Bombay High Court
Il And Fs Engineering And Construction ... vs Tech Mahindra Limited And 33 Ors on 18 August, 2021
Author: G.S. Patel
Bench: G.S. Patel
24-25-COMSL-280-2020+.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUIT (L) NO. 280 OF 2020
IL & FS Engineering And Construction Company ...Plaintiff
Limited
Versus
Tech Mahindra Limited & Ors ...Defendants
WITH
INTERIM APPLICATION NO. 478 OF 2021
WITH
LEAVE PETITION (L) NO. 8801 OF 2020
WITH
INTERIM APPLICATION NO. 2116 OF 2020
AND
COMMERCIAL SUIT (L) NO. 281 OF 2020
WITH
INTERIM APPLICATION NO. 417 OF 2021
Digitally
WITH
signed by
ARUN
ARUN RAMCHNDRA
RAMCHNDRA SANKPAL
SANKPAL Date:
LEAVE PETITION (L) NO. 8803 OF 2020
2021.08.20
10:41:26
+0530
WITH
INTERIM APPLICATION NO. 2117 OF 2020
Page 1 of 7
18th August 2021
24-25-COMSL-280-2020+.DOC
Mr Sharan Jagtiani, Senior Advocate, with Kunal Dwarkadas,
Rahul Dwarkadas A Gazdar and Sanaya Contractor, i/b Veritas
Legal, for the Plaintiff/Applicant in IA/478/2021 in
COMSL/280/2020 and IA/417/2021 in COMSL/281/2020.
Mr Mustafa Doctor, Senior Advocate, with Raj Panchmatia,
Peshwan Jehangir, Pranav Sampat, Anindya Basarkod and
Ayush Jain, i/b M/s Khaitan & Co, for Defendant No.1 in
COMSL/280/2020 and COMSL/281/2020.
CORAM: G.S. PATEL, J
DATED: 18th August 2021
PC:-
1.This is a Commercial Suit valued at over Rs.100 crores. Mr Doctor appears for the 1st Defendant. He points to my general order of 9th July 2021 (which I have since suo motu corrected). He also argues that this is not a Commercial Suit, but we will come to that on some other, more propitious, date.
2. The settled legal position is that service of the Writ of Summons can only be waived where an Advocate for the Defendant specifically consents to a waiver of the Writ of Summons. The Writ of Summons can only be issued once the Plaint is finally registered. Therefore the wavier, and this is the pronouncement by SJ Kathawalla J in Axis Bank Ltd v Mira Gehani & Ors1 can only happen when a Defendant appears after the Suit is finally numbered.
1 (2019) SCC OnLine Bom 358.
Page 2 of 718th August 2021 24-25-COMSL-280-2020+.DOC
3. As a matter of practice, I propose to issue directions in this class of matters to the Registry that all office objections must be removed within 10 days of lodging and a Writ of Summons must be applied for within 10 days thereafter. If not, those suits must be listed before the Court for directions. Unless there is a reasonable explanation, I propose to dismiss such suits in default. The purpose of the Commercial Courts Act, 2015 is an expeditious disposal of commercial suits. This is not achieved by (indirectly) allowing a plaintiff an indefinite amount of time to cure filing defects or to apply for a Writ of Summons or both.
4. In this particular case, there may be an exception. There is a Petition pending for Leave under Clause 12. That is before another Bench. Unless that Petition is decided, the Suit cannot be finally numbered. This means that the Plaintiffs cannot apply for issuance of a Writ of Summons and the Defendant cannot be served with a Writ of Summons accompanied by a copy of the finally numbered/registered Plaint. It also means that there can be no waiver by the Counsel as yet of service of the Writ of Summons. As a corollary, this means that the 1st Defendant cannot be deemed to have waived service of the Writ of Summons as yet. If there is to be such a waiver, first, the Defendants' lawyers' consent will be specifically noted and, second, that will only happen after the Plaint is finally numbered. That in turn will only happen if the Clause 12 Petition succeeds.
5. To make matters even more interesting, Mr Jagtiani for the Plaintiff has a Chamber Summons for the amendment of the Plaint to bolster or shore-up his Clause 12 Petition. In fact, Mr Jagtiani Page 3 of 7 18th August 2021 24-25-COMSL-280-2020+.DOC applied to Mr Justice AK Menon for a further amendment to the Plaint. The matter was stood over to 18th January 2021 before that Bench. That Interim Application has not been listed yet. Now unfortunately that Interim Application for amendment is laid at my door.
6. I will take up the Interim Application for amendment. Apart from anything else, this seems to me to be the safer option rather than tagging the Interim Application with the Clause 12 Petition because that would then bring the Clause 12 Petition back to this Court.
7. This is the second amendment that the Plaintiffs have sought. The first has been allowed. To leave no room for controversy, I reproduce the entire proposed amendment at Exhibit "A" pages 16 and 17 of the Interim Application.
DRAFT FURTHER AMENDMENT After Paragraph 27A add the following paragraph:
"27B. Grant of leave under Clause XII of the Letters Patent Act, 1866 is being sought qua Defendant Nos. 2 to 34, as some part of the cause of action against them has arisen outside Mumbai, however, a material part of the cause of action has arisen within Mumbai.
(i) Events that have occurred outside Mumbai:
On a plain reading of the Plaint as a whole, it is evident that the captioned Suit is a tracing action by which the Plaintiff seeks to recover its monies that had been fraudlently siphoned, routed and transferred through Defendant Nos. 2 to 33, at the behest of Defendant No.34 and the Raju Family Page 4 of 7 18th August 2021 24-25-COMSL-280-2020+.DOC Group, for the ultimate use and benefit of Defendant No.1. At the time of the aforesaid transfers, Defendant Nos. 2 to 33 (being the Level I and Level II Companies) had their registered offices outside Mumbai and Defendant No. 34 had his place of residence outside Mumbai. As such, the part of cause of action i.e., the fraudulent movement of the funds from the Plaintiff for the ultimate benefit of Defendant No.1 through the conduit of Level I and Level II Companies has arisen outside the territorial jurisdiction of this Hon'ble Court.
(ii) Material Part in Mumbai However, a material part of the cause of action took place in Mumbai. The material part being that:
(1) Pursuant to such fraudulent transfers: (a) a sum of Rs.237 crores being a portion of the monies siphoned away from the Plaintiff and of which recovery is sought were eventually transferred to and lie with Defendant No.1, whose registered office is in Mumbai: (b) a sum of Rs.79 crores being the balance portion of the monies siphoned away from the Plaintiff and of which recovery is sought were eventually used to repay loans which were taken fro the ultimate use and benefit of Defendant No.1, whose registered office at the time of the filing of the Suit is in Mumbai;
(2) it is the Plaintiff's case (see paragraphs 5 to 8 and 21 above) that the trail of funds will show that Defendant No.1 is the vehicle and ultimate beneficiary of the fraud and as such, is a constructive trustee for the Plaintiff and is therefore obligated to repay the amounts to the Plaintiff. This obligation to repay arises in Mumbai; (3) it is also the Plaintiff's case (see paragraphs 12 and 13 above) that Defendant Nos. 2 to 33, being merely conduit/intermediary companies, cannot be regarded as separate juristic entities but are in fact an indistinguishable Page 5 of 7 18th August 2021 24-25-COMSL-280-2020+.DOC single entity, the apex of which is Defendant No.1 which is located in Mumbai; and (4) this is a fit case piercing the corporate veil of Defendant Nos. 2 to 33, which in any event are entities conceived in fraud (see paragraphs 1.3, 1.4, 12 and 22 above), and upon doing so, the Level I and Level II Companies as well as Defendant No. 34 must be treated as alter egos and part of an indistinguishable whole with Defendant No.1, whose registered office at the time of the filing of the Suit is in Mumbai.
Accordingly, the Plaintiff submits that a material part of the cause of action vis a vis Def 2 to 34 has occurred in Mumbai and with leave under Clause 12 of the Letters Patent Act, 1886 this Hon'ble Court has jurisdiction to hear and decide the captioned Suit qua Defendant Nos. 2 to 34".
8. There is no real opposition to this amendment. I will allow the amendment. It is to be carried out within one week from today. These are legal submissions and will therefore dispense with reverification. The Suit will remain on a lodging number because the Clause 12 Petition is as yet pending. The amendment is, of course, without prejudice to the rights and contentions of the Defendant including that this dispute does not fall within the definition of a "commercial dispute" under the Commercial Courts Act 2015.
9. The Interim Application No. 478 of 2021 is made absolute.
10. The Registry has raised a requisition that the Notary in Hyderabad who has notarised the Plaint should come to Mumbai to confirm that he has seen the original Power of Attorney. At a time like this, it is not possible to accept this endorsement. I will list this Page 6 of 7 18th August 2021 24-25-COMSL-280-2020+.DOC matter on 27th August 2021. The Notary in question will join the hearing online and confirm to the Court that he has, in fact, seen the original Power of Attorney. That will be sufficient.
11. The meeting id and link are given below.
LOGIN LINK https://bombayhighcourt.webex.com/meet/rg-bhc
MEETING ID 170 478 6692
12. The Advocates for the Plaintiffs will send a copy of this order to the Notary in question.
13. Ms Rajashri Kale, Master and Assistant Prothonotary is requested to remain present on that date.
14. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production of a digitally signed copy of this order.
(G. S. PATEL, J) Page 7 of 7 18th August 2021