Delhi District Court
Sanjiv Rawal vs Kapil Chopra on 24 February, 2023
Suit No. 16486/2016 Page 1 of 41
IN THE COURT OF SH. DIVYANG THAKUR
ADDL. DISTRICT JUDGE-03:
SOUTH WEST DISTRICT: DWARKA COURTS:NEW DELHI
Civil Suit No. 16486/16
CNR No. DLSW01-000099-2012
In the matter of :
Sanjiv Rawal
Proprietor of M/s Peerless Pack,
B-46, Naraina Industrial Area,
Phase-II, New Delhi-110028
....Plaintiff
Versus
1. Kapil Chopra,
S/o Late K.L. Chopra,
Director of Karan Technofab Pvt. Ltd.
B-65/3, Naraina Industrial Area,
Phase-II, New Delhi-110028
....Defendant no. 1
2. Amandeep Singh
S/o Sh. Jasbir Singh,
R/o Z-57, Rajouri Garden,
New Delhi
....Defendant no. 2
Sanjiv Rawal Vs. Kapil Chopra
Suit No. 16486/2016 Page 2 of 41
3. North Delhi Municipal Corporation
Through its Commissioner
Shyama Prasad Mukherjee Civic Centre,
J.L. Nehru Marg, New Delhi
....Defendant no. 3
Date of institution of the suit : 25.08.2012
Final Arguments Heard on : 20.01.2023
Date of Judgment : 24.02.2023
Decision : Partly Decreed/Dismissed
SUIT FOR RECOVERY OF DAMAGES, PERMANENT AND
MANDATORY INJUNCTION
JUDGMENT :
1. Present suit has been filed by the plaintiff seeking (a) decree of recovery of damages of Rs. 15,00,000/- in favour of the plaintiff and against the defendants and (b) decree of mandatory and permanent injunction.
PLAINT
2. The brief facts of the case as mentioned in the plaint are reproduced here as under:
(i) Plaintiff is running his proprietorship business under the name and style of M/s Peerless Pack at B-46, Naraina Industrial Area, Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 3 of 41 Phase-II, New Delhi-110028 and the goodwill of the aforesaid business is approximately Rs. 12,00,000/- per annum. Defendant no. 1 is the owner of the property bearing no. B-46/1, Naraina Industrial Area, Phase-II, New Delhi-110028 carrying out construction work through defendant no. 2 who is the occupant of B-46/1, Naraina Industrial Area, Phase-II, New Delhi-110028 without any sanctioned plan from defendant no. 3.
(ii) It is further averred in the plaint that defendant no. 1 had constructed a single brick wall of 45 ft. x 4 ft. which was objected by the plaintiff and thereafter, defendant no. 2 had occupied the building of defendant no. 1 and started drilling the walls and digging the floor of the said premises.
(iii) Plaintiff alleged that on 04.06.2012, the care taker of the plaintiff had informed him that the wall constructed by the defendants had fallen down on the premises of the plaintiff and when the plaintiff visited the same, he found out that the entire roof of the building was crashed and expensive office equipments as well as infrastructure was damaged.
(iv) Thereafter, plaintiff had lodged a written complaint dated Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 4 of 41 04.06.2012 to SHO, P.S. Naraina, Delhi vide Diary no. 501/SHO/MR dated 05.06.2012 in this regard. To no action, another complaint was lodged by the plaintiff dated 06.06.2012 to the ACP, P.S. Naraina, Delhi vide diary no. S-123 dated 06.06.2012 and subsequently made complaints to DCP, South-West, Delhi by hand as well as through Regd. Post and also sent a complaint to the Commissioner of Police, Delhi on 07.06.2012 through Regd. Post for taking necessary action against defendant no. 1.
(v) Plaintiff further avers that complaint was also lodged to MCD Control Room on 04.06.2012 and a J.E. named Varun Arora had visited the site on 19.06.2012 at 06:15 PM but no action was taken by the MCD against defendant no. 1. Thereafter, plaintiff had submitted a reminder dated 15.06.2012 to ACP, P.S. Naraina, Delhi on 18.06.2012 for registration of FIR against the defendant no. 1 and also sent a reminder to the office of Deputy Commissioner, North DMC, Karol Bagh Zone, Delhi but all in vain.
(vi) It is further submitted in the plaint that on 25.06.2012, SHO, P.S. Naraina had called the plaintiff and gave him the copy of the inspection report of the MCD alongwith the copy of his report also Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 5 of 41 wherein MCD had informed that the investigation of the said area had been handed over to DSIIDC in the month of March, 2012. Thereafter, plaintiff had made representation to DSIIDC upon which the DSIIDC had replied that MCD is solely responsible to check and control any unauthorized construction in the said area.
(vii) Aggrieved by the inaction, plaintiff had filed a complaint case under Section 200 Cr. P.C. R/w 156 (3) Cr. P.C. against all the defendants. It is further averred that the plaintiff got the site inspected from registered architect namely Mr. Milind Upadhye on 24.07.2012 who gave his inspection report and categorically mentioned that the damage had occurred in the building of the plaintiff due to collapse of the brick masonry of the property bearing no. B-46/1, Naraina Industrial Area, Phase-II, New Delhi-110028 and such mishap may occur in the future in the front side portion of the said building.
(viii) Plaintiff further averred that the plaintiff got assessed the damages caused to the building and infrastructure which came to the tune of Rs. 14,29,054/-. Thereafter, plaintiff served a legal notice dated 30.07.2012 to the defendants through his Counsel by way of Regd. AD and Speed Post but despite service of legal notice, Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 6 of 41 defendants have neither complied with nor gave any reply to the same and consequently, plaintiff had filed the present suit for recovery of damages, mandatory and permanent injunction.
PROCEEDINGS OF THE CASE, WRITTEN STATEMENT AND REPLICATION
3. Summons for settlement of issues were issued to the defendants on 28.08.2012 and the same were served upon defendants no. 1 and 3 only. Defendant no. 2 was served through publication in the newspaper and Written Statement was filed on behalf of defendant no. 3 to which replication was also filed. Thereafter, WS was also filed on behalf of defendant no. 2 and defendant no 1 and replication to the same was also filed. Defendant no 1 in the Written statement took up the defence that the suit was bad for non joinder of necessary parties as he could not be made personally liable and that the owner of the property was the company. He further took the stand that the company Karan Technofab Pvt Ltd had sold the property and handed over the possession in July of 2012 to one company M/s Manikaran International Pvt Ltd. Defendant no 2 in his written statement also took up the defence of non joinder of necessary parties and also set up Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 7 of 41 defence that Manikaran International had come into possession of the suit property only after the happening of the incident and denied having carried out any construction at the spot. Defendant no 3 being the statutory authority averred that the owner/occupier of B-46/1 Narain Industrial Area had raised deviation against sanction building plan and show cause notice had been issued after being booked on 02.11.2012. On basis of the aforesaid pleadings, on 07.10.2013, the following issues were framed:
(i) Whether the suit of the plaintiff is liable to be dismissed fro misjoinder and non-joinder of necessary parties, as defendants no. 1 and 2 being not the owner of the property no. B-46/1, Naraina Industrial Area, Phase-II, New Delhi, as claimed by defendants? (OPD)
(ii) Whether the plaintiff is entitled for a decree of damages in the sum of Rs.15 lacs against the defendants? (OPP)
(iii) Whether the defendants no. 1 and 2 had raised unauthorized construction over the property in question i.e. B-46/1, Naraina Industrial Area, Phase-II, New Delhi? (OPP)
(iv) Whether the plaintiff is entitled for a decree of Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 8 of 41 mandatory injunction against the defendants, directing the defendant no. 3/MCD to remove the unauthorized construction raised by defendants no. 1 and 2 over the property in question i.e. bearing no. B-46/1, Naraina Industrial Area, Phase-II, New Delhi? (OPP)
(v) Whether the plaintiff is entitled for a decree of permanent injunction against the defendants no. 1 and 2 whereby restraining the defendants no. 1 and 2 from raising further unauthorized construction over the property i.e. bearing no. B-46/1, Naraina Industrial Area, Phase-II, New Delhi? (OPP)
(vi) Relief.
No other issue arose and claimed by the parties. Matter was proceeded for plaintiff's evidence.
EVIDENCE LED BY THE PARTIES
4. PW-1 Sh. Sanjiv Rawal tendered his evidence by way of affidavit Ex. PWA/A and marked the documents from Mark A to Mark P and de-exhibited the documents in his affidavit of evidence except Ex. PW-1/1 (colly) to Ex. PW-1/3 (colly). PW-1 was cross examined by the Ld. Counsel for defendants no. 1 and 2.
Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 9 of 41
5. PW-2 Lady Constable Jyoti (No. 2766, SW, P.S. Naraina), examined and discharged. PW-3 SI Rakesh Kumar was also examined and discharged on 02.06.2016. Thereafter, PW-4 Sh. Suresh Kumar, Assistant Sanitary Inspector, DEMS, MCD, Karol Bagh and PW-5 Sh. Suresh Kumar, Assistant Executive Engineer, DSIIDC were also examined and discharged on behalf of plaintiff. Further, PW-6 Sh. Kuldeep Ruhil, Asstt. Engineer (M-1) was examined and discharged on 07.05.2018 and PW-7 Sh. A.P. Khan, Assistant Engineer (Maintenance), North MCD was examined and discharged on 25.07.2018.
6. No other witness was examined on behalf of plaintiff and PE was closed vide separate statement of plaintiff recorded on 25.07.2018. Thereafter, matter was proceeded for defendant's evidence.
7. Meanwhile, defendant no. 1 had moved an application under Order I R 10 of CPC for striking out defendant no. 1 Sh. Kapil Chopra from the array of parties and another application for recalling PW-2 to PW-7 for their cross-examination, which were dismissed vide separate order dated 11.02.2019.
Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 10 of 41
8. Defendant no. 1 had examined two witnesses. On 20.04.2019, DW-1 Sh. Kapil Chopra had tendered his evidence by way of affidavit Ex. DW-1/1 and relied upon the following documents:
(i) Ex. DW-1/A (OSR) i.e. affidavit dated 17.05.2016 and
(ii) Ex. DW-1/B (OSR) i.e. affidavit dated 24.05.2016.
DW-1 was cross examined and discharged on 31.08.2019.
9. DW-2 Sh. Adesh Niboria was examined, cross examined as nil and discharged on 20.02.2020. Thereafter, SHO, P.S. Naraina was dropped from the list of witnesses filed on behalf of defendants no. 1 and 2 vide the order dated 03.06.2022 and defendant's evidence was closed on behalf of defendant no. 3 vide separate statement of Ld. Counsel for defendant no. 3 recorded on 03.06.2022. Further, defendant's evidence was also closed on behalf of defendant no. 1 Kapil Chopra vide order dated 05.08.2022.
10. Defendant no. 2 examined two witnesses. D2W1 Sh. Amandeep Singh had tendered his evidence by way of affidavit Ex. D2W1/X, cross examined and discharged on 05.08.2022. Thereafter, on 20.10.2022, D2W2 Sh. Ramandeep Singh was examined, cross Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 11 of 41 examined and discharged. DE was closed on behalf of defendant no. 2 vide order dated 10.11.2022 and matter was proceeded for final arguments.
CONTENTION OF PARTIES
11. Ld. Counsel for the plaintiff argued that the plaintiff had been able to prove on a preponderance of probabilities that the defendant no 1 had built a substandard single brick wall of 45 feet which had collapsed on the roof of the office building of the plaintiff thereby causing loss to the plaintiff. Further it was submitted that work was also carried out by the defendant no 2 in drilling the wall. It was further submitted that the defendants had made only evasive denials to the pleadings of the plaintiff by claiming that the other was in possession of the property on the fateful day and nothing came in cross examination to shake the version of the plaintiff. Per Contra it was submitted on behalf of defendant no 1 that firstly the incident happened due to an act of god and therefore no responsibility arose. It was further submitted that during the cross examination of the plaintiff it had come on record that the plaintiff was not having any knowledge of the construction and it had not been proved that the wall was Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 12 of 41 negligently constructed. It was further submitted that the defendant no 1 was not the owner of the property where construction had been carried out but merely director of the company which owned the suit property namely Karan Technofab Pvt Ltd and the defendant no 1 could not be made personally liable as such. It was further submitted that the plaintiff had not proved the damages suffered allegedly amounting to Rs 15,00,000. It was submitted that the estimate of loss filed was not proved by bringing any witness or the author of the estimate, nor was the report of the architect proved. It was further submitted that the plaintiff had admitted during cross examination that he did not make any expenditure to replace the damaged articles. It was further submitted that the defendant no 3 did not lead any evidence to show that there was any deviation in the sanctioned plan for construction. In rebuttal the Ld Counsel for the plaintiff submitted that the pleadings of the Defendant no 3 were sufficient to show and prove negligence wherein it had been pleaded that the show cause notice was issued for deviation.
12. On behalf of Ld Counsel for Defendant no 2, it was submitted that on the date of incident it was defendant no 1 who was Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 13 of 41 in possession and therefore, no question arose of making defendant no 2 liable for the same. He emphasized that the directors of the company could not be made liable in their personal capacity and that the plaintiff should have impleaded the necessary parties, i.e. Karanfab Techno Pvt Ltd and Manikaran International both of whom were companies duly incorporated under the Companies Act and which had been proved by the defendants by leading evidence of the concerned official from the Registrar of Companies. In rebuttal, the Ld Counsel for the Plaintiff relied upon the order of this Court dismissing the application of the defendants under Order I Rule 10 CPC on 11.02.2019 for deletion of the defendants from the array of parties. The Ld Counsel for the plaintiff also argued that a reading of Ex PW 5/1 would show that defendant no 2 was present when inquiry was being carried out by the local authorities.
ISSUE WISE FINDINGS
13. I have heard the final arguments and perused the record. My findings are as follows :-
ISSUE NO. 1
The case of the plaintiff is that the defendant no 1 was the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 14 of 41 owner of the property and that the said property was sold to defendant no 2. However, the plaintiff did not adduce any evidence in this regard and instead during the cross examination of DW-1, the plaintiff gave a suggestion to the defendant Kapil Chopra that "It is correct that in June, 2012, the registered owner of the property bearing no B-46/1, Narain Industrial Area, Phase-II, New Delhi - 110028 was M/s Karan Technofab Pvt Ltd." DW-1 further deposed during cross examination that "The property bearing no B-46/1, Naraina Industrial Area, Phase- II, New Delhi - 110028 was sold to M/s Manikaran Pvt Ltd for a consideration amount of Rs 1.95 Cr." Therefore, in my opinion what has been proved is that the property where it is alleged that negligent construction was carried out was owned by the corporations as mentioned and not by the defendant no 1 or defendant no 2 in their personal capacity. The status of the M/s Karan Technofab Pvt Ltd and M/s Manikaran Pvt Ltd as duly incorporated companies has been proved by the defendants by leading evidence of Sh Adesh Niboria (examined as DW-2 and inadvertently as DW-3) from the office of the Registrar of Companies who proved the certificates of incorporation etc showing the directors and the incorporation of the corporations Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 15 of 41 under the extant law.
14. The said fact was also disclosed in the written statement of defendant no 1 and 2. For reasons best known to the plaintiff, he did not implead the companies who were the registered owners of the property where the incident happened. The plaintiff is the dominus litis. In certain circumstances, the directors can be made personally liable for the torts committed by the Corporation as a joint-tortfeasor or by piercing the corporate veil, subject to the standards as required by law and evidence adduced by the parties. The present is a suit for damages, and therefore if the plaintiff could show that the tort had been committed by the defendants no 1 and 2 in their personal capacity or on their active connivance and direction then the same would be maintainable and M/s Karan Technofab Pvt Ltd and M/s Manikaran Pvt Ltd would not be necessary parties, though it could be said that they are the proper parties. No judicial precedent or law to the contrary, i.e. to the effect that the civil suit against the director in tort law for damages is completely barred and liable to be dismissed for non joinder of the company of which they are director was brought to my attention. Therefore, the said issue is decided in favour of the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 16 of 41 plaintiff and against the defendants.
ISSUES NO. 2, 3, 4 & 5
15. The question then arises in the present case as to whether the defendant no 1 and 2 being the directors of the company M/s Karan Technofab Pvt Ltd and M/s Manikaran Pvt Ltd who allegedly perpetrated the act of negligence are liable in the present case towards the plaintiff.
16. In Mukesh Hans & Anr v. Smt. Uma Bhasin & Ors.2010 SCC OnLine Del 2776, the Hon'ble High Court of Delhi had observed the law with regard to the liability of directors and taken note of the relevant decisions, the relevant portions are extracted herein :
"10. The short question which arises for consideration in the present appeal is as to whether the appellants as erstwhile Directors of the Company, M/s. Dawson Leasing Limited (In Liquidation) can be made liable in a suit for recovery of money when the Directors have not made themselves personally liable by extending any guarantee, indemnity, etc. Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 17 of 41
11. Indubitably, a company incorporated under the Companies Act, whether as a private limited company or a public limited company, is a juristic entity. The decisions of the Company are taken by the Board of Directors of a Company. The Company acts through its Board of Directors, and an individual Director cannot don the mantle of the Company by acting on its behalf, unless he is so authorized to act by a special resolution passed by the Board or unless the Articles of Association so warrant. It is equally well settled that a Director of a Company though he owes a fiduciary duty to the Company, he owes no contractual duty qua third parties. There are, however, two exceptions to this rule. The first is where the Director or Directors make themselves personally liable, i.e., by execution of personal guarantees, indemnities, etc. The second is where a Director induces a third party to act to his detriment by advancing a loan or money to the Company. On the third party proving such fraudulent misrepresentation, a Director may be held personally liable Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 18 of 41 to the said third party. It is, however, well settled that this liability would not flow from a contract, but would flow in an action at tort, the tort being of misrepresentation and of inducing the third party to act to his detriment and to part with money.
12. This is the settled position ever since 1897 when the House of Lords decided the case of Salomon v. Salomon & Co. Ltd. 1897 AC 22, and Lord Macnaghten, observed as under: - "the company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by that Act."
13. However, with the passage of time inroads have been made into the aforesaid legal principle that the company is Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 19 of 41 a legal entity distinct from its shareholders and directors and certain exceptions have been carved out. One such inroad is commonly described as lifting or piercing of the corporate veil. This has been succinctly put by the Supreme Court in Tata Engineering and Locomotive Co. Ltd. v. State of Bihar [1964]6SCR885 as follows: "24. The true legal position in regard to the character of a corporation or a company which owes its incorporation to a statutory authority, is not in doubt or dispute. The Corporation in law is equal to a natural person and has a legal entity of its own. The entity of the Corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the Corporation. This position has been well Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 20 of 41 established ever since the decision in the case of Salomon v. Salomon and Co. was pronounced in 1897; and indeed, it has always been the well-recognised principle of common law. However, in the course of time, the doctrine that the Corporation or a Company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the Corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the Corporation. As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more."
Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 21 of 41
14. Similar observations were made by the Supreme Court in the case of New Horizons Ltd. v. Union of India: (1995) 1 SCC 478 : "27. The conclusion would not be different even if the matter is approached purely from the legal standpoint. It cannot be disputed that, in law, a company is a legal entity distinct from its members. It was so laid down by the House of Lords in 1897 in the leading case of Salomon v. Salomon & Co. Ever since this decision has been followed by the courts in England as well as in this country. But there have been inroads in the doctrine of corporate personality propounded in the said decision by statutory provisions as well as by judicial pronouncements. By the process, commonly described as "lifting the veil", the law either goes behind the corporate personality to the individual members or ignores the separate personality of each company in favor of the economic entity constituted by a group of associated companies. This course is adopted when it is found that the principle of corporate personality is too flagrantly opposed to justice, convenience or the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 22 of 41 interest of the Revenue. (See : Gower's Principles of Modern Company Law, 4th Edn., p.112.) This concept, which is described as "piercing the veil" in the United States, has been thus put by Sanborn, J. in US v. Milwaukee Refrigerator Transit Co.4: 'When the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.'"
15. The question therefore in the instant case is - Can the corporate veil be lifted in the present case to reveal the identity of the person or persons behind it? The respondents in their plaint have not made out any such case to justify the piercing of the corporate veil. Therefore, this matter is not required to be dwelt upon by this Court any longer.
16. The next question which arises for consideration is whether the appellants as Directors made themselves personally liable for the dues of the Company. Reference in this context may be made to the judgment of this Court in Tristar Consultants v. Customer Services India Pvt. Ltd. And Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 23 of 41 Anr., 139 (2007) DLT 688. Paragraphs 28 to 30 of the said judgment, which are apposite, read as under:-
"28. To interpret the law as is sought to be projected by the petitioner would mean negation of the concept of a company being limited by its liability as per the memorandum and articles of association of the company. Other than where directors have made themselves personally liable i.e. by way of guarantee, indemnity, etc. liabilities of directors of a company, under common law, are confined to cases of malfeasance and misfeasance i.e. where they have been guilty of tort towards those to whom they owe a duty of care i.e. discharge fiduciary obligations. Additionally, qua third parties, where directors have committed tort. To the third party, they may be personally liable.
29. For example by making false representations about a company, a director induces a third party to advance a loan to the company. On proof of Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 24 of 41 fraudulent misrepresentation, a director may be personally liable to the third party.
30. But this liability would not flow from a contract but would flow in an action at tort. The tort being of misrepresentation of inducement and causing injury to the third party having induced the third party to part with money."
17. Therefore, directors of the company would be liable for the tortious acts of the company in a very limited set of circumstances as outlined by the Hon'ble High Court of Delhi in Tristar Consultants (supra).
18. Let us assume here, that the brick wall constructed was of shoddy construction and that the plaintiff has suffered due to an act of negligence. The plaintiff, having taken the risk of not impleading the concerned M/s Karan Technofab Pvt Ltd (who was admittedly the registered owner of the property where such construction was carried out) and M/s Manikaran Pvt Ltd (to whom it is alleged that the property was sold) must then establish the specific role and connivance of the defendant no 1 and 2 in their personal capacity as Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 25 of 41 there is no presumption in law that one of the directors must be liable for the tortious acts of the company which is a separate and distinct juristic entity.
19. On a holistic examination of the evidence, I find that the plaintiff has not led any evidence to show that the brick wall alleged to be of shoddy and substandard condition was built with the active connivance and direction of the defendant no 1 and defendant no 2. The bare allegations in the plaint and in the examination in chief that it was the defendant no 1 who was carrying out the construction through defendant no 2 do not suffice and cannot on its own prove the case of the plaintiff. While it was alleged in the plaint that the construction was being carried out by defendant no 2 on the instructions of defendant no 1, during cross examination PW-1 deposed that "When I made complaint to the police about the fall of the wall then defendant no 2 was present in the premises....I had not visited the property B- 46/1 myself but the police persons told me about the presence of defendant no 2. I had not seen the defendant no 2 on the date of incident at the property in question.....I had never had any introduction with defendant no 2 prior to the incident. I had made Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 26 of 41 defendant no 2 as a party in present suit as the police persons told me about the presence of the defendant no 2 in property in question." The said portion of the cross examination renders the deposition of the plaintiff to the effect that it was the defendant no 1 and 2 who were personally overseeing the construction as unreliable and untrustworthy. The allegations seem to suggest that the plaintiff knew and had met the defendant no 2 in person at the spot which turns out to be not the case as revealed during cross examination. The plaintiff alleges that the defendant no 1 was carrying out construction using sub standard material and further alleges in para 2 of his plaint that the same was without sanction and that the defendant no 1 had rebuffed him, but the plaintiff did not prove any complaint that he had made about the construction prior to the incident dated 04.06.2012 to the authorities on coming to know about such unauthorized construction. Keeping apart the question of whether the wall was negligently constructed, what is important is that the aforesaid inconsistencies reflect on the probative value of the oral testimony led by the plaintiff to show the active connivance of the defendant no 1 and 2. In absence of any other piece of evidence to corroborate the allegations, the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 27 of 41 directors i.e. the defendants no 1 and 2 cannot be made ipso facto liable for the acts of M/s Karan Technofab Pvt Ltd and M/s Manikaran Pvt Ltd. No doubt that the owner/occupier of a building could be held liable if any part of the construction collapses by application of the legal maxim res ipsa loquitor (and in this regard reference can be had to a similar fact situation in the decision of the Hon'ble Supreme Court reported as Municipal Corporation of Delhi v. Subhagwanti AIR 1966 SC 1750 wherein a clock tower which was 80 years old collapsed in Chandni Chowk and their Lordships observed that the owner was legally responsible irrespective of whether the same was due to latent or patent defect and he could not be heard to plead that he could not have known that the building was likely to collapse) and causes damage to the neighbor, but since neither the defendant no 1 and 2 are the owners or occupiers, they cannot be held liable only on the ground that they are the director in the corporation who is in fact the registered owner/occupier of the property where the incident of 04.06.2012 took place. This would be clear from the reading of the judgment of Mukesh Hans (supra) and Tristar Consultants (supra). Hence I find that the defendants no 1 and 2 cannot be held liable for Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 28 of 41 damages to the plaintiff in the present case.
20. As far as defendant no 3 is concerned, the question is whether the MCD could be held liable for breach of statutory duty. The crux of the case of the plaintiff against defendant no 3 is that it is entrusted with the statutory duties under the DMC Act, 1957 to ensure that no unauthorized construction takes place and to take action against persons who raise shoddy and unsafe construction.
21. However, in Municipal Corporation of Delhi Vs. Uphaar Tragedy Victims Association and Others (2011) 14 SCC 481, Hon'ble Supreme Court of India has observed as under:
"......46. This Court in Rajkot Municipal Corpn. v. Manjulben Jayantilal Nakum dealing with a case seeking damages under law of torts for negligence by municipality, held as follows: (SC p. 601, para 63) "63. The conditions in India have not developed to such an extent that a Corporation can keep constant vigil by testing the healthy condition of the trees in the public places, roadsides, highways frequented by passers-by. There is no duty to maintain regular Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 29 of 41 supervision thereof, though the local authority/other authority/owner of a property is under a duty to plant and maintain the tree. The causation for accident is too remote. Consequently, there would be no common law right to file suit for tort of negligence. It would not be just and proper to fasten duty of care and liability for omission thereof. It would be difficult for the local authority, etc. to foresee such an occurrence. Under these circumstances, it would be difficult to conclude that the appellant has been negligent in the maintenance of the trees planted by it on the roadsides."
47. In Geddis v. Bann Reservoir Proprietors, the House of Lords held: (AC pp. 455-56) ". . . For I take it, without citing cases, that is now thoroughly well established that no action will lie for doing that which the legislature has authorised, if it be done negligently." (emphasis supplied)
48. In X (Minors) v. Bedfordshire County Council the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 30 of 41 House of Lords held that in cases involving enactments providing a framework for promotion of social welfare of the community, it would require exceptionally clear language to show a parliamentary intention that those responsible for carrying out the duties under such enactment should be liable in damages if they fail to discharge their statutory obligations.
49. It was held: (Bedforshire case, AC p. 739) ". . . a common law duty of care cannot be imposed on a statutory duty if the observance of such a common law duty of care would be inconsistent with or have a tendency to discourage the due performance by the local authority of its statutory duties."
50. In R. v. Governor of Parkhurst Prison, ex p Hague, the House of Lords held that the legislature had intended that the Prison Act, 1952 should deal with the administration and management of prisons, but had not intended to confer on prisoners a cause of Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 31 of 41 action in damages. The Prison Rules, 1964 were regulatory in nature to govern prison regime, but not to protect prisoners against loss, injury, or damage nor to give them any right of action.
51. In Just v. British Columbia, the Canadian Supreme Court considered the question whether the Department of Highways is liable for payment of damages to a person who was hit by a boulder on a highway on the ground that it was the duty of the Department to maintain the highway in a safe and secure manner. The Canadian Supreme Court held:
"Prior to the accident the practice had been for the Department of Highways to make visual inspections of the rock cuts on Highway. These were carried out from the highway unless there was evidence or history of instability in an area in which case the rock engineer would climb the slope. In addition there were numerous informal inspections carried out by highway personnel as they drove along the road when they Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 32 of 41 would look for signs of change in the rock cut and for rocks in the ditch.... In order for a private duty to arise in this case, the plaintiff would have to establish that the Rockwork Section, having exercised its discretion as to the manner or frequency of inspection, carried out the inspection without reasonable care or at all. There is no evidence or indeed allegation in this regard... I would therefore dismiss the appeal."
(emphasis supplied)
52. In Holland v. Saskatchewan the Canadian Supreme Court held:
"The law to date has not recognized an action for negligent breach of statutory duty. It is well established that mere breach of a statutory duty dies not constitute negligence [R. (Can.) v. Saskatchewan Wheat Pool]. The proper remedy for breach of statutory duty by a public authority, traditionally viewed, is judicial review for invalidity." (emphasis supplied)
53. In Union of India v. United India Insurance Co. Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 33 of 41 Ltd. this Court held: (SCC pp. 703-04, para 30) "30. ... But in East Suffolk Rivers Catchment Board v. Kent, Lord Romer had stated: (AC p. 102) '. . . Where a statutory authority is entrusted with a mere power it cannot be made liable for any damage sustained by a member of the public by reason of a failure to exercise that power.' (emphasis supplied) In Anns v. Merton London Borough Council this principle was somewhat deviated from. As stated earlier the plaintiff in Anns had sued for losses to flats in a new block which had been damaged by subsidence caused by inadequate foundations. The contention that the Council was negligent in the exercise of statutory powers to inspect foundations of new buildings giving rise to a claim for economic damage suffered was upheld. This principle was however not accepted in Murphy to the extent economic losses were concerned.
Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 34 of 41 According to Lord Hoffman, Anns was not overruled in Murphy v. Brentwood District Council so far as physical injury resulting from omission to exercise statutory powers was concerned. A duty of care at common law can be derived from the authority's duty in public law to 'give proper consideration to the question' whether to exercise power or not. This public law duty cannot by itself give rise to a duty of care. A public body almost always has a duty in public law to consider whether it should exercise its powers but that did not mean that it necessarily owed a duty of care which might require that the power should be actually exercised. A mandamus could require future consideration of the exercise of a power. But an action for negligence looked back at what the authority ought to have done. Question is as to when a public law duty to consider exercise of power vested by statute would Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 35 of 41 create a private law duty to act, giving rise to a claim for compensation against public funds. One simply cannot derive a common law 'ought' from a statutory 'may'. The distinction made by Lord Wilberforce in Anns between 'policy' and 'operations' is an inadequate tool with which to discover whether it was appropriate to impose a duty of care or not. But leaving that distinction, it does not always follow that the law should superimpose a common law duty of care upon a discretionary statutory power. Apart from exceptions relating to individual or societal reliance on exercise of statutory power-it is not reasonable to expect a service to be provided at public expense and also a duty to pay compensation for loss occasioned by failure to provide the service. An absolute rule to provide compensation would increase the burden on public funds." (emphasis supplied) Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 36 of 41
54. It is evident from the decisions of this Court as also the decisions of the English and Canadian Courts that it is not proper to award damages against public authorities merely because there has been some inaction in the performance of their statutory duties or because the action taken by them is ultimately found to be without authority of law. In regard to performance of statutory functions and duties, the courts will not award damages unless there is malice or conscious abuse. The cases where damages have been awarded for direct negligence on the part of the statutory authority or cases involving doctrine of strict liability cannot be relied upon in this case to fasten liability against MCD or the licensing authority. The position of the DVB is different, as direct negligence on its part was established and it was a proximate cause for the injuries to and death of victims. It can be said that insofar as the licensee and the DVB are concerned, there was contributory negligence.
Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 37 of 41
55. The position of licensing authority and MCD is different. They were not the owners of the cinema theatre. The cause of the fire was not attributable to them or anything done by them. Their actions/omissions were not the proximate cause of the deaths and injuries. The licensing authority and MCD were merely discharging their statutory functions (that is granting licence in the case of the licensing authority and submitting an inspection report or issuing an NOC by MCD). In such circumstances, merely on the ground that the licensing authority and MCD could have performed their duties better or more efficiently, they cannot be made liable to pay compensation to the victims of the tragedy. There is no close or direct proximity to the acts of the licensing authority and MCD on the one hand and the fire accident and the death/injuries of the victims. But there was close and direct proximity between the acts of the licensee and the DVB on the one hand and the Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 38 of 41 fire accident resultant deaths/injuries of victims. In view of the well-settled principles in regard to public law liability, in regard to discharge of statutory duties by the public authorities which do not involve mala fides or abuse, the High Court committed a serious error in making the licensing authority and MCD liable to pay compensation to the victims jointly and severally with the licensee and the DVB.
56. We make it clear that the exoneration is only in regard to monetary liability to the victims. We do not disagree with the observations of the High Court that the performance of duties by the licensing authority and by MCD (in its limited sphere) was mechanical, casual and lackadaisical. There is a tendency on the part of these authorities to deal with the files coming before them as requiring mere paperwork to dispose it. They fail to recognise the object of the law or rules, the reason why they are required to do certain acts and the consequences of non-application of mind or Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 39 of 41 mechanical disposal of the application/requests which come to them. As rightly observed by Naresh Kumar's Report, there is a lack of safety culture and lack of the will to improve performance. The compliance with the procedure and rules is mechanical. We affirm the observations of the High Court in regard to the shortcoming in the performance of their functions and duties by the licensing authority and to a limited extent by MCD. But that does not lead to monetary liability."
22. Therefore, the defendant no 3 being MCD, not being in possession of the property B-46/I cannot be held liable in negligence on the ground that there was a breach of its statutory duties. As held in MCD Vs. Uphaar (supra), the MCD cannot be burdened with the consequences of all the shoddy construction carried out by third parties and such consequences cannot be said to be due to the proximate actions of the MCD. It would have been different if the MCD was actually in possession or the occupier of the building but such not being the case, I find that the defendant no 3 cannot be held Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 40 of 41 liable towards the plaintiff for damages.
23. However, at the same time, note has to be taken of the fact that undoubtedly it appears that the occupier/owner of the building whether M/s Karan Technofab or M/s Manikaran International, were at fault and that the MCD has also been adopting a casual and lackadaisical approach in the present case. The fact is that it appears from the photographs Ex. PW1/1 proved by the plaintiff that a wall had indeed been constructed on the property as alleged and that the same fell on the property of the plaintiff on 04.06.2012. Though, it has been vaguely alleged that there was a storm, but no reliable evidence has been led to show that the same happened due to an act of God. On the basis of the evidence led, it appears that the construction of the brick wall was not done in the proper manner due to which the same fell and caused damage to the property of the Plaintiff. It is the statutory duty of the MCD to ensure that no unsafe and unauthorized construction is erected which could pose a threat to the life and property of innocent neighbours. The MCD itself has admitted that there were deviations in the sanction plan but has not placed on record any action taken report with regard to the same. In such cases it would Sanjiv Rawal Vs. Kapil Chopra Suit No. 16486/2016 Page 41 of 41 be appropriate that the defendant no 3 MCD is directed to examine and remove the unauthorized construction at B/46-I, Naraina Industrial Area, Phase-II, New Delhi-110028.
24. Issues no. 2, 3 and 5 are therefore, decided against the plaintiff and in favour of the defendants, while issue number 4 is decided in favour of the plaintiffs and against defendant no 3. RELIEF
25. In view of the aforesaid discussion, suit of the plaintiff is partly decreed and a decree of mandatory injunction is passed against defendant no. 3 to remove the unauthorized construction at B/46-I, Naraina Industrial Area, Phase-II, New Delhi-110028. Suit of the plaintiff qua the remaining reliefs is dismissed. Parties to bear their own cost.
26. Decree sheet be prepared accordingly.
27. File be consigned to Record Room after due compliance. Digitally signed by DIVYANG THAKUR
DIVYANG Date:
THAKUR 2023.02.24
14:38:27
+0530
Announced in the open court (Sh. Divyang Thakur)
On 24.02.2023 ADJ-03/South West
Dwarka / New Delhi
Sanjiv Rawal Vs. Kapil Chopra