Delhi District Court
Corporateserve Solutions Pvt Ltd vs Teerthankar Mahaveer Univeristy on 17 August, 2022
In the Court of Shri Sanjiv Jain,
District Judge (Commercial Court)03, Patiala House Courts
New Delhi
CS No. 38/2021
CorporateServe Solutions Pvt Ltd
408, Udyog Vihar, Phase IV,
Gurgaon, Haryana.
... Plaintiff
Versus
1.Teerthankar Mahaveer Univeristy
2. Suresh Jain Chancellor
3. Manish Jain Group Vice Chairman
4. R. K. Mittal Founder Vice Chancellor
5. Prof. Raghuvir Singh Vice Chancellor
6. Dr. Aditya Kumar Sharma Registrar
7. Rajesh Verma Director (Corp. Affairs)
8. Abhishek Kapoor Director (Administration) CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.1 of 14
9. Dr. R. K. Dwivedi Principal College of Computing Science & IT
10. R. K. Gupta Jt. Director, Administration & Student Welfare Add: 1004-1005-1006, 10th Floor, Mercantile House, 15 K. G. Marg, New Delhi.
Also at N. H. 24, Delhi Road, Moradabad, UP.
........ defendants
Date of institution : 03.02.2021
Date of decision : 17.08.2022
JUDGME NT
1. This suit for recovery of a sum of Rs. 36,73,800/- along with interest has been filed by the plaintiff, Corporateserve Solutions Pvt Ltd against the defendants Teerthakar Mahaveer University and Ors on the premises that in December, 2015, defendant no.1 through its representative had approached the plaintiff to purchase ERP software and licenses of some softwares and to procure services in support for its day to day affairs. The plaintiff provided demonstration to the defendants at its Delhi office and campus. The cost was also discussed and negotiated. Thereafter, it shared a proposal as detailed in para 09 via mail dated 30.12.2015 for Rs. 80.0 lakhs plus taxes after offering a CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.2 of 14 special discount of Rs. 13.52 lakhs considering the fact that defendant no.1 is a minority institution and imparting education to the students belonging to the rural areas. Pursuant to the proposal, defendant no.1 made an advance payment of Rs. 79,27,328/- on 31.12.2015. The plaintiff thereafter provided microsoft product i.e. Microsoft Dynamics NAV, 2013 R-2 with one year enhancement plan and license of education and payroll vertical to defendant no.1. It successfully completed the project within the stipulated time frame in 2016. The defendant no.1 also made the balance payment plus taxes. The last payment was made on 27.03.2017 as per details mentioned in para 11.
2. Thereafter in September, 2018, defendant no.1 called a meeting where it raised 388 new additional requirements for new features in the project (additional work). It discussed the cost with the plaintiff and negotiated for Rs. 70.0 lakhs plus taxes. A memorandum of understanding (MOU) was signed on 17.09.2018, terms and conditions discussed in para 12. It is stated that the plaintiff provided the services to the utmost satisfaction of the defendant no.1 and achieved all the milestones in terms of the MOU but the defendant no.1 released the payments only upto the three milestones and not of the forth milestone as detailed in para 13 though it had performed all its obligations and executed the works.
3. It is alleged that apart from the contract and MOU, the CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.3 of 14 defendant no.1 had requested the plaintiff in the meetings held from 30.12.2016 to 24.01.2020 to provide additional microsoft users licenses and licenses of additional enhancement plan of the microsoft products for 1 to 5 years which it provided. Defendant no.1 pursuant thereto, discharged its liability by making payments in tranches without raising any dispute as detailed in para 14. It also issued a purchase order dated 27.01.2020 for Rs. 1,75,000/- for development of a facility to purge all the transactional data in the microsoft dynamic ERP software by making initial payment of Rs. 1,03,250/- including taxes. It is stated that in terms of MOU, annual maintenance contract/AMC commenced from December, 2019 at Rs. 2,50,000/- plus applicable taxes per quarter against which it raised the invoices for the services rendered in December, 2020, March, 2020 and January, 2020 quarters as detailed in para 16 which the defendant no.1 paid but it did not make the payment against the forth milestone and for some other works executed by it for the defendant no.1.
4. It is stated that as per ledger account maintained by it in the name of defendant no.1, a sum of Rs. 18,93,800/- (Rs. 14,86,800/- for additional works, 388 new features + Rs. 4,07,000/- towards balance against quarterly invoices of AMC services) is payable as on 01.07.2020. It is stated that on 01.07.2020, it received a call from defendant no.3 interalia that defendant no.1 has decided to have its own full time IT in-house team to maintain ERP systems. He requested the plaintiff to quote price of license rights to maintain/enhance Microsoft Dynamics ERP and price of license of CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.4 of 14 source code of Dot Net application for maintaining/enhancing education vertical and internal team. On 02.07.2020, it sent a mail to defendant no.3 and shared a quotation for Rs. 13,03,200/- for grant of non exclusive license rights and Rs. 17,80,000/- plus taxes for grant of non exclusive license. It is alleged that the defendant no.1 instead approached one of its full time employee namely Sh. Bhupinder Yadav who was part of ERP team on the project and had possession of valuable source code of Dot Net application and allured him to share the source code of Dot Net application to save money. It is alleged that Bhupinder Yadav abandoned the services with the plaintiff and tendered his resignation on 09.09.2020. Even he did not comply with the notice period. It is alleged that defendant no.1 with malafide intention to cause wrongful loss to the plaintiff had approached Bhupinder Yadav. It wrote a mail dated 09.07.2020 that when its team was attempting access to TMU server to provide support, it got a message that password has been changed, thus, denying access to its servers. It is alleged that it received the last payment from the defendant no.1 on 01.07.2020 but soon thereafter, defendant no.9 lodged a police complaint at P.S Pakwara, Muradabad under Section 120 IPC against it with an intention not to pay the balance which culminated into registration of FIR 539/20. It is alleged that despite reminders vide mails as detailed in para 26, defendant no.1 did not release the balance payments which made it send legal notice dated 20.07.2020 to the defendants. It is stated that a sum of Rs. 36,73,800/- has become due against the defendants as detailed in para 32 along with interest @ 18% per annum plus CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.5 of 14 taxes.
5. On getting summons of the suit, defendant no.1 filed its written statement denying the averments made in the plaint and its liability to make the payments to the plaintiff. It is stated that defendant no.2 to 10 are the employees of defendant no.1 and are not personally/vicariously liable for the transactions. It is alleged that the plaintiff was engaged in malpractices. It manipulated the data so as to play fraud upon defendant no.1. It thereafter indulged in blackmailing in order to extract money from them. It has falsely claimed that it performed its obligations as per the MOU. It is stated that it had a vision to provide quality education and state of art platform to its students. For this, it was in search of a reputed IT company/entity. It came in contact with the plaintiff which recommended some softwares/programmes. It paid the entire payment of Rs. 80.0 lakhs in advance on 31.12.2015 against the proposal sent via mail dated 30.12.2015. Despite receipt of entire sale consideration in advance, the plaintiff failed to perform its obligation within the prescribed line and kept creating frivolous excuses to extract more money from defendant no.1. Subsequent thereto, it raised demands towards service implementation vide invoices dated 14.03.2016 for Rs. 11,29,630/- which it also paid but despite that, plaintiff failed to perform its obligations/complete the project within the time line. It is stated that even after 16 weeks, almost 388 open issues and related concerns remained incomplete as detailed in the list of documents at page 4 to 6. It is stated that since defendant no.1 had made the entire payments CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.6 of 14 towards the project, it had no option but to enter into MOU dated 17.09.2018 with the plaintiff but even after the expiry of the agreed time line, the plaintiff failed to complete the project and under such scenario, hiring any other IT company/agency would have amounted to large scale expenses by the defendant no.1. It, therefore, negotiated a fresh timeline and terms for the completion of project vide MOU dated 17.09.2018. it is alleged that against the aforesaid work, plaintiff raised a fresh demand of Rs. 50.0 lakhs and 6,67,000/-. Since the launch of the project was of great significance and importance for the functioning of defendant no.1, it adhered to the payment demand raised by the plaintiff but the plaintiff continued with its callous attitude and failed to comply with its obligations under the MOU as detailed in para 14. It is alleged that defendant no.1 has made the payments towards each milestone as and when the demands were raised by the plaintiff till milestone ML-3. It is alleged that the plaintiff though failed to resolve the issues but raised frivolous demand for payment towards ML-4 which was never achieved, rather started complaining/blaming the staff of the defendant for not providing adequate data. It is alleged that due to delay caused by the plaintiff, defendant no.1 suffered monetary and reputational loss. In order to amicably resolve the issue and set the project running, it had multiple meetings with the plaintiff who despite giving assurances vide minutes of meeting dated 15.03.2019 did not resolve the issues. It is alleged that on 17.12.2019 and 14.03.2020, meetings were held where pending issues were discussed and it was resolved that issues would be resolved but nothing happened.
CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.7 of 14 It is alleged that despite the timeline as per the MOU, several issues remained unresolved. The defendant no.1 then vide mails as detailed in para 20 requested the plaintiff to address the issues subsequent to which, balance payments would be made by. It is stated that defendant no.1 suffered great difficulties in its operations/functioning due to the plaintiff's unprofessional approach towards the project which resulted the project remaining incomplete. It vide mails dated 16.11.2019 and 28.05.2020 again requested the plaintiff to complete the pending issues so as to enable it digitally manage its data/conduct but the plaintiff raised the invoices dated 30.03.2020 and 04.05.2020 for the alleged AMC services for the period till June, 2020. It is stated that since the conduct of examination and management was essential, it had to make the payments against the invoices but under protest vide mail dated 16.11.2019 and 28.05.2020. It is alleged that since the project could not be made fully functional, defendant no.1 had to incur additional expenses for completing the project. It appointed Sh. Ankur Gupta and Ors as its full time employees for operation and management and incurred an amount of Rs. 46,43,165/- towards their salaries/expenses occurred.
6. The plaintiff filed the replication wherein it denied the averments made in the written statement filed by the defendant no.1 and reiterated the averments made in the plaint.
7. Parties also filed the affidavits of admission-denial of documents. The defendants thereafter absented from the CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.8 of 14 proceedings and vide order dated 04.05.2022, they were proceeded against exparte.
8. To substantiate its case against the defendants, plaintiff examined its Manager Sh. Amar Singh as PW-1. He tendered his affidavit in evidence Ex.PW-1/A and the documents Ex.PW-1/1 to Ex.PW-1/16.
9. I have heard the arguments advanced by ld. Counsel Sh. S.K Chaudhary for the plaintiff and gone through the oral and documentary evidences on record.
10. It is not in dispute that the plaintiff had shared a proposal of providing ERP software and licenses of some softwares with the defendant no.1 which it had accepted. It had released the payments against the proposal by making advances on 31.12.2015. The plaintiff also provided Microsoft dynamic NAV 2013 R2 with enhancement plan on license of education vertical and payroll to the defendant no.1 for which defendant made the payments plus taxes which fact is also admitted by the plaintiff.
11. Testimony of PW-1 and the documents show that in September, 2018, the defendant no.1 had a meeting with the plaintiff where it raised 388 new additional requirements. It negotiated the cost with the plaintiff which was Rs. 70.0 lakhs plus taxes. It entered into the MOU dated 17.09.2018. There were four milestones which were to be achieved by the plaintiff. The CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.9 of 14 plaintiff has claimed that all the four milestones were achieved but the defendant has stated that only the three milestones were achieved. PW-1 has stated that against the MOU, defendant no.1 released the payments upto three milestones. Though the defendant in its written statement has stated that the plaintiff failed to perform its obligations or complete the project within the timeline and 388 issues/related concerns remained incomplete but it failed to substantiate this fact by leading evidence as after the pleadings, it absented from the proceedings.
12. The defendant no.1 though in its written statement has admitted the execution of MOU dated 17.09.2018 but alleged that even after the expiry of agreed timeline, plaintiff failed to complete the project and it had to hire/employ IT professionals for which it incurred an amount of Rs. 46,43,165/- but it did not lead evidence to substantiate this fact though it was incumbent upon it because of specific denial made by the plaintiff in its replication/affidavit of admission-denial of documents. I failed to understand what made the defendant absent from the proceedings or why it did not file counter claim claiming the payment as alleged in the written statement. In this case, the defendant no.1 has admitted the acceptance of the final proposal Ex.PW-1/3 dated 30.12.2015, purchase orders and the mails. Record shows that the plaintiff had raised the invoices from time to time. Against the invoices, payments were made by the defendant no.1. The ledger Ex.PW-1/2 which the plaintiff had maintained during the course of its business transactions shows the outstanding liability on the part CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.10 of 14 of defendant no.1 as Rs. 39,94,200/-. The plaintiff time and again as evident from the mails, had requested the defendant no.1 to release the payments and raised the invoices Ex.PW-1/4 (colly) and Ex.PW-1/5 (colly) qua the services/additional works rendered by it. It had also sent mail Ex.PW-1/6 (page 105 of the plaintiff's documents) for the payments against milestone-4 stating that it has completed the milestone. It had raised the invoices of the licenses of additional enhancement plan Ex.PW-1/7 (colly) and sent mail in respect of enhancement plan and other related issues Ex.PW-1/8 (colly). It has placed a letter written by the defendant no.1 Ex.PW-1/9 i.e. the purchase order regarding data purging facility in Microsoft Dynamic ERP Software dated 25.01.2020 and the invoice of annual maintenance Ex.PW-1/10 (colly). It vide mail Ex.PW-1/11 had requested the defendant no.1 to clear the past pending payments and issue project closure letter etc raising the invoices and also made a complaint regarding the change of password vide Ex.PW-1/12.
13. The record shows that before 07.07.2020, no complaint/report was lodged by the defendant no.1. Defendant no.1 has also failed to produce any witness to substantiate its allegations of deficiency/delay in services/unsatisfactory services as alleged which fact has been specifically denied by the plaintiff. Rather defendants absented from the proceedings and not proved the documents placed with the written statement as per the Evidence Act. The plaintiff on the contrary has successfully proved its case for recovery against the defendant no.1 in respect CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.11 of 14 of the services rendered by it against which payments were not released by the defendant no.1 i.e. Rs. 14,86,800/- for additional works, 388 new features + Rs. 4,07,000/- towards balance against quarterly invoices of AMC services commencing December, 2019, March, 2020 and June, 2020 + Rs. 17,80,000/- for using license of source code of dot net application for full rights to maintain and enhance education vertical including taxes, total amounting to Rs. 36,73,800/-.
14. In this case, plaintiff has duly proved the legal notice. As per the statement, the last payment was made by defendant on 01.07.2020. This suit has been filed on 03.02.2021 i.e. within the period of limitation.
15. Admittedly, in the present case, defendant had filed a complaint against the plaintiff but there is nothing on record to indicate or infer that defendant no.1 had no liability towards the plaintiff. In this case, despite legal notice and correspondences, defendant no.1 did not make the payments and therefore, plaintiff is entitled to said amount.
16. Now coming to interest, in the instant case, the plaintiff has claimed interest @ 18% on the amount of Rs. 36,73,800/-. There is no mention in the invoice that in case of delay, defendant no.1 shall be liable to pay interest @18% per annum as claimed. Looking into the fact that defendant no.1 is imparting education to the students belonging to the rural areas, I grant interest @ 8% p.a being the reasonal rate of interest on the said amount from the CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.12 of 14 date of filing the suit till its realization.
17. As regards impleading defendant no.2 to 10, the Chancellor, Group Vice Chairman, Founder Vice Chancellor, Vice Chancellor, Registrar, Director (Corp. Affairs), Director (Administration), Principal College of Computing Science and IT and Jt. Director, Administration and Student Welfare of defendant no.1 as party in the present suit. It was held in case of Tristar Consultants v/s M/s Vcustomer Services India P. Ltd and Anr, MANU/DE/4031/2013 decided on 05.03.2007 in CRP No. 365/2006 that company is a juristic person. The decisions on behalf of the company are taken by the Board of Directors of the company. An individual director has no power to act on behalf of a company of which he is a director, unless there is a specific resolution of the board of directors of the company giving specific power to him or where the articles of company confer such a power. Directors of the company have been described as agents, trustees or representatives of the company because of the fact vis-a-vis the company they act in a fiduciary capacity. They owe no fiduciary or contractual duties or any duty of care to third parties who deal with the company. They cannot be treated as acting as agents of the company. Reference is made of Section 230 of the Indian Companies Act where it was held that unless an agent personally binds himself, an agent is not personally liable for contracts entered into by him on behalf of his principal.
18. Reference is made of the case, Mukesh Hans and Anr v/s CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University Page No.13 of 14 Smt. Uma Bhasin and Ors, RFA 14/2010, decided on 16.08.2010 wherein it was held that a director of a company owes a fiduciary duty to the company. He owes no contractual duty qua third parties. It was held in the case titled as Faith Mercantile Pvt Ltd v/s Simbhaoli Sugars Ltd and Ors, OA No. 166/2017, decided on 20.08.2018 that Directors of the company are agents, trustees or representatives of the company, thus, they are not personally liable. In the instant case, there is no allegation of fraud against the defendants no.2 to 10. The plaint narrates the facts and events which the defendants no.2 to 10 had undertaken as agents/representatives of the defendant. That being the position, defendant no.2 to 10 are neither the necessary nor proper parties for adjudication of the disputes. Their names be deleted from the array of parties.
19. The suit is accordingly decreed for a sum of Rs. 36,73,800/- along with interest @8% per annum with costs from the date of filing the suit till its realization in favour of the plaintiff and against the defendant no.1.
20. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in open court (Sanjiv Jain)
today i.e. 17th August,2022 District Judge
(Commercial Court)03
New Delhi
CS No. 38/2021 Corporate Serve Solutions Pvt Ltd v/s Teerthakar Mahaveer University
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