Court refused to extend fact-finding committee from investor representative suit to platform's recovery suit against trading member, requiring trial on mutual fraud allegations, ledger proof, and contract validity at pleadings stage.

JUDGMENT :

GAURI GODSE, J.

1. The plaintiff has prayed for a decree to recover a sum of approximately Rupees 937 crores jointly and severally from defendants nos. 1, 3 to 41 and 45 to 50. The plaintiff has pleaded that it is a company incorporated under the Companies Act, 1956, and that it was a National Spot Exchange (‘NSEL’) providing an electronic trading platform for spot contracts in commodities on a compulsory-delivery basis. Defendant no. 1 is a trading cum clearing member of the plaintiff. Defendant no. 1, on behalf of itself and various clients, including defendant nos. 2, 3, 4 and 5, traded in various commodities. The other defendants are described as promoters, partners, directors, shareholders, auditors, the company secretary and subsidiary companies.

2. This notice of motion is filed by the plaintiff seeking directions to apply and extend to the defendants in this suit, the order and mechanism provided under the Order dated 2^nd September 2014 (constituting a Three Member Committee) in Notice of Motion No. 240 of 2014 in Suit No. 173 of 2014, including the order in terms of the minutes passed as a part and parcel of the said order. In the alternative, the plaintiff prays that a similar order in terms of the order dated 2^nd September 2014 be passed in this suit.

3. The said Suit No. 173 of 2014 is a representative suit filed by one of the investors who dealt on the plaintiff’s platform and entered into transactions on it. The present plaintiff is defendant no. 2 in the said suit. By order dated 2^nd September 2014, the notice of motion filed in the said suit is disposed of in terms of the minutes of order by constituting a committee of three members. As directed in the said order, the committee is expected to peruse the papers, comprehend the overall exercise involved and accordingly make a report to this court of the work carried out by the committee in terms of the minutes of order.

4. To understand the exact functioning and powers of the committee, it is necessary to reproduce a scanned copy below;

Submissions on behalf of the Plaintiff:

5. The order in terms of the minutes of the order passed in the representative suit was passed after hearing all the necessary parties, including defendant no. 1 herein. The plaintiff had taken out third-party notices against all the defaulting members in the representative suit. However, at that time, the third-party notice could not be filed against defendant no.1 and its clients as the plaintiff had already filed an arbitration petition under section 9 of the Arbitration and Conciliation Act 1996 (‘Arbitration Act’) against defendants nos. 1 to 4 by invoking the arbitration clause under the bye- laws of the plaintiff. The minutes of order records that, in the larger public interest, the committee is formed as a fact- finding authority to determine the amount payable by alleged defaulters/third parties. While noting the committee's powers and functions, it is stated that the committee is empowered to issue notices to various parties, including defaulters and their clients. Thus, all defaulters were covered, including defendant no. 1 and its clients.

6. The committee is permitted to call upon the various defaulting members, clients of the members, defaulters of NSEL, or other parties, and to seek information and doc