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ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
NOTICE OF MOTION NO.121 OF 2016
IN
COMMERCIAL SUIT NO.87 OF 2015
Mediacom Communication Private Limited ] erstwhile known as Mediacom Communication ]
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ] ...Applicant
(Org. Defendant No.1)
In the matter between
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Having their address at 47, Malcolm Baug ]
S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
5. Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen iris Victoria, 3146, Australia ]
6. Stephen David Allan ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
IN
COMMERCIAL SUIT NO.87 OF 2015
Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, Glen ]
Iris, Victoria, 3146, Australia ] ...Applicant
In the matter between
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Occupation: Director ]
Having their address at 47, ]
Malcolm Baug, S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
5. Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen Iris Victoria, 3146, Australia ]
6. Stephen David Allan ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
IN
COMMERCIAL SUIT NO.87 OF 2015
Stephen David Allan ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Applicant
In the matter between
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Occupation: Director ]
Having their address at 47, ]
Malcolm Baug, S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
5. Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen Iris Victoria, 3146, Australia ]
6. Stephen David Allan ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
IN
COMMERCIAL SUIT NO.87 OF 2015
1. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
Occupation: Director ]
Having their address at 47, Malcolm Baug ]
S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ] ...Applicants
In the matter between
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Occupation: Director ]
Having their address at 47, ]
Malcolm Baug, S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
5. Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen Iris Victoria, 3146, Australia ]
6. Stephen David Allan ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
IN
COMMERCIAL SUIT NO.87 OF 2015
Multi Commodity Exchange of India Ltd. ] ...Applicant
In the matter between
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Occupation: Director ]
All having their address at 47, ]
Malcolm Baug, S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen Iris Victoria, 3146, Australia ]
6. Stephen David Allan ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
7. Mediacom Media India Pvt. Ltd. ]
2nd
Floor, Trade World, C-Wing, ]
Kamala City, Senapati Bapat Marg, ]
Lower Parel, Mumbai 400 013 ]
8. Meritus India Private Limited ]
Commerz, 8th
Floor, International ]
Business Park, Oberoi Garden City, ]
Goregaon (E), Mumbai -400 063 ]
9. Vikram Sakhuja ]
3rd floor, Hormuzd, Shanti Road ]
Juhu, Mumbai – 400 049 ]
10. Ashutosh Srivastava ]
13, Cypress Avenue, ]
Singapore – 279839 ]
11. Srinivas Venkata Lakshmana Chintakindi ]
Flat No.2501, Tivoli Central Avenue, ]
Hiranandani Gardens, Powai ]
Mumbai 400076 ]
12. Ramsubramanian Iyer Sridhar ]
Plot No. C, Flat No.302, C Wing, ]
Vasant Galaxy Jupiter CHSL, ]
Bangur Nagar, M.G. Road, ]
Goregaon W, Mumbai – 400 090. ]
201 2nd
Floor, Kamala Business ]
Executive Park, Opposite Vazir ]
Glass Factory, Kondovita Road, ]
Andheri East, Mumbai – 400 059. ] ..Proposed
Defendants
Multi Commodity Exchange of India Ltd. ] a Company incorporated under the terms of ] the Companies Act, 1956 and having its ] registered office at Exchange Square, Suren ]
Road, Chakala, Andheri (East) ]
Mumbai 400 093. ] ...Plaintiff
Ltd. having its address at 201, 2nd
Floor ]
Kamala Business Executive Park ]
Opposite Vazir Glass Factory, ]
Kondovita Road, Andheri East, ]
Mumbai 400 056 ]
2. Sam Baman Balsara ]
Occupation : Director ]
3. Lara Sam Balsara ]
Occupation : Director ]
4. Soli Bomanji Balsara ]
Occupation: Director ]
Def. Nos.2 to 4 having their address at 47, ]
Malcolm Baug, S.V. Road, Jogeshwari (West) ]
Mumbai 400 102 ]
5. Nadaraja Kaniappan ]
Occupation: Alternate Director ]
Having his address at 54 Pascoe ST, ]
Glen Iris Victoria, 3146, Australia ]
Occupation: Director ]
Having his address at 2 Spaniards Close ]
Hampstead, Lond, NW 116th
]
United Kingdom ] ...Defendants
Plaintiff.
Mr. Nirav Shah, a/w Adv. Ashwini Hariharan, i/by DSK Legal for the
Defendants.
JUDGMENT
1) By these Motions, the Defendants seek rejection of the Plaint under Order 7 Rule 11 (a) of the Code of Civil Procedure 1908 (“CPC”), and dismissal of the Suit against them - Defendant No. 1 being the company, and Defendant Nos. 2 to 6 being its directors.
2) Mr. Nirav Shah, learned Counsel for the Defendants, submits that the plaint is essentially a money claim for recovery under certain invoices. However, each relied upon invoice, on a plain reading, shows that they were raised by “Mediacom Media India Pvt. Ltd.” (MMIPL) and not by Defendant No. 1 - “Mediacom Communication Pvt. Ltd. (MCPL).
3) The underlying transactions between the Plaintiff and MMIPL pertain to the period 2008 to 2010. The plaint discloses no services rendered by Defendant No. 1 to the Plaintiff through any of the invoices. On this ground, it is urged that the plaint suffers from non-joinder of a necessary party, misjoinder of Defendant No. 1, and multifariousness.
4) Accordingly, it is submitted that the Plaint discloses no cause of action against Defendant No. 1 or its directors (Defendants 2 to 6) and warrants rejection under Order VII Rule 11 of the CPC.
5) Mr. Shah further contends that the claim is barred by limitation. Since the invoices pertain to the years 2008 and 2010 and the suit was filed only in 2014, the claim is ex-facie time barred. He submits that the Suit is vexatious and an abuse of the process of this Court, meriting dismissal with exemplary costs.
6) Per contra, Mr. Sabnis, learned Counsel for the Plaintiff, submits that Defendant No. 1 – MCPL is an associate company/fellow subsidiary of MMIPL. He relies on a letter dated 24th February 2010 to establish the connection between the two entities. The letter records that, in view of certain statutory changes, MMIPL would henceforth issue bills to the Plaintiff in its new name MCPL. The original agreement was also to be revised in the MCPL’s name.
7) He further submits that between 2008 and 2010, MMIPL, an advertising company, raised invoices for work allegedly carried out, for which it received payments aggregating to Rs. 10.93 crores. He places reliance on the invoices and purchase orders evidencing payments.
8) He emphasis that Mr. Tushar Deshmukh, who had signed the invoices of MMIPL, is the same individual who has affirmed the Affidavit-in-support of the present Notice of Motion in his capacity as the Finance Director of Defendant No. 1 (MCPL). He submits that from October 2010 onwards, invoices were issued by MCPL, drawing attention to the invoice dated 28th October 2010.
9) He also relies upon the Revised Agreement dated 7th December 2010, between the Plaintiff and Defendant in lieu of change in name of MMIPL to MCPL.
10) According to him, MMIPL is the parent company and the Defendant No. 1 is an associate company/fellow subsidiary. Reliance is place on E-Form 23AC filed with the Registrar of Companies (RoC) by MMIPL for the year 2011. On this basis, he contends that the Plaintiff rightly instituted proceedings against MCPL as the new name of MMIPL.
11) He submits that after defrauding the Plaintiff of several crores, the Defendant No. 1 have now sought to evade liability by contending that they are a separate entity. Referring once again to the letter dated 24th February 2010 and the RoC filing of E-Form 23AC, he contends that MMIPL and Defendant No. 1 are related entities, and therefore the Notice of Motion must be dismissed.
12) The Learned Counsel disputes the contention that the Suit is barred by the law of limitation. He relies upon the correspondence exchanged between 11th March 2014 and 25th September 2014 addressed to Defendant No.1, to which no response was received. By the letter dated 25th September 2014, a final opportunity was given to Defendant No.1 to furnish proof of services rendered against the suit invoices. He further relies on the said correspondence in the light of the special audit report of Price Waterhouse Coopers (“PWC”) came to the Plaintiff’s notice in 2014. It was only then, according to him, that the Plaintiff discovered that the Defendant had raised invoices without rendering services. He therefore submits that the Suit is governed by Section 17 of the Limitation Act and is not barred by limitation. Analysis and Conclusion 13) I have heard both Counsel and considered their rival contentions. A mere perusal of the invoices evinces that, none of them have been raised by the Defendant No. 1 upon the Plaintiff's. The money claim against Defendant No. 1 to 6 is based solely these 16 invoices.
14) Apart from a bald assertion in the Reply to the Notice of Motion, the plaint and the documents annexed thereto disclose no connection whatsoever between Defendant No. 1 to 6 and the said invoices. This is even more glaring as documents relied by the Plaintiff’s counsel do not form a part of the plaint.
15) It is well settled that, while considering an application under Order 7 Rule 11, the Court proceeds on a demurrer, examining only the Plaint and the documents annexed therewith.[1]
16) I find merit in the submissions of Mr. Shah. It is evident that MMIPL is a distinct legal entity. Indeed, the Plaintiffs themselves have filed a Chamber Summons seeking to implead MMIPL and its directors in the present Suit.
17) The argument that the Chamber Summons should be heard first before deciding the Notice of Motion seeking rejection of the Plaint is misconceived and deserves rejection.[2]
18) A Chamber Summons that seeks to alter the very cause of action cannot be permitted to pre-empt adjudication of a pending Order VII Rule 11 application.[3] In fact, the Chamber Summons was filed on 2nd May 2018 - nearly four years after the suit (filed on 4th December 2014) and almost two years after the present Notice of Motion (filed on 29th September 2016).
1 Dahiben Vs. Arvindbhai Kalyani Bhanusali (Gajra) Thr. LRs. & Ors. (2020) 7 SCC 366. 2 R.K. Roja Vs. U.S. Rayudu (2016) 14 SCC 275. 3 L.I.C. Vs. Sanjeev Builders, 2022 INSC, paragraph no.70.
19) Evidently, MCPL and MMIPL are two independent juristic entities. The invoices on their face disclose no nexus between MCPL (Defendant No. 1) and MMIPL. The cause of action, if any, lies only against MMIPL, a distinct legal entity. No averment in the Plaint or documents on record establishes any legal link binding MCPL (Defendant No. 1) to the invoices admittedly issued by MMIPL. On the contrary, the agreement with MCPL and the invoice dated 28th September 2010 issued by MCPL corroborate the Defendant’s case that the entities are separate.
20) The mere fact that the same individual signed both the affidavit in the present Motion on behalf of MCPL and the invoices for MMIPL cannot by itself establish any legal interconnection. No such averment finds place in the plaint, and an additional affidavit filed in response to the present Motion cannot be read into the plaint to expand its scope – such a course is impermissible in law. The corporate individuality of the two entities, which is recognized and protected by law, cannot be disregarded. Nothing prevented the Plaintiff from suing MMIPL directly on the basis of the invoices, or from impleading both entities at the inception. I therefore find no merit in Mr. Sabnis’s contention that the two entities are interlinked.
21) In my view, the Suit also is barred by limitation. Mere unilateral correspondence by the Plaintiff without any acknowledgement of liability by the Defendant No.1 cannot extend the period of limitation.
22) The plea that the Suit is saved by Section 17 of the Limitation Act is untenable. The Plaintiff has not disclosed any steps taken from September 2010 to March 2014. Such inaction by the Plaintiff for over four years is uncondonable; the Court cannot place a premium on lethargy and inaction. To rely on the PWC report to explain the discovery of unpaid invoices is equally untenable. It is settled law that where, with due diligence, a party could have discovered the alleged fraud, the benefit of Section 17 of Limitation Act is unavailable (see Shrikrishna Vs. The Kurukshetra University[4] ). O R D E R
23) Accordingly, I find no substance in the submissions of Mr. Sabnis and the Motions must be allowed.
24) There is clearly no cause of action against the Defendant No. 1, who have been wrongly dragged into this litigation.
25) The Suit is accordingly dismissed against the Defendants.
26) In view of the dismissal of the Suit, the Chamber Summons seeking to implead MMIPL and amend the Plaint also stands dismissed. I find no reason to allow a Chamber Summons filed nearly eight years after institution of the Suit and nearly one and half years after the present Motion. Ex-facie, it would be barred by limitation. To permit such an amendment would amount to granting judicial approval to delay and lethargy on the part of indolent litigants.
27) The Plaintiffs have subjected the Defendants to litigation for nearly a decade. In these circumstances, all the above Motions are allowed in terms of prayer clauses (a) respectively and Chamber Summons dismissed with exemplary costs. Having regard to the statement of costs filed by the Defendants, in addition to the unstated incidental expenses incurred in the course of this litigation, I direct the Plaintiffs to pay cost of Rs.20,00,000/- to the Defendants within two weeks from the date of this Order. (KAMAL KHATA, J.)