THE HON’BLE SRI JUSTICE ABHINAND KUMAR SHAVILI AND THE HON’BLE SMT. JUSTICE TIRUMALA DEVI EADA CITY CIVIL COURT APPEAL No.64 OF 2009 JUDGMENT: (Per Hon’ble Smt. Justice Tirumala Devi Eada)

This is an appeal filed by the appellants being aggrieved by the judgment and decree, dated 13.11.2008, passed in O.S.No.36 of 2004 by the learned III Additional Chief Judge, City Civil Court at Hyderabad (for short “the trial Court”).

2. The appellants herein are the defendants and the respondent herein is the plaintiff before the trial Court and the parties herein are referred to as they were arrayed in the suit before the trial Court for the sake of convenience and clarity.

3. The brief facts of the case before the trial Court are that the plaintiff is the business organization engaged in designing, developing, selling, licencing and marketing various software systems for Vibro-accoustic CAE and Optimization and related documentation and also in the business of developing, selling and marketing the related consulting and customized development services. The 1st defendant company is registered under the Companies Act and defendants No.2 to 5 are its Directors on Board during the relevant period. The 1^st defendant company desired to obtain the right to sub-license the software products of the plaintiff and to market the consulting and customized development services of the plaintiff in the Indian market and therefore, the 1^st defendant company approached the plaintiff as distributor and the plaintiff appointed the 1^st defendant company as its distributor vide agreement dated 01.06.1997. During the course of business, the 1st defendant placed various purchase orders and the plaintiff supplied them accordingly and the said relationship continued for a considerable period of time, after which the 1^st defendant was terminated from the distributorship as it committed certain violations to the agreed terms and conditions. The plaintiff has not received the price of the software products supplied to the 1st defendant company under various invoices as mentioned in the plaint. Thus, the 1st defendant has fallen due to pay the suit amount. Inspite of several demands made by the plaintiff, the 1^st defendant has not paid the amount. Finally, the plaintiff got issued a notice dated 05.04.2002 and the 1^st defendant company instead of making the payments has replied on 09.04.2002. Thus, the present suit is filed claiming an amount of Rs.2,11,86,590/- with interest at 18%.

4. The 1^st defendant has filed written statement denying the averments of the plaint and has contended that the defendants 2 to 5 are only the representatives of the 1st defendant company and that they have no personal liability. They admitted that 1st defendant is the distributor of plaintiff in India through an agreement dated 01.06.1997 and the defendant never violated the agreed terms and conditions of the agreement. Therefore, there is no cause of action to file the suit.

5. Defendant Nos.2 to 5 remained ex parte but the record shows that the 3^rd defendant was permitted to participate in the trial without filing any written statement.

6. Based on the above pleadings, the trial Court has framed the following issues:

“1) Whether defendants 2 to 5 have no liability personally to the acts of the 1st defendant- company? If so, whether it is a fit case to lift corporate veil of the 1^st defendant-company?

2) Whether the 1^st defendant violated terms of agreement dated 01-06-1997?

3) Whether the suit instituted on 15.12.2003 is not within time?

4) Whether as per the agreement, the Courts of Leuvan alone has jurisdiction to try the suit?

5) Whether the plaintiff is entitled to suit claim?

6) To what relief?”

7. At the time of trial, the plaintiff got examined PW1 and got marked Exs.A1 to A46. On behalf of the defendants, DW1 got examined and Ex.B1 was marked.

8. Based on the evidence on record, the trial Court has decreed the suit Aggrieved by the said judgment and decree, the present appeal is filed by