Delhi District Court
Ashutosh Razdan vs Netcom Softech Pvt Ltd And Ors on 24 February, 2024
IN THE COURT OF SHRI PANKAJ GUPTA:
DISTRICT JUDGE, (S/W) (COMMERCIAL COURT)-01,
DWARKA COURTS: DELHI.
CS (COMM) NO.04-19
SH. ASHUTOSH RAZDAN
SON OF SHRI HARI K. RAZDAN
RESIDENT OF:-
HOUSE NO. 6427,
DLF PHASE -IV,
GURUGRAM, HARYANA-122009. ...PLAINTIFF
VERSUS
1. NETCOM SOFTECH PRIVATE LIMITED
(CIN-U72200DL2006PTC145261)
THROUGH MR. GIRISH SARIN, DIRECTOR
REGISTERED OFFICE AT:
C-4 E/ 123, JANAKPURI,
NEW DELHI-110058.
2. SHRI GIRISH SARIN
C-4 E/ 123, JANAKPURI,
NEW DELHI - 110058.
3. SHRI RAJNISH BEHL
37, SUNSHINE APARTMENTS,
PASCHIM VIHAR, NEW DELHI-110063.
4. SHRI ARVIND KAUL
142, TARUN ENCLAVE, PITAMPURA,
DELHI -110034.
5. SHRI ASHISH MAGO
106, VINOBA PURI, LAJPAT NAGAR,
NEW DELHI -110024. ...DEFENDANTS
Date of Institution : 27.08.2018
Date when the case reserved
for Judgment : 24.02.2024
Date of Judgment : 24.02.2024
JUDGMENT
1. The plaintiff filed the present suit for recovery of Rs. 81,00,000/- along with interest @18 % per annum from the CS Comm No. 4/2019 Page No. 1 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. date of institution of the suit till realization of the amount.
2. In the plaint, it is stated that the plaintiff, an engineer by profession, has done BE (Hons.) in Electronics and Communication from NIT Trichy, University of Madras, and M. Tech. in Digital Communication from Indian Institute of Technology (IIT) Kanpur. The plaintiff has a vast experience of 32 years in corporate sector and has worked with the prestigious companies like Nokia, Tata Docomo, Siemens, HCL etc.
3. In the plaint, it is also stated that the defendant no. 1, a company incorporated under the Companies Act, 1956, is engaged in the business of software publishing, consultancy and supply etc. The defendant no. 2, being the director of the defendant no. 1, is actively involved in its day-to-day affairs. The defendants no. 3 to 5 are the business partners of the defendant no. 1 and have floated various companies.
4. In the plaint, it is also stated that from 2004 to 2014, the plaintiff was engaged with M/s. Tata Tele Services Ltd. At that time, the defendants no. 1 to 3 were engaged with the said company as the contractor for the repair and refurbishment activities. The plaintiff being the head of the customer division of the said company, came in contact with the defendants no. 1 to 3. In March 2016, the defendants no. 2 and 3 introduced the defendants no. 4 and 5 to the plaintiff as their business partners and portrayed a rosy picture to incorporate a new company under the name and style of "Net Com Technologies Pvt. Ltd." (NTPL) to provide services in the specialized field of the plaintiff and assured CS Comm No. 4/2019 Page No. 2 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. that the plaintiff would lead NTPL. Initially, the plaintiff did not accept the said proposal of the defendants on the ground that he required a fixed amount for his livelihood. At that time, the defendants arranged the meeting of the plaintiff with Mukul Harmilapi as their financer and assured that they had adequate financial resources and had completed the formalities for incorporation of NTPL. From April 2016 to June 2016, the defendants no. 2 to 5 agreed that they would issue a 20% stake to the plaintiff in NTPL against payment of a certain amount towards shareholding and would pay Rs. 2,25,000/- per month to the plaintiff to meet his financial commitments. It was also agreed that initially, the plaintiff would work for the defendant no. 1 as the "Chief Executive Officer" (CEO) so that Rs. 2,25,000/-per month could be paid to him from the account of the defendant no. 1. Consequently, "Term Sheet" dated 05.05.2016 was executed between the plaintiff and the defendants no. 2 to 5.
5. In the plaint, it is also stated that as agreed, the defendants asked the plaintiff to take over the operation of the defendant no. 1. After joining the defendant no. 1, the plaintiff came to know that the defendant no. 1 had negative cash inflow and was irregular in paying the salary of its staff and the employees. Once the plaintiff requested the defendants to pay the salary of the employees of the defendant no.1, they informed him that they were cashless and asked the plaintiff to deposit Rs. 10,00,000/- in the account of the defendant no. 1 to enable it to pay the salary of its employees. Initially, the plaintiff was reluctant to pay Rs. 10,00,000/-, then the defendants assured to adjust the said amount towards a 20% equity stake at the time of CS Comm No. 4/2019 Page No. 3 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. issuance in NTPL. Accordingly, the plaintiff in good faith deposited Rs. 10,00,000/- in the account of defendant no. 1 vide cheque dated 02.07.2016 so that it could pay the salary of its employees.
6. In the plaint, it is also stated that the defendants failed to infuse the funds in the defendant no. 1 due to which the defendant no. 1 was not able to pay even its electricity and telephone bills. At one point of time, the defendants informed the plaintiff that due to certain reasons, they were not able to conclude their internal arrangement. At that time, the plaintiff was apprehended about the issuance of a 20% equity stake in NTPL in his favour. However, the defendants assured that in case, NTPL could not be incorporated, they would issue a 20% equity stake in the defendant no. 1 as per the terms and conditions of the Term Sheet. The plaintiff believed the said assurance made by the defendants and paid the electricity and the telephone bills of the defendant no. 1 through his credit card.
7. In the plaint, it is also stated that in January 2017, the plaintiff was appointed as the director in the defendant no.
1. However, the defendants had not shared the information with the plaintiff. In June, 2017, the plaintiff bagged the liquidity business opportunity to provide service to Samsung which required a minimum capital of Rs. 50,00,000/- to set up service operation and intimated the defendants to that effect. However, the defendants failed to arrange the funds to provide the services in June/ July, 2017. The plaintiff got another offer which required the minimum capital of Rs. 5,00,000/- but the defendant no. 2 and Mukul CS Comm No. 4/2019 Page No. 4 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. Harmipali did not respond to the same. As such, the plaintiff suffered damages and loss of reputation and claimed Rs. 7,50,000/- on that account.
8. In the plaint, it is also stated that at the end of January 2018, the plaintiff realized that the defendants had induced him to enter into the Term Sheet but were not making the payments to him though they were managing their finances and getting the payments from other companies. Once, the plaintiff objected to the same, the defendants threatened the plaintiff to claim financial losses from him. Hence, in February 2018, the plaintiff intended to resign from the Board of Directors of the defendant no. 1, but the defendants did not accept his resignation. Vide e-mail dated 09.02.2018 sent to defendant no. 2, with a copy to the defendant no. 4, the plaintiff called upon them to pay his pending dues of Rs. 37,00,000/- but they did not respond to the same.
9. In the plaint, it is also stated that on 11.02.2018, officials of BSES came to the office of the defendant no. 1 to disconnect the electricity on account of non-payment of the electricity bill. Once the plaintiff informed the defendants about the same, they again induced him to clear the said bill. Consequently, the plaintiff paid Rs. 14,342/- to BSES through his credit card.
10. In the plaint, it is also stated that left with no option, the plaintiff sent a legal notice dated 17.04.2018 calling upon the defendants to refund Rs. 10,00,000/- paid towards a 20% stake in NTPL and to pay Rs. 27,00,000/- which CS Comm No. 4/2019 Page No. 5 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. remained unpaid till February 2018. Despite that, the defendants had not paid any heed to the said demand of the plaintiff. Hence, the plaintiff was forced to file mandatory form DIR 11 with the Registrar of Companies. Vide e-mail dated 29.05.2018, the plaintiff called upon the defendants to remove him as the director of the defendant no. 1 but of no use. On 30.05.2018, the defendant no. 2, for the first time, sent an e-mail to the plaintiff stating that they would accept the resignation of the plaintiff, once all the issues would be resolved.
11. In the plaint, it is also stated that since, the defendants failed to pay the monthly remuneration to the plaintiff, the plaintiff was forced to obtain personal loan of Rs. 10,00,000/- from HDFC Bank to meet his family expenses on 10.12.2016. Hence, the plaintiff was forced to pay Rs. 3,76,496/- towards interest and Rs. 5,700/- process fee. He also borrowed money from his family friends. The plaintiff was also forced to surrender his 15 life insurance policies and suffered a loss of Rs. 3,57,512/- due to premature surrender of those policies. The plaintiff was also forced to cancel the booking of the residential flat no. J74, 63 Golf Drive at Sector 63A, Gurugram, Haryana (the flat) which he booked on 13.04.2015. Consequently, the plaintiff sustained a loss of Rs. 15,00,000/- because if he would have paid the complete installments, then he would have earned a profit of Rs. 15,00,000/-. Further, due to non-payment of the credit card bills by the plaintiff in time, the bank charged the interest @ 36% p.a. from him. At that time, the plaintiff availed the loan of Rs. 6,00,000/- from City Bank on 28.02.2018 and was forced to pay the interest of Rs.
CS Comm No. 4/2019 Page No. 6 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. 1,72,000/- on the said amount. Time and again, the defendants forced the plaintiff to pay the expenses of the defendant no. 1 and on that account, the plaintiff incurred the expenses of Rs. 1,60,242/-.
12. In the plaint, it is also stated that at the time of pre- engagement/negotiations meetings and deliberations, the defendants no. 2 to 5 were at the helm of affairs of the defendant no. 1 and were aware of their inability to incorporate NTPL or to manage the business of defendant no. 1. Despite that, with the sole intention of defrauding the innocent plaintiff, the defendants in conspiracy with other Board of Directors of their group companies/ sister concerns made representations, undertakings and assurances and also received Rs. 10,00,000/- from the plaintiff in favor of defendant no. 1 to deceive him. The defendants have also induced the plaintiff with their misleading and false statements and representations to enter into the Term Sheet and have committed a breach of trust. Hence, the present suit.
13. Notice of the suit was duly served upon the defendants. However, the defendants failed to file the written statement (WS) despite being given opportunities. Hence, vide orders dated 02.04.2019 and 02.07.2019, the right of the defendants to file the WS was closed. As per the record, the said orders are final as on date.
14. To prove his case, the plaintiff has examined himself as PW-1 and his affidavit in evidence is Ex.PW1/A. He relied upon the following documents:-
CS Comm No. 4/2019 Page No. 7 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
1. Printouts of company master details containing the address of the registered office and other details downloaded from the website of MCA affairs i.e. mca.gov.in Ex. PW1/1.
2. Printouts from the company master details containing details of Directors in master data list downloaded from the website of MCA Affairs i.e. mca.gov.in as well as from www.azubacorp.com Ex. PW1/2.
3. Original copy of Term Sheet dated 05.05.2016 Ex. PW-1/3.
4. Copy of cheque bearing no. 165487 dated 02.07.2016 for Rs. 10 Lakhs Ex. PW1/4.
5. Original copies of the offer letter dated 10.12.2016 and disbursement request form dated 06.02.2017 Ex. PW1/5(colly).
6. Original copies of payment of surrender value issued by the insurer "Life Insurance Corporation of India" Ex. PW1/6(colly).
7. Copy of acknowledgment slip in proof of booking along with surrender letter dated 22.08.2017 (in original) Ex. PW-1/7(colly).
8. Print out of e-mail dated 28.02.2018 Ex. PW1/8.
9. Printouts of credit card, statements issued by Citi bank showing payments Ex. PW1/9(colly).
10. Printouts of credit, card statements issued by ICICI Bank showing payment Ex. PW-1/10(colly).
11. Print out of e-mail dated 09.02.2018 Ex. PW1/11.
12. Print out e-mail dated 19.02.2018 & 20.02.2018 Ex. PW1/12(colly).CS Comm No. 4/2019 Page No. 8 of 43
Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
13. Office copy of the legal notice dated 17.04.2013 Ex. PW1/13.
14. Original postal receipts Ex. PW1/14.
15. Original copy of reply to legal notice dated 21.05.2018 Ex. PW1/15.
16. Print out e-mail dated 29.05.2018 along with e-
form DIR 11 submitted with ROC Ex.
PW1/16(colly).
17. Print out of e-mail dated 30.05.2018 by defendant and reply dated 30.05.2018 Ex. PW1/17(colly).
18. Print out of e-mail dated 31.05.2018 sent by Mr. Girish Sarin to the plaintiff at 12:42 pm Ex. PW1/18.
19. Print out of e-mail dated 31.05.2018 sent by the plaintiff to Mr. Girish Sarin at 1:44 PM Ex. PW1/19.
20. Print out of e-mail dated 11.06.2018 Ex. PW1/20.
21. Certificate under section 65B of Indian Evidence Act Ex. P/W 1/21.
15. The plaintiff has also examined his wife Ms. Sunita Razdan as PW-2 and her affidavit in evidence is Ex.PW2/B. She proved the original letter dated 01.12.2020 issued by Jammu & Kashmir Bank Ltd. along with account statement Ex. PW2/1(colly).
16. The plaintiff has also examined Sh. Tahir Ahmad Sheikh (Assistant Manager of Jammu Kashmir Bank) as PW-3. He proved authority letter Ex. PW-3/1 and statement of account from 01.07.2016 to 04.07.2016 Ex. PW-3/2.
CS Comm No. 4/2019 Page No. 9 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
17. Counsel for the defendants cross-examined PW-1, PW2 and PW3 at length.
18. As mentioned above, vide orders dated 02.04.2019 and 02.07.2019, the right of the defendants to file the written statement was closed. Hence, there was no occasion to lead the defendant's evidence.
19. I have heard counsel for the plaintiff and counsel for the defendants and have perused the material available on record.
20. The present suit was instituted on 27.08.2018 and was assigned to the court of Ld. ADJ-02, South-West, Dwarka Courts, New Delhi. The designated "Commercial Court"
came into existence w.e.f. 06.12.2019. Consequently, the suit was transferred to this court and was taken up for hearing by the ld. The predecessor of this court on 30.01.2020.
21. Perusal of the record reveals that during the proceedings, the issue arose as to whether the subject dispute is a commercial dispute within the meaning of Section 2 (1) (c) of Commercial Courts Act, 2015 (the Act). Vide order dated 11.03.2020, the ld. Predecessor of this court held that the subject dispute was not a commercial dispute within the meaning of Section 2 (1) (c) of the Act and sent the matter to the ld. Principal District & Sessions Judge, South-West District, Dwarka (PDJ) for appropriate order. However, being aggrieved by the order dated 11.03.2020, the plaintiff preferred CM (M) 445/20 before CS Comm No. 4/2019 Page No. 10 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. the Hon'ble Delhi High Court and vide order dated 09.10.2020 passed therein, the matter was remitted back to pass the reasoned order.
22. Accordingly, before the ld. Predecessor of this court, again, the issue arose as to whether the subject dispute is the commercial dispute within the meaning of the Act. Vide order dated 03.03.2021, the ld. Predecessor of this court held that the subject dispute was not a commercial dispute within the meaning of the Act. Being aggrieved by the same, the plaintiff challenged the order 03.03.2021 before the Hon'ble Delhi High Court vide CM(M) no. 330/2021 and vide order dated 01.05.2023 passed therein, it was held that the subject dispute was the commercial dispute within the meaning of Section 2 (1) (c) of Commercial Court Act, 2015 and sent back the matter for disposal as per law. Being aggrieved by the order dated 01.05.2023, the defendants preferred SLP (Civil) no. 11660/2023 before the Hon'ble Supreme Court but the same was dismissed.
23. As per the record, the defendants also moved the application for review of the order dated 01.05.2023 passed by the Hon'ble Delhi High Court in CM(M) no. 330/2021 and the said application was dismissed on 31.07.2023. Being aggrieved by the said order, the defendants preferred SLP (Civil) no. 37935/2023 before the Hon'ble Supreme Court and the same was dismissed on 17.10.2023.
24. In view of the foregoing discussions, it can be held that now, it stands settled that the subject dispute is the commercial dispute within the meaning of the Act.
CS Comm No. 4/2019 Page No. 11 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
25. Counsel for the plaintiff pleaded that the defendants no. 2 to 5 induced the plaintiff to join them on the ground that they were going to incorporate a new company "NTPL" to provide services in the specialized field of the plaintiff. Consequently, the plaintiff and the defendants no. 2 to 5 entered into the Terms Sheet dated 05.05.2016 Ex. PW-1/3 whereby it was agreed that they would incorporate NTPL in which the plaintiff would have a 20% stake and in turn, the plaintiff would invest Rs. 10,00,000/- in NTPL. It was also agreed that the plaintiff would work as the Chief Executive Officer (CEO) in the defendant no. 1 and he would get Rs. 2,25,000/- per month from it. Consequently, in May 2016, the plaintiff joined the defendant no. 1. However, the defendant no. 1 failed to pay Rs. 2,25,000/- per month as remuneration to the plaintiff in terms of the Terms Sheet but paid less than Rs. 2,25,000/- per month He also pleaded that NTPL could not come into existence. Consequently, the defendants no. 2 to 5 represented to the plaintiff that they would induct him as the director in the defendant no. 1 on the terms and the conditions mentioned in the Terms Sheet Ex. PW-1/3 and asked the plaintiff to deposit Rs. 10,00,000/- in the defendant no. 1 which would be adjusted against a 20% stake in NTPL. Accordingly, the plaintiff paid Rs. 10,00,000/- vide cheque dated 02.07.2016 Ex.PW-1/4 and the plaintiff was appointed as the director in the defendant no.1. As per the Terms Sheet, the plaintiff was entitled to the remuneration of Rs. 48,84,677/-, however, he was paid Rs. 20,02,262/- only which included Rs. 4,00,162/- which was paid to the family of the plaintiff in emergency. As such, the defendants did not fulfill their promise. Consequently, the plaintiff faced the financial crisis and CS Comm No. 4/2019 Page No. 12 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. was forced to obtain a personal loan of Rs. 10,00,000/- from HDFC Bank to meet his day-to-day expenses and paid Rs. 3,76,496/- towards the interest. To meet his expenses, the plaintiff was also forced to surrender his 15 LIC policies; to cancel his flat; and to avail a loan of Rs. 6,00,000/- from the Citi Bank to pay his credit card bills. Due to the misdeeds of the defendants, the plaintiff also suffered mental harassment and loss of reputation and sustained loss of Rs. 7,50,000/- on that account.
26. Counsel for the plaintiff also pleaded that ultimately, the plaintiff tendered his resignation vide his e-mails dated 09.02.2018 Ex. PW-1/11 and dated 19.02.2018 Ex. PW1/12 and also pleaded his grievances and called upon the defendants to pay the amount as mentioned therein. However, the defendants had neither accepted the resignation of the plaintiff nor had intimated the Registrar of Companies (ROC) regarding the resignation of the plaintiff.
27. Counsel for the plaintiff also pleaded that left with no option, the plaintiff got issued legal notice dated 17.04.2018 Ex. PW-1/13 calling upon the defendants to pay the outstanding amount. However, vide reply dated 21.05.2018 Ex. PW-1/15, the defendants denied their liability to pay any amount to the plaintiff. Consequently, vide e-mail dated 29.05.2018 Ex. PW-1/16 the plaintiff intimated to the defendants that since, despite his resignation, his name had not been removed from the MCA portal, hence, the plaintiff's final date of resignation would be treated as 29.05.2018. Despite all that, the defendants failed to pay the outstanding to the plaintiff. Hence, the present suit.
CS Comm No. 4/2019 Page No. 13 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
28. Counsel for the defendants pleaded that the plaintiff's case is based upon the Terms Sheet dated 05.05.2016 Ex. PW-1/3 signed by the plaintiff and the defendants no. 2 to 5 with respect to incorporation of NTPL. Vide clause 4 (f) &
(g) of the Terms Sheet, the parties thereto agreed that they would execute an agreement incorporating the terms and conditions of the Terms Sheet in the future and then it would become enforceable. As such, the Terms Sheet is merely an agreement to enter into an agreement in the future and therefore, is not enforceable in law.
29. Counsel for the defendants also pleaded that according to the plaintiff, the defendants no. 2 to 5 had induced him to sign the Terms Sheet. As evident from the Terms Sheet, the plaintiff and the defendants no. 2 signed it on 05.05.2016 while the defendants no. 3 to 5 signed it on 24.06.2016. Therefore, in between, the plaintiff had sufficient time to withdraw from the Terms Sheet if it was signed by the defendants no. 2 to 5 by inducing him which is not done in the present case. Even otherwise, the plaintiff has not filed any document to show that he had ever complained to the defendants no. 2 to 5 about their alleged act of inducing him to sign the Terms Sheet.
30. Counsel for the defendant also pleaded that vide clause 4(e) of the Terms Sheet, it was agreed that the life of the Terms Sheet would be 12 months unless extended. In terms of the Terms Sheet, the parties had to incorporate NTPL. However, it was not mentioned therein as to who would take the initiative to incorporate NTPL. Therefore, if the plaintiff was interested in the corporation of NTPL, then CS Comm No. 4/2019 Page No. 14 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. he must have taken some initiative and must have called upon the defendants no. 2 to 5 to take steps for incorporation of NTPL instead of resign w.e.f. 29.05.2018. Further in terms of clause 4 (a) of the Terms Sheet, the parties thereto including the plaintiff were debarred from indulging in the competitive business subject matter of the Terms Sheet. However, admittedly, the plaintiff before resigning from the defendant no. 1 on 29.05.2018 started a new company "Serviquo Systems Pvt. Ltd." and indulged in the competitive business. Therefore, the plaintiff itself was not inclined to enforce the Term Sheet. Hence, the plaintiff is estopped by his act, conduct and acquiescence to seek enforcement of the Term Sheet at this stage. Not the least, the plaintiff and the defendants no. 2 to 5 by their conduct have rendered the Term Sheet as infructuous.
31. Counsel for the defendants also pleaded that before execution of the Term Sheet i.e. before 05.05.2016, the plaintiff had joined the defendant no. 1 as the CEO and remained so even thereafter till December 2016. As such, the plaintiff was the employee of the defendant no. 1 on the date when the Term Sheet was signed by him. According to the plaintiff, the terms and conditions of his employment with the defendant no. 1 were substituted by the terms and conditions mentioned in the Term Sheet Ex.PW1/3. As such, according to the plaintiff, there was novation of the contract with the defendant no. 1. If that was so, the defendant no. 1, a private limited company, must have passed the resolution to this effect. However, neither is it the case of the plaintiff nor has he filed any document to substantiate that the defendant no. 1 had passed any CS Comm No. 4/2019 Page No. 15 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. resolution or executed any document to novate the contract of the plaintiff in terms of the Term Sheet and the plaintiff's association with the defendant no.1 was governed by the Term Sheet. Further, as evident from the plaintiff's e-mail dated 09.02.2018 Ex. PW1/11 and Form 16 Ex. PW-1/D1 the plaintiff got the salary till December, 2016. As such, even after the execution of the Term Sheet in May 2016, the plaintiff continued to be the employee of the defendant no. 1 till December, 2016. In January, 2017, the plaintiff was appointed as one of the directors of the defendant no. 1 to generate its business. According to the plaintiff, he paid Rs. 10,00,000/- to the defendant no. 1 as consideration for novation of the contract. However, PW2 i.e. the wife of the plaintiff in her cross-examination deposed that Rs. 10,00,000/-was not paid by the plaintiff but was paid by her. As such, the said amount was not paid as consideration for the novation of the contract of the plaintiff's appointment in the defendant no.1. Hence, there was no novation of the contract after 05.05.2016 when the Term Sheet came into picture.
32. Counsel for the defendants also pleaded the plaintiff has claimed the suit amount on account of alleged financial losses suffered by him under several heads. However, the plaintiff admitted that the defendant no. 1 had never asked him to incur expenses as alleged and he had also not informed the defendant no. 1 to this effect. Further, the plaintiff had not incurred the alleged expenses in terms of the Term Sheet. Hence, the defendants are not liable to pay the suit amount to the plaintiff.
CS Comm No. 4/2019 Page No. 16 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
33. The case of the plaintiff is based upon the Term Sheet dated 05.05.2016 Ex.PW1/3 (hereinafter referred to as "TS").
34. According to the plaintiff, in May 2016, the defendants no. 2 to 5 were at helm of affairs of the defendant no. 1 and were well versed with the experience and expertise of the plaintiff. Hence, they approached the plaintiff with a proposal to incorporate a new company under the name and style "NTPL" and offered him a responsible position and a lucrative package in NTPL. The plaintiff believed the said representations made by the defendants no. 2 to 5 and agreed to their proposal. Consequently, TS was executed between them. However, the defendants no. 2 to 5 failed to fulfill their commitment in terms of TS. As such, they had not only induced the plaintiff to enter into TS but also cheated him and committed a breach of trust.
35. On the contrary, case of the defendant is that TS was nothing more than an agreement to enter into another agreement and therefore, is not enforceable in law. Further, admittedly, in terms of TS, NTPL has not come into existence. Neither the plaintiff nor the defendants no. 2 to 5 had acted upon TS nor had called upon each other to act upon the same nor had extended the period mentioned therein. Hence, TS has died its own death. Accordingly, the claim of the plaintiff based on TS is not sustainable in law.
36. Before proceeding further, it is inevitable to mention the educational qualification and working experience of the CS Comm No. 4/2019 Page No. 17 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. plaintiff.
37. It is evident from the cross-examination of PW1 that the plaintiff graduated in Electronics and Telecommunication in the year 1982 and did his master's from IIT Kanpur in the year 1984. Thereafter, he worked with many reputed companies in high and responsible positions for about 30 years before the date of execution of TS on 05.05.2016.
38. It is evident from the master data of the defendant no. 1 Ex.PW1/1 and Ex.PW1/2 that when TS was executed, out of the defendants no. 2 to 5, only the defendant no. 2 was its director and the defendants no. 3 to 5 were not in the position to take any decision on its behalf. Therefore, it can be held that at the time of execution of TS, the defendants no. 3 to 5 were not at the helm of affairs of the defendant no. 1.
39. Now, it is to be ascertained what is the nature and scope of TS Ex.PW1/3.
40. TS Ex. PW1/3 is reproduced herein for the sake of convenience:
Term Sheet Ashutosh Razdan (AR) And Girish Sarin, Ashish Mago, Arvind Kaul and Rajnish Behl, Collectively hereinafter called "other shareholders' (OS) CS Comm No. 4/2019 Page No. 18 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
Of Netcom Technologies Pvt. Ltd. (Company) Made and agreed this 5th day of May of Year 2016.
It is mutually agreed that AR (or his assignees) would be inducted as additional shareholder in the Company on the following terms and conditions:-
a. That AR's effective date of joining will be 9 may 2016.
b. That AR will have 20% stake in the company. c. That the value of AR's stake has been agreed to be Rs. 10 lacs and it at discount to the projected valuation of the company.
d. That in view of AR agreeing to spearhead the company on full time basis, his monthly emoluments have been agreed to be CTC Rs. 2.25 lacs.
e. That AR shall be designated as the CEO of the company.
f. That the company shall work out a mutually agreeable tax beneficial structure for AR's CTC. g. That for the purpose of board level decisions, the board of directors shall comprise of AR, Girish Sarin (GS), and Mukul Harmilapi (MH). h. That for the purpose of board representation, GS shall be the representative of other shareholders (OS)- namely Arvind Kaul, Rajnish Behl, and Ashish Mago.
2. Representations by AR a. That given AR's rich corporate experience is CS Comm No. 4/2019 Page No. 19 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
servicing line; he is better equipped to spearhead the operations of the company.
b. That AR shall bring in stake in maximum two tranche, the first tranche shall be minimum 50% and invested within 7 days of signing this term sheet, and the balance within 30 days thereof. c. That AR shall not, either directly or indirectly, engage in any other economic activity other than in the company, as mutually decided by the BOD- in which he has a fair representation.
d. That AR shall work in the best interest of the company, and all decisions shall be first to protect the interest of the Company over personal interests.
e. That AR shall be responsible for driving the vision, the topline and the bottom-line of the company.
f. That AR shall present a Business Plan and regular MIS, as and when, and in the format, decided by the BOD.
3. Representation by OS.
a. That currently all other OS do not hold the shares in the company, the matter of transfer of shares inter-se between OS, and /OR in other group company is in active consideration. b. That OS's shall allow a fair freedom to allow AR take effective decisions in the interest of the company.
c. That OS's shall give able support in all respects to help AR achieve Business vision.
d. That the OS's shall work transparently with CS Comm No. 4/2019 Page No. 20 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
regards the operations of the company.
e. That OS shall share with AR the actual Statement of Affairs of the company as on date of his joining.
4. Both parties agree that a. Should any party decide to shall his stake or, disengage from active role in company, either party shall not either directly or indirectly, engage in any competing activity of the company until 1 year from the date of such disengagement. b. AR and each OS is equal stakeholder in the business, and are answerable to the BOD for their conduct and approval of direction.
c. That OS's may consolidate their shareholding in other group company; however the board representation shall not change as a result of this decision.
d. That each other shareholder shall have a FROR (First right of Refusal) in respect to transfer/ sale of shareholding of the exiting shareholder.
e. That this term sheet is mutually binding for a period of 12 months or, as mutually decided in BOD meeting.
f. That no terms shall be deemed to have been agreed or modified unless signed and agreed in writing by all shareholders as a new/ supplement / addendum to this agreement.
g. That a formal and detailed SSHA (Subscription cum shareholding agreement) shall be drafted in due course.
CS Comm No. 4/2019 Page No. 21 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
h. That the BOD shall meet every month for operative performance review and decisions, and the CEO (and or his designate) shall make formal presentation to the BOD, OS may optionally participate in such meeting for apprising themselves of the progress of business.
i. Subject to concurrence of the BOD, the shareholders agree that the broad allocation of the profit shall be basis the following guidelines.
Net profit 0 to 50 >50 to 100 >100 to >3 cr
after tax Lacs lacs 300 Lacs
Project Min 90% Min 50% Min 30% Min 20%
Allocation of Profit
pool
Risk pool Min 5% Min 20% Min 15% Min 15%
Shareholde 0% Max 15% Min15% Min 20%
rs pool
Employees Max 5% Max 5% Max 10% Min 5%
pool
Agreed and accepted
Ashutosh Razdan Girish Sarin Arvind Kaul Ashish Mago Rajnish Behl Date Date Date Date Date Witness Name Name Address Address
41. Now the question arises what was the intention of the plaintiff and the defendants no. 2 to 5 behind the execution of TS.
42. It is settled law that while interpreting a document to ascertain the intentions of the parties behind its execution, that document is to be read as a whole.
CS Comm No. 4/2019 Page No. 22 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
43. It is evident that TS Ex.PW1/3 was executed between the plaintiff and the defendants no. 2 to 5 describing them as "Other shareholders (OS)" of Netcom Technology Pvt. Ltd. (Company) (NTPL). Admittedly, the defendant no. 1 was not the signatory to TS. PW1 in his cross-examination admitted that NTPL had to come into existence after the execution of TS but it had never come into existence. As such, there was no occasion for NTPL to sign TS at any point of time.
44. Perusal of TS reveals that vide clause 1, the plaintiff and the defendants no. 2 to 5 agreed that the plaintiff's effective date of joining NTPL would be 09.05.2016 and he would be the CEO in NTPL; that the plaintiff would get monthly emoluments of Rs. 2,25,000/-; that the plaintiff would have 20% stake in NTPL and its value would be Rs.10,00,000/-; and the plaintiff would be inducted as additional shareholder in NTPL on the terms and conditions mentioned therein. Further, on the day TS was executed, the defendants no. 2 to 5 did not have the shares in NTPL and the matter of transfer of shares inter-se between them and other group companies was in consideration and a formal & detailed subscription cum shareholder agreement was to be drafted in due course. As such, the plaintiff also did not have any share in NTPL. Vide clause 4 (f), it was agreed that no term of TS be deemed to have been agreed or modified unless signed and agreed in writing by all shareholders as a new/ supplement/ addendum to it.
45. In view of the forgoing discussions, it can be held that the date when TS was executed, the defendants no. 2 to 5 CS Comm No. 4/2019 Page No. 23 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. were not holding any share in NTPL and the said issue was in active consideration. Hence, it was agreed that upon finalization of the same, a formal and detailed subscription cum shareholding agreement would be drafted in due course. It was also agreed that the plaintiff would have the post of the CEO in NTPL with a 20% stake therein of the value of Rs. 10,00,000/-. Hence, vide TS, the plaintiff and the defendants no. 2 to 5 agreed that they would incorporate NTPL in the future and to do some groundwork for the same, they agreed upon certain terms and conditions regarding their proposed rights and liabilities in the proposed company i.e. NTPL as mentioned therein. Therefore, vide clause 4 (f) of TS, it was made clear that no term mentioned therein be deemed to have been agreed upon unless signed and agreed in writing by all the shareholders as a new agreement. Hence, the plaintiff and the defendants no. 2 to 5 agreed that after completion of the formalities as mentioned therein, they would enter into a new agreement incorporating therein the finalized terms and conditions relating to their rights and liabilities.
46. In view of the foregoing discussions, it can be held that the plaintiff and the defendants no. 2 to 5 did not contemplate that with the execution of TS, a binding contract came into existence. In fact, TS was a statement of their intent and agreement to enter into a definitive agreement in the future. Therefore, TS was an agreement between the plaintiff and the defendants no. 2 to 5 to enter into another agreement to incorporate NTPL, a private limited company complying with the provisions of Companies Act and laws related thereto because for that, TS CS Comm No. 4/2019 Page No. 24 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. was not sufficient. Hence, TS, being an agreement to enter into another agreement, is not enforceable in law. Reliance is placed on the judgments titled as "PVR Pictures Ltd. vs. Studio 18" reported in 2009 (111) DRJ 436 and "NEC Corporation India Private Limited vs. Plus91 Security Solutions" reported in 2023 SCC Online Del 8103.
47. During the course of the arguments, counsel for the defendants pleaded that, TS Ex.PW1/3 is not duly stamped. Hence, it is inadmissible under section 35 of the Indian Stamp Act, 1899. As held above, TS is an agreement to enter into an agreement and therefore, is not an instrument within the meaning of section 2(14) of Indian Stamp Act, 1899. Therefore, there is no substance in the plea raised by counsel for the defendants.
48. It is evident from TS that the plaintiff and the defendants no. 2 signed it on 05.05.2016 while the defendants no. 3 to 5 signed it on 24.06.2016. If the defendants no. 2 to 5 had induced the plaintiff to sign TS on 05.05.2016 then he had sufficient period of 1-1/2 months from that day to withdraw from the same which was not done. Not only that, the plaintiff's legal notice dated 17.04.2018 Ex.PW1/13 is silent to the effect that the defendants no. 2 to 5 had induced him to sign TS and also cheated and committed breach of trust. Hence, it can be held that the plaintiff had voluntarily signed TS Ex.PW1/3.
49. Now the question arises as to what was the life of TS Ex. PW1/3.
CS Comm No. 4/2019 Page No. 25 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
50. Vide clause 4 (e) of TS, the plaintiff and the defendants no. 2 to 5 agreed that it was mutually binding for a period of 12 months or as mutually decided in the meeting of the Board of Directors of NTPL. As such, TS had a life span of 01 year ending on 06.05.2017 or the period be extended by mutual decision in the meeting of the Board of Directors of NTPL.
51. PW1 in his cross-examination deposed that there was a mutual extension of TS but it was not in writing. Firstly, the plaintiff has not mentioned the specific date, month and year when it was mutually extended by the parties. Secondly, in terms of clause 4 (e) of TS, that could be extended in the meeting of the Board of Directors of NTPL. However, once, NTPL had not come into existence, there was no question of holding any meeting of its Board of Directors. Therefore, there was no occasion for an extension of the terms of TS by their oral mutual agreement. Hence, it can be held that TS died its own death on 06.05.2017.
52. Vide TS, the plaintiff and the defendants no. 2 to 5 agreed that they would incorporate NTPL. But TS is silent as to who would take the initiative to incorporate NTPL. According to the plaintiff, he asked the defendants no. 2 to 5 on several occasions to incorporate NTPL but they avoided the said issue on one pretext or another. However, the said averments are vague in nature. Further, the plaintiff has failed to disclose what steps he had taken towards the incorporation of NTPL. As evident from the record, the plaintiff himself had not taken any step towards incorporation of NTPL. Further, if the plaintiff was/is CS Comm No. 4/2019 Page No. 26 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. aggrieved by the acts of the defendants no. 2 to 5 for not incorporating NTPL in terms of TS and thereby causing loss to him, then he would have prayed for the specific performance of TS to seek direction against the defendants no. 2 to 5 to incorporate NTPL in terms thereof. However, no such direction has been prayed for by the plaintiff.
53. On the contrary, PW-1 in his cross-examination deposed that in February 2018, he left the defendant no. 1 and in March 2018, he formed a new company namely "Serviquo Systems Pvt. Ltd." which deals in feel service operations which involves sitting up of service center wherein the customer walks in for getting his phones repaired and proved the linked in profile Ex. PW-1/D5. It is the own case of the plaintiff and is also evident that from the plaintiff's e-mail dated 29.05.2018 Ex.PW-1/16 that in February 2018, he tendered his resignation from the defendant no. 1 but it was not accepted. Ultimately, he sent the DIR form to MCA and intimated to the defendant that his resignation should be deemed to be effected w.e.f. 29.05.2018. Hence, it can be held that during the period when the plaintiff was the director in the defendant no. 1, he incorporated a new company and indulged in a competitive business which was against the terms of TS. In view of the foregoing discussions, it can be that the plaintiff is estopped by his act, conduct and acquiescence to seek enforcement of TS at this stage.
54. However, I propose to decide the matter on merits also presuming that TS is enforceable in law to ascertain as to whether the defendant no. 1 and the defendants no. 2 to 5 CS Comm No. 4/2019 Page No. 27 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. can be held liable to pay the suit amount to the plaintiff based on TS.
55. As held above, the defendant no. 1 was not the signatory to TS and TS is completely silent about the defendant no. 1 and its role in NTPL. TS is also silent about the role of the plaintiff and defendants no. 2 and 5 in the defendant no. 1.
56. Now the question arises as to how the defendant no. 1 came into picture in the present case.
57. It is pleaded in para no. 11 of the plaint that once the negotiations were going on between the parties during April 2016-June 2016, it was agreed that for the initial period, the plaintiff would work for the defendant no. 1 as the CEO so that Rs. 2,25,000/- per month could be paid to the plaintiff from the account of the defendant no. 1. Consequently, the plaintiff was appointed as the CEO in the defendant no. 1. It is also the case of the plaintiff that after joining the defendant no. 1, he came to know that the financial condition of the defendant no. 1 was not sound and it was not even able to pay the salary of its employees. Consequently, he asked the defendants to pay the salary of the employees of the defendant no. 1. However, they showed their inability to pay the same on the ground that they were cashless and asked the plaintiff to deposit Rs. 10,00,000/- with the defendant no. 1 and assured that Rs. 10,00,000/- would be adjusted against 20 % equity stake in NTPL at the time of its issuance. Consequently, the plaintiff deposited Rs. 10,00,000/- in the account of CS Comm No. 4/2019 Page No. 28 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. defendant no. 1 vide cheque dated 02.07.2016 Ex. PW1/4. Later on, the plaintiff was appointed as the director in the defendant no. 1 on the terms and conditions mentioned in TS.
58. In view of the foregoing discussions, it can be held that according to the plaintiff, after execution of TS, as per the understanding between him and the defendants no. 2 to 5, he joined the defendant no. 1 as the CEO in June 2016 but got the salary from the defendant no. 1 from May 2016. Subsequently, he invested Rs. 10,00,000/- in the defendant no. 1 to enable the defendant no.1 to pay salary of its employees. Thereafter, he was appointed as the director in the defendant no. 1 on the terms and conditions of TS. As such, TS was acted upon by the plaintiff and the defendants no. 2 to 5 and the defendant no. 1 became part of it. In other words, according to the plaintiff, he joined the defendant no. 1 as the CEO at the instance of the defendants no. 2 to 5 after execution of TS on the terms and conditions mentioned therein.
59. Now the question arises as to when the plaintiff joined the defendant no. 1 as the CEO and what his remuneration was.
60. The plea raised by counsel for the plaintiff that once the negotiations were going on between the parties during April 2016-June 2016, it was agreed that for the initial period, the plaintiff would work for the defendant no. 1 as the CEO so that Rs. 2,25,000/- per month could be paid to the plaintiff from the account of the defendant no.1 does not CS Comm No. 4/2019 Page No. 29 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. inspire confidence of this court because firstly, the defendant no. 1 was not the party and signatory to TS Ex. PW-1/3. TS is completely silent about the defendant no. 1 and also about the role of either the plaintiff or the defendants no. 2 to 5 in the defendant no.1. Secondly, the plaintiff has not disclosed the exact date and time when the said agreement arrived between them. Thirdly, at the relevant time, out of the defendants no. 2 to 5, only the defendant no. 2 was the director in the defendant no. 1. As such, the defendants no. 3 to 5 had no authority to even agree on any such term on behalf of the defendant no. 1. So far as the defendant no. 2 is concerned, he was only one of the directors in the defendant no. 1 and not the entire Board of Directors of the defendant no. 1. Therefore, the defendant no. 2 himself was not competent to take a decision on behalf of the defendant no. 1 and to offer the post of CEO to the plaintiff in the defendant no. 1. Fourthly, the plaint is completely silent as to whether the alleged agreement was brought to the notice of the defendant no. 1 and if yes, when and what was the response of the defendant no. 1 to their said offer i.e. whether the defendant no. 1 accepted the same because the defendant no. 1 being a private limited company had to take the decision following the company laws which is not done in the present suit.
61. Further, TS Ex. PW-1/3 though is dated 05.05.2016 but that day, only the plaintiff and the defendant no. 1 had signed the same. The defendants no. 3 to 5 signed TS on 24.06.2016. Therefore, till 24.06.2016, when all the parties to TS had signed it, it cannot be held to have been executed between the parties. Hence, it can be held that TS was CS Comm No. 4/2019 Page No. 30 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. executed on 24.06.2016 though it was made effective from 05.05.2016.
62. PW-1 in his cross-examination deposed that he joined the defendant no. 1 in June, 2016 but his remuneration was paid from May 2016 in terms of TS Ex. PW-1/3 and that time, his designation was the CEO and he drew the salary for the month of May 2016 which was not Rs. 2,25,000/-. PW-1 in his cross-examination again stated that he joined the defendant no. 1 in May 2016 and proved Form-16 for the financial year 2016-2017 Ex. PW-1/D1. If the plaintiff joined the defendant no. 1 after the execution of TS in June 2016 as part of the negotiation, then there was no occasion for the defendant no. 1 to pay the salary to the plaintiff for May 2016 as reflected in Form-16 Ex. PW-1/D1 that too less than Rs. 2,25,000/- per month. Hence, it can be held that the plaintiff joined the defendant no. 1 in May 2016 as the CEO before the execution of TS and therefore, the terms and conditions mentioned in TS were not the part of his appointment.
63. The plaintiff's case is that vide TS Ex. PW-1/3, he was offered 20 % stakes in NTPL for a value of Rs. 10,00,000/- and for that purpose, he had to deposit Rs. 10,00,000/- in NTPL. Admittedly, NTPL had not come into existence. PW-1 in his cross examination deposed that once NTPL could not come into the existence, the defendants no. 2 to 5 persuaded him to invest Rs. 10,00,000/- in the defendant no. 1 and assured that the terms and conditions of TS would apply to the defendant no. 1 and that the said arrangement was not in writing but was followed by them CS Comm No. 4/2019 Page No. 31 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. and thereafter, he was designated as the director of the defendant no. 1. Hence, he deposited Rs. 10,00,000/- in the defendant no. 1. On the contrary, as discussed above, the plaintiff's case is that he paid Rs. 10,00,000/- to the defendant no. 1 to enable it so pay salary of its employees on the assurance of the defendants no. 2 to 5 that Rs. 10,00,000/- would be adjusted against 20 % equity stake in NTPL at the time of its issuance. As such, there exists a material contradiction in the stand of the plaintiff. Hence, an adverse inference can be drawn against the plaintiff.
64. Further, as held above, TS was signed by the defendant no. 3 to 5 on 24.06.2016 and that day, its execution was completed. According to the plaintiff, he paid Rs. 10,00,000/- to the defendant no. 1 via cheque dated 02.07.2016. As such, according to the plaintiff, he paid Rs. 10,00,000/- to the defendant no. 1 within 07 days from the date of completion of execution of TS since NTPL could not come into existence. As per TS, the parties thereto had not fixed the time within which NTPL was to be incorporated. Further, the plaintiff had to pay Rs. 10,00,000/- to the defendants no. 2 to 5 against his 20 % stake in NTPL. Therefore, it is highly improbable that within 07 days execution of TS, the plaintiff apprehended his 20 % stake in NTPL and invested Rs. 10,00,000/- in the defendant no. 1 i.e. the third party to TS, on the persuasion of the defendants no. 2 to 5 that on payment of Rs. 10,00,000/-, the terms and conditions of TS, would be applicable to the defendant no. 1 that too without any written document to this effect. It is worth mentioning here that time, out of the defendants no. 2 to 5, only the defendant no. 2 was the director in the CS Comm No. 4/2019 Page No. 32 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. defendant no. 1 and he had no authority to bind the defendant no. 1 to that extent.
65. In view of the foregoing discussions, it can be held that before payment of Rs. 10,00,000/- by the plaintiff to the defendant no. 1 as alleged, the plaintiff was the CEO in the defendant no. 1 and even after payment of Rs. 10,00,000/- in July 2016, the plaintiff remained the CEO in the defendant no. 1 till December 2016 and was getting the remuneration less than Rs. 2,25,000/- per month. Admittedly, in January 2017, the plaintiff was appointed as the director in the defendant no. 1. Even thereafter, the plaintiff did not get the remuneration of Rs. 2,25,000/- per month.
66. PW-1 is his cross-examination admitted that in November 2017, the defendant no. 1 lastly paid his remuneration and he had not sent any written communication intimating the defendant no. 1 to pay his remuneration. It is evident from the record that during the period, when the plaintiff remained associated with the defendant no. 1 whether as the CEO or as the director, he never got the remuneration @ Rs. 2,25,000/- per month. The plaintiff has failed to show any document that he ever complained to the defendant no. 1 that he was entitled to remuneration @ Rs. 2,25,000/- per month in terms of TS and called upon it to pay the same.
67. As held above, even during the period, when the plaintiff was the director in the defendant no. 1, he incorporated a new company and indulged in a competitive CS Comm No. 4/2019 Page No. 33 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. business which was against the terms of TS. Hence, it can be held that the contract of employment of the plaintiff with the defendant no. 1 was not novated in terms of TS. Therefore, the defendant no. 1 was not bound by the terms and conditions of TS.
68. The plaintiff has claimed the suit amount under the following heads:
(i) Refund of Rs. 10,0,000/- paid to the defendant no. 1 towards payment of the salary of its employee;
(ii) Recovery of Rs. 28,82,415/- as differential amount because the defendant no. 1 paid remuneration less than Rs. 2,25,000/- per month which the plaintiff was entitled to as per TS;
(iii) Recovery of Rs.24,06,664/-, because due to less payment by the defendant no. 1, the plaintiff faced a financial crisis and was forced to obtain the loan from HDFC Bank, Citi Bank and his friends; to surrender his LIC policies; and to cancel his flat;
(iv) Recovery of Rs. 1,26,747/-, because the defendants forced the plaintiff to clear the electricity and telephone bills of the defendant no. 1 which he paid through his credit card; and
(v) Damages of Rs. 7,50,000/- on account of loss of reputation and mental torture as the defendants did not act upon the business proposals brought by the plaintiff from the reputed companies.
69. At the outset, it is mentioned that it is the case of the plaintiff that before the institution of the suit, he got served a legal notice dated 17.04.2018 Ex. PW-1/13 upon the CS Comm No. 4/2019 Page No. 34 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. defendants no. 2 to 5 and the proposed company i.e. NTPL. Surprisingly, the plaintiff has not sent any such notice to the defendant no.1. In fact, the said notice is completely silent about the defendant no. 1. Not the least, the role assigned to the defendant no. 1 in the present suit was assigned by the plaintiff to the addressee no. 1 i.e. NTPL in the said notice. Therefore, it can be held that till 17.04.2018, the plaintiff had no grievance against the defendant no. 1.
70. Further, vide legal notice dated 17.04.2018 Ex. PW- 1/13, the plaintiff called upon the defendants no. 2 to 5 and NTPL to pay Rs. 27,00,000/- due till February 2018 towards his remuneration and refund of Rs. 10,00,000/-. However, the said notice is silent that the plaintiff paid any amount to the defendant no. 1 towards the salary of its employees, clearance of its electricity and telephone bills and incurred losses on account of the loans obtained by him from HDFC Bank, Citi Bank and his friends or due surrender of his LIC policies or cancelation of his flat, or loss of reputation & mental torture. The plaintiff did not claim any amount on that account from the defendants no. 2 to 5 also in the said notice. The plaintiff has failed to assign any reason for his silence to that effect. Hence, an adverse inference can be drawn against the plaintiff.
71. Now I propose to ascertain as to whether the plaintiff has proved his claims on the abovementioned grounds against the defendants.
72. As discussed above, according to the plaintiff, once NTPL could not come into the existence, the defendants no.
CS Comm No. 4/2019 Page No. 35 of 43Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. 2 to 5 persuaded him to invest Rs. 10,00,000/- in the defendant no. 1 and assured that the terms and conditions of TS would apply to the defendant no. 1, however, that arrangement was not in writing. Despite that, he deposited Rs. 10,00,000/- in the defendant no. 1. On the contrary, the plaintiff's case is that he paid Rs. 10,00,000/- to the defendant no. 1 to enable it to pay salary of its employees on the assurance of the defendants no. 2 to 5 that Rs. 10,00,000/- would be adjusted against 20 % stake in NTPL at the time of its issuance. As such, there exists a material contradiction in the stand of the plaintiff. Hence, an adverse inference can be drawn against the plaintiff.
73. Further, at that time, the plaintiff was the CEO and the defendant no. 2 was the director in the defendant no. 1 and NTPL had not come into existence. Being so, the plaintiff, a highly educated person having a vast work experience in corporate sector cannot be expected to act in the manner as pleaded by him especially once the payment of the salary of the employees of the defendant no. 1 was not his responsibility. Further, due to nonpayment of the salary of the employees of the defendant no. 1, TS was not going to be affected because the defendant no. 1 was not the party to the same. Not the least, the plaintiff has not filed a single document to show that the defendant no.1 had ever asked him to deposit Rs. 10,00,000/- towards payment of the salary of its employees.
74. Further, except making the bald statement that the plaintiff deposited Rs. 10,00,000/- towards the payment of the salary of the employees of the defendant no. 1, the CS Comm No. 4/2019 Page No. 36 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. plaintiff has neither brought any material on record nor has examined any witness to prove that during the said period, the defendant no. 1 was in financial crisis due to which it could pay the salary of its employees and therefore, it forced the plaintiff to deposit the said amount.
75. According to the plaintiff, he paid Rs. 10,00,000- to the defendant no. 1 vide cheque dated 02.07.2016 Ex. PW1/4. However, PW-2 specifically deposed that all money in the account from which the subject cheque was drawn belonged to her and not to the plaintiff. Surprisingly, PW-2 has no grievance against the defendant no. 1 for a deposit of Rs. 10,00,000/- from her account.
76. As discussed above, the defendant no. 1 was not bound by TS and the contract of appointment of the plaintiff with the defendant no. 1 was not novated in terms of TS. Hence, the defendant no. 1 was not under any obligation to pay Rs.2,25,000/- per month as remuneration to the plaintiff. Therefore, there is no occasion for the plaintiff to plead any grievance against the defendants on that account.
77. According to the plaintiff, the competent authorities raised the electricity and telephone bills raised upon the defendant no. 1 but the defendant no. 1 did not clear the same. Once the plaintiff brought the said fact to the notice of the defendants, the defendants assured the plaintiff that if NTPL could not be incorporated, then they would issue a 20% equity stake in the defendant no. 1 on the same terms and conditions as mentioned in TS. The plaintiff relied upon CS Comm No. 4/2019 Page No. 37 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. the same and thereafter, paid the electricity and telephone bills of the defendant no. 1 through its credit card. PW-1 admitted in his cross-examination that the defendant no. 1 had never asked the plaintiff to pay its electricity and telephone bills. Further, the defendants no. 2 to 5 had no authority to commit to this effect on behalf of the defendant no. 1.
78. Further, the plaintiff has relied upon the statements of credit card Ex. PW1/9 and Ex. PW1/10 to show that he paid the bills mentioned therein. However, the plaintiff has not filed nor has led any evidence to substantiate the entries made therein.
79. In the judgment titled as "M/s. J.K. Synthetic Ltd. versus M/s. Dynamic Cement Traders, passed by the Hon'ble Delhi High Court in CS(OS) 782/1998, it was held:
"6. The only averment in the plaint for claiming amount due is that the amount claimed in the suit is an entry dated 31.3.1995 which is found in the statement of account of the plaintiff. The statement of account of the plaintiff has been proved and exhibited as Ex.PW1/50. This is a statement of account from 1.4.1993 to December, 1997. Another document, which of course, is not a statement of account but only some of the entries in the statement of account is Ex.PW1/49. In view of Section 34 of Indian Evidence Act, 1872, a mere entry in the statement of account is not sufficient to fasten any liability and the entries in the statement of account have to be proved by means CS Comm No. 4/2019 Page No. 38 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
of the documents/vouchers of the transaction. Admittedly, the entry dated 31.3.1995 in Ex.PW1/50 for Rs. 69,36,240.36/- has not been substantiated by means of any document showing as to how and for what this amount of Rs. 69,36,240.36/- is due. The Supreme Court in the judgment reported as Central Bureau of Investigation Vs. V.C. Shukla & Ors. (1998) 3 SCC 410 has observed that Section 34 is in two parts. The first part speaks of relevancy of the entries in evidence once the books of accounts are shown to be regularly kept in the course of business and the second aspect is that even if it is proved that the statements of accounts are regularly kept in course of business, yet, the statement of account/entry alone is not sufficient evidence to charge a person with liability. The object of law is that mere entries should not be sufficient to fasten the monetary liability unless documents of transaction (which would be invoices, challans and receipts of supply of goods etc) are filed and exhibited in support of the entries made. I therefore hold that mere entry of Rs.
69,36,240.36/- existing in the statement of account in Ex.PW1/50 is not sufficient to charge the defendant with liability as claimed by the plaintiff in the suit. Once this entry is not proved, then, even if I take the payment of Rs. 2 lacs made by the defendant on 21/22.4.1995 and as admitted by the defendant in his cross-examination, will not in any manner help to prove the existence of debit entry of Rs.
69,36,240.36/-. Even the plaint is totally silent as to because of what reason this entry exists i.e. for supply CS Comm No. 4/2019 Page No. 39 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
of goods or towards interest or towards any other aspect, and if so what are such invoices/agreement qua the supply or interest or other aspects. I therefore hold that the plaintiff has failed to prove the entries dated 31.3.1995.
7. At this stage, I must state that the statement of account Ex.PW1/50 can be taken as an open, mutual and current account only upto the end of the financial year 1992-93 inasmuch as w.e.f. 1.4.1995 the statement of account itself shows that the cheques which have been drawn by defendant are with respect to either a specific bill or a specific bunch of bills. In fact, the defendant has very meticulously in the evidence led on its behalf shown each particular invoice of the plaintiff and each particular cheque covering that particular invoice or bunch of invoices. In the affidavit of Sh. Vinod Sharma, DW-1 from paras 9(i) to 9(xxxxviii) DW-1 has given Ex.P-1, Ex.PW-1/2 to Ex.PW-1/48 as the bills and in each of the paragraphs with respect to the bills, the specific cheque towards that amount has been given. This aspect is not disputed in any manner in the cross- examination of this witness. Therefore, for the financial year 1995-96, there would be no mutuality as is known under Article 1 of the Schedule I of the Limitation Act, 1963 inasmuch as mutuality requires shifting balances vide Hindustan Forest Company v. Lal Chand and Others AIR 1959 SC 1349. 8. The net result of the above is that:- (i) The entry of Rs. 69,36,240.36/- has not been proved. If this entry is CS Comm No. 4/2019 Page No. 40 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors.
not proved, therefore, the suit amount of Rs. 45,30,506.36 and which is part of this entry amount will also not stand proved. Once the principal due of Rs. 45,30, 506.36/- is not proved nothing will come out for the purpose of extending of limitation by payment of cheque of Rs. 2 lacs on 21/22.4.1995 by the defendant and at best it will only amount to a reduction of the liability of the defendant, assuming it was proved but which has not been done. ii) If, however, the principal amount due was proved, the suit would have been within limitation inasmuch as the suit was filed on 17.4.1998, and limitation once we take the cheque of Rs. 2 lacs into account, would have expired by 21/22.4.1998.
80. In view of the above-cited judgment, it can be held that in view of section 34 of the Indian Evidence Act, 1872, a mere entry in the statement of accounts is not sufficient to fasten any liability upon the defendants. Hence, the statements of credit card Ex. PW1/9 and Ex. PW1/10 is not sufficient to prove those entries. Consequently, the statements of credit card Ex. PW1/9 and Ex. PW1/10 are of no consequence to decide the claim of the plaintiff in the present suit.
81. According to the plaintiff in February 2018, he tendered his resignation from the defendant no. 1 vide e- mail dated 09.02.2018 Ex. PW-1/11 and dated 19.02.2018 Ex. PW-1/12 and called up the defendants to pay Rs. 37,00,000/- but they did not respond. Simultaneously, he pleaded that on 11.02.2018, the officials of BSES visited the CS Comm No. 4/2019 Page No. 41 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. office of the defendant no. 1 to disconnect the electricity due to non-payment of the electricity bill. Once, the plaintiff informed the defendants about the same, they again induced him to clear the bill of Rs. 14,342/- which he paid through his credit card. The plaintiff has failed to explain once he was the victim at the hands of the defendants as alleged for about the last 02 years and had already paid a hefty amount as alleged to clear the dues of the defendant no. 1, then why he made a further payment of Rs. 14,342/-. As such, the plaintiff's plea does not inspire confidence of this court.
82. Not the least, PW-1 in his cross-examination admitted that the defendant no. 1 had not given him the instruction to pay the salary of its employees and to clear its dues. He also deposed that he had not given intimation in writing to the defendants about his grievances relating to remuneration before surrendering his LIC policies and the flat and availing loans from HDFC Bank and Citi Bank. He also admitted that the defendants had not asked him in writing to make the payments through his credit card.
83. Plaintiff in his cross-examination deposed that after joining the defendants no. 1 to 5, he tried to get a new number of new leading brands, but due to non-infusion of funds, the same could not be executed which affected his creditability in the market. However, the plaintiff has failed to lead any evidence to prove the same. He also showed his ignorance as to how much business he brought for the defendant no. 1.
84. In view of the foregoing discussions, it can be held CS Comm No. 4/2019 Page No. 42 of 43 Ashutosh Razdan Vs. Netcom Softech Pvt. Ltd. & Ors. that the plaintiff has failed to prove that the defendants are liable to pay the suit amount. Hence, the plaintiff is held not entitled to the decree as prayed for.
85. Accordingly, the suit is dismissed. No order as to cost. Decree sheet be prepared accordingly.
86. File be consigned to the record room.
Digitally signed Pankaj by Pankaj Gupta ANNOUNCED IN THE OPEN COURT, Gupta Date: 2024.02.26 12:27:43 +0530 On this 24th Day of February, 2024 (PANKAJ GUPTA) District Judge, S/W (Commercial Court)-01 DELHI CS Comm No. 4/2019 Page No. 43 of 43