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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. KATHAWALLA, J.
National Spot Exchange Limited – Plaintiff
Versus
P.D. Agro Processors Private Limited & Others – Defendants
Notice of Motion Nos. 765, 1388 of 2014 & Suit No. 781 of 2014
Decided On : 23.9.2015
The Court held that the Plaint discloses a cause of action against the Applicants and that the required particulars are set out in the Plaint by the Plaintiff. The Court also held that the Applicants cannot seek immunity in the case of an alleged fraud and that the contention that the jurisdiction of a Court to go into any action of a nominee Director of IFC is barred, is too far-fetched.
Fact of the Case:
The Plaintiff, National Spot Exchange Ltd., filed a suit against Defendant Nos. 1 to 19, including Gopal Srinivasan and Sankaran Balasubramanian (Applicants), for recovery of dues amounting to Rs. 680,23,97,706.55. The Applicants filed Notices of Motion seeking rejection of the Plaint or deletion of their names from the cause title, contending that the Plaint discloses no cause of action against them and that the required particulars of fraud, collusion, and breach of trust are not provided.
Finding of the Court:
The Court found that the Plaint discloses a cause of action against the Applicants and that the required particulars are set out in the Plaint by the Plaintiff. The Court also held that the Applicants cannot seek immunity in the case of an alleged fraud and that the contention that the jurisdiction of a Court to go into any action of a nominee Director of IFC is barred, is too far-fetched.
Issues: 1. Whether the Plaint discloses a cause of action against the Applicants? 2. Whether the required particulars of fraud, collusion, and breach of trust are provided in the Plaint? 3. Whether the Applicants can seek immunity in the case of an alleged fraud? 4. Whether the jurisdiction of a Court to go into any action of a nominee Director of IFC is barred?
Ratio Decidendi: 1. The Court held that the Plaint discloses a cause of action against the Applicants because the Plaintiff has made particular allegations against the Applicants in the Plaint and has also prayed for a decree and various reliefs against them. The Court also held that the Plaintiff has set out various fraudulent and collusive actions of Defendant Nos. 1 to 4 including their failure to maintain adequate commodities in the exchange designated warehouses. The allegations made in the Plaint are supported with detail material particulars as set out inter alia in paragraphs 7 (a) to (aaa) of the Plaint. 2. The Court held that the required particulars of fraud, collusion, and breach of trust are provided in the Plaint because the Plaintiff has set out various fraudulent and collusive actions of Defendant Nos. 1 to 4 including their failure to maintain adequate commodities in the exchange designated warehouses. The allegations made in the Plaint are supported with detail material particulars as set out inter alia in paragraphs 7 (a) to (aaa) of the Plaint. 3. The Court held that the Applicants cannot seek immunity in the case of an alleged fraud because the immunity contemplated under the International Finance Corporation (Status, Immunities and Privileges) Act, 1958, is only “with respect to acts performed by them in their official capacity”. The case set out in the Plaint is of alleged fraud. Fraudulent actions can never be stated to be committed in an official capacity. 4. The Court held that the contention that the jurisdiction of a Court to go into any action of a nominee Director of IFC is barred, is too far-fetched. It can never be contended that any act of a nominee Director of IFC can be protected from the scrutiny of the Court. If such a contention were to be accepted, the same would be a certification that any Nominee Director of IFC can commit any fraud and yet be protected by an immunity.
Final Decision: Both the Notices of Motion filed by the Applicants were dismissed.
S.J. KATHAWALLA, J.
1. Notice of Motion No. 765 of 2014 is filed by the Applicant - Mr. Sankaran Balasubramanian, original Defendant No. 15 in Suit No. 781 of 2014 and Notice of Motion No. 1388 of 2014 is filed by Gopal Srinivasan, Original Defendant No. 14 in Suit No. 781 of 2014.
2. Notice of Motion No. 765 of 2014 is filed by the Applicant - Mr. Sankaran Balasubramanian, original Defendant No. 15 in Suit No. 781 of 2014 and Notice of Motion No. 1388 of 2014 is filed by Gopal Srinivasan, Original Defendant No. 14 in Suit No. 781 of 2014. Both the above Notices of Motion are filed by the above named Applicants who are party Defendant Nos. 14 and 15 to the captioned Suit, under Order 7 Rule 11 and Order 1 Rule 10 of the Code of Civil Procedure, 1908 (“CPC”) for rejection of the Plaint qua them and / or deleting their names from the cause title.
3. Both the above Notices of Motion have been heard together. Mr. R.A. Kapadia, Senior Advocate, has advanced submissions on behalf of the Applicant - Defendant No. 14 and Dr. V.V. Tulzapurkar, Senior Advocate, has advanced submissions on behalf of the Applicant - Defendant No. 15. The submissions advanced by both the Learned Senior Advocates in support of the respective Applicants are more or less the same save and except that Dr. Tulzapurkar, has on behalf of the Applicant - Mr. Sankaran Balasubramanian (Defendant No. 15) made an additional submission that the plaint is barred under the provisions of the International Finance Corporation (Status, Immunities and Privileges) Act, 1958 on account of the immunity available to employees of the Corporation in respect of acts performed in the official capacity. In view thereof, both the Notice of Motions are disposed of by this common order.
4. Following are the parties to the above suit:-
5.(a) Plaintiff - National Spot Exchange Ltd. is a spot exchange which provides an electronic trading platform for spot contract in commodities.
(b) Defendant No. 1 – P.D. Agro Processors Pvt. Ltd. is a Trading-cum-Clearing Member of the Plaintiff Exchange.
(c) Defendant Nos. 2, 3 and 4 are Dulisons Cereals, Dulisons Foods and Dunar Food Limited respectively. They are related entities of Defendant No. 1 and are also clients of Defendant No. 1. It is the Plaintiff's case that Defendant No. 1 for itself and also on behalf of Defendant Nos. 2 to 4 has executed alleged trades on the Plaintiff Exchange. Defendant Nos. 2 to 4 are largely controlled by the same management and/or promoters. According to the Plaintiff, Defendant Nos. 1 to 4 in collusion with the erstwhile Managing Director of the Plaintiff and some of the managerial staff, have orchestrated and played a fraud on the Plaintiff and the counter parties to the outstanding trades by seeking to represent to and assure them that the commodities sold thereunder had been duly deposited in the warehouses designated by the Plaintiff, which representations were false to their own knowledge.
(d) Defendant No. 5 – Mr. Surender Gupta was the Director of Defendant No. 1 and Managing Director of Defendant No. 4 at the relevant time.
(e) Defendant Nos. 6 to 8 are Deepak Sharma, Raju Sharma and Abhimanyu Veer Arti respectively. They are the Additional Directors of Defendant No. 1.
(f) Defendant Nos. 9 to 11 are Sheetal Gupta, Ranjeev Agarwal and Sandeep Singla respectively. They are the shareholders of Defendant No. 1. Defendant No. 10 was also the Director of Defendant No. 1 at the relevant time and has signed the membership application admitting that he shall be responsible on behalf of Defendant No. 1 to the Plaintiff Exchange to ensure compliance of law and procedure.
(g) Defendant Nos. 12 and 13 are Kanta Gupta and Kirti Dua respectively. They are the whole time Directors of Defendant No. 4.
(h) Defendant Nos. 14 and 15 (Applicants herein) are Gopal Srinivasan and Sankaran Balasubramanian respectively. They were the nominee Directors on the Board of Defendant No. 4. According to the Plaintiff, amongst others
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