Order 9

Order Details: COPY OF ORDER
Pdf Text: IN THE COURT OF SH. M. K. NAGPAL, DISTRICT
JUDGE (COMMERCIAL COURT)-13, CENTRAL
DISTRICT, TIS HAZARI COURTS, DELHI
CS (COMM.) NO. 1263/2023
IN THE MATTER OF:
1. Ms. Kanchan Windhwani
2. Ms. Vanika Madan
3. Ms. Anisha Bajaj
…….Plaintiffs
Vs.
1. Dtwevle Spaces Pvt. Ltd.,
through its Directors
2. Ms. Anindya Dutta
3. Sh. Abhinav Chaturvedi
4. Sh. Sandeep Dalmia
5. Sh. Navroz Darius Udwadia
…....Defendants
ORDER ON APPLICATION UNDER ORDER 1 RULE
10(2) CPC OF THE DEFENDANT NO. 1
25.04.2024
1. By this order, I shall dispose of an application dated
30.11.2023 filed under Order 1 Rule 10(2) CPC by the defendant
no.1 company for striking off the names of defendants no.2 to 5.
2. The contents of application as well as that of the reply
dated 22.04.2024 thereto filed on behalf of the plaintiffs have
been perused and the arguments advanced on application by Sh.
Robin George, Ld. Counsel for defendant no.1 and Ms. Dhriti
CS(Comm) No. 1263/2023 Page no.1 of 8
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Chhabra, Ld. Counsel for plaintiffs have been heard and
considered. The case record has also been perused.
3. Facts of the case, as far as the same are necessary for
disposal of the present application, are that this suit has been
instituted by the plaintiffs against the defendants under the
provisions of Order 37 CPC read with Section 2 (c) (vii) of the
Commercial Courts Act, 2015 for recovery of arrears of rent
amounting to Rs. 38,91,259/-, along with pendente lite and future
interest @ 18% per annum, in respect to the property bearing No.
C-1/33-34, Malka Ganj, Delhi-110007. As per averments made
in plaint, the above property was let out by plaintiffs to defendant
no.1 company vide registered lease deed dated 17.07.2020, a
copy of which has been annexed by the plaintiffs with plaint as
Document 2. The said lease deed is found to have been signed by
all the three plaintiffs as lessors and by Sh. Sujoy Ghose on
behalf of defendant no.1 company as the lessee. The defendants
no.2 to 5 impleaded in the present suit are being claimed to be
directors of the defendant no.1 company.
4. The contention of Ld. Counsel for defendant no.1 is that
since the defendants no.2 to 5 are not personally liable to pay the
claimed amount of arrears of rent to the plaintiffs as per terms of
the above lease deed and further since they are not even
signatories to the above deed or any separate deed of guarantee
executed in favour of the plaintiffs to pay the rent amount, they
are not the necessary or proper parties to the present lis/suit and
hence, their names are required to be struck off. In support of his
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submission, Ld. Counsel for defendant no.1 has also relied upon
the judgments/orders of the Hon’ble High Court of Delhi in cases
of Space Enterprises Vs. Srivivasa Enterprises Ltd.,
MANU/DE/0079/1998 and Lakhani Rubber Works Vs. Ritzy
Polymers, MANU/DE/0479/2010.
5. On the other hand, the main contention of Ld. Counsel for
plaintiffs is that since the suit has been instituted by plaintiffs
under the provisions of Order 37 CPC and the defendants no.2 to
5 have failed to enter their formal appearance or the leave to
defend, the suit is liable to be decreed against them and once this
court had directed issuance of summons to the said defendants
under the above provisions, this court cannot see or adjudicate
upon the requirement or necessity of impleadment of said
defendants as a party to the present suit. It is also her submission
that a speedy and effective mechanism has been provided under
Order 37 CPC for trial of some specific cases and the very
purpose thereof would stand defeated if such types of objections
are entertained as it will amount to treating the suit filed under
the above summary procedure as an ordinary suit.
6. Besides the above above, it is also the contention of Ld.
Counsel for plaintiffs that no application seeking deletion of their
names has been filed on record on behalf of the defendants no.2
to 5 and even the present application filed by defendant no.1 is
not supported by affidavits of the said defendants and hence, the
present application should not be entertained and is liable to be
dismissed. It is further her submission that defendants no.2 to 5
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are necessary and proper parties for adjudication of the present
suit. In support of her above contentions, Ld. Counsel for
plaintiffs has also relied upon the judgments/orders of the
Hon’ble High Court of Delhi in cases of Comba Telecom
Limited Vs. S. Tel Private Ltd., MANU/DE/1057/2016 and
S.S. Steel Industry Vs. Shri Guru Hargobind Steels,
MANU/DE/2911/ 2019.
7. It is the admitted case of plaintiffs that the above lease
deed/agreement dated 17.07.2020 in respect to the above leased
premises was executed by them with the defendant no.1 company
only and none of the defendants no. 2 to 5 was a party or
signatory to the said agreement. It is also the admitted case of
parties that no other or separate agreement was executed between
the plaintiffs and the above defendants towards guarantee or
assurance of payment of rent amounts in respect to the said
premises and arising out of the above lease agreement. It is not
even the case of plaintiffs that any of the above defendants had
executed the said lease agreement on behalf of defendant no.1
company as admittedly, it was executed by a representative of the
company named Sh. Sujoy Ghose.
8. In the case of Space Enterprises (Supra) being relied
upon by Ld. Counsel for defendant no.1, the question of personal
liability of director of a company was directly in issue before the
Hon’ble High Court in a suit filed under the provisions of Order
37 CPC and based on a loan agreement executed between the
plaintiff firm through its managing partner and the defendant
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company through its managing director. It was held by their
Lordship in the said case that a company incorporated under the
Companies Act is a distinct and independent person in law and
directors of a company are not liable for any ordinary contractual
liability of the company and in the absence of any contract
between the plaintiff and defendant no.2/director, the said
director could not be held liable to pay any amount to the
plaintiff firm under the said contract. The relevant observations
made by their Lordship in the above said case are as under:-
“11. In so far as the liability of defendant No. 2 is concerned,
the effect of the registration of a company under Section 34
of the Companies Act is that it is a distinct and independent
person in law and is endowed with special rights and
privileges; a person distinct from its members.
Consequently, the company is enabled to contract with its
shareholders also, to use common seal and acquire and hold
property in its corporate name. The company is distinct
from its shareholders and its directors. Neither the
shareholders nor the director can treat the companies assets
as their own. Directors of a company are liable for
misappropriation of company's funds and other
misfeasance, but not for an ordinary contractual liability of
the company. The liability of the members or the
shareholders or the directors is limited to the capital
invested by them. So long the liability is not unlimited under
Sections 322 and 323 of the Companies Act and no special
resolution of the limited company making liability of the
directors or the managing directors unlimited is alleged. The
doctrine of lifting of the corporate veil could be applied in
cases of tax evasion, or to circumvent tax obligation or to
perpetuate fraud or trading with an enemy are concerned. It
is not alleged that the director has lost the privilege of
limited liability and has become directly liable to the
plaintiff i.e. creditor of the company on the ground that with
his knowledge the company carries on business six months
after the number of its members was reduced below the legal
minimum number. In absence of such a case it would be
totally inappropriate and improper to say that defendant No.
2 is patently covered under Order 37 CPC.
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12. There is no contract between the plaintiff and defendant
No. 2. Therefore, case against defendant No. 2 is not based
on any contract nor there is any such liability on defendant
No.2. Consequently, there is no cause of action against
defendant No. 2. Since there is no cause of action against
defendant No. 2, the plaint is liable to be rejected so far as
defendant No. 2 is concerned.”
(Emphasis supplied)
9. Now coming to the summary procedure and provisions
contained under Order 37 CPC, this court fails to accept the
contention of Ld. Counsel for plaintiffs that once a suit has been
instituted under the said provisions or Order and defendant fails
to file his appearance or leave to defend, then the court is bound
to or has mandatorily to pass a decree for the claimed amount
against the said erring defendant. It is so because even though the
said Order lays down a specific procedure for summary disposal
of certain types of suits mentioned in the said Order, but it
nowhere absolves the plaintiff of its primary liability to prove his
documents and case and satisfy the court about his entitlement
for amount claimed in the said suit. In the case of Lakhani
Rubber Works (Supra) being relied upon by Ld. Counsel for
defendant no.1, while setting aside an order of a trial court
dismissing in default an application filed by the defendant
seeking leave to defend in a suit filed under Order 37 CPC, it was
held by their Lordship of the Hon’ble High Court that even if a
suit is decreed ex-parte by a court, the court is supposed to satisfy
itself as to whether the suit of plaintiff is worth of decree or not.
The relevant observations made by their Lordship in the above
said case are as under:-
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“5. Once defendant files an application for leave to defend
disclosing such facts, even if on the date of arguments on
application for leave to defend the defendant does not
appear or the court is inclined not to give adjournment, the
court has to consider the application for leave to defend
made by the defendant on merits and to pass an order on the
grounds raised by the defendant seeking leave to defend and
state whether the facts as disclosed entitle the plaintiff to
leave to defend or not. The first proviso under sub-Rule 5
makes it clear that leave to defend cannot be refused unless
the court was satisfied that the facts disclosed by the
defendant do not raise a substantial defence or defence put
up by the defendant was frivolous or malicious.
6. Perusal of the trial court order shows that the trial court
did not advert to any of the facts, either stated by the
plaintiff in the plaint or by the defendant in leave to defend
and just decreed the suit dismissing the application for leave
to defend in default. Even where a suit is decreed ex-parte,
the trial court is supposed to satisfy itself on the basis of
facts as disclosed by the plaintiff and the documents as
placed by the plaintiff on record whether the suit of the
plaintiff was worth decreeing or not. The trial court has to
look into the admissibility of the documents, consider
whether the documents filed were reliable or not and apply
mind and then pass even an ex-parte decree.”
(Emphasis supplied)
10. The judgment/order in the case of Comba Telecom
Limited (Supra) being relied upon by Ld. Counsel for plaintiffs
on this aspect is found not applicable to the facts of the present
case and even the judgment in case of S.S. Steel Industry
(Supra) is not found applicable as the same was given in a
different context. Moreover, the respondent/defendant in the said
suit was found signatory to the written contract i.e. invoices on
the basis of which the suit was filed by plaintiff/petitioner and it
was directed to be treated as an ordinary suit by the trial court
and the said order was set aside by the Hon’ble High Court in the
above petition.
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11. As far as the formal objections taken by plaintiffs
regarding non filing of the present application on behalf of
defendants no.2 to 5 or the non filing of their affidavits are
concerned, the same do not matter much as under the provisions
of Order 1 Rule 10(2) CPC, the court is well empowered to strike
out or add the name of any party to a suit either upon an
application moved by any of the parties or even on its own, if it it
appears to the court that name of that party has been improperly
joined in the suit or it ought to have been joined.
12. Hence, in view of the above factual and legal discussion,
this court of considered view that the present application dated
30.11.2023 filed under Order 1 Rule 10(2) CPC by the defendant
no.1 company is allowed and the names of defendants no.2 to 5
are directed to be deleted from the array of parties.
Announced in the open court
Dated: 25.04.2024
(M. K. Nagpal)
District Judge, Commercial Court-13
Central District, Tis Hazari Courts,
Delhi/25.04.2024
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