Binu Anand Khanna vs. Ratan Tata

8/12/2019 Binu Anand Khanna vs. Ratan Tata

1/8

THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT : CODE OF CIVIL PROCEDURE

CS(OS) Nos. 399/2001

Date of Decision: 01.10.2013

MRS. BINU ANAND KHANNA ..... Plaintiff

Through: Mr. K.Datta with Mr. Ashish Verma and Mr. Abhinav, Advs.

Versus

RATAN TATA & ORS. ..... Defendants

Through: Mr.Rajiv Nayar, Sr.Adv. with Mr.Darpan Wadhwa,

Ms.Meghna Mishra, Mr.Akhil Sachar, Mr.Rohan Sharma, Mr.Saurabh Seth,Ms.Ritika Ahuja, Advs. for D7.

CORAM:

HONBLE MR. JUSTICE M.L. MEHTA

M.L. MEHTA, J.

I.A. No. 3607/2012 (under Order I Rule 10 and Order VI Rule 16 of CPC)

1. By this Order, I shall dispose of the application filed by defendant no. 7

under Order I Rule 10 of the CPC seeking deletion of the names of

defendants no. 1 to 4 and 6, as well as under Order VI Rule 16 for striking

off pleadings made against these defendants. Before proceeding on the

merits of this application, it is pertinent to give a brief description of the

parties in this suit.

2. The plaintiff, Smt. Binu Anand Khanna, was an erstwhile employee of

defendant no. 7, The Indian Hotels Co. Ltd., a company under the TataGroup of Companies, incorporated under the provisions of the Companies

Act, 1956 and having its registered office in Bombay. Defendant no. 7 is

stated to be engaged in the business of running a chain of reputed hotels

under the name and style of Taj. Defendant no. 8, The Taj Trade and

Transport Co. Ltd., is stated to be a wholly owned subsidiary of defendant

no. 7. Defendant no. 8 is also stated to own and operate a reputed chain of


2/8

exclusive variety stores known as Khazana. Defendants no. 1 to 6 are

stated to be the officers of defendants no. 7 and 8. For the sake of brevity, a

table of the memo of parties is reproduced as hereunder.

Defendant No.

Name

Description/Designation

Defendant no. 1

Sh. Ratan Tata

Chairman of Tata Group

Defendant no. 2

Sh R. K. Krishna Kumar

Managing Director of Defendants no. 7

Defendant no. 3

Sh. S. RamakrishnanDeputy Managing Director of D7

Defendant no. 4

Sh. A. P. Goel

Vice President, Finance of Defendant no. 7

Defendant no. 5

Smt. Sabina Saxena

CEO of Defendant no. 7

Defendant no. 6

Smt. Namita Jain

Deputy General Manager of Defendant no. 8

Defendant no. 7

The Indian Hotels Co. Ltd.

Defendant no. 8

The Taj Trade and Transport Co. Ltd

3. The case of the plaintiff is that her employment with Defendant nos. 7 and

8 was wrongfully and arbitrarily terminated. She claims to have joined the

service of Defendant no. 7 on October 23, 1980, as a receptionist on atemporary basis. Thereafter, vide letter dated July 14, 1981, she was

confirmed and was designated as Confidential Secretary in the then

Managing Directors office at Taj Mahal Hotel, New Delhi. She claims that

she was not only involved with the offices of the Chairman, Vice-Chairman,

Managing Director, but was also associated with the exclusive stores known

as Khazana, The Collection, which are owned and operated by defendant


3/8

no. 8. And that in or around July-August, 1997, the defendant no. 7 company

was going through a tumultuous time, on account of wide ranging changes in

the management structure brought about by the takeover of the reins by

defendant no. 1, who allegedly wanted to have his own set of officers in

charge of the affairs of defendants no. 7 and 8.

4. The plaintiff submits that defendants no. 1 to 3 hatched a conspiracy to

get rid of various officers of the defendants no. 7 and 8, and that a number of

officers of the said two companies were subjected to numerous audits and

investigations and thereby harassed. She submits that the appointments of

defendants no. 5 and 6 were done in a surreptitious manner with a view to

oust her role and standing in the defendants organization. And that

defendant no. 1 to 6 were acting in concert with each other and wanted to

force the plaintiff to either resign or take up duties which would not interfere

with their style of working. And that her services were terminated illegallyand that all the defendants are jointly and severally liable to pay

compensation and damages to the plaintiff.

5. The pith and substance of the application filed by defendant no. 7 is as

follows. The applicant/defendant submits that names of defendants no. 1 to 4

and 6 ought to be deleted from the array of parties on the ground that they

are neither necessary nor proper parties. And that the plaintiff has not been

able to establish a cause of action against defendants no. 1 to 4 and 6. And

that all allegations made against them are vague, baseless, unsubstantiated

and entirely misconceived, with a view to make them parties in this suit for

vexatious purposes. The applicant/defendant also contends that all the

pleadings made against defendants no. 1 to 4 and 6, also ought to be struck

off as being unnecessary, scandalous, frivolous, vexatious, prejudicial,

embarrassing and an abuse of the process of this Court.

6. The applicant/defendant contends that the dispute in the instant case is

that of a simplicitor termination of employment by the defendant no. 7

company, which by itself cannot give rise to any cause of action against the

Chairman/M.D./Deputy M.D./other senior executives of defendants no. 7and 8. And that the said officers cannot be made to undergo the rigours of

long court proceedings, when no relief can be granted against them qua the

plaintiff. The applicant/defendant also submits that vide Affidavit dated

March 20, 2003, it has already agreed to unequivocally undertake and bear

all liabilities which may be determined against defendants no. 1 to 4, 6, and

8. And that once the said affidavit has been filed, the claim of the plaintiff is


4/8

fully secured and no purpose would be served by continuing the defendants

no. 1 to 4 and 6 in this suit.

7. In her reply to this application, the plaintiff has reiterated her claims

against all the defendants as set up in the plaint. Relying on the Order of this

Court dated September 1, 2005, wherein this Court observed that there were

allegations made against each defendant and definite reliefs have been

claimed against each of them, the plaintiff submits that the issue of cause of

action is precluded by issue estoppel. The plaintiff submits that the

defendants earlier moved an application under Order I Rule 10, seeking

same reliefs, and which came to be dismissed as withdrawn vide Order dated

February 8, 2006. And that the instant application is yet another attempt by

the defendants to delay the final determination of the suit.

8. I have heard the counsel for the parties. Before I proceed to decide thecontentions of the parties with respect to the instant application, it is relevant

to revisit prior Order passed by this Court in the instant suit. This Court, vide

Order dated September 1, 2005 dismissed I.A. No. 2005/2001 filed by this

defendant under Order VII Rule 11, for rejection of the plaint. The reasoning

of this Court in dismissing the said application will be noted a little later.

9. Thereafter, defendants no. 1 to 4, 6 and 8 filed separate applications vide

I.As No. 1532-1537/2006 invoking Order I Rule 10 for deletion of their

names from the array of parties. Subsequently, the said applications were

withdrawn by the defendants on February 8, 2006, wherein this Court

observed the following:

"In view of the above orders, the Learned Counsel appearing for Defendant

Nos. 1,2,3,4,6, and 8 does not press the above six Applications and the same

are dismissed as such. However, objection taken in the Application would be

open to these Defendants to be taken up during the trial."

10. Aggrieved, the applicant/defendant preferred an appeal before the

Division Bench of this Court, vide F.A.O. No. 373/2005 against the Order

dated September 1, 2005. During the pendency of the appeal, vide Orderdated February 8, 2006, the written statement of the applicant/defendant was

adopted by the other defendants viz. defendants no. 1 to 4, 6 and 8.

Subsequently, vide Order dated April 16, 2010, the Division Bench

observed:

Accordingly, the Appeal is disposed of with the clarification that since

written statements have now been filed by all the defendants in CS (OS)


5/8

399/2001, it will be open to the Appellant/Defendant No. 7 to file an

Application under any provision other than Order VII Rule 11 of the CPC. If

the Appellant is so advised, the Ld. Single Judge would in the ordinary

course is expected to decide those applications on merits. There is no order

as to Costs. We make it clear that the impugned order shall be conclusive

only in respect of all the provisions of Order VII Rule 11 of CPC.

11. The learned counsel for the applicant/defendant submits and rightly so

that it is in pursuance of this order that the instant application is filed.

However, I am of the view that the grounds on which the

applicant/defendant has pressed this application are untenable, for the

following reasons.

12. It can be said that paragraph 1 of the written statement pithily

summarises the grounds on which the instant application is moved. It readsas under:

There is no cause of action in favour of the Plaintiff and against the

Defendants No. 1 to 6 and Defendant No. 8. Merely because Defendants No.

1 to 6 are/were Directors and/or senior executives of the Indian Hotels Co.

Ltd., it does not give a cause of action to the Plaintiff to sue them

individually. The suit is bad for mis-joinder of Defendants No. 1 to 6 and

Defendant No. 8.

13. In the instant application, the applicant/defendant has additionally also

claimed that the plaintiff cannot seek any specific remedy against defendants

no. 1 to 4, 6 and 8. And that in any event, vide Affidavit dated March 20,

2003, it has already agreed to unequivocally undertake and bear all liabilities

which may be determined against defendants no. 1 to 4, 6, and 8. And that

once the said affidavit has been filed, the claim of the plaintiff is fully

secured and no purpose would be served by continuing the defendants no. 1

to 4 and 6 in this suit. The Ld. Counsel relies on the decision of this Court in

Tristar Consultants v. Vcustomer Services India Pvt. Ltd and Anr., 139

(2007) DLT 688, wherein this Court held thus:

12. Sub rule 2 of Rule 10 of Order 1 permits a Court, at any stage of theproceedings, either upon or without any application of either party to strike

out a person improperly joined as a defendant.

13. In a suit for recovery of money, only such persons can be impleaded as

defendants against whom averments are made which on proof would entitle

the plaintiff to a decree whether jointly or severally or in the alternative

against the said persons named as defendants.


6/8

14. The other facet of the aforesaid proposition of law is that there must be a

cause of action disclosed against a person impleaded as a defendant.

Xxx xxx xxx xxx

xxx xxx xxx xxx

19. It is settled law that a company is a juristic person. Therefore, a company

has to act through a living human being. Collectively, decisions on behalf of

the company, are taken by the board of directors of a company. An

individual director has no power to act on behalf of a company of which he

is a director, unless there is a specific resolution of the board of directors of

the company giving specific power to him/her, or, where the articles of

company confer such an power.

.

23. Directors of a company are referred to as agents of the company in the

context of their fiduciary duty to the company and therefore if they derive

any personal benefit while purporting to act on behalf of the company, theywill be liable to the company and its shareholders. But the directors cannot

be treated as acting as agents of the company, in the conventional sense of

an agent, vis-a-vis third parties.

14. There is no quarrel with regard to the legal propositions as recorded by

this Court in the aforesaid case. However, it is pertinent to note that this

Court has already put to rest the very same contentions, which have been

raised in the instant application dated February 22, 2002 while dismissing

application (I.A No. 2005/2001) on September 1, 2005, observing thus:

Now it would be appropriate to look into the merits of the application of the

defendants under Order 7 Rule 11 CPC as well as the oral prayer made by

learned counsel appearing for the defendant for deletion of names of

defendants 1 to 6 and 8 from the array of the parties in the plaint.

15. In paragraph 16 of the Order dated September 1, 2005; this Court

observed that the plaint expressly made out a cause of action against all the

defendants jointly and severally.

Paragraphs 10, 11, 15, 17, 18, 20 and 21 read in conjunction with paras 38,

41, 42 and the prayer clause make a complete and composite cause of actionagainst all the defendants jointly and severally. Whether the plaintiff would

succeed in getting a decree against the defendants or not is a matter of trial

and the merits of the case ought not to be subject matter of court's discussion

at this stage. In all these paragraphs, it has been specifically stated by the

plaintiff that it was under the directions of defendant No.1 and with an

intention to change the entire higher management of the defendant No.7 that


7/8

services of the persons were terminated in an arbitrary and mala fide

manner. It is also her allegation that she had tried to satisfy defendant Nos.1

& 2 that her performance was good and she was not in-competent but it was

because of some personal reasons known to them that her services were

dispensed with in a most arbitrary, illegal and malafide manner. The

allegations made in the plaint are stated to be supported with some

correspondence between the parties and also that prior and subsequent

conduct of her termination of service by these defendants show that this was

not a case of simplicitor bonafide termination of her services. Serious

allegations have been made against these defendants. May be, they are not

correct but that can only be done by the court after a complete trial. If that be

so, the plaintiff would run the risk of facing consequences of a malicious

prosecution, may be the Court would award costs to the such defendants or

pass such order or direction at the end of the trial as the Court may deem fit

and proper in the facts and circumstances of the case. At this stage, itcertainly cannot be said that the plaint does not disclose any cause of action

against these defendants. There are allegations against them. The allegations

are in relation to wrongful termination of the plaintiff and definite reliefs

have been claimed against all these defendants. The formation of cause of

action has to be examined and determined in the facts of each case. It cannot

be subjected to any universal rule. Cause of action will constitute of every

fact which would be necessary for the plaintiff to prove, if traversed, in order

to support her claim before the Court for judgment, but clearly distinct from

every piece of evidence which may be necessary to prove each fact. In the

present case, the facts averred in the plaint are the ones which on their plain

reading disclose a right of the plaintiff to sue the defendants for the relief

claimedThere is no misjoinder of parties demonstrated on the bare

reading of the plaint. Consequently, I find no merit in this application and

the same is dismissed. (emphasis supplied).

16. Further, this Court also disregarded the relevance of the Affidavit dated

March 20, 2003 filed by the applicant/defendant, undertaking the liabilities

of the remaining defendants.

The orders of the Court dated 28th February, 2001, 20th March, 2003 andthe affidavit dated 20th March, 2003 filed by defendant No.7 in the Court

are of no consequence or favorable to the applicant/defendant No.7. Merely

because the defendant No.7 had stated that it shall bear the liability, if any,

that may ultimately be determined against defendants 1 to 6 and 8 and that

this is without prejudice to the rights and contentions of the parties to the

suit, should per se be sufficient to delete the name of the parties in the suit, is


8/8

to say the least is an erroneous approach in law. It is a well settled canon of

civil jurisprudence that the plaintiff is dominus litus of the suit and is free to

choose the defendant against whom she has a cause of action and claim such

relief as she desires, provided the same is permissible in law. Obviously for

such acts, the plaintiff also renders herself liable for such consequences as

may flow in law, upon conclusion of the trial. (emphasis supplied).

17. It is seen from above that this Court has already substantially dealt with

all the grounds asserted by the applicant/defendant in the instant application.

Vide Order dated September 1, 2005 this Court has expressly observed that,

prima facie, there seems to be a distinct cause of action against each of the

defendants. And that the undertaking of liabilities by the applicant/defendant

cannot be a cogent ground to delete the names of the remaining defendants

from the array of parties.

18. Moreover, the material findings made in the abovementioned Order have

also been appealed against and have not been altered by the Division Bench.

In such event, and there being no change in circumstances, it must be said

that the Order dated September 1, 2005 has attained finality and I do not see

any reason to interpolate anything at this stage. In light of the above

discussion, the application is accordingly dismissed.

Sd/-

M.L. MEHTA, J.

OCTOBER 01, 2013

Documents

Binu Anand Khanna vs. Ratan Tata