of the suit, including the pleaded payment flow, and the audit triggered discovery. The thrust of Mr. Shah is upon the amendment application being considered first, and despite this, if the defect still survived, and which was incurable to reject the plaint, but by not following the sequence, the Court has grossly erred, is his submission. Mr. Shah would place reliance upon the decision of this Court in Pramod s/o Manoharrao Konge Vs. Shantaram which involved a similar set of facts and the Court holding that the application for amendment of plaint need to be considered on its merit before consideration of 1 2017(3) Mh.L.J 223 application for rejection of plaint. He has also placed reliance upon another decision of this Court in Akshay Quenim Vs. Royce Savio Pereira,2.

7 Opposing the contention raised by Mr.Surel Shah for the respondent (defendants in the suit), Mr. Nirav Shah support the impugned order, as he would submit that all the invoices annexed to the plaint at Exhibit-C were issued in the name of MMIPL, and the plaintiff was conscious that none of the invoices were issued by Media Communication. He would submit that the appellant had adopted inconsistent and contrary stand across the pleadings, and no case was made out for piercing the corporate veil, by establishing that Mediacom Communications and MMIPL are the same companies or group companies, and in order to decide an application under Order VII Rule 11 of the Code, only the averments made and the documents attached to the plaint are to be looked into. It is his submission that the Chamber Summons filed by the appellant completely changed the nature of the case, as now the matter did not remain merely of fraud, but the case pleaded was of piercing the corporate veil and in any case, when a right has accrued to the defendant to raise an issue of limitation, it cannot be defeated by the amendment being permitted to be carried out, and the issue about the chamber summons for amendment to be heard before the Notice of Motion seeking rejection of plaint is irrelevant, as the defect in the Suit of the plaintiff is incurable and cannot be cured even by amendment. It is also the submission of Mr.Nirav Shah that though the plaintiff had alleged fraud in connivance with it’s own employees, it is not disclosed as to what action was taken against them and neither they are joined in the Suit nor their identity is disclosed. Mr.Nirav Shah would place reliance upon the decision of Dahiben Vs. Arvindbhai Kalyanji Bhanushali (Gajra) dead through Legal Representatives and ors[3], which has determined the parameters, to ascertain whether the plaint prima facie discloses cause of action and it is held that the plea raised in the written statement cannot be looked into, and if the Court finds the suit to be manifestly vexatious, not disclosing any right to sue, it would be justified in exercising power of rejection of plaint. In addition, he would also place reliance upon the decision in case of R.K. Roja Vs. U.S Rayudu and Anr[4]. By placing reliance upon the decision in case of Life Insurance Corporation of India Vs. Sanjeev Builders Private Limited and anr,[5] Mr.Shah would submit that in the said decision, the cardinal principle of law, in allowing or rejecting the application for amendment of pleading to be followed by the Court is set out, by stating that as a rule, decline amendments, if a fresh suit on the amended claim would be barred by limitation on the date of filing of the application.

Apart from this, learned counsel has also invited our attention to the decision of the Apex Court in State of Rajasthan and ors Vs. Gotan Lime Stoneo Khanij Udyog Pvt Ltd and anr[6], laying down the principles of lifting of the corporate veil and submitting that unless and until the foundational fact for the same is made out, the Court may not exercise its discretion to lift the corporate veil, just in the backdrop of a bald unsupported pleading.

8 We have perused the impugned order and in order to examine its validity in the backdrop of the rival contentions advanced, we have perused the documents placed before us, including the plaint as well as the Notice of Motion taken out under Order VII Rule 11 and the Chamber Summons filed by the original plaintiff seeking amendment in the plaint. There can be no dispute about legal proposition that the power under Order VII Rule 11 can be exercised by the Court at any stage of the Suit, either before registering the plaint or after issuing summons to the defendant or before conclusion of the trial, and merely because the issues are framed, the matter must necessarily go to trial, has been considered to be not a ground available to refuse entertaining of an application. The power conferred on the Court to terminate the civil action through Order VII Rule 11, which permit the Court to summarily dismiss a Suit at the threshold, without proceeding with the trial and recording the evidence, but aborting the proceedings on any of the grounds set out in the provision, is undisputedly a drastic step. It is therefore, the responsibility of a Court to determine whether the grounds on the basis of which the power is to be exercised, are made out, and a duty is cast on the Court to determine whether the plaint discloses a cause of action by scrutinizing the averments in the plaint, read in conjunction with the documents relied upon to find out whether the Suit is barred by any law. When a document is referred to in the plaint, it formulates the basis of the plaint and is treated a part of the plaint. The test for exercise of the power, to reject a plaint is that, the averments in the plaint are taken in its entirety to be read with the documents filed in support of the plaint and not to pick up a stray sentence or an averment in the plaint and read the same in isolation, but if on the meaningful reading of the plaint, it is found that the Suit does not disclose a right to sue, or cause of action, or Suit is barred by any law, in such case, the plaint ‘shall’ be rejected. While exercising the power under Order 7 Rule 11 (a), as the plaint do not disclose a cause of action, it is necessary to take note that ‘cause of action’ is every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his entitlement to seek a judgment on its basis. It consist of bundle of material facts which the plaintiff shall prove in order to secure a relief sought by him and there must exist a real cause of action and the cause shall not be illusionary, i.e. a clear right should be established for the entitlement of a relief sought by a person who approaches the Court.

9 With the aforesaid principle of law flowing from the Code of Civil Procedure and through various authoritative pronouncements, we must turn our attention to the plaint filed by the appellant, as the plaintiff in the Commercial Suit instituted by it in the Ordinary Original Civil Jurisdiction of the Court. The plaintiff Multi Commodity Exchange of India Ltd, a National Level Commodity Exchange recognized by the Forwards Market Commission (FMC) is constituted for the purpose of facilitating and regulating online trading, clearing and settlement operations for commodity future contracts and it enabled the Members of the Exchange, their authorized persons, constituents and other participants to clear and settle trade on exchange in commodity future contracts. The defendant no.1, being an Advertisement Company, engaged in the business of buying and selling advertising space, with defendant nos.[2] to 6 being its Directors, were pleaded to be responsible for conduct of business of the Company. During the course of business, the plaintiff engaged defendant no.1 as its media agency for outboard print and T.V. campaign from 2008 to 2010 and the defendant raised invoices for the purported work carried by it and as per the invoices, an amount of Rs.10,93,58,113.[9] was also paid. The plaint was accompanied with 16 invoices from Exhibit – C[1] to Exhibit C-

16. As per the plaint, the defendant paid a total amount of Rs.8.48 crores for the services rendered by the defendant no.1, but in respect of seven invoices aggregating to 6.42 crores, the broadcasting certificate from the T.V channel were not attached, to substantiate that the Television commercials were actually aired by the T.V. Channel. Further, in respect of eight invoices aggregating to 3.73 crores, though a copy of broadcasting certificate was attached, there were discrepancies in the certificate issued by T.V. channel and invoices received by the defendant. Apart from this, an invoice of 0.77 crores for outdoor advertisement, the photograph of hoarding was not attached. According to the plaintiff, this was also revealed during the audit and was made known through audit report.

10 The plaintiff pleaded that it addressed letter to the defendant for confirmation of services, however, it did not receive any response. According to the plaintiff, when the FMC directed the plaintiff to conduct a special audit on non-trading financial dealings with it’s promoters and related parties, since the inception of the Company till the review period i.e. 30/9/2013, the Auditor, PriceWaterCoopers (PWC) submitted its report to the Forward Market Commission and also to the plaintiff to realise that the defendant defrauded the plaintiff. In order to afford an opportunity to the defendant, to provide proof of delivery in reference to the services rendered to the plaintiff, the plaintiff addressed repeated communications, but no cognizance thereof was taken. Pleading that from the observations of PWC report, it was clear that a fraud had been played upon the plaintiff by the defendant without providing any form of service or deliverable in return. It is, hence, pleaded that there was no verification of due diligence performed by the Officers of the plaintiff prior to sanctioning the invoices and since the conduct of the defendant was found to be fraudulent, the plaintiff sought refund of the monies paid under various invoices.

11 Along with the plaint, all the invoices that are annexed, are raised on the plaintiff, MCX-Corporate for the Corporate activity (outdoor and OOH) and these invoices are issued for an on behalf of MMIPL, but on each of the invoices, there is a logo of “Mediacom People First – Better results”. The invoices are for T.V. bill and provide the details of the airing of the advertisement on behalf of the plaintiff on various T.V. channels including NDTV Profit, Set Max, Aaj Tak, Star Sports, etc. There are also receipts of the amount received by MMIPL. The claim of the defendant no.1 through its Notice of Motion is, that the invoices were raised by MMIPL and not by Mediacom Communications Ltd. We have noted that the invoices/T.V Bill carried a logo of ‘Mediacom’. Report of the Special Audit of Multi Commodity Exchange of India (MCX) forwarded to the Forward Market Commission (FMC) pertaining to the appellant, in the background of Financial Technologies of India Ltd (for short ‘FTIL ’) Flagship Company of FT Group floated by Jignesh Shah, with relation to the transaction conducted on National Spot Exchange of India Ltd (NSEL), highlighted the scope of work of review, as identification of related parties as NSEL, and review of non-trading transactions between MCX and significant related parties. The background reveal that the FTIL established first exchange Multi Commodity Exchange of India (MCX) as the largest commodity exchange. In the report of the Auditor in clause 8.3.2, there is a reference of MCX i.e. the plaintiff being engaged with ‘Mediacom Communication’ as its media agency for outdoor print and T.V. campaigns between 2008 and 2001 and being paid INR Rs.18.48 crores for its services. The report find specific mention of ‘Mediacom Communication’ when it records thus:- “8.3.[3] Seven(7) invoices aggregating to INR 6.42 crores, broadcasting certificates from the TV channels were not attached to substantiate that the television commercials were actually aired by the TV channels. Further, eight (8) invoices aggregating to INR 3,73 crores, though a copy of the broadcasting certificate was attached, discrepancies were noted between the broadcasting certificates issued by TV channels and invoiced from Mediacom Communication, with regard to time and date of telecasting of advertisement. Additionally, in case of an invoice of INR 0.77 crores for outdoor advertisement photographs of hoardings was not attached as a supporting. 8.3.[4] The letter sent by MCX to Mediacom Communication for confirmation of services and broadcasting certificates were delivered, however, no response was received till the date of issuance of this report. 8.3.[5] Considering the absence of broadcasting certificates and discrepancies and lack of responses to letters sent by MCX, the payment of Mediacom to the extent of INR 6.42 crores appears questionable.”

12 What is pertinent to note is the audit report reference to Mediacom Communication and MCX being engaged with Mediacom Communication as its media agency, and in furtherance of this report, the plaintiff addressed a communication of 11/3/2014, which is part of the plaint to Mediacom Communications Pvt. Ltd, with regards to the following subject:- “Confirmation for services provided against payment received from Multi Commodity Exchange India Ltd (“MCX”)” The plaintiff MCX addressed as below:- “Dear Sir, Kindly confirm if the following invoices were raised by you on MCX and complete services have been provided by you against such invoices. Request you to also confirm whether the payments have since been received by you from MCX. Kindly treat this as URGENT and send us your written response to the undersigned by courier or email Kanika.Khandelwal@mcxindia.com to reach MCX latest by March 20, 2014. Thanking you, Yours faithfully, For Multi Commodity Exchange India Limited” This is accompanied with the annexure with regards to four advertisements.

13 Along with the plaint, several communications addressed to Mediacom Communications Pvt Ltd (defendant no.1) are placed on record and amongst these communication, one communication dated 11/3/2014 is addressed to Mediacom Media India Pvt Ltd (MMIPL) with regards to the same subject and with the similar content with list of 25 invoices with the amount of Rs.34,80,000/- for the years 2008-