KOHLI ONE HOUSING & DEVELOPMENT PVT LTD vs C.S. AGARWAL AND OTHERS

2024-03-18 Information

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 22nd February, 2024
Pronounced on: 18th March, 2024

+ CS(OS) 76/2010, CCP(O) 95/2011, CCP(O) 125/2011, I.A. 7907/2012, I.A. 18365/2013, I.A. 7910-7911/2019, I.A. 12991/2019, I.A. 9709/2021, I.A. 11863/2021, I.A. 12631/2021, I.A. 13369/2022, I.A. 22135/2022, I.A. 15187/2023, I.A. 15910/2023

KOHLI ONE HOUSING & DEVELOPMENT PVT LTD….. Plaintiff
Through: Mr. Amit Sibal, Sr. Advocate with Mr. Shaunik Kashyap, Mr. Balasubramaniam R. Iyer, Ms. Parul Tuli and Ms. Muskan Yadav, Advocates
versus

C.S. AGARWAL AND OTHERS ….. Defendants
Through: Mr. Gorangg Gupta & Mr. Safiullah Shah, Advocates for D-1 & 3.
Ms. Shambhani Kala, Advocate for D-2(a), (b) & (d).
Mr. T.K. Ganju, Sr. Advocate with Mr. Rohit Gandhi, Mr. Hargun Singh Kalia, Ms. Akshita Nigam & Mr. Maheshwar Singh Salaria, Advocates for D-4 to 7, D-9, 10, 11 & 13.
Mr. Mohit Gupta, Ms. Aayushi Jain & Ms. Seemab Ali Fatima, Advocates for proposed D-14, 15, 17, 18 & 20.
Mr. Varun Nischal & Mr. Shubham Sharma, Advocates for Proposed D-16 & 19.
Mr. Vikas Dhawan, Sr. Advocate with Mr. Bharat Gupta, Mr. Varun Tyagi & Mr. Vansh Sharma, Advocates for D-21.
Mr. Vijay Nair & Mr. Arpit Dwivedi, Advocates for D-22 to 25.
CORAM:
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.
I.A. No. 2737/2014 (under Order VI Rule 17 read with Section 151 CPC seeking amendment of the Plaint):

1. The application under Order VI Rule 17 read with Section 151 of the Code of Civil Procedure, 1908 (hereinafter referred to as CPC) has been filed on behalf of the plaintiff seeking amendment in the plaint.
2. It is submitted in the Application that the present Suit for Recovery of Rs.77,57,00,562/- (Rupees Seventy Seven Crores Fifty Seven Lakhs Five Hundred Sixty Two Only) along with the pendent lite interest, has been filed on behalf of the plaintiff.
3. It is the admitted case that the Plaintiff Company M/s Kohli One Housing & Development Put. Ltd., had paid a sum of Rs.43,00,00,000/- (Rupees Forty Three Cores Only) to defendant No. 3, M/s Rockman Projects Limited, as they entered into a MOU dated 18.06.2007, to develop a SEZ (Special Economic Zone) on a specific property namely the said lands. As per the MOU, a Special Purpose Vehicle (SPV) in the form of a Company was to be floated and the defendant No. 3 was to first transfer the contiguous 250 acres of land in Gurgaon to SPV, free from all encumbrances and the SPV was then to receive Final Notification for the multi-services SEZ from the Commerce Ministry of India. The balance consideration was payable by the plaintiff within 12 business days of the notification of the Land as a SEZ and on transfer of 74% shares in the SPV in the name of the plaintiff company. The MOU included a land map signed by the defendant No. 1, namely, Mr. C.S. Aggarwal, detailing the said lands in question.
4. Admittedly, defendant No. 2 Mr. D.K. Jain, is the Director of defendant No. 3 Company and he along with his family members has 50% shareholding in defendant No. 3. The defendant No. 2, executed the Resolution on behalf of the defendant No. 3 Company authorizing defendant No. 1, to deal with all SEZ issues.
5. The plaintiff has asserted that the defendant No. 2, Mr. D.K. Jain owned and controlled the said lands through his closely held Companies and Associates, namely defendant Nos. 4 to 13 and had authorized defendant No. 1, Mr. C.S. Aggarwal, to deal with the plaintiff, in respect of the said lands. The transfer of money took place from defendant No. 3 to defendant No. 4 (also parent/holding Company of other defendants) at the bidding of defendant No. 2.
6. On filing of the present Suit, the status quo was directed to be maintained viz-a-viz the lands vide Order dated 25.01.2010. It is asserted that the foundation of the dispute lies in the designated lands and the status quo Order is still in operation. The plaintiff asserted that the defendant No. 2, Mr. D.K. Jain, has not been forthcoming in his Written Statement and has been making contradictory statements in various other proceedings including Police/Criminal Complaints, copies of which have been filed on record.
7. The plaintiff seeks to make amendment in the plaint to incorporate the facts, which have subsequently came to its knowledge from other litigations, which have commenced inter se the parties.
8. The plaintiff wants to add Paragraph 3A to claim that the defendant No. 2, Mr. D.K. Jain and his family members are the Directors and the majority shareholders of defendant No. 4, M/s Rajdhani Nursuries Limited, which is holding/parent Company of various other defendants such as the following Companies:-

(a) M/S SUPER PROMPT HOLDING LIMITED
(Defendant No. 10)

(b) M/S SUPERQUICK HOLDINGS PUT. LIMITED
(Defendant No. 5)

9. The other defendants namely M/s German Gardens Limited (Defendant No. 8), M/s Tower Leasing And Finance Limited (Defendant No. 9) and M/s Rajdhani Securities Ltd. (Defendant No. 11) are family companies of defendant No. 2, Mr. D.K. Jain. The common thread of common Directors, common shareholding pattern and family ownership runs through all the defendant Companies namely 4 to 11 and the defendant No. 2, Mr. D.K. Jain is the face of all the Companies and has been representing them as such. Furthermore, he in his Criminal Complaint to the Station House Office, Police Station Bilaspur, Haryana, has stated that his entire land measuring about 175 acres and 66 KM stone Village Sigharwali, is in the name of his separate eight Companies.
10. In his second Criminal Complaint, defendant No. 2, Mr. D.K. Jain, has specifically stated that he along with his family members, have been running the business in the name of the Companies, namely, Rajdhani Nursuries Ltd., German Gardens Ltd., Super Quick Holdings Pvt. Ltd., Super Prompt Holdings Ltd, Urgent Holdings Ltd., Tower Leasing and Finance Ltd., Monsoon Finance Ltd. and Rajdhani Securities Ltd., all having their Office at B-30, Lawrence Road, Delhi-110035. He has further stated that the objective of the Company was to carry on business as owners, builders, developers, promoters etc of residential, commercial, industrial buildings and in particular with an aim to form SEZ. Mr. C.S. Aggarwal had undertaken responsibility of taking all approvals and setting up of SEZ spending all funds required. Therefore, the contribution by the defendant No.2 was only that at the relevant time, was to contribute a part of the land required for the SEZ after procurement of necessary licenses and thereafter, to jointly develop the entire area.
11. The plaintiff has claimed that on the principle of estoppel, the defendant No. 2 cannot wriggle out from his own stand taken in the matter. He is guilty of constructive fraud as he, in connivance with defendant No. 1 and other group Companies, has sought to defraud the plaintiff Company. He in his Police Complaint, has categorically admitted that he personally controls and owns all the Land Owning Companies/entities i.e. the defendant Nos. 4 to 13 and thus, the owner of the lands. The defendant No. 2 and his Companies and associates, namely, defendant Nos. 4 to 13, cannot be permitted to take a different stand in different forums. An impression was given to the plaintiff Companys Directors that the defendant No. 2 represented the land owners and he has authorized the defendant No. 1 to take action on their behalf.
12. The plaintiff further wants to add Paragraph 18A to state that Mr. D.K. Jain had taken positive and overt steps in development of SEZ, which was intended for the MOU executed in the following manner:-
18A. That D.K. Jain had taken positive and overt steps in development for SEZ (Special Economic Zone) which was intended for the Memorandum of Understanding executed with Plaintiff in the following manner:

(a) D.K. Jain, Defendant No. 2 had got organized board resolutions from various companies, including the Defendants No. 4-11 such as:

(1) Amar Portifolio Private Limited
(2) Super Fast Holdings Pvt. Ltd.
(3) Super Quick Holdings Private Ltd. (Defendant No. 5)
(4) Rajdhani Securities Ltd. (Defendant No. 11)
(5) Super Prompt Holdings Ltd. (Defendant No. 10)
(6) Urgent Holding Ltd. (Defendant No. 7)
(7) German Garden Ltd. (Defendant No. 8)
(8) Super Fast Holding Pvt. Ltd.
(9) Tower Leasing and Finance Ltd. (Defendant No. 9)
(10) Monsoon Finance Ltd. (Defendant No. 6)
(11) Rajdhani Nursuries Ltd. (Defendant No. 4)

In his favour, authorizing him solely for dealing with the said lands.

(b) D.K. Jain, Defendant No. 2 first entered into a lease dated 04.05.2006 on behalf of defendants 4-13, then a 99 year lease dated 30.11.2006 on behalf of Defendants 4-13 and then also entered into an agreement to sell dated 05.02.2007 on behalf of Defendants 4-13 in respect of the said properties with Defendant No. 1 and 3. The agreements are binding between the parties. The Defendant No. 1 and 3 are fully entitled to act and deal with the land on behalf of the other Defendants due to these agreements.

(c) Defendant No. 2 – D.K. Jain had entered into a consultancy agreement with one M/s Jurong of Singapore for development of the same SEZ land which is subject matter of the Memorandum of Understanding. Naturally the agreement was for the land which was to be transferred to SPV (Special Purpose Vehicle) for which the Plaintiff had advanced the money. It is humbly submitted that there would have been no occasion for Defendant No. 2 to have entered into an agreement for development of land as SEZ land if the agreement with the Plaintiff was not in the mind of Defendant No, 2. All these documents were shown to the Plaintiff Company to win the trust and seek advance money.

(d) An application to convert the land into the SEZ was made by the Defendant No. 3 to the Commerce ministry which specifically lists/mentions the abovementioned lease of the said lands between Defendants no. 4-13 with Defendant No. 3 and the fact that the commerce ministry has communicated correspondence with D.K Jain, the Defendant No. 2 (authorized representative of defendants 4-13) in reference to same application. The aforesaid clearly shows that the Defendant No. 2 was deeply involved not only by himself but also through his closely held companies/entities, the Defendants No. 4-13 where he and his family members were Majority Shareholders/Directors. An application for SEZ notification was not possible without active involvement of Defendant No. 2 and the land holding companies/entities Defendant No. 4 to 13. The Plaintiff reserves his right to summon the relevant files from the concerned departments at the relevant stage. Thus, the Defendant No. 2 by his conduct had given an impression to the Plaintiff that he is actively involved in the transaction and his closely held companies/entities were also involved in the transaction.

(e) By executing the board resolution in favour of the Defendant No. 1 on behalf of the Defendant No. 3 authorizing Defendant No. 1 to enter into an agreement with the Plaintiff in respect of the said properties.

13. The plaintiff further wants to add Paragraph 20A and intends to state that the plaintiff has learnt that the defendant No. 3 Company has made various payments to defendant No.4 and Rajdhani Garden Limited, another associate Company of defendant No. 2 and other Companies stated therein.
14. It is sought to be claimed that the defendant No. 2 is the major beneficiary of the funds since defendant No. 4 is his Company and other defendant Companies are also the subsidiaries owned by the defendant No. 4. A plea is sought to be taken that by lifting of the corporate veil, the faces of the defendant No. 2 and his immediate family members would be revealed as the real person behind the veil.
15. Likewise, Paragraph 20B is sought to be inserted in the plaint, to further explain the nexus between the defendant No. 2 and defendant No. 4 and other Companies being defendant No. 5 to 11, which are the subsidiary Companies of defendant No. 4. It is asserted that the defendant Nos. 4 to 11 cannot now take claim non privity of contract, having enjoyed large sums of money, which were advanced by the plaintiff Company.
16. The plaintiff also wants to add Paragraph 20C to further elaborate the above-mentioned facts. He also intends to assert that the money of the plaintiff has been deliberately and in a planned manner siphoned off, which all the defendants are jointly and severally liable to pay back.
17. The verification Clause is sought to be amended accordingly.
18. The plaintiff has submitted that the aforesaid amendments are relevant and the application has been made, in the first instance. The application may be allowed to add Paragraphs 3A, 18A, 20A, 20B and 20C and Verification Clause.
19. In support of his assertions, the plaintiff has placed reliance upon Anita Kumari Gupta vs. Ved Bhushan, (2014) 143 DRJ 576; Hari Bhagwan Sharma & Ors. vs. Badri Bhagat Jhandewalan Temple Society & Ors., (1985) 27 DLT 68; Wasudhir Foundation vs. C. Lal & Ors., (1991) 45 DLT 556; Usha Devi vs Rijwan Ahmad & Ors., (2008) 3 SCC 717; Anita Anand vs. Gargi Kapur & Ors.; 2017 SCC OnLine Del 11794 and Haridas Alidas Thadani & Ors. vs. Godrej Rustom Kermani, (1984) 1 SCC 668 to state that application under Order VI Rule 17, CPC is to be decided at the first instance.
20. The plaintiff has further sought to draw the attention of this Court to the general principles governing Order VI Rule 17, CPC by referring to the case of Rajesh Kumar Agarwal vs. K.K. Modi, (2006) 4 SCC 385; Mahila Ramkali Devi vs. Nandram, (2015) 13 SCC 132, State of Bihar vs. Modern Tent House, (2017) 8 SCC 567 and Life Insurance Corporation of India vs. Sanjeev Builders Pvt. Ltd. & Another (2022) SCC OnLine SC 1128.
21. It is further submitted that transfer of property in violation of an injunction is no transfer. Reliance has been placed in this regard on the case of Vareed Jacob vs. Sosamma Geevarghese & Ors., (2004) 6 SCC 378; Delhi Development Authority vs. Skipper construction Co. (P) Ltd. & Anr., (1996) 4 SCC 622; Satyabrata Biswas vs. Kalyan Kumar Kisku, (1994) 2 SCC 266; Surjit Singh vs. Harbans Singh & Ors., (1995) 6 SCC 50; Sitakant Kashinath Parab vs. Goa Housing Board, Through its MD, (2016) SCC OnLine Bom 3548;
22. The plaintiff has relied on the case of Arcelormittal India Private Limited vs. Satish Kumar Gupta & Ors., (2019) 2 SCC 1; Vodafone internation Holdings BV vs. Union of India & Anr., (2012) 6 SCC 613; Balwant Rai Saluja & Anr. vs. Air India Limited & Ors., (2014) 9 SCC 407; Keshrimal Jivji Shah vs. Bank of Maharashtra, (2004) 3 Mh. L.J. 893; Official Liquidator vs. Parthasarathi Sinha & Ors., (1983) 1 SCC 538; New Horizon Limited & Anr. vs. Union of India & Ors., (1995) 1 SCC 478; Subhra Mukherjee & Ors. vs. Bharat Coking Coal Ltd. & Ors., (2000) 3 SCC 312; Iridium India Telecom Limited vs. Motorola incorporated & Ors., (2011) 1 SCC 74 and Tata Engineering and Locomotive Co. Ltd. vs. State of Bihar & Ors., 1964 SCC OnLine SC 111 in support of his plea of lifting of corporate veil.
23. Reference has been made to the case of Sejal Glass Limited vs. Navilan Merchants Pvt. Ltd., (2018) 11 SCC 780 and Madhav Prasad Aggarwal & Anr. vs. Axis Bank Ltd. & Anr., (2019) 7 SCC 158, to assert that a plaint cannot be rejected in part under Order VII Rule 11, CPC.
24. The application is contested by the defendants. The defendant Nos. 4 to 13 in their Written Submissions have asserted that the MOU had been executed and signed only between the plaintiff and the defendant No. 3 and there is no other person/entity, who was a party or signatory to the said MOU. All the representations and assurances have been alleged by the plaintiff, to have been given only by defendant No. 1, Mr. C.S. Aggarwal.
25. The present Suit has been filed by the plaintiff, in collusion and connivance with the defendant Nos. 1 and 3, and defendant No. 4 to 13 have been wrongly impleaded in the Suit as they neither have any privity of contract nor are they the signatories. Further, no amount has been paid to them by the plaintiff and there is no cause of action disclosed against them in the plaint. The defendant Nos. 4 to 13 have also filed the application bearing I.A. No. 6063/2010 under Order VII Rule 11 CPC for deletion of their name/rejection of the Suit qua them.
26. The plaintiff in response to the application under Order VII Rule 11 CPC instead of seeking an amendment, filed a Reply wherein he took a categorical stand that the plaint as filed, discloses a cause of action against the defendant Nos. 4 to 13. After the arguments were heard on the application, the Court vide Order dated 16.01.2014, framed a preliminary issue as to the maintainability of the Suit against the defendant Nos.1,2 and 4 to 13. The relevant portion of the Order reads as under:-
CS(OS) 76/2010. LA. Nos. 9817/2013, 6063/2013, 882/2010, 5357/2013, 599/2010 and 7907/2012

1. After hearing the learned counsel for the parties, I feel that the following preliminary issues are required to be framed:

i) Whether the plaint is liable to be rejected qua defendant Nos.1, 2 and 4 to 13 in entirety or against any one of them?

2. The aforesaid issue is being treated as a preliminary issue.

3. The learned counsel for the parties are directed to file a short synopsis running into not more than three pages each with a list of judgments relied upon by them.

4. List on 12.02.2014.

5. Interim order to continue.

27. Thereafter, no amendment application was filed by the plaintiff, who maintained consistently that the Suit was maintainable. However, after framing of the issue on the maintainability of the Suit, it has sought amendment by way of the present application. The plaintiff has now taken a completely contradictory stand to plead that the amendment should be heard, before the application under Order VII Rule 11, CPC is considered.
28. It is asserted that it is with the malafide and dishonest intention that the application for amendment has been filed as a complete after thought and is not maintainable, which is evident from the fact that the plaintiff in the original plaint, as well as the amendment application, has itself pleaded that it was made aware of all the documentation done and was shown all the documents at the time he entered in the MOU, as has been reflected in Paragraph 7 and Paragraph 12 of the plaint. Despite these categorical averments, the amendment is being sought by vaguely and contradictorily stating that these facts have come to his knowledge subsequently.
29. Moreover, by way of the amendment, plaintiff is seeking to change the nature of the case and also withdraw the admissions made therein. While in the original plaint, the plaintiff had categorically pleaded that the assurances were given by the defendant No. 1, Mr. C.S. Aggarwal, by way of amendment it is sought to be alleged that the defendant No. 2, Mr. D.K. Jain by his conduct, gave representation and assurances. It is settled law that by way of the amendment, the party cannot be allowed to retract admissions or change the nature of the Suit.
30. In support of their assertions, the defendants have placed reliance upon Revajeetu Builder & Developers vs. Narayana Swamy & Sons (2009) 10 SCC 84; Patasibai & Ors. vs. Ratanlal, (1990) 2 SCC 42; Bharat Bhushan Maggon vs. Joginder Lal & Ors., 2012 SCC OnLine DEL and SICPA India Pvt. Ltd. vs. Kapil Kumar, 2015 SCC OnLine DEL.
31. Submissions heard and Synopsis perused.
32. Before getting into the merits of the application, it is pertinent to mention that the application under Order VI Rule 17, CPC and the application bearing I.A. No. 6063/2020 under Order VII Rule 11, CPC was decided vide Order dated 02.07.2014. The application under Order VII Rule 11 CPC was allowed and it was held that there was no cause of action in favour of the plaintiff against the defendant Nos. 4 to 13, to file the Suit for Recovery as there was no privity of contract. The Suit was, therefore, rejected as against the defendant Nos. 4 to 13 and the application under Order VII Rule 11 CPC was allowed. Insofar as, the application under Order VI Rule 17 CPC was concerned, the same was also rejected.
33. FAO(OS) 534/2014 and RFA(OS) 126/2014 were filed against these two Orders dated 02.07.2014 which were set aside in toto by the Division Bench vide Order dated 11.02.2019, with the directions that the application under Order VI Rule 17 CPC shall be heard in the first instance and thereafter, the application under Order VII Rule 11 CPC, shall be heard by the learned Single Judge. The amendment application under Order VI Rule 17 CPC and the application under Order VII Rule 11 CPC, have been remanded back to be decided afresh.
34. Before going into the merits of the application under Order VI Rule 17 CPC, it would be relevant to reiterate the law relating to the amendment of the pleadings.
35. The Apex Court in the case of Ganga Bai v. Vijay Kumar, (1974) 2 SCC 393, has categorically held that the power to allow an amendment is wide and may be exercised by the Court at any stage notwithstanding the limitation, in the interests of justice. It further observed, But the exercise of such far-reaching discretionary powers is governed by judicial considerations and wider the discretion, greater ought to be the care and circumspection on the part of the court.
36. In the case of Rajesh Kumar Aggarwal and Others (Supra), the Apex Court observed that the provision provides for amendment of pleadings by either party at any stage of the proceedings on such terms as may be just. Such amendment should be necessary for the purpose of determining the real question in controversy. However, as per the proviso, no amendment shall be made after trial has commenced, unless the court comes to conclusion that despite due diligence, the party could not raise the matter for which amendment is sough before the trial has commenced. It was explained that the object of the rule is that the courts should try the merits of the case that come before them and allow all amendments which may be necessary for the determination of the real question in the controversy between the parties provided it does not cause injustice or prejudice to the other side.
37. The Apex court in the case of Mahila Ramkali Devi and Others (Supra), observed that rules of procedure are intended to be a handmaiden to the administration of justice and a relief sought by a party cannot be refused merely because of some mistake, negligence, inadvertence or even infraction of rules of procedure. An amendment application must be allowed by a Court, unless the Court is satisfied that the party seeking amendment was acting malafide or his mistake caused injury to the opposite party which cannot be compensated by way of an Order of cost.
38. In the case of State of Bihar and Ors. (Supra), while considering whether the application for amendment on behalf of the appellant was rightly dismissed by the lower Courts, the Apex Court perused the application and observed that since i) the proposed amendment is on facts and mere elaboration of facts originally pleaded in the Written Statement is sought, ii) the amendment is in the nature of amplification of defence already taken, iii) no new defence is being introduced, iv) if allowed, it would neither change the defence already taken nor withdraw any admission, if made in the Written Statement, v) no prejudice would be cause to the respondents (plaintiffs) if the amendment sought is allowed and vi) the trail is not yet concluded, it would be in the interest of justice to allow the amendments sought.
39. It would also be pertinent to refer to the recent judgment of the Apex Court in Life Insurance Corporation of India (Supra), wherein after considering the earlier judgments on the aspect of scope of amendment, had summed up the fundamental principles to be considered while allowing the application under Order VI Rule 17, CPC which reads as under :
.

(ii) All amendments are to be allowed which are necessary for determining the real question in controversy provided it does not cause injustice or prejudice to the other side. This is mandatory, as is apparent from the use of the word shall, in the latter part of Order VI Rule 17 of the CPC.
(iii) The prayer for amendment is to be allowed:

(i) if the amendment is required for effective and proper adjudication of the controversy between the parties, and
(ii) to avoid multiplicity of proceedings, provided

(a) the amendment does not result in injustice to the other side,
(b) by the amendment, the parties seeking amendment does not seek to withdraw any clear admission made by the party which confers a right on the other side and
(c) the amendment does not raise a time barred claim, resulting in divesting of the other side of a valuable accrued right (in certain situations).

(iv) A prayer for amendment is generally required to be allowed unless:

(i) by the amendment, a time barred claim is sought to be introduced, in which case the fact that the claim would be time barred becomes a relevant factor for consideration,
(ii) the amendment changes the nature of the suit,
(iii) the prayer for amendment is malafide, or
(iv) by the amendment, the other side loses a valid defence.
(v) In dealing with a prayer for amendment of pleadings, the court should avoid a hypertechnical approach, and is ordinarily required to be liberal especially where the opposite party can be compensated by costs.
(vi) Where the amendment would enable the court to pin-pointedly consider the dispute and would aid in rendering a more satisfactory decision, the prayer for amendment should be allowed.
(vii) Where the amendment merely sought to introduce an additional or a new approach without introducing a time barred cause of action, the amendment is liable to be allowed even after expiry of limitation.
(viii) Amendment may be justifiably allowed where it is intended to rectify the absence of material particulars in the plaint.
(ix) Delay in applying for amendment alone is not a ground to disallow the prayer. Where the aspect of delay is arguable, the prayer for amendment could be allowed and the issue of limitation framed separately for decision.
(x) Where the amendment changes the nature of the suit or the cause of action, so as to set up an entirely new case, foreign to the case set up in the plaint, the amendment must be disallowed. Where, however, the amendment sought is only with respect to the relief in the plaint, and is predicated on facts which are already pleaded in the plaint, ordinarily the amendment is required to be allowed.
(xi) Where the amendment is sought before commencement of trial, the court is required to be liberal in its approach. The court is required to bear in mind the fact that the opposite party would have a chance to meet the case set up in amendment. As such, where the amendment does not result in irreparable prejudice to the opposite party, or divest the opposite party of an advantage which it had secured as a result of an admission by the party seeking amendment, the amendment is required to be allowed. Equally, where the amendment is necessary for the court to effectively adjudicate on the main issues in controversy between the parties, the amendment should be allowed. (See Vijay Gupta v. Gagninder Kr. Gandhi & Ors., 2022 SCC OnLine Del 1897)

40. It may be noted that after the filing of the suit the defendants No.4 to 13 had filed an application under Order VII Rule 11, CPC for rejection of the plaint viz-a-viz them on the ground that there was no cause of action disclosed against them and there was no plea of lifting of the corporate veil. Further, there was no cause of action disclosed against them. During the course of the arguments the plaintiff had introduced the concept of lifting of the corporate veil which prompted the plaintiff to move the present amendment application to incorporate the relevant facts. The core question, therefore, is whether the amendment application filed subsequent to the filing of rejection of suit application, can be resorted to, to introduce a cause of action which is non-existent in the plaint.
41. Reference may be had to the case of Gaganmal Ramchand vs. The Hongkong & Shanghai Banking AIR 1950 BOM 345, wherein the Bombay High Court had permitted the amendment of the plaint by the appellant to amplify the facts constituting the cause of action. In Hari Bhagwan Sharma vs. Badri Bhagat Jhandewala Temple Society 27 (1985) DLT 68, this Court had permitted the amendment in order to rectify the insufficiency of cause of action by furnishing additional particulars. It was observed that those amendments which are sought to be made bonafide can be allowed by way of amendment even though the application under Order VII Rule 11, CPC is pending.
42. Similarly, in Wasudhir Foundation vs. C. Lal & Sons (1991) 45 DLT 556, the Division Bench of Bombay High Court reiterated that if ouster of application under Order VI Rule 17 is done, it would throttle the very life of Order VII Rule 11 CPC and instead of promoting, it would defeat the ends of justice.
43. Likewise, in Beenu Anand Khanna vs. Ratan Tata, Chairman Taj Group, 2006 III AD Del. 129, this Court permitted the amendment of the plaint in similar backdrop.
44. From the above said judgments, it may be concluded that despite pending application under Order VII Rule 11, CPC the amendment application under Order VI Rule 17, CPC may be considered and may be allowed if it is bonafide and only intends to amplify the facts in regard to cause of action. However, the amendment application may be dismissed, if it is found to be malafide or tries to introduce a new cause of action of which there is not even a vestige in the original plaint. With these observations, the present application under Order VI Rule 17 CPC may be considered.
45. Admittedly, the plaintiff entered into a Memorandum of Understanding (MOU) dated 18.06.2007 with defendant No.3 Company which was signed by defendant No.1, its Director. According to the terms of MOU, the plaintiff agreed to pay total consideration of Rs.1,85,00,00,000/-. It was mentioned in the MOU that defendant No.3 had made an application dated 14.07.2006 to the Ministry of Commerce, Government of India, for setting up of Special Economic Zone (SEZ) on land admeasuring 100 Hectares on Delhi-Jaipur National Highway, Manesar, District Gurgaon, Haryana. The defendant No.3 was proposing to develop SEZ through Special Purpose Vehicle Rockman Projects Limited (Gurgaon) (SPV) to be incorporated for such purpose and was desirous of selling 74% of the share in SPV to the plaintiff which it was agreed to acquire either itself or through any other entity, person or investor. Accordingly, the plaintiff agreed to pay a total consideration of Rs.185,00,00,000/- for acquisition of 74% shares in SPV. Various terms were drawn as to the mode of payment of this amount and also the steps to be taken by either party for constitution of SPV and for sale of lands to SPV. The defendant No.3 Company (through defendant no2) was to ensure for sale of land to SPV in terms of Clause 9 of the MOU. Clause 12 of the MOU is most relevant which reads as under :
12. That both the parties agree that in the event of the SEZ notification does not take place on or before 31st, December, 2008 due to unforeseen circumstances as well as change in government policies, Kohli will have the liberty to either get refund of the amount paid or to pay the balance amount on or before 31st December 2008 for the sale consideration mentioned here in above. However if the said transaction does not take place in the prescribed period i.e. 31st December 2008, the MOU shall stand cancelled/terminated. Further Rockman Projects agree that if they decide to initiate other SEZ projects in Haryana including the present SEZ, the company would first offer them to Kohli.

46. Admittedly, a sum of Rs.43 crores were paid by the plaintiff to defendant No.3 as advance payment which was received by defendant No.3. However, the plaintiff has claimed that it was shocked to find that till the signing of MOU, the defendant No.1 had withheld the crucial information from them and kept them under the impression that defendant No.3 already possessed the contiguous 250 acres of land on which the SEZ was to be set up. The plaintiff claimed that since a fraud was committed on it by defendant No.1 and by defendant No.3, the plaintiff sought refund of the advance payment in January, 2009 in terms of Clause 12 of MOU, but the defendant No.3 was elusive and constantly through defendant No.1 kept assuring the plaintiff that the money would be refunded at the earliest. The plaintiff thus, came to know that the litigation has commenced between defendant No.1 and Associates and Directors and majority holder of defendant No.3 Company. It also came to know that the moneys have been diverted to the sister concerns; the plaintiff thus, made complaints in Economic Offences Wing (EOW) and the statements of defendant No.2 had been recorded from time to time. It is further submitted that the cheques given to the plaintiff on presentation have been dishonoured, the last time on 03.12.2009. Hence, the suit for Recovery of an amount of Rs.42.7cr and other amounts, had been filed by the plaintiff.
47. From the averments in the plaint, it may be succinctly stated that the parties had entered into a MOU dated 18.06.2007 and initially a payment of Rs.43 crores was made by the plaintiff, but eventually the SEZ did not fructify and therefore, the plaintiff sought recovery of Rs.42.7 crores paid by him, in terms of Clause 12 of MOU.
48. The plaintiff in his plaint had alleged various acts of defendant No.1 and 2, to claim that all the money that was given by the plaintiff was siphoned off by defendant No.2 to the sister concerns, who are defendant No.4 to 11, while defendant No.12 and 13 are the associates of defendant No.2. The plaint also gives details of how at the time of entering into the MOU, defendant No.1 and 2 had represented that they were having 250 Acres of land which was held by their sister concerns in which the defendant No.1 and 2 had a major share holding. The documents of title of property were also shown along with in-principle approval from Ministry of Commerce in favour of defendant No.3, for setting up of the SEZ.
49. The plaintiff by way of the present application has sought to introduce paragraph 3-A to explain how defendant No.2 Shri D.K. Jain and his family are Directors and majority shareholders of defendant No.4 to 11 and are the family Companies of defendant No.2. It is thus, sought to be incorporated that these defendants have common thread of common Directors, common shareholding pattern and family ownership which runs through all the defendant companies namely, defendants 4 to 11. It further intends to incorporate in this paragraph the statements made by defendant No.2 in the Criminal Complaint admitting being a Director in these Companies. A further plea of estoppel is sought to be invoked against defendant No.2 to claim that he cannot wriggle out of his own stand taken in the matter.
50. Paragraph 3-A is, therefore, only an elaboration of what had been claimed by him in paragraph 3 of the plaint; being only a further elucidation of the facts contained in previous paragraph, the same does not in any way change the cause of action and is, therefore, permitted.
51. The plaintiff further wants to insert paragraph 18-A to explain the positive and overt steps taken by defendant No.2 in the development of SEZ as was intended under the MOU executed between the parties. This paragraph also reiterates that by virtue of Board Resolution in favour of defendant No.1 executed in his favour by defendant No.3, defendant No.1 entered into an Agreement with the plaintiff. This proposed amendment is also only an explanation to the acts undertaken under the MOU by the defendants. It is again only an elucidation of the facts already contained in the plaint and is, therefore, permitted.
52. The third amendment sought to be made is by inserting paragraph 20A, wherein the plaintiff intends to assert that various payments are being made by defendant No.2 to the Companies 4 to 11. It is further sought to be asserted that it is a fit case for lifting of corporate veil and once it is lifted, the face of defendant No.2, his immediate family members would be revealed as the real persons behind the veil. Defendant No.2 cannot feign ignorance of the transactions; moreover, defendant No.2 had gotten the defendant No.3 and its other associate Companies to give advance money to its other Companies. Hence, the Corporate veil is required to be lifted in respect of defendant No.4 to 11 and proper investigation is required to be made as the major portion of the money has been enjoyed by them.
53. Likewise, to the similar effect are the facts sought to be inserted by way of paragraph 20-B, wherein the plea is sought to be taken that defendant No.4 to 13 cannot be allowed to turn around and claim non-privity of Contract, having enjoyed a large sum of money which was advanced by the plaintiff Company and then returning it all as a condition of bail of defendant No.2.
54. In paragraph 20-C, it is intended to be inserted that defendant No.2 had planned the deal in a manner that the money was to come to defendant No.3 and from there was to be transferred to different Companies of defendant No.2 making defendant No.4 to 13 as a necessary party to the present suit.
55. The plaintiff also wants to state that various documents such as Agreement to Lease dated 04.05.2006, 30.11.2006 and Agreement to Sell dated 05.02.2007 had been created by active involvement of all the parties with the objective to trap buyers like plaintiffs, for making the payment of advance money. The fraud is writ large on the face of the transaction and the paper work was not possible without the active connivance of all the defendants. It is claimed that the various documents establish an unbroken chain making all the defendants liable to pay the money back to the plaintiff Company.
56. Essentially, be way of paragraph 20-A, 20-B and 20-C, the plaintiff is setting up a case of showing that though the MOU was signed by defendant No.1 for an behalf of defendant No.3 but defendant No.2 and 3 connived with defendant No.4 to 13 by creating documents and luring the plaintiff to enter into the MOU and to give advance money which has been transferred to the sister concerns of defendant No.2 but has been returned back to defendant No.2 as a condition for bail. The plaintiff wants to introduce the concept of lifting to corporate veil and there being a privity of contract between the plaintiff and all the defendants.
57. First and the foremost, there is no challenge or denial by either party that an MOU had been signed between plaintiff and defendant No.3 through defendant No.1 and that defendant No.2 is the other Director of defendant No.3. Essentially, what is emerging from the proposed amendments by way of paragraph 20-A to 20-C is that the plaintiff is apprehensive that even if the liability of defendant No.3 is adjudicated, then too the plaintiff may not be able to recover the money. It is, therefore, trying to claim that the money received by defendant No.3 has been diverted and transferred to the accounts of defendant No.4 to 11 and has then been brought back to defendant No.2. The plaintiff also intends to claim that by lifting the corporate veil, it would be evident that defendant No.4 to 11 are none other than defendant No.2 and even though the MOU was signed by defendant No.3, the other defendants No.4 to 11 cannot avoid their liability to pay by pleading lack of privity of contract. These are new facts which are sought to be inserted only because apparently the plaintiff apprehends that even if it succeeds in the Suit, it may have difficulty in recovery of money from defendant No.3.
58. Secondly, how the money had been used or transferred by defendant No.3 to other Companies, cannot be held to be relevant for the purpose of adjudication of this case which is for simplicitor recovery of Rs.43 crores which had been paid by the plaintiff to defendant No.3 pursuant to an MOU which did not materialize. The facts sought to be incorporated by paragraph 20-A, 20-B and 20-C are not only irrelevant for the purpose of the determination of the controversy, but are also not necessary for determining the core issue of recovery. Therefore, the amendment sought by introduction of paragraph 20-A, 20-B and 20-C are held to be not necessary for the purpose of determination of the suit.
59. It is also pertinent to note that it is the simplicitor case where the plaintiff has sought recovery of Rs.43 crores which were admittedly paid by it to the defendant under an MOU dated 18.06.2007 which did not materialize, thereby the plaintiff has sought recovery in terms of Clause 12 of the MOU. Moreover, defendant No.4 to 11 may be the sister concerns or defendant No.2 and his family members may be the Directors, but the fact remains that defendant No.4 to 11 are admittedly independent and separate entities. They are separate juristic persons and merely because the Directors are found to be common, would not take away their independent juristic status and make them a party to the Contract which was admittedly signed between plaintiff and defendant No.3. The tracing of money to these sister concerns by lifting the corporate veil, may be relevant at the time of execution, but is not necessary for the purpose of seeking recovery pursuant to MOU entered between the plaintiff and defendant No.3.
60. In view of the above discussions, the plaintiff is allowed to insert paragraph 3-A and 18-A by way of amendment, while insertion of paragraph 20-A, 20-B and 20-C is rejected.
61. The other amendment sought is to make correction in the Verification Clause, which is consequential and is hereby allowed.
62. The application under Order VI Rule 17 CPC is partly allowed and accordingly disposed of.
63. Proposed Amended plaint filed may be taken on record accordingly.
CS(OS) 76/2010
64. List on 30.04.2024 for completion of pleading before learned Joint Registrar.

(NEENA BANSAL KRISHNA)
JUDGE

MARCH 18, 2024
rs/va

CS (OS) 76/2010 Page 26 of 26