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2020 Supreme(Mad) 965
IN THE HIGH COURT OF MADRAS
G. Jayachandran, J.
Grant Thornton India – Appellant
Versus
63 Moons Technologies Limited and Ors. – Respondents
Application Nos. 451 and 455 of 2019 in A. No. 5728 of 2018 in O.A. No. 696 of 2018 in C.S. No. 501 of 2018
Decided On : 09-01-2020
Advocate Appeared:
For the Appellant : Krishna Srinivasan for Ramasubramanian Associates
For the Respondent: A.L. Somayaji, Senior Counsel for Nithyaesh Natraj
Headnote:
Civil Procedure Code, 1908 –Order VII Rule 11 – Section 19 – Companies Act, 1956 – Section 396 – Commercial Courts Act – Section 20 and 2 – Jurisdiction – Financial Technologies – National Agricultural Cooperative Marketing Federation – Case of plaintiff in short is that Moons Technologies Limited is a public listed Company, incorporated Defendant Grant Thornton India, a Limited Liability Partnership, is engaged in the business of providing services, such as consulting, assurance, business advisory – Plaintiff has acquired stake of MCX in NSEL in order to meet regulatory compliance of Spot Exchange – Plaintiff is technology service company Plaintiff are listed in the Bombay stock Exchange and National Stock Exchange plaintiff claims that they are leaders in financial technologies market – Defendant had carried out forensic service of the 2nd defendant with approval of FMC – Held, Learned Counsel appearing for 1st defendant is accepted, that there is no privity of contract between plaintiff and 1st defendant point to be tested is whether injury caused was by direct action of defendant or it was a collateral damages caused remotely issue is a matter for trial and not a point for consideration in an application – Learned Senior Counsel for the plaintiff, it is clear that suit for damages is filed based on alleged tortuous liability arising out of forensic report of 1st defendant report came to be filed by 1st defendant pursuant to order passed by FMC appointing 1st defendant as forensic Auditor in proceeding pending defendant has submitted report being an expert in field of Auditing – Forensic report is a document emanated in a quasi-judicial proceedings and not an instrument arising out of contract as contended by the plaintiff – Appeal dismissed.
ORDER :
G. Jayachandran, J.
1. These two applications were taken out by the 1st defendant, (i) to reject the plaint in C.S. No. 501 of 2018 under Order VII Rule 11 of the Code of Civil Procedure, 1908. (ii) To revoke the leave to sue the defendants in A. No. 5328 of 2018.
2. The case of the plaintiff in short is that, "the plaintiffs M/s. 63 Moons Technologies Limited (formerly known as Financial Technologies (India) Limited, is a public listed Company, incorporated under the Companies Act, 1956. The 1st Defendant, M/s. Grant Thornton India, a Limited Liability Partnership, is engaged in the business of providing services, such as, consulting, assurance, business advisory, digitech, etc., as published on its website. The 2nd defendant, National Sport Exchange Limited (NSEL), is a Company registered under the Companies Act, 1956 and is promoted by the MCX and National Agricultural Cooperative Marketing Federation of India (NAFED).
3. The Plaintiff has acquired the stake of MCX in NSEL in order to meet regulatory compliance of Spot Exchange. The Plaintiff is a technology service company. The shares of the Plaintiff are listed in the Bombay stock Exchange (BSE) and National Stock Exchange (NSE). The plaintiff claims that they are leaders in financial technologies market. The 1st Defendant had carried out forensic service of the 2nd defendant with the approval of FMC. The scope of the work was to establish the books of accounts, including contracts/trades pending settlement, quantifying the outstanding, quantifying and verifying the collateral available and ascertaining accounting if accounting policies and procedures reflect the complexity of the NSEL.
4. In the report, the 1st Defendant has specifically stated that there are some limitations with respect to their report and there are also certain restrictions. In spite of the limitation and restrictions, the 1st defendant has disclosed the content of the report during the proceedings initiated before the Forward Markets Commission (hereinafter referred as "FMC"). Since the 1st defendant has made the content of the report public and it has been used to damage the reputation and goodwill of the plaintiff.
5. Therefore, alleging that based on the report of the 1st defendant, show cause notice was issued by FMC as to why the plaintiff should not be declared not fit and proper to hold the shareholders in commodity exchanges. Later, the plaintiff Company was declared not fit and proper and was forced to exit the commodity exchanges. Various criminal proceedings were initiated against the plaintiff and Officials, pursuant to the 1st defendant report. More particularly, the Government of India through Ministry of Corporate Affairs, has passed draconian order under Section 396 of the Companies Act, merging the 2nd defendant with the plaintiff and this order has been passed largely on the basis of the 1st defendant's report.
6. In the plaint, it is alleged and averred that the 1st defendant had not approached the forensic Audit from the holistic point of view and of being biased. It is contended that fixing responsibility should have been done only after all stakeholders in the value chain were investigated, the 1st defendant has colluded with the FMC and targeted the plaintiff to inflict harm to the plaintiff. Therefore, the plaintiff suffering illegal actions till date and suffered loss. Hence, sought for a relief of declaring the report of the 1st defendant dated 21.09.2013 and the supplementary report dated 24.10.2013 as invalid, null and void, vitiated and unreliable. Further, compensation of Rs. 5,00,00,000/-, besides injunction restraining the 1st defendant, agent and nominees from directly or indirectly relying upon the report.
7. The 1st defendant, who is the applicant herein, has not filed the written statement. This Court has held that, having failed to file the written statement within 120 days, it has forfeited the right to file the written statement, as per the Commercial Courts Act
