Bangalore District Court
M/S Tusker Workspace Private Limited vs M/S Idos India Private Limited on 4 April, 2025
KABC170022312023
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.O.S.No.1077/2023
Dated on this 4th day of April 2025
Plaintiff/s M/S TUSKER WORKSPACE PRIVATE
LIMITED
No. L-148, BBMP No.170/148, 5th Main
Road, Sector-6, HSR Layout,
Bangalore, Karnataka-560102 India
Represented by
Sri.Siddarth B. Bhavikatti
Senior Executive Office
Authorized Representative
(By Sri Skandan Prakash, Advocate)
// versus //
Defendant/s 1. M/S IDOS INDIA PRIVATE LIMITED
Having its registered office at
No.701, 7th Floor, No.131,
Devatha Plaza, Residency Road,
Bengaluru -560025
2. MR CHERUKU SRIKANTH
Director
No.701, 7th Floor, No.131
Devatha Plaza, Residency Road
Bengaluru -560025.
2
CT 1390_Com.O.S.No.1077-2023_Judgment.doc
KABC170022312023
3. MS. SOWMYANARAYAN SAMPATH
CFO & Director,
No.701, 7th Floor, No.131
Devatha Plaza, Residency Road
Bengaluru -560025
4. MS. TANUJA NARASIMHA MURTHY
Director,
No.701, 7th Floor, No.131
Devatha Plaza, Residency Road
Bengaluru -560025.
5. MS. ANURADHA SHESHAGIRI
Director,
No.701, 7th Floor, No.131
Devatha Plaza, Residency Road
Bengaluru -560025.
(Exparte)
Date of Institution of suit : 20/09/2023
Nature of the suit : Recovery of money
Date of commencement of : 15/04/2024
recording of the evidence
Date on which the : 04/04/2025
Judgment was pronounced.
: Year/s Month/s Day/s
Total duration
01 06 15
JUDGMENT
This is a suit filed by the plaintiff company against defendant No. 1 to 5, of which Defendant No. 1 is a 3 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 company and defendant No. 2 to 5 are said to be its directors, for recovery of sum of Rs. 90,70,000 along with interest from December 2020 till date of realization.
2. The plaint averments in brief are that, the plaintiff is in the business of operating a chain of co-working spaces under the name and style of "Bhive Workspace". The defendant No. 1 approached the plaintiff for availing seats in one of the co-working spaces operated by the plaintiff. In this regard, the parties formulated electronic agreement dated 25/11/2019. But although the said agreement was digitally signed by the representative of the plaintiff, it was not digitally signed by the defendants. Under the said electronic agreement, the plaintiff agreed to provide seats in the co-working spaces at discounted price of Rs. 7500 per seat per month. The parties have acted on the terms of the said agreement, although the same has not been signed by the defendants.
3. During the subsistence of the agreement, defendants proposed an arrangement whereby they undertook to develop accounting software as per the needs and 4 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 requirements of the plaintiff, in consideration of the plaintiff providing seats in the co-working space. And this reciprocal arrangement resulted in payment by way of barter system and cash neutral arrangement. However, it was agreed between the parties that in the event defendant fails to provide services, the defendant is bound to pay the rent at non-discounted price per seat. Thereafter, the defendant also sought for additional seats. The plaintiff found shortcomings in the services promised by the defendants. This resulted in correspondence between the parties and in email dated 21/5/2020, the plaintiff raised the issue that defendants have moved their belongings out of the premises without making the payment of deposit for March of the said year and without making payment for the additional seats. The defendants in an email dated 6/9/2020 stated that they are willing to pay the rent only for month of May 2020 and denied any other liability. According to the tabulation at paragraph 22 of the plaint, from the inception of agreement i.e., from December 2019 up to January 2021, the defendants are liable to pay rental at discounted price 5 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 of Rs. 36 lakhs. However, since the services of the defendant (in the matter of providing customized finance software) were not satisfactory, the actual rental payable by the defendant, as per the tabulation made at paragraph 26, for the period from December 2019 to June 2021, is Rs. 90,70,000/=. It is contended that, the same has not been paid in spite of issuance of legal notice. Hence, for recovery of the said sum of Rs. 90,70,000 along with interest at 18% per annum from December 2020 till realization, the present suit is filed.
4. Be it noted that by filing memo dated 15/3/2025, plaintiff has relinquished the claim for interest at 18% and stated in the memo that suit may be decreed with interest at such rate as the court may deem fit.
5. On issuance of suit summons to the defendants, the defendants are held to be duly served by paper publication in Indian Express and Kannada Prabha newspaper and placed ex parte.
6. In the ex parte evidence, the representative of the plaintiff is examined as PW1 and got marked Ex. P1 to P11. 6
CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023
7. Thereafter, I have heard the arguments of the learned counsel for plaintiff and perused the records of the case.
8. In this case, issues are not framed since Defendant is exparte and therefore, at this stage, the following point is framed for consideration:
Whether the plaintiff is entitled to recover sum of Rs. 90,70,000 along with interest from December 2020 till realization from the defendant No. 1 to 5 jointly and severally?
9. My answer to the above point is in the negative for the following:-
REASONS.
10. The case of the plaintiff in brief is that, the plaintiff is in the business of operating a chain of co-working spaces under the name and style of "Bhive Workspace". The defendant No. 1 approached the plaintiff for availing seats in one of the co-working spaces operated by the plaintiff. In this regard, the parties formulated electronic agreement dated 25/11/2019. But although the said agreement was 7 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 digitally signed by the representative of the plaintiff, it was not digitally signed by the defendants. Under the said electronic agreement, the plaintiff agreed to provide seats in the co-working spaces at discounted price of Rs. 7500 per seat per month. The parties have acted on the terms of the said agreement, although the same has not been signed by the defendants. During the subsistence of the agreement, defendants proposed an arrangement whereby they undertook to develop accounting software as per the needs and requirements of the plaintiff, in consideration of the plaintiff providing seats in the co-working space. And this reciprocal arrangement resulted in payment by way of barter system and cash neutral arrangement. However, it was agreed between the parties that in the event defendant fails to provide services, the defendant is bound to pay the rent at non-discounted price per seat. Thereafter, the defendant also sought for additional seats. The plaintiff found shortcomings in the services promised by the defendants. This resulted in correspondence between the parties and in email dated 21/5/2020, the plaintiff raised the 8 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 issue that defendants have moved their belongings out of the premises without making the payment of deposit for March of the said year and without making payment for the additional seats. The defendants in an email dated 6/9/2020 stated that they are willing to pay the rent only for month of May 2020 and denied any other liability. According to the tabulation at paragraph 22 of the plaint, from the inception of agreement i.e., from December 2019 up to January 2021, the defendants are liable to pay rental at discounted price of Rs. 36 lakhs. However, since the services of the defendant (in the matter of providing customized finance software) were not satisfactory, the actual rental payable by the defendant, as per the tabulation made at paragraph 26, for the period from December 2019 to June 2021, is Rs. 90,70,000/=. It is contended that, the same has not been paid in spite of issuance of legal notice. Hence, for recovery of the said sum of Rs. 90,70,000 along with interest at 18% per annum from December 2020 till realization, the present suit is filed. However, by filing memo dated 15/3/2025, plaintiff has relinquished the claim for interest at 18% and 9 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 stated that suit may be decreed with interest at such rate as the court may deem fit.
11. In support of its case, the plaintiff has examined its representative as PW1 and got marked Ex. P1 to P11.
12. Ex. P1 is a board resolution in favor of one Mr. Aniket Das, Vice President of the company. Ex. P2 is the company master data in respect of defendant No. 1 company.
13. Ex. P3 is the digital rental agreement dated 25/11/2019 and as already noted supra, even as per the plaintiff, the same is digitally signed only on behalf of plaintiff and has not been digitally signed on behalf of defendant No. 1 company. Since the said document was on plain paper, it was marked keeping open question of stamp duty and thereafter at the request of the plaintiff the same was referred to the District Registrar for adjudication regarding stamp duty and the District Registrar has sent back the document after collecting the deficit stamp duty and penalty of Rs. 46,200 and therefore, now, there is no embargo for looking into the document.
10
CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023
14. Ex. P4 are printouts of emails exchanged between the parties. Ex. P5 are the tax invoices raised by the plaintiff against the defendant No. 1, in respect of the total suit claim of Rs. 90,70,000. Ex. P6 is the non-starter report of PIM. Ex. P7 is the 65B certificate. Ex. P8 are the paper publications on the basis of which the defendants are placed ex parte. Ex. P9 is the ledger extract. Ex. P10 is the board resolution authorizing PW1. Ex. P11 is the 65B certificate.
15. As already noted supra, since the defendants are ex parte, the above oral and documentary evidence adduced by the plaintiff has remained undisputed, and there is also no rebuttal evidence.
16. Having considered the material on record, at the very outset, it is to be noted that, the suit invoices at Ex. P5, on the basis of which the plaintiff claims the sum of Rs. 90,70,000, is raised only against defendant No. 1 company. Defendant No. 2 to 5 are impleaded on the ground that they are the directors of defendant No. 1. The law is settled that the company has a distinct identity of its own and the 11 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 directors and shareholders of the company cannot be held liable to pay for the liability of the company unless they have given personal guarantee. This position of law is laid down by Hon'ble Delhi High Court in the case of Gurmeet Satwant Singh v. Meera Gupta reported in 2019 SCC Online Delhi 9505, as follows;
7. Having heard learned counsel for the parties, I am of the view that the order of the Trial Court is entirely unsustainable. The allegations contained in the plaint do not speak of any transaction with the defendant nos. 2 to 4 in their personal capacity. The business dealings, although claimed to be with the "defendants", the bills and invoices enclosed with the plaint were all issued on the defendant no. 1 company. Similarly, the cheques mentioned in the plaint were drawn on the account of the defendant no. 1 - company, although they were signed by the defendant no. 2, as a director of the company. The factory which is alleged to be sold in order to evade a decree is also admittedly in the name of the company. The contention of the plaintiff is that the company acted through the defendant nos. 2 to 4 and they thus incur a personal liability also. The Trial Court has correctly noticed that a company has a distinct legal personality and its directors and shareholders cannot ordinarily be held liable for its dues. However, the cryptic observation of the Trial Court that the circumstances of the present case attract the principle of lifting the corporate veil is not 12 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 supported by the pleadings before it or the reasoning in the impugned order.
(Emphasis Supplied)
17. In the light of the above law, when it is neither pleaded nor proved that the directors had given any personal guarantee undertaking to pay the company liability, it follows that when the invoices are raised only against defendant No. 1, the liability cannot be extended to the directors of the company. Therefore, at the very outset, the suit is liable to be dismissed against defendant No. 2 to 5, who are the directors.
18. Now, turning to the question whether at least the plaintiff can seek recovery of money from the defendant No. 1 company is concerned, it is to be noted that, the basis of the suit claim is a digital agreement dated 25/11/2019, which is styled as a "rental agreement" and which is marked as Ex. P3.
19. However, even as per the Plaint averments at paragraph 7, the said agreement was never signed by defendant No. 1 company and it was signed only by the 13 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 plaintiff. Therefore, when the defendant No. 1 has not signed the said agreement, then, the said agreement cannot be used against defendant No. 1 to impose any liability against defendant No. 1.
20. Faced with this situation, Counsel for Plaintiff relied upon the correspondence exchanged between the parties by way of emails and contended that the agreement to pay a particular monthly amount towards seats in co-working spaces occupied by the defendant No. 1 is spelt out from the said correspondence between the parties.
21. In this regard, reference may be made to the law laid down by Hon'ble Apex Court in the case of Rickmers Verwaltung GMBH v. Indian Oil Corpn. Ltd., (1999) 1 SCC 1 at page 9, wherein it is held as follows;
13. In this connection the cardinal principle to remember is that it is the duty of the court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of mind between the parties, which could create a binding contract between them but the court is not empowered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate 14 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 implications of law to be drawn. Unless from the correspondence, it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence. The court is required to review what the parties wrote and how they acted and from that material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of the parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there had been meeting of mind between the parties and they had actually reached an agreement upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence.
(Emphasis Supplied)
22. In the light of the above law, if the emails exchanged between the parties, which are collectively marked as Ex. P4 and are available at page 48 to 82, are closely perused, what is forthcoming is that the arrangement between the parties was a kind of barter system whereby the plaintiff agreed to provide seats in co-working spaces for the employees of the defendant No. 1 and in consideration of the same, the defendant No. 1 agreed to provide its 15 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 customized financial software to the plaintiff. At no point of time, the plaintiff has ever intimated to the defendant No. 1 that this arrangement has come to an end and henceforth the defendant No. 1 has to pay for the occupation of the office seats by way of money, instead of by way of barter system.
23. In this regard, before analyzing the emails, it is to be noted that, even as per the plaint averment, it is admitted that the defendant vacated the office space earlier to 21.05.2020. This is forthcoming from paragraph 17 of the plaint wherein it is pleaded that in its email dated 21.5.2020, the plaintiff pointed out that defendants have moved their belongings out of the premises, which means that defendants vacated the premises earlier to 21.5.2020. In the absence of written agreement between the parties specifying the lock-in period, it means that the defendant No. 1 can at the most be held liable for occupancy of the office seats only up to 21.5.2020, since, by then, the defendant No. 1 admittedly vacated the office seats. 16
CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023
24. In the said email dated 21.5.2020, which is written by the plaintiff to the defendant No. 1 (page 56 of Ex. P. 4
- Document No. 7), it is stated as follows:
"Our agreements are not signed off as we still did not have a clear rollout of roadmap from IDOS. While you have been committing that you were looking to do all customization within this year itself, we wanted it in the agreement specifically to document rollout and delivery timeframes.
You will agree that Bhive made the space available and customized as per your requests from day one, and we have also held additional space for you, basis your projections, without any financial commitment from your end."
(Emphasis Supplied)
25. The statement, "without any financial commitment from your end," makes it clear that, at no point of time the defendant No. 1 had agreed to pay for the office spaces by way of money and instead, as pleaded specifically at paragraph 10 of the plaint, the reciprocal arrangement between the parties was by way of barter system i.e. it was cash neutral and in consideration of the office seats the defendant No. 1 agreed to provide its financial software by 17 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 customizing it to suit the requirement of the plaintiff. When this is the Plaint averment and when in the email dated 21/5/2020, by which time admittedly the defendants had vacated the office seats, the plaintiff reiterates that there was no financial commitment at any point of time from the defendant No. 1, it follows that the plaintiff cannot now turn around and seek payment of money for the office seats.
26. In an earlier email dated 8/5/2020 issued by the plaintiff to defendant No.1 (page 69 of Ex. P. 4 - Document No. 13A) , it is stated as follows:
"On the side of our relationship, to be very honest, we are not quite happy. I have had interactions with Garima through the lockdown and also had a Zoom call two weeks or so back. Despite our regular interactions and meetings with everyone in the team, I am still not able to see anything that we can tangibly use on the software.
It is now getting to be the mid of May, 5 ½ into our relationship, and we still don't even have wireframes for everything that was promised to us, let alone even a small part of a working product. We were promised that we would get a functioning "reports" section at least by the end of March / early April, and were supposed to get 18 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 wireframes for the rest a long time back, not got anything."
(Emphasis Supplied)
27. Therefore, it is clear that, even in the earlier email dated 8-5-2020, although the plaintiff has no doubt complained about the non-delivery of the customized financial software, the plaintiff has at no point of time categorically informed the defendant that the earlier barter system has come to an end and henceforth the defendant No. 1 will have to pay for the office seats by way of money.
28. Therefore, from the above emails, it is clear that, at this stage, the plaintiff cannot turn around and seek for payment of money for the office seats on the basis of an unsigned agreement when from the emails exchanged between the parties it is forthcoming that, initially, the plaintiff had agreed for a barter system and at no point of time was the said arrangement brought to an end by specifically intimating the defendant No. 1 that henceforth the defendant No. 1 will have to pay money for the office seats. Admittedly, even before the barter system put in 19 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 place by mutual agreement was formally terminated by the plaintiff, the defendant No. 1 vacated the office seats. Therefore, the result of the above discussion is that the claim of the plaintiff for sum of Rs. 90,70,000 from defendant No. 1 is without any basis and liable to be rejected. Accordingly, answering the point for consideration in the negative, I proceed to pass the following :-
ORDER The suit is dismissed, with cost.
Office to draw decree accordingly.
Office to issue soft copy of this
judgment to both sides, by email, if
furnished.
[Dictated using MacWhisper Pro 10.8.1, transcript revised, corrected, signed and then pronounced by me in open court on this the 04th day of April, 2025] SUDINDRA Digitally signed by SUDINDRA NATH S NATH S Date: 2025.04.07 17:09:08 +0530 (S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT, BENGALURU 20 CT 1390_Com.O.S.No.1077-2023_Judgment.doc KABC170022312023 ANNEXURE
1. List of witnesses examined on behalf of Plaintiff/s:
PW1 : Sri. Siddharth B. Bhavikatti
2. List of witnesses examined on behalf of Defendant/s:
Nil
3. List of documents marked on behalf of Plaintiff/s:
Ex.P1 : Attested copy of board resolution of authorization. Ex.P2 : Print out of website of ministry of corporate affairs.
Ex.P3 : Digital rental agreement dated. 25.11.2019 Ex.P4 : Print out of E-mails Ex.P5 : Attested copy of tax invoices Ex.P6 : Non starter report of PIM Ex.P7 : 65B certificate Ex.P8 : Paper publication Ex.P9 : Attested copy of ledger extract
Ex.P10 : Board resolution dated 01.06.2023 Ex.P11 : 65B certificate
4. List of documents marked on behalf of Defendant/s:
Nil (S. Sudindranath) LXXXIII ACC & SJ, (COMMERCIAL COURT), BENGALURU