Full Text
Date of Decision: 29.09.2021
M/S. SIGMA OUTSOURCING SERVICES PRIVATE LIMITED & ORS. ..... Plaintiffs
Through Mr.Samar Kachwaha, Ms.Shivangi Nanda and Ms.Kavita Vinayak, Advocates
Through Mr.Vikas Arora, Adv.
This hearing is conducted through video conferencing.
IA No.12565/2021(exemption)
Allowed subject to all just exception.
IA No.12564/2021 This application is filed by the plaintiffs seeking leave to file additional documents.
Learned counsel for the defendants state that the defendants have no objection to the same.
The application is allowed.
JUDGMENT
1. This application is filed under section 24(b) CPC for transfer of the suit bearing CS(COMM) No.272/2021 pending in the court of learned IA No.11456/2021 2021:DHC:3106 District Judge (Commercial), Patiala House Courts, New Delhi to be heard alongwith the present suit.
2. The plaintiffs have filed the present suit seeking the following reliefs:
(i) Damage caused by decline in performance of Plaintiff
No.1 post 2018 due to lack of focus of Defendant No. 1 and Defendant No. 2 on the business and growth prospects of Plaintiffs’ business (as was their contractual and fiduciary obligation towards the Plaintiffs).
(ii) Damage caused by misappropriation of confidential data including but not restricted no trade secrets, client lists, proprietary data etc, and using the same to clandestinely running a competing concern, to derive unscrupulous gains.
(iii) Damage caused by transfer of business opportunities, poaching of clients and employees resulting in huge reputational and financial loss in terms of loss of profits, loss of business opportunities, loss of human and financial capital of the Plaintiffs.
Defendants from using the name “Essencia Outsourcing Private Limited” or carrying on a like business under any other name, until a proper forensic audit of all defendants is completed and all proprietary date/trade secretes/client lists etc. belonging to the plaintiffs are restituted.
Defendants from poaching any of the clients or employees of the Plaintiffs, or using any proprietary data, client list, trade secrets etc. belonging to/pertaining to the plaintiffs.”
3. It is the case of the plaintiffs that in 2007 plaintiffs No.2 and 3 set up a company (plaintiff No.1) which is engaged in the business of outsourcing domestic business process management services. In 2013, a Memorandum of Understanding (MoU) was arrived at between plaintiff No.2, plaintiff No.3 and defendant No.1. The business was also being carried out through a partnership firm, namely M/s SIGMA (plaintiff No.4), which was constituted on 01.06.2011 with plaintiff No.2, plaintiff No.3 and Mr.Vivek Manchanda. In 2014, Mr.Vivek Manchanda submitted his resignation and plaintiff No.4 firm was reconstituted. Defendant No.1 was inducted as a partner and started drawing salary as a consultant of plaintiff No.1. In 2017- 18, defendant No.1 was made an Associate Director of plaintiff No.1.
4. It is the case of the plaintiffs that defendant No.1 persuaded the plaintiffs to induct his wife (defendant No.2). She also began to draw a salary from plaintiff No.1. It is also the case of the plaintiffs that in 2018 onwards, defendants No.1 and 2 started misappropriating the proprietary data, client lists, trade secrets etc. of plaintiff No.1. It is stated that by means of a conspiracy, defendants No.1, 2 and 3 clandestinely incorporated defendant No.5 in 2018. Thereafter, defendant No.1 started transferring business opportunities of plaintiff No.1 to defendant No.5. With effect from March, 2020, defendant No.2 stopped working with plaintiff No.1. In 2021, defendant No.1 expressed his desire of parting ways. Various other allegations are made against the defendants on the basis of which, the present suit has been filed.
5. Defendant No.1 herein on 10.08.2021 had already filed a suit being CS(COMM) 272/2021 before the court of learned District Judge (Commercial), Patiala House Courts, New Delhi against plaintiffs No.1 to 4 herein claiming the following reliefs: “(i) Pass a decree in favour of plaintiff and against defendants of Recovery, thereby directing the defendants to pay a sum of Rs.1.50 crores (Rupees one crore Fifty Lacs) to plaintiff, lying in the bank account of Defendant No.2, as detailed above, alongwith pendent- lite and future interest @ l8% pa along with other amounts as may be crystalized upon the rendition of accounts to be submitted by the defendants.
(ii) Pass a decree in favour of plaintiff and against defendants
3 & 4 thereby directing the defendants to pay a sum of Rs.45,00,000.00 [Rupees Forty Five Lacs only] as compensation as crystalized in the meeting held on 17.03.2021 along with pendente - lite and future interest @18% pa.
(iii) Pass a decree in favour of plaintiff and against defendants of permanent injunction thereby restraining defendants, their agents, assigns etc. from inducting any new director or new authorized signatory in the bank accounts of defendant No.1.
(iv) Pass a decree in favour of plaintiff and against defendants agents, assigns etc. from operating the bank accounts of defendant No.1. Company.
(v) Pass a decree in favour of plaintiff and against defendants agents, assigns etc. from operating the bank accounts of defendant No.2 Firm. (vA) Pass a decree in favour of plaintiff and against defendants agents, assigns etc. from conducting any business in the name of Defendant No.2 Firm.
(vi) Pass a decree in favour of plaintiff and against defendants of rendition of accounts thereby directing the defendants to provide the complete details of bank statements, financial statements and other accounts of the defendant No.1 Company for the period of last three years from date of filing above suit till up to date.
(vii) Pass a decree in favour of plaintiff and against defendants of rendition of accounts thereby directing the defendants to provide the complete details of bank statements, financial statements and other accounts of the defendant No.2 Firm for the period of last three years from date of filing above suit till up to date.”
6. In the said suit filed before the court of learned District Judge (Commercial), Patiala House Courts, New Delhi various allegations are made by the plaintiff (defendant No.1 herein) against the defendants(plaintiffs herein). It is claimed in the said suit that in 2020 defendant No.1 herein came to know that the goodwill that is being generated by defendant No.1 herein by doing his hard work is being encashed by plaintiffs No.2 and 3 herein and they were transferring the business of clients bypassing defendant No.1 herein. Based on these allegations and various other allegations, defendant No.1 herein has filed the said suit seeking the above reliefs.
7. I have heard learned counsel for the parties.
8. Learned counsel for the defendants has strongly opposed the present application. He has firstly pointed out that the suit filed by the plaintiffs is barred under section 69 of the Partnership Act as the firm, namely, plaintiff No.4 already stands dissolved. However, he states that his suit is filed in District Court for rendition of accounts and the same would not be barred. Reliance is also placed on a judgment of the Division Bench of this court in the case of Mr.Manjunath Hedge & Ors. v. Jaypee Brothers Medical Publishers (P) Ltd, 2010 (44) PTC 534 to urge that no common issues would arrive. He stressed that all the persons who are parties to the present suit, are not parties before the suit filed by defendant No.1 herein in the District Court. It is also urged that the suit in the District Court is a simple suit for rendition of accounts of plaintiff No.4 firm. The other issues raised in the present suit would needlessly delay the said proceedings.
9. Section 24 CPC reads as follows: “24. General power of transfer and withdrawal.— (1) On the application of any of the parties and after notice to the parties and after hearing such of them as desired to be heard, or of its own motion without such notice, the High Court or the District Court may at any stage— (a) transfer any suit, appeal or other proceeding pending before it for trial or disposal to any Court subordinate to it and competent to try or dispose of the same, or (b) withdraw any suit, appeal or other proceeding pending in any Court subordinate to it, and—
(i) try or dispose of the same; or
(ii) transfer the same for trial or disposal to any
(iii) retransfer the same for trial or disposal to the
Court from which it was withdrawn. (2) Where any suit or proceeding has been transferred or withdrawn under sub-section (1), the Court which is thereafter to try or dispose of such suit or proceeding may, subject to any special directions in the case of an order of transfer, either retry it or proceed from the point at which it was transferred or withdrawn. (3) For the purposes of this section,— (a) Courts of Additional and Assistant Judges shall be deemed to be subordinate to the District Court; (b) “proceeding” includes a proceeding for the execution of a decree or order. (4) The Court trying any suit transferred or withdrawn under this section from a Court of Small Causes shall, for the purposes of such suit, be deemed to be a Court of Small Causes. (5) A suit or proceeding may be transferred under this section from a Court which has no jurisdiction to try it.”
10. It is clear from the above narration of the facts that essentially the dispute pertains to the company plaintiff No.1 and the firm plaintiff No.4 and their finances and business. There are allegations made by the plaintiffs against defendants. Similarly, defendant No.1 is making allegations against the plaintiffs in the suit filed in the District Court. Both the parties are seeking injunction against each other pertaining to the entities, namely, plaintiff No.1 company and plaintiff No.4 firm.
11. There are clearly number of common questions of facts and law which would clearly arise i.e. which party was moving business out of plaintiffs No.1 and 4, if any, whether the said party owe money to other side. It would be in the interest of justice that to avoid conflicting orders being passed, both the suits be heard together.
12. Reliance of the learned counsel for defendant No.1 on the judgment of the Division Bench of this court in the case of Mr.Manjunath Hedge & Ors. v. Jaypee Brothers Medical Publishers (P) Ltd. (supra) is misplaced. Relevant paras of the same reads as follows: “10. The rationale of the impugned order is contained in the following paragraphs of the impugned order: “To my mind the scope and ambit of the two suits is entirely different. While the inquiry in the suit before the learned Additional District Judge would be limited to the contract alleged of the defendant No.2 herein with the plaintiff and the alleged breach thereof and if so whether the plaintiff would be entitled to damages and injunction, the inquiry in the present suit is as to whether there was a future assignment of copyright under the contract of the defendant No.1 with the plaintiff. If this court finds that there was such an assignment and the work so published infringes the same, then naturally the defendant No.1 as the author and the defendant No.2 as the publisher may be liable for infringement of the said copyright.” xxxxx In my opinion the need for the plaintiff to make identical averments qua the defendant No.2 in the plaint in the present suit arose only for the reason that the defendant No.2 is the publisher of the book in the present case also and only as an ancillary to the case of the plaintiff of a contract for assignment of copyright by the defendant No.2 in favour of the plaintiff and breach thereof by the defendant No.1 in collusion with the defendant No.2. The reason for the said averments appears to be to show that the contract of publishing of the defendant No.1 with the defendant No.2 is not an independent or a fresh contract but is in continuation of the transaction of the defendant No.2 on behalf of the plaintiff, with the defendant No.1. Otherwise, the rights, if any, of the defendant No.2 to carry on business as a publisher are not to be adjudicated in the present suit. Seen in this light, it will be found that though the witnesses maybe the same in both the suits but their evidence would be entirely different. While the contract of the plaintiff with the defendant No.1 would not be the subject matter of adjudication in the suit before the learned Additional District Judge, that would be the main concern in the present suit.”
11. In view of the above, we are of the opinion that the Learned Single Judge has correctly exercised his discretion in dismissing the application under Section 24 CPC inasmuch as most of the issues, and in fact all the issues in two suits are wholly different. The reliefs claimed are wholly different. The parties are also different in that whereas the suit in the District Court is only against Ex-employee who is now into printing business, in the suit in the original side of this Court there are four defendants; two being the authors and the other two being the Ex-employee and the firm which is carrying on printing/publishing business. The fact that there are some common averments does not mean that there are common issues of law and fact which is required for consolidation of suits. Any doubt that two suits cannot go on merely because and assuming that some of the issues are common is clear from the explanation 1 to Section 11 of CPC which shows that two suits can simultaneously go on and principle of res judicata will apply with respect to that suit/issue which will be decided earlier.”
13. Clearly, a perusal of the facts of the above judgment would show that there were only common averments and no common issues of facts and law which required consolidation of the suits therein. The facts of the present case are different.
14. In this context reference may be had to the judgment of the Supreme Court in the case of Chitivalasa Jute Mills v. Jaypee Rewa Cement, 2004 (3) SCC 85. The relevant portion of the said judgment reads as follows: “9. On the facts averred in the two plaints filed by the two parties before two different courts, it is clear that the parties are substantially the same. Jaypee Rewa have alleged and Willard India or Chitivalasa Jute Mills do not deny that Chitivalasa Jute Mills is nothing but a division of Willard India Limited. The fact remains that the cause of action alleged in the two plaints refers to the same period and the same transactions i.e. the supply of jute bags between the period 7-1- 1992 and 31-12-1993. What is the cause of action alleged by one party as foundation for the relief prayed for and the decree sought for in one case is the ground of defence in the other case. The issues arising for decision would be substantially common. Almost the same set of oral and documentary evidence would be needed to be adduced for the purpose of determining the issues of facts and law arising for decision in the two suits before two different courts. Thus, there will be duplication of recording of evidence if separate trials are held. The two courts would be writing two judgments. The possibility that the two courts may record findings inconsistent with each other and conflicting decrees may come to be passed cannot be ruled out. XXX
11. The transfer petition is allowed. The suit at Rewa is directed to be transferred for hearing and decision in accordance with law to Visakhapatnam before the same court which is seized of the hearing in the suit filed by Willard India i.e. the Court of Ist Additional Subordinate Judge at Visakhapatnam.” As noted above, in the present case also the common question of facts and law would arise. Most of the evidence would also be common. It would be in the interest of justice that the two suits are tried together.
15. In view of the above, the application is allowed.
16. The suit bearing CS(COMM) 272/2021, titled, ‘Rishi Kumar v. Sigma Outsourcing Services Pvt. Ltd. & Ors., pending in the court of Sh.Gurvinder Pal Singh, District Judge (Commercial Court)-02, Patiala House Court, New Delhi is directed to be transferred to this court and shall be heard alongwith the present suit.
17. Needless to say that this order is being passed without prejudice to the contentions of the respective parties on the merits of the respective contentions and claim. CS(COMM) 419/2021 List in court on 12.11.2021.
JAYANT NATH, J. SEPTEMBER 29, 2021