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 Tata
Group 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
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. Ramakrishnan
Deputy 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 a
temporary 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
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 illegally
and 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. 7
and 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
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 the
contentions 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 Order
dated 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)
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 reads
as 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 the
proceedings, 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.
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, they
will 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 action
against 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
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, it
certainly 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 and
the 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
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