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FAO 330/2016
HIGH COURT OF DELHI
Date of Decision: November 03, 2016
HIGH COURT OF DELHI
Date of Decision: November 03, 2016
FAO 330/2016 & C.M.No.25864/2016
NATIONAL COUNCIL OF EDUCATIONAL RESEARCH AND TRAINING ..... Appellant
Through: Ms. Deepa Rai, Advocate
NATIONAL COUNCIL OF EDUCATIONAL RESEARCH AND TRAINING ..... Appellant
Through: Ms. Deepa Rai, Advocate
VERSUS
M/S SKYWING CARRIERS PVT LTD ..... Respondent
Through: Mr. Sushil Kabra and Mr. Rajeev Kumar, Advocates
Through: Mr. Sushil Kabra and Mr. Rajeev Kumar, Advocates
CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR
JUDGMENT
(ORAL)
Impugned order of 31st March, 2016 rejects appellant’s objection under Section 34 of the Arbitration and Conciliation Act, 1996 while holding that respondent herein and M/s. Decent Transport of India (for short M/s. Decent Transport) are two separate legal entities and the outstanding amount qua M/s. Decent Transport (who is not a party before the Arbitrator) cannot be adjusted against the outstanding of respondent qua appellant herein. The factual backdrop is not in dispute and hence needs no reproduction.
2016:DHC:7317 At the hearing of this appeal, learned counsel for appellant contends that in view of Supreme Court’s decision in Delhi Development
Authority v. Skipper Construction Company Private Limited, 1996 (4)
SCC 622, the corporate veil of these two legal entities is required to be lifted as it would reveal that both the Directors of respondent are the partners of M/s. Decent Transport and the outstanding amount qua M/s.
Decent Transport is required to be adjusted qua the outstanding of respondent against appellant herein and that this objection has been erroneously brushed aside by trial court. It is pointed out by appellant’s counsel that the claim petition of M/s. Decent Transport qua appellant stood dismissed vide Award of 19th April, 2012 and it has attained finality. Thus, it is submitted that the outstanding amount qua M/s.
Decent Transport is required to be adjusted qua the outstanding of respondent against appellant herein.
Learned counsel for respondent supports the impugned order and submits that the Management of M/s. Decent Transport and respondent is not the same and otherwise also, the corporate veil can be only lifted to detect illegality and there is no illegality committed in the instant case.
Thus, it is submitted that impugned order does not suffer from any infirmity and so, this appeal deserves dismissal.
Upon hearing and on perusal of impugned order, Arbitrator’s
Award, material on record and the decision cited, I find that the corporate veil can be certainly lifted to find out as to whether the sisters-concern were acting like one economic entity and if it is so, then the adjustment can be made. In M/s. Rajesh and Co. v. M/s. Ravissant Pvt. Ltd., 2012
SCC OnLine Del 1161, a Co-ordinate Bench of this Court had dealt with a case of sisters-concern and had concluded that they had acted like one economic entity as their ledger accounts showed that they were acting like one economic entity. However, it is not so in the instant case.
During the course of the hearing, it was not brought to notice of this Court as to what were the ledger accounts of respondent and M/s.
Decent Transport. No endeavour was made by appellant’s counsel to show that respondent and its sisters-concern M/s. Decent Transport had acted like one common entity. Nor can it be so inferred from the evidence on record.
In view of the aforesaid, this Court finds no infirmity or illegality in the impugned order. In the facts and circumstances of this case, it is made clear that appellant can always avail of the remedies qua M/s.
Decent Transport within three months from today. Consequentially, this appeal and the application are dismissed while leaving the parties to bear their own costs.
(SUNIL GAUR)
JUDGE
NOVEMBER 03, 2016 s
Impugned order of 31st March, 2016 rejects appellant’s objection under Section 34 of the Arbitration and Conciliation Act, 1996 while holding that respondent herein and M/s. Decent Transport of India (for short M/s. Decent Transport) are two separate legal entities and the outstanding amount qua M/s. Decent Transport (who is not a party before the Arbitrator) cannot be adjusted against the outstanding of respondent qua appellant herein. The factual backdrop is not in dispute and hence needs no reproduction.
2016:DHC:7317 At the hearing of this appeal, learned counsel for appellant contends that in view of Supreme Court’s decision in Delhi Development
Authority v. Skipper Construction Company Private Limited, 1996 (4)
SCC 622, the corporate veil of these two legal entities is required to be lifted as it would reveal that both the Directors of respondent are the partners of M/s. Decent Transport and the outstanding amount qua M/s.
Decent Transport is required to be adjusted qua the outstanding of respondent against appellant herein and that this objection has been erroneously brushed aside by trial court. It is pointed out by appellant’s counsel that the claim petition of M/s. Decent Transport qua appellant stood dismissed vide Award of 19th April, 2012 and it has attained finality. Thus, it is submitted that the outstanding amount qua M/s.
Decent Transport is required to be adjusted qua the outstanding of respondent against appellant herein.
Learned counsel for respondent supports the impugned order and submits that the Management of M/s. Decent Transport and respondent is not the same and otherwise also, the corporate veil can be only lifted to detect illegality and there is no illegality committed in the instant case.
Thus, it is submitted that impugned order does not suffer from any infirmity and so, this appeal deserves dismissal.
Upon hearing and on perusal of impugned order, Arbitrator’s
Award, material on record and the decision cited, I find that the corporate veil can be certainly lifted to find out as to whether the sisters-concern were acting like one economic entity and if it is so, then the adjustment can be made. In M/s. Rajesh and Co. v. M/s. Ravissant Pvt. Ltd., 2012
SCC OnLine Del 1161, a Co-ordinate Bench of this Court had dealt with a case of sisters-concern and had concluded that they had acted like one economic entity as their ledger accounts showed that they were acting like one economic entity. However, it is not so in the instant case.
During the course of the hearing, it was not brought to notice of this Court as to what were the ledger accounts of respondent and M/s.
Decent Transport. No endeavour was made by appellant’s counsel to show that respondent and its sisters-concern M/s. Decent Transport had acted like one common entity. Nor can it be so inferred from the evidence on record.
In view of the aforesaid, this Court finds no infirmity or illegality in the impugned order. In the facts and circumstances of this case, it is made clear that appellant can always avail of the remedies qua M/s.
Decent Transport within three months from today. Consequentially, this appeal and the application are dismissed while leaving the parties to bear their own costs.
(SUNIL GAUR)
JUDGE
NOVEMBER 03, 2016 s