MANMOHAN SINGH, J.

1. By this order, I shall dispose of the two applications being IA No.14392/2007 (U/o VI R 17 CPC) in CS (OS) No.195/2007 filed by the plaintiff seeking amendment in the plaint and application IA No.10454/2007 under Order X Rule 1 CPC filed by the Defendant No.2 for deletion of his name.

.2. The plaintiff has filed the suit for recovery of Rs.75,20,000/- by way of compensation against the Defendants claiming the joint and several liability of the Defendants. The Defendant No.1 is a company incorporated under the Companies Act, 1956 and Defendants No.2 and 3 are the promoters/directors of the Defendant company who are alleged to be liable for their fraudulent acts of using the corporate personality as a cloak to defraud the functioning of the company and thereby diverting the funds of the Defendant company to their own personal advantages or building projects in their individual names. In the suit, the allegation relating to fraud and misrepresentation are specifically averred to allege the liability of the Defendants and their liability as the officers of the company.

3. The plaintiff has filed the present application seeking amendment to the plaint for inclusion of pleading regarding lifting of corporate veil for holding Defendants No. 2 and 3 personally liable for claim in the suit under the transactions made by them in the name of the Defendant company with plaintiff, and also for making a typographical correction in prayer clause in description of Defendants with number ``1 to 3` in place of ``2 and 3`.

4. The plaintiff sought to add the following para at the end of para No.14 of the plaint : ``In view of conduct and contradictory claims stated by defendant nos.2 and 3 described above and the facts and circumstances of the case, plaintiff pleads and applies for lifting of corporate veil of defendant company for holding defendant nos.2 and 3 liable personally to claim in suit.`

5. From the bare reading of the plaint in paragraphs 8, 9 and 10, it can be gauged that there are allegations of fraud made against the Defendant No.2 and Defendant No.3 whereby the personal liability of the Defendant No.2 and Defendant No.3 is sought. It is stated in the paragraph 8 of the plaint that Defendant No.2 had withdrawn under ``self cheques`, a sum of Rs.208 lacs from account of the company maintained with ABN Amro Bank and on asking for response in withdrawing over Rs.208 lacs during span of over 30 months refused to audience to the plaintiff. It was alleged that the withdrawals made by Defendant No.2 were used for setting up of a shopping mall by trade name of ``One Style Mile` and restaurant ``Olive Bar and Restaurant` in a old haveli near Qutub, New Delhi.

6. In the reply filed by the Defendant No.3, it is denied that he has diverted any funds of the Defendant from the Defendant company for his personal use or committed any fraud. The Defendant No.3 also denied existence of any veil which is required to be lifted.

7. In the reply filed by Defendant No.2 it is submitted that since the Defendant No.2 has ceased to be the director of the Defendant No.1 company since 1st January, 2000, there was no privity of contract between the plaintiff and Defendant No.2 and thus, there is no personal liability of Defendant No.2 against the plaintiff.

8. I have heard the learned counsel for the parties and the pleadings and application filed by the plaintiff.

9. In the beginning, It would be pertinent to mention that the original suit itself contained the specific allegations against the directors more specifically Defendant No.2 and Defendant No.3 seeking their personal liability. The plaintiff by way of this amendment is attempting to elaborate the said plea by averring and seeking to lift the corporate veil.

10. There is no res integra that the concept of the corporate veil can be invoked by the courts when there is case of fraud, misrepresentation, diversion of funds. (Singer India Ltd. v. Chander Mohan Chadha, (2004) 7 SCC 1).

Click Here to Read the rest of this document